Q2 2021 results ESG leader with a sustainable dividend yield - 30 July 2021 - Aperam
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Q2 2021 results
ESG leader with a
sustainable dividend yield
30 July 2021
1
Disclaimer
Forward-Looking Statements
This document may contain forward-looking information and statements about Aperam SA 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, in particular, the
length and severity of the COVID-19 (coronavirus) outbreak, including its impacts in the sector, macroeconomic
conditions and in Aperam's principal local markets, that could cause actual results and developments to differ
materially and adversely from those expressed in, or implied or projected by, the forward-looking 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).
The information is valid only at the time of release and Aperam does not assume any obligation to update or
revise its forward-looking statements on the basis of new information, future events, subject to applicable
regulation.
2
Content
1. Q2 2021 highlights page 4
2. Financial results page 12
3. Value Strategy page 16
4. ESG page 25
5. Business Overview page 39
• Group Segments & corporate structure page 40
• Stainless & Electrical Steel Europe page 47
• Stainless & Electrical Steel South America page 52
• Services & Solution page 57
• Alloys & Specialties page 60
• Appendix page 64
3
Q2 2021 Operational highlights
Again record earnings on the back of normalizing markets
and self-help
Q2 2021 key developments
Normalized volumes and normalized pricing in both
Europe and Brazil
Aperam demonstrates ESG leadership by getting first
sites audited by Responsible Steel. Certification pending
Leadership Journey® phase 4: EUR15m gains in Q2 2021
(EUR22m since start of program)
EU: prelim. anti-dumping duties on CR 304 from
Indonesia & India + Safeguard extended for 3 years
Brazil: Launch of Anti-subsidy investigation (Indonesia
CR 304)
ELG approval process progresses and remains on track
Back to normal
4
Europe and Brazil recovery
Demand recovery, cost improvement and effective
protection against dumping support earnings growth
Stainless & Electrical Europe Stainless & Electrical Brazil
2020 vs 2020 vs
normal normal
Price*
Mix
-43% -11pp
2014
2015
2016
2017
2018
2019
2020
H1-21
2014
2015
2016
2017
2018
2019
2020
H121
EU base price hist avg Stainless share Normal
2020 vs 2020 vs
normal normal
Volume
Volume
-15% -10%
2014
2015
2016
2017
2018
2019
2020
H1 21
2014
2015
2016
2017
2018
2019
2020
H1 21
S&E Europe shipments Normal demand Brazil shipments Normal demand
Extremely challenging market was hiding
EUR223m Leadership Journey ® gains 2018-2020
*Source: CRU
5
Market update
Market environment has fully normalized
End markets have recovered
Automotive & Transport • Normal production and solid outlook. Components shortage and restocking balance each other
Consumer Goods • Demand is strong with a stable outlook
Construction • Recovery is visible but slower than expected partly due to raw material shortages
Food, Health & Catering • Normal demand in food & health. Hospitality has normalized
Industry, Energy,
• Slow recovery, especially in oil & gas recovery
Chemical
Distributor inventory is seasonally below normal* Import market share in line with historic average
90,000 105
50.0%
85,000 95 400,000
80,000 85 40.0%
300,000
tonnes
75,000
75 30.0%
70,000 200,000
65,000 65
100,000 20.0%
60,000 55
55,000 45 0 10.0%
Q2 17
Q3 17
Q4 17
Q1 18
Q2 18
Q3 18
Q4 18
Q1 19
Q2 19
Q3 19
Q4 19
Q1 20
Q2 20
Q3 20
Q4 20
Q1 21
Q2 21*
Q1-16
Q3-16
Q1-17
Q3-17
Q1-18
Q3-18
Q1-19
Q3-19
Q1-20
Q3-20
Q1-21
German distributors inventory (t) Days
Imports CR market share HR market share
Weak Below normal Normal Strong *based on May data as June data was not available in time
6
Q2 2021 Segments
Brazil and S&S generate the best quarter ever. S&E Europe
normalizes
Stainless & Electrical Steel Services & Solutions Alloys & Specialties
449 265
1,905
216 1,714
1,264
290
adj EBITDA* adj EBITDA* adj EBITDA*
(EURm) (EURm) (EURm)
212 50 16
a dj EBITDA/t 38 45 a dj EBITDA/t a dj EBITDA/t
118 11 12
140 (€) (€) (€)
43 5
Q2 20 Q1 21 Q2 21 Q2 20 Q1 21 Q2 21 Q2 20 Q1 21 Q2 21
• Shipments stabilize at a high level: • Shipments -9% qoq +12% yoy • Shipments -3% qoq +20% yoy
-2% qoq, +30% yoy as lower
• QoQ higher adj EBITDA mainly reflects • QoQ: higher adj. EBITDA was driven
restocking balances seasonal increase
better pricing which compensates for by higher volumes and lower costs
• QoQ: Europe adj EBITDA reflects lower volumes. Inventory valuation
• YoY: higher adj EBITDA was driven by
slightly lower volumes better pricing gains were comparable
significantly higher volumes, higher
and comparable inventory valuation
• YoY: higher adj EBITDA due to higher prices and inventory valuation gains
gains. Brazil generated the best quarter
volumes, better pricing and inventory
ever due to higher prices and volumes
valuation gains
• YoY: adj EBITDA improves due to
higher volumes, better prices and
inventory valuation gains
Adj. EBITDA of EUR545/t in Q2 2021 (+ EUR190/t qoq, +EUR414/t yoy)
* Difference with total Aperam’s quarterly adj EBITDA due to Others & Eliminations line
7
Q2 2021 Financial highlights
Again record earnings, solid cash flow and a fully de-levered
balance sheet
Strong earnings, positive FCF and strong balance sheet Q2 key comments
• Stable shipments at a high level.
Solid demand in Europe and Brazil
EURm Q2 21 Q1 21 qoq Q2 20 yoy
• Adj EBITDA at all time high: Brazil
Sales 1,272 1,177 8% 818 56% with a peak quarter and pricing
adj. EBITDA 262 175 50% 49 435% recovers in Europe; comparable
inventory valuation gains
EBITDA 271 175 55% 49 453%
• Stated EBITDA contains exceptional
Basic EPS (EUR) 2.67 1.45 84% 0.27 900% gain of EUR9m (PIS/Cofins)
Steel shipments (000t) 481 493 -2% 376 28% • EPS increased due to higher adj.
