APERAM S.A. 
10 November 2023
Q3 2023 Results
Disclaimer
Forward Looking Statements
This document may contain forward-looking information and statements about Aperam SA 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).
The information is valid only at the time of release and Aperam does not assume any obligation to update or revise its forward-looking statements on the basis of new information, future, events, subject to applicable regulation.
CONTENT
Q3 2023 highlights | page 4 | |
Value Strategy | 16 | |
ESG | 27 | |
Business Overview | 43 | |
• | S&E Europe | 50 |
• | S&E South America | 60 |
• | Services & Solution | 67 |
• | Alloys & Specialties | 76 |
• | Recycling & Renewables | 85 |
• | Appendix | 107 |
3
Q3 2023 HIGHLIGHTS
A TROUGH QUARTER SHAPED BY SOFT DEMAND, PRODUCTION ISSUES AND INVENTORY VALUATION
Europe: Volume & price indicate an industrial recession. Investment related prod. disruption in Belgium. S&E, S&S, A&S with high neg inventory valuation. Normal import market share at 21.5%.
Brazil: Solid result based on normal volumes and despite headwind from global pricing
New anti circumvention investigations 1) EU against cold rolled products from Taiwan, Turkey, Vietnam. Immediate registration allows for retroactive duties 2) Brazil: cold rolled 2xx and 410 grades from China
Leadership Journey® phase 4 realized EUR28m gains in Q3 2023
(Σ EUR178m since Q1-21). Additional LJ 5 booster program announced
First Botanickel Harvest
(Pilot)
Launch of infiniteTM - | -zero carbon footprint product line |
4
ESG
LAUNCH OF INFINITETM
-ZERO CARBON FOOTPRINT PRODUCT LINE
- Infinite leverages the full potential of the circular economy
- Up to 98% recycled material content
- Produced using renewable or sustainable energy
- 85% reduction in CO2 emission²
- Supported by our differentiated value chain via our Recycling & Renewables segment:
ELG supplier of scrap
BioEnergia Charcoal from our FSC-certified forest
Botanickel a pioneering investment in an agro based nickel solution
Renewable energy (hydroelectricity, photovoltaics, wind power)
Provides consumers with a low
Increases use of recycled material
2 compared to industry average
environmental impact material
5
LEADERSHIP JOURNEY 5 BOOSTER
EUR50M STRUCTURAL COST ACTION PLAN TO RESTORE EUROPEAN
COMPETITIVNESS IN A CHALLENGING MARKET ENVIRONMENT
Cost Challenge
- Energy cost inflation
- Labor cost inflation
- Equipment reliability
- Excess NWC
LJ 5 Booster
- Fixed cost reduction
- Purchasing efficiency
- Shift S&E capex from growth to productivity
Volume EUR50m
(in addition to ~EUR50m pa run rate)
Time Line
Implementation of a comprehensive plan has started
Realization:
- 50% 2024
- 50% 2025
Our action will improve results even in an unchanged economic environment | 6 |
Q3 2023 MARKET UPDATE
PERSISTENT SOFT DEMAND IN EUROPE, SOLID DEMAND IN BRAZIL IMPORTS REMAIN AT A NORMAL LEVEL, INVENTORIES ARE LOW
CONSTRUCTION | CONSUMER | AUTOMOTIVE & |
GOODS | TRANSPORT |
LOW DISTRIBUTOR INVENTORY
85,000 | 100 |
EU: Declining property prices, high inventory and cost inflation weigh on demand
Brazil: Market is
stabilizing
EU: Reduced consumer spending and elevated inventory in Europe
Brazil: Stable consumer demand and recovery in
white goods
EU: Stable demand at a solid level in Europe
Brazil: below average auto demand but solid transport demand
80,000 | 90 | |||||||||
75,000 | ||||||||||
80 | ||||||||||
70,000 | ||||||||||
70 | ||||||||||
65,000 | ||||||||||
60 | ||||||||||
60,000 | ||||||||||
55,000 | 50 | |||||||||
Q218 | Q418 | Q219 | Q419 | Q220 | Q420 | Q221 | Q421 | Q222 | Q422 | Q223 |
German distributors inventory (t) | Days |
FOOD, HEALTH & CATERING
EU: Lower restaurant & tourism activity weighs on food, beverage & catering demand
Industry, Energy, Chemical
EU: Energy and O&G demand is good, rest is soft
Brazil capital goods
demand is solid. Record bookings
IMPORTS ARE AT A NORMAL LEVEL
500 | 50% | ||||||||
40% | |||||||||
400 | |||||||||
000't | 30% | ||||||||
300 | |||||||||
200 | 20% | ||||||||
100 | 10% | ||||||||
0 | 0% | ||||||||
Q1-18 | Q3-18 | Q1-19 | Q3-19Q1-20Q3-20Q1-21 | Q3-21 | Q1-22 | Q3-22 | Q1-23 | Q3-23 | |
Imports | CR market share | HR market share |
Weak | Below Average | Normal | above average | Strong |
7 |
Q3 2023 FINANCIAL HIGHLIGHTS
