2013-02-22 07:03:39 -
Paris, February 22(nd), 2013
PRESS RELEASE
ERAMET Group 2012 Results
* ERAMET's annual results were down in 2012 in a very challenging economic
environment, weighed down by unfavorable market conditions and a non-
recurring technical incident in Owendo (Gabon) during the first quarter.
* Substantial investments to prepare for the future.
* Sound financial position.
ERAMET's Board of Directors, meeting on February 21(st) 2013 under the
chairmanship of Patrick BUFFET, approved the financial statements for 2012,
which will be submitted to the General Shareholders' Meeting of May 15(th) 2013.
------------------------------------------------------------------------
(€ millions) H1 2012 H2 2012 2012 2011
------------------------------------------------------------------------
Turnover 1,735 1,712 3,447 3,603
------------------------------------------------------------------------
Current operating income 81 63 144 554
------------------------------------------------------------------------
Net income, Group share 21 (13) 8 195
------------------------------------------------------------------------
Net income, Group share (€/share) 0.79 (0.48) 0.31 7.42
------------------------------------------------------------------------
Operating cash flow 51 166 217 591
------------------------------------------------------------------------
Consolidated net cash 825 448 448 1,153
------------------------------------------------------------------------
The Group's results were impacted by a very tough economic environment in 2012.
Countries in the developed world faced the simultaneous challenges of rising
debt levels, exacerbated by the slowdown in emerging countries, and in China in
particular. The negative impact of this general weak environment was evident in
the main steel-consuming sectors, especially, and to varying degrees by country,
the automotive and construction sectors. The Group's results were hit by the
sharp drop in nickel prices, the decline in manganese ore and manganese alloy
prices, as well as by the non-recurring technical incident at the port of Owendo
(Gabon) in the first half of 2012. This incident resulted in a manganese ore
production deficit of roughly four weeks.
Group turnover in 2012 was down 4% to €3,447 million.
Despite stepping up manganese ore production, current operating income in H2
2012 declined relative to the first half as expected, primarily due to the
weakness in the markets and the fall in nickel prices. Current operating income
for the full year was
€144 million.
Net income, Group share stood at €8 million after payment of taxes totaling €28
million, taking into account withholding taxes related to the payment of COMILOG
and SLN dividends.
ERAMET's capital expenditure in 2012 amounted to €641 million, primarily to
progress projects already decided on. Moreover, other operating income and
expenditure include research expenses for a number of development projects of
€46 million, mainly for Maboumine in Gabon.
Consolidated net cash was €448 million at end-2012, after, notably, payment of
€228 million to minority shareholders of SLN and COMILOG. Moreover, the ERAMET
Group has a €980 million medium-term line of credit.
* Dividend of €1.30/share proposed
The Board of Directors will propose to Shareholders at the General Meeting a
dividend of €1.30 per share.
* ERAMET Manganese: current operating income at €236 million in 2012
The current operating income posted by ERAMET Manganese reflects the impact of
the technical incidents in the first half of 2012 as a result of difficulties
encountered when changing the wagon unloading facilities at Owendo port, which
extended the planned production stoppage by four weeks, in addition to the
scheduled two weeks, and a production stoppage lasting one month at the
Norwegian Tyssedal plant (TIZIR-titanium dioxide slag and high-purity pig iron)
for the anticipated overhaul of the rotary kiln in 2012. ERAMET Manganese's
current operating income amounted to €236 million in 2012.
The manganese market benefited from an increase in global steel production,
which was up 1.2% for 2012 as a whole, a markedly slower pace of growth than the
6% in 2011. Chinese output grew 3% in 2012.
Surplus manganese ore inventories at Chinese ports declined gradually and
continuously from their peak level in May 2011. These deep inventories dragged
down prices in 2012, before adjusting at a relatively low level at the end of
the year. CIF China spot prices (source: CRU) for the ore were down 9% on
average in 2012 vs. 2011 to close the year at US$ 4.93/dmtu.
COMILOG's production of manganese ore and sinter in Gabon was a little over 3
million tons for the year, impacted by the significant non-recurring incident in
H1 2012 at Owendo.
Global manganese alloy supplies remained in surplus in 2012, especially in China
due to substantial excess capacity, while demand in Europe was weakened by the
4% fall in steel production year-on-year. Spot prices for manganese alloys
(source: CRU) declined by some 7% on average in 2012 compared with 2011. There
were steeper falls in refined alloy prices, as well as in the Chinese market.