EBITDA and a low tax rate of 6.6%
adj EBITDA/tonne (EUR) 545 355 53% 130 318%
(tax contains a EUR32m profit from
adj EBITDA margin 20.6% 14.9% 39% 6.0% 244% tax loss carry forward)
Operating cash flow 115 106 8% 57 102% • Strong operating CF despite
seasonal & raw material price driven
CAPEX -27 -46 -41% -23 17% NWC build due to low interest and
Free cash flow* 87 58 50% 34 156% cash tax payments
Dividends paid -36 -35 3% -37 -3% • Solid FCF more than covers the
dividend. Debt free balance sheet is
Net financial debt 1 56 -98% 123 -99% ready to take on ELG
A normal environment highlights
XXX Aperam’s financial strength
8
Leadership Journey® Phase 4 (2021-2023)
A mix of cost improvements and growth to
defend Aperam’s cost leadership in Europe
Phase 4 target gains Target savings composition Cash out
160 50
Σ EUR150m Σ EUR90m
Leadership Journey gains (EURm)
140 Growth & 45
Sche- Schematic
LJ cash out gains (EURm)
product portfolio 40
120 matic 35
100 Raw material & 30
80 purchasing 25
Sche-
60 matic 20 Sche-
Fixed costs
15 matic
40
Schematic 10 Sche-
20 matic
Variable costs 5
0 0
2021 2022 2023 2021 2022 2023
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Footprint Europe Structural cost cuts Growth Brazil
Gueugnon development Purchasing & sourcing gains Top line strategy & distribution NGO upgrade
towards specialties Automation & centralization Gueugnon transformation HGO mix improvement
CR center reduction to 3 Ramp up of Genk CRM enables growth in value
Site specialisation increases added & specialty products
FTE reductions
load of most efficient lines Dedicated Alloys growth plan
A more efficient and lower cost footprint opens up growth opportunities
9
Outlook
Q3 2021 guidance & other forward looking items
Q3 2021 Outlook
• Q3 2021 shipments are expected at a slightly lower level qoq
• Adj. EBITDA is expected at a comparable level versus the record Q2 2021 base
– Supportive pricing
– Inventory valuation gains at a comparable level
• We guide for comparable free cash flow in Q3 2021 despite higher working capital
Other items:
• Cash return to shareholders via a share buyback (EUR100m / max 2.45m shares)
• FY 2021 group capex raised to ~EUR165m from EUR130m (accelerated Leadership Journey® phase 5
investments in AOD and Imphy HRM)
• FY 2021 P&L effective tax rate expected at ~20% of which ~ half will be cash tax in CF
• FY 2021 base dividend EUR1.75 (amounts to EUR140 million)
• Leadership Journey® Phase 4: EUR150 million savings target by end of 2023
• ELG acquisition: closing expected in Q4-21*
We expect the best H2 result in Aperam’s history
* Subject to regulatory approvals
10Corporate Access
Upcoming corporate access events
• 6 & 7 Sep Capital Markets Day, Genk (BEL) Aperam
• 8 Sep Steel & Mining Conference Credit Suisse
• 9 Sep Benelux Conference ING
• 14 Sep Autumn Conference Kepler Cheuvreux
• 23 Sep Baader Investment Conference Baader/ Alphavalue
• 06 Oct The European ESG/ SRI Conference Societe Generale
We are looking forward to discuss Aperam’s long term strategy in more detail
11Financial Results
Middle East Training Center, Beirut Rafic Hariri International Airport, Lebanon - Khatib & Alami Executed using grade316L with Uginox Méca 8ND fini
12Financial results
Q2 2021: Highest ever adj. EBITDA
Q2 volumes increased 28% yoy versus a low base. Q2 adj. EBITDA reflects solid volumes, higher prices
Demand remains solid in both Europe and Brazil and tight cost control
20.6%
262
493
481 14.9%
465
11.9%
438 175
432 431
418 8.7%
8.1% 8.5% 7.7%
402 6.7%
6.0% 109
376 95
79 85
70 65
49
Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Q3 20 Q4 20 Q1 21 Q2 21 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Q3 20 Q4 20 Q1 21 Q2 21
Shipments (thousand metric tonnes) Adj. EBITDA (m€) Adj. EBITDA as % of Sales
Q2 reflects a fully normalized environment and inventory valuation gains
13Financial results
Q2 2021: Record earnings in Brazil, S&S and A&S together
with a solid recovery in Europe yields an all time high EPS
Adj EBITDA: all segments achieve record results Q2 EPS sets a new all time high*
262 2.67
175
1.45
109
95 1.26
213
79 85
70 65
49 0.69
116
0.47 101
0.36 0.36 0.30
57 0.27
37 29 29 21 24
Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Q3 20 Q4 20 Q1 21 Q2 21
Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Q3 20 Q4 20 Q1 21 Q2 21
S&E A&S S&S Other Net result (m€) EPS (€)
All segments contributed to earnings growth
*Q4-19: Income tax expense contains a EUR26m impairment of the deferred tax asset *Q2-20 Financial result contains a EUR15m interest payment on Brazil PIS/COFINS
position *Q4-20 contains a EUR51m financial result gain related to PIS/Cofins *Q2-21 contains a EUR10m PIS/Cofins gain and a EUR32m DTA from tax loss carry 14
forwardsFinancial results
Q2 2021: Solid free cash flow despite seasonal & raw material
price induced working capital build. Debt free balance sheet
Higher EBITDA translates into a solid FCF despite
Strong balance sheet and NFD decreases qoq and yoy
seasonal working capital build
EURm
140
72
55
88 87
45 58
34
18
Q2 19
Q3 19
Q4 19
Q1 20
Q2 20
Q3 20
Q4 20
Q1 21
Q2 21
Change in working capital Capex Free Cash Flow
Aperam’s dividend rests on a solid balance sheet and a structurally high FCF generation
* Includes interest, taxes and other items
15Value Strategy
Bodega Irius, Barbastro, Huesca - Spain J. Marino Pascual y Asoc. Arquitectura
©Adobe
Adriana Landaluce Executed using grade 316L with Uginox Top finish
stock © Adobe Stock
16Investment case & value strategy
Guiding principle: Combining growth, mix and cost
improvements to restore a normal level of profitability
Aperam foundation
Progressive dividend policy
High cash generation
Performance & cost
Differntiated, stable
Only stainless mill
leader in Europe
Own distribution
Industry leading
Alloys business
ESG position
in S. America
& e-business
Value added
Cost improvement Growth De-commoditization
distribution
Solid balance sheet
LJ 4 adds new dimensions to a proven cost improving track record
17Investment case & value strategy
Financial policy: Strong balance sheet, investment in long term
earnings growth and solid cash returns to shareholders
Financial Policy 2021e
Return excess cash to Share buyback
5
investors EUR100m max2.45m shares
4 Dividend Dividend of EUR1.75
