COMBINED GENERAL SHAREHOLDERS' MEETING. 27 May 2016

Transcription

1 COMBINED GENERAL SHAREHOLDERS' MEETING 27 May 2016

2 CONTENTS COMBINED GENERAL SHAREHOLDERS' MEETING 27 MAI 2016 Introduction 2015 financial results Strengthening of cash preservation measures Operational activities and cost reduction and productivity improvement program ERAMET Nickel ERAMET Alloys ERAMET Manganese Group strategy Conclusion Appendices 2

3 A DEEPENING CRISIS IN THE GLOBAL METALS MARKET... A PARTICULARLY DEPRESSED RAW MATERIAL SECTOR GROUP S METALS ARE PARTICULARLY IMPACTED 0% Gold Aluminium Copper Platinium Zinc Silver Palladium Iron (ore) Molybdenium Nickel Manganese (ore) -10% -20% -11% -15% -30% -24% -26% -27% -30% -30% -40% -40% -42% -42% -50% -49% -60% Evolution of metal prices: end of 2015 spot prices compared to end of 2014 spot prices 3

4 STAGNATION FOR NICKEL IN 2016 AND A STRONG REBOUND FOR Mn ORE STARTING FROM A VERY LOW LEVEL A garder? 80% Or Aluminium Cuivre Platine Zinc Argent Palladium Fer (minerai) Molybdene Nickel Manganèse (minerai) 70% 60% 58,4% 50% 40% 40,0% 30% 20% 10% 0% -10% 17,5% 0,0% 1,4% 12,6% 15,3% 16,0% -2,0% 3,8% 1,5% -20% Evolution of metal prices: end of 2015 spot prices compared to mid-april spot prices 4

5 IMPACTING ALL ACTORS IN THIS SECTOR 0% EVOLUTION OF SHARE PRICES FOR MAIN MINING COMPANIES IN 2015 Rio Tinto BHP Biliton Vale ERAMET Glencore African Rainbow Minerals First Quantum Anglo American Sherritt -10% -20% -30% -40% -50% -60% -38% -44% -70% -80% -90% -65% -65% -71% -73% -74% -76% -80% Evolution of share prices: end of 2015 spot prices compared to end of 2014 spot prices 5

6 FINANCIAL RESULTS

7 KEY FIGURES Million of Sales 3,109 3,144 3,162 EBITDA % Sales 3% 12% 7% Current operating income (207) 75 (45) % Sales (7%) 2% (1%) Total impairment of assets and tax receivables (668) (27) (423) Net income Group share (714) (159) (370) Net financial debt (878) (547) (218) Net debt-to-equity ratio before impairment in 2015 Net debt-to-equity ratio after impairment in % 20% 7% 49% - - The reported data and notes are adjusted data based on the Group's reporting, in which joint ventures are accounted for using proportionate consolidation. Reconciliation with the published financial statements is presented in the Appendix on page 41. 7

8 CURRENT OPERATING INCOME (COI) Million of Million of Nickel (261) (52) Alloys Manganese Holding (31) (33) Group (207) 75 Nickel Manganese Alloys Group 8

9 IMPAIRMENT IN 2015 EXCEPTIONAL IMPAIRMENT OF 668 M DUE TO METAL MARKET CRISIS Total impairment in 2015 include: 474 million of euros in assets; 194 million of euros in tax receivables for SLN. In million of Assets Tax receivables 9

10 1.6 BILLION EUROS IN FINANCIAL LIQUIDITY ON 31 DECEMBER 2015 Strong financial liquidity. Draw-down on the revolving credit facility (RCF) at start of January Million of Financial liquidity of ERAMET group 1,800 1,600 1,400 1,200 1, ,611 1, Cash and cash equivalents Revolving credit line /12/2015 Proforma 31/12/