Against this backdrop, ERAMET Manganese continued to make adjustments to its
industrial facilities in China. The former manganese alloy plant at Guilin was
closed in May 2011 and capacity at Guangxi scaled back to 50% in 2012, prior to
its scheduled closure at the end of 2012. The New Guilin plant was commissioned
in July 2012. The facility is based on more efficient technology and targets a
large proportion of refined alloys in its production. With the reduced output of
alloys in China, overall production by ERAMET Manganese declined 7% to 730,000
tons (despite a slight increase outside China) in 2012 compared with 2011. The
share of refined products increased to 48%.
In addition, ERAMET Manganese is simultaneously pursuing a number of major
projects: the Moanda metallurgical complex, COMILOG's increase in production
capacity to four million tons and, through TIZIR, the 50/50 joint venture with
the Australian Mineral Deposits Limited, the Grande-Côte mineral sands deposit
project in Senegal, to constitute a major global player in titanium dioxide
feedstock and zircon in the long term.
In Gabon, ERAMET continued testing to develop an innovative process as part of
the Maboumine project (niobium, rare earths, tantalum, uranium, etc.); tests
were conducted at two pilot labs during the second half of 2012 (upstream and
downstream phases of the process).
* ERAMET Nickel: particularly low nickel prices in 2012 weighed on current
operating income
Current operating income posted by ERAMET Nickel was down in 2012 to
-€40 million for the year as a whole. This result primarily reflects the fall of
23% in LME nickel prices, as well as the rise in fuel costs in 2012 vs. 2011,
when it had the benefit of favorable hedges.
In 2012, global stainless steel production was up 2% year-on-year. The decline
in nickel prices on the LME reflects not only falling demand, but also a rise in
global production in excess of demand. This increasing production comes from
major new projects gearing up and the surge in Chinese nickel pig iron output in
particular.
Given the weakness in nickel prices in H2 2012 (averaging US$ 7.56/lb), a very
significant percentage of world nickel production was loss-making in the period.
Nickel deliveries by ERAMET Nickel rose 6% in 2012 compared with 2011 to almost
57,000 tons, as the ramp-up of metallurgical production at the Doniambo, New
Caledonia continued.
Operational improvements achieved under the plan to improve competitiveness
partially offset the cost increases associated with external factors (exchange
rates, energy costs, inflation, content, overburden ratios, etc.), in the amount
of about US$ 1 per pound in 2012, compared with 2008, under equivalent economic
conditions.
ERAMET Nickel will continue to roll out its continuous improvement programs to
sharpen its competitive positioning, while production will continue to increase
gradually to a target of 62,000 tons in 2015.
Two important decisions to prepare the groundwork for the company's future in
New Caledonia were taken in the past few months:
* The Board of Directors of Société Le Nickel (SLN), meeting on December
4, 2012, approved the choice of fuel for the future Doniambo power plant.
The pulverized coal technology selected for the power plant will deliver far
superior economic and environmental performance. The final investment
decision will be made in 2014,
once an operator has been selected, the engineering studies completed and
the necessary government permits obtained in New Caledonia.
* A declaration of intent was signed on November 6, 2012 with the VALE Group
and the Government of New Caledonia's South Province with a view to
collaboration in exploring the Prony and Creek Pernod deposits. These nickel
deposits are potentially world class and are unexploited to date.
In Indonesia, the Weda Bay project has entered the reliability testing and risk-
reduction phase. ERAMET appointed external technical experts tasked with
undertaking a comprehensive review of the project in the course of the past few
months. A number of actions and additional tests were decided on as a result.
The project scope was expanded to incorporate a downstream processing stage to
produce nickel metal instead of an intermediate product. For reasonable
additional capex, this expansion will increase the added value generated by the
project and enhance its access to the market. Moreover, the decision is
consistent with the Indonesian government's objective of maximizing added value
from the project locally. Discussions with the Indonesian government were held
in recent months and will continue in order to clarify a number of points in
Indonesian legislation and fiscal regulations applicable to the project. Given
these factors, the final investment decision on Weda Bay may be expected in
2014.
* ERAMET Alloys: strongly contrasting developments pressured results in 2012;
the measures undertaken in response to these developments should ensure
2015 profitability targets are met
ERAMET Alloys grew its turnover by 9% in 2012 versus 2011. However, this growth
masks very contrasting developments: sales in the aerospace sector grew 24%,
while sales in tooling and high-speed steel declined by an average of 13%, with
the contraction concentrated in the second half of the year in the main.
Current operating income stood at - €8 million.
ERAMET Alloys improved its logistics chain in fiscal 2012 and reduced
inventories at Aubert & Duval by more than €50 million in H2 2012. Furthermore,
the action plans aimed at achieving the profitability targets set for 2015 will
be stepped up in 2013: order selectivity, reductions in overhead costs and
continued WCR gains, amongst others. These measures, combined with the ramp-up
of strategic investments by ERAMET Alloys completed in 2011 and 2012 in France
and Sweden, should ensure it meets its 2015 targets, namely a pre-tax return on
capital employed of 15% and a current operating margin of 10%.