base dividend, progressively increases over time* =ෝ EUR140m
3 Value accretive growth + M&A ~EUR35m capex
min IRR 15% EUR357m ELG acquisition²
Company Sustainability, Upgrade and ~EUR80m maintenance
2 ~EUR50m Leadership
Transformation Journey®
1 Strong balance sheet
Ratios consistent with investment grade ratios , NFD / EBITDA ofInvestment case & value strategy
Leadership Journey® Self help has turned Aperam into a
resilient, profitable and cash generative company
Phase 1 (USD350m): Phase 2 (USD225m): Phase 3 (EUR200m): Phase 4 (EUR150m):
2011-13 Restructuring 2014-17 Asset upgrade 2018-20 Transformation 2021-23 Footprint & Growth
Realized cost savings Number of production lines Headcount (FTE)
1000 EURm
800
-26% -11%
600
400
200
0
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021e
2022e
2023e
2011 2020 2011 2020
Adj EBITDA & base price Free cash flow Dividend paid
EURm EURm
+4%
-46% +216%
+550%
195 139
44
30
2011 2020
adj EBITDA Base price 2011 2020 2011 2020
Source: CRU (base price), Aperam accounting data
19Investment case & value strategy
Track record: Aperam a solid performer in every part of the
cycle
Transformation yields a positive net income even
Solid operating performance despite market headwind
in a recessionary market environment
12.7% 4.00 3.39
11.8% 2.47 2.19 2.19
10.6% 10.8% 1.99
8.9% 0.91
8.0% 8.1%
567 320
5.7% 504 286
451 455 -1.08 -0.96 193 175
4.1% 155 148
368 340 71
293 -86 -74
220
168
2012 2013 2014 2015 2016 2017 2018 2019 2020
2012 2013 2014 2015 2016 2017 2018 2019 2020
Net result (m€) EPS (€)
Adj. EBITDA (m€) adj. EBITDA margin
2019 & 2020 volumes reflect soft real demand in
A strong balance sheet is corporate policy
both EU and Brazil and trade war induced imports
26%
23%
1,972
20%
1,936
1,917
14%
1,886
6%
1,813
3% 3%
1,786
2%
619 -2%
1,728
501 442
1,683
1,677
290 147 75 67
-63 48
2012 2013 2014 2015 2016 2017 2018 2019 2020 2012 2013 2014 2015 2016 2017 2018 2019 2020
Net debt (m€) Gearing (%) Aperam shipments (kt)
20Investment case & value strategy
Resilience: Strong balance sheet, high liquidity and low
maintenance capex
Low maintenance capex + solid investment
A strong balance sheet adds safety in a volatile industry*
in growth improvement
3.7 200
2.3 175
150 84
1.1 47
0.6 125 61 ~80
619 0.3 0.2 0.2 0.3 100 34
501 442 -0.1 0.1 0.0 44
50
75
290 50 117 108
48 75 67 56 84 90 ~85
147 -63 1 75 59
25
0
2012
2013
2014
2015
2016
2017
2018
2019
2020
Q1 21
Q2 21
2015 2016 2017 2018 2019 2020 2021e
Replacement capex (EURm) Growth / Improvement
Net debt (m€) Net debt / LTM EBITDA
Balanced maturity profile & ample liquidity Flexible mix and broad range of financing instruments2
800
700
600 Schuldschein
No credit arrangement contains
500 Leasing &
400 any earnings related covenant other
300
200
100
0
2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
EIB loan Leasing & other Schuldschein
Com. Paper & other Cash & equiv. RCF EIB loan
*Aperam intends to maintain a strong balance sheet that is consistent with investment grade ratios 2Financing documentation is in line with investment grade standards and
contains no pledges of assets or earnings covenants 21Investment case & value strategy
Shareholder focus: We care about investors and can support
it due to a high & stable FCF
Solid cash generation through the cycle
112%
88%
High profitability 78% 85%
67% 59%
45%
377 374 400
354
295 303
Low cash taxes*
184
2014 2015 2016 2017 2018 2019 2020
Low cash interest Cash-flow from operations (m€) Cash flow conversion
Solid average 8% free cash flow yield* Best in class cash distribution to shareholders
9% 12% (EURm)
8% 6%
6% 5%
281 7%
260 93 100
90 70
211 195
241 142 139 140
106 130
108 87
106
2016 2017 2018 2019 2020 2021e
2014 2015 2016 2017 2018 2019 2020
Dividends Share buy backs
Free Cash Flow FCF Yield
*at year end 2020 the recognized deferred tax asset on tax losses amounted to EUR97m and the unrecognized deferred tax asset amounted to EUR405m
22Investment case & value strategy
Portfolio improvement: Top line strategy
Constant innovation to shift portfolio into attractive growth / margin segments
New products in sales
Growth
Niches
Index 2015=100
Margin management /
demand driven
New Asian
competition
Margin 2015 2016 2017 2018 2019 2020
Guiding principle: strengthen product & service differentiation
• Increase competitiveness against other materials by improving existing solutions
• Innovate and apply existing solutions to new target markets
• Develop innovative new products
• Optimize product & customer mix
• Redefine distribution channels
Aperam product areas (size indicates volumes)
23Investment case & value strategy
ESG excellence: Take a look at Aperam from an ESG
perspective
Our mission is to produce reliable, 100% recyclable, green stainless steel
Products Non toxic, long lifespan and 100% infinitely recyclable without loss of quality
Climate change We have the lowest CO2 footprint in the stainless industry globally*
*scope 1 & 2
Environment We are recycling champion and 33% of our energy intake is renewable
Process We have ambitious ESG targets and a convincing track record
Social We value our diverse workforce, invest in training & 86% rate us a good employer
Governance The majority of our board is independent
Compliance We have a robust compliance framework and a zero tolerance policy
Please find our complete ESG presentation & report at: www.aperam.com/sustainability
24ESG
Silène luminaris sive Muflier de Borges, Miguel Chevalier Fondation Clément, Le François, Martinique – France Fabrication : Serrurerie La Parette, Roquefort-la Bédoule
Aperam stainless steel used : Aperam 316 Hot Rolled
Aperam produces the greenest stainless steel globally
25ESG summary
ESG is core at Aperam and starts at the top
We take E, S and G seriously
Governance & Stakeholders Social
• Our high ethical standards are reflected in our • Our people are colleagues with whom we share
robust corporate governance and structured values and a common future
compliance program with a zero tolerance – Their safety is our non-negotiable
priority
policy for non compliant behavior
– Their motivation and creativity is our
• our Board of directors is composed of a
greatest asset
majority of independent directors. Board
Committees are independent members only – Their development is a key to our
success.
