Eramet Group Annual Results. March 2001

Transcription

1 Eramet Group 2000 Annual Results March

2 Highlights for 2000 p Very strong increase in earnings per share p Favourable markets in the three divisions p Good integration of the new activities synergies / modernization / development p SMC high losses / improvement in progress p Significant growth of the profitability (ROCE, ROE) p Increase in the dividend The results show the benefit of the strategic moves. The Group has the means to pursue its development 2

3 Eramet Group : key figures for 2000 * p Turnover m. (+ 19 %) excluding SMC p Net result Group's share 107 m. (x( x 3.1) 4.42 / share (x( x 3.2) p Operating profit (EBIT) 301 m. ( x 2.8) p Profitability ROCE (pre( pre-tax) ) : 21 % (x 3) ROE : 11 % (x 2.9) p Dividend proposed 1.30 / share (+ 14 %) * Comparison with 1999 pro forma (estimates) 3

4 Eramet Group : consolidated balance sheet at December 31,, 2000 p Sound financial position, despite high capex for modernization p The means to pursue development Assets Millions of Euros Liabilities Fixed assets Current assets Cash and cash * equivalent Total Shareholders equity Minorities Provisions Financial debts (including mining indemnity 131 m.) Other debts SMC is equity accounted net financial debt : 271 million, net financial debt / total equity : 20 % * Excluding unrealized capital gain net of payables taxes at December 31 : 28 million

5 Eramet dividend : + 14 % / share 5.0 A regular and progressive dividend policy Dividend per share excluding tax credit Tax credit Net result per share 5

6 Group s operating cash flow * Operating cash flow million LME price **USD/tonne 400 Nickel & Holding Alloys Manganese LME Nickel price Group s operating cash flow pro forma * Operating cash flow, after tax, before change in working capital ** average LME Settlement price 6

7 Eramet Group : breakdown of the turnover for 2000* p by division Nickel + 45 % 24% 34% 42% Alloys + 6 % p by main m market Steel industry 29 % Stainless Steel 17 % Aerospace 12 % Manganese + 18 % North America 27% Others 21 % p by geographical area Europe excluding France 37% Power generation 9 % Tooling 12 % Others 3% France 15% * Comparison with 1999 pro forma (estimates) Asia 18% 7

8 Eramet Group : contribution to EBIT for 2000 Millions of euros pro forma Change Eramet Nickel x 9 Eramet Alliages % Eramet Manganèse % Holding & elimination (4.6) (9.2) n.s Eramet Group % * Excluding SMC 8

9 Eramet Group : ROCE (pre( pre-tax) Return on capital employed * ROCE before taxes* pro forma Eramet Nickel 47 % 5 % Eramet Alliages * 16 % 14 % Eramet Manganèse 11 % 4 % Eramet Group 21 % 7 % ROCE = * excluding SMC Operating profit (EBIT) Fixed assets excluding financial investments + working capital - provisions beginning of period 9

10 Eramet Manganèse World s leader in manganese alloys for the steel industry World s leader in manganese based chemical products World s n 2 producer of high grade manganese ore 10

11 Eramet Manganèse : key figures for 2000 * p Turnover 953 m. (+ 18 %) Steel industry (Mn ore and alloys) 71% 17% 12% Operating profit (EBIT) 61 m. (+ 158 %) Capital expenditure 126 m. (+ 95 %) Recycling Carbon black Others Chemicals (Ore and Mn products) ROCE pre-tax 11 % (1999 : 4 %) * Comparison with 1999 pro forma (estimates) 11

12 Eramet Manganèse : highlights for 2000 p Significant recovery in the steel industry p Upturn of demand and alloy prices, leading position asserted p Integration of the recent acquisitions and implementation of the synergies p Program of capital expenditure completed within scheduled timing and budget p Sharp increase in earnings A stronger manganese division both in commercial, industrial and financial terms 12

13 Manganese division : synergies and actions p Sales network unified and strengthened reduction of selling costs / increased efficiency p Comparison / rationalization / specialization of each alloy plant reduction of alloy production costs p Strengthening of the mine to plant downstream integration : Industrial Complex of Moanda : enrichment-sinter plant Boulogne-sur sur-mer plant : upgrading of a blast furnace further profit margin improvement p Strengthening of the R & D program p Preservation of environment : major improvements (Gabon, France, Norway) Realized synergies in 2000 : 5 m./year,, as planned 13

14 Evolution of manganese alloy prices DEM / m.t. EUROPE March MC Fe Mn Si Mn HC Fe Mn Jan.1996 Jan.1997 Jan.1998 Jan.1999 Jan.2000 Jan.2001 Source : CRU HCFeMn SiMn MCFeMn 14

15 Eramet Manganèse Strong commercial positions on world markets Year 2000 World demand Mn alloys 7,110,000 t.m Eramet Manganèse Deliveries : 1,090,000 t.m (capacity 1,130,000 t.m) High-carbon ferromanganese Silico-manganese Refined Alloys 42% 49% 9% 50% World's n 1 producer 25% World's n 2 producer 25% World's n 1 producer 15

