Eramet Group's results for 1st half 2014
30.07.2014 | Globenewswire Europe
Paris, July 30(th), 2014PRESS RELEASE
Eramet group's results for 1(st) half 2014
* Positive current operating income restored in 1(st) half 2014, improving on the two previous halves.
* All the Group's business units will step up the implementation of its operating performance improvement plans
* Improvement in nickel prices and Eramet Nickel's operating performance in 1(st) half 2014
* At the end of 1(st) half 2014, Manganese ore prices levelling out, with production recovering towards
* Group's current operating income expected to improve in 2(nd) half of 2014 compared with 1(st) half 2014
The data presented and commented on are adjusted data from the Group's reporting, which consolidates joint ventures under the equity method. Reconciliation with published financial statements is presented in appendix 4 (cf. page 8).
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(€ millions) H1 2013 H2 2013 H2 2014
---------------------------------------------------------------
Turnover 1 613 1 549 1 534
---------------------------------------------------------------
Eramet Manganese 777 785 683
---------------------------------------------------------------
Eramet Nickel 368 336 381
---------------------------------------------------------------
Eramet Alloys 473 431 474
---------------------------------------------------------------
Holding company & eliminations (5) (3) (4)
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EBITDA 129 102 157
---------------------------------------------------------------
Current operating income (9) (36) 14
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Net income, Group share (32) (338)* (59)
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Global economic activity improved slightly in the 1(st) half of 2014. China succeeded in keeping its growth above 7% with the support of its government's economic policy, despite a slowdown in the construction sector. In some of the Group's businesses, inventory reduction limited the effects of that positive growth on market and price trends.
Furthermore, in this context of moderate growth, market and price trends are heavily influenced, metal by metal, by the development pace of the production capacity projects begun in previous years.
The Eramet group's turnover was on a par with the 2(nd) half of 2013, at 1,534 M€.
The Group's current operating income became positive again, at 14 M€ in the 1(st) half of 2014, an improvement of 23 M€ on the 1(st) half of 2013 and 50 M€ on 2(nd) half 2013. These results were affected by nickel prices, which were very low early in the year before picking up in the 2(nd) quarter. As regards manganese-related activities, results were affected by maintenance operations in Gabon and Norway in the 1(st) quarter, an exceptional railway incident in Gabon and the drop in manganese ore prices (around 15% in 1(st) half 2014 vs. 1(st) half 2013).
The Group's share of net income for the 1(st) half of 2014 totalled -59 M€, taking into account the effect of expenditure for several project studies, foremost among which the Maboumine niobium- rare earths project in Gabon, and the higher tax charge in the 1(st) half of 2014.
Productivity gains in the 1(st) half of 2014 represented 42 M€.
Capital expenditure was reduced by 37% to 175 M€ in the 1(st) half of 2014 compared with the same period in 2013, in line with the target of a total amount below 400 M€ for 2014.
The Group's net debt remained moderate as of the end of June 2014, at 473 M€, corresponding to 16% of shareholders' equity.
As of June 30(th), 2014, Eramet kept a very satisfactory amount of liquidity.
* Eramet Manganese: turnover down 12% from 1(st) half 2013. Eramet Manganese's current operating income totalled 61 M€ in the 1(st) half of 2014, compared with 109 M€ in 1(st) half 2013.
Global production of carbon steel grew 2.5% in the 1(st) half of 2014 compared with the 1(st) half of 2013, mainly driven by developed countries (European Union, USA) and China.
Prices for manganese ore 44% CIF China (source: CRU) fell in the 1(st) half of 2014 by around 15% compared with the same period in 2013. They have however levelled out since May.
Despite lower prices for manganese ore, manganese alloy prices remained stable overall in the 1(st) half of 2014 compared with 1(st) half 2013.
Turnover by TiZir (titanium dioxide for white pigments, high-purity pig iron for foundries) decreased 24% in the 1(st) half of 2014 compared with the same period in 2013, to 28 M€ (for the 50% held by Eramet), mainly because of lower prices for titanium dioxide slag.
On the other hand, the Grande Côte project in Senegal operated by TiZir, a 50/50 joint venture by Eramet and the Australian company Mineral Deposits Ltd., began to ramp up production and is making satisfactory progress.
