Aperam S.a. · EURONEXT:APAM
Aperam — Goldman Sachs Global Metals & Mining, Steel Conference 2016
38 slides from Aperam's conference presentation, Nov 16, 2016
Slide 1: Goldman Sachs Global Metals & Mining, Steel Conference
Goldman Sachs Global Metals & Mining, Steel Conference November 16, 2016 Sandeep Jalan – Chief Financial Officer © Aperam 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 unique investment case
Aperam’s unique investment case A solid and growing value, sustainably profitable for its shareholders • Diminishing raw material advantages in China 1. Attractive • European stainless steel market restructured outlook • Tariff measures in both Brazil and Europe • Brazilian growth potential 2. Cost
Slide 4: Environment and markets
Goldman Sachs Global Metals & Mining, Steel Conference Environment and markets
Slide 5: Asian stainless steel overcapacity remains
Environment and markets Asian stainless steel overcapacity remains Upstream operational capacity of the Chinese industry Downstream operational capacity of the Chinese industry (in million tonnes) (in million tonnes) 40 20 30 15 20 10 10 5 - - Domestic consumption and net exports Overcapacity Domest
Slide 6: European restructuring is completed
Environment and markets European restructuring is completed Upstream operational capacity of the European industry Downstream operational capacity of the European industry (in million tonnes) (in million tonnes) 8,5 4,5 8,0 7,5 4,0 7,0 6,5 3,5 2011 2012 2013 2014 2015 2015E 2016F 2011 2012 2013 2014
Slide 7: European stainless steel apparent demand is improving
Environment and markets European stainless steel apparent demand is improving CR stainless steel European apparent consumption Stocks of CR stainless steel in Germany – quarterly average* (in million tonnes) (in number of days) 3,5 8,5 80 75 3,0 75 70 2,5 8,0 70 65 2,0 65 60 7,5 60 1,5 55 55 1,0 50
Slide 8: South American stainless steel apparent demand remains stable at 2015 level
Environment and markets South American stainless steel apparent demand remains stable at 2015 level Stainless steel Brazilian apparent consumption Stainless steel flat stainless steel consumption per capita (in thousand tonnes) (kg/year) 400 8 350 7 300 6 250 5 200 4 150 3 100 2 50 1 0 0 2012 2013 2
Slide 9: Both domestic markets of Aperam have tariff measures
Environment and markets Both domestic markets of Aperam have tariff measures Chinese marginal cost player to landed costs in Brazil Chinese marginal cost player to landed costs in Europe (USD/t) (USD/t) Chinese marginal FOB, CIF, Imports Anti-dumping Chinese landed Chinese marginal FOB, CIF, Anti-du
Slide 10: Investigation on Taiwanese imports reopened as of August 11, 2016
Environment and markets Investigation on Taiwanese imports reopened as of August 11, 2016 Anti-dumping development in Europe • On May 13, 2014, Eurofer filed an antidumping complaint to European Commission “China and Taiwan have a structural • On June 26, 2014, European Commission started investigat
Slide 11: Diminishing raw material advantage of Chinese players
Environment and markets Diminishing raw material advantage of Chinese players Price equivalent of Nickel contained in NPI vs. LME Nickel price Breakdown of Chinese nickel imports (USD/t) (in kt) 500 21 000 19 000 400 17 000 15 000 300 13 000 200 11 000 9 000 100 7 000 5 000 0 2013 2014 2015 9M'16E a
Slide 12: Positive price momentum in China and Europe
Environment and markets Positive price momentum in China and Europe CR stainless steel products imports in Europe Chinese versus European CR 304 2B 2mm coil transaction (in %) price (USD/t) 5000 30% 4500 4000 20% 3500 3000 10% 2500 2000 1500 0% 2012 2013 2014 2015 9M 2016* Chinese prices European pr
Slide 13: Aperam's fundamentals
Goldman Sachs Global Metals & Mining, Steel Conference Aperam’s fundamentals