11 DEBT MATURITY SCHEDULE Proforma gross debt on 31/12/2015 including RCF draw-down at the start of January No major deadline in This debt maturity schedule do not include potential refinancing RCF draw down in January 2016 Nickel Alloys Manganese Holding - Group >

12 STRENGTHENING OF CASH PRESERVATION MEASURES 12

13 STRENGTHENING OF CASH PRESERVATION MEASURES Major strengthening of operational action plan in view of increased cash-flow CAPEX Projects Asset disposal Operational plan for Restriction of capital expenditure Suspension of major projects 2016 programme 360 M * in cost reduction and productivity improvement ERAMET Nickel - SLN Project to strengthen SLN performance plan during the first half of *in annual impact on current operating income compared to 2013

14 REDUCTION IN INDUSTRIAL CAPITAL EXPENDITURE In million of ERAMET Nickel ERAMET Manganese ERAMET Alloys %

15 CONTINUATION OF PROGRAM FOR COST REDUCTION AND PRODUCTIVITY IMPROVEMENT Total of: 360 million Outside of the strengthening during the first half of 2016 of the SLN specific economic action plan. 15

16 ERAMET NICKEL World number 1 producer of ferronickel. Leading global producer of nickel chloride. One of only three producers of high purity nickel worldwide 16

17 GLOBAL STAINLESS STEEL PRODUCTION kt ,4% % 46% 50% 52% 52% China % 54% 50% 48% 48% Rest of the World Source : ERAMET Nickel estimations 17

18 SLUMP IN STAINLESS STEEL MARKET GROWTH IN 2015 For the first time in a while, stainless steel production was down in 2015 (-0.4%) 8.0% 7.0% 6.0% 5.0% -0.4% Source: ERAMET Nickel estimations 18

19 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 July-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 NICKEL PRICES Nickel prices have dropped significantly in 2015, reaching their lowest level for 12 years. In the first half of 2016, nickel prices have remained under pressure A change of 1 USD/dmtu in price results in a change of 110 M in ERAMET's annual current operating income (with an exchange rate of 1.10 USD/ ). Prix du nickel au LME USD/lb USD/tonne LME stocks SHFE stocks LME Nickel spot price (USD/t) Stocks nickel (in tonnes)

20 ERAMET NICKEL PRODUCTION kt ERAMET Nickel production % SLN cash cost (USD/lb) (Source: Wood Mackenzie - cash cost C1) % Target 4.5 * End of 2017 * Based on economic conditions at the start of

21 SLN PERFORMANCE AND PRODUCTIVITY PROJECT CASH COST OBJECTIVE: USD 4.5/lb END-2017* From USD 6/lb Mining projects Grade optimisation Lean in mining operations Plant projects End of Bessemer process Technical productivity Maintenance / reliability Slag valorisation Lean Supports Productivity in support functions Purchasing gains to USD 4.5/lb* 21 * Based on economic conditions of 2016

22 SLN PROJECT FINANCING ERAMET has temporarily ensured the financing of SLN alone for a total amount of 190 million between end-2015 and June 2016 Nisshin Steel 10% STCPI 34% ERAMET 56% SLN shareholding distribution 22

23 CHANGE IN WEDA BAY NICKEL PROJECT SHARE STRUCTURE Put option exercised by Mitsubishi following its decision to review its mining assets portfolio No impact on ERAMET s income statement Increase in Group s net debt of nearly 100 million The Weda Bay deposit is one of the largest nickel deposit in the world. The measured, indicated, and inferred resources are valued at more than 9.3 million tonnes of nickel 23

24 ERAMET ALLOYS World number 2 producer of high-power closed-die forged parts World number 1 player in gas atomized powder metallurgy A leading producer of high-performance special steels 24

25 ERAMET ALLOYS: SALES PER MARKET +6% In M % 49% 55% 57% 59% Aircraft industry 13% 16% 13% 11% 14% Energy 28% 23% 19% 19% 17% High-speed steel + Equipment 15% 13% 13% 13% 9% Other

