11th International Stainless & Special Steel Summit 12 th September 2012, Stockholm. Philippe Darmayan Chief Executive Officer

Transcription

1 11th International Stainless & Special Steel Summit 12 th September 2012, Stockholm Philippe Darmayan Chief Executive Officer 1

2 Disclaimer Forward-Looking Statements This document may contain forward-looking information and statements about Aperam 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, that could cause actual results and developments to differ materially and adversely from those expressed in, or implied or projected by, the forwardlooking 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). Aperam undertakes no obligation to publicly update its forward-looking statements, whether as a result of new information, future events, or otherwise 2

3 Environment, markets and performance Market recovered from 2009 but still suffering World stainless steel flat product demand (in million tonnes) China Emerging Developed +5% Source: CRU, Eurostat, SPAS and Aperam estimates % Demand is hit by global recession 2012 European Market supplies (kt, incl. imports) and Economic Sentiment Indicator Mar May Jul Sep Nov Mar May Jul Market supplies (left) Moving average 12m (left) ESI EU27 (Eurostat, right) ESI Germany (Eurostat, right) 3

4 11th International Stainless & Special Steel Summit 12 th September 2012, Stockholm Key industry challenges 4

5 Key industry challenges Overinvestment has led stainless industry to overcapacity Stainless steel slab capacity expansion (in million tonnes) Stainless steel slab equivalent global utilization rates (% of capacity) % 90% 85% 80% 75% 70% 65% 60% 55% E 50% Europe China Rest of the World Expansion of capacity is expected to slow but utilization rates will not fully recover Source: CRU and Aperam estimates 5

6 Key industry challenges Asian imports are becoming important in the European industry Stainless steel flat product export/import from China, Taiwan and Korea (in million tonne) Evolution of European imports 25% 1,50 1,00 20% 0,50 15% 0,00-0,50 10% -1,00 5% -1,50-2, % Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q Total European imports European imports from China, Taiwan and Korea Stainless CAPEX Steel budget has become of USD 4.0 a world billion wide for 2010 market Source: CRU, SPAS and Aperam estimates 6

7 Key industry challenges Margin and demand are highly correlated to the nickel Nickel price and Chinese stainless steel price Nickel price and European demand of SSFP [1] Q Q Q Q Q Q Q Q Q Q Nickel price (USD/t) CR 304 2mm including VAT (USD/t) Nickel price (USD/t) European demand of SSFP [1] per quarter ( 000 t) Nickel price dropped by more than 9 thousand USD/tonne since the beginning of 2011 Rapid adjustment of stainless steel price to nickel [1] SSFP stands for Stainless Steel Flat Products Source: CRU, SBB and Bloomberg 7

8 Key industry challenges Resulting in strong pressure on prices and margins South Europe stainless steel base price (CR 304 2B 2mm coil) Margin to stainless steel maker in % of total price % % % 70% % 50% % % 20% % 0% Monthly (EUR/t) Annual average (EUR/t) Material margin including energy cost and fixed cost Raw material cost Margin to the stainless steel maker has become very limited relative to total stainless price Source: SBB 8

9 11th International Stainless & Special Steel Summit 12 th September 2012, Stockholm Opportunities for improvement 9

10 Opportunities for improvement Standalone stainless steel producers can close capacity Shipments and finishing capacity for European producers in 2010 (in million tonnes) Steel making and finishing capacity for European producers (in million tonnes) 7% of capacity Optimization Competitor 1 Aperam Competitor 3 Competitor 2 Competitor 1 Aperam Competitor 3 Competitor 2 LT supension/closure Shipments and used capacity Unused finishing capacity Steel making capacity Finishing capacity Overcapacity offers significant cost reduction potential through closure, suspension and optimization Source: Aperam estimates 10

11 Opportunities for improvement Consolidation will support the reduction of overcapacity Flat product stainless steel global producers ranking by slab capacity (mt) 5 4 Steel making and finishing capacity for European producers (mt) 9 8 Reduction in capacity % 85% Outokumpu* Acerinox TISCO YUSCO POSCO Aperam Baosteel JISCO Nippon Steel AK Steel 1 0 Before optimization & capacity closure Steel making capacity After optimization & capacity closure Finishing capacity Consolidation should help CAPEX the global budget stainless of USD 4.0 steel billion industry for 2010 to become more efficient * Dependent upon regulatory and other approvals Source: CRU and Aperam estimates 11

