Luxembourg, February 6, 2012
Highlights
Aperam (referred to as "Aperam" or the "Company") (Amsterdam, Luxembourg, Paris: APAM and NYRS: APEMY), today announced results for the three and twelve month periods ending December 31, 2011.
Philippe Darmayan, CEO of Aperam, commented:
"Despite a more difficult environment than anticipated, Aperam has been able to maintain a comparable performance in Q4 2011 to Q3 2011 and to reduce debt levels significantly.
Since the beginning of the year, we have started to see the signs of a rebound in the business but we continue to remain cautious considering the global economic uncertainty for 2012.
Finally, we welcome recent steps towards industry consolidation and we believe that Aperam is well-positioned to benefit from it."
- Health and Safety frequency rate[2] of 0.7x in 2011 compared to 2.1x in 2010
Shipments of 1,749 thousand tonnes in full year 2011, flat compared to shipments of 1,741 thousand tonnes in full year 2010
Basic earnings per share of USD (0.76) in 2011
Cash inflows from operations amounted to USD 189 million in 2011
Net debt of USD 878 million at December 31, 2011, representing a gearing of 25%
Prospects
EBITDA in Q1 2012 is expected to improve compared to Q4 2011 due to stainless steel market rebound and the continuing progress of the Leadership Journey
Net debt is expected to increase in Q1 2012 compared to Q4 2011 due to increased activity
Financial Highlights (on the basis of IFRS)
| (USDm) unless otherwise shown | 12M '11 | 12M '10 | Q4 '11 | Q3 '11 | Q4 '10 |
| Sales | 6,345 | 5,604 | 1,436 | 1,520 | 1,434 |
| EBITDA | 356 | 410 | 53 | 62 | 22 |
| Operating income (loss) | 45 | 93 | (29) | (20) | (77) |
| Net (loss) income | (60) | 104 | (46) | (41) | 2 |
| Steel shipments (000t) | 1,749 | 1,741 | 429 | 429 | 366 |
| EBITDA/tonne (USD) | 204 | 235 | 124 | 145 | 60 |
| Basic earnings per share (USD) | (0.76) | N/A | (0.57) | (0.53) | N/A |
Health & Safety results analysis
Health and Safety performance, based on Aperam personnel figures and contractors lost time injury frequency rate2, was 0.3 in the fourth quarter of 2011 compared to 0.9 in the third quarter of 2011.
Financial results analysis
Sales in the fourth quarter of 2011 decreased by 6% to USD 1,436 million compared to USD 1,520 million in the third quarter of 2011. Shipments in the fourth quarter of 2011 were flat at 429 thousand tonnes compared to 429 thousand tonnes in the third quarter of 2011.
EBITDA was USD 53 million in the fourth quarter of 2011 compared to EBITDA in the third quarter of 2011 of USD 62 million. The decrease in EBITDA quarter versus quarter was primarily driven by lower activity resulting from the seasonal slowdown in South America and a decrease in base and transaction prices. These factors impacting EBITDA were partially offset by the continuing progress of the "Leadership Journey", which has contributed USD 176 million to EBITDA since the beginning of the year.
Depreciation, amortization and impairment expense in the fourth quarter of 2011 was USD 82 million.
Aperam had an operating loss in the fourth quarter of USD 29 million compared to an operating loss of USD 20 million in the previous quarter.
Net interest expense and other financing costs in the fourth quarter of 2011 were USD 27 million, including financing costs of USD 16 million. Unrealized foreign exchange and derivative gains were USD 2 million in the fourth quarter of 2011.
The Company recorded a net loss of USD 46 million, inclusive of an income tax benefit of USD 8 million in the fourth quarter of 2011.
Cash flows from operations in the fourth quarter were a positive USD 227 million, with a working capital decrease of USD 253 million. CAPEX in the fourth quarter was USD 51 million.
As of December 31, 2011, shareholder's equity was USD 3,443 million and net financial debt was USD 878 million (gross financial debt as of December 31, 2011 was USD 1,125 million and cash & cash equivalents were USD 247 million).