• We aim to be a partner of choice for our
customers and suppliers • We actively promote diversity
• Our Corporate Responsibility is reflected by • We believe in a positive dialogue and have
local programs and stakeholder engagement collective labour agreements in place throughout
Aperam
• Our approach is fed with and supporting the
multi-stakeholder ResponsibleSteelTM initiative
Environment
• As an energy-intensive company, we consider environmental consciousness as a necessary prerequisite to our sustainable
profitability
• Recycle: Our products are infinitely recyclable and our main input in Europe is recycled scrap
• We have an industry leading CO2 footprint with the greenest” stainless steel globally due to our FSC-certified forest in Brazil
• We have clear targets in place to improve our environmental performance and are a member of Responsible Steel®
26ESG summary
Product & process: Aperam produces a superior product in
a sustainable and responsible way
Our mission is to produce reliable, 100% recyclable, green stainless steel
Superior product Renewable energy Recycling
Stainless Steel
Very long useful life 100% recyclable Non toxic
Corrosion resistant Mechanically strong Abrasion resistant
Fire & acid resistant Magnetic (or not) Aesthethically pleasing
Renewable energy
Our blast furnace in Brazil uses only charcoal as fuel - produced from our sustainably cultivated
FSC-certified forests
Recycling
Aperam’s main input in Europe is recycled scrap (>80%)
Our Recyco unit recycles dust, sludges & residues for us and third parties
Best practice forest management, recognized by the Forest Stewardship Council’s (FSC®) certification, which standards and principles conciliate ecological protection (flora and
fauna, but also water reserves) with social benefits and economic feasibility. Our forests are made of selected cloned saplings which are considered among the best on the market 27
and they are separated by firewalls and strips of natural vegetation to take into account both fire-prevention, biodiversity preservation and local development (beekeeping).ESG summary
Our products: We are part of the solution
Stainless steel is a high added-value material that, due to its unique properties, has a key role in the energy transition
e-Mobility solutions
Aperam’s solutions enable e-vehicle components such as converters, inverters, onboard-charges, motors, EPS, cooling
systems, air conditioning systems, current sensors, charging stations, fuel cells and battery packs
Clean air
Stainless and alloys help the marine transport sector minimizing emissions. Aperam offers scrubbing systems that remove over
90% of Sulphur and 80% of particles. Corrosion resistance grades with high mechanical properties are required
Cryogenic applications
They require a material that can withstand very low temperatures. Aperam solutions (stainless and INVAR M93 LNG tanker) are
specially designed for cryogenic storage; transporting natural gas, ethane, or ethylene; and handling liquefied air gases like
nitrogen, oxygen and argon
Sustainable water supply
Due to its inert nature, stainless is the material of choice for water supply (e.g. tanks and fountains, water boilers, sanitary
piping systems, etc.) and water treatment (e.g. sewerage, distillation, desalination) applications
Solar power
Alloys are resistant to heat, corrosion, fatigue, and creep. It is the ideal material for the receiver tubes used to ensure the flow of
molten salt and for glass metal sealing. Stainless, is the material of choice for the structural and fixing elements used in solar
power systems
Renewable energy
> Electrical steels enable high performing wind generators due to their high permeability.
> The magnetic properties of alloys convert and shape an electrical signal from generation to end use
> Anemometric towers built of stainless steel enjoy an increased life span, reduced maintenance costs, improved safety
The hydrogen economy
Stainless steel and alloys are already used in a number of important hydrogen applications eg fuel cells, production and storage
installations, and transportation*. Aperam is a big supporter of the shift to hydrogen and a proud member of HydrogenEurope
* Eg electrodes in alkaline electrolyzers, catalysts for steam methane reforming, storage and transportation
28ESG summary
Recycling & scrap: Aperam is at the heart of the European
circular economy. Scrap is our dominating raw material
Scrap is a closed loop in Europe²
Automotive Construction Other
Transport • Aperam uses more than
14 years 50 years 30 years 85% scrap in its austenitic
Customers 90% 85% 90% grades
(Fabrication & End product 12% 18% 3% • Scrap is sourced
Manufacturing) Machinery Appliances, Metal Goods regionally in Europe
Electronics • Aperam’s location at the
Life cycle 25 years 15 years 15 years heart of Europe minimizes
Recycling rate 90% 80% 80%
transportation costs &
% of end use 29% 8% 29%
environmental impact
Stainless steel
• Aperam’s Recyco unit
recovers metal content
from waste material*
New scrap
5-25% Ø 6 months
Scrap Old scrap
~70% Ø 27 years Recycling content of
collection stainless steel by region:
Revert scrap
~11%,ESG summary
Environment: Bio Energia & recycling give Aperam a best in
class climate change footprint
Aperam energy mix 2020 Aperam’s has the smallest CO2 footprint in the industry*
CO2 t/t scope 1+2
3%
1.8
1.0
28% 0.5
39%
Aperam Global stainless Global steel
CO2 t/t **
Factor
>4x
30% >8
~2
Charcoal Natural Gas Electricity Other EU industry NPI based producers
Our sustainably cultivated forest in Brazil is a unique asset
Source: Aperam estimates & calculation, ISSF data, CRU *Data is for austenitic HR steel, scope 1+2
**scope 1 + 2 + total raw material emissions and transport 30ESG summary
Aperam supports the United Nations’ Sustainable
Development Goals
We take broad responsibility: our Products and Environmental and Social action
Gender balance ranks In our forestry, located on
highly on our priority list hydric-stressed areas like
since 2017 and has a our other plants, lowering
Health & Safety is Aperam’s primary special commitment from water consumption and improving
concern and the priority in all our management. Aperam established the quality of discharge are key
proceedings specific objectives for creating more elements of our environmental
gender balance in our workforce strategy
More than 30% of Aperam’s Research & Development Aperam is committed to a
energy comes from and innovation are top sustainable cohabitation
renewables, mainly as priorities for Aperam. We with our neighboring
biomass (charcoal) and, via pilot also help our customers to adapt communities, allowing host cities to
projects, wind and solar their own processes (welding, thrive and addressing inhabitants’
stamping, etc.) to make the most of legitimate requests
their tools
Aperam is a recycling Our BioEnergia cultivated Ethics are a key component
champion: We use the forest produces charcoal to Aperam’s values. We
maximum amount of which we use instead of met comply with all applicable
recycled material in our production coal & coke. The forest also acts as regulations, interact transparently
(eg 85%+ scrap in Europe) and also a FSC certified carbon sink. Aperam with authorities and support the fight
take good care to leverage wastes plants are constantly reducing their against corruption, money laundering
and by-products in line with our zero- energy consumption and participate and anti-competitive practices -
waste target in our climate action plan among others
Environment Social Governance 31ESG summary
Health & safety performance
Health & Safety frequency rate
3.0
2.5
2.0
1.5
1.0
0.5
0.0
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
H1-21
Health & Safety of our people is our prime objective
32ESG summary
Social: Our people are our asset
Criteria Target Aperam 2020 status
Lost-time injury
frequency rateESG summary
Environment: A best in class footprint²
Criteria Target 2030 Aperam 2020 status
Energy intensity* 11.1 GJ/t -11% vs 2015 13.4 GJ/t +5% !
CO2 intensity** 0.39 t/t -30% vs 2015 0.47 t/t -14%
Water consumption 5.8 m3 /t -40% vs 2015 11.6 m3 /t +14% !
