Aperam releases first quarter results 2020

Aperam (referred to as “Aperam” or the “Company”) (Amsterdam, Luxembourg, Paris, Brussels: APAM, NYRS: APEMY), announced today results for the three months ending March 31, 2020.

Timoteo Di Maulo, CEO of Aperam, commented:

“We started well into the year with a seasonal volume recovery and the exhaustion of some import quotas increasing demand for domestically produced material although prices remained low. Towards the end of the quarter we faced significant COVID-19 related effects from temporary plant shutdowns as we continue to do everything we can to support and look after our employees and the people we serve. Looking ahead our order book indicates a clear drop in volumes for the second quarter that will impact earnings. We have taken all necessary operational and financial mitigation measures. We continue to focus on Aperam’s solid cash generation, ample liquidity and strong balance sheet which will allow us to emerge stronger from this crisis.​”

Financial Highlights (on the basis of financial information prepared under IFRS)

Health & Safety results

Health and Safety performance based on Aperam personnel figures and contractors’ lost time injury frequency rate was 1.9x in the first quarter of 2020 compared to 1.9x in the fourth quarter of 2019.

Financial results analysis for the three-month period ending March 31, 2020

Sales for the first quarter of 2020 increased by 5% to EUR 1,049 million compared to EUR 1,000 million for the fourth quarter of 2019. Steel shipments increased from 402 thousand tonnes in the fourth quarter of 2019, to 438 thousand tonnes in the first quarter of 2020.

EBITDA decreased during the quarter to EUR 70 million from EUR 102 million for the fourth quarter of 2019 (including exceptional gains of EUR 17 million for PIS/Cofins tax credits related to prior periods recognized in Brazil). Europe benefited from seasonally higher volumes while Brazil declined due to seasonal factors. Prices remained under pressure. Lower raw material prices caused significant negative inventory valuation effects. Also COVID-19 related costs burdened EBITDA due to temporary plant closures and transportation disruptions starting mid March.

Depreciation and amortization was EUR (36) million for the first quarter of 2020.

Aperam had an operating income for the first quarter of 2020 of EUR 34 million compared to an operating income of EUR 59 million for the previous quarter.

Financing costs including the FX and derivatives result for the first quarter of 2020 were EUR (7) million, including cash cost of financing of EUR (3) million.

Income tax benefit for the first quarter of 2020 was EUR 2 million.

The Company recorded a net income of EUR 29 million for the first quarter of 2020.

Cash flows from operations for the first quarter of 2020 were positive at EUR 63 million, with a working capital increase of EUR 21 million. CAPEX for the first quarter was EUR (45) million.

Free cash flow before dividend for the first quarter of 2020 amounted to EUR 18 million.

During the first quarter of 2020, the cash returns to shareholders amounted to EUR 32 million, consisting fully of dividend.

Operating segment results analysis

(1) Amounts are shown prior to intra-group eliminations

The Stainless & Electrical Steel segment had sales of EUR 827 million for the first quarter of 2020. This represents a 2.4% increase compared to sales of EUR 808 million for the fourth quarter of 2019. Steel shipments during the first quarter were 426 thousand tonnes, an increase of 6.0% compared to shipments of 402 thousand tonnes during the previous quarter. Volumes in Europe increased seasonally and also benefited from the anti dumping investigation on hot rolled coil against China, Indonesia and Taiwan, while volumes declined seasonally in Brazil. Average steel selling prices for the Stainless & Electrical Steel segment increased by 1.8% compared to the previous quarter.

The segment generated EBITDA of EUR 53 million for the first quarter of 2020 compared to EUR 87 million for the fourth quarter of 2019 including exceptional gains of EUR 16 million in Brazil for PIS/Cofins tax credits related to prior periods. The positive impact from higher volumes in Europe was fully compensated by negative inventory valuation effects from raw material pricing and COVID-19 related costs.

Depreciation and amortisation expense was EUR (30) million for the first quarter of 2020.

The Stainless & Electrical Steel segment had an operating income of EUR 23 million for the first quarter of 2020 compared to an operating income of EUR 53 million for the fourth quarter of 2019.

The Services & Solutions segment had sales of EUR 450 million for the first quarter of 2020, representing an increase of 17.8% compared to sales of EUR 382 million for the fourth quarter of 2019. For the first quarter of 2020, steel shipments were 186 thousand tonnes compared to 144 thousand tonnes during the previous quarter. The Services & Solutions segment had lower average steel selling prices during the period compared to the previous period.

The segment generated EBITDA of EUR 9 million for the first quarter of 2020 compared to EBITDA of EUR 5 million, including EUR 1 million of PIS/Cofins credits for the fourth quarter of 2019. EBITDA increased mainly due to a pronounced 29% increase in volumes quarter on quarter that was more than compensated for negative inventory valuation effects and COVID-19 related costs from the temporary closure of our service center in Italy.

Depreciation and amortisation was EUR (3) million for the first quarter of 2020.

The Services & Solutions segment had an operating income of EUR 6 million for the first quarter of 2020 compared to an operating income of less than EUR 1 million for the fourth quarter of 2019.

The Alloys & Specialties segment had sales of EUR 155 million for the first quarter of 2020, representing a decrease of 3.1% compared to EUR 160 million for the fourth quarter of 2019. Steel shipments were stable during the first quarter of 2020 at 9 thousand tonnes. Average steel selling prices were slightly higher during the quarter.

The Alloys & Specialties segment achieved EBITDA of EUR 9 million for the first quarter of 2020 compared to EUR 14 million for the fourth quarter of 2019. The decrease in EBITDA was due to COVID-19 related disruptions that also impacted shipments due to temporary plant closures. The segment also recorded negative raw material induced inventory valuation effects.

Depreciation and amortisation expense for the first quarter of 2020 was EUR (3) million.

The Alloys & Specialties segment had an operating income of EUR 6 million for the first quarter of 2020 compared to an operating income of EUR 13 million for the fourth quarter of 2019.

Source: Aperam, Photo: Fotolia