ERAMET. RESULTS 1 st half SFAF meeting, Paris July 28 th, 2011 ALLOYS, ORES AND PEOPLE

Transcription

1 ERAMET RESULTS 1 st half 2011 SFAF meeting, Paris July 28 th, 2011 ALLOYS, ORES AND PEOPLE

2 GROUPE CONTENTS TARGETED STRATEGIC POSITIONING 4 1 st HALF 2011 RESULTS 5 ACTIVITY BY DIVISION 11 OTHER METALS: DEVELOPMENT OF NEW INTEGRATED BUSINESSES 31 OUTLOOK 37 CONCLUSION 39 APPENDIX 41 ALLOYS, ORES AND PEOPLE DES ALLIAGES, DES MINERAIS ET DES HOMMES.

3 ERAMET: HIGHLIGHTS OF 1 st HALF 2011 Turnover up 8% from 1 st half of 2010, to 1,931 M. Current operating income up 7% compared with 1 st half 2010, totalling 366 M. A very sound financial situation. Implementation of growth strategy: Ramp-up of major structuring projects. Joint venture agreement with Mineral Deposits Limited, creating a major new player in the mineral sands market, a high-potential sector. Partnership with the Chinese group HeYe in high-speed steels. ERAMET 1 st HALF 2011 RESULTS - 3

4 ERAMET: TARGETED STRATEGIC POSITIONING A world leader at the technological cutting edge of alloying metal mining and conversion A specialist in upscale metallurgy and alloying metals used to produce steels. An integrated Group, from ore through to finished parts and recycling, with key strengths: World-class orebodies. Upscale metallurgical facilities. World-class R&D at the heart of strategy, enabling the Group to carry out transformative projects and to diversify into new metals. Long-term relationship with local partners. Businesses and skills that make ERAMET the mining and metallurgical partner of strategic sectors and new industrial production chains. ERAMET 1 st HALF 2011 RESULTS - 4

5 THE GROUP S RESULTS ERAMET 1 st HALF 2011 RESULTS - 5

6 KEY FIGURES 2011 Turnover up 8%, COI up 7% in 1 st half 2011 vs. 1 st half 2010 (M ) H H H Turnover 1,788 1,788 1,931 Current operating income Net income, Group share * Net income, Group share ( /share) Net cash 1,062 1,295 1,196 *After a 71 M increase in tax charge compared with 1 st half 2010 ERAMET 1 st HALF 2011 RESULTS - 6

7 CURRENT OPERATING INCOME Sharp rise in ERAMET Nickel s COI 800 M 600 H H Group Manganese Manganese Nickel Nickel Alloys Alloys H H H H H H H H H H H Group Contribution of business groups to current operating income* * Including eliminations ERAMET 1 st HALF 2011 RESULTS - 7

8 CHANGE IN CURRENT OPERATING INCOME M COI H PRICES VOLUMES COSTS MISC. COI H ERAMET 1 st HALF 2011 RESULTS - 8

9 INCOME STATEMENT M H1 H Turnover 3,576 1,788 1,931 EBITDA % turnover 27% 26% 25% Current operating income % turnover 21% 19% 19% Other operating revenue and expenses (19) (5) (15) Operating income Net borrowing cost Other financial revenue and expenses (15) (15) 6 Income before tax Share in income of affiliates Tax (255) (90) (161) % tax 36% 27% 44% Net income Minority interests (126) (64) (72) % minority interests 28% 27% 35% Net income - Group share ERAMET 1 st HALF 2011 RESULTS - 9

10 CONSOLIDATED NET CASH A very sound financial situation M 1800 Net TRESORERIE cash as on NETTE 30/12/2010 AU 31/12/2010 MBA Cashflows 385 Variation BFR WC simplifié Change in simplified Other operating Autre BFR WC exploitat. CAPEX Invest. industriels Dividends Dividendes Cession Sale of COMILOG titres shares COMILOG Capital Augment. Increase Capital Others Autres TRESORERIE Net cash as on NETTE 30/06/2011 AU 30/06/ * ,295 1, * Of which paid to COMILOG & SLN minority shareholders -94 ERAMET payout ratio: 28.2% 0 ERAMET 1 st HALF 2011 RESULTS - 10