26 STRENGTHENED OPERATIONAL PERFORMANCES Trend of current operating income - Aubert & Duval and Erasteel (in millions of ): Aubert & Duval Erasteel

27 NEW STEP IN STRUCTURING OF THE AEROSPACE- GRADE TITANIUM SUPPLY CHAIN Forging of billets, wires bars, and sheets from ingots Ingot production: Plasma welding compacting press PAM CHR Furnace Transformation Production of semi-finished parts Titanium sponges Treatment of scrap and chips Parts sent to the manufacturer Machining Recovery of scrap and chips Ore 27

28 ERAMET MANGANESE World number 2 producer of high-grade manganese ore World number 2 producer of manganese alloys Leading global producer of refined manganese alloys Leading global producer of manganese chemical derivatives 28

29 GLOBAL CARBON STEEL PRODUCTION Mt % % 47% 50% 49% 49% China % 53% 50% 51% 51% Rest of the World Source : World Steel Association 29

30 USD/dmtu MANGANESE ORE PRICES Manganese ore prices have fallen to their lowest level for 20 years. PRIX SPOT DU MINERAI DE MANGANÈSE 44% CIF CHINE 6,0 5,5 5,0 4,5 4,0 3,5 3,0 2,5 2,0 1,5 1,0 0,5 0,0 Jan-11 Apr Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Chart source : CRU A change of 1 USD/dmtu in price results in a change of 90 M in ERAMET's annual current operating income (with an exchange rate of 1.10 USD/ ). 30

31 /t MANGANESE ALLOYS PRICES Manganese alloys prices have decreased significantly in the second half of MANGANESE ALLOY PRICES IN EUROPE Jan Juil.11 Jan.12 Juil.12 Janv.13 Juil.13 Janv.14 Juil.14 Janv.15 Juil.15 Jan.16 High Carbon Ferromanganese Silicomanganese Medium Carbon Ferromanganese Source: CRU Spot Prices in Western Europe 31

32 PRODUCTION OF ERAMET MANGANESE IN 2015 IN LINE WITH THE ANNUAL TARGET OF 4 MILLION TONS Historical record of manganese ore production in 2015 (3.9 million tons transported) MANGANESE ORE AND SINTER PRODUCTION kt %

33 TIZIR: AN INTEGRATED PLAYER IN TITANIUM DIOXIDE AND ZIRCON MARKETS TiZir: JV with Mineral Deposits Limited (Australia) 2 sites: GCO in Senegal and TTI in Norway TiZir Titanium and Iron (TTI) Tyssedal, Norway Grande Côte Operations (GCO) Diogo,Senegal Upstream: GCO Grande Côte Operations to become a new major player in the mineral sands production: Ilmenite primarily used as a feedstock for TTI upgrading facility Zircon for the ceramic industries Downstream: TTI TiZir Titanium and Iron is producing upgraded titanium dioxide feedstock for the pigment industry and high purity pig iron. 33

34 ERAMET GROUP STRATEGY 34

35 ERAMET: A PRESENCE IN ALL THE RAW MATERIAL VALUE CHAIN ERAMET is a mining and metallurgical group Extractive Metallurgy Elaboration Metallurgy Transformation Metallurgy / Products Mine Exploration Recycling R&D and Engineering at each stage 35

36 STRATEGY FOCUS ON CASH FLOW GENERATION Over the short term: Focus our efforts on our core businesses. Increase competitiveness to strengthen our market positions. And in the long term: Selectively develop target projects with strong value-creating, resulting in particular from our R&D. 36

37 CONCLUSION 37

38 A GROUP MOBILISED TO ADDRESS THE RAW MATERIAL CRISIS Dynamic actions taken: Industrial investments specifically restricted to safety and maintenance. Suspension of major projects. Asset transfers planned for Resolute pursuit of cost reduction and productivity improvement with an objective of 360 M * by the end of Strengthening of the SLN productivity improvement and cost reduction plan launched in the first half of In light of current market conditions, a drop in manganese alloy and ore productions at the start of High financial liquidity of the Group: 1.6 billion of on 31 December * annual impact on Group's current operating income compared to