16 Manganese division : targets p Develop high value added products / reduce working capital p Achieve the modernization program hraise production of the sinter plant at Moanda hrationalization of the Boulogne-sur sur-mer plant hstart-up of the mercury removal unit (Norway( Norway)/ Comilog ore p Carry on with the specialization/ rationalization (alloy plants) hnorway,, Boulogne, China, p Further develop manganese chemicals husa, Mexico, Belgium p Increase margins : R & D, cost reductions, maximize consumption of Comilog ore in alloy plants Additional synergies forecast : 5 to 7m./year 16

17 Eramet Nickel World s leading producer of ferronickel for stainless steel One of the three producers in the world of high purity nickel for aerospace 17

18 Eramet Nickel : key figures for 2000 p Turnover 564 m. (+ 45 %) Chemical, Plating Others Stainless Steel 9% 68% 16% 7% Nickel alloys (aerospace, Power generation, electronic, coinage) Tooling (Eurotungstène) Operating profit (EBIT) 165 m. (x( x 9) 9 Capital expenditure 24 m. (+ 19 %) ROCE pre-tax 47 % (1999 : 5 %) * Comparison with 1999 pro forma (estimates) 18

19 Eramet nickel : highlights for 2000 p Strong increase in the stainless steel market and the nickel demand during the 1 st half of the year,, but slowdown during the 2 nd half of the year p Increase in the world nickel production, decrease in Russian exports p Large supply deficit during the 1 st half. p Deliveries : 55,266 t (-( 4 %) 1st half : 26,654 t labor conflict in New-Caledonia 2 half : 28,612 t recovery p High nickel price during the 1st half / significant decrease during the 2nd half Average selling price in FRF : + 58 % (US dollar rise) 19

20 Eramet Nickel : highlights for 2000 p Good industrial operations in the 2 nd half, production rate above 60,000 t/year p Higher production cost in FRF (fuel price,, USD parity, labor conflict), but expressed in USD a slight decrease p Feasibility study of the expansion project to 70,000 tpy p STCPI, now a shareholder of SLN, as announced (Eramet 60 %, STCPI 30 %, Nisshin Steel 10 %) 20

21 1100 Nickel market nearly balanced in 2001 nickel inventories at a low level.000 t. LME Stocks.000 t. Demand Supply LME Stocks End March *E Eramet estimates 0 21

22 Eramet nickel : targets p Produce at full capacity (62,000 tpy) ) (according( to market conditions) by optimizing technical performances in the mines and plant p Strengthen competitiveness p Reach a production capacity over 70,000 tpy,, in line with market growth : decision at the end of June 2001 (depending upon tax conditions) p Sandouville : maximize production / further develop high value added products (aeronautics/ energy/ electronics) p Participate to laterites processing projects (if it is under profitable conditions for the Group) 22

23 Eramet Alliages World s n 1 in high speed steels World s n 1 in superalloys and nickel alloys Among the world s leaders for high performance specialty steels World s n 2 in forged parts for aerospace, power generation 23

24 Eramet Alliages : key figures for 2000 * Turnover EUR 778 m. (+ 6 %) Aerospace 30% Tooling 31% 18% 21% Operating profit (EBIT) 80 m. (+ 9 %) Capital expenditure 35 m. (-( 30 %) Others (automotive, defense, medical, transportation, mechanical engineering) Power generation ROCE pre tax 16 % (1999 : 14 %) Comparison with 1999 pro forma (estimates), excluding SMC 24

25 Eramet Alliages : highlights for 2000 p Increase of activity in aerospace / gas turbine / tooling Erasteel : strong markets / good results p Large order book at the end of 2000 / high business level in Q4 p Integration / organization of the division / management structure p Transfers of activities / rationalization p Pressure on margins / costs rise were not passed on p Capacity expenditure implemented / organization of R & D p SMC : high losses,, but improvement in EBIT in Q4, as expected Realized synergies in 2000 : 5 m/year 25

26 Eramet Alliages : synergies and actions in progress p In front of a strong activity, mobilize all the industrial means of the division p A major project : combine Aubert & Duval, Fortech, Tecphy p Coordination of R & D programmes p A 35,000 t close-die forging press to be built (project) strengthened positions on growing markets (aeronautics / power generation) p Strategic analysis of markets / products / margins Possible additional synergies from 2001 to 2003 : 5 to 10 m./year 26

27 Eramet Alliages : a major project combine Aubert & Duval, Fortech and Tecphy p A & D/Fortech Fortech/Tecphy : growing markets Very stringent quality requirements/global markets and players p Two businesses : hclose-die forged parts (special( steels, superalloys, aluminium, titanium) aerospace/power generation hlong products and specialty products aeronautics, tooling,, car and transportation, engineering p Create in these 2 businesses a first class world player,, by combining the industrial,, commercial, financial strengths and technical competences p New organization to be implemented in H : subject to consultation of Employee Council, Board of Directors.. 27

28 Eramet Alliages : new organization* * (as of ) Eramet Alliages 100 % 100 % 38.5% Aubert & Duval Holding Erasteel Special Metals Corp. A & D industrial Fortech Tecphy An opportunity to speed up development and increase profitability * The actual shareholding structure is different 28