* Outlook
The global economic environment remains unstable, despite some short-term
positive signals in both the United States and China. The outlook varies across
the Group's markets.
ERAMET Manganese is expected to increase its production of manganese ore and
sinter by roughly 20% in 2013. The relatively low stockpile levels observed in
Chinese ports and a degree of improvement in physical demand from clients are
reflected in the gradual increase in CIF China spot prices for the ore (source:
CRU) in the early part of 2013, which has lifted them above US$ 5/dmtu
currently.
Nickel prices recently bounced back slightly from the very low level in the
second half of 2012; however the price is expected to remain burdened by market
surplus. New projects
will continue to come on stream. The production volume of nickel pig-iron in
China remains uncertain and will depend partly on developments in processing
costs and partly on future export flows of ore to China.
Similarly, the outlook for growth in ERAMET Alloys's market is contrasted:
demand in the aerospace sector remains sound, while the prospects for tooling
and high-speed steels deteriorated at the year-end.
Patrick BUFFET, Chairman and CEO of the ERAMET Group, stated:
"Medium- and long-term demand for the Group's metals and alloys holds
substantial development potential, especially in emerging markets.
With world-class deposits and innovative technologies, the Group has the
capability to deliver efficient and value-generating solutions across the entire
chain, from processing through to the finished product.
Simultaneously, ERAMET will pursue its operating improvement programs in all
three business lines, continuing its capital expenditure on organic growth
projects, as well as feasibility studies prior to decision-making on
transformative projects.
It expects to complete the construction of two substantial programs at end-
2013/early-2014: the Moanda Metallurgical Complex in Gabon and the new Grande
Côte mineral sands operation in Senegal.
Without calling its strategic policy into question, the ERAMET Group has decided
to be increasingly selective with regards to investments."
- ooOoo -
WEBCAST OF RESULTS PRESENTATION
Presentation of the 2012 results will be available by Webcast at 10:00 today
(CET), in French with simultaneous translation into English. To subscribe, click
on the link on the Group's Web site: www.eramet.com
--------------------------------------------------------------------------------
ABOUT ERAMET
ERAMET is a leading global producer of:
* alloying metals, particularly manganese and nickel, used to improve the
properties of steel,
* high-performance special steels and alloys used in industries such as
aerospace, power generation and tooling.
ERAMET is also studying or developing major projects in new activities such as
mineral sands (titanium dioxide and zircon), lithium, niobium and rare earths,
as well as in recycling.
The Group employs approximately 14,000 people in 20 countries. ERAMET is part of
Euronext Paris Compartment A.
CONTACT
Head of Financial Communications and Economic Studies
Philippe Joly
Tel: +33 (0)1 45 38 42 02
Investor Relations and Economic Analyst
David Fortin
Tel: +33 (0)1 45 38 42 86
For more information: www.eramet.com
--------------------------------------------------------------------------------
APPENDIX
Turnover
------------------------------------------------------------------------------
Turnover (M€) Q4 2012 Q3 2012 Q2 2012 Q1 2012 2012 2011 Change
------------------------------------------------------------------------------
-9%
ERAMET Manganese 427 380 379 374 1,560 1,713
------------------------------------------------------------------------------
ERAMET Nickel 242 196 224 236 898 989 -9%
------------------------------------------------------------------------------
ERAMET Alloys 251 220 255 271 997 910 10%
------------------------------------------------------------------------------
Holding co. & eliminations (1) (3) 0 (4) (8) (9) -
------------------------------------------------------------------------------
ERAMET Group 919 793 858 877 3,447 3,603 -4%
------------------------------------------------------------------------------
Production and shipments
-------------------------------------------------------------------------------
In tons Q4 2012 Q3 2012 Q2 2012 Q1 2012 2012 2011 Change
-------------------------------------------------------------------------------