Eramet Manganese's capital expenditure totalled 110 M€ in the 1(st) half of 2014, a 37% reduction compared with the same period in 2013.
* Eramet Nickel: turnover up 3.5% compared with 1(st) half 2013 due to rising nickel prices since March 2014 Global production of stainless steel increased 10% in the 1(st) half 2014 compared with the 1(st) half of 2013, driven by all of the main producing countries.
In this context and thanks to improved operating performance and higher nickel prices in the 2(nd)quarter, wp=1425]Eramet[/wp] Nickel's turnover increased in the 1(st) half of 2014 compared with the same period in 2013 to total 381 M€. Current operating income recovered over the same period, going from -94 M€ to -27 M€.
Metallurgical production of nickel in Doniambo (New Caledonia) rose 6% to 27,100 tons in the 1(st) half of 2014, compared with 25,500 in the 1(st) half of 2013. Over the same period nickel sales grew 9%.
Thanks to the upturn in the 2(nd) quarter, LME nickel prices rose 3% in the 1(st) half of 2014 compared with the 1(st) half of 2013 to 7.51 USD/lb. In the past few weeks they have been around 8.7 USD/lb.
Eramet Nickel's capital expenditure was reduced by 33% to 42 M€ in the 1(st) half of 2014, compared with the corresponding period in 2013.
* Eramet Alloys: turnover stable compared with 1(st) half 2013, up 10% compared with 2(nd) half 2013
The aerospace sector grew 6% in the 1(st) half of 2014 compared with the same period the previous year, without however completely making up for the 33% fall in turnover with the energy sector. Over the same period, the turnover achieved with the tooling market (mainly high-speed steels) remained stable at an insufficient level. Eramet Alloys' turnover was 12% higher in the 2(nd) quarter of 2014 than in the 1(st) quarter 2014.
Eramet Alloys' current operating income was at the break-even point in the 1(st) half of 2014.
Eramet Alloys' capital expenditure totalled 23 M€ in the 1(st) half of 2014, a 34% reduction compared with the same period in 2013.
Aubert & Duval continued to implement its general expenses reduction programme. A majority agreement was signed for that purpose with trade unions in early July.
· Highlights
- During the 1(st) half of 2014, the Eramet group successfully carried out three bond issues with institutional investors and by private investment ("Euro PP") for a total amount of 225 M€, bringing the total amount of bond issues to 625 M€, and set up a 3-year bank facility for 100 M€ to fund Eramet Nickel's working capital requirement. These operations enable it to benefit from advantageous terms on the credit market in a context of low interest rates, continue diversifying its sources and extend the average duration of its debt.
- As part of Eramet's performance improvement programmes, a study was undertaken on the ways and means to reduce costs corresponding to corporate structures and support services across the Group.
- On March 27(th), 2014, the Eramet group announced that the Grande Côte mineral sand (ilmenite and zirconium) beneficiation facility, operated in Senegal by TiZir, its 50/50 joint venture with the Australian company Mineral Deposits Limited, was now in the start-up phase.
- On April 5(th), 2014, the Eramet and VALE groups, together with New Caledonia's Southern Province, signed a general agreement protocol for the exploration, followed by the study and beneficiation, of the Prony and Pernod deposits in the south of New Caledonia.
Following Eramet's Board of Directors meeting, Patrick BUFFET, Eramet group
Chairman & CEO, stated:
"Manganese ore production in Moanda in Gabon will increase significantly in the 2(nd) half of 2014 compared with the 1(st)half.
Moanda Metallurgical Complex (a silicomanganese plant and a manganese metal plant) will start up in the 2(nd) half of 2014.
All the Group's business units will step up the implementation of its operating performance improvement plans.
Given the current outlook for the nickel market and thanks to the operating improvements achieved in all activities:
* cash requirements should decrease significantly in the 2(nd )half of 2014.
* the Eramet group's current operating income in the 2(nd) half of 2014 should be higher than in the 1(st) half."
-oo0oo-
WEBCAST OF PRESENTATION OF FIRST-HALF RESULTS
The presentation of the 1(st) half 2014 results will be webcast at 10am (Paris time) today in French with English interpreting.
