ERAMET. Investors and Analysts Presentation - December 2015

Transcription

1 ERAMET Investors and Analysts Presentation - December 2015

2 DISCLAIMER This document and the materials appended to it (together, the materials ) may include certain forwardlooking statements, beliefs or opinions, including statements with respect to ERAMET s business, financial condition and results of operations. These statements reflect ERAMET s beliefs and expectations and involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. No representation is made that any of these statements or forecasts will come to pass or that any forecast results will be achieved. Forward-looking statements speak only as at the date of the relevant materials and ERAMET and their advisers expressly disclaim any obligations or undertaking to release any update of, or revisions to, any forward-looking statements in the materials. No statement in the materials is intended to be a profit forecast. As a result, you are cautioned not to place any undue reliance on such forward-looking statements. Nothing in these materials constitutes any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for sale, any securities in the United States or any other jurisdiction where it is or may be unlawful to do so. ERAMET has not and does not intend to register any securities under the U.S. Securities Act of 1933, as amended (the Securities Act ), or under the applicable laws of any other jurisdiction and no such securities may be offered or sold within the United States or to, or for the account or benefit of, U.S. Persons, each as defined in Regulation S under the Securities Act, except in transactions exempt from such registration. 2

3 CONTENT ERAMET ERAMET: a Global Leader in Mining and Metallurgy 4 The Mining and Metallurgical Sector: Update 18 ERAMET Financial Position 37 Action Plan 44 Appendices 50 3

4 ERAMET: A GLOBAL LEADER IN MINING AND METALLURGY 4

5 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 5

6 A GLOBAL LEADER IN EACH OF ITS BUSINESSES French mining and metallurgical group operating in 3 divisions and listed on Euronext Paris. Sales breakdown by division (2014) ERAMET Nickel: 1 ferronickel producer worldwide 3 high grade nickel producer worldwide ERAMET Manganese: 2 of high-grade manganese ore worldwide 1 refined manganese alloys producer worldwide ERAMET Alloys: 2 closed-die forging parts producer 1 gas-atomized powders producer ERAMET is employing more than people including in France. 6

7 Shareholding structure Diversification of activities A HISTORY SPANNING OVER MORE THAN 100 YEARS, WITH CONTINUOUS DIVERSIFICATION INTO NEW MINING AND METALLURGICAL ACTIVITIES Incorporation of Le Nickel (operations of nickel mines in New Caledonia) Le Nickel becomes SLN, with Elf Aquitaine (French State) holding 50% of the company The Duval family becomes shareholder of ERAMET, through the contribution of Aubert & Duval Acquisition by ERAP (French State) of 70% of SLN Set up of ERAMET-SLN Transfer of ERAP stake to Cogema, subsequently absorbed into AREVA 382m Inauguration of Moanda Metallurgical Complex. Launch of EcoTitanium, to establish the first European facility for recycling aviation grade titanium Establishment of MKAD closed-die forged parts for aircraft parts manufacturers Agreement with the Gabonese Republic for a phased increase of its shareholding in COMILOG (up to 35%) Listing of ERAMET 1.2bn 3.1bn Diversification into closed-died forging and special steels, following contribution by the Duval family of Aubert & Duval (now ERAMET Alloys) to ERAMET Diversification into manganese, with the acquisition of 61% of COMILOG in Gabon Acquisition of 51% of Eurotungstène (cobalt and tungstene powder producer) Set-up of TiZir in Senegal (ilmenite and zircon project) Acquisition of a 59% stake in Tinfos (manganese alloys, titanium dioxyde) Acquisition of Weda Bay Nickel (nickel project) in Indonesia Transfer of AREVA 26% stake to FSI 3.5bn 1880 Acquisition of Erasteel (high speed steel producer) ERAMET Group sales

8 HISTORICAL AND STABLE SHAREHOLDERS ERAMET s shareholders June 30 th, 2015 BRGM 2 1,34% STCPI 1 4,03% Others 19,12% Duval Family : SORAME + CEIR 37,06% Carlo Tassara 12,79% Bpifrance 25,66% ERAMET group is jointly controlled by the Duval family holdings and Bpifrance (which recovered the FSI participation historically recovered from AREVA). Notes 1 Distribution by shares 2 STCPI (Société Territoriale Calédonienne de Participation Industrielle) : New Caledonian provinces owned entity 3 BRGM (Bureau de Recherches Géologiques et Minières) 8

