31st Jul 2019 06:01
Aperam S.A. / Key word(s): Quarter Results Aperam S.A.: Second quarter 2019 results 31-Jul-2019 / 07:00 CET/CEST "Improved quarterly operational results in a challenging market environment"
Luxembourg, July 31, 2019 (07:00 CET) - Aperam (referred to as "Aperam" or the "Company") (Amsterdam, Brussels, Luxembourg, Paris: APAM and NYRS: APEMY), announced today results for the three month period ending June 30, 2019
Timoteo Di Maulo, CEO of Aperam, commented: "Aperam delivered an improved operational performance this quarter despite a challenging global market environment. Imports start increasing once again commanding a disproportionate market share and put extreme pressure on pricing. The measures put in place by the European Commission are ineffective so far, as Indonesia continues to remain exempted and import quotas have been increased while demand has dropped. Looking ahead, to counter these challenges our ability to realize further gains via the Leadership Journey(R) will be key. We are also confident in our ability to generate cash flow and rely on a solid balance sheet. We continue to take all the necessary measures to weather a challenging market environment."
Financial Highlights (on the basis of financial information prepared under IFRS)
Health & Safety results
Health and Safety performance based on Aperam personnel figures and contractors' lost time injury frequency rate was 1.2x in the second quarter of 2019 compared to 1.1x in the first quarter of 2019.
Financial results analysis for the three-month period ending June 30, 2019 Sales for the second quarter of 2019 were EUR 1,090 million, down from EUR 1,178 million for the first quarter of 2019. Steel shipments decreased from 501 thousand tonnes in the first quarter of 2019 to 465 thousand tonnes in the second quarter of 2019. EBITDA was EUR 95 million for the second quarter of 2019 compared to EUR 81 million for the first quarter of 2019. The sequential EBITDA increase was mainly due to a partial recovery in base prices and a positive seasonality in Brazil while the previous quarter additionally suffered from negative inventory effects. Significantly lower volumes in Europe and temporarily higher input costs in Brazil had negative effects, partly offset by Phase 3 of the Leadership Journey(R), which continued to progress over the quarter with annualized gains of EUR 22 million to EBITDA. The cumulative annualized savings for Phase 3 now stand at EUR 89 million. Depreciation and amortisation was EUR (36) million for the second quarter of 2019. Aperam had an operating income for the second quarter of 2019 of EUR 59 million compared to an operating income of EUR 46 million for the previous quarter. Net interest expense and other financing costs for the second quarter of 2019 were EUR (5) million. Realized and unrealized foreign exchange and derivative losses were EUR (1) million for the second quarter of 2019. Income tax result for the second quarter of 2019 was an income tax benefit of EUR 4 million mainly due to a tax benefit amounting to a total of EUR 15 million applicable as from 2018. The Company recorded a net income of EUR 57 million for the second quarter of 2019. Cash flows from operations for the second quarter of 2019 were positive at EUR 97 million, with a working capital decrease of EUR 32 million. CAPEX for the second quarter was EUR (26) million. Free cash flow before dividend and share buy-back for the second quarter of 2019 amounted to EUR 72 million. During the second quarter of 2019, the cash returns to shareholders amounted to EUR 132 million, consisting of EUR 93 million of share buy-back and EUR 39 million of dividend. Total cash returned to shareholders during the first semester 2019 amounted to EUR 165 million consisting of EUR 93 million of share buy-back and EUR 72 million of dividend. During the second quarter of 2019, the Company repurchased Convertible Bonds 2021 with a nominal amount of USD 137 million (EUR122 million) for a total consideration of EUR131 million. As of June 30, 2019, shareholders' equity was EUR 2,387 million and net financial debt was EUR 176 million (as of June 30, 2019, gross financial debt was EUR 365 million and cash and cash equivalents were EUR 189 million). The Company had liquidity of EUR 489 million as of June 30, 2019, consisting of cash and cash equivalents of EUR 189 million and undrawn credit lines3 of EUR 300 million.
Operating segment results analysis
Stainless & Electrical Steel (1)
(1) Amounts are shown prior to intra-group eliminations
The Stainless & Electrical Steel segment had sales of EUR 842 million for the second quarter of 2019. This represents a 9.6% decrease compared to sales of EUR 931 million for the first quarter of 2019. Steel shipments during the second quarter were 440 thousand tonnes compared to 479 thousand tonnes during the previous quarter. The weak economic environment led to contraction of demand in Europe while Brazil saw the benefit of a seasonally stronger quarter. Overall, average steel selling prices for the Stainless & Electrical Steel segment slightly decreased compared to the previous quarter due to a lower nickel price and mix effects.
The segment had EBITDA of EUR 79 million for the second quarter of 2019 compared to EUR 52 million for the first quarter of 2019. The increase in profitability was primarily driven by partially recovering base prices in Europe and the seasonal improvement in Brazil while the previous quarter additionally suffered from negative inventory effects. The Leadership Journey(R) contributed positively but significantly lower volumes in Europe and temporarily higher costs in Brazil burdened the result meaningfully. The Stainless & Electrical Steel segment had an operating income of EUR 49 million for the second quarter of 2019 compared to an operating income of EUR 22 million for the first quarter of 2019.