Manganese ore and 886,400 838,600 840,600 471,200 3,036,800 3,432,600 -12%
sinter production
-------------------------------------------------------------------------------
Manganese alloy 186,100 189,800 178,200 176,000 730,100 784,300 -7%
production
-------------------------------------------------------------------------------
Manganese alloy 201,200 177,200 170,800 195,500 744,700 795,700 -6%
sales
-------------------------------------------------------------------------------
Nickel production* 14,184 14,578 13,465 14,220 56,447 54,360 4%
-------------------------------------------------------------------------------
Nickel sales** 15,807 12,551 14,721 13,602 56,681 53,279 6%
-------------------------------------------------------------------------------
* Ferronickel and matte
** Finished products
Statement of comprehensive income
(millions of euros) Full year Full year Full year
2012 2011 2010
Sales 3 447 3 603 3 576
Other income 34 81 31
Cost of products sold (2 823) (2 674) (2 437)
Administrative & selling costs (200) (174) (155)
Research & development expenditure (51) (47) (44)
EBITDA 407 789 971
Depreciation, amortisation & impairment of (245) (230) (225)
non-current assets
Impairment losses and provisions (18) (5) (7)
Current operating income 144 554 739
Other operating income and expenses (74) (63) (19)
Operating income 70 491 720
Net cost of debt 8 22 3
Other finance income and expenses (8) 8 (15)
Share in earnings of affiliates - 1 1
Income tax (28) (219) (255)
Net income 42 303 454
- Minority interests 34 108 126
- Equity holders of the parent 8 195 328
Basic earnings per share (EUR) 0,31 7,42 12,43
Diluted earnings per share (EUR) 0,31 7,39 12,40
Net income 42 303 454
Exchange differences on translation of 2 7 63
foreign operations
Net (loss) / gain on cash flow hedges 37 (51) (20)
Net (loss) / gain on available for sale 6 (10) 3
financial assets
Income tax (12) 21 6
Other comprehensive income (loss) 33 (33) 52
- Minority interests (4) 4 8
- Equity holders of the parent 37 (37) 44
Total comprehensive income 75 270 506
- Minority interests 30 112 134
- Equity holders of the parent 45 158 372
Statement of financial position
Assets
(millions of euros) 12/31/2012 12/31/2011 12/31/2010
Goodwill 173 210 172
Intangible assets 717 612 521
Property, plant & equipment 2 454 2 119 1 903
Companies accounted for using the 33 23 22
equity method
Other financial non-current assets 100 87 86
Deferred tax 29 25 30
Other non-current assets 7 5 5
Non-current assets 3 513 3 081 2 739
Inventories 1 038 1 093 996
Trade receivables and other current 690 664 642
assets
Tax receivables 38 33 12
Financial derivatives 51 46 128
Other financial current assets 368 473 359
Cash and cash equivalents 621 911 1 227
Current assets 2 806 3 220 3 364
Total assets 6 319 6 301 6 103
Shareholders' equity and liabilities
(millions of euros) 12/31/2012 12/31/2011 12/31/2010
Share capital 81 81 81
Share premiums 373 372 371
Available for sale reserve 5 - 7
Cash flow hedge reserve 4 (24) 10
Foreign currency translation reserve 32 28 24
Other reserves 2 538 2 579 2 465
Shareholders' equity of the parent 3 033 3 036 2 958
Minority interests 818 1 043 1 016
Shareholders' equity 3 851 4 079 3 974
Employee benefits 131 129 123
Provisions 428 379 360
Deferred tax 380 406 342
Borrowings - due in more than one year 311 151 203
Other non-current liabilities 28 37 33
Non-current liabilities 1 278 1 102 1 061
Provisions - due in less than one year 30 29 29
Borrowings - due in less than one year 230 80 88
Trade payables and other current 805 833 731
liabilities
Tax payables 72 77 149
Financial derivatives 53 101 71
Current liabilities 1 190 1 120 1 068
Total shareholders' equity and 6 319 6 301 6 103
liabilities
Statement of changes in net
cash / borrowing position
(millions of euros) Full year Full year Full year
2012 2011 2010
Opertating activities
EBITDA 407 789 971
Elimination of non-cash
or
non-business items: (149) (155) (201)
Operating cash flow before 258 634 770
changes in working capital
Changes in operating
working capital (41) (43) (43)
requirement
Net cash flows from 217 591 727
operating activities
Investing activities
Capital expenditure (641) (492) (326)
Non-current financial (19) (65) 76
assets
Disposals of non-current 4 3 5
assets
Net change in non-current asset 7 12 4
receivables / liabilities
Changes in scope of 13 17 (11)
consolidation and loans
Dividends from equity - - -