9 A WORLDWIDE GEOGRAPHIC PRESENCE (20 COUNTRIES) WITH AN EXPANDING FOOTPRINT IN EMERGING COUNTRIES Sales breakdown by geography (2014) Alloys powder and transformation plants Manganese alloys and titanium dioxide Manganese chemicals and recycling High purity nickel and alloys melting and transformation plants TiZir Grande Côte (Senegal) ilmenite and zircon mine Lithium Project (under study) Manganese mine project (under study) Manganese mine Manganese alloys and metal plants (under construction) Maboumine project - niobium and rare earths (under study Manganese alloys plant (China) Weda Bay nickel project (Indonesia) (under study) SLN-Nickel mines and ferronickel plant (New Caledonia) 9

10 DIVERSIFIED MARKETS ERAMET sales breakdown by end-market (2014) Tooling 6% Pigments 1% Other Mn 5% Other Alloys 4% Energy 3% Batteries 2% Chemistry 3% Carbon steel 34% Steels: 55% Aerospace 17% Other Ni 3% Stainless steel 21% 10

11 ERAMET NICKEL AT A GLANCE Positioning #1 ferronickel producer worldwide 1 nickel chloride producer worlwide One of the 3 nickel carbonate producers of the three worldwide producers of high purity nickel Activity overview Integrated ferronickel producer Operation of nickel mines in New Caledonia (SLN) ~80% of nickel ore production transformed into ferronickel in New Caledonia and sold directly to stainless steel producers ~20% of nickel ore production transformed into nickel matte in New Caledonia, and then into high purity nickel and nickel salts in the Group s plants in France Main applications ~ 65% worldwide nickel production used in stainless steel Extensive use of stainless steel in a wide range of industries (Household equipment, domestic appliances, food industry and pharmaceutical production tools, surgical equipment ) Other main applications of nickel: aerospace, nuclear and petrochemical industries Main competitors Main clients 11

12 ERAMET ALLOYS AT A GLANCE: AUBERT & DUVAL AND ERASTEEL Positioning Activity overview Main applications #2 closed-die forging parts producer worldwide Leading player in gasatomised powder metallurgy Producer of highly technological advanced steel products Elaboration of high performance steels, superalloys, for high and markets Conversion of high performance steel, titanium, aluminum Producer of special steels, tool steels, high-speed steels Use of high advanced products in a wide range of industries given technological specificities High mechanical strength at high temperatures for the aerospace industry (engine parts and parts of landing gears) Airframes for aircrafts Power generation: gas turbines, nuclear power Main competitors Main clients 12

13 ERAMET MANGANESE AT A GLANCE Positioning #2 high-grade manganese ore worldwide #1 refined manganese alloys producer worldwide #1 manganese chemical derivatives producer worldwide Main competitors Activity overview Integrated manganese producer Operation of a manganese mine in Gabon (COMILOG) 90% of manganese ore production, transformed into manganese alloys within the Group (plants in Norway, China and France) or by third parties 10% remaining ore production used in a large range of chemical applications Integrated producer of titanium dioxyde (TiZir) Mining Operation in Senegal Conversion to titanium dioxide on Norway Main clients Main applications > 90% worldwide manganese production used in carbon steel Non substitutable element in carbon steel Key component in a large range of industries, mainly construction (> 50% worldwide consumption) and automotive Main manganese chemical applications: Disposable alkaline batteries Fertilizers and animal feed Pigments 13

14 RESOURCES ACCESS: WORLD-CLASS MINERAL DEPOSITS Manganese Gabon 40+ years ressources 5 world-class deposits Under operation since more than 50 years Nickel Nickel Ilmenite - Zircon Lithium New Caledonia SLN 50+ years ressources Under operation since the end of the 19 th century Indonesia - Weda Bay 50+ years ressources Project in course Senegal TiZir 28+ years ressources Under operation Argentina 50+ year ressources Project in course 14

