Full year and fourth quarter 2022 results

Full year and fourth quarter 2022 results1

“Resilient in the cyclical trough quarter”

Luxembourg, February 10, 2023 (07:00 CET) - Aperam (referred to as “Aperam” or the “Company”) (Amsterdam, Luxembourg, Paris, Brussels: APAM, NYRS: APEMY), announced today results for the three months and full year ended December 31, 2022.
 

Highlights

Strategic initiatives

Cash deployment

Prospects

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 1.4x in the fourth quarter of 2022 compared to 1.0x in the third quarter of 2022. For 2022 the lost time injury frequency rate was 1.8x after 2.3x in 2021.

Financial results analysis for full year period to December 31, 2022

Sales for the year ended December 31, 2022 increased by 59.9%, at EUR 8,156 million compared to EUR 5,102 million for the year ended December 31, 2021, mainly due to the first time consolidation of ELG and higher realized prices. Shipments in 2022 increased by 26.9% at 2,309 thousand tonnes compared to 1,819 thousand tonnes in 2021.

EBITDA reached EUR 1,076 million for the year ended December 31, 2022 (including an exceptional loss of EUR (53) million related to the reversal of the inventory step-up of EUR (48) million recognized in the 2021 bargain purchase gain on ELG acquisition and a final bargain purchase gain adjustment on this acquisition for EUR (5) million), compared to EUR 1,186 million for the year ended December 31, 2021 (including exceptional gains of EUR 126 million made of a bargain gain on ELG acquisition of EUR 117 million and PIS/Cofins tax credits related to prior periods recognized in Brazil for EUR 9 million). Group Adjusted EBITDA increased by 6.5% as the first time consolidation of ELG and higher realized prices compensated lower demand, cost inflation and significant inventory valuation charges. Phase 4 of the Leadership Journey® - the Transformation Program - realized EUR 82 million gains in 2022.

Depreciation, amortization and impairment was EUR (186) million for the year ended December 31, 2022.

Aperam had an operating income for the year ended December 31, 2022 of EUR 890 million compared to an operating income of EUR 1,042 million for the year ended December 31, 2021.

Financing costs including the FX and derivatives result for the year ended December 31, 2022 were EUR (137) million, including cash cost of financing of EUR (9) million. These negative results were mainly driven by unrealized results on nickel derivatives and realized FX derivatives that were compensated by revenues in foreign currency.

Income tax expense for the year ended December 31, 2022 was EUR (126) million.

The Company recorded a net income of EUR 625 million for the year ended December 31, 2022.

Cash flows from operations for the year ended December 31, 2022 were positive at EUR 642 million, despite a working capital increase of EUR 258 million. CAPEX for the year ended December 31, 2022 was EUR (296) million.

Free cash flow before dividend and share buy-back for the year 2022 amounted to EUR 345 million.

As of December 31, 2022, total equity amounted to EUR 3,392 million and net financial debt was EUR 468 million. Gross financial debt as of December 31, 2022 was EUR 925 million. Cash & cash equivalents were EUR 457 million.

Total cash returns to shareholders in 2022 amounted to EUR 345 million, consisting of EUR 194 million of share buy-back and EUR 151 million of dividend (of which EUR 1 million paid to non-controlling interests).

The Company had liquidity of EUR 984 million as of December 31, 2022, consisting of cash and cash equivalents of EUR 457 million and undrawn credit lines3 of EUR 527 million.

Financial results analysis for the three-month period ending December 31, 2022

Sales for the fourth quarter of 2022 decreased by 11% at EUR 1,616 million compared to EUR 1,818 million for the third quarter of 2022. Shipments decreased from 508 thousand tonnes in the third quarter of 2022 to 493 thousand tonnes in the fourth quarter of 2022, due to pronounced destocking by customers in Europe.

EBITDA decreased during the quarter to EUR 129 million from EUR 235 million predominantly due to negative inventory valuation, lower volumes and a price/cost squeeze.

Depreciation, amortization and impairment was EUR (48) million for the fourth quarter of 2022.

Aperam had an operating income for the fourth quarter of 2022 of EUR 81 million compared to an operating income of EUR 187 million for the previous quarter.

Financing costs, net, including the FX and derivatives result for the fourth quarter of 2022 were EUR (116) million. The negative result was mainly driven by unrealized results on nickel derivatives. Cash cost of financing was nil during the quarter as interest expenses paid have been offset by interest income received on cash and cash equivalents.

Income tax benefit was EUR 35 million during the fourth quarter of 2022, notably due to EUR 17 million additional net deferred tax assets recognized on tax losses carried forward.

The net result recorded by the Company was nil for the fourth quarter of 2022, compared to a net income of EUR 121 million for the third quarter of 2022.

Cash flows from operations for the fourth quarter of 2022 were at EUR 209 million, including a working capital decrease of EUR 197 million. CAPEX for the fourth quarter was EUR (143) million.

Free cash flow before dividend and share buyback for the fourth quarter of 2022 amounted to EUR 69 million, compared to EUR 209 million for the third quarter of 2022.

During the fourth quarter of 2022, cash returns to shareholders amounted to EUR 44 million, consisting of EUR 8 million of share buy-back and EUR 36 million of dividend.

Operating segment results analysis

Stainless & Electrical Steel (1)