Autumn conference, Kepler Cheuvreux September 19 th, Aperam 1

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1 Autumn conference, Kepler Cheuvreux September 19 th, 2013 Aperam 1

2 Disclaimer 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 forwardlooking 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). For more information about these risks and uncertainties, the reader is encouraged to refer to page 35 and pages 142 to 146 of Aperam s annual report for the year ended December 31, filed on March 7, 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 2

3 Autumn conference, Kepler Cheuvreux Aperam s fundamentals Aperam 3

4 Aperam s fundamentals A key leader in the stainless steel industry Aperam rankings Aperam sales breakdown in (by destination) Number 1 in South America Asia & Africa 7% USA 6% Number 2 in Europe Number 6 in the World Brazil & Latin America 26% Europe 61% Well-positioned CAPEX in budget both developed of USD 4.0 and billion emerging for 2010 markets Aperam 4

5 Aperam s fundamentals A unique position in Brazil Apparent consumption in South America of stainless steel flat product ( 000t) Stainless steel consumption per capita pre-crisis (kg/year) % Other South America India Brazil China US Based upon historically apparent consumption per capita, there is important growth potential in Brazil and South America Source: CRU and Aperam South America Aperam 5

6 Aperam s fundamentals High quality and cost effective European operations European steelmaking restructuring realised in the mid-2000 s Black coil (HRC) European cost curve (base 100) Closure Greenfield/Brownfield Isbergues Genk brownfield Genk Châtelet Greenfield L Ardoise Competitor 1 Chatelet Competitor 2 Genk Competitor 3 Competitor 4 Profit improvement in due to market and internal initiatives but expected to be more challenging The last Greenfield built in Europe Aperam 6

7 Aperam s fundamentals A global distribution network Sales, distribution and steel service centers network, including precision & tubes businesses Sales subsidiaries and representative offices Sales agencies Steel Service Centers A key competitive advantage to maintaining market share and capturing growth opportunities Aperam 7

8 Aperam s fundamentals A leading position in nickel alloys Global nickel alloys producers (kt)* Aperam Alloys & Specialties geographical footprint Rescal Amilly Imhua 40 Wire drawing The magnetic parts company n n n Transformation workshop 25 n n Imphy ICS (JV) Special Metals TK VDM Carpenter Aperam Hitachi Nippon Yakin Allegheny Sumitomo Daido Haynes Meltshop, wire mill, cold rolling, bars, R&D Diversification into industrial clads Profit improvement in due to market A highly and internal value creative initiatives business but expected to be more challenging Source: SRM Aperam 8

9 Autumn conference, Kepler Cheuvreux Environment and markets Aperam 9

10 Environment and markets Stainless steel market remains difficult Nickel - LME Cash (USD/t) Stainless steel transaction price in China for CR 304 2B 2mm coil (USD/t) 35,000 5,000 30,000 4,500 25,000 4,000 20,000 3,500 15,000 3,000 10,000 2,500 5,000 2,000 Dec 07 Mar 08 Jun 08 Sep 08 Dec 08 Mar 09 Jun 09 Sep 09 Dec 09 Mar 10 Jun 10 Sep 10 Dec 10 Mar 11 Jun 11 Sep 11 Dec 11 Mar 12 Jun 12 Sep 12 Dec 12 Mar 13 Jun 13 Sep 13 Dec 07 Mar 08 Jun 08 Sep 08 Dec 08 Mar 09 Jun 09 Sep 09 Dec 09 Mar 10 Jun 10 Sep 10 Dec 10 Mar 11 Jun 11 Sep 11 Dec 11 Mar 12 Jun 12 Sep 12 Dec 12 Mar 13 Jun 13 Sep 13 But positive signs have been seen on prices recently Source: SBB Aperam 10

11 Environment and markets European prices have stabilised at low level Stainless steel base price in South Europe for CR 304 2B 2mm coil (USD/t) Stainless steel base price in South Europe for CR 430 BA 2mm coil (USD/t) 2,050 2,050 1,850 1,850 1,650 1,650 1,450 1,450 1,250 1,250 1,050 1, Dec 07 Mar 08 Jun 08 Sep 08 Dec 08 Mar 09 Jun 09 Sep 09 Dec 09 Mar 10 Jun 10 Sep 10 Dec 10 Mar 11 Jun 11 Sep 11 Dec 11 Mar 12 Jun 12 Sep 12 Dec 12 Mar 13 Jun 13 Sep 13 Dec 07 Mar 08 Jun 08 Sep 08 Dec 08 Mar 09 Jun 09 Sep 09 Dec 09 Mar 10 Jun 10 Sep 10 Dec 10 Mar 11 Jun 11 Sep 11 Dec 11 Mar 12 Jun 12 Sep 12 Dec 12 Mar 13 Jun 13 Sep 13 However demand starts to show signs of improvement Source: SBB Aperam 11