15 KEY PARTNERSHIPS WITH COUNTRIES AND TERRITORIES ERAMET is associating the main countries and territories where it operates: New-Caledonia STCPI holds 34% of SLN s share capital. STCPI holds around 4% of ERAMET s share capital. Gabon Around 30% of COMILOG s share capital is owned by the Gabonese Republic. Senegal 10% of Grande Côte s share capital is owned by the Republic of Senegal. Long-term relationship reinforced by the significant contribution to the local economies Main private employer in Gabon and in New Caledonia. Primary challenge of social and environmental related matters. 15

16 A PROACTIVE SUSTAINABLE DEVELOPMENT POLICY ERAMET has put sustainable development at the centre of its strategy To protect as a priority the health and safety of its employees. To develop industrial processes in compliance with environmental regulation. To reduce the environmental impacts of its activities, especially regarding biodiversity To develop product stewardship ("license to market"). To intensify sustainable use of resources and to promote recycling. To sustain a trusting relationship with its stakeholders ERAMET's sustainable development policy covers all its activities and is implemented through: An Environnemental Charter. A Biodiversity Policy formalized in An Ethical Charter updated in A Responsible Purchasing Charter. An Energy Policy. 16

17 CONCLUSION ERAMET is a French mining and metallurgical diversified group The Group owns leadership positions on each of its businesses. Plans for competitiveness and restructuring have been established to cover the economic climate Critical advantages to ensure the future and sustainable growth World-class deposits. Developed partnerships with local authorities (specific governance for SLN and COMILOG for example). High performance R&D all over the raw material value chain. New innovating projects towards new high-valued metals and new extension of the Group s geographical positions. 17

18 THE MINING AND METALLURGICAL SECTOR: UPDATE 18

19 USD/lb or USD/dmtu MARKET UPDATE THE RAW MATERIALS MARKETS, AND METALS PARTICULARLY, ARE VERY DEPRESSED In a global environment in which metal prices have reached their lowest level in 15 years, the ERAMET group is particularly impacted by the prices of nickel and manganese, which have fallen simultaneously to historically low levels 18 Ni LME and Mn ore 44% CRU CIF China prices Spot 30 Nov 2015: 3.96 $/lb Ni price LME (USD/lb) Mn (USD/dmtu) 19

20 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 July-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 NICKEL PRICES Although nickel prices improved on average in 2014 from 2013, nickel prices are back to a very low level in the firsthalf A variation of 1 USD/lb LME nickel price implies a variation of 100 million of the ERAMET Current operating income Nickel spot prices November 30th: 3.96 $/lb LME nickel price USD/lb USD/tonne LME nickel stocks (in metric tons)

21 NICKEL ORE AVAILABILITY Nickel ore imports from the Philippines to China have declined 8,0 7,0 6,0 5,0 4,0 3,0 2,0 1,0 0, Imports of nickel ore in China in million wet metric tonnes Indonesian ore - Mt Philippines ore - Mt M wmt M wmt M wmt M wmt M wmt Mwmt Jan Mar May Jul 2014 Sep Nov Jan Mar May Jul 2015 Sep YTD % y-o-y 21

22 Norilsk ERAMET AND ITS COMPETITORS POSITIONS ON PRODUCTION COST CURVE Q Jinchuan Vale Voiseys Bay Vale Sudbury Cerro Matoso PT Vale Soroako Ambatovy Taganito Vale Manitoba SLN Donoambo Mount Keith Fuan RKEF Yangjiang RKEF Murrin Murrin Nippon Yakin Koniambo Pamco Hachinohe QNI Yabulu IM EAF NPI BF Vale NC Fujian Densheng Cash Cost C1* ($/lb Ni) 12 5 $/lb ERAMET ~6$/lb Near the 6th decile Q prices 6,5$/ lb Q prices2015 5$/ lb Current price 6,5$/lb 5$/lb 4$/lb 2 0 (2) Production (kt Ni) (4) Source : Wood Mackenzie 22

23 GLOBAL STAINLESS STEEL PRODUCTION The stainless steel production should be stable in 2015 Forecast kt % % % % % China % 59% 54% 50% 48% Rest of the world

24 NICKEL SUPPLY / DEMAND BALANCE We expect the market to show a small surplus this year kt

25 ERAMET NICKEL PRODUCTION Nickel metallurgical production at the Doniambo plant declined 4% in the first nine months of 2015, over the same period in kt Forecast

26 CONTINUED GROWTH IN THE AEROSPACE MARKET Further rise in Boeing and Airbus deliveries Number of aircraft Actual Forecast Deliveries

