24 mai 2018 Combined General Shareholders Meeting

Transcription

1 24 mai 2018 Combined General Shareholders Meeting Christel BORIES Chairman and CEO

2 CONTENTS 1 Safety Financial Results and Q Operating Performance 4 Ambition & Vision, Our strategy 5 Shareholders & stock market information 6 Conclusion and outlook

3 DISCLAIMER Certain information contained in this presentation including any information on ERAMET s plans or future financial or operating performance and any other statements that express management s expectations or estimates of future performance, constitute forward-looking statements. Such statements are based on a number of estimates and assumptions that, while considered reasonable by management at the time, are subject to significant business, economic and competitive uncertainties. ERAMET cautions that such statements involve known and unknown risks, uncertainties and other factors that may cause the actual financial results, performance or achievements of ERAMET to be materially different from the company s estimated future results, performance or achievements expressed or implied by those forward-looking statements. Past performance information given in this presentation is solely provided for illustrative purposes and is not necessarily a guide to future performance. No representation or warranty is made by any person as to the likelihood of achievement or reasonableness of any forward-looking statements, forecast financial information or other forecast. Nothing contained in this presentation is, or shall be relied upon as, a promise, representation, warranty or guarantee as to the past, present or future performance of ERAMET. Nothing in this presentation should be construed as either an offer to sell or a solicitation to buy or sell securities nor shall there be any offer or sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful under the securities laws of any such jurisdiction. 3

4 2017 results 1 up sharply, in a favourable manganese market Sales up 22% to 3,652m. Current operating income (COI) up sharply to 608m. Net income share at 203m. Positive Free Cash-Flow at 476m. Net debt reduced to 376m, resulting in a net debt-to-equity ratio of 19% versus 47% at end Repayment in January 2018 of the entire drawdown of revolving credit facility (RCF). Resumption of dividend payment: 2.3 per share, which corresponds to a 30% payout ratio, is submitted to the General Meeting of Shareholders for approval today. 1 Consolidated performance indicators; see p.10 of the 2017 Registration Document 4

5 Full achievement of our 2017 operating performance targets SLN 2018 plan: cash-cost 1 of USD 4.44/lb 2 in H (versus a target of USD 4.50/lb 1 at end-2017). COMILOG production record: 4.1 Mt of manganese ore produced and transported in 2017 (versus a target of 4.0 Mt) productivity plan: 405m in cumulative productivity gains 1 during the period (versus a target raised to 400m). 1 See definition on p.10 of the 2017 Registration Document; 2 At constant economic conditions (early 2016) 5

6 Slight growth in sales 1 in Q1 2018, at a historically high level Sales of 870m, up +2% on Q Contrasted evolution depending on the division: Manganese division +3%, Nickel division +14% and Alloys division -6%. Strong growth in spot manganese ore prices and nickel prices versus Q1 2017, +28% and +29% respectively. Decrease in the Euro-US dollar exchange rate (-15%) impacting sales for Q Consolidated performance indicators; see Press release published on 19 April

7 1 Safety 7

8 22% reduction in accident frequency rate in 2017 Frequency (TF2) ERAMET 1 : Our roadmap: ,0 17,3 16,8 13,6 13,2 10, Safety standards set for the 100% compliant with established rules More management commitment to on-site interaction, to improve behaviour 1 TF2 = number of lost time and recordable injury accidents for 1 million hours worked 8

9 2 Financial results

10 Net income up sharply in 2017 m Sales 3,652 2,984 EBITDA % Sales 24% 13% Current operating income % Sales 17% 3% Net income - share before impairment 217 (43) Impairment of assets and tax receivables (42) (167) o/w share (14) (136) Net income share 203 (179) (Net debt) (376) (836) Net debt-to-equity ratio 19% 47% ROCE (COI / Capital employed 1 of year n-1) 21.4% 2.7% The data presented and commented on is adjusted data from Reporting, in which joint ventures are accounted for using proportionate consolidation. The reconciliation with the published financial statements is presented on page 80 of the 2017 Registration Document. 1 of equity, net financial debt, provisions for restoration of sites, for restructuring and other social risks, less noncurrent financial assets, excluding capital employed at Weda 10 Bay