Slide 14: Solid and diversified sources of profitability
Aperam’s fundamentals Solid and diversified sources of profitability Aperam sales breakdown by destination (FY 2015) Aperam EBITDA breakdown (FY 2015) USA Alloys & Asia & Africa 7% Services & Specialties 10% Solutions 8% 8% Stainless & Electrical Steel Europe Brazil & Latin 46% America 18% Europe 65
Slide 15: A restructured and efficient European footprint
Aperam’s fundamentals A restructured and efficient European footprint able to seize market opportunities Aperam downstream rationalization in EU from 29 tools to 17 tools Aperam productivity evolution, average 10 500 600 GENK ISBERGUES GUEUGNON 10 000 500 HA&P HAP 3 HAP 3 RD 79 lines 9 500 400 CR mi
Slide 16: Unique asset base in South America well adapted to the market
Aperam’s fundamentals Unique asset base in South America well adapted to the market South American Footprint Range of products Caracas (Venezuela) A complete range of stainless steel grades Stainless steel Colombia (austenitics, ferritics, duplex, martensitics) Ecuador Grain oriented electric steel
Slide 17: An industrial footprint in Europe and South America
Aperam’s fundamentals An industrial footprint in Europe and South America, perfectly complemented with global service centres and sales network Steel making Finishing line Sales subsidiaries and representative offices Sales agencies Steel Service Centers Services & Solutions Division offers a key co
Slide 18: A leading position in nickel alloys
Aperam’s fundamentals A leading position in nickel alloys Global nickel alloys producers (kt in 2014) Aperam Alloys & Specialties geographical footprint Rescal Amilly Imhua Wire drawing The magnetic parts company 40 35 nn Transformation 30 n workshop 25 n n 20 Imphy 15 ICS (JV) 10 5 0 Meltshop, wire
Slide 19: Strong and continuous cash generation throughout the cycle
Aperam’s fundamentals Strong and continuous cash generation throughout the cycle Net income and EPS evolution over the last 5 years Free cash flow evolution (USD million)* (USD million) 250 2,42 2,5 300 2,21 200 2 1,82 250 150 1,5 100 189 1 200 172 50 95 0,5 150 0 0 -50 -111 -100 -0,5 100 -100 -1 -1
Slide 20: A solid Balance Sheet
Aperam’s fundamentals A solid Balance Sheet Total Financial Debt breakdown Financial Debt maturity profile (USD million) as of September 30, 2016 [1] as of September 30, 2016 [1] 600 500 400 300 200 100 0 Convertible bonds BBF Others 2016 2017 2018 >2019 A robust balance sheet and debt structure, ma
Slide 21: Aperam's value strategy
Goldman Sachs Global Metals & Mining, Steel Conference Aperam’s value strategy: A customer driven company focused on its self-help story
Slide 22: Unlocking value of Aperam's best performing assets
Aperam’s value strategy Unlocking value of Aperam’s best performing assets Leadership Journey® initiatives: Enhancing the potential of Asset upgrade program launched on best performing assets best performing assets Launched at the early stage of the program, the • Productivity improvement of the dow
Slide 23: Strengthening product and service differentiation
Aperam’s value strategy Strengthening product and service differentiation Shipments of Top Line products developments in kT 250 200 • Toplines are commercial projects focusing on Top Line development of Aperam’s most profitable product, mindset segment, client or geographical areas. 150 100 • Among
Slide 24: 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 25: Optimise value creation in South America
Aperam’s value strategy Optimise value creation in South America thanks to a perfectly adapted asset base and flexible sales management Key pillars of the mitigation plan in Brazil Aperam’s assets optimisation in South America • Ensure full utilisation rate with the best margin Product mix Geographi
