Aperam S.a. · EURONEXT:APAM
Aperam — Investor Presentation (December 2010)
43 slides from Aperam's investor presentation, Dec 16, 2010
Slide 1: Aperam – Positioning, strategy and drivers
Aperam – Positioning, strategy and drivers Bernard Fontana – Chief Executive Officer 16 December 2010
Slide 2: Forward-looking Statements
Forward-looking Statements This document may contain forward-looking information and statements about ArcelorMittal and its subsidiaries. These statements include financial projections and estimates and their underlying assumptions, statements regarding plans, objectives and expectations with respec
Slide 3: Content
Content • Overview • Markets and products • Unique strengths • Challenges and opportunities in stainless steel • Challenges and opportunities in electrical steel, alloys and specialties • The Leadership Journey • Q&A 2
Slide 4: Overview
“<= ArcelorMittal Overview
Slide 5: Aperam snapshot
Aperam snapshot – A global player in stainless steel • 2.5mt of Flat stainless steel capacity in Europe and Brazil (27% of Aperam turnover in 2009) – Leading position in high valued added niches, alloys and specialties • Stainless specialities (Ferritics) • Electrical steel (GO and NGO) • Special-ca
Slide 6: A global player
A global player Stainless steel shipments in 2009 Europe North America and CIS 43 kT 743 kT Asia & Pacific 46 kT South America 41 kT Middle-East & Africa 228 kT PLANTS SERVICE CENTERS FOREST 5 Source: Aperam SALES AGENCIES
Slide 7: Production assets in Europe & South America
Production assets in Europe & South America Châtelet Genk Gueugnon Isbergues Timóteo Imphy Location & facts Location & facts Location & facts Location & facts Location & facts Location & facts - Melt shop and hot- - Melt shop and cold - Cold-rolling mill and - Cold-rolling mill and - Melt shop and -
Slide 8: An organization by core competencies
An organization by core competencies Alloys & Specialties Biomass & Upstream Bioenergia Strategic participation GMO Stainless & Industry Industry Industry Electrical Steel Distribution Distribution Services Distribution & Tubes Wire drawing Tubes Solutions Precision Components 7
Slide 9: Team and organisation
Team and organisation Bernard FONTANA CEO 48 years old Clenio Jean-Paul Timoteo DI Julien Julien Johanna VAN GUIMARAES ROUFFIAC MAULO BURDEAU ONILLON SEVENANT Stainless & Stainless & Services & Alloys & CFO & Sustainability, Electrical steel Electrical steel Solutions Specialities Strategy HR & Sout
Slide 10: Markets and products
“<= ArcelorMittal Markets and products
Slide 11: Stainless steel represents only 2% of total world steel market in volume
Stainless steel represents only 2% of total world steel market in volume Stainless steel consumption by end user* Main end-user applications Energy & Others Chemicals 3% Industry 14% Catering & Appliance 34% General Industry 20% Automotive & Building & Transportation Construction 12% 17% Demand for
Slide 12: Demand for stainless steel comes later in the economic development cycle
Demand for stainless steel comes later in the economic development cycle Carbon steel consumption per capita* (kg/year) Stainless steel consumption per capita* (kg/year) 500 12 10 400 30% 8 90% 300 x6 6 x8 200 4 100 2 0 0 Emerging world China Developed world Emerging world China Developed world Stro
Slide 13: Electrical steel products are driven by energy oriented applications
Electrical steel products are driven by energy oriented applications Grain Oriented (GO) High grades • Higher efficiency equipment • GO is used in the construction of static electrical machines / transformers • Lower Energy consumption • Amorphous alloy is the only material that • Lower CO2 emission
Slide 14: Nickel Alloys applications and products
Nickel Alloys applications and products Magnetic and controlled expansion alloys Oil & Gas Aerospace • FeNi alloys (Ni>25%) and FeNiCo exhibit unique thermal expansion coefficient and magnetic properties Superalloys, corrosion alloys • High Ni-based alloys, enriched with Cr and additions of Co, Mo,
Slide 15: Unique strengths
“<= ArcelorMittal Unique strengths
Slide 16: What makes Aperam unique
What makes Aperam unique – Long-term growth trends in mature markets supported by emerging market demand • Emerging markets representing approximately 30% of Aperam total sales • Approximately 30% of sales in emerging markets – Global, integrated distribution network and proximity to customer • Serv