11 ACTIVITY BY DIVISION ERAMET 1 st HALF 2011 RESULTS - 11

12 ERAMET MANGANESE World #2 producer of high grade manganese ore World #2 producer of manganese alloys World #1 producer of refined manganese alloys World #1 producer of manganese chemical derivatives ERAMET 1 st HALF 2011 RESULTS - 12

13 MANGANESE DEMAND: WORLD STEEL PRODUCTION Further growth in 1 st half Mt +8% % Rest of the world 63% 62% 52% 55% 54% 56% % 38% 48% 45% 46% 44% 46% China 0 H H H H H H H Chinese production of carbon steel increased 10%, while production in the rest of the world grew 6% in the 1 st half of 2011 compared with the 1 st half of ERAMET 1 st HALF 2011 RESULTS - 13

14 MANGANESE ORE PRICES Decrease in 1 st half 2011 compared with 1 st half $/dmtu H1 08 : 14,8 H2 08 : 14,0 Source : CRU*, June 30 th H1 07 : 3,7 H2 07 : 7,6 H1 09 : 4,7 H2 09 : 6,0 H1 10 : 7,9 H2 10 : 6,8-28% H1 11 : 5, CIF spot price for 45% manganese ore imported into China Average CIF spot price over six months for 45% manganese ore imported into China 1 dmtu = 10 kg Mn content ERAMET 1 st HALF 2011 RESULTS - 14

15 MANGANESE ALLOY PRICES 8% average price decrease for alloys compared with 1 st half /t Medium carbon ferromanganese Silico-manganese High carbon ferromanganese 0 Jan.2005 Jan.2006 Jan.2007 Jan.2008 Jan.2009 Jan.2010 Jan.2011 EUROPE SPOT PRICE Source : CRU*, June 30 th, 2011 ERAMET 1 st HALF 2011 RESULTS - 15

16 ERAMET MANGANESE PRODUCTIONS AND SHIPMENTS Manganese ore and sinter production Implementation of organic growth Kt % ,695 1,553 1,339 1,574 1,627 1,681 Sharp rise in external shipments (+ 17%) Low inventories H1 08 H2 08 H1 09 H2 09 H1 10 H2 10 H1 11 Manganese alloy production* Kt % Shipments up 5% in H vs. H H1 08 H2 08 H1 09 H2 09 H1 10 H2 10 H1 11 *Refined alloys up 10% in H vs. H ERAMET 1 st HALF 2011 RESULTS - 16

17 MANGANESE: ORGANIC DEVELOPMENTS Ore: Increase in ore and sinter production capacity to 4 million tons in Moanda by Moanda metallurgical complex: Construction in progress and on schedule of: a silico-manganese plant a manganese metal plant Capital expenditure approx. 200 million. Start-up planned for late New Guilin project (China): Ongoing construction of a manganese alloy plant in China (165,000 tons, of which 60,000 tons of refined alloys) using electric arc furnaces. Start of production of the first furnaces in late ERAMET 1 st HALF 2011 RESULTS - 17

18 ERAMET MANGANESE: STRONGER PARTNERSHIP WITH GABON Completion of planned sale of 1.37% of COMILOG to the Gabonese Republic in June In addition to the initial sale of 2.17% completed in 2010, achieving the 3.54% goal announced in October 2010 for 2010/2011. The Gabonese Republic s stake in COMILOG now totals 28.94%. By 2015, additional sales in several stages are planned to increase the Gabonese Republic s stake in COMILOG to 35.4%. ERAMET 1 st HALF 2011 RESULTS - 18

19 ERAMET NICKEL World #2 producer of ferronickel One of only three producers of high-purity nickel in the world World #1 producer of nickel chloride One of the three main producers of nickel carbonate in the world ERAMET 1 st HALF 2011 RESULTS - 19