The Company had liquidity of USD 647 million as of December 31, 2011, consisting of cash and cash equivalents (including short-term investments) of USD 247 million and available credit lines of USD 400 million.
Operating segment results analysis
Stainless & Electrical Steel
The Stainless & Electrical Steel segment had sales of USD 1,107 million in the fourth quarter of 2011. This represents a decrease of 3% compared to sales of USD 1,143 million in the third quarter of 2011. Shipments during the fourth quarter were 396 thousand tonnes, including 238 thousand tonnes in Europe and 158 thousand tonnes in South America. This is an increase of 6 thousand tonnes compared to the previous quarter's shipments of 390 thousand tonnes (222 thousand tonnes in Europe and 168 thousand tonnes in South America). Volumes in South America decreased by 6% in the quarter due to seasonality. Despite this decrease in South America, overall volumes for the segment increased slightly as a result of the 7% increase in volumes in Europe due to the reduced impact of seasonality in the quarter compared to the previous quarter.
The segment had EBITDA of USD 26 million in the fourth quarter of 2011 compared to USD 23 million in the third quarter of 2011. EBITDA from South America decreased from USD 26 million in the third quarter of 2011 to USD 23 million in the fourth quarter of 2011. EBITDA from Europe increased from negative USD 3 million in the third quarter of 2011 to USD 3 million in the fourth quarter of 2011. Average steel selling prices for the Stainless & Electrical Steel segment were lower for the quarter.
The Stainless & Electrical Steel segment had an operating loss of USD 37 million during the fourth quarter compared to an operating loss of USD 45 million in the third quarter of 2011. Depreciation and amortization expense was USD 63 million in the fourth quarter of 2011.
Services & Solutions
The Services & Solutions segment had a 13% decrease in sales during the period, from USD 630 million in the third quarter of 2011 to USD 546 million in the fourth quarter of 2011. In the fourth quarter of 2011, shipments were 149 thousand tonnes compared to 164 thousand tonnes in the previous quarter. In addition to lower shipments, the Services & Solutions segment also had lower average selling prices for the period.
The segment had negative EBITDA in the fourth quarter of USD 6 million compared to negative EBITDA of USD 1 million in the third quarter of 2011. EBITDA for the quarter was again impacted by the seasonality at the end of the year and lower average selling prices. In addition, the segment was also impacted by a negative stock effect resulting primarily from the decline in nickel prices that occurred during the quarter.
Depreciation, amortization and impairment expense in the fourth quarter of 2011 was USD 11 million.
The Services & Solutions segment had an operating loss of USD 17 million in the fourth quarter of 2011 compared to an operating loss of USD 8 million in the third quarter of 2011.
Alloys & Specialties
The Alloys & Specialties segment had sales in the fourth quarter of USD 153 million, representing a decrease of 7% compared to USD 164 million in the third quarter of 2011. Shipments were comparable at 8 thousand tonnes in the third quarter to 8 thousand tonnes in the fourth quarter.
The Alloys & Specialties segment achieved EBITDA of USD 12 million in the fourth quarter of 2011 compared to USD 11 million in the third quarter of 2011. Average selling prices in the quarter were down as a result of lower nickel prices.
Depreciation and amortization expense for the quarter was USD 2 million.
The Alloys & Specialties segment had operating income of USD 10 million in the fourth quarter of 2011 compared to operating income of USD 10 million in the third quarter of 2011.
Recent developments
On October 25, 2011, S&P revised the outlook on Aperam from Stable to Negative. At the same time, they affirmed their 'BB' long-term corporate credit rating on the company.
On November 2, 2011, Aperam announced that in response to the current economic uncertainty and in a continuing effort to improve Aperam's cost competitiveness and profitability the company targeted an additional USD 100 million of management gains and profit enhancement under the Leadership Journey. This initiative is in addition to the current USD 250 million program with a new combined target of USD 350 million of management gains and profit enhancement by 2013. As part of this increase, Aperam will focus on further industrial optimization and rationalization in Europe, systematic benchmarking in Brazil and new sourcing initiatives.
On November 8, 2011, Moody's downgraded the corporate family rating for Aperam S.A. to Ba3 from Ba2 and changed the company's ratings outlook to negative from stable.