Services & Solutions(1)
(1) Amounts are shown prior to intra-group eliminations
The Services & Solutions segment had sales of EUR 453 million for the second quarter of 2019 compared to EUR 520 million for the first quarter of 2019. For the second quarter of 2019, steel shipments were 182 thousand tonnes compared to 214 thousand tonnes during the previous quarter. The Services & Solutions segment had higher average steel selling prices during the period compared to the previous period.
The segment had EBITDA of EUR 16 million for the second quarter of 2019, compared to EUR 16 million for the first quarter of 2019. Lower volumes were compensated by lower costs and the absence of inventory valuation effects.
The Services & Solutions segment had an operating income of EUR 12 million for the second quarter of 2019, compared to EUR 14 million for the first quarter of 2019.
Alloys & Specialties(1)
(1) Amounts are shown prior to intra-group eliminations
The Alloys & Specialties segment had sales of EUR 156 million for the second quarter of 2019 compared to EUR 153 million for the first quarter of 2019. Steel shipments during the second quarter of 2019 were at 9 thousand tonnes compared to 10 thousand tonnes during the first quarter of 2019. Average steel selling prices increased over the quarter.
The Alloys & Specialties segment achieved an EBITDA of EUR 12 million for the second quarter of 2019 compared to EUR 12 million for the first quarter of 2019. Lower volumes were compensated by a price/mix improvement.
The Alloys & Specialties segment had an operating income of EUR 10 million for the second quarter of 2019 compared to an operating income of EUR 10 million for the first quarter of 2019.
Recent developments On June 13, 2019, Aperam announced that it has requested to be withdrawn from the credit rating services of S&P Global Ratings and Moody's Investor Service, while reaffirming to maintain investment grade financial ratios: On June 27, 2019, Moody's Investors Service withdrew the 'Baa3' long-term issuer rating with stable outlook of Aperam S.A. On July 15, 2019, S&P Global Ratings withdrew its 'BBB-' long-term issuer credit rating with stable outlook of Aperam S.A. On June 27, 2019, Aperam announces the completion of its share buyback program announced on 6 February 2019. In aggregate, 3,700,000 shares were bought under this Program, representing an equivalent amount of EUR 92.6 million.
New developments On July 18, 2019, 1,800,0000 shares acquired under the 2018 share buyback program were cancelled in line with the announced purpose of the program. The total number of shares outstanding (Net of Treasury Shares 3,899,921) as of July 18, 2019 is 79,796,359 shares. On July 31, 2019, Aperam published its Half-Year Report for the six month period ended June 30, 2019. The report is available in the Luxembourg Stock Exchange's electronic database OAM on www.bourse.lu and on www.aperam.com under Investors > Investors Essentials > Financial Reports section. On July 31, 2019, Aperam announced the resignation of Mrs. Laurence Mulliez for personal considerations effective August 1, 2019. Mrs. Mulliez joined the Board in May 2011 and chaired its Audit and Risk Management Committee since May 2013. The members of the Board of Directors extended their warmest gratitude and appreciation for Mrs. Mulliez's valuable contribution to the Board. Mrs. Bernadette Baudier will replace Mrs. Mulliez as Chairperson of the Audit and Risk Management Committee.
Investor conference call
Aperam management will host a conference call for members of the investment community to discuss the second quarter of 2019 financial performance at the following time:
The dial-in numbers for the call are: France (+33 (0) 1767 00794); USA (+1 631 510 7495) and international (+44 (0) 2071 928000). The participant access code is: 6091614#. A replay of the conference call will be available until August 7, 2019: France (+33 (0) 170950348); USA (+1 (917) 677-7532) and international (+44 (0) 3333 009785). The participant access code is 6091614#.
Contacts
Corporate Communications / Laurent Beauloye: +352 27 36 27 103 Investor Relations / Thorsten Zimmermann: +352 27 36 27 304
About Aperam
Aperam is a global player in stainless, electrical and specialty steel, with customers in over 40 countries. The business is organised in three primary operating segments: Stainless & Electrical Steel, Services & Solutions and Alloys & Specialties.
Aperam has 2.5 million tonnes of flat Stainless and Electrical steel capacity in Brazil and Europe and is a leader in high value specialty products. Aperam has a highly integrated distribution, processing and services network and a unique capability to produce stainless and specialty from low cost biomass (charcoal). Its industrial network is spread in six production facilities located in Brazil, Belgium and France.
In 2018, Aperam had sales of EUR 4,677 million and steel shipments of 1.97 million tonnes.