20 NICKEL: GLOBAL SUPPLY & DEMAND BALANCE Supply shortfall in 1 st half 2011 WORLD ( 000 t.) H H H vs. H Stainless steel production Apparent nickel consumption Nickel production Supply / demand balance 26,021 25,030 30,730 16,006 16,394 +2% 1,252 1,324 1, % 1,377 1,314 1, % Nickel inventory in weeks consumption (*) (*) Producers + LME inventories ERAMET 1 st HALF 2011 RESULTS - 20

21 NICKEL PRICES LME nickel prices up 21% in 1 st half 2011 vs 1 st half 2010 LME* USD/lb 22 H : 9,62 USD/lb H : 11,61 USD/lb 50,000 LME* USD/ton ,000 40, S ,000 30,000 25,000 20, ,000 10, , LME annual average LME quarterly average LME half year average ERAMET 1 st HALF 2011 RESULTS - 21

22 NICKEL: SLN S COMPETITIVENESS Production of 26,000 tons in 1 st half 2011, slightly down on 1 st half 2010 due to the impact of weather conditions on mining. Development of SLN in New Caledonia Further modernisation capital expenditure, factoring in the environment and safety. Progress on Competitiveness Improvement Plan. Continuation of study on replacing the current power station at the Doniambo metallurgical facility in New Caledonia. ERAMET 1 st HALF 2011 RESULTS - 22

23 WEDA BAY NICKEL: MAJOR HYDROMETALLURGICAL PROJECT A major project for Indonesia Weda Bay: a major metallurgical project in nickel in Indonesia Weda Bay, a strategic project under the new economic policy announced in late May 2011 by the Indonesian government. Weda Bay is in line with Indonesia s policy of creating value-added locally. Project preparation: several permits required for the implementation phase have been obtained. land acquisition. ERAMET 1 st HALF 2011 RESULTS - 23

24 ERAMET ALLOYS World #2 in high-power closed-die forging World #1 producer of high speed steels and high-performance special steels ERAMET 1 st HALF 2011 RESULTS - 24

25 ERAMET ALLOYS: TURNOVER BY MARKET Faster recovery in 1 st half M +25% H H H H H H H Aerospace Power High speed steels + tooling Other ERAMET 1 st HALF 2011 RESULTS - 25

26 ERAMET ALLOYS: UPTURN IN AEROSPACE Record order intake in 1 st half 2011 Expected increase of deliveries by Airbus and Boeing Number of aircraft Actual Forecast Orders Deliveries AIRBUS & BOEING order entries AIRBUS & BOEING aircrafts deliveries ERAMET 1 st HALF 2011 RESULTS - 26

27 A&D: PROGRESS ON STRATEGIC CAPITAL PROJECTS UKAD : conversion of Titanium JV 50/50 with UKTMP (Kazakhstan) France, Saint-Georges de Mons: Civil engineering: 1 st stone laid on 16/04/2010 First production: mid-june 2011 Qualification phase for aircraft products and power superalloy forging: 3 rd quarter nd quarter 2012 Capital expenditure (100%): 47M Long-term contract (USD 1 billion over 10 years) signed with EADS to supply titanium forged products. ERAMET 1 st HALF 2011 RESULTS - 27

28 A&D: PROGRESS OF STRATEGIC CAPITAL PROJECTS France, Les Ancizes: vacuum furnace for highperformance superalloys and steels: First melt mid-september 2011 First production: October 2011 Capital expenditure: 39 M France, Issoire: 3,000-ton press for manufacturing aluminium aircraft parts: First press operations: December 1 st 2010 First commercial parts: February 2011 Three-shift operation: September 2011 Capital expenditure: 16 M ERAMET 1 st HALF 2011 RESULTS - 28