To sign up please click the link on the Group's website: 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 with high growth potential, 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 Investor Relations and Economic Studies
Philippe Joly
Tel: +33 (0)1 4538 4202
Investor Relations and Economic Analyst
David Fortin
Tel: +33 (0)1 4538 4286
For more information: www.Eramet.com
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APPENDIX
Appendix 1: Turnover
-------------------------------------------------------------------------
Turnover (M€) Q1 2013 Q2 2013 Q1 2014 Q2 2014
-------------------------------------------------------------------------
Eramet Manganese 388 389 326 357
-------------------------------------------------------------------------
Eramet Nickel 181 187 166 215
-------------------------------------------------------------------------
Eramet Alloys 231 242 224 250
-------------------------------------------------------------------------
Holding company & eliminations (3) (2) (2) (2)
-------------------------------------------------------------------------
Eramet Group
797 816 714 820
including joint ventures
-------------------------------------------------------------------------
Share of joint ventures (18) (19) (14) (16)
-------------------------------------------------------------------------
Eramet Group
779 797 700 804
IFRS published statements(1)
-------------------------------------------------------------------------
Following application of IFRS 11 "Joint Arrangements" as of January 1, 2014, proportionally consolidated companies (Ukad and the TiZir sub-group) in the financial statements to December 31, 2013 are consolidated according to the equity method from FY 2014, with retrospective impact on 2013.
To reflect the economic reality of the Group's companies, the operating performance of jointly controlled companies continue to be proportionally consolidated in the Group's internal reporting, which is used by senior management and the Board of Directors as the basis for monitoring activity.
As a result, in accordance with IFRS 8 "Operating Segments", segment information included in the consolidated financial statements will be aligned with this internal information. As of 2014, the Group's financial reporting will be based on this operational financial information, which is also reconciled with the
financial statements reported under IFRS.
Appendix 2: Production and deliveries
--------------------------------------------------------------------------
Tonnes H1 2013 H2 2013 H1 2014
--------------------------------------------------------------------------
Manganese ore and sinter production 1,767,300 1,935,600 1,644,100
--------------------------------------------------------------------------
Manganese alloy production 385,400 360,800 338,300
--------------------------------------------------------------------------
Manganese alloy sales 393,800 370,600 352,900
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Nickel production* 25,480 27,535 27,078
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Nickel sales** 25,280 27,130 27,627
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* Ferronickel and matte
** Finished products
Appendix 3: Segment reporting
Segment reporting - by division
(€ million) Nickel Manganese Alloys Holding & Total Joint- Published
venture
eliminations contribution
1st half
year 2014
External 380 681 473 - 1 534 (30) 1 504
sales
Inter-
division 1 2 1 (4) - - -
sales
Sales 381 683 474 (4) 1 534 (30) 1 504
EBITDA 20 124 31 (18) 157 (3) 154
Current
operating (27) 61 - (20) 14 - 14
profit
(loss)
Operating
profit - - - - (29) - (29)
(loss)
Cash
generated 15 77 16 (31) 77 (2) 75
from
operations
Net cash
generated by - - - - (68) (21) (89)
operating
activities
Industrial
capital
expenditure
(intangibles 42 110 23 - 175 (33) 142
assets,
property,
plant &
equipment)
Closing net
cash (debt) - - - - (473) 93 (380)
position
------------------------------------------------------------------------------------
1st half
year 2013
External 365 775 471 2 1 613 (37) 1 576
sales
Inter-
division 3 2 2 (7) - - -
sales
Sales 368 777 473 (5) 1 613 (37) 1 576
EBITDA (49) 172 30 (24) 129 (15) 114
Current
operating (94) 109 3 (27) (9) (11) (20)
profit