11 Recovery in COI, driven by the manganese business m Manganese Nickel Alloys m Manganese Nickel (125) (119) Alloys Holding (37) (43) Reminder of sensitive factors Exchange rate: +/- 0.1 USD/EUR impact on annual COI: +/- 65m Oil prices: +/- 10 USD/bbl impact on annual COI: +/- 20m* Manganese ore prices: +/- 1 USD/dmtu +/- 95m* (at nominal production capacity) Manganese alloys prices: +/- 100 USD/t +/- 73m* Nickel prices: +/- 1 USD/lb +/- 110m* * for an exchange rate of USD/ 11

12 largely owing to a strong price effect from manganese ore and alloys More than 90m in intrinsic progress in 2017, incl. + 99m in productivity gains Change in current operating income (COI) ( m) m COI Volume/Mix Productivity Businesses in ramp-up Price Input costs Currency Scope Amort. Prov. and others 2017 COI 12

13 Free Cash Flow* of 476m in 2017 Free Cash Flow positive across the previous three half-year periods Strong contribution from manganese business. Effects of cost-reduction initiatives and WCR improvements +35% Free cash-flow ( m) FCF: 476m Proceeds from assets disposal FCF excluding disposals -292 H H H H * Sum of cashflow generated by business and related to investments and disposals of assets. 13

14 Sharp reduction in net debt Sharp improvement in operating WCR in days of sales (from 107 to 86 days). Strict management and selectivity of industrial capex, limited to production maintenance but not a long-term measure. In m FCF: 476m Net debt end real Operating cashflow* Change in operating WCR Industrial capex Other investment Other Net debt end real * Sum of net income excluding amortisation and depreciation 14

15 High liquidity for ambitions Revolving Credit Facility ("RCF"): repayment of entire drawdown of early 2016 ( 730m in 2017 and 250m in January 2018). 3,000 2,500 financial liquidity ( m) 2,806 In September, successful bond issue of 500m maturing in February 2024 and 65m buyback of the 2020 bond. 2,000 1,500 1,281 1,698 1,825 Issue by TiZir in July 2017 of a new USD 1,000 1, m bond with end maturity on July 1, /06/ /12/ /12/2017 pro forma* Available cash Undrawn line: Revolving Credit Facility ("RCF") * Pro forma figures adjusted from the repayment of 250m RCF drawdown on 18 Jan and from post-extension to 2023 of RCF signed 13 Feb

16 Debt maturity rephased On February 2018, RCF was extended for 981m and a five-year maturity (new term in 2023). Average maturity for the debt went from 3 to 4 years from end-2016 to end-2017 excluding RCF. 81% of debt (excluding RCF) is based on fixed rates. Maturity in 31 December 2017 ( m) Bonds (ERAMET / TiZir at 50%) French Government SLN loan Commercial papers, bank debt and operating debt pro forma* >2026 * Excluding drawdown of RCF repaid in January 2018 ( 250m) 16

17 and Q Operating performance 17

18 USD/lb / USD/dmtu High group metal prices in a favourable environment in 2017 and in Q After fluctuations in Q1 2017, manganese ore prices remained at a historically high level. The trend continued in Q (7.4 USD/dmtu on average), up +16% on Q Manganese alloys prices reached high levels in 2017, but contrary to ore prices, they have decreased since H unfavourably impacting margins. Nickel prices remained low in 2017, nonetheless up slightly in H They ended at 6.02 USD/lb on average in Q1 2018, up +15% on Q MONTHLY CHANGE IN PRICES FOR MANGANESE. MEDIUM-CARBON FERROMANGANESE AND NICKEL average: average: /t Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Manganese Nickel Medium-carbon ferromanganese Manganese: CRU 44% CIF China; FerroMn MediumCarbon: CRU Western Europe spot prices; Nickel : LME 18