29 Eramet Alliages : targets p Strengthen positions as a strategic partner on main markets in all major geographic areas p Implement the new organization : A & D / Fortech / Tecphy p Increase margin by further rationalizing industrial facilities / benchmarking p Optimize capex / reduce working capital despite high business level p SMC : return to normal profitability in the medium term and sound financial situation Increase profitability (ROCE) 29

30 Special Metals Corp. : actions implemented in 2000 p Management structure : major changes, recruitement of senior managers p Priorities implemented hoptimize product range hincrease margins, reduce delivery time hreduce production costs hlarge internal communication programme p Recovery of commercial positions in progress p Synergies implemented Significant improvement of operation and EBIT in Q4, this trend seems to continue in Q1,

31 SMC : financial results M. USD 1st Q. 2nd Q. 3rd Q. 4th Q. 1st Q. 2nd Q. 3rd Q. 4th Q.. Net sales Operating income (loss) (6.4) 4.6 (4.2) (13.7) (7.1) (7.4) (11.5) (1.9). Net income (loss) (6.7) (0.3) (5.5) (12.8) (7.8) (7.7) (11.3) (5.0). Accumulated preferred stocks dividends (1.6) (1.6) (1.6) (1.6) (2.0) (1.8) (1.7) (1.7). Net income (loss) attributable to (8.3) (1.9) (7.1) (14.4) (9.8) (9.5) (13.1) (6.7) shareholders (10.2) (21.5) (19.3) (19.8). USD Parity in M. Eramet share of SMC net income (loss). Provision for nickel price fluctuations. Cancellation of SMC deferred tax credit *. Contribution of SMC to Eramet results (3.6) (7.8) (7.7) (0.4) (1.2) (4.1) (2.0) (4.0) (9.0) (13.8) (8.6) 1.3 (6.2) (13.5) * Deferred tax credits at SMC are not accounted by Eramet in

32 SMC : a too high debt level p The high debt level impacts on earnings ratio of financial costs to turnover : 5.5 % (including preferred dividends) p Net debt to total equity : USD 445 / 30 m. (convertible bonds included in net debt) p Due to the accumulated losses, the value of SMC in Eramet balance sheet is now down to zero p Total loan of Eramet to SMC in Eramet balance sheet : USD 58 m. (at( ) SMC has commenced discussions with its bank group 32

33 Special Metals Corp.. : our objectives as a shareholder p Continue the commercial recovery and the reduction in industrial and marketing costs Implement the 3 years plan p Return to break-even even during 2001 p Reduce net debt level A more resilient company, with positive earnings even at the through of the aerospace / energy cycle, regaining a leading position on its main markets 33

34 Eramet Group : outlook and strategy 34

35 Group organization Eramet Alliages Georges Duval Edouard Duval Alain Pradoura Alain Robert Eramet Manganèse Jacques Bacardats / Marcel Abéké Eramet Nickel Patrick André Eramet Group Yves Rambaud General Management Jacques Bacardats Group Company Secretary Michel Hémonnot Human Resources Dominique Franchot Eramet International Philippe Choppin de Janvry Executive Committee Yves Rambaud Jacques Bacardats Georges Duval Michel Hémonnot Communication Alain Ray Technical Management Antoine Gréco TEC Ingénierie Centre de Recherche de Trappes (CRT) As of 1 st September 2001, Patrick André will be appointed Managing Director of the Manganese division, Jacques Bacardats will take over the management of the Nickel division, in addition to its position of General Manager of the Eramet Group 35

36 Groupe Eramet : Strategy p 1999 : activities were enlarged, acquisitions, ownership changes a larger size, Group's activities now better balanced p 2000 : implement complementarities / synergies adjust organization / strengthen management structure increased profitability, the ability to grow p 2001 : initiate a new step in Group's internal development, prepare the futur a growth potential in all 3 branches, a more resilient Group in cyclical markets /... 36

37 Eramet Group : the year 2001 objectives p Draw the maximum benefit from the Group's existing strengths hmanganese : priority to high margin products realize additional synergies hnickel : increase deliveries optimize production to reduce costs halloys : organize for very strong activity preserve delivery terms / customer services p Reach a new stage in the Group's growth hmanganese : succeed in the ramp-up of the new equipments hnickel : implement the expansion to 70,000 tpy halloys : achieve the Aubert & Duval business combination prepare capacity increases 37

38 Eramet Group : the year 2001 objectives Reach a new stage in the development p Management's tasks hbetter explain to Investors the Group's new image and growth potential hdrive, motivate, assist and speed-up development 38

39 Groupe Eramet : 1 st half 2001 outlook p Manganese : slowdown in volume, erosion of sales prices, productivity gains higher EBIT / 1 st half 2000 p Nickel : larger deliveries / 1 st half 2000 Sharp price decrease, favourable US dollar parity significant decrease in EBIT / 1st half 2000 p Alloys : strong activity, produce at maximum rate optimize margins / markets increase in EBIT / 1st half 2000 p Group : despite a less favourable world economy, and providing there is no sharp fall of the nickel price and the US dollar, good resistance to the nickel cycle downturn lower earnings but still relatively satisfactory 39