Media release SCHMOLZ + BICKENBACH achieved strong growth in 2017 Sales volume in full-year 2017 rose by 4.2% to 1 797 kilotons and revenue by 15.7% to EUR 2.68 billion compared to full-year 2016, attributable to almost all product groups and regions Sales prices per ton increased by 11.0% to EUR 1 490 compared to EUR 1 342 Adjusted EBITDA up 45.4% to EUR 222.7 million from EUR 153.2 million Net income of EUR 45.7 million compared to EUR 80.0 million Positive free cash flow of EUR 16.3 million despite improved demand and higher raw material prices Outlook for full-year 2018: adjusted EBITDA expected in a range of EUR 200 million to EUR 230 million CEO Clemens Iller said: We had a good year 2017 in which we reached or exceeded all our targets. On the one hand, we finalized the initiative to sustainably reduce the cost base by more than EUR 70 million. On the other hand, we made significant structural progress, for example through the reorganization of our Business Unit DEW and the restructuring of Steeltec. Through these measures combined with a successful refinancing we are today in a much better position than one year ago to tackle the challenges of an ever changing special steel market. Another important step in this direction was the recent acquisition of parts of Ascometal which created a leading company in the European engineering steel business. In 2018, we will bring significant management attention to the integration of our new colleagues and plants without losing the grip on developing the other Business Units and on ongoing cost discipline. SCHMOLZ + BICKENBACH AG, Landenbergstrasse 11, CH-6005 Lucerne, phone +41 41 581 40 00 www.schmolz-bickenbach.com page 1 of 5
Financial key figures Unit 2017 2016 +/- (%) Q4 2017 Q4 2016 +/- (%) Sales volume kilotons 1 797 1 724 +4.2 433 401 +8.0 Revenue million EUR 2 677.8 2 314.7 +15.7 659.4 558.3 +18.1 Adjusted EBITDA million EUR 222.7 153.2 +45.4 48.5 43.9 +10.5 EBITDA million EUR 214.9 108.0 +99.0 43.8 8.9 nm Adjusted EBITDA margin % 8.3 6.6 1.7 7.4 7.9 0.5 EBITDA margin % 8.0 4.7 3.3 6.6 1.6 5.0 Operating result (EBIT) million EUR 88.0 18.5 nm 12.9 25.2 nm Earnings before taxes (EBT) million EUR 42.4 59.6 nm 4.9 33.6 nm Group result (EAT) million EUR 45.7 80.0 nm 26.2 44.1 nm Free cash flow million EUR 16.3 92.0 82.3 13.6 9.6 +41.7 Earnings per share 1) EUR CHF 0.05 0.06 0.08 0.09 nm 0.03 0.03 0.02 0.02 nm 31/12/17 31/12/16 30/09/17 Net debt million EUR 442.0 420.0 454.6 Employees as at balance sheet date 8 939 8 877 8 969 1) Earnings per share are based on the net income (loss) of the Group after deduction of the portions attributable to non-controlling interests Lucerne, March 8, 2018 SCHMOLZ + BICKENBACH, a global leader in special long steel, today reported higher sales volumes of 1 797 kilotons compared to 1 724 kilotons in 2016. In combination with an increase in average sales prices of 11.0% to EUR 1 490 per ton, revenue rose to EUR 2 677.8 million, a rise of 15.7% compared to the full-year 2016. This development in combination with an improved gross profit led to an adjusted EBITDA of EUR 222.7 million, which was 45.4% higher than in 2016. With this we exceeded our target to achieve an adjusted EBITDA between EUR 200 million and EUR 220 million. The Group result was with EUR 45.7 million highly positive, which is also attributable to a one-time positive tax effect due to the US tax reform. Results development in the full-year 2017 The market environment in 2017 was favorable which resulted in a constant high demand for our products in almost all relevant end markets. To meet this demand we produced 1 937 kilotons of crude steel, which corresponds to an increase of 6.7%. Sales volume reached 1 797 kilotons, higher by 4.2% than in 2016. Especially the sales volume of quality & engineering steel with an increase of 6.4% contributed to this growth. While sales volume of stainless steel increased by 1.7%, tool steel remained almost stable. The development of raw material prices was volatile, but on a much higher level than in 2016. Overall, raw material prices supported the normalization of the pricing environment, resulting in an increase of average sales prices to EUR 1 490 per ton from EUR 1 342 per ton in 2016. Revenue in 2017 therewith increased by 15.7% to EUR 2 677.8 million compared to 2016. There was an increase in revenue of 20.6% in quality & engineering steel and 15.9% in stainless steel. Revenue in tool steel increased 3.6%. page 2 of 5
