Aperam (referred to as “Aperam” or the “Company”) (Amsterdam, Luxembourg, Paris: APAM and NYRS: APEMY), today announced results for the three month period ending March 31, 2011.

Commenting, Mr Bernard Fontana, CEO of Aperam said: “Following a weak Q4 2010, we experienced a strong improvement in the results of Q1 2011. The market has shown signs of improvements but we expect pricing to remain under pressure throughout 2011 due to overcapacity in the industry. Additionally, we have made good progress with the Leadership Journey to reduce our costs to date, and expect continued success.”

Highlights

Health and Safety frequency rate2 of 0.7x in Q1 2011 compared to 1.0x in Q4 2010
Shipments of 452 thousand tonnes in Q1 2011, up 23% from 366 thousand tonnes in Q4 2010
EBITDA3 of USD 139 million in Q1 2011 compared to USD 22 million in Q4 2010. A charge of USD 36 million relating to the implementation of the “Leadership Journey”4 was recorded within the EBITDA of Q1 2011.
Earnings per share of USD 0.32 in Q1 2011
Cash flows from operations were USD 40 million in Q1 2011 compared to pro forma5 cash flows from operations of USD 137 million in Q4 2010
Net debt of USD 864 million at March 31, 2011 represented a gearing of 22% compared to pro forma net debt of USD 851 million at December 31, 2010
Prospects
Recent decline in nickel prices, economic uncertainty and weakness in US dollar are expected to put pressure on margins in Q2 2011
Net debt is expected to increase in Q2 2011
Financial Highlights (on the basis of IFRS)
USDm) unless otherwise shown Q1 ‘11 Q4 ‘10 Q1 ‘10
Sales 1,681 1,434 1,285
EBITDA 139 22 144
Operating income / (loss) 70 (77) 68
Net income 25 2 48

Steel shipments (000t) 452 366 436
EBITDA/tonne (USD) 308 60 330
Basic earnings per share (USD) 0.32 N/A N/A

Health & Safety results analysis
Health and Safety performance, based on Aperam personnel figures and contractors lost time injury frequency rate, improved from 1.0 in the fourth quarter of 2010 to 0.7 in the first quarter of 2011.

Financial results analysis
Sales in the first quarter of 2011 increased by 17% to USD 1,681 million compared to USD 1,434 million in the fourth quarter of 2010. Shipments in the first quarter of 2011 rose by 86 thousand tonnes to 452 thousand tonnes compared to 366 thousand tonnes in the fourth quarter of 2010.

EBITDA was USD 139 million in the first quarter of 2011 compared to EBITDA in the fourth quarter of 2010 of USD 22 million. This increase was primarily driven by higher volumes, margin improvement and the contribution of the “Leadership Journey” initiative for USD 33 million during the quarter. A charge of USD 36 million related to the implementation of the “Leadership Journey” was also recorded within the EBITDA.

Depreciation expense in the first quarter of 2011 was USD 68 million. There was also an impairment of USD 1 million.

Aperam had operating income in the first quarter of USD 70 million compared to an operating loss of USD 77 million in the previous quarter.

Net interest expense and other net financing costs in the first quarter of 2011 were USD 46 million, of which USD 16 million relates to interest charges on the specific financing that existed prior to the spin-off. Other net interest expense includes the impact of foreign exchange primarily on monetary assets held in different currencies, the mark-to-market of derivative instruments and USD 18 million of financing costs.

The Company recorded net income of USD 25 million in the first quarter of 2011, which included an income tax benefit of USD 1 million.

Cash flows from operations in the first quarter were USD 40 million, with working capital outflows of USD 9 million. CAPEX in the first quarter was USD 32 million.

Shareholder’s equity at March 31, 2011 was USD 3,999 million and net financial debt at first quarter’s end was USD 864 million (gross financial debt as of March 31, 2011 was USD 1,132 million and cash & cash equivalents were USD 268 million).

The Company had liquidity of USD 668 million at March 31, 2011, consisting of cash and cash equivalents (including short-term investments) of $268 million and $400 million of available credit lines.

Operating segment results analysis
Stainless & Electrical Steel
The Stainless & Electrical Steel segment had sales of USD 1,430 million in the first quarter of 2011. This represents an increase of 28% compared to sales of USD 1,113 million in the fourth quarter of 2010. Shipments during the first quarter were 458 thousand tonnes, including 296 thousand tonnes in Europe and 162 thousand tonnes in South America. This is an increase of 115 thousand tonnes compared to the previous quarter’s shipments of 343 thousand tonnes (186 thousand tonnes in Europe and 157 thousand tonnes in South America). The increase in volumes is due in part to the restocking taking place following the seasonal slowdown that traditionally takes place in the fourth quarter in both Europe and South America. Average steel selling prices for the Stainless & Electrical Steel Segment were relatively flat for the quarter.

The segment had EBITDA of USD 79 million in the first quarter of 2011 after USD 36 million of charges relating to the implementation of the “Leadership Journey”. That compared to USD 26 million in the fourth quarter of 2010. This significant increase is primarily driven by the strong growth in shipments, improvement in the margins and cost reductions that took place during the quarter. EBITDA from South America increased from USD 17 million in the fourth quarter of 2010 to USD 26 million in the first quarter of 2011 after USD 12 million of charges relating to the implementation of the “Leadership Journey”. EBITDA from Europe saw a substantial improvement during the quarter, increasing from USD 9 million in the fourth quarter of 2010 to USD 53 million in the first quarter of 2011 after USD 24 million of charges relating to the implementation of the “Leadership Journey”.

