(AOF) – Aperam shared its guidance for the third quarter of 2023 when publishing its second quarter 2023 results on July 27, 2023. The company producing and marketing stainless steel targets slightly higher volumes quarter-on-quarter . Additionally, it expects lower adjusted EBITDA quarter-on-quarter, including a comparable inventory valuation loss (between 7-9%) assuming unchanged raw material prices.
Two unforeseen events in the form of a longer than planned shutdown of the Genk upstream to accommodate the construction of the new AOD (new argon oxygen decarburization) as well as problems operational problems at the melting shop in Chatelet caused a significant loss of shipments during the quarter.
As a result, Aperam now expects volumes to be at a comparable level compared to the second quarter of 2023, with an associated impact on earnings.
Aperam will report its third quarter 2023 results on November 10, 2023.
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Key points
– World number one in steel and fourth in alloys and special steels, born in 2010 from the split with ArcelorMittal;
– Turnover of €8.2 billion, distributed between Europe for 62%, the Americas for 32%, Asia for 6% and achieved 67% in stainless and electrical steels, 33% in services & solutions then in alloys and special steels;
– Business model based on maintaining the position of world leader in the sector in financial discipline, European leader by the lowest level of production costs, on the highest return for the shareholder and on the use of acquisitions to nourish growth;
– Company controlled at 36.91% (40.91% of voting rights) by the Mittal family, Lakshmi N. Mittal chairing the 9-member board of directors and Timoteo Di Maulo being general manager;
– Healthy balance sheet with €3.4 billion in equity, €419 million in net debt and €984 million in liquidity.
Challenges
– “Leadership Journey” strategy, extended in 2 phases, 4 and 5, until 2023 and 2025:
– cost savings of €150 million over 2021-2023,
– ramp-up of the Services & solutions activity;
– Innovation strategy with 4 R&D centers serving the energy transition: steels for e-mobility solutions, for solar or wind installations, for hydrogen installations;
– Environmental strategy aimed at carbon neutrality for 2050:
– intermediate objectives 2030, vs 2015: reduction of 30% in CO2 emissions and 42% in water use,
– by focusing on achievements – “Green Steel” products, the lowest CO2 footprint in the sector, 50% use of renewables in electricity consumption, recycling of 80% of waste, compensation by planting forests within BioEnergia, etc. ,
– industrial partnership with Econick in the production of biosourced nickel;
– launch of the first “green” loan;
– Positive contribution of ELG to sales and gross operating profitability;
– Control of the distribution network.
Challenges
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After a first quarter marked by difficulties in Europe (planned closure of sites for investments, strike and clearance), slight improvement expected despite the decline in global stainless steel prices;
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Evolution of discussions with Acerinox for a possible merger;
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After a 20% increase in shipments and stability in operating profit at the end of March, anticipation for the 2
th
quarter 2023: slight increase in operating profit and net debt;
– Dividend maintained at €2 paid in 4 installments (February, May, August and November) and continuation of share buybacks.
An ecological transition that drives metal prices
The ecological transition is driving demand and causing prices to rise. Lithium prices jumped 100% last year, supported by sales of electric cars. The need for metals such as aluminum, copper, graphite, or nickel is expected to soar by 2050. The war in Ukraine has reinforced the rise in prices because Russia is a major producer of mineral raw materials. , in particular aluminum, palladium, nickel and titanium. The International Energy Agency (IEA) recently warned of the risk of shortages of several metals necessary for the energy transition. Europe has mobilized on strategic metals with the objective of strengthening its sovereignty.