Philippe Darmayan, CEO of Aperam, commented:
“Our improved performance in the first quarter reflects Aperam’s agility to benefit from a better market environment while continuing to progress on our Leadership Journey®5 and maintaining net debt under control.
Looking forward, despite the current recovery of the real stainless steel demand, we remain cautious given the uncertainties regarding the evolution of the nickel price and the apparent demand for 2014. However, we are confident we will be able to increase our profitability in the second quarter and continue the good progress of our Leadership Journey® and Top Line strategy.”

Highlights
•Health and Safety frequency rate2 of 1.0x in Q1 2014 compared to 1.0x in Q4 2013
•Shipments of 475 thousand tonnes in Q1 2014, an 8% increase compared to shipments of 441 thousand tonnes in Q4 2013
•EBITDA 3 of USD 129 million in Q1 2014, compared to EBITDA of USD 84 million in Q4 2013
•Basic earnings per share of USD 0.24 in Q1 2014
•Cash flow from operations amounted to USD 20 million in Q1 2014
•Net debt4 of USD 689 million on March 31, 2014, representing a gearing of 23% compared to a net debt of USD 690 million on December 31, 2013

Prospects
•EBITDA in Q2 2014 is expected to increase compared to EBITDA in Q1 2014
•Net debt to slightly decrease in Q2 2014

Financial Highlights (on the basis of IFRS)
(USDm) unless otherwise stated
Q1 ‘14 Q4’13 Q1 ‘13
Sales 1,394 1,281 1,269
EBITDA 129 84 65
Operating loss 54 3 (11)
Net loss 19 (42) (28)
Steel shipments (000t) 475 441 401
EBITDA/tonne (USD) 272 190 162
Basic loss per share (USD) 0,24 (0,53) (0,36)

Health & Safety results analysis

Health and Safety performance based on Aperam personnel figures and contractors lost time injury frequency rate2, was 1.0x in the first quarter of 2014 compared to 1.0x in the fourth quarter of 2013.

Financial results analysis
Sales in the first quarter of 2014 increased by 9% to USD 1,394 million compared to USD 1,281 million in the fourth quarter of 2013. Shipments in the first quarter of 2014 increased by 8% at 475 thousand tonnes compared to 441 thousand tonnes in the fourth quarter of 2013.

EBITDA was USD 129 million in the first quarter of 2014 compared to EBITDA of USD 84 million in the fourth quarter of 2013. EBITDA increased quarter on quarter as a result of higher activity including customers restocking effect, of a slight improvement on prices and of the contribution of the Leadership Journey® and the Top Line strategy. The Leadership Journey® has continued to progress over the quarter and has contributed a total amount of USD 385 million to EBITDA since the beginning of 2011.

Depreciation and amortization expense in the first quarter of 2014 was USD 75 million.

Aperam had an operating income in the first quarter of 2014 of USD 54 million compared to an operating income of USD 3 million in the previous quarter.

Net interest expense and other net financing costs in the first quarter of 2014 were USD 29 million, primarily related to financing costs of USD 20 million. Realized and unrealized foreign exchange and derivative losses were USD 3 million in Q1 2014.

The Company recorded a net income of USD 19 million, inclusive of an income tax expense of USD 3 million, in the first quarter of 2014.

Cash flows from operations in the first quarter of 2014 were USD 20 million, with a working capital increase of USD 56 million. CAPEX in the first quarter was USD 22 million.

As of March 31, 2014, shareholders’ equity was USD 3,026 million and net financial debt4 was USD 689 million (gross financial debt as of March 31, 2014 was USD 988 million and cash, cash equivalents and restricted cash were USD 299 million).

The Company had liquidity of USD 725 million as of March 31, 2014, consisting of cash and cash equivalents of USD 294 million and undrawn credit lines6 of USD 431 million.

Operating segment results analysis
Stainless & Electrical Steel

The Stainless & Electrical Steel segment had sales of USD 1,104 million in the first quarter of 2014. This represents an increase of 11% compared to sales of USD 997 million in the fourth quarter of 2013. Shipments during the first quarter were 453 thousand tonnes, including 301 thousand tonnes in Europe and 152 thousand tonnes in South America. This is an increase of 7% compared to shipments of 425 thousand tonnes in the previous quarter (261 thousand tonnes in Europe and 164 thousand tonnes in South America). The volumes decline in South America mainly due to the traditional seasonality was more than compensated by higher volumes in Europe. Overall, average steel selling prices for the Stainless & Electrical Steel segment were higher for the quarter.

