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    APAM   LU0569974404

APERAM S.A.

(APAM)
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Second quarter 2021 results : 'Another set of record earnings and a positive outlook for the second half'

07/30/2021 | 01:01am EDT
Aperam S.A. / Key word(s): Quarter Results 
Second quarter 2021 results: 'Another set of record earnings and a positive outlook for the second half' 
30-Jul-2021 / 07:00 CET/CEST 
=---------------------------------------------------------------------------------------------------------------------- 
 
Luxembourg, July 30, 2021 (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 June 30, 2021. 
 
Highlights 
  ? Health and Safety: LTI frequency rate of 2.3x in Q2 2021 compared to 2.6x in Q1 2021 
  ? Steel shipments of 481 thousand tonnes in Q2 2021, 2% decrease compared to steel shipments of 493 thousand tonnes 
    in Q1 2021 
  ? Adj EBITDA of EUR 262 million in Q2 2021, compared to EUR 175 million in Q1 2021 
  ? Net income of EUR 213 million in Q2 2021, compared to EUR 116 million in Q1 2021 
  ? Basic earnings per share of EUR 2.67 in Q2 2021, compared to EUR 1.45 in Q1 2021 
  ? Cash flow from operations amounted to EUR 115 million in Q2 2021, compared to EUR 106 million in Q1 2021 
  ? Free cash flow before dividend and share buy-back of EUR 87 million in Q2 2021, compared to EUR 58 million in Q1 
    2021 
  ? Net financial debt of EUR 1 million as of June 30, 2021, compared to EUR 56 million as of March 31, 2021 

Strategic initiatives

  ? Leadership Journey?(R)2 Phase 4:? Gains reached EUR 15 million in Q2 2021. Aperam realized cumulative gains of EUR 
    22 million in the first 6 months of the program. This compares to cumulative target gains of EUR 150 million over 
    the period 2021 to 2023 
 
  ? Preparing for the next phase of growth and specialization: Investment in Brazil Hot Rolling Mill to drive growth in 
    high value stainless products 

Prospects

  ? Adj EBITDA in Q3 2021 is expected at a comparable level versus Q2 2021 
  ? We guide for comparable free cash flow in Q3 2021 despite higher working capital 
  ? Shareholder returns: share buyback program of up to EUR 100 million 
Timoteo Di Maulo, CEO of Aperam, commented: 
 
"I am delighted to report again a record result in the second quarter for which Brazil and S&S were major drivers by 
achieving the best quarter ever. Europe also improved significantly as the price environment has now fully normalized 
on the back of the economic recovery and more effective protection against dumping. While restocking driven demand, 
stretched global supply chains and positive effects from higher raw material prices will eventually fade, we expect the 
positive environment to persist during the second half of the year. This coupled with the continued improvement and 
higher flexibility achieved through our Leadership Journey(R) puts us in a position to project the best second half in 
Aperam's history." 
 
 

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

(in millions of Euros, unless otherwise stated)         Q2 21 Q1 21 Q2 20 H1 21 H1 20 
Sales                                                   1,272 1,177 818   2,449 1,867 
Operating income                                        235   140   14    375   48 
Net income attributable to equity holders of the parent 213   116   21    329   50 
Basic earnings per share (EUR)                          2.67  1.45  0.27  4.12  0.63 
Diluted earnings per share (EUR)                        2.66  1.44  0.27  4.10  0.63 
 
Free cash flow before dividend and share buy-back       87    58    34    145   52 
Net Financial Debt (at the end of the period)           1     56    123   1     123 
 
Adj. EBITDA                                             262   175   49    437   119 
Exceptional items                                       9     -     -     9     - 
EBITDA                                                  271   175   49    446   119 
 
Adj. EBITDA/tonne (EUR)                                 545   355   130   449   146 
EBITDA/tonne (EUR)                                      563   355   130   458   146 
 
Steel shipments (000t)                                  481   493   376   974   814 

Health & Safety results

Health and Safety performance based on Aperam personnel figures and contractors' lost time injury frequency rate was 2.3x in the second quarter of 2021 compared to 2.6x in the first quarter of 2021.

Financial results analysis for the three-month period ending June 30, 2021

Sales for the second quarter of 2021 increased by 8% to EUR 1,272 million compared to EUR 1,177 million for the first quarter of 2021. Steel shipments decreased from 493 thousand tonnes in the first quarter of 2021, to 481 thousand tonnes in the second quarter of 2021.

EBITDA increased during the quarter to EUR 271 million (including exceptional gains of EUR 9 million made of PIS/ Cofins tax credits related to prior periods recognised in Brazil) from EUR 175 million for the first quarter of 2021. Brazil delivered its best quarter ever on the back of an excellent demand environment and a positive seasonality and Europe benefited from a normalizing price environment. Positive inventory valuation effects remained at a comparable level.

Depreciation and amortisation was EUR (36) million for the second quarter of 2021.

