Aperam S.a. · EURONEXT:APAM
Aperam — Jefferies Industrials Conference 2018
40 slides from Aperam's conference presentation, Aug 7, 2018
Slide 1: Jefferies Industrials Conference
Jefferies Industrials Conference August 7, 2018 Sandeep Jalan, Chief Financial Officer 1
Slide 2: Disclaimer
Disclaimer Forward-Looking Statements This document may contain forward-looking information and statements about Aperam and its subsidiaries. These statements include financial projections and estimates and their underlying assumptions, statements regarding plans, objectives and expectations with re
Slide 3: Aperam's investment case
Aperam’s investment case Being a sustainably safe and profitable company Solid execution Cost leading Cash generation and of self help strategy footprint financial discipline Optimized and sustainable Strong cash generation Leadership Journey® through the cycle European asset base Phase 1: Restructu
Slide 4: Aperam's robust business model and solid performance
Jefferies Industrials Conference Aperam's robust business model and solid performance 4
Slide 5: Aperam's performance track record
Aperam’s robust business model and solid performance Aperam’s performance track record Continuous solid improvement of the operating performance From net loss to fast growing net income since 2013 800 11.8% 12.5% 4.00 700 10.6% 600 8.9% 2.47 1.99 500 320 5.7% 0.91 400 155 193 71 300 559 200 451 455
Slide 6: Strong cash generator through the cycle
Aperam’s robust business model and solid performance Strong cash generator through the cycle Consistent cash flow from operations through the cycle Strong shareholder returns and Investment in sustainability 400 2017 cash 2018 cash 377 utilization (m€) utilization (m€)* 374 354 300 164 185 - 200 200
Slide 7: Strong balance sheet with significantly improved financing costs
Aperam’s robust business model and solid performance Strong balance sheet with significantly improved financing costs A strong decrease in net interest and financing costs Through debt reduction / restructuring actions Strong decrease of net interest & financing costs, especially cash 88 interest co
Slide 8: Operational performance by division
Aperam’s robust business model and solid performance Operational performance by division Aperam’s improved profitability despite Nickel A robust Stainless and Electrical Steel Division profitability Jan 07 Jan 08 Jan 09 Jan 10 Jan 11 Jan 12 Jan 13 Jan 14 Jan 15 Jan 16 Jan 17 Jul 07 Jul 08 Jul 09 Jul
Slide 9: Stainless & Electrical Steel Europe
Aperam’s robust business model and solid performance Stainless & Electrical Steel Europe Strong European operations performance thanks to the European economy back to healthy growth levels Leadership Journey and despite rising import pressure Sources: GDP and inflation: IMF 1 800 28% 1 700 26% 1 600
Slide 10: Stainless & Electrical Steel Europe: Streamlined footprint and enhanced productivity
Aperam’s robust business model and solid performance Stainless & Electrical Steel Europe: Streamlined footprint and enhanced productivity Aperam Europe downstream rationalization from 29 tools to 17 tools Aperam total productivity evolution, average 10 500 600 GENK ISBERGUES GUEUGNON 10 000 500 HA&P
Slide 11: Stainless & Electrical Steel South America: strong potential
Aperam’s robust business model and solid performance Stainless & Electrical Steel South America: strong potential Continued solid margins despite crisis Brazil economy on recovery track, low inflation, weak currency further improving competitiveness Sources: GDP and inflation: IMF South America adju
Slide 12: Unique asset base in South America well adapted to the market
Aperam’s robust business model and solid performance Unique asset base in South America well adapted to the market South American Footprint Upstream integration Blast furnace fuel needs fully covered Caracas (Venezuela) through cost competitive and Bio Energia environment friendly captive charcoal C
Slide 13: Services & Solutions enhances partnerships with customers
Aperam’s robust business model and solid performance Services & Solutions enhances partnerships with customers A majority of “in house“ exposure to end users to best serve A profitable Services & Solutions thanks to its focus on their needs and provide best services & solutions services and end-user