Dust intensity 70 g/t -70% vs 2015 152 g/t -36%
Zero Waste target >97% reused / recycled 94.3% +0.8pp
Lower production volumes hurt some KPI’s in 2019 & 2020
We aim to exceed environmental legislation and are committed to continuous improvement
*amounts to -11% on electricity & natural gas **Scope 1+2. An internal CO2 price of €60/t is applied to all investments. We review and adjust this if necessary to maintain
the incentive for CO2 savings ²per ton of slab 34ESG summary
Environment: Aperam has a convincing environmental track
record and clear improvement targets. Low volumes impacted 2019 & 2020
CO2 emissions (t/t crude steel)* Energy consumption (GJ/t crude steel)
0.78
0.72 14.7
0.70
0.61 14.0 13.814.013.613.6
0.58 13.313.4
13.012.812.8
0.55 0.49 12.412.5
0.50 0.49 0.500.47 12.1
0.480.48
0.39
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2030
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Dust emissions (g/t crude steel) 2030 Water intake (m3/t)
254 11.8 11.6
211 213 240 185 162
11.5 10.7 10.2 10.1
10.1 9.9
147 152 5.9
70
2013
2014
2015
2016
2017
2018
2019
2020
2030
2013
2014
2015
2016
2017
2018
2019
2020
2030
target Actual *scope 1 & 2
35ESG summary
Aperam’s CO2 footprint: Aperam Europe fulfils the EU
Taxonomy = environmentally sustainable economic activity
Aperam has a industry leading CO2 footprint and produces the greenest stainless steel globally
0.49 t CO2 /t*
Raw materials EU Taxonomy**
Electricity Threshold 0.352 t/t
Stainless scrap APAM 0.27 t Co2 / t EU ETS (= scope 1)
Europe
Ferronickel Consumables: Electricity
Ferrochrome Graphite Electrode Nat. gas Electricity Electricity
Other alloys Natural gas Nat. gas
Electric Arc Molten Slab Hot HR Cold CR Annealing &
Slab Furnace Slab
Furnace metal Caster rolling band rolling band Pickling
FSC certified Raw materials Raw materials Consumables
forest Iron ore SS scrap Graphite Electrode
Limestone
Wood
Electricity
0.41 t CO2 /t*
Charcoal Blast Electric Arc
Charcoal
production Furnace Furnace
Brazil
Co2 neutral Nat. gas Nat. gas
Molten
Pig iron
metal
Nat. gas Electricity Electricity
Electricity Electricity
Stainless
Raw materials
Ferronickel Second Molten Slab Hot HR Cold CR Annealing
Ferrochrome Slab Furnace Slab
Metallurgy metal Caster rolling band rolling band & Pickling
Other alloys
Electrical
Raw materials
Silicon Second Molten Slab Hot HR Cold CR Decarb. High temp.
Slab Furnace Slab
Metallurgy metal Caster rolling band rolling band Annealing Annealing
Scope 1 Scope 2 Scope 3 Scope 1 – All Direct Emissions from the activities of an organisation or under their control. Scope 2 – Indirect Emissions from electricity purchased and used by the
Product Process /
organisation. Scope 3 – All Other Indirect Emissions from activities of the organisation, occurring from sources that they do not own or control*per tonne of slab, scope 1 + 2
emissions emissions emissions equipment
based on ISO14404 **EU Taxonomy* requires 0.352 t CO2/t scope 1+2 or 90% scrap 36ESG summary
Governance: Our leadership team
Key facts & compensation A diverse & experienced team
• Entrusted with day-to-day management of the Company
• Appointed by the Board of Directors
• Experience and industry know how
• Average age: 49 / 6 Nationalities
• CEO: is ultimately responsible for Aperam’s sustainability
performance and compliance
• CTO, is also Head of Health, Safety & Environment
• Compensation aligned with long term interest of the
Company and its stakeholders
Multiplier for performance related bonus includes
H&S factors (1 year plan)
Long term incentive plans based on EPS and TSR
evolution (3 year plan) vs relevant peers and index
Aperam benefits from the experience and industry know-how of its Leadership Team
*also responsible for environmental & industrial risk on a group wide basis
37ESG summary
Governance: Board of directors and shareholder structure
Principles of our board Shareholder structure
● Responsible for strategic direction and oversight of the
business, as well as for appointing senior management
● Election subject to shareholder approval. Directors are 13% 11%
elected for 3 year terms
● Chairman: Mr. Lakshmi N. Mittal 11%
● 7 members with a majority of independent directors
(4 independent directors out of 7)
● Mrs. Ros Rivaz is lead independent director 10%
● 2 Board Committees composed of 100% of
independent directors and reporting to the Board of 41% 4%
Directors: 4%
4%
▬ Audit and Risk Management Committee 2%
covering also ESG matters ; Chair: Ms.