On December 1, 2011, Philippe Darmayan became a member of Aperam's Management Committee and Chief Executive Officer of Aperam. Philippe Darmayan is a French citizen with extensive experience in various industrial fields and was appointed as the new Chief Executive Officer of Aperam following the announcement on September 20, 2011 that Bernard Fontana was leaving Aperam to become the CEO of Holcim, a leading producer of cement and aggregates based in Zurich, Switzerland.
On January 23, 2012, Aperam joined the United Nations Global Compact, the world's largest corporate responsibility initiative with over 8,000 business and non-business participants in 135 countries.
New developments
On February 6, 2012, Aperam announces that the Board of Directors will submit to a shareholder's vote, at the next annual general meeting, a proposal to maintain the quarterly dividend payment at USD 0.1875 per share. The dividend payments would occur on a quarterly basis for the full year 2012 on March 13, 2012, June 14, 2012, September 10, 2012 and December 10, 2012 taking into account that the first quarterly dividend payment to be paid on March 13, 2012 shall be an interim dividend.
Investor conference call
Aperam management will host a conference call for members of the investment community to discuss the full year and fourth quarter 2011 financial performance at the following time:
| Date | New York | London | Luxembourg |
| Monday, February 6, 2012 | 12:30 pm | 5:30 pm | 6:30 pm |
The dial-in numbers for the call are: France (+33 (0) 170 48 01 66 and toll free 0805 631 580); USA (+1 212 444 0481 and toll free +1 877 280 2342); and international (+44 (0) 20 7784 1036).
A replay of the conference call will be available until February 13, 2011: France (+33 (0) 174 20 28 00); USA (+1 347 366 9565) and international (+44 (0) 20 7111 1244). The participant access code is 7143277#.
Contacts
Corporate Communications / Jean Lasar: +352 27 36 27 27
Investor Relations / Michael Bennett: +352 27 36 27 36
About Aperam
Aperam is a global player in stainless, electrical and specialty steel, with operations in more than 30 countries. The business is organized in three divisions: Stainless & Electrical Steel, Services & Solutions and Alloys & Specialties.
Aperam has 2.5 million tonnes of flat stainless steel capacity in Brazil and Europe and is a leader in high value added niches - alloys and specialties. 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 concentrated in six main plants located in Brazil, Belgium and France. Aperam has about 10,500 employees.
Aperam commits to operate in a responsible way with respect to health, safety and the well-being of its employees, contractors and the communities in which it operates. It is also committed to the sustainable management of the environment and of finite resources. In 2011, Aperam had revenues of USD 6.3 billion and shipments of 1.75 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, whether as a result of new information, future events, or otherwise.
APERAM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
| (in million of U.S. dollars) | December 31, 2011 | September 30, 2011 | December 31, 2010 COMBINED[5] |
| Non current assets | 4,156 | 4,258 | 4,488 |
| Intangible assets | 904 | 940 | 989 |
| Property, plant and equipments | 2,804 | 2,885 | 2,917 |
| Investments & Other | 448 | 433 | 582 |
| Current assets & working capital | 1,199 | 1,558 | 1,905 |
| Inventories, trade receivables & trade payables | 807 | 1,088 | 959 |
| Other assets | 145 | 168 | 180 |
| Amounts receivable under cash-pooling arrangements | - | - | 646 |
| Cash & cash equivalents | 247 | 302 | 120 |
| Shareholders' equity | 3,443 | 3,580 | 3,654 |
| Group share | 3,437 | 3,576 | 3,649 |
