Last checked at 10 Nov 2022 06:17
Aperam S.A. / Key word(s): Quarter Results Third quarter 2022 results 10-Nov-2022 / 07:15 CET/CEST Third quarter 2022 results1
“Solid earnings and free cash flow despite market headwind in Europe”
Luxembourg, November 10, 2022 (07:00 CET) - Aperam (referred to as “Aperam” or the “Company”) (Amsterdam, Luxembourg, Paris, Brussels: APAM, NYRS: APEMY), announced today results for the three months ended September 30, 2022. Highlights
Strategic initiatives
Cash deployment
Prospects
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 1.0x in the third quarter of 2022 compared to 2.1x in the second quarter of 2022.
Financial results analysis for the three-month period ending September 30, 2022 Sales for the third quarter of 2022 decreased by 26% at EUR 1,818 million compared to EUR 2,457 million for the second quarter of 2022. Shipments decreased from 635 thousand tonnes in the second quarter of 2022 to 508 thousand tonnes in the third quarter of 2022, due to pronounced destocking by customers in Europe.
EBITDA decreased during the quarter to EUR 235 million from EUR 402 million due to negative inventory valuation, lower volumes and a price/cost squeeze.
Depreciation and amortization expense was EUR (48) million for the third quarter of 2022.
Aperam had an operating income for the third quarter of 2022 of EUR 187 million compared to an operating income of EUR 356 million for the previous quarter.
Financing costs, net, including the FX and derivatives result for the third quarter of 2022 were EUR (65) million. Cash cost of financing was nil during the quarter as interest expenses paid have been offset by interest income received on cash and cash equivalents.
Income tax result was a benefit of EUR 1 million during the third quarter of 2022, notably due to EUR 25 million additional deferred tax assets recognized on tax losses carried forward.
The Company recorded a net income of EUR 121 million for the third quarter of 2022, compared to EUR 317 million for the second quarter of 2022. Cash flows from operations for the third quarter of 2022 were at EUR 267 million, including a working capital decrease of EUR 36 million. CAPEX for the third quarter was EUR (58) million.
Free cash flow before dividend and share buyback for the third quarter of 2022 amounted to EUR 209 million, compared to EUR 170 million for the second quarter of 2022. During the third quarter of 2022, cash returns to shareholders amounted to EUR 123 million, consisting of EUR 86 million of share buy-back and EUR 37 million of dividend.
Operating segment results analysis
Stainless & Electrical Steel (1)
(1) Amounts are shown prior to intra-group eliminations (2) Due to the transfer of the entity Aperam Bioenergia from the segment 'Stainless & Electrical Steel' to the segment 'Recycling & Renewables' starting Q1 2022, segmented figures for Q3 2021 and 9M 2021 have been recast for the sake of comparison.
The Stainless & Electrical Steel segment had sales of EUR 1,186 million for the third quarter of 2022. This represents a 28% decrease compared to sales of EUR 1,643 million for the second quarter of 2022. Steel shipments during the third quarter were 352 thousand tonnes, a decrease of 19% compared to shipments of 432 thousand tonnes during the previous quarter. Shipments in Brazil were seasonally normal and remained at a high level but customers’ destocking impacted Europe in the seasonal trough quarter. Average steel selling prices for the Stainless & Electrical Steel segment decreased by 12% compared to the previous quarter.
The segment generated an EBITDA of EUR 153 million for the third quarter of 2022 compared to EUR 328 million for the second quarter of 2022. EBITDA decreased due to lower volumes, negative inventory valuation and a price/cost squeeze despite a slight seasonal increase in shipments in Brazil.
Depreciation and amortization expense was EUR (25) million for the third quarter of 2022.
The Stainless & Electrical Steel segment had an operating income of EUR 128 million for the third quarter of 2022 compared to an operating income of EUR 303 million for the second quarter of 2022.
Services & Solutions(1)
(1) Amounts are shown prior to intra-group eliminations
The Services & Solutions segment had sales of EUR 584 million for the third quarter of 2022, representing a decrease of 30% compared to sales of EUR 832 million for the second quarter of 2022. For the third quarter of 2022, steel shipments were 138 thousand tonnes compared to 172 thousand tonnes during the previous quarter. Average steel selling prices for the Services & Solutions’ segment were 11% lower during the third quarter of 2022 compared to the second quarter of 2022.
The segment generated a negative EBITDA of EUR (21) million for the third quarter of 2022 compared to an EBITDA of EUR 45 million for the second quarter of 2022. EBITDA was substantially impacted by negative inventory valuation and lower volumes that were not compensated by a favorable price / cost development
Depreciation and amortization expense was EUR (4) million for the third quarter of 2022.
The Services & Solutions segment had an operating loss of EUR (25) million for the third quarter of 2022 compared to an operating income of EUR 42 million for the second quarter of 2022.
Alloys & Specialties(1)
(1) Amounts are shown prior to intra-group eliminations
The Alloys & Specialties segment had sales of EUR 171 million for the third quarter of 2022, representing an increase of 6% compared to EUR 162 million for the second quarter of 2022. Steel shipments decreased by 3% during the third quarter of 2022 at 6 thousand tonnes. Average steel selling prices for the Alloys & Specialties’ segment were 12% higher during the third quarter.
The Alloys & Specialties segment achieved EBITDA of EUR 5 million for the third quarter of 2022 compared to EUR 15 million for the second quarter of 2022. EBITDA decreased due to the impact of severe weather conditions, seasonally lower volumes and negative inventory valuation.