Bernadette Baudier
▬ Remuneration, Nomination and Corporate
Governance Committee ; Chair: Mr. Alain
N America France UK
Kinsch Benelux Germany Scandinavia
Other Europe Mittal Family Private & NA
Diverse skills, backgrounds, knowledge, experience, geographic locations, nationalities and
gender are reflected on our board and ensure effective governance
Source: IHS Markit, Aperam
38Business overview
Musée ©
Musée des Confluences in Lyon, France. Architect: Coop Himmelb(l)au des Confluences,
Sergio Lyon - France
Pirrone. Stainless steel COOP HIMMELB(L)AU
used: Aperam © Sergio
316L/1.4404 PirroneMe
with Uginox Executed using grade 316L - microblasted finish
39Group segments &
corporate structure
40Business overview
Aperam is a global stainless, electrical & specialty steel
producer. #2 in Europe and the only producer in S. America
Production assets in Europe and South America
€3.6bn Revenue by industry
Sales
9,400
Employees
2.5mt
Capacity
Revenue by region
14 steel
service
1
centers
FSC
certified
forest in
Brazil
1 Timóteo, Brazil 2 Genk, Belgium 3 Châtelet, Belgium 4 Imphy, France 5 Gueugnon, France 6 Isbergues, France BioEnergia, Brazil
41
41Business overview
Group: Segments & corporate structure*
Stainless & Electrical Steel Services & Solutions Alloys & Specialties
2.5mt production capacity 40 kt production capacity
1.6mt of gross shipments 646kt of gross shipments 31kt of gross shipments
77% of group adj EBITDA 13% of group adj EBITDA 15% of group adj EBITDA
One of the largest global producers of S&S is Aperam’s distribution arm. S&S Fourth largest producer of nickel alloys
stainless steel** provides value added and customized globally
Europe: solutions through further processing
Aperam specializes in nickel alloys and
according to specific customer
2 Electric Arc Furnaces use scrap as specific stainless steels
requirements. S&S core activities:
major input material
Our products take the form of bars,
Stainless steel flat product output • direct sale of Aperam products to end
semis, cold-rolled strips, wire and wire
users
South America: rods, and plates, and are offered in a
• distribution of Aperam and third party
2 blast furnace use iron ore and charcoal wide range of grades
material
produced from own forests • transformation services, according to High value items that are often sold on a
2 EAF use recycled scrap specific customer requirements kg basis
Stainless flat products & electrical steel
Aperam covers the complete stainless value chain with industry leading assets
in Europe and Brazil
*gross shipments and adj EBITDA are before eliminations
** By production capacity 42Business overview
Group: Segments & corporate structure II
Production assets in Europe and South America
Châtelet, Belgium Genk, Belgium Gueugnon, France Isbergues, France Timóteo, Brazil Imphy, France
Location & facts Location & facts Location & facts Location & facts Location & facts Location & facts
Melt shop Melt shop Cold-rolling mill Cold-rolling mill Melt shop Melt shop
Hot rolling mill Cold-rolling mill Finishing Finishing Cold-rolling mill Cold-rolling mill
Finishing Finishing Finishing
Capacity Capacity Capacity Capacity Capacity* Capacity
Slabs 1,000 kt Slabs 1,000 kt Finished 400 kt Finished 350 kt Slabs 900kt EAF 60kt
HSM 2,800 kt 2 m wide capacity Specialized in Bright LC2i: integrated line Stainless finished 1 VIM, 2 VAR,
316 and duplex Annealing (BA) 350kt Rotary continuous
grades products and Electrical CR: Caster for long
stabilized ferritics. Grain oriented 60kt products
Cold-rolling 700 kt
Non GO 170kt Wire hot rolling mill:
SP Carbon 200kt 40kt
*some lines are flexibly
used for different
6 Cold rolling mills
products
43Business overview
Group: Segments & corporate structure III
Aperam’s value chain
Slabs Hot rolling Cold rolling / Finishing Service
Isbergues Direct
Châtelet 0.35Mt Sale
1.0Mt Service
Center
Châtelet Genk Stainless
2.8Mt 0.7Mt flat
Direct
Genk Sale
End customers
1.0Mt Gueugnon Service Steel service
0.4Mt Center centers
Transformation
Electrical Direct
0.18Mt Electrical flat Sale
Timoteo Timoteo
0.9Mt 0.88Mt Service
Stainless Stainless flat
0.35Mt Center
Chatelet Direct
Imphy Ni alloys & Sale
Imphy
0.06Mt specialties
Imphy Service
Center
Stainless & Electrical Steel Europe
}
Stainless & Electrical Steel South America Stainless & Electrical Steel
Alloys & Specialties
Services & Solutions 44Business overview
Group: A balanced risk profile and customer structure
Shipment split by segment 2020* Adj EBITDA contribution by segment 2020*
12%
28% S&E Europe S&E Europe
33%
S&E S. America 14%
45% S&E S. America
1% A&S A&S
S&S S&S
26%
41%
Revenue by region 2020 Revenue by customer industry 2020
Asia & Brazil
Building & Construction
7%
27% 8% Africa US 10% 27% Catering & Appliances
Europe 8% Other Americas
7% General Industry
68% Germany 17%
18%
12% Automotive
24% Italy
4% Energy & Chemicals
22% 18%
France
Americas 21%
Transport
Other Europe
* Calculated on segmental data before eliminations
45Business overview
Group: Self help has transformed the group. Higher cash
generation and profitability even in adverse market conditions
Adj EBITDA by segment (EURm) Shipment by segment (kt)
559 1,972
504 1,917 1,936
451 455 1,886
368 1,813
340 1,786
293 1,728
220 1,683 1,677
168
2012 2013 2014 2015 2016 2017 2018 2019 2020 2012 2013 2014 2015 2016 2017 2018 2019 2020
S&E A&S S&S Group Adj. EBITDA S&E A&S S&S Group Net Shipments
Adj EBITDA/t (EUR) Adj EBITDA margin
11.8% 12.5%
10.6% 10.8%
8.9%
8.0% 8.1%
5.7%
4.1%
289
256
239
237
203
190
175
127
100
2012 2013 2014 2015 2016 2017 2018 2019 2012 2013 2014 2015 2016 2017 2018 2019 2020
S&E S&S A&S Group Adj. EBITDA/t S&E A&S S&S Group adj EBITDA margin
46Stainless & Electrical Steel
Europe
47Business overview
S&E Steel Europe: Self-help measures yield a robust
operational performance despite a price and volume squeeze
Major adj EBITDA contributor 2020 Robust profitability capitalizing on restructuring
12.8%
11.1%
8.8% 9.1%
12% 6.7% 352
6.0%
33%
S&E Europe 4.6%
2.7% 258 260
14% 220
S&E S. America 0.5%
A&S 153 150
12 101
S&S 57
41% 2012 2013 2014 2015 2016 2017 2018 2019 2020
Adj. EBITDA (m€) Adj. EBITDA margin (%)
European shipments reflect import pressure, destocking European stainless steel demand came
and weak real demand under cyclical pressure in 2020
Pre-crisis level (2016)
6.0
5.0
1,267
1,253
1,241
1,190
1,113
1,082
1,050
1,004
994
4.0
3.0
2012
2013
2014
2015
2016
2017
2018
2019
2020
2012 2013 2014 2015 2016 2017 2018 2019 2020
EU S&E Shipments (kt) Stainless European ap. consumption (mt - slab equivalent)
48Business overview
S&E Steel Europe: Leverage Aperam’s unique position