Slide 17: Leading global stainless and specialty steel producer
Leading global stainless and specialty steel producer Flat product stainless steel producers ranking Nickel Alloys producers ranking in Europe (by slab capacity) (by production) TK VDM 4 Aperam 3 2 30- 35 kt 20- Kanthal 25 kt DNick BGH A&D 1 7 kt VAC G&G 5 kt 4 kt Isabellen Hütte 3 kt 2 kt 2 kt 0 1
Slide 18: Market leader in stainless and electrical steel in Brazil
Market leader in stainless and electrical steel in Brazil Brazilian stainless steel demand estimates (000t) Brazilian electrical steel demand estimates (000t) 500 450 400 400 350 +75% 300 +90% 300 250 200 200 150 100 100 50 0 0 2005 2006 2007 2008 2009 2010E 2011E 2012E 2013E 2014E 2015E 2005 2006 2
Slide 19: Close to customer through a highly integrated distribution network
Close to customer through a highly integrated distribution network Sales, distribution and steel services centers network Strong relationships with global and long term customers, including Whirlpool, Bosch Siemens, Indesit and others… Sales subsidiaries and representative offices Sales agencies Ste
Slide 20: Strong R&D capabilities catering to high-end application and specialities
Strong R&D capabilities catering to high-end application and specialities Commodity and specialty price (USD/t) Sales 2009 breakdown by products 17,000 Nickel Alloys & Specialities Surcharge 3,000 9% Base price 2,500 Electrical Steel 11% 2,000 1,500 1,000 500 0 Regular High Base Base Regular High Ni
Slide 21: Strong culture of continuous improvement
Strong culture of continuous improvement Steelshop Hot rolling Cold rolling Service Isbergues Chatelet 0.35Mt 1.0Mt Genk Steel Service Centers Chatelet Stainless flat Transformation 0.74Mt 3.4Mt Direct sales Genk 1.1Mt Clients Gueugnon 0.40Mt Timoteo Electrical 0.17Mt Electrical flat Steel Service C
Slide 22: A unique capability to produce stainless and specialties from Biomass
A unique capability to produce stainless and specialties from Biomass Equivalent Coke and Charcoal cost in 2009 (USD/t)* – Strategic participation of 36% in Bioenergia which produces biomass (charcoal) from eucalyptus - planting, maintenance and cutting at 7 years old Imported 280 (coke) – Consumed
Slide 23: Strong financials through the cycle and effective working capital management
Strong financials through the cycle and effective working capital management EBIT per tonne (in USD) Operating working capital as % of sales 1500 60% 1000 50% 500 40% 0 30% -500 20% -1000 10% -1500 0% 07 07 07 07 08 08 08 08 09 09 09 09 10 10 07 07 07 07 08 08 08 08 09 09 09 09 10 10 1Q 2Q 3Q 4Q 1Q
Slide 24: Challenges and opportunities in stainless steel
Challenges and opportunities in stainless steel 23
Slide 25: Global stainless steel demand has more than recovered from 2009
Global stainless steel demand has more than recovered from 2009 Stainless steel market structure (mt) Global flat stainless steel demand* (mt) 30 30 +6% per year 25 25 China +20% 37% 20 20 15 26% 15 37% Emerging World 31% 13% 32% 10 10 29% 25% 40% 5 5 Developed World 62% 42% 32% 34% 0 - 2006 2007 20
Slide 26: European demand expected to come back to pre-crisis levels in 2013/2014
European demand expected to come back to pre-crisis levels in 2013/2014 Demand for stainless steel flat products in Western Eastern European HR & CR demand (mt) Europe* (mt) 6,000 700 5,000 600 500 4,000 400 3,000 300 2,000 200 1,000 100 0 0 99 00 01 02 03 04 05 06 07 08 20 9 20 E 20 E 20 E 20 E 20
Slide 27: South America presents important growth potential
South America presents important growth potential Stainless steel consumption per capita pre-crisis Stainless steel flat products demand in South America (kg/year) (kt) 6 700 Rest of South America 600 Brazil 5 500 4 400 3 300 2 200 1 100 0 0 Other South India Brazil China US 03 04 05 06 07 08 09 E E
Slide 28: Despite increased demand, structural overcapacity remains a challenge
Despite increased demand, structural overcapacity remains a challenge Worldwide excess capacity* (mt) Global utilization rates* (mt) 14.0 90% 12.0 85% 10.0 80% 8.0 75% 70% 6.0 65% 4.0 60% 2.0 55% 0.0 50% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2
Slide 29: Raw material impact on pricing
Raw material impact on pricing Stainless steel CR 304 base price versus LME Stainless steel CR 304 base price versus Ferro- Nickel pricing* (US$/t) chrome North Europe Import CFT* 60,000 5,000 250 5,000 4,500 4,500 50,000 4,000 200 4,000 40,000 3,500 3,500 150 3,000 3,000 30,000 2,500 2,500 100 2,00