| Non-controlling interests | 6 | 4 | 5 |
| Non current liabilities | 1,020 | 1,038 | 1,363 |
| Interest bearing liabilities | 587 | 594 | 932 |
| Deferred employee benefits | 174 | 179 | 181 |
| Provisions and other | 259 | 265 | 250 |
| Current liabilities (excluding trade payables) | 892 | 1,198 | 1,376 |
| Interest bearing liabilities | 538 | 746 | 900 |
| Other | 354 | 452 | 476 |
APERAM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
| (in million of U.S. dollars) | Three Months Ended | Year Ended | ||||
| December 31, 2011 | September 30, 2011 | December 31, 2010 COMBINED | December 31, 2011 | December 31, 2010 COMBINED | ||
| Sales | 1,436 | 1,520 | 1,434 | 6,345 | 5,604 | |
| EBITDA | 53 | 62 | 22 | 356 | 410 | |
| Depreciation & impairment | 82 | 82 | 99 | 311 | 317 | |
| Operating (loss) / income | (29) | (20) | (77) | 45 | 93 | |
| Income from other investments | 1 | - | - | 2 | 9 | |
| Net interest expense and other net financing costs | (27) | (24) | 59 | (124) | (9) | |
| Unrealized foreign exchange and derivative gains (losses) | 2 | (32) | (5) | (30) | 9 | |
| (Loss) / income before taxes and non-controlling interests | (53) | (76) | (23) | (107) | 102 | |
| Income tax benefit | 8 | 35 | 25 | 48 | 3 | |
| (Loss) / income before non-controlling interests | (45) | (41) | 2 | (59) | 105 | |
| Non-controlling interests | 1 | - | - | 1 | 1 | |
| Net (loss) / income | (46) | (41) | 2 | (60) | 104 | |
APERAM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
| (in million of U.S. dollars) | Three Months Ended | Year Ended | ||||
| December 31, 2011 | September 30, 2011 | December 31, 2010 COMBINED | December 31, 2011 | December 31, 2010 COMBINED | ||
| Net (loss) / income | (46) | (41) | 2 | (60) | 104 | |
| Non-controlling interests | 1 | - | - | 1 | 1 | |
| Depreciation and impairment | 82 | 82 | 99 | 311 | 317 | |
| Change in working capital | 253 | 58 | 161 | 34 | (211) | |
| Other | (63) | 21 | 140 | (97) | 151 | |
| Net cash provided by / (used in) operating activities | 227 | 120 | 402 | 189 | 362 | |
| Purchase of property, plant and equipment (CAPEX) | (51) | (48) | (40) | (158) | (101) | |
| Loans under cash pooling arrangements (net) | - | - | (327) | 647 | (317) | |
| Other investing activities | 2 | 9 | (6) | 9 | 14 | |
| Net Cash (used in) / provided by investing activities | (49) | (39) | (373) | 498 | (404) | |
| (Payments) / proceeds from payable to banks and long term debt | (212) | (12) | (8) | 55 | (179) | |
| Borrowings (repayments) under cash pooling arrangements (net) | - | - | (34) | (540) | 197 | |
| Dividends paid | (17) | (14) | - | (61) | (69) | |
| Other financing activities (net) | (2) | (2) | 2 | (6) | 93 | |
| Net cash (used in) / provided by financial activities | (231) | (28) | (40) | (552) | 42 | |
| Net (decrease) / increase in cash and cash equivalents | (53) | 53 | (11) | 135 | - | |
| Effect of exchange rate changes on cash | (2) | (17) | - | (8) | 2 | |
| Change in cash and cash equivalents | (55) | 36 | (11) | 127 | 2 | |
Appendix 1a - Health & Safety statistics
| Health & Safety Statistics | Three Months Ended | Year Ended | |||
| December 31, 2011 | September 30, 2011 | December 31, 2010 | December 31, 2011 | December 31, 2010 | |
| Frequency Rate | 0.3 | 0.9 | 1.0 | 0.7 | 2.1 |
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
| Year Ended December 31, 2011 | Stainless & Electrical Steel1,2 | Services & Solutions | Alloys & Specialties | Others & Eliminations | Total |
| Operational information | |||||
| Steel Shipment (000t) | 1,675 | 662 | 37 | (625) | 1,749 |
| Steel selling price (USD/t) | 2,903 | 3,764 | 18,805 | 3,475 | |
| Financial information | |||||
| Sales (USDm) | 5,068 | 2,603 | 721 | (2,047) | 6,345 |