European stainless steel industrial footprint Aperam key competitive advantage
Finishing line
Steel making • The only integrated upstream operations
Sourcing
Sourcing in the heart of Europe
• Superior access to raw material flows
Outokumpu
• Best location to serve the biggest
Logistics consumption areas of Europe
Logistics • Efficient logistics between sites
Aperam results in industry leading working capital
management
• Full range of products with flexible
capacity
Acerinox Terni Production • Increase scrap recycling to minimize
Production
environmental impact
• Aim to become cost leader in the key
products
Located in the heart of European scrap generation and stainless consumption
49Business overview
EU trade action: Further actions against unfair trade have
been initiated
Safeguard Anti-dumping (AD) Countervailing duties (CVD)
• Maintain traditional trade flows • Duty on imports that are priced below • Neutralize effect of subsidies that
Aim
fair market value benefit certain imports
• Volume focused
• Price focused • Price focused
• • •
Countries
All countries globally (if not explicitly Hot rolled: China, Indonesia, Taiwan Cold rolled: Case opened by EU
affected
exempt) since Oct. 2020 for 5 years commission in February 2021 against
• Effective since February 2019 till July • Cold rolled: China , Taiwan since India, Indonesia
2024 2015, Indonesia, India since May 2021
• HR quota 364kt pa* • HR: China 9.2% - 19.5%, Indonesia • To be determined
CR quota 861kt pa* 17.3%, Taiwan 4.1% - 7.5%
Measure
• Largest importers have a country
• CR: China 25.3%, Taiwan 6.8%
quota. A residual quota for all others
NEW: India (13.6-34.6%), Indonesia
• 25% duty for shipments > quota (19.9-20.2%)
• •
initiatives
Renewal: of cold rolled duty against Investigation: of cold rolled duty
China & Taiwan (due Q4 2021) against Indonesia & India (~25% of CR
New
imports, decision due Q4 2021)
WTO dispute has been lodged officially
Safeguard quotas are excessively generous. AD is effective in levelling the playing field
*Effective quota from 1 July 2021 to 30 June 2022. Quotas are quarterly from 07/20. There is one global SS Hot Rolled quotas since July 2020
SS CR: country quotas S. Korea, Taiwan, India, USA, Turkey, Malaysia, Vietnam **could be difference between domestic market price and export price or cost based 50Business overview
EU stainless steel imports: Anti dumping is effective in HR
products. Safeguard with minimal effect only in CR products
Hot rolled imports & market share Total stainless imports & market share
150,000 50.0%
Hot rolled (t)
40.0%
100,000
30.0% 450,000 40%
20.0%
50,000
400,000
10.0%
0 0.0% 35%
350,000
Q1-16
Q3-16
Q1-17
Q3-17
Q1-18
Q3-18
Q1-19
Q3-19
Q1-20
Q3-20
Q1-21
300,000
Indonesia Other countries Market share % 30%
250,000
tonnes
200,000
25%
Cold rolled imports & market share
150,000
100,000
300,000 40.0% 20%
Cold rolled (t)
30.0% 50,000
200,000
20.0%
0 15%
100,000
Q1-16
Q3-16
Q1-17
Q3-17
Q1-18
Q3-18
Q1-19
Q3-19
Q1-20
Q3-20
Q1-21
10.0%
0 0.0%
Indonesia & India All other Market share %
Q1-16
Q3-16
Q1-17
Q3-17
Q1-18
Q3-18
Q1-19
Q3-19
Q1-20
Q3-20
Q1-21
Indonesia & India All other Market share %
SS Hot Rolled products have one global quota. Countries with a SS CR quota: S. Korea, Taiwan, India, USA, Turkey, Malaysia, Vietnam. All other countries if not exempt fall
under the residual quota 51Stainless & Electrical Steel
South America
52Business overview
S&E Steel South America: A flexible, agile and highly
profitable asset
A significant adj EBITDA contributor 2020 despite
Earnings reflect weak domestic economic environment
demanding conditions
17% 19% 17% 17%
13% 14% 13% 13%
12%
176
167 162
S&E Europe 8%
33%
14%
S&E S. America 120 126
113 118
109
A&S
S&S 82
41% 2012 2013 2014 2015 2016 2017 2018 2019 2020
Adj. EBITDA (m€) Adj. EBITDA margin (%)
Weak economic growth continues to weigh on
Stable shipments due to mix of domestic and exports
stainless steel consumption in Brazil
0.45
Pre-crisis level (2014)
0.40
0.35
649 654 652 656 638 656 0.30
617 610 591
0.25
0.20
2012
2013
2014
2015
2016
2017
2018
2019
2020
2012 2013 2014 2015 2016 2017 2018 2019 2020
Brazil S&E shipments (kt) Stainless BRA ap. consumption (mt - slab equivalent)
53Business overview
S&E Steel South America: Our Brazil asset is unique – flexibly
switches between products and markets to maximize profitability
Aperam South America footprint Mix² Upstream integration
Exports Raw material:
Cost competitive & CO2 neutral
Domestic
Caracas Bio Energia charcoal from our FSC certified
(Venezuela) Business
(incl S. America)
forests heats the blast furnace
Colombia
Ecuador Product range:
Peru
Timoteo Complete stainless steel range
Stainless Steel
Sumaré austenitic, ferritic, duplex, martensitic
Campinas
Ribeirão Pires
Caxias do Sul
Declining margin
Montevideo (Uruguay)
Timoteo melt shop used eg in stationary machines and
~900kt capacity
Buenos Aires (Argentina) Grain oriented
transformers due to its magnetic
electrical steel
properties*
Non grain
used in electric motors and
oriented
generators**
Melt shop, Hot/Cold rolling electrical steel
Service Centers
Tubes mills and Cutting centers
High or medium alloyed & other
Rep offices, sales agencies Special carbon
specialties complete the product
steel
portfolio
Sustained solid double digit adj EBITDA margin proves the flexibility & agility
of our operations in Brazil
*Grain oriented steel (GO & HGO) has the magnetic properties optimized in one direction during hot rolling. **Non-grain oriented steel (NGO) has identical magnetic properties
in all directions ²schematic only 54Business overview
S&E Steel South America: Brazil offers ample opportunity
for both cyclical and structural growth
Brazil consumes substantially below the global trend line Brazil opportunities
Short term: reviving the economy. Large scale infrastructure &
energy projects have been missing + Aperam LJ4 growth strategy
with investment into high margin products (HGO)
China
10
Medium term: Tax reform that put our customers in a position to
Stainless CR consumption per capita (kg)
compete on a global level will drive volume and yield a positive
mix effect
8
Long term: Higher standard of living will drive stainless steel
Poland consumption. Currently Brazil at 1.4kg / capita vs China
EU
6 Vi etnam
>9kg/capita and a GDP implied consumption of >3.5kg/capita
Asia
Examples of stainless steel solutions in the Agrobusiness:
Thailand
4 Turkey World
N Ameri ca
Ma laysia
S. Afri ca
2 India S.E Asia
S. Asia BrazilMexi co Equipment for the Equipment for Slats of metallic
Indonesia Russia
Egypt L America Romania transport and washing gases conveyor belt for
