Groupe Eramet : ERAMET group H1 2015 results

¹ Adjusted data from Group reporting, in which joint ventures are accounted for using proportionate consolidation. The reconciliation with the published financial statements is presented in Appendix 4.

• Key figures for the Eramet Group

Despite a difficult market environment, the Eramet Group reported sales of ?1,626 million in H1 2015 compared with ?1,534 million in H1 2014.

Current operating income came out at -?70 million, affected by exceptional or non-recurrent items and provisions for nickel inventories. Net income, Group share totalled -?83 million in H1 2015.

Net financial debt stood at ?805 million with a net debt-to-equity ratio of 30%.

The Group forged ahead with its large-scale 2014-2017 plan to improve productivity and reduce costs, with its objective of a ?360 million annual impact on current operating income at the end of the period compared to 2013. All the Eramet teams are rallying to meet that target.

Industrial investments are to be reduced through a strict and rigorous policy of capital expenditure. Investments in 2015 will be significantly below ?400 million.

• Eramet Nickel: results impacted by sharp market downturn

The average LME nickel price in H1 2015 was USD 6.2/lb, down from USD 7.8/lb in H2 2014 and USD 7.5/lb in H1 2014.

Eramet Nickel posted current operating income of -?98 million in H1 2015, compared with -?27 million in H1 2014.
             
The continued accumulation of nickel inventories in LME warehouses in 2014 weighed on nickel prices. The consensus opinion was that the law introduced by the Indonesian government in early 2014 banning the export of unprocessed nickel ore would have a positive impact on nickel prices in the short term. But owing to the build-up of major ore inventories in China prior to the ban, and to major and unrecorded transfers of inventories of Chinese metal to LME warehouses, nickel prices trended sharply downwards in H1 2015. LME nickel metal inventories reached record highs in early June, representing, together with producers inventories, around 24 weeks of consumption. LME inventories have trended downwards in recent weeks.

Experts agree on a coming LME nickel prices increase.

• Eramet Alloys: considerable cost reductions and major gains in productivity served to confirm growth in current operating income against a backdrop of contrasted markets

Eramet Alloys sales increased by 8% year-on-year in H1 2015. The aerospace sector accounted for almost 60% of the sales of Eramet Alloys.

Eramet Alloys current operating income came to ?15 million in H1 2015 compared with a break-even result in H1 2014.

Once again, Eramet Alloys confirmed its strong base in the aerospace sector in H1 2015 with the strengthening of Europe's number-one aerospace titanium business through the creation of EcoTitanium^[1], launched on 27 April, 2015, and MKAD^[2], a joint venture with Mecachrome announced in late June 2015.

• Eramet Manganese: robust results despite the fall in manganese ore prices thanks to the outstanding quality of its Moanda deposit

CRU CIF China spot prices for high-grade manganese ore fell by more than 30% year-to-date to approximately USD 3/dmtu, largely due to the decrease of the global carbon steel production (-2% in H1 2015 compared to H1 2014).

Despite this backdrop, Eramet Manganese sales has moderately increased in
H1 2015 at ?718 million compared with ?683 million in H1 2014.

Eramet Manganese ore production in Gabon totalled almost 1.9 million tons in H1 2015, increasing steadily since H1 2014, a level never attained before in a first semester. The Group is extremely well positioned on the cost curve of manganese ore producers thanks to the intrinsic qualities of the Moanda deposit in Gabon.

Manganese alloys prices remained stable as a whole and production increased by over 4% on H1 2014.

Current operating income for Eramet Manganese came out at ?32 million in H1 2015 compared with ?61 million in H1 2014.

H1 2015 was marked by the opening of the Moanda Metallurgical Complex in Gabon. These new entities reaffirm Eramet's global leadership position across the entire spectrum of manganese alloys.

Lastly, in the mineral sands sector, the ramp-up at Grande Côte will continue during the second half of this year. TiZir, a 50/50 joint-venture with the Australian company Mineral Deposits Ltd., aims to become a new leader in the markets of ilmenite for titanium dioxide and zirconium for ceramics.

• Eramet Group outlook

In a very difficult market backdrop impacting all mining and metallurgy companies in the last semesters, nickel and manganese prices in simultaneous downward trends weighed significantly on the Group's results in H1 2015.

Against this backdrop, the Eramet Group pursues with determination its programme to reduce costs and improve productivity in all Group entities and reinforces its selective approach to capital expenditure.

The ramp-up in recent investments (The Moanda Metallurgical Complex, TiZir, .) and future investments (EcoTitanium, MKAD, .) will strengthen the Group's leadership positions.

Eramet remains strongly positioned in fundamentally high-potential markets in the long term.
  

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WEBCAST OF PRESENTATION OF FIRST-HALF RESULTS

The presentation of the H1 2015 results will be webcast tomorrow, 30 July, 2015, at 10 am (Paris time) in French and with a simultaneous translation in English.
To sign up, please click on 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 reviewing or developing major projects in new activities with high growth potential, such as mineral sands (titanium dioxide and zirconium), lithium and recycling.
The Group employs approximately 14,000 people in 20 countries. Eramet is listed on Euronext Paris Compartment A.

CONTACT

Vice President Strategy and Financial Communication
Philippe Gundermann
Tel: +33 (0)1 45 38 42 78

Investor Relations and Strategic Analyst
Hughes-Marie Aulanier
Tel: +33 (0)1 45 38 38 04

Strategic and Financial Communication Analyst
Ludovic Donati
Tel: +33 (0)1 45 38 42 88

For more information: www.Eramet.com

APPENDICES

Appendix 1: Sales

¹ Application of IFRS standard 11 "Joint Arrangements".

Appendix 2: Production and shipments

¹ Ferronickel and matte
² Finished products

Appendix 3: Sectorial information

Segment reporting - by division

Segment reporting - by geographic region

Performance indicators by period - profit and loss

Performance indicators by period - net financial debt variation

Performance indicators by period - balance sheet

Appendix 4: Reconciliation Group reporting and published accounts

(1) Financial statements prepared under applicable IFRS, with joint ventures are accounted for using equity method. See 2015 condensed interim consolidated financial statements. 
(2) Group reporting, in which joint ventures are accounted for using proportionate consolidation.