27 IMPLEMENTATION OF THE 1 ST INTEGRATED AIRCRAFT-GRADE TITANIUM SUPPLY CHAIN IN EUROPE 27

28 ERAMET AND ITS COMPETITORS POSITIONS ON PRODUCTION COST Manganese ore producers position 4 th quartile 1 er quartile Vale South 32 ERAMET Assmang P P Privat UMK 3 rd quartile 2 nd quartile 28

29 Mn ORE: WORLD SUPPLY AND DEMAND BALANCE Mn ore destocking is likely in the near-term on the back of production cuts in Q4 15. Mn units demand vs. ore production (in million tonnes of Mn contained) Oversupply Destocking likely in Q

30 Mn ORE: PRODUCTION CUTS TO COME? Mn ore production in million tonnes of Mn contained Mn units demand vs. Mn ore supply in China in million tonnes of Mn contained 30

31 Mn ORE: SOUTH AFRICA FOCUS In Q3 15, the depreciated Rand contributed to a rebound of South African ore exports (+16% vs. Q2 15). In Q4 15, a supply adjustment is likely on the back of South32 suspending Mn ore production and UMK reducing output by 50% in December and January. South African manganese ore exports in million wet metric tonnes 31

32 PRODUCTION OF ERAMET MANGANESE Manganese ore production increased in 2015 (9 months 2015: 2,950 kt). Historic peak: 1.97 million of tonnes moved to the Owendo port in the first half of 2015, in line with the target of 4 million of tonnes annual goal. kt MANGANESE ORE AND SINTER PRODUCTION 2015 Forecast

33 GLOBAL CARBON STEEL PRODUCTION Mt Stable outlook for the world steel production compared to the historical trend Forecast % 47% 49% 50% 50% 49% China % 53% 51% 50% 50% 51% Rest of the World Source : World Steel Association, ERAMET estimates

34 WORLD STEEL PRODUCTION Stable outlook for the world steel production compared to the historical trend kt China Rest of World World CAGR +3.3% CAGR +5.6% Source : World Steel Association CAGR +0.7% CAGR +4.9% 34

35 TIZIR: AN INTEGRATED PLAYER IN TITANIUM DIOXIDE AND ZIRCON TiZir presentation: 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 as a feedstock for titanium dioxide pigment production Zircon for the ceramic and fused zirconia industries Downstream: TTI TiZir Titanium and Iron is producing titanium dioxide feedstock for the pigment industry and high purity pig iron. 35

36 MINERAL SANDS: PRODUCTION AT GRANDE CÔTE IN SENEGAL Extraction run rate in line with target: 5500 to 6500 t/h of mineral sands dredged according to grade in current operation area Q results: t/h of mineral sands dredged Heavy Minerals Concentrate (HMC) production: 176 kt 36

37 ERAMET FINANCIAL POSITION 37

38 KEY FIGURES Millions of H H H Sales 1,626 1,610 1,534 EBITDA % Sales 5% 13% 10% Current operating income (70) % Sales (4%) 4% 1% Net income Group share (83) (100) (59) Net financial debt (805) (547) (473) Net debt-to-equity ratio 30% 20% 16% 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. 38

39 CURRENT OPERATING INCOME in millions of Nickel Alloys Manganese Group Millions of H H Nickel (98) (27) Manganese Alloys 15 0 Holding (19) (20) Group (70) 14 39

40 CHANGE IN CURRENT OPERATING INCOME 25 in millions of * ** Current operating income H Volume/Mix Prices Depr. Prov. And others Currencies Cost of Factors Productivity *Determined using a nickel price of 5.3 $/lb, 25 million impact for 1 $/lb with 1 =1.1 USD **Latent potential of improvement of 12 million untilthe end of fiscal year. Provision Ni inventories Exceptional items Hedging $** Current operating income H

41 CHANGE IN NET FINANCIAL DEBT METAL PRICES ARE DIRECTLY IMPACTING RESULTS AND DEBT In M * In June 2015 the gearing ratio was 30% End 2012 End 2013 End 2014 End June ERAMET s gearing ratio is below those of the other mining companies No major debt maturities en Cash/ net debt in M * Dividends excluded (252 M in 2013) 41