Slide 30: Challenges and opportunities in electrical steel, alloys and specialties
Challenges and opportunities in electrical steel, alloys and specialties 29
Slide 31: Electrical steel market growth expected to come mainly from China
Electrical steel market growth expected to come mainly from China Global GO demand (mt) Global NGO demand (mt) 3.0 14 +10% +12% per year 12 per year 2.5 10 2.0 8 1.5 6 1.0 4 0.5 2 - - 04 05 06 07 08 09 E E E E E 04 05 06 07 08 09 E E E E E 10 11 12 13 14 20 20 20 20 20 20 10 11 12 13 14 20 20 20 20
Slide 32: Current overcapacity due to crisis expected to reduce progressively
Current overcapacity due to crisis expected to reduce progressively Global capacity and demand for GO (mt) Global capacity and demand for NGO (mt) 3.5 Demand 16 Demand Capacity +18% 14 3.0 Capacity 12 2.5 10 2.0 +56% +40% 8 1.5 6 1.0 4 0.5 2 0.0 0 2008 2009 2015E 2008 2009 2015E Utilization Utilizat
Slide 33: Nickel alloys markets expected to recover in line with core end-use sectors
Nickel alloys markets expected to recover in line with core end-use sectors Ni use in nickel alloys End-use sectors: CAGR 3-4% 150 175 140 CAGR +8.5% Power +50% by 2015 130 150 generation 120 Base: 2008 = 100% Oil & Gas 125 110 Process 100 industries 100 90 Elec. Appliances 80 75 70 Aerospace 50 60
Slide 34: The Leadership Journey
The Leadership Journey ArcelorMittal
Slide 35: An adverse trend
An adverse trend Southern Europe - CR 304 2B 2mm coil base price (€/t)* Aperam quarterly EBITDA (USDm)** 1250 178 1200 1150 144 1100 1050 1000 950 66 900 850 800 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 1Q 2010 2Q 2010 3Q 2010 EBITDA expected to decline significantly in Q4 compared to Q3 due
Slide 36: The Leadership Journey to confront challenges and seize opportunities
The Leadership Journey to confront challenges and seize opportunities • Leadership Journey accelerating sustainable management gains – Targeting USD 250m over the next two years Based upon : – USD 100m of fixed costs improvement (including Isbergues traditional cold roll mill suspension, Gueugnon Ho
Slide 37: Forest expansion and biomass development
Forest expansion and biomass development Biomass (charcoal) production (000t)* Biomass integration (% of Aperam production) 100% 500 90% 80% 400 70% 60% 300 50% 40% 200 30% 100 20% 10% 0 0% 2009 2010E 2011E 2012E 2013E 2014E 2009 2010 2011 2012 2013 2014 Biomass Stainless & Electrical Stainless, Ele
Slide 38: Reconfiguring European downstream to achieve cost leadership
Reconfiguring European downstream to achieve cost leadership Current downstream industrial network Future downstream industrial network 29 downstream tools 20 downstream tools Total capacity of 1.49mt Total capacity of 1.39mt Rationalization initiated by temporarily suspending the Isbergues’ traditi
Slide 39: Investment in productivity
Investment in productivity We Keep the existing bay with exiting over-cranes Benefits: Manual welding Furnace shot blastingx4 Existing pickling Existing edge trimming SCHEME - Productivity increase Current RD7 - Energy saving - Elimination of one line - Quality and yield This part of RD7 line is kep
Slide 40: Capturing post-crisis growth and recovery
Capturing post-crisis growth and recovery Stainless steel demand in Western Europe (000’t)* Stainless steel demand in Brazil (000’t)* 4,500 400 +6% +7% +4% +3% +43% 4,000 +22% 350 3,500 300 3,000 250 2,500 200 2008 2009 2010E 2011E 2012E 2008 2009 2010E 2011E 2012E Each additional tonne expected to
Slide 41: Project to capture South American growth in electrical steel
Project to capture South American growth in electrical steel GO and NGO expansion project 2 CL X5 BO g C2 ol lin l R a d tric D l 5 Co Elec CR P5 BF2 HA BF1 Melt Shop ld LF Co lling s s LF New Ladle Furnace t Ro inle Ho ling St a l CR New ZMill Ro HAP New HAP5 – 400 kty DC2 BOX5 CL2 New GO final lin
Slide 42: Other opportunities and potential
Other opportunities and potential Asia… …and upstream opportunities • Develop further Biomass (charcoal) opportunities • Strategy to actively look at upstream and mining Developed world opportunities (Cr, Ni) directly or in partnership • Upstream integration aiming to secure strategic raw materials
Slide 43: ArcelorMittal
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