Depreciation and amortization expense for the third quarter of 2022 was EUR (3) million.
The Alloys & Specialties segment had an operating income of EUR 2 million for the third quarter of 2022 compared to an operating income of EUR 12 million for the second quarter of 2022.
Recycling & Renewables
(1) Amounts are shown prior to intra-group eliminations (2) Due to the transfer of the entity Aperam Bioenergia from the segment 'Stainless & Electrical Steel' to the segment 'Recycling & Renewables' starting Q1 2022, segmented figures for Q3 2021 and 9M 2021 have been recast for the sake of comparison. (3) Pro Forma information including ELG for the sake of comparison.
The Recycling & Renewables segment had sales of EUR 468 million for the third quarter of 2022, representing a decrease of 41% compared to EUR 788 million sales for the second quarter of 2022. Shipments decreased by 23% during the third quarter of 2022 to 278 thousand tonnes. Average selling prices for the Recycling & Renewables’ segment were 22% lower during the third quarter.
EBITDA decreased during the quarter to EUR 31 million compared to EBITDA of EUR 39 million in Q2 2022. EBITDA decreased due to seasonality and lower scrap volumes that were not fully offset by better pricing of scrap and cost savings.
Depreciation and amortization expense for the third quarter of 2022 was EUR (16) million.
The Recycling & Renewables segment had an operating income of EUR 15 million for the third quarter of 2022 compared to an operating income of EUR 24 million for the second quarter of 2022.
Investor conference call / webcast
Pre-recorded management comments are available as from publication of this earnings release on our website at www.aperam.com, section Investors > Reports & Presentations > Quarterly results > Q3-2022 (Link).
Aperam management will host a conference call / webcast for members of the investment community to discuss the third quarter 2022 financial performance at the following time:
Link to the webcast: https://channel.royalcast.com/landingpage/aperam/20221110_1/
The dial-in numbers for the call are: France : +33 (0) 1 7037 7166; USA: +1 212 999 6659; UK: +44 (0) 33 0551 0200
The conference password is Aperam.
Contacts
Company Secretary / Julia Eisenmann +352 661 527 279; julia.eisenmann@aperam.com Investor Relations / Thorsten Zimmermann: +352 661 570 250; thorsten.zimmermann@aperam.com
About Aperam
Aperam is a global player in stainless, electrical and specialty steel and recycling, with customers in over 40 countries. Starting from 1 January 2022, the business is organized in four primary reportable segments: Stainless & Electrical Steel, Services & Solutions, Alloys & Specialties and Recycling & Renewables.
Aperam has a flat Stainless and Electrical steel capacity of 2.5 million tonnes in Brazil and Europe and is a leader in high value specialty products. In addition to its industrial network, spread over six production facilities in Brazil, Belgium and France, Aperam has a highly integrated distribution, processing and services network and a unique capability to produce low carbon footprint stainless and special steels from biomass, stainless steel scrap and high performance alloys scrap. With Bioenergia and its unique capability to produce charcoal made from its own FSC-certified forestry and with ELG, a global leader in collecting, trading, processing and recycling of stainless steel scrap and high performance alloys, Aperam’s places sustainability at the heart of its business, helping customers worldwide to excel in the circular economy.
In 2021, Aperam had sales of EUR 5,102 million and steel shipments of 1.82 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
APERAM CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
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 – Adjusted Net Income and Adjusted Basic Earnings per Share
Appendix 3 – Terms and definitions3
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:
Adjusted EBITDA: operating income before depreciation and amortization expenses and exceptional items. Adjusted EBITDA/tonne: calculated as Adjusted EBITDA divided by total shipments. Adjusted Net Income: refers to reported net income less exceptional items, reversal of provisions for liabilities and charges, recognition of deferred tax assets on tax losses carried forward, reversal of current income tax on interest on PIS/Cofins in Brazil and deferred tax effect on exceptional items. Adjusted Basic Earnings per Share: refers to Adjusted Net Income divided by Weighted average common shares outstanding. Average selling prices: calculated as sales divided by shipments. 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 property plant and equipment, intangible assets and biological assets. EBITDA: operating income before depreciation and amortization expenses. EBITDA/tonne: calculated as EBITDA divided by total shipments. Exceptional items: consists of (i) inventory write-downs equal to or exceeding 10% of total related inventories values before write-down at the considered quarter end (ii) restructuring (charges)/gains equal to or exceeding EUR 10 million for the considered quarter, (iii) capital (loss)/gain on asset disposals equal to or exceeding EUR 10 million for the considered quarter or (iv) other non-recurring items equal to or exceeding EUR 10 million for the considered quarter. Financing costs, (net): Net interest expense, other net financing costs and foreign exchange and derivative results. 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 (i) Recycling & Renewables and Stainless & Electrical Steel (ii) 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.
2 The Leadership Journey® is an initiative launched on December 16, 2010, and subsequently accelerated and increased, to target management gains and profit enhancement. The fourth phase of the Leadership Journey® is targeting EUR 150 million gains for the period 2021 - 2023 via a combination of cost, growth and mix improvement measures. Some additional investments, as announced in 2021 as part of the Strategy 2025 program, have been accelerated to achieve earnings growth already in 2022 contributing to the ongoing Leadership Journey Phase 4.
3 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 3 “Terms & definitions”. Dissemination of a Financial Wire News, transmitted by EQS Group.The issuer is solely responsible for the content of this announcement. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
1483833 10-Nov-2022 CET/CEST
corporate announcement transmitted by EQS Group. The issuer is solely responsible for the content of this announcement.