The Stainless & Electrical Steel segment had operating income of USD 19 million during the first quarter. Depreciation and amortization was USD 59 million and impairment charges were USD 1 million in the first quarter of 2011.

Operating income in the first quarter of 2011 was USD 19 million compared to an operating loss of USD 62 million in the fourth quarter of 2010.

Services & Solutions
The Services & Solutions segment had a substantial increase in sales of 29% during the period, increasing from USD 566 million in the fourth quarter of 2010 to USD 728 million in the first quarter of 2011. In the first quarter of 2011, shipments were 181 thousand tonnes compared to 147 thousand tonnes in the previous quarter. Overall, the growth in sales for the quarter was the result of higher average selling prices and an increase in volumes.

The segment achieved EBITDA in the first quarter of 2011 of USD 33 million compared to USD 3 million in the fourth quarter of 2010. The increase in EBITDA for the quarter is the result of a strong rebound in activity and pricing.

Depreciation and amortization in the first quarter of 2011 was USD 8 million.

The Services & Solutions segment had operating income of USD 25 million in the first quarter of 2011 compared to an operating loss of USD 5 million in the fourth quarter of 2010.

Alloys & Specialties
The Alloys & Specialties segment had increased sales in the first quarter of 2011 of USD 181 million compared to USD 166 million in the fourth quarter of 2010. This represents an increase in sale for the quarter of 9% Shipments remained flat during the quarter at 10 thousand tonnes, while average selling prices in the first quarter increased compared to the previous quarter.

The Alloys & Specialties segment achieved EBITDA of USD 24 million in the first quarter of 2011 compared to USD 10 million in the fourth quarter of 2010. The growth in EBITDA in the first quarter was primarily due to the result of better product mix and low maintenance costs.

Depreciation and amortization for the quarter was USD 1 million.

The Alloys & Specialties Segment had operating income of USD 23 million in the first quarter of 2011.

Recent developments
On February 15, 2011, Aperam announced its dividend payment schedule for 2011, following approval in principle by a general meeting of the Company held on January 21, 2011 of the payment of an interim dividend of USD 0.75 per Company share. The dividend will be paid in four equal quarterly installments of USD 0.1875 (gross) per share. Quarterly payments of USD 0.1875 per share will occur on March 30, June 14, September 12 and December 12, 2011.
On March 15, 2011, Aperam signed a USD 800 million Secured Borrowing Base Revolving Credit Facility with a group of banks. The facility is structured as a 3-year revolving credit facility and will be used for liquidity and working capital purposes including the repayment by Aperam of part of the financing provided by ArcelorMittal SA.
On March 28, 2011, Aperam announced the pricing of two series of US dollar denominated notes, consisting of USD 250 million aggregate principal amount of its 7.375% Notes due 2016 and USD 250 million aggregate principal amount of its 7.75% Notes due 2018, in a private placement in the international capital markets. The net proceeds were used to repay outstanding amounts under the company's USD 900 million bridge loan facility with ArcelorMittal SA.
On March 30, 2011, Aperam repaid all outstanding amounts on the USD 900 million bridge loan facility provided to Aperam by ArcelorMittal. The facility does not allow for further drawings to be made by Aperam.
On April 5, 2011, Standard & Poor’s Ratings Services assigned its 'BB' long-term corporate credit rating to Aperam. The rating is in line with the 'BB' preliminary rating assigned on February 3, 2011. The outlook is stable. At the same time, Standard & Poor’s assigned their ‘BB' rating to the USD 500 million bonds, in line with the 'BB' preliminary rating.
On April 11, 2011, Moody’s Investor Services assigned a definitive Ba2 corporate family rating (CFR) and a definitive Ba2 probability of default rating (PDR) to Aperam. Concurrently, Moody’s assigned a definitive B1/loss-given default (LGD) 6 rating to the company’s USD500 million worth of senior unsecured bonds. The outlook on all ratings is stable.
New developments
On May 9, 2011, the Board of Directors of Aperam has decided to co-opt Mrs. Laurence Mulliez (45) until Aperam’s next general meeting of shareholders, where Mrs. Mulliez' election will be submitted for confirmation by the shareholders. This decision follows the stepping down of Mrs. Sylvie Ouziel from the Board for personal considerations effective May 10, 2011. Mrs. Laurence Mulliez is CEO of Eoxis since 2010. Privately held Eoxis produces energy from renewable sources. Mrs. Laurence Mulliez was previously CEO of Castrol Industrial Lubricants and Services at BP from 2007 to 2009 and held various positions in BP starting 1999, including Head of Strategy for Gas, Power and Renewable Energy. Mrs. Laurence Mulliez will be member of the Audit and Risk, Transition and Sustainability, Performance and Strategy Committees.
On May 10, 2011, as part of the “Leadership Journey”, Aperam announces that the Board of Directors of Aperam approved an investment of USD 35 million to improve the performance and profitability of its steel service center in Campinas, Brazil. This investment will result in the doubling of its processing capacity to 200,000 tonnes through revamping, streamlining and the addition of new processing lines, thus improving Aperam’s ability to serve its customers in the thriving Brazilian market.

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Aperam EUR 28,27 -42ct.