In regional terms, revenue in 2017 increased in almost all countries compared to the previous year. The 26.3% increase in revenue in the USA is particularly noteworthy. Here, we benefited above all from the successful launch of new products and the slight recovery in demand from the oil and gas industry. In Germany, Italy and France, it was mainly the continued strong demand from the automotive industry that drove sales. We also recorded consistently strong sales growth in China with an increase of 38.4% compared to 2016, which, although starting from a low base, underscores the fact that we are on the right track with the worldwide expansion of our sales network. In July 2017, the acquisition of a majority interest in Shanghai Xinzhen Precision Metalwork Co., Ltd., a joint venture with Tsingshan, the world's largest stainless steel producer, was completed. With this new investment, we have significantly expanded our range of drawn bright steel products in China in particular. In addition, we have broadened our Sales & Services network with a branch in Santiago de Chile (Chile). With our performance improvement program we slightly exceeded the planned cost reductions of EUR 70 million for the two years 2016 and 2017. In total we saved costs of EUR 30 million in 2017. This means that we have achieved cost savings overall of EUR 72 million in the years 2016 and 2017. SCHMOLZ + BICKENBACH was able to increase adjusted EBITDA by 45.4% to EUR 222.7 million in 2017 compared to EUR 153.2 million in 2016. The adjusted EBITDA per ton of sold steel increased by 39.5% to EUR 124.0. This was the result of higher sales prices and volumes that more than compensated significantly higher raw material costs and slightly higher personnel and other operating expenses. The adjustments to EBITDA for restructuring measures and M&A activities amounted to EUR 7.8 million, bringing EBITDA to EUR 214.9 million compared to EUR 108.0 million in the previous year. At EUR 126.9 million (2016: EUR 126.5 million), depreciation, amortization and impairments in 2017 were slightly higher than in the previous year. At EUR 49.6 million, financial expenses were 5.8% higher than in the previous year. This was due to one-off effects in connection with the new issue and the early repayment of a bond. Financial income fell to EUR 4.0 million from EUR 5.8 million in 2016 and is attributable to valuation effects in connection with the repurchase option for the outstanding bond. Overall, the financial result in 2017 was EUR 45.6 million compared to EUR 41.1 million in 2016. As a result of the developments described above, we achieved earnings before taxes (EBT) of EUR 42.4 million in 2017. Positive tax effects, mainly due to the tax reform in the US, led to a tax income of EUR 3.3 million. In 2017, we thus achieved a Group result of EUR 45.7 million. We achieved a positive free cash flow of EUR 16.3 million in 2017, mainly due to a successful working capital management. The ratio of net working capital to revenue significantly improved to 25.6% from 27.6% in 2016. Net debt came in at EUR 442.0 million which was EUR 12.6 million lower than the EUR 454.6 million recorded at the end of September 2017. Despite net debt was slightly higher than at the end of 2016 with EUR 420.0 million, the financial leverage, i.e. the ratio between net debt and adjusted EBITDA, improved to 2.0 and is therefore at a 10-year low for the Group. Results development in the fourth quarter 2017 In the fourth quarter of 2017, the same positive sales trends were observed as in the full-year 2017. Sales volume of stainless steel rose by 1.2%. Despite the portfolio streamlining at Steeltec, which reduced sales volume in the fourth quarter by around 7 kilotons, 11.7% higher sales volumes were recorded for quality & engineering steel overall. Sales volumes of tool steel rose by 2.5% year-on-year. In total, sales volume in the fourth quarter 2017 amounted to 433 kilotons, which was 8.0% higher than in the same quarter of 2016. page 3 of 5