42 TOTAL DEBT DEBT REPAYMENT MATURITIES: In M Holding Nickel Manganese Alloys New debt negotiate*

43 STRONG FINANCIAL POSITION Financial liquidity of the Group remains at a high level: M Other non drawn lines Cash available Revolving credit lines /06/ /08/

44 ACTION PLAN 44

45 ACTIONS TO FACES WITH THE METAL CRISIS The Board of Directors of the ERAMET group decided to strengthen the operational action plan to improve the Free Cash-Flow Press Release, 14 October

46 MAJOR MEASURES TO REDUCE COSTS AND IMPROVE PRODUCTIVITY ARE BEING PURSUED Total of : 360 million Reinforcement of productivity actions to be implemented in 2016 in Nickel division. 46

47 REDUCTION IN INVESTMENTS 25% year-on-year reduction in capital expenditure in H Industrial investments will be essentially limited to safety and strict maintenance Millions of % ERAMET Nickel ERAMET Manganese ERAMET Alloys H H

48 DIVIDENDS, ASSET DISPOSAL A strict cash policy to face the crisis: Dividends Asset disposal projects No dividends were paid to ERAMET shareholders in 2013 and 2014 Pursuit of asset disposal programme underway 48

49 CONCLUSION Given the particularly deteriorated market conditions, the Board of Directors has decided to limit industrial investments and to suspend the ERAMET group s major projects. The Board will review regularly the Group s investment capacity All of our teams are strongly committed to pursuing with determination the plan to reduce costs and improve productivity. Looking beyond today s metal crisis, stemming largely from the trend in the Chinese economy, the Group s markets continue to show fundamental potential in the long term. 49

50 APPENDICES 50

51 RECONCILIATION BETWEEN GROUP INTERNAL REPORTING AND PUBLISHED FINANCIAL STATEMENTS ( million) 1sr half year Joint-venture 1st half year 1sr half year Joint-venture 1st half year Full year Joint-venture Full year 2015 contribution contribution contribution 2014 Published (1) Adjusted (2) Published (1) Adjusted (2) Published (1) Adjusted (2) Sales EBITDA 79 (1) Current operating profit (loss) (61) (9) (70) (11) 75 Operating profit (loss) (106) (9) (115) (29) - (29) (15) (39) (54) Profit (loss) for the period - attributable to equity holders of the parent (83) - (83) (59) - (59) (159) - (159) Net cash generated by operating activities (112) (6) (118) (89) 21 (68) 50 (7) 43 Industrial capital expenditure (124) (8) (132) (142) (33) (175) (305) (41) (346) (Net financial debt) position (647) (158) (805) (380) (93) (473) (411) (136) (547) Shareholders' equity - attributable to equity holders of the parent (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. 51

52 INCOME STATEMENT AS AT 30 JUNE 2015 Millions of H H Sales 1,626 1,534 EBITDA % Sales 5% 10% Current operating profit (loss) (70) 14 % Sales (4%) 1% Other operating income and expense (45) (43) Operating profit (loss) (115) (29) Net cost of debt (26) (16) Other financial income and expenses (8) (9) Earnings before tax (149) (54) Share of income from equity-accounted companies 0 (1) Taxes 23 (3) % Taxes 15% (6%) Net income (126) (58) Minority interests 43 (1) Net income, Group share (83) (59) 52

53 ERAMET NICKEL : KEY FIGURES Millions of H H Sales Current operating income (98) (27) (52) (222) (38) Industrial investments

54 ERAMET ALLOYS : KEY FIGURES Millions of H H Sales Current operating income (5) Industrial investments

55 ERAMET MANGANESE : KEY FIGURES Millions of H H Sales ,429 1,562 1,560 Current operating income Industrial investments

56 BALANCE SHEET AS AT 30 JUNE ASSETS LIABILITIES 12/31/ /30/ /30/ /31/2014 In millions of Fixed assets Working Capital Requirement Equity Group Share Minority interests Provisions and deferred taxes Net debt Financial instruments 56

57 CONTACT Vice President Strategy and Financial Communication Philippe Gundermann Tel: +33 (0) Investor Relations and Strategic Analyst Hughes-Marie Aulanier Tel: +33 (0) Strategy and Financial Communication Analyst Ludovic Donati Tel: +33 (0)