HITTING ROCK BOTTOM DUE TO SIGNIFICANT ONE-TIME EFFECTS
EURm | Q3 23 | Q2 23 | qoq | Q3 22 | yoy | |
Sales | 1,463 | 1,702 | -14% | 1,818 | -20% | |
Adj. EBITDA | 19 | 103 | -82% | 235 | -92% | |
EBITDA | 19 | 103 | -82% | 235 | -92% | |
Basic EPS (EUR) | -0.59 | 0.60 | -198% | 1.66 | -136% | |
Shipments (000t) | 516 | 550 | -6% | 508 | 2% | |
Adj EBITDA/t (EUR)² | 37 | 187 | -80% | 463 | -92% | |
Adj EBITDA margin² | 1.3% | 6.1% | -4.8pp | 12.8% | -11.5pp | |
Operating cash flow | -48 | 63 | -176% | 267 | -118% | |
CAPEX | -55 | -58 | -5% | -56 | -2% | |
Free cash flow | 1 | -135 | 1 | NM | 209 | -165% |
Share buyback | 0 | 0 | NA | -86 | NA | |
Dividends paid | -37 | -36 | 3% | -37 | 0% | |
Net financial debt | 646 | 461 | 40% | 482 | 34% | |
1 Before dividend , share buyback & M&A | ² based on steel shipments |
Q3-23 KEY COMMENTS
Shipments: Decrease due to soft real demand, destocking and maintenance related production issues in Europe
Adj EBITDA: Decreases due to a high negative inventory valuation charge, lower volumes and margin pressure
Exceptional items : None
Fin. Result : Contains EUR8m FX & derivative valuation losses
Tax rate: Q3 24%, 9m: 19% in line with guidance
EPS: Reflects the high negative inventory valuation charge and the difficult economic environment in Europe
Cash Flow: Low earnings turn into negative operating cash flow. NWC build to buffer for 2nd AOD standstill. Higher capex within 2023 guidance
Net Fin. Debt: is temporarily elevated. Substantial NWC release expected in Q4-23 as NWC buffer dissolves
Footprint upgrade related items had a significant impact on Q3 | 8 |
Q3 2023 SEGMENTS
SOLID RESULT IN R&R AND BRAZIL, PRODUCTION DISRUPTION IN EUROPE.
HIGH NEGATIVE VALUATION EFFECT IN S&E, S&S AND A&S
Recycling & Renewables
adj. EBITDA (EURm)
112 | 83 | ||
55 | adj EBITDA* | ||
(EURm) | |||
30 | 29 | 17 | adj EBITDA/t |
Q3 22 | Q2 23 | Q3 23 |
Shipments -12% qoq, +12% YoY
QoQ: Adj. EBITDA decreased due to lower volumes despite slightly higher prices
YoY: Adj EBITDA decreased mainly due to lower prices
Stainless & Electrical Steel
adj. EBITDA (EURm)
435 | ||||
360 | adj EBITDA* | |||
153 | 139 | (EURm) | ||
160 | ||||
52 | adj EBITDA/t | |||
-6 | ||||
-16 | (40) | |||
Q3 22Q2 23Q3 23 |
Shipments: -1% qoq, +5% yoy seasonally stronger Brazil, Europe production disruptions
QoQ: Adj. EBITDA decreased due to a price/cost squeeze and a higher inventory valuation charge that more than compensated cost improvements through the Leadership Journey®
YoY: Adj EBITDA decreased mainly due to lower prices despite slightly higher volumes
Services & Solutions
adj. EBITDA (EURm)
1 | adj EBITDA* | ||
-7 | 6 | ||
(EURm) | |||
(21) | |||
-47 | adj EBITDA/t | ||
(152) | |||
Q3 22 | Q2 23 | Q3 23 |
Shipments +5% qoq, +14% yoy versus extremely low base values
QoQ: adj EBITDA improved due to higher prices and slightly higher volumes. It contains a comparably high inventory valuation charge
YoY: adj EBITDA improved due to higher volumes and a less negative inventory valuation charge
Alloys & Specialties
adj. EBITDA (EURm)
1,809 | ||
781 | adj EBITDA* | |
(EURm) | ||
17 | ||
333 | ||
5 | adj EBITDA/t | |
2 | ||
Q3 22 | Q2 23 | Q3 23 |
Shipments: -32% qoq, -6% yoy
QoQ: Adj. EBITDA decreased due to a significantly higher inventory valuation charge and lower volumes
YoY: Adj. EBITDA decreased mainly due to a significantly higher inventory valuation charge
9
NET WORKING CAPITAL
FOOTPRINT UPGRADE DELAYED NET WORKING CAPITAL RELEASE:
SIGNIFICANT NWC REDUCTION IN Q4 23
MOST VOLUME & BUFFER STOCK RELATED NWC REVERSES IN Q4 23
200
81
-22
-41
AB
-258
-485
2019 2020 2021 2022 YTD 23 Q4 23e
A
B
SUBSTANTIAL RAW MATERIAL PRICE RELATED NWC COMPONENT REMAINS*
107% | 88% | |||
28% | 32% | |||
1% | ||||
Ni | FeCr | Nat Gas Electricity | SS price | |
Price change Q4-20 to Q3-23² |
Buffer stock reversal + slightly higher NWC intensity from value chain differentiation
• Scrap | 16% |
ROCE |
+40%
undlerl. • Alloys growth
EBITDA
* Source: Bloomberg average Q4-20 vs average Q3-23 data
Aperam stands for a solid balance sheet and a reliable cash generation | 10 |
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Aperam SA published this content on 10 November 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 13 November 2023 08:32:54 UTC.