The segment had EBITDA of USD 100 million in the first quarter of 2014 compared to USD 64 million in the fourth quarter of 2013. EBITDA from South America improved in the first quarter of 2014 at USD 53 million, including USD 15 million positive results from sale of electricity surplus (compared to an EBITDA of USD 43 million in Q4 2013 including a positive USD 9 million from the sale of real estate). The lower volumes in South America were mainly compensated by a slight price recovery and the continuous progress on the Top Line strategy. EBITDA from Europe increased from USD 21 million in the fourth quarter of 2013 to USD 47 million in the first quarter of 2014. The improvement in EBITDA in Europe was primarily driven by higher activity, Aperam’s value strategy and the continuing progress of the Leadership Journey®.
The Stainless & Electrical Steel segment had an operating income of USD 34 million during the first quarter of 2014 compared to an operating loss of USD 4 million in the fourth quarter of 2013. Depreciation and amortization expense was USD 66 million in the first quarter of 2014.

Aperam Bioenergìa (eucalyptus forests used in the production of charcoal) serves mostly the captive needs of the blast furnaces of Aperam South America’s operations, allowing us to maintain a reduced carbon emissions footprint. Therefore Aperam Bioenergia, until now reported under the "Others" segment, has been transferred starting Q1 2014 to the 'Stainless & Electrical' segment under the management of Aperam South America to better reflect the actual configuration of our South American operations’ supply chain. Accordingly, segmented figures for Q4 2013 have been restated in this Earnings Release.

Services & Solutions

The Services & Solutions segment had a 16% increase in sales during the quarter, from USD 535 million in the fourth quarter of 2013 to USD 623 million in the first quarter of 2014. In the first quarter of 2014, shipments were 197 thousand tonnes compared to 169 thousand tonnes in the previous quarter. The Services & Solutions segment had higher average selling prices for the period compared to the previous quarter.

The segment had EBITDA in the first quarter of 2014 of USD 23 million compared to EBITDA of USD 5 million in the fourth quarter of 2013. The improvement in EBITDA was mainly driven by increase in volumes and the positive contribution of the Leadership Journey® and the Top Line strategy.

Depreciation and amortization expense in the first quarter of 2014 was USD 6 million.

The Services & Solutions segment had an operating income of USD 17 million in the first quarter of 2014 compared to an operating loss of USD 6 million in the fourth quarter of 2013.

Alloys & Specialties

The Alloys & Specialties segment had sales in the first quarter of 2014 of USD 149 million, representing a decrease of 7% compared to USD 160 million in the fourth quarter of 2013. Shipments were flat in the first quarter of 2014 at 9 thousand tonnes compared to last quarter, while average selling prices decreased quarter over quarter.

The Alloys & Specialties segment achieved EBITDA of USD 15 million in the first quarter of 2014 compared to USD 17 million in the fourth quarter of 2013. The EBITDA decreased over the quarter as a result of the product mix.

Depreciation and amortization expense in the first quarter of 2014 was USD 2 million.

The Alloys & Specialties segment had operating income of USD 13 million in the first quarter of 2014 compared to operating income of USD 15 million in the fourth quarter of 2013.

Recent developments
•On March 6, 2014, Aperam announced the publication of its 2013 Annual Report.
•On March 17, 2014, Aperam announced the appointment of Frédéric Mattei as head of its Alloys and Specialties division and member of Aperam's Management Committee as of June 1, 2014.
•On April 7, 2014, Standard & Poor’s Ratings Services revised Aperam's outlook to positive on strong performance and potential for market recovery and affirmed Aperam's long-term corporate credit rating of ‘B+’.
•On April 8, 2014, Aperam announced the publication of the convening notice for its Annual and Extraordinary General Meetings of shareholders.

New developments
•On April 30, 2014, Aperam exercised its option of early termination and repayment of its USD 50 million loan, which was secured with Gerdau shares.
•On May 7, 2014, as part of the Leadership Journey® and the Top Line strategy, the Board of Directors of Aperam approved an investment of USD 25 million in productivity improvement of the downstream facilities in Genk, Gueugnon and Timoteo.

tijd 09.14
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