Slide 14: Alloys & Specialties with healthy EBITDA margins
Aperam’s robust business model and solid performance Alloys & Specialties with healthy EBITDA margins Alloys and Specialties profitable performance from high Strong R&D capability to serve higher growth end end products & end user orientation applications Heating LNG tankers, resistance, special wel
Slide 15: Environment and markets
Jefferies Industrials Conference Environment and markets 15
Slide 16: Stainless steel prices
Environment and markets Stainless steel prices Nickel prices at higher levels compared to 2017 Widening price gap between Europe and China 35.000 5000 30.000 4500 4000 25.000 3500 20.000 3000 15.000 2500 10.000 2000 5.000 1500 CR 304 2B 2mm coil transaction price* (USD/t) Nickel - LME Cash (USD/t) C
Slide 17: Diminishing raw material advantage of Chinese players
Environment and markets Diminishing raw material advantage of Chinese players Chinese cost competitiveness linked to NPI production is Chinese reduced NPI production leading to increased decreasing Ferro-Nickel Imports 500 21000 400 19000 17000 300 15000 13000 200 11000 9000 100 7000 5000 0 2013 201
Slide 18: Stainless steel demand in Europe continuous growth
Environment and markets Stainless steel demand in Europe continuous growth European stainless steel flat slab equivalent demand growing at a healthy pace European stocks remain at normal levels 6,0 80 5,0 Pre-crisis level (2007) 4,0 60 3,0 40 2,0 20 1,0 0 0,0 Flat Stainless steel European apparent c
Slide 19: Opportunities emerge in Brazil again
Environment and markets Opportunities emerge in Brazil again Brazilian market recovery Brazil opportunities Automotive: strong growth expected (domestic & exports). Anfaevea expects 7% growth surpassing 3m vehicles - Aperam is closely linked with majors car makers base 0,5 White Goods: good poten
Slide 20: Trade measures remain supportive
Environment and markets Trade measures remain supportive Upstream operational capacity of the Chinese Industry Downstream operational capacity of the Chinese Industry (In million tonnes) (In million tonnes) 25 50 20 40 15 30 10 20 10 5 0 0 Domestic consumption and net exports Overcapacity Domestic c
Slide 21: Aperam's performance
Jefferies Industrials Conference Aperam’s performance 21
Slide 22: Year on Year evolution of profitability
Aperam’s performance Year on Year evolution of profitability Adj. EBITDA evolution (EUR million) Net Income evolution (EUR million) 13,4% 12,2% 12,3% 0.94 11,0% 1.00 10,1% 154 150 140 0.77 0.60 120 6,1% 5,9% 109 4,8% 0.33 76 80 60 106 47 72 62 26 51 1 -8 0.02 -22 -0.12 -0.28 Q2 2011 Q2 2012 Q2 2013
Slide 23: Quarter on Quarter evolution of profitability
Aperam’s performance Quarter on Quarter evolution of profitability YoY growth in shipments in context of import pressure in Robust divisional performances despite challenging market Europe and truckers’ strike in Brazil conditions 517 508 495 486 478 477 123 111 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 20
Slide 24: Leadership Journey Phase 3 (Transformation Program)
Aperam’s performance Leadership Journey Phase 3 (Transformation Program) Annualized EBITDA cumulated gains (EUR million) Key pillars of the Phase 3 Transformation Program 150 Accelerate productivity gains by implementation New of latest technology and breakthough in technologies automation with deve
Slide 25: Aperam's value strategy: Customer focus and self-help
Jefferies Industrials Conference Aperam’s value strategy: Customer focus and self-help 25
Slide 26: Leadership Journey
Aperam’s value strategy Leadership Journey Aperam Mission Aperam continuously reinforced Leadership Journey® Total target gains 1 Be a sustainably safe company USD 1 2011-2013: LJ phase 1 - Restructuring 350m 2 USD Deliver best in class profitability and returns 2 2014-2017: LJ phase 2 – Asset upgra
Slide 27: Reinforcing our industry-leading asset portfolio