Slide 26: Sustainability is fully embedded in Aperam Strategy
Aperam’s value strategy Sustainability is fully embedded in Aperam Strategy Our vision Priorities & targets 2015 achievements People • LITFR: improvement from 1.1 to 1.0 Consider Safety as our first • Become a “Zero-injury” Company • Absenteeism: from 2.0 to 2.3 duty to our People. • LITFR : 1 Then
Slide 27: Financial policy and capital allocation priorities
Aperam’s value strategy Priority on maintaining a strong Balance Sheet consistent with Investment Grade Financial ratios. Cash resources to be allocated to: Company Invest in sustaining and upgrading the company’s assets base to continuously sustainability reinforce Leadership Journey and Top Line S
Slide 28: Aperam's performance
Goldman Sachs Global Metals & Mining, Steel Conference Aperam’s performance
Slide 29: Health & Safety performance
Aperam’s performance Health & Safety performance Lost Time Injury Frequency rate* 4.0 3.0 2.0 1.0 0 Profit improvement in Q1 due to market Health andfrequency & Safety internal initiatives butin rate of 1.8x Q2Q3 expected 2016 to be more challenging * WorldSteel-standard: Fr = lost time Injuries per
Slide 30: Solid evolution of profitability
Aperam’s performance Solid evolution of profitability EBITDA evolution (USD million) Net result evolution (USD million) 0,8 12,2% 70 11,0% 0,69 0,7 10,4% 0,68 9,7% 9,7% 0,63 60 0,6 0,5 50 0,42 0,4 0,4 123 124 40 0,3 108 112 53 54 105 49 0,2 30 33 0,1 31 20 0 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q
Slide 31: Third quarter operating performance
Aperam’s performance Third quarter operating performance Shipments (‘000t) Q2 2016 EBITDA per division (USD million) [1] 520 483 101 102 476 455 457 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 EBITDA (USD million) 124 27 123 24 112 7 5 108 105 Q2 2016 Q3 2016 Q2 2015 Q3 2016 Q2 2015 Q3 2016 Q3 2015 Q4 2
Slide 32: Leadership Journey
Aperam’s performance Leadership Journey® Cumulated gains over the last 12 months (USD million) Asset upgrade program launched on best performing assets Status • Productivity improvement of the downstream 600 facilities in Genk (CAP2), Gueugnon (CAP10) Tranche 1 and Timoteo (Sendzimir Mill #1). 550
Slide 33: Sustainable cash flow from operations
Aperam’s performance Sustainable cash flow from operations Aperam net debt and gearing[1] evolution Aperam Net Debt / EBITDA evolution, x (USD million) 29% 1 200 30% 4,0 3,76 26% 26% 3,5 1 000 23% 25% 20% 3,0 2,60 800 20% 2,5 2,36 2,20 14% 600 15% 2,0 1066 878 10% 1,5 400 816 10% 690 0,98 536 1,0 0,
Slide 34: Steep reduction in net interest and financing costs
Aperam’s performance Steep reduction in net interest and financing costs Net interest & financing costs (USD million) Aperam Debt restructuring actions 107 Strong decrease of net interest and financing costs, especially 10 cash interest costs, thanks to the financing restructuring actions taken sinc
Slide 35: Credit Rating: one of the fastest re-rating
Aperam’s performance Credit Rating: one of the fastest re-rating Aperam rating evolution with S&P Aperam rating evolution with Moody’s BBB-/Baa3 5 BBB-/Baa3 5 BB+/Ba1 4 BB+/Ba1 4 BB/Ba2 3 BB/Ba2 3 BB-/Ba3 BB-/Ba3 2 2 B1/B+ B1/B+ 1 1 B2/B B2/B 0 0 S&P rating Moody's rating One of the fastest rerating
Slide 36: Solid financial ratios
Aperam’s performance Solid financial ratios Profitability ratio Debt ratio 700 12% 6,0 120% 11% N/A N/A 10% 10% 600 10% 5,0 93% 100% 500 7% 8% 4,0 80% 69% 400 6% 3,0 60% 300 3% 35% 4% 2,0 33% 40% 200 3% 20% 2% 1,0 14% 20% 100 0 0% 0,0 0% FY 2014 FY2015 FY 2014 FY2015 FY 2014 FY2015 FY 2014 FY2015 FY
Slide 37: Q&A
Q&A
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 1,077 USD/t. The case involves CR 304 and 430, in thicknesses be
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