In the fourth quarter 2017, average sales prices rose to EUR 1 523 per ton, 0.9% above the average sales prices of the third quarter 2017 and 9.4% above those of the fourth quarter 2016. Accordingly, revenue increased by 18.1% to EUR 659.4 million with stainless steel rising by 11.7%, quality & engineering steel by 30.0% and tool steel by 5.6% compared to the same quarter of the previous year. Regionally, in the fourth quarter, year-on-year revenue growth of 16.5% to EUR 508.8 million in Europe was higher than in the full year. In the Africa/Asia/Australia region, revenue rose significantly year-on-year to EUR 55.2 million. Also, in the fourth quarter 2017 we were able to increase adjusted EBITDA to EUR 48.5 million, which was 10.5% above the prior-year figure. Adjusted EBITDA per ton therewith increased from EUR 109.5 to EUR 112.0 in the fourth quarter 2017. With 9.4% lower depreciation, amortization and impairments, an improved financial result by EUR 0.4 million as well as a one-off tax income of EUR 21.3 million in the fourth quarter 2017 we achieved a Group result of EUR 26.2 million. In the fourth quarter 2016 Group result was negative with EUR 44.1 million. Acquisition of Ascometal As of February 1, 2018, SCHMOLZ + BICKENBACH acquired parts of Ascometal, a steel company specializing in the production and processing of special long steel for the automotive, mechanical engineering and oil & gas industries as well as the production of bearing steel. With this move, we are expanding our business in the segment of quality & engineering steel and our position as one of the leading companies for high-quality special long steel products in Europe. The acquisition is a first step to underline our strategy of participating in the consolidation of the European special long steel industry. The aim is to achieve an improved utilization of the existing plants and thus a more efficient production through cost advantages. Outlook 2018 We expect that the special long steel industry will continue to grow in 2018, both in terms of sales volume and the value of products, as we anticipate a further shift towards more demanding production and steel applications. We want to build on the success of the last two years and make even better use of our strengths. At the same time, we focus on cost discipline, which is necessary to mitigate rising costs for raw materials and personnel. However, the integration of Ascometal will be a clear focus. In order to bring this acquisition to a successful conclusion, we will use significant management capacities in this project over the next two years. Based on a strong order backlog and robust fundamentals in most customer industries we expect an adjusted EBITDA in a range between EUR 200 million and EUR 230 million. END page 4 of 5
For further information: Dr Ulrich Steiner, Vice President Corporate Communications & Investor Relations Telephone +41 (0)41 581 4120 u.steiner@schmolz-bickenbach.com www.schmolz-bickenbach.com About SCHMOLZ + BICKENBACH The SCHMOLZ + BICKENBACH Group is today one of the world's leading providers of individual solutions in the special long steel products sector. The Group is one of the leading manufacturers of tool steel and non-corrosive long steel on the global market and one of the two largest companies in Europe for alloyed and high-alloyed quality and engineering steels. With more than 10 000 employees and its own production and distribution companies in more than 30 countries on 5 continents, the company guarantees global support and supply for its customers and offers them a complete portfolio of production and sales & services around the world. Customers benefit from the company's technological expertise, consistently high product quality around the world as well as detailed knowledge of local markets. Forward-looking statements This press release contains forward-looking statements about developments, plans, intentions, assumptions, expectations, convictions, possible impacts or the description of future events, outlooks, revenues, results or situations, for example. These are based upon the company's current expectations, convictions and assumptions, but could materially differ from any future results, performance or achievements. We are providing this communication as of the date hereof and do not undertake to update any forward-looking statements contained herein as a result of new information, future events or otherwise. page 5 of 5