29 ERASTEEL: PROGRESS OF STRATEGIC CAPITAL PROJECTS Söderfors in Sweden: metallurgical powder atomization tower 2 nd quarter 2011: equipment test phase. Industrial start-up in September Capital expenditure: 16 M. The new Durin building in Söderfors The new atomization tower will be used to make a wide range of special steels. Erasteel will consolidate its position as world #1 in gas atomised powder production. ERAMET 1 st HALF 2011 RESULTS - 29

30 ERASTEEL: STRONGER POSITION IN HIGH SPEED STEELS Strategic agreement signed in July % shareholding in HeYe acquired by Erasteel for circa 13M. HeYe is China s 2 nd largest producer of high speed steels and is growing fast. A strategic, commercial and industrial agreement. HeYe is located in Shijiazhuang, 360 km from Tianjin ERAMET 1 st HALF 2011 RESULTS - 30

31 OTHER METALS: DEVELOPMENT OF NEW INTEGRATED BUSINESSES ERAMET 1 st HALF 2011 RESULTS - 31

32 MABOUNIÉ PROJECT: NIOBIUM, RARE EARTHS AND TANTALUM Gabon Mabounié EQUATORIAL GUINEA N2 Libreville Owendo N1 Ogooue Port-Gentil N2 N1 Gamba Nyanga N3 Yaoundé Oyem Mounana Moanda Ngounié Ivindo Transgabonais Franceville Maboumine, a 60% subsidiary of COMILOG, holds the exploration permit to the Mabounié, Gabon deposit. Strategic metals: towards Brazzaville Kinshasa Rare earths (used in hybrid cars, wind farms, oil catalysts, etc.) Niobium (used in superalloys and some steels oil/chemicals) Tantalum (used in electronic devices) Uranium (by-product) CONGO Goal: Develop the Mabounié complex polymetallic deposit, which would give Gabon and ERAMET a front-rank world position in rare earths, niobium and tantalum. Pilot test on the upstream part of the process in 2011, with the aim of building a demonstration plant on the site in ERAMET 1 st HALF 2011 RESULTS - 32

33 DEFINITIVE AGREEMENTS SIGNED WITH MDL Eramet and MDL have signed the definitive agreements on the creation of a joint venture grouping together Eramet Titanium & Iron (ETI) and the Grande Côte (Senegal) ilmenite and zircon mineral sands project Under the terms of the Memorandum of Understanding announced on June 17 th, 2011, the new entity will be 50% held by ERAMET and 50% by MDL. ERAMET will contribute its stake of 100% in ETI and $30 million in cash. MDL will contribute 90% of the Grande Côte mineral sands project. 100% 90% Eramet Titanium & Iron (ETI) Grande Côte mineral sands project The transaction should be closed by the end of September 2011 (after receiving the due authorizations). 50% 100% Joint venture 50% 90% Republic of Senegal Eramet Titanium & Iron (ETI) Grande Côte Mineral Sands 10% ERAMET 1 st HALF 2011 RESULTS - 33

34 CREATION OF A MAJOR PLAYER IN MINERAL SANDS GRANDE CÔTE (MDL) Heavy minerals mining Ilmenite Zircon ERAMET Titanium & Iron (ETI) Enrichment (melting) High purity pig iron TiO2 slag Markets TiO2 markets Zircon markets Ductile cast iron (e.g. wind mills parts) Titanium sponge (metal) Other Pigments Source : TZMI Source : TZMI ERAMET 1 st HALF 2011 RESULTS - 34

35 IMPORTANT SUPPLY DEFICIT EXPECTED FOR TITANIUM DIOXIDE AND ZIRCON Titanium feedstock supply/demand outlook Zircon supply/demand outlook 000 TiO2 Source: TZMI 000tonnes Source: TZMI Existing production and approved expansions/projects Likely new projects Underlying Demand Existing production and approved expansions/projects Likely new projects Underlying Demand Titanium dioxide and zircon demand will be driven by strong fundamentals, especially in emerging countries (urbanisation, higher discretionary income ). From a supply side, production by existing producers is expected to decline over the next few years, and new projects are not expected to fill the gap in the medium and long terms. ERAMET 1 st HALF 2011 RESULTS - 35