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40 APPENDICES 40

41 RECONCILIATION OF GROUP REPORTING AND PUBLISHED ACCOUNTS ( million) Full year Joint-venture Full year Full year Joint-venture Full year 2015 contribution contribution 2014 Published (1) Reporting (2) Published (1) Reporting (2) Sales EBITDA Current operating profit (loss) (191) (16) (207) 86 (11) 75 Operating profit (loss) (744) (69) (813) (15) (39) (54) Profit (loss) for the period - Group share (714) - (714) (159) - (159) Net cash generated by operating activities (13) 6 (7) 50 (7) 43 Industrial capital expenditure Net financial debt position (716) (162) (878) (411) (136) (547) Shareholders' equity (9) (2) Shareholders' equity - Group share (1) Financial statements prepared under applicable IFRS, with joint ventures are accounted for using equity method See 2015 consolidated financial statements. (1) Group reporting, in which joint ventures are accounted for using proportionate consolidation. 41

42 PROFIT AND LOSS ACCOUNT ON 31 DECEMBER 2015 M Sales 3,109 3,144 3,162 EBITDA % of sales 3% 12% 7% Current operating income (207) 75 (45) % of sales (7%) 2% (1%) Other products and operational costs (606) (129) (503) Operating Income (813) (54) (548) Financial income (90) (68) (32) Pre-tax income (903) (122) (580) Share of income of equity affiliates (1) 0 (1) Income tax (8) (49) 72 Net income (912) 171 (507) Minority interest (198) Net income - Group share (714) (159) (370) 42

43 BALANCE SHEET AS AT 31 DECEMBER 2015 In million of ASSETS LIABILITIES 31/12/ /12/ /12/ /12/ Fixed assets Working Capital Requirement Equity Group share Minority interests Provisions and deferred taxes Net debt Financial instruments 43

44 DIVERSIFIED MARKETS ERAMET sales breakdown by end-market (2015) Other Mn 5% Mineral sands/ pigments 2% Batteries 2% Chemistry 3% Other Alloys 3% Energy 4% Carbon steel 34% Tooling 6% Steels: 50% Aerospace 19% Other Ni 6% Stainless steel 16% 44

45 SHAREHOLDER STRUCTURE ON 31 DECEMBER 2015 Other 19,12% BRGM 1,34% STCPI 4,03% SORAME + CEIR 37,06% Carlo Tassara 12,79% Bpifrance 25,66% Number of issued shares: 26,543,218 45

46 EXAMPLE OF TARGET PROJECT IN DEVELOPMENT: LITHIUM ERAMET IS CONTINUING TO ASSESS THE ECONOMIC VIABILITY OF A LITHIUM PROJECT IN ARGENTINA Lithium: an extremely dynamic market Projected deficit at the end of 2016 due to a strong upward trend in demand, supported by the Lithium-ion battery market Increase in prices ERAMET Deposit Antofagasta Quality deposits An innovative process developed using internal Group skills 10 registered patents ERAMET aims to enter this market alongside a partner 46

47 A PROACTIVE SUSTAINABLE DEVELOPMENT POLICY Sustainable development is at the core of ERAMET's strategy Protect men and women by placing health and safety at the heart of our objectives. Create processes which respect both regulations and the environment. Develop ways to reduce environmental impacts, commit to biodiversity. Implement "product" responsiblity ("license to market"). Increase resource effectiveness and promote recycyling. Maintain a trusting relationship with stakeholders. ERAMET is implementing this sustainable development policy across all Group activities through: An environmental charter. A biodiversity policy updated in An ethics charter updated in A sustainable purchasing charter. An energy policy. 47