accounted affiliates
Net cash flows from (636) (525) (252)
investing activities
Financing activities
Dividends paid (287) (186) (152)
Share capital increases 2 1 31
Changes in working capital requirement - (2) -
related to financing activities
Net cash flows from (285) (187) (121)
financing activities
Impact of translation (1) (21) (5)
adjustments
Decrease (increase) in net cash (705) (142) 349
(borrowing) position
Opening net cash 1 153 1 295 946
(borrowing) position
Closing net cash 448 1 153 1 295
(borrowing) position
Segment reporting
By division
(millions of euros) Nickel Manganèse Alloys Holding & Total
eliminations
Full year 2012
Non-Group sales 893 1 557 994 3 3 447
Intra-Group sales 5 3 3 (11) -
Sales 898 1 560 997 (8) 3 447
Cash flows from
operating 45 246 11 (44) 258
activities
EBITDA 53 357 40 (43) 407
Current operating (40) 236 (8) (44) 144
income
Other operating - - - - (74)
income and expenses
Operating income - - - - 70
Cost of borrowed - - - - 8
capital
Other finance - - - - (8)
income and expenses
Share of income
from equity - - - - -
accounted companies
Income tax - - - - (28)
Minority interests - - - - (34)
Group net income - - - - 8
(loss)
Non-cash expenses (79) (105) (38) 6 (216)
- depreciation & (88) (111) (47) (1) (247)
amortisation
- provisions (14) (7) 1 11 (9)
- impairment losses (1) (8) - - (9)
Capital expenditure
(intangibles and 146 399 84 12 641
property, plant &
equipment)
Total balance sheet
assets (current and 2 385 2 904 1 182 (152) 6 319
non-current)
Total balance sheet
liabilities
(current and non- 991 1 282 794 (599) 2 468
current excluding
sareholders)
Capitaux employés
Full year 2011
Non-Group sales 983 1 709 909 2 3 603
Intra-Group sales 6 4 1 (11) -
Sales 989 1 713 910 (9) 3 603
Cash flows from
operating 249 364 43 (22) 634
activities
EBITDA 269 499 57 (36) 789
Current operating 189 388 16 (39) 554
income
Other operating - - - - (63)
income and expenses
Operating income - - - - 491
Cost of borrowed - - - - 22
capital
Other finance - - - - 8
income and expenses
Share of income
from equity - - - - 1
accounted companies
Income tax - - - - (219)
Minority interests - - - - (108)
Group net income - - - - 195
(loss)
Non-cash expenses (128) (154) (29) (20) (331)
- depreciation & (81) (105) (39) (3) (228)
amortisation
- provisions (12) 5 7 (1) (1)
- impairment losses - (19) 3 - (16)
Capital expenditure
(intangibles and 141 245 100 6 492
property, plant &
equipment)
Total balance sheet
assets (current and 2 830 2 604 1 217 (350) 6 301
non-current)
Total balance sheet
liabilities
(current and non- 982 997 826 (583) 2 222
current excluding
sareholders)
Capitaux employés 277 348 575 15 1 214
Full year 2010
Non-Group sales 958 1 853 763 2 3 576
Intra-Group sales 7 5 1 (13) -
Sales 965 1 858 764 (11) 3 576
Cash flows from
operating 229 518 56 (33) 770
activities
EBITDA 269 656 76 (30) 971
Current operating 194 548 29 (32) 739
income
Other operating - - - - (19)
income and expenses
Operating income - - - - 720
Cost of borrowed - - - - 3
capital
Other finance - - - - (15)
income and expenses
Share of income
from equity - - - - 1
accounted companies
Income tax - - - - (255)
Minority interests - - - - (126)
Group net income - - - - 328
(loss)
Non-cash expenses (82) (211) (40) 17 (316)
- depreciation & (78) (100) (41) (2) (221)
amortisation
- provisions (10) (5) (14) 12 (17)
- impairment losses - (2) 13 - 11
Capital expenditure
(intangibles and 124 130 69 3 326
property, plant &
equipment)
Total balance sheet
assets (current and 2 630 3 030 1 007 (564) 6 103
non-current)
Total balance sheet
liabilities
(current and non- 842 1 043 630 (386) 2 129
current excluding
sareholders)
Segment
reporting
By
geographic
region
(millions of France Europe North Asia Oceania Africa South
Total
euros) America America
Sales
(destination
of sales)
Full year 455 1 143 686 992 29 84 58 3 447
2012
Full year 337 1 261 676 1 193 30 66 40 3 603
2011
Full year 324 1 274 642 1 201 32 77 26 3 576
2010
Capital
expenditure
(intangibles
and
property,
plant &
equipment)
Full year 104 36 48 118 69 265 1 641
2012
Full year 106 38 27 122 61 138 - 492
2011
Full year 76 32 28 75 50 64 1 326
2010
Total
balance
sheet assets
(current and
non-current)
Full year 2 512 778 363 869 904 892 1 6 319
2012
Full year 2 799 823 368 783 903 624 1 6 301
2011
Full year 2 952 840 400 700 846 365 - 6 103
2010
2012 RESULTS PRESS RELEASE PDF:
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