36 GRANDE COTE MINERAL SANDS PROJECT Grande Côte project is located in Senegal, 80 km north of Dakar. It covers 445,7 km², along a 100 km long stretch. Grande Côte is a world class mineral sands project which start-up is expected by the end of 2013: Average expected production is 85kt per year of zircon, 575kt of ilmenite and small amounts of rutile and leucoxene. Its reserves will allow a mine life of at least 13 years (and over 20 years based on measured and indicated resources, and exploration potential). The simplicity of orebody provides for conventional largescale, low-cost dredging. Capital cost estimate is around 516 M$. A 25 years mining concession has been granted, under which: The project will receive a tax exemption for the first 15 years of operation. ERAMET 1 st HALF 2011 RESULTS - 36

37 OUTLOOK ERAMET 1 st HALF 2011 RESULTS - 37

38 OUTLOOK Short-term outlook: The outlook for the mining divisions is globally less favourable overall in the early 2 nd half of 2011 than in the 1 st half of 2011, mainly because of the decrease in manganese ore and alloy prices in recent months. Medium- and long-term outlook: Industrialisation and urbanisation of emerging countries, particularly China and India. High potential of world demand for alloying metals. Strong constraints on global supply for these metals. Potential supply shortfall, which should have a favourable impact on prices. ERAMET 1 st HALF 2011 RESULTS - 38

39 CONCLUSION ERAMET 1 st HALF 2011 RESULTS - 39

40 CONCLUSION THE ERAMET GROUP A world leader in alloying metals and upscale metallurgy that has the means to achieve its ambitious development project. Dynamic growth and greater diversification (new high-potential metals, new geographic bases). An essential mining and metallurgical partner for the sustainable development of new, often strategic industrial production chains. A value-creating project for all the Group s partners ERAMET 1 st HALF 2011 RESULTS - 40

41 APPENDIX ERAMET 1 st HALF 2011 RESULTS - 41

42 ERAMET GROUP KEY FIGURES M H1 H2 H Turnover 3,756 1,788 1,788 1,931 EBITDA % turnover 27% 26% 28% 25% Current operating income % turnover 19% 22% 19% Net income - Group share Net cash flow from operating activities Simplified working capital requirements (*) 1,052 1,052 1,052 1,115 Days' turnover (**) Capital expenditure (326) (109) (217) (178) Dividend payout (78) (74) (152) (186) Net debt (-) / Net cash (+) 1,295 1,062 1,295 1,196 ROCE before income tax (%) (***) 30% 27% 33% 28% ROCE after normative income tax at 35% (%) (***) 20% 18% 21% 18% EVA (%) =(ROCE*0.65)-10% (***) 10% 8% 11% 8% Earnings per share (*) Inventory + Receviables - Payables (**) Ratios excluding securitisation impact (***) Ratios excluding Weda Bay impact ERAMET 1 st HALF 2011 RESULTS - 42

43 GROUP BALANCE SHEET AS ON JUNE 30 th, 2011 Assets Liabilities 31/12/ /06/ /06/ /12/2010 4,798 4,891 M 4, ,704 2, ,295 1, PROPERTY, PLANT & EQUIPMENT SHAREHOLDERS EQUITY, GROUP SHARE WORKING CAPITAL MINORITY INTERESTS NET CASH PROVISIONS & OTHER DEBTS FINANCIAL INSTRUMENTS FINANCIAL INSTRUMENTS ERAMET 1 st HALF 2011 RESULTS - 43

44 SHAREHOLDING AS ON DECEMBER 31 st, 2010 Other Treasury shares 0.39% 18.78% 36.90% Sorame + CEIR Carlo Tassara 12.86% 1.34% BRGM 4.04% STCPI 25.69% Areva NUMBER OF ISSUED SHARES: Shareholders agreement: AREVA & SORAME and CEIR ERAMET 1 st HALF 2011 RESULTS - 44