published on 11/10/2023 at 06:58 from APERAM (isin : LU0569974404)

Third quarter 2023 results: “Trough results in a challenging macro environment”

Aperam S.A. / Key word(s): Quarter Results
Third quarter 2023 results: “Trough results in a challenging macro environment”

10-Nov-2023 / 06:58 CET/CEST

Third quarter 2023 results1

“Trough results in a challenging macro environment”

Luxembourg, November 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 ended September 30, 2023.

Highlights

Health and Safety: LTI frequency rate of 1.4x in Q3 2023 compared to 2.8x in Q2 2023

Shipments of 516 thousand tonnes in Q3 2023, a 6% decrease compared to shipments of 550 thousand tonnes in Q2 2023

EBITDA of EUR 19 million in Q3 2023, compared to EBITDA of EUR 103 million in Q2 2023
Net loss of EUR (42) million in Q3 2023, compared to net income of EUR 43 million in Q2 2023
Basic earnings per share of EUR (0.59) in Q3 2023, compared to EUR 0.60 in Q2 2023
Free cash flow before dividend and share buy-back was negative at EUR (135) million in Q3 2023, compared to EUR 1 million in Q2 2023
Net financial debt of EUR 646 million as of September 30, 2023, compared to EUR 461 million as of June 30, 2023

Strategic initiatives

Leadership Journey®2 Phase 4: Gains reached EUR 28 million in Q3 2023 and a cumulative EUR 178 million versus target gains of EUR 150 million over the period 2021 to 2023.

Prospects(1]

Q4 2023 EBITDA is expected to increase versus Q3 2023
We guide for lower Q4 2023 net financial debt

Timoteo Di Maulo, CEO of Aperam, commented:

“Q3 results are a clear indicator of the environment we operate in. Europe remains in the grip of an extremely challenging market environment characterized by both historically low prices and volumes. Additional company-specific effects resulted from the footprint upgrade. Production disruptions and an unusually high inventory valuation charge caused Aperam’s lowest ever quarterly EBITDA. We realized the Leadership JourneyⓇ Phase 4 targets early and, to restore the resilience and flexibility in our business model, we add a structural cost reduction plan of EUR 50 million to Phase 5 in addition to the normal EUR 50 million annual run rate. We thereby lay the basis for a better 2024 irrespective of what shape the recovery might take.”

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

(in millions of Euros, unless otherwise stated)	Q3 23	Q2 23	Q3 22	9M 23	9M 22
Sales	1,463	1,702	1,818	5,041	6,540
Operating income / (loss)	(36)	54	187	99	809
Net income / (loss) attributable to equity holders of the parent	(42)	43	121	133	625
Basic earnings per share (EUR)	(0.59)	0.60	1.66	1.84	8.23
Diluted earnings per share (EUR)	(0.58)	0.59	1.64	1.83	8.19

Free cash flow before dividend and share buy-back	(135)	1	209	(49)	276
Net Financial Debt (at the end of the period)	646	461	482	646	482

Adj. EBITDA	19	103	235	249	1,000
Exceptional items	—	—	—	—	(53)
EBITDA	19	103	235	249	947

Adj. EBITDA/tonne (EUR)	37	187	463	150	551
EBITDA/tonne (EUR)	37	187	463	150	521

Shipments (000t)	516	550	508	1,657	1,816

Health & Safety results

Health and Safety performance based on Aperam personnel figures and contractors’ lost time injury frequency rate was 1.4x in the third quarter of 2023 compared to 2.8x in the second quarter of 2023.

Financial results analysis for the three-month period ending September 30, 2023

Sales for the third quarter of 2023 decreased by 14% at EUR 1,463 million compared to EUR 1,702 million for the second quarter of 2023. Shipments decreased from 550 thousand tonnes in the second quarter of 2023 to 516 thousand tonnes in the third quarter of 2023, due to a persistent low demand in Europe.

EBITDA decreased during the quarter to EUR 19 million from EUR 103 million predominantly due to a price / cost squeeze, significant inventory valuation charges and lower volumes.

Depreciation and amortization expense was EUR (55) million for the third quarter of 2023.

Aperam had an operating loss for the third quarter of 2023 of EUR (36) million compared to an operating income of EUR 54 million for the previous quarter.

Financing costs, net, including the FX and derivatives result for the third quarter of 2023 were EUR (19) million. Cash cost of financing was EUR (7) million during the quarter.

Income tax benefit was EUR 13 million during the third quarter of 2023.

The net result recorded by the Company was a loss of EUR (42) million for the third quarter of 2023, compared to a profit of EUR 43 million for the second quarter of 2023.

Cash flows consumed by operations for the third quarter of 2023 were at EUR (48) million, including a working capital increase of EUR 21 million. CAPEX for the third quarter was EUR (55) million.

Free cash flow before dividend and share buyback for the third quarter of 2023 was negative and amounted to EUR (135) million, compared to EUR 1 million for the second quarter of 2023.

During the third quarter of 2023, cash returns to shareholders amounted to EUR 37 million (including EUR 1 million to non-controlling interests), consisting fully of dividend.

Operating segment results analysis

Stainless & Electrical Steel (1)

(in millions of Euros, unless otherwise stated)	Q3 23	Q2 23	Q3 22	9M 23	9M 22
Sales	931	1,050	1,186	3,214	4,352
EBITDA	(6)	52	153	126	753
Depreciation & amortization	(27)	(26)	(25)	(78)	(75)
Operating income / (loss)	(33)	26	128	48	678
Steel shipments (000t)	371	373	352	1,143	1,229
Average steel selling price (EUR/t)	2,414	2,713	3,271	2,710	3,455

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

The Stainless & Electrical Steel segment had sales of EUR 931 million for the third quarter of 2023. This represents a 11.3% decrease compared to sales of EUR 1,050 million for the second quarter of 2023. Steel shipments during the third quarter were 371 thousand tonnes, a marginal decrease of 0.5% compared to shipments of 373 thousand tonnes during the previous quarter. Shipments in Brazil increased slightly seasonally but production disruptions as explained in the recent developments section impac

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