(loss)
Operating
profit - - - - (35) (11) (46)
(loss)
Cash
generated (65) 124 18 (21) 56 (12) 44
from
operations
Net cash
generated by - - - - 65 (19) 46
operating
activities
Industrial
capital
expenditure
(intangibles 63 176 35 2 276 (71) 205
assets,
property,
plant &
equipment)
Closing net
cash (debt) - - - - 127 56 183
position
Full year
2013
External 700 1 558 901 3 3 162 (77) 3 085
sales
Inter-
division 4 4 3 (11) - - -
sales
Sales 704 1 562 904 (8) 3 162 (77) 3 085
EBITDA (130) 350 49 (38) 231 (20) 211
Current
operating (222) 218 4 (45) (45) (14) (59)
profit
(loss)
Operating
profit - - - - (548) (14) (562)
(loss)
Cash
generated (150) 257 20 (53) 74 (13) 61
from
operations
Net cash
generated by - - - - 161 (27) 134
operating
activities
Industrial
capital
expenditure
(intangibles 172 346 64 5 587 (128) 459
assets,
property,
plant &
equipment)
Closing net
cash (debt) - - - - (218) 80 (138)
position
------------------------------------------------------------------------------------
Segment reporting - by geographic region
(€ million) France Europe North Asia Oceania Africa South Total Joint- Published
venture
America America contribution
Sales
(destination
of sales)
----------------------------------------------------------------------------------------------------
1st half 204 521 312 428 10 40 19 1 534 (30) 1 504
year 2014
1st half 256 510 328 443 13 40 23 1 613 (37) 1 576
year 2013
Full year 414 1 004 642 949 27 76 50 3 162 (77) 3 085
2013
----------------------------------------------------------------------------------------------------
Capital expenditure
(intangibles and
property, plant &
equipment)
----------------------------------------------------------------------------------------------------
1st half 26 14 5 10 30 89 1 175 (33) 142
year 2014
1st half 44 11 9 38 20 154 - 276 (71) 205
year 2013
Full year 82 35 20 86 77 286 1 587 (128) 459
2013
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Appendix 4: Reconciliation of Group reporting and published financial statements
-------------------------------------+--------+----------------------+--------+----------------------+--------+
(€ million) 1st half Joint-|1st half| 1st half Joint-|1st half| Full Joint-| Full|
year venture| year | year venture| year | year venture| year |
| | | | | |
2014 contribution| 2014 | 2013 contribution| 2013 | 2013 contribution| 2013 |
| | | | | |
Published |Adjusted|Published |Adjusted|Published |Adjusted|
((1)) | ((2))| ((1)) | ((2))| ((1)) | ((2))|
-------------------------------------+--------+----------------------+--------+----------------------+--------+
Sales 1 504 30 | 1 534 | 1 576 37 | 1 613 | 3 085 77 | 3 162 |
| | | | | |
EBITDA 154 3 | 157 | 114 15 | 129 | 211 20 | 231 |
| | | | | |
Current | | | | | |
operating - | | 11 | | 14 | |
profit (loss) 14 | 14 | (20) | (9)| (59) | (45)|
| | | | | |
Operating - | | 11 | | 14 | |
profit (loss) (29) | (29)| (46) | (35)| (562) | (548)|
| | | | | |
Profit (loss) | | | | | |
for the | | | | | |
period - | | | | | |
attributable (59) - | (59)| (32) - | (32)| (370) - | (370)|
to equity | | | | | |
holders of | | | | | |
the parent | | | | | |
| | | | | |
Net cash | | | | | |
generated by 21 | | 19 | | 27 | |
operating | | | | | |
activities (89) | (68)| 46 | 65 | 134 | 161 |
| | | | | |
Industrial | | | | | |
capital (33)| | (71)| | (128)| |
expenditure (142) | (175)| (205) | (276)| (459) | (587)|
| | | | | |
Net cash | | | | | |
(debt) (93)| | (56)| | (80)| |
position (380) | (473)| 183 | 127 | (138) | (218)|
| | | | | |
Shareholders' | | | | | |
equity - | | | | | |
attributable 2 473 - | 2 473 | 2 905 - | 2 905 | 2 532 - | 2 532 |
to equity | | | | | |
holders of | | | | | |
the parent | | | | | |
-------------------------------------+--------+----------------------+--------+----------------------+--------+
(1) Financial statements prepared under IFRS applicable as of 01/01/2014, with joint venture accounted under equity method.
See 2014 condensed interim consolidated financial statements on the Eramet Group website (www.Eramet.com).
(2) Group reporting, with joint venture accounted under proportional consolidation method.
Eramet press release in PDF:
http://hugin.info/143395/R/1842752/641461.pdf
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