Ukraine Iran Argentina Mi ddle East sterilization of Palm from biomass the transport of
0 Africa
fruits burning sugarcane
1,000 6,000 11,000 16,000
GDP per capita (USD) Largest global producer of: Largest global exporter of:
• Coffee Orange • Meat Poultry
• Sugarcane and sugar • Sugar Ethanol
Brazil has tremendous potential for volume & mix improvement
Source: IMF, CRU, Aperam
55Business overview
S&E Steel South America: 3 pillars of trade protection
against unfair market behavior
Import duty Logistics Anti dumping duty
Anti dumping duties:
Stainless flat products:
• China: up to USD629/t, Taiwan up to
USD705/t since 4.10.19 for 5 years
Brazil EU 28 Stainless steel welded tubes:
• China & Taiwan: up to USD911/t
Area (mn km2) 8.51 -45% 4.66 since 29.07.13 for 5 years. Renewal
Consumption (kt) 270 x12 3,355 investigation launched 16.07.18
• Malaysia, Thailand and Vietnam:
• Costly & time consuming transportation USD367/t up to USD888/t
by truck only since 13.06.18, for 5 years
General import duty:
Electrical steel (non grain oriented):
• 14% import duty on all stainless steel • Aperam has the most comprehensive • China, South Korea, Taiwan, Germany:
imports irrespective of origin network of service centers and agents in USD90/t – USD166.3/t
South America since 15.07.19 for 5 years
Tariff measures to support fair market environment in Brazil
Sources: SBB/Platts, Steelfirst
56Services & Solutions
57Business overview
Services & Solutions: stronger partnership with customers
enhances margins
A significant adj EBITDA contributor 2020 despite trough A profitable Services & Solutions thanks to its focus on
conditions service oriented customers
100 19,000
80 17,000
12%
83 15,000
S&E Europe 60 65
33% 70
14%
S&E S. America 13,000
40
43 45 11,000
A&S 38 38
20 9,000
S&S 16
0 7 7,000
41%
2012 2013 2014 2015 2016 2017 2018 2019 2020
EBITDA €m Nickel LME price
Increasing focus on downstream value added services A majority of “in house“ exposure to end users to best
and solutions serve their needs and provide best services & solutions
Direct distribution
818 819 Apera
799 m
721 746 Aperam End
679 706 Stainle
Stainless
661 646 ss&& Aperam -
End-
Services &
user
users
Solutions
Electrical
Electric s
Steel
2012 2013 2014 2015 2016 2017 2018 2019 2020 al
Steel Independent
distributors
S&S shipments (kt) and other
58Business overview
Services & Solutions: Adding value downstream
Services & Solutions value chain
Input - - - - - - - - Service Centers - - - - - - - -
Hot rolled coil / Cutting/ Polishing
Packaging Logistics Customer
Cold rolled coil Slitting Brushing
Slit / Machined
& Slit
deburred deburred Square Round
- - - - - - - Tube making - - - - - - -
Forming
Expanding
Hot rolled coil / Welding
Cutting Packaging Logistics Customer
Cold rolled coil Pickling
Bending
Annealing
59Alloys & Specialties
60Business overview
Alloys & Specialties: attractive niche market with high margins
High profitability due to end products & end user
Aperam’s high value-added segment 2020
orientation
1,407 1,278 1,385 1,456
1,191 1,219 1,264 1,147
12% 864 50
S&E Europe 43 44 44 46 46 45
33% 39
14%
S&E S. America
26
A&S
S&S
41% 2012 2013 2014 2015 2016 2017 2018 2019 2020
Adj. EBITDA (m€) Adj. EBITDA/t
Stable shipments but markedly improved mix Nickel Alloys a growing and premium niche market
400
350
CAGR 2.2% pa
300
250
36 36 35 34 33 36 36 kt 200
30 31
150
100
50
2012 2013 2014 2015 2016 2017 2018 2019 2020 0
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
A&S shipments (kt)
Source: SMR, Aperam
61Business overview
Alloys & Specialties: attractive niche market with high margins
Aperam is a global top player in nickel alloys
Aperam Alloys & Specialties geographical footprint
and strong in long products (kt)
Rescal Amilly
Imhua
Wire The magnetic parts
drawing company
n
n
nnn
n
n
n
Imphy
ICS (JV)
Melt shop, wire rod mill, Diversification into
cold rolling, bars, R&D industrial clads
Alloys & Specialties sales by industry 2020
Major products
Marine Wire rod ~45% Plates ~5% Strips ~40% Bars ~10%
Upstream
6% Oil & Gas
14% 28%
Chemical industry /
welding / environment
6% Aerospace
E&E
Downstream
16%
29% Automotive /
Transportation
Others
Source: SMR, Aperam
*PCC (Special Metals) NYK (Nippon Yakin Kogyo) 62Business overview
Alloys & Specialties: Specialty alloys add stability and
profitable growth element
Innovation is key for premium …to cater for highly sophisticated …yielding growth opportunities and
specialties… and evolving needs… margin stability
R&D intensive industry High growth end market applications Less exposed to commodity cycles
Intensive technical effort required to “Kilogram” market: unique products Cost of raw materials passed through to
market new products designed to enable precision and high- customers
Benchmark customers in advanced tech solutions globally Long-standing client relationships
industries require tailored, certified and Highly diversified end-markets Good visibility on volumes with high
highly sophisticated solutions proportion of recurring revenue
Key R&D figures (based on 2019) Key end-markets / application types EBITDA margins by Aperam division
14%
Heating 12%
LNG tankers,
resistance, special welding 10%
Cooperation contracts 26 watches 8%
Gearbox, 6%
fasteners, Gas turbines,
turbo
4%
Total registered patents 341 chargers
heat
exchangers
2%
0%
Smart
2010
2011
2015
2016
2020
2012
2013
2014
2017
2018
2019
Sales of new products 14% phones, Fasteners,
LED TV, landing gears,
Electrical
seals turbine S&S A&S S&E
safety,
engines
sensors
A very profitable, growing and stable niche market
63Appendix
64
Résidence Hôtelière du Rail, Montparnasse station, Paris - France
- aasb_agence d‘architecture suzelbrout - Executed using grade 304L, with Uginox Mat finishAppendix
Key prices and exchange rates
Nickel Nickel pig iron Stainless scrap
21,000 220 1,900
19,000 200 1,700
17,000 180 1,500
15,000 160 1,300
13,000 140 1,100
11,000 120 900
9,000 100 700
Jan 19
Jul 19
Jan 20
Jul 20
Jan 21
Jul 21
Jan 19
Jul 19
Jan 20
Jul 20
Jan 21
Jul 21
Jan 19
Jul 19
Jan 20
Jul 20
Jan 21
Jul 21
Nickel LME (USD/t) NPI 10-15% (USD/unit) EU 18/8 scrap (USD/t)
Ferrochrome Stainless steel 304 BRL / USD
2.25 5,000 6.00
2.00 4,000 5.50
1.75 3,000 5.00
1.50
2,000 4.50
1.25
1,000 4.00
1.00
Jan 19
Jul 19
Jan 20
Jul 20
Jan 21
Jul 21
0.75 3.50
Jan 19
Jul 19
Jan 20
Jul 20
Jan 21
Jul 21
Jan 19
Jul 19
Jan 20
Jul 20
Jan 21
Jul 21
CR304 Europe (USD/t)
EU FeCr benchmark (USD/lb) CR304 Asia (USD/t) BRL/USD
Source: Bloomberg, Fastmarkets
65Appendix
Key stainless product categories by alloy content
Martensitic Ferritic (400 series) Austenitic (300 series)You can also read