Aperam’s value strategy Reinforcing our industry-leading asset portfolio Proforma Revenue by division 1, 2 (FY17) Europe ∙ Second largest stainless steel producer Stainless & in Europe Electrical Steel ∙ Largest stainless steel producer in South America Brazil The enlarged Alloys & Specialities divi
Slide 28: VDM Metals: a transformative transaction
Aperam’s value strategy VDM Metals: a transformative transaction Structure • 100% of VDM Metals Holding GmbH and related entities • Total Enterprise Value of €596m incl. €123m of pension liabilities, €35m net financial debt, purchase price €438m • Equivalent to 7.8x EV/EBITDA before synergies, based
Slide 29: Specialty alloys is a growing and premium niche segment
Aperam’s value strategy Specialty alloys is a growing and premium niche segment ∙ Higher growth end applications ∙ R&D intensive industry to offer ∙ Less exposed to commodity ∙ “Kilogram” market: unique products innovative solutions and anticipate cycles as cost of raw materials designed to answer p
Slide 30: A global specialty alloys producer
Aperam’s value strategy A global specialty alloys producer Sales by region (FY17 PF1) Rescal Altena Wire drawing Amilly ! Unna Melting, Forging, Rod & Bar, Plate Werdohl Rod & Bar Magnetic parts Strip, Wire Duisburg Siegen Imphy Slab Rolling Hot Rolling, Plate Meltshop, Wire mill, Cold rolling, Bars
Slide 31: Investment project to further transform Aperam's European footprint
Aperam’s value proposition Investment project to further transform Aperam’s European footprint Genk AOD converter , cold rolling and annealing & pickling line • On January 30, 2018, Aperam announced a new investment project in its Genk plant (Belgium) consisting of a new Cold Rolling and Annealing a
Slide 32: Leverage Aperam's unique position in Europe
Aperam’s value strategy Leverage Aperam’s unique position in Europe European stainless steel industry footprint after restructuring Key strengths of the European operations of Aperam Finishing line • The only integrated upstream Steel making Sourcing operations in the heart of Europe, with the best
Slide 33: Flexibility and Agility to manage profitable operations in Brazil
Aperam’s value strategy Flexibility and Agility to manage profitable operations in Brazil Key pillars Aperam’s assets optimisation in South America • Ensure full utilisation rate with the best margin Product mix Geographical mix thanks to a wide range of products and Portfolio geographical sales opt
Slide 34: Sustainability is fully embedded in Aperam Strategy
Aperam’s value strategy Sustainability is fully embedded in Aperam Strategy Social Environment Governance Our People are our We provide the We lead by example greatest asset. “greenest steels” and and maintain constant Their Safety is our priority, constantly reduce our engagement with all our their
Slide 35: Aperam preserves its financial policy and strong credit profile
Aperam’s value strategy Aperam preserves its financial policy and strong credit profile while maximising the long-term growth and value accretion for shareholders Financial Policy 2018 Company Invest in sustaining and upgrading the company’s assets base to continuously CAPEX 2018 reaffirmed at susta
Slide 36: Appendix
Jefferies Industrials Conference Appendix 36
Slide 37: Aperam's Leadership Team
Aperam’s Leadership Team operon Timoteo | MAULO —li Chief Executive Officer Sandeep JALAN Bert LYSSENS Vani , ‘ ” fanisha MITTAL BATHIA, Nicolas CHANGEUR Chief Financial Officer Chief HR, Communication & Chief Strategy Officer Chief Marketing Officer Sustainability officer f T T 1 Stainless & Electr
Slide 38: Brazilian protections against unfair market behaviour
Environment and markets Brazilian protections against unfair market behaviour Type of products Import duties status Anti-dumping status Normal import duties are 14% AD duties starting October 4th, 2013 for 5 years from 236 USD/t to Stainless Steel Flat 1,077 USD/t for CR 304 and 430, in thicknes
Slide 39: European Union measures since 2014
Environment and markets European Union measures since 2014 Anti-dumping development in Europe • On March 25, 2015, European Commission implemented provisional duties from 24-25% for China and 10-12% for Taiwan. Anti-dumping duties “The US tariffs on steel products are causing were applicable during
Slide 40: Q&A
Q&A 40