| EBITDA (USDm) | 221 | 15 | 70 | 50 | 356 |
| Depreciation & Impairment (USDm) | 260 | 33 | 6 | 12 | 311 |
| Operating (loss) / income (USDm) | (39) | (18) | 64 | 38 | 45 |
| Note 1: Stainless & Electrical Steel shipments of 1,675kt of which 647kt were from South America and 1,028kt were from Europe | |||||
| Note 2: Stainless & Electrical Steel EBITDA of USD 221m of which USD 118m were from South America and USD 103m were from Europe | |||||
| Year ended December 31, 2010 | Stainless & Electrical Steel1,2 | Services & Solutions | Alloys & Specialties | Others & Eliminations | Total |
| Operational information | |||||
| Steel Shipment (000t) | 1,638 | 652 | 33 | (582) | 1,741 |
| Steel selling price (USD/t) | 2,591 | 3,397 | 15,368 | 3,066 | |
| Financial information | |||||
| Sales (USDm) | 4,431 | 2,327 | 529 | (1,683) | 5,604 |
| EBITDA (USDm) | 289 | 83 | 42 | (4) | 410 |
| Depreciation & Impairment (USDm) | 281 | 30 | 6 | - | 317 |
| Operating income / (loss) (USDm) | 8 | 53 | 36 | (4) | 93 |
| Note 1: Stainless & Electrical Steel shipments of 1,638kt of which 622kt were from South America and 1,016kt were from Europe | |||||
| Note 2: Stainless & Electrical Steel EBITDA of USD 289m of which USD 220m were from South America and USD 69m were from Europe | |||||
| Quarter Ended December 31, 2011 | Stainless & Electrical Steel1,2 | Services & Solutions | Alloys & Specialties | Others & Eliminations | Total |
| Operational information | |||||
| Steel Shipment (000t) | 396 | 149 | 8 | (124) | 429 |
| Steel selling price (USD/t) | 2,676 | 3,487 | 17,399 | 3,200 | |
| Financial information | |||||
| Sales (USDm) | 1,107 | 546 | 153 | (370) | 1,436 |
| EBITDA (USDm) | 26 | (6) | 12 | 21 | 53 |
| Depreciation & Impairment (USDm) | 63 | 11 | 2 | 6 | 82 |
| Operating (loss) / income (USDm) | (37) | (17) | 10 | 15 | (29) |
| Note 1: Stainless & Electrical Steel shipments of 396kt of which 158kt were from South America and 238kt were from Europe | |||||
| Note 2: Stainless & Electrical Steel EBITDA of USD 26m of which USD 23m were from South America and USD 3m were from Europe | |||||
| Quarter Ended September 30, 2011 | Stainless & Electrical Steel1,2 | Services & Solutions | Alloys & Specialties | Others & Eliminations | Total |
| Operational information | |||||
| Steel Shipment (000t) | 390 | 164 | 8 | (133) | 429 |
| Steel selling price (USD/t) | 2,808 | 3,695 | 20,152 | 3,388 | |
| Financial information | |||||
| Sales (USDm) | 1,143 | 630 | 164 | (417) | 1,520 |
| EBITDA (USDm) | 23 | (1) | 11 | 29 | 62 |
| Depreciation & Impairment (USDm) | 68 | 7 | 1 | 6 | 82 |
| Operating (loss) / income (USDm) | (45) | (8) | 10 | 23 | (20) |
| Note 1: Stainless & Electrical Steel shipments of 390kt of which 168kt were from South America and 222kt were from Europe | |||||
| Note 2: Stainless & Electrical Steel EBITDA of USD 23m of which USD 26m were from South America and USD (3)m were from Europe | |||||
[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] Lost time injury frequency rate equals lost time injuries per 1,000,000 worked hours, based on own personnel and contractors.
[3] EBITDA is defined as operating income plus depreciation and impairment expenses.
[4] The "Leadership Journey" is an initiative that was launched on December 16, 2010 , and subsequently accelerated and increased, to target management gains and profit enhancement of USD 350 million by 2013.
[5] The financial statements for periods prior to January 25, 2011 reflect the combined results of operations and cash flows for the Company. The financial statements for periods as of and subsequent to January 25, 2011 reflect the consolidated results of operations and cash flows for the Company.