Aperam had an operating income for the second quarter of 2021 of EUR 235 million compared to an operating income of EUR 140 million for the previous quarter.

Financing costs, net, including the FX and derivatives result for the second quarter of 2021 were EUR (6) million, including cash cost of financing of EUR (3) million and exceptional interest income of EUR 6 million in Brazil for PIS/ Cofins tax credits related to prior periods.

Income tax expense for the second quarter of 2021 was EUR (16) million, including the recognition of additional deferred tax assets on tax losses carried forward of EUR 32 million.

The Company recorded a net income of EUR 213 million for the second quarter of 2021.

Cash flows from operations for the second quarter of 2021 were positive at EUR 115 million, despite a working capital increase of EUR 118 million. CAPEX for the second quarter was EUR (27) million.

Free cash flow before dividend and share buyback for the second quarter of 2021 amounted to EUR 87 million.

During the second quarter of 2021, the cash returns to shareholders amounted to EUR 36 million, consisting fully of dividend (of which EUR 1 million paid to non-controlling interests).

Operating segment results analysis

Stainless & Electrical Steel (1)

(in millions of Euros, unless otherwise stated) Q2 21 Q1 21 Q2 20 H1 21 H1 20 
Sales                                           1,078 977   632   2,055 1,459 
EBITDA                                          212   140   43    352   96 
Depreciation & amortisation                     (30)  (30)  (28)  (60)  (58) 
Operating income                                182   110   15    292   38 
Steel shipments (000t)                          472   483   364   955   790 
Average steel selling price (EUR/t)             2,209 1,969 1,678 2,087 1,785 

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

The Stainless & Electrical Steel segment had sales of EUR 1,078 million for the second quarter of 2021. This represents a 10% increase compared to sales of EUR 977 million for the first quarter of 2021. Steel shipments during the second quarter were 472 thousand tonnes, a decrease of 2% compared to shipments of 483 thousand tonnes during the previous quarter. Volumes in Europe remained at a comparable level in a seasonally stronger quarter versus a restocking induced high base in Q1. Brazil demand continued to be at a stable high level and shipments increased seasonally. Average steel selling prices for the Stainless & Electrical Steel segment increased by 12% compared to the previous quarter.

The segment generated EBITDA of EUR 212 million for the second quarter of 2021 compared to EUR 140 million for the first quarter of 2021. Profitability increased due to higher prices, a better mix and tight cost control.

Depreciation and amortisation expense was EUR (30) million for the second quarter of 2021.

The Stainless & Electrical Steel segment had an operating income of EUR 182 million for the second quarter of 2021 compared to an operating income of EUR 110 million for the first quarter of 2021.

Services & Solutions(1)

(in millions of Euros, unless otherwise stated) Q2 21 Q1 21 Q2 20 H1 21 H1 20 
Sales                                           542   531   310   1,073 760 
Adjusted EBITDA                                 50    45    5     95    14 
Exceptional items                               9     -     -     9     - 
EBITDA                                          59    45    5     104   14 
Depreciation & amortisation                     (3)   (3)   (4)   (6)   (7) 
Operating income                                56    42    1     98    7 
Steel shipments (000t)                          189   208   132   397   318 
Average steel selling price (EUR/t)             2,761 2,448 2,212 2,597 2,281 

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

The Services & Solutions segment had sales of EUR 542 million for the second quarter of 2021, representing an increase of 2% compared to sales of EUR 531 million for the first quarter of 2021. For the second quarter of 2021, steel shipments were 189 thousand tonnes compared to 208 thousand tonnes during the previous quarter. The Services & Solutions segment had higher average steel selling prices during the period compared to the previous period.

The segment generated EBITDA of EUR 59 million, including EUR 9 million in Brazil due to PIS/Cofins tax credits related to prior periods, for the second quarter of 2021 compared to EBITDA of EUR 45 million for the first quarter of 2021. Higher prices and the exceptional PIS/Cofins gain were the main drivers for the higher EBITDA.

Depreciation and amortisation was EUR (3) million for the second quarter of 2021.

(MORE TO FOLLOW) Dow Jones Newswires

July 30, 2021 01:00 ET (05:00 GMT)

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Financials (USD)
Sales 2021 5 914 M - -
Net income 2021 658 M - -
Net cash 2021 148 M - -
P/E ratio 2021 5,80x
Yield 2021 4,22%
Capitalization 4 464 M 4 467 M -
EV / Sales 2021 0,73x
EV / Sales 2022 0,65x
Nbr of Employees 9 400
Free-Float 58,8%
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Number of Analysts 13
Last Close Price 55,90 $
Average target price 68,23 $
Spread / Average Target 22,1%
EPS Revisions
Managers and Directors
Timoteo di Maulo Chief Executive Officer
Sudhakar Sivaji Chief Financial Officer
Lakshmi Niwas Mittal Chairman
Bert Lyssens CHRO & Head-Communications & IT
FrÚdÚric Mattei Chief Executive Officer-Alloys & Specialties
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