19 Manganese 2 nd global producer of high-grade manganese ore. 2 nd global producer of manganese alloys. 1 st global producer of refined manganese alloys. Mn 19

20 Historic record carbon steel production in Slowdown in growth in Q Mn Carbon steel production was up 5.3% in 2017 on 2016, driven by China (+5.7%) and bolstered by Europe (+4.1%) and North America (+4.8%). In Q1 2018, we saw a slowdown in growth, particularly in Europe and North America (- 2% to -3%). Production at full-capacity for manganese ore producers in 2017 and Q GLOBAL CARBON STEEL PRODUCTION Mt % +2% China % 49% 49% Rest of world % 51% % 51% % 0 51% 51% Q Q Source: Worldsteel Association on an annual basis; Worldsteel Association / ERAMET on a quarterly basis 20

21 Historic record in COMILOG manganese ore production in 2017 Mn COMILOG achieved a record level of 4.1 Mt of manganese ore produced and transported in 2017, in line with the announced target. In Q1 2018, ore production increased by 8% on Q But, the derailment of a mining train did impact the volume of transported ore (-6%). MANGANESE ORE PRODUCTION AND AGGLOMERATES* kt % -6% ,928 3,346 4, Q Q * Produced and transported; excluding CMM consumption 21

22 Good performance of TiZir* in 2017, in a favourable context for mineral sands markets Other metals Favourable change in prices for zircon and Titanium in 2017 and Q Mine in Senegal +18% in heavy mineral concentrate production in 2017 (725 kt) vs Metallurgy in Norway +73% of titanium dioxide slag produced in 2017 (181 kt): successful ramp up of pyrometallurgical process. Current Operating Income (for 100%) of 27m in 2017 (vs. loss of 13m in 2016) Sales down (- 23%) in Q vs. Q Notably due to the impact of railway construction work in Senegal and a technical incident in Norway impacting the prereduction furnace. * 50% JV with Mineral Deposits Limited (Australia) 22

23 Nickel 1 st global producer of high-grade ferronickel. One of the global producers of high-purity nickel salts. Ni 23

24 Continued growth in global stainless steel production in 2017 and in Q Ni In 2017, stainless steel production was up 5.7% versus Trend continued in Q (+6%). Despite the increase in primary nickel production, notably strong in Indonesia, global nickel stocks (LME and SHFE) declined steadily: -12% in 2017, - 11% in Q GLOBAL STAINLESS STEEL PRODUCTION kt +5.7% +6% ,210 45,084 47, China % 54% 54% Rest of World % 46% 11,514 53% 46% 12,191 51% % 49% Q e Q1 2018e Source: ISSF and ERAMET 24

25 Global production for nickel division up 7%. Down slightly in Q (-2%) Ni SLN production up 2.9% at 56.8 kt in 2017, its highest point across the decade. NICKEL PRODUCTION In tonnes ,369 +3% 55,227 +7,2% -2% 59,183 2, , , ,175 14, , Q Q High purity nickel Ferronickel Ferronickel and matte 25

26 SLN: achieved cash-cost target of USD 4.5/lb* at end-2017 Ni SLN s cash-cost was USD 4.44/lb* in H and USD 4.76/lb* in 2017, given a seasonality effect which negatively impacts the first-half of every year. The company is targeting an annual average of USD 4.5/lb* in SLN CASH-COST* (USD/lb) % -6% Target at end-2017 : USD/lb H target End-2020 target * At constant economic conditions (early 2016) 26

27 SLN: Euro-US dollar exchange rate and oil price impacted cash-cost in Q Ni Average SLN s cash-cost was 4.80 USD/lb* in Q1 2018, i.e USD/lb at current economic conditions, and 6.39 USD/lb including capital expenditure** and finance cost*** («break-even cost»). SLN CASH-COST & BREAK-EVEN COST (USD/lb) At current economic conditions (dollar / fuel) Including capital expenditure** and finance cost*** Break-even cost % % Q1 2018* Q Q At constant economic conditions (early 2016) ; ** 2018 capex forecast divided by 2018 tonnage forecast *** recorded in SLN financial statements 27