12 Autumn conference, Kepler Cheuvreux Performance Aperam 12

13 Performance Solid performance over the quarter despite a challenging market environment Shipments ( 000t) EBITDA per division (USD million) [1] Brazil 41 Europe 30 Q3 Q Brazil 24 EBITDA (USD million) [1] Europe Q3 Q Stainless & Electrical Services & Solutions Alloys & Specialties EBITDA of 180 USD/t in 2013 compared to 162 USD/t in 2013 [1] Figures for have been restated due to change in accounting principle of defined benefit plans and other long-term employee benefits, and adoption of revised IAS 19 standard. Aperam 13

14 Performance Outperformance of Aperam s profitability EBITDA margin of Aperam and of the European industry (USD/t) Quarterly EBITDA of the European producers (USDm) Q Q3 Q4 Q3 Q Q Q3 Q4 Q3 Q Aperam European industry margin Aperam Competitor 1 Competitor 2 Competitor3 Contrary to competition, Aperam has increased its profitability compared to Sources: Corporate financial reports (Acerinox, Outokumpu, Inoxum, Aperam) Aperam 14

15 Performance Aperam has been able to maintain its debt level in Assets & liabilities (USD million) Equity & net debt (USD million) [1] Assets Liabilities 30/06/12 30/09/12 31/12/12 31/03/13 30/06/13 Non-current assets Working capital Shareholders equity Other net liabilities Net Debt Equity Net debt of USD 841 million, representing a gearing of 29% [1] Figures for have been restated due to change in accounting principle of defined benefit plans and other long-term employee benefits, and adoption of revised IAS 19 standard. Aperam 15

16 Performance Acceleration of net debt reduction Quarterly net debt of Aperam and average evolution (USDm) Debt level of the European stainless steel producers % 120% 100% 80% 60% 40% 20% % 0 Q Q3 Q4 Q3 Q /13 06/13 Aperam 03/13 06/13 Competitor 1 03/13 06/13 Competitor 2 Gearing (LHS) Net debt in USDm (RHS) Net debt reduction target to USD 650 million by the end of 2014 Sources: Corporate financial reports (Aperam & peers) Aperam 16

17 Autumn conference, Kepler Cheuvreux Plan Aperam 17

18 Plan Enhancing marketing strategy and promoting high margin products Market segments Aperam portfolio breakdown in Europe Potential Ferritics Specialties Specialties Niches Specialties 26% Niches 4% Mass commodities 42% Standard Ferritics Mass commodities Ferritics specialities 21% Standard ferritics 7% Margin Margin of stainless steel specialties and niches are more than 500 USD/t higher than for commodities. Top line target is to increase those high margin products by 5% to 10% per year. Aperam 18

19 Plan Leadership Journey Cumulated gains (USD million) Key projects completed since beginning of In Brazil, VSS*, switch from LPG to natural gas and conversion of blast furnace number 2 from coke to biomass. Service center expansion in Campinas. In Europe, suspension of traditional cold roll mill in Isbergues (France) and investment 204 Key projects progressing New induction furnace, Electro Slag Remelting furnace and new VAR furnace at Imphy (France Alloys & Speciality) 73 Industrial optimization and rationalization in Europe (from 20 tools to 17 tools) 33 Yield and Quality improvement, Sourcing initiative, SG&A reduction through organisation simplification The new hot annealing and pickling line in Gueugnon was restarted in June 2013 Q3 Q4 Q3 Q Announcement of the upcoming closure of Firminy (Precision) The Leadership Journey is still in progress with the restart of the new hot annealing and pickling line in Gueugnon and the restructuring of the precision activity *VSS Voluntary Separation Scheme Aperam 19

20 Plan Recent Brazilian developments Type of products Import duties status Anti-dumping status Stainless Steel Flat Products Import duties applicable on Cold Rolled product expected to come back from 25% to 14% in October 2013 Under investigation by Brazilian authorities. Stainless Steel Welded Tubes Request for import duties AD rights have just been published valid as of July 29 th for 5 years and up to 911USD/t. Countries involved are China and Taiwan. Electrical steel Non Grain Oriented 14% of Import duties on NGO AD rights imposed for NGO on July 17th with fixed USD/t values ranging from 133 USD/t to 567 USD/t for 5 years. The countries involved are China, Korea and Taiwan. Electrical steel Grain Oriented Import duties applicable on Cold Rolled product expected to come back from 25% to 14% in October 2013 No anti-dumping investigation Brazilian government is still investigating on anti-dumping for stainless steel flat products [1] Aperam 2013 Earnings Release. Sources: SBB/Platts, Steelfirst Aperam 20

21 Plan European capacity closures expected to have a positive impact Steel making and finishing capacity for European producers (mt) European stainless steel industry footprint after restructuring Reduction in capacity Finishing line Steel making % 85% Outokumpu 2 1 Aperam 0 Before optimization & capacity closure After optimization & capacity closure Steel making capacity Finishing capacity Acerinox Terni Capacity closures planned in Europe Aperam 21

22 Autumn conference, Kepler Cheuvreux Q&A Aperam 22