For further information, please refer to our website at www.aperam.com
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 respect to future operations, products and services, and statements regarding future performance. Forward-looking statements may be identified by the words "believe," "expect," "anticipate," "target" or similar expressions. Although Aperam's management believes that the expectations reflected in such forward-looking statements are reasonable, investors and holders of Aperam's securities are cautioned that forward-looking information and statements are subject to numerous risks and uncertainties, many of which are difficult to predict and generally beyond the control of Aperam, that could cause actual results and developments to differ materially and adversely from those expressed in, or implied or projected by, the forward-looking information and statements. These risks and uncertainties include those discussed or identified in Aperam's filings with the Luxembourg Stock Market Authority for the Financial Markets (Commission de Surveillance du Secteur Financier). Aperam undertakes no obligation to publicly update its forward-looking statements or information, whether as a result of new information, future events, or otherwise.
APERAM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
* Increase in Net Financial Debt by EUR128 million from EUR48 million as of December 31, 2018 to EUR176 million as of June 30, 2019 primarily due to accounting effects (+EUR56 million out of which IFRS 16 Leases +EUR29 million and Convertible Bonds 2021 repurchases +EUR27 million), share buyback (+EUR93 million), dividend paid (+EUR72 million) and other items (+EUR3 million), partly offset by free cash-flow generated during the first six months (-EUR96 million).
APERAM CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
* Number of shares outstanding as of June 30, 2019 (in thousands): 79,796 (85,496 issued shares, net of 5,700 treasury shares)
APERAM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Appendix 1a - Health & Safety statistics
Lost time injury frequency rate equals lost time injuries per 1,000,000 worked hours, based on own personnel and contractors.
Appendix 1b - Key operational and financial information
Appendix 2 - Terms and definitions
Unless indicated otherwise, or the context otherwise requires, references in this earnings release report to the following terms have the meanings set out next to them below:
Average steel selling prices: calculated as steel sales divided by steel shipments. Cash and cash equivalents: represents cash and cash equivalents, restricted cash and short-term investments. CAPEX: relates to capital expenditures and is defined as purchase of tangible assets, intangible assets and biological assets. EBITDA: operating income before depreciation, amortisation and impairment expenses. EBITDA/tonne: calculated as EBITDA divided by total steel shipments. Free cash flow before dividend and share buy-back: net cash provided by operating activities less net cash used in investing activities. Gross financial debt: long-term debt plus short-term debt. Liquidity: Cash and cash equivalent and undrawn credit lines. LTI frequency rate: Lost time injury frequency rate equals lost time injuries per 1,000,000 worked hours, based on own personnel and contractors. Net financial debt: long-term debt, plus short-term debt less cash and cash equivalents. Net financial debt/EBITDA or Gearing: Refers to Net financial debt divided by last twelve months EBITDA calculation. Shipments: information at segment and group level eliminates inter-segment shipments (which are primarily between Stainless & Electrical Steel and Services & Solutions) and intra-segment shipments, respectively. Working capital: trade accounts receivable plus inventories less trade accounts payable.
1 The financial information in this press release and Appendix 1 has been prepared in accordance with the measurement and recognition criteria of International Financial Reporting Standards ("IFRS") as adopted in the European Union. While the interim financial information included in this announcement has been prepared in accordance with IFRS applicable to interim periods, this announcement does not contain sufficient information to constitute an interim financial report as defined in International Accounting Standard 34, "Interim Financial Reporting". Unless otherwise noted the numbers and information in the press release have not been audited. The financial information and certain other information presented in a number of tables in this press release have been rounded to the nearest whole number or the nearest decimal. Therefore, the sum of the numbers in a column may not conform exactly to the total figure given for that column. In addition, certain percentages presented in the tables in this press release reflect calculations based upon the underlying information prior to rounding and, accordingly, may not conform exactly to the percentages that would be derived if the relevant calculations were based upon the rounded numbers. This press release also includes Alternative Performance Measures ("APM" hereafter). The Company believes that these APMs are relevant to enhance the understanding of its financial position and provides additional information to investors and management with respect to the Company's financial performance, capital structure and credit assessment. These non-GAAP financial measures should be read in conjunction with and not as an alternative for, Aperam's financial information prepared in accordance with IFRS. Such non-GAAP measures may not be comparable to similarly titled measures applied by other companies. The APM's used are defined under Appendix 2 "Terms & definitions". 2 The Leadership Journey(R) is an initiative launched on December 16, 2010, and subsequently accelerated and increased, to target management gains and profit enhancement. The third phase of the Leadership Journey(R) - the Transformation Program - was initially targeting EUR 150 million of additional EBITDA gains per year by end of 2020. In February 2019, the annualized gains target has been increased by EUR 50 million to reach EUR 200 million by year end 2020. 3 Includes revolving credit facility of EUR 300 million.
AttachmentDocument title: Aperam Q2 2019 ER_ENDocument: http://n.eqs.com/c/fncls.ssp?u=KQHUXPWYGN Dissemination of a Financial Wire News, transmitted by EQS Group.The issuer is solely responsible for the content of this announcement. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
849159 31-Jul-2019 CET/CEST
corporate announcement transmitted by EQS Group. The issuer is solely responsible for the content of this announcement.
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