28 Difficulties in ramp-up of Sandouville impacting performance Ni Since June 2017, Sandouville refinery is supplied by a new source of European matte as part of a long-term agreement. This matte is made from a complex multi-metal composition which differs substantially from the Neo-Caledonian product. The ramp-up of the plant is difficult and impacted 2017 results (c. - 40m in COI) and is expected to last a few months. In Q1 2018, the refinery s operating rate is gradually increasing. 28

29 All Alloys 2 nd global producer of high-power closed-die forged parts. One of the global leaders in gas atomised powder metallurgy. A leading producer of high-performance special steels. 29

30 2017 sales up (+15%) in a market with contrasting trends All 2017 ALLOYS SALES BY SECTOR Aerospace The aerospace sector remained strong in % 22% 7% 1,087m 58% High-speed steels Growth of c.9% in high-speed steel sales volumes in 2017 following a plan to win back market share. Energy One-off high level of sales in 2017 on gas turbines in a cyclical market. Aerospace High-speed steels, Tools & Specialties Energy Others Powder metallurgy Increase in demand in a market in which the Alloys division is well positioned.. 30

31 6 % decline in sales in Q All Revenue for Aubert et Duval down 12% in Q on Q Aerospace Q particularly affected by a slow-down in order rates for wide-body programmes. Energy Sharp decline in land turbines sector in Q1 2018; weak order backlogs of major players in the energy sector. Erasteel sales continue to grow (+24%). High-speed steels Growth in volumes continues in Q Powder metallurgy Continued significant interest from clients for developments in this segment.. 31

32 COI up 19% with contrasting trends for each business All Improved performance from Erasteel Successful recovery plan for cutting tools and favourable impact of raw materials prices. Difficulties in ramp-up of the recycling of spent catalysts and batteries business. Underperformance from Aubert & Duval Operational difficulties and productivity contribution down. COI (in m) +19% -71% Alloys division Aubert & Duval Erasteel %

33 4 Ambition & Vision Our strategy Managerial and strategic transformation 33

34 2017: implementing the s managerial and strategic transformation Our ambition Develop a selective portfolio of value-accretive mining and metallurgical activities, Be among the best in each of our businesses, in terms of performance, profitability and innovation, Be admired for our strategic model, our management system and our societal commitment. Significant transformation Strategic Managerial: TITRE ERAMET DE LA Combined PRÉSENTATION General Shareholders Meeting 24 May

35 A new strategic roadmap for our 1 FIX / REPOSITION OUR LEAST PERFORMING ASSETS SLN Aubert & Duval Erasteel 3 EXPAND OUR PORTFOLIO INTO HIGH VALUE-ACCRETIVE MARKETS 2 GROW ORGANICALLY AND/OR EXTERNALLY IN OUR ATTRACTIVE BUSINESSES Energy transition (nickel, lithium, cobalt) COMILOG / SETRAG Weda Bay Nickel TiZir External growth in Manganese ore Managerial transformation / Operational excellence / Digital transformation 35

36 Strategic investment criteria MARKETS Growing, In which ERAMET has potential to be leader generating synergies with our current markets ASSETS Competitively positioned Significant size and life CSR compliant OPERATIONS Management of operations and favouring control of assets Technical, commercial, HR synergies Value over volume Capital discipline Diversified portfolio Expansion of opportunities Improved profitability Long-term value creation over the cycles 36

37 Implementation of the strategy: highlights to date (1/2) Conditions required to implement the partnership agreement with the Chinese Steel, Tsingshan, were satisfied on 19 May 2018 ERAMET: 43% interest in PT Weda Bay s control holding. Weda Bay Nickel: one of the largest oxidised nickel deposits in the world that is still unexploited. Objective: competitive production for NPI in Indonesia, with a production target of 30 kt per year of nickel content (13 kt nickel per year for ERAMET) 1 st production expected end

