COMBINED GENERAL SHAREHOLDERS' MEETING 27 May 2016
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
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
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
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
FINANCIAL RESULTS - 2015 6
KEY FIGURES Million of 2015 2014 2013 Sales 3,109 3,144 3,162 EBITDA 92 363 231 % 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 2015 36% 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
CURRENT OPERATING INCOME (COI) Million of 1000 800 600 400 200 0-200 -400 Million of 2015 2014 Nickel (261) (52) Alloys 27 23 Manganese 58 137 Holding (31) (33) Group (207) 75 Nickel Manganese Alloys Group 8
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
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 2016. Million of Financial liquidity of ERAMET group 1,800 1,600 1,400 1,200 1,611 630 1,611 1,000 800 1 611 Cash and cash equivalents Revolving credit line 600 400 981 200 0 0 31/12/2015 Proforma 31/12/2015 10
DEBT MATURITY SCHEDULE Proforma gross debt on 31/12/2015 including RCF draw-down at the start of January 2016. No major deadline in 2016. This debt maturity schedule do not include potential refinancing 987 624 RCF draw down in January 2016 Nickel Alloys Manganese Holding - Group 410 895 85 156 58 127 19 13 12 82 2016 2017 2018 2019 2020 2021 2022 2023 2024 >2025 11
STRENGTHENING OF CASH PRESERVATION MEASURES 12
STRENGTHENING OF CASH PRESERVATION MEASURES Major strengthening of operational action plan in view of increased cash-flow CAPEX Projects Asset disposal Operational plan for 2014-2017 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 2016 13 *in annual impact on current operating income compared to 2013
REDUCTION IN INDUSTRIAL CAPITAL EXPENDITURE In million of 650 600 550 500 492 641 587 ERAMET Nickel ERAMET Manganese ERAMET Alloys 450 400 350 300 250 419 286 326-23% 346 267 200 150 100 50 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 14
CONTINUATION OF 2014-2017 PROGRAM FOR COST REDUCTION AND PRODUCTIVITY IMPROVEMENT 2014 2016-2017 Total of: 360 million 2014-2017 2015 Outside of the strengthening during the first half of 2016 of the SLN specific economic action plan. 15
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
GLOBAL STAINLESS STEEL PRODUCTION kt 45 000 40 000 35 000 33 207 35 336 37 786 41 372-0,4% 41 209 30 000 25 000 41% 46% 50% 52% 52% China 20 000 15 000 10 000 59% 54% 50% 48% 48% Rest of the World 5 000 0 2011 2012 2013 2014 2015 Source : ERAMET Nickel estimations 17
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% 2011 2012 2013 2014 2015 Source: ERAMET Nickel estimations 18
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 30 000 27 000 24 000 21 000 18 000 15 000 12 000 9 000 6 000 3 000 0 LME stocks SHFE stocks LME Nickel spot price (USD/t) Stocks nickel (in tonnes) 2011 2012 2013 2014 2015 2016 540 000 510 000 480 000 450 000 420 000 390 000 360 000 330 000 300 000 270 000 240 000 210 000 180 000 150 000 120 000 90 000 60 000 30 000 0 19
ERAMET NICKEL PRODUCTION 60 000 55 000 kt 54 360 ERAMET Nickel production 56 447 55 012 53 015-3% 53 369 SLN cash cost (USD/lb) (Source: Wood Mackenzie - cash cost C1) 50 000 45 000 40 000 35 000 30 000 25 000 20 000 15 000 10 000 8.3-30% 7.4 5.8 Target 4.5 * 5 000 0 2011 2012 2013 2014 2015 2013 2014 2015 End of 2017 * Based on economic conditions at the start of 2016 20
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
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
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
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
ERAMET ALLOYS: SALES PER MARKET +6% In M 910 997 904 938 991 43% 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 2011 2012 2013 2014 2015 25
STRENGTHENED OPERATIONAL PERFORMANCES Trend of current operating income - Aubert & Duval and Erasteel 2012-2015 (in millions of ): 50 20 31 Aubert & Duval Erasteel 3-8 -16-8 -23 2012 2013 2014 2015 26
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
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
GLOBAL CARBON STEEL PRODUCTION Mt 1 800 1 500 1 531 1 558 1 645 1 667-3% 1 625 1 200 45% 47% 50% 49% 49% China 900 600 300 55% 53% 50% 51% 51% Rest of the World 0 2011 2012 2013 2014 2015 Source : World Steel Association 29
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-11 2011 2012 2013 2014 2015 2016 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
/t MANGANESE ALLOYS PRICES Manganese alloys prices have decreased significantly in the second half of 2015. MANGANESE ALLOY PRICES IN EUROPE 1 600 1 400 1 200 1 000 800 600 400 200 0 Jan.11 2011 2012 2013 2014 2015 2016 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
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 4 000 3 500 3 000 2 500 +11% 2 000 1 500 3 201 3 434 3 037 3 703 3 481 3 868 1 000 500 0 2010 2011 2012 2013 2014 2015 32
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
ERAMET GROUP STRATEGY 34
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
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
CONCLUSION 37
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 2016. Resolute pursuit of cost reduction and productivity improvement with an objective of 360 M * by the end of 2017. Strengthening of the SLN productivity improvement and cost reduction plan launched in the first half of 2016. In light of current market conditions, a drop in manganese alloy and ore productions at the start of 2016. High financial liquidity of the Group: 1.6 billion of on 31 December 2015. * annual impact on Group's current operating income compared to 2013 38
APPENDICES 40
RECONCILIATION OF GROUP REPORTING AND PUBLISHED ACCOUNTS ( million) Full year Joint-venture Full year Full year Joint-venture Full year 2015 contribution 2015 2014 contribution 2014 Published (1) Reporting (2) Published (1) Reporting (2) Sales 3 015 94 3 109 3 075 69 3 144 EBITDA 92-92 363-363 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 242 25 267 305 41 346 Net financial debt position (716) (162) (878) (411) (136) (547) Shareholders' equity 1 788 (9) 1 779 2 756 (2) 2 754 Shareholders' equity - Group share 1 466-1 466 2 322-2 322 (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
PROFIT AND LOSS ACCOUNT ON 31 DECEMBER 2015 M 2015 2014 2013 Sales 3,109 3,144 3,162 EBITDA 92 363 231 % 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) 12 137 Net income - Group share (714) (159) (370) 42
BALANCE SHEET AS AT 31 DECEMBER 2015 In million of ASSETS LIABILITIES 31/12/2014 31/12/2015 31/12/2015 31/12/2014 4 255 4 255 3 704 3 704 1 466 2 322 3 407 3 003 313 935 432 862 848 701 Fixed assets Working Capital Requirement 878 112 Equity Group share Minority interests Provisions and deferred taxes 547 92 Net debt Financial instruments 43
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
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
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
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 2015. An ethics charter updated in 2015. A sustainable purchasing charter. An energy policy. 47