12 Opportunities for improvement Dumping is a world shared concern SBB August 21: Thailand s Ministry of Commerce has launched anti dumping investigations into imports of carbon and stainless steel cold rolled coils, while also initiating a review of existing duties against hot rolled coil imports from Korea. In the dumping petition regarding CRC, the alleged dumping margins were 11.76% for material from China, 11.86% from Vietnam and 8.76% from Taiwan. SBB June 14: India s largest stainless steel producer Jindal Stainless has asked the government to extend existing antidumping duties on stainless cold rolled flat products to wider coils. Imports from China have risen substantially, particularly in the past two years, noted one spokesman. China s is experiencing overcapacity and this surge in imports is not only happening in India but all over the world,. SBB June 12: The steelmakers [Taiwan s Yieh United Steel Corp (Yusco)] have been complaining that since late 2010 import volumes of commercial grade stainless coils from China and Korea into Taiwan have been rising. Low landed prices as well have increased pressure on local producers to cut their domestic prices to compete with the imports. SBB May 15: Argentina s federal public revenue administration Afip has imposed import duties on flat stainless steel from twelve Asian countries; details were published in the country s official gazette on May 11. According to Afip, the new duties are designed to counter tax evasion and under-invoicing practices. SBB May 1: The US Department of Commerce (DOC) is accepting requests for administrative reviews of a variety of steel products. Up for review are the AD orders on stainless steel coiled plate from Belguim, Korea, South Africa and Taiwan; welded carbon steel pipe and tube from India, Taiwan and Turkey; certain circular welded carbon quality line pipe from China; OCTG from China; and light-walled rectangular pipe and tube from Turkey. Metalbulletin April 18: The [Brazilian] government verified growing import levels with dumped prices, and the subsequent damage to the Brazilian industry, ministry secretary Tatiana Prazeres said in the country s official gazette on Monday April 16. While supporting the benefit of free trade, our industry has to be protected from dumping attitudes 12

13 Opportunities for improvement Business pricing rules have to be homogenised Aluminium pricing chain LME indexation in the Aluminium industry Bauxite Fixed year / Multi year Current or future reference, never from the past Alumina // Liquid Aluminium Coexistence of floating [1] and fixed [2] contracts LME + Alloy ingots premium Fixed or LME + premium LME + Geographical premium + Rolling margin + Alloys differential Never price the LME without defining the quantity Casting alloys Extruded products Rolled products Other materials have a clear, unique LME+ pricing based on replacement values [1] referring to future period of LME pricing [2] on LME of contractual day Source: Oddo Metals presentation to ISSF Beijing, May 15 th

14 11th International Stainless & Special Steel Summit 12 th September 2012, Stockholm Aperam s strengths and strategy 14

15 Aperam s strengths and strategy A solid industrial base Steelshop Hot rolling Cold rolling Service Châtelet Chatelet Isbergues 0.35Mt Isbergues 1.0Mt Genk Chatelet 3.4Mt Genk 0.74Mt Stainless flat Steel Service Centers Transformation Direct sales Timóteo Genk 1.1Mt Gueugnon 0.40Mt Clients Gueugnon Timoteo 0.90Mt Timoteo 0.88Mt Timoteo Electrical 0.17Mt Timoteo Stainless 0.38 Mt* Electrical flat Stainless flat Steel Service Centers Transformation Direct sales Imphy Imphy Chatelet (strip) 0.06 Mt Imphy (wire) Imphy Ni alloys & specialties SSCs, Direct sales Transformation Built in 2005, Chatelet is the most recent European greenfield 15

16 Aperam s strengths and strategy Close to customers through Services & Solutions Sales, distribution and steel service centers network, including precision & tubes businesses Sales subsidiaries and representative offices Sales agencies Steel Service Centers A key competitive advantage to maintaining market share and capturing growth opportunities 16

17 Aperam s strengths and strategy A large product range of specialties supported by strong R&D Corrosion resistance FERRITIC 400 series DUPLEX 2507 LOW NICKEL 200 series AUSTENITIC 300 series 6Mo Capital Goods White Goods Automotive Appliances Food & Health 17-4 Cu Ni 14Cr LNM 317LN Building & Construction Aperam product 25% 30% 50% Elongation (%) High-end application and specialty products benefiting from higher margins and growth 17

18 Aperam s strengths and strategy Focus on cost reduction through its Leadership Journey Cumulated gains and 2013 target (USD million) Key projects completed since beginning of In Brazil, VSS*, switch from LPG to natural gas and conversion of blast furnace number 2 from coke to biomass In Europe, suspension of traditional cold roll mill in Isbergues. Key projects progressing Completion underway of a new induction furnace and electro slag remelting furnace at Imphy (France Alloys & Speciality) Completion underway of a service center expansion in Campinas (Brazil Services & Solutions) 123 Completion underway of a new hot annealing and pickling line in Gueugnon (France - Stainless & Electrical Steel) 73 Industrial optimization and rationalization in Europe (from 20 tools to 17 tools) 33 Systematic benchmarking in Brazil New sourcing initiatives YTD MarYTD JunYTD SepYTD DecYTD MarYTD Jun Leadership Journey Yield and quality improvement, SG&A reduction through organisation simplification, biomass development, new product growth Key Profit projects improvement already delivered in Q1 due 231 to market MUSD and of management internal initiatives gains with but Q2 additional expected 119 to MUSD be more expected challenging by 2013 * VSS Voluntary Separation Scheme 18

19 Aperam s strengths and strategy A market driven organisation to better serve its customers Customers Marketing & Sourcing with wolrdwide service centers, global commercial, sourcing and R&D functions Europe stainless know-how and quality Production assets focused on quality and leadtime Brazil growth, electrical steel & biomass Alloys & Specialties worldwide recognised high performance products Profit improvement in Q1 due to market and internal initiatives but Q2 expected to be more challenging Aperam is committed to customer satisfaction 19