38 Implementation of the strategy: highlights to date (2/2) Takeover offer announced on 27 April 2018 to acquire the shares of Mineral Deposits Limited (MDL)*, ERAMET s 50/50 partner in the TiZir joint venture Objective: full consolidation of TiZir within ERAMET s asset portfolio Offer price: A$1.46 per share, or A$291 million for MDL s equity** ERAMET acquired a relevant interest in 13.3% of MDL from key institutional shareholders prior to the takeover announcement Offer opened on 14 May 2018 and is ongoing * Mineral Deposits Limited (Australia) ** based on total issued shares of 196,985,649 and performance rights of 2,338,209 as at 27 April

39 neways: managerial transformation (1/2) New ways of organising New ways of working New ways of managing TITRE ERAMET DE LA Combined PRÉSENTATION General Shareholders Meeting 24 May

40 neways: managerial transformation (2/2) New ways of organising Flat and lean organisations Simplified governance Streamlined yet strong corporate structure New ways of managing New ways of working The right people in the right place Delegation Accountability Trust Performance management Managerial courage Ambitious objectives Results orientation Focus/Discipline in work execution Respect of standards Curious, open-minded approach, benchmarking Speed and agility Team spirit Continuous improvement TITRE ERAMET DE LA Combined PRÉSENTATION General Shareholders Meeting 24 May

41 Digital transformation to improve performance Project started in February 2017, a priority for the 4 priority areas centered on Industry 4.0: Predictive maintenance Energy efficiency Process automation (plants and mines) Big Data analysis New organisation Launch of a Proof of Concept ("POCs") process 9 POCs in 2017, of which 3 approved for pre-industrialization 9 POCs ongoing in POCs in the "POC Box" 41

42 CSR: a driver of performance to strengthen the stewardship CSR Policy Employees Employees health & safety Professional development Social dialogue Diversity Human rights at work Produits Risk management Users / business benefits Circular economy Innovation Collaborative research 4 pillars Environment & Energy Control of environmental impacts Industrial risk management Energy efficiency Carbon footprint Ethics & Governance Compliance Stakeholder relations Local development Responsible value chain 42

43 5 Shareholders & stock market information 43

44 Historic and stable core shareholders Of which: 19.5 % Foreign institutional shareholders 4.9 % Individual shareholders/legal persons 4.0 % French institutional shareholders 0.6 % Treasury shares Others 32.14% BRGM % STCPI % APE 25.57% Duval Family : SORAME + CEIR 36.93% Number of shares issued: 26,633,660 at 31 December 2017 Notes 1 STCPI (Société Territoriale Calédonienne de Participation Industrielle): entity owned by the New Caledonian provinces 2 BRGM (Bureau de Recherches Géologiques et Minières): the French Geological Survey Office 44

45 Excellent stock market performance in 2017, relisted on SBF 120 index in December CHANGE IN ERAMET & SBF 120 STOCK PRICES DURING PERIOD (BASE 100) 250,00 200,00 150,00 Stock price +76% In (stock price at 21 May) 100,00 ERAMET SBF ,00 0,00 01/01/ /07/ /01/ /07/ /01/ /07/ /01/2018 Source: Bloomberg, ERAMET 45

46 Relocation of Headquarters Ratification to relocate headquarters (10 th resolution) ERAMET headquarters relocated from the Tour Maine Montparnasse to 10, boulevard de Grenelle, Paris. Relocation scheduled for early June

47 6 Conclusion and outlook 47

48 2017: a key milestone for ERAMET 2017 results up sharply, giving us more financial levers and allowing us to propose to resume the payment of dividends to our shareholders. New strategic impetus for the, which is the foundation for value accretive growth in the long-term, and which can only succeed in conjunction with a significant managerial transformation. Sales up slightly in Q1 2018, at a level that remains historically high. Overall, the s markets remain favourable at the start of Q but with a few signs of slowdown. In a context of tensions and uncertainty in international trade relations, we remain vigilant regarding a volatile environment in terms of metals and alloys prices. We approach the future with determination and all the s teams are fully committed to meeting the challenges that will be key to our success. 48

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