Aperam (referred to as “Aperam” or the “Company”) (Amsterdam, Luxembourg, Paris: APAM and NYRS: APEMY), today announced results1 for the three month period ending September 30, 2011.

Bernard Fontana, CEO Aperam, commented:
“Despite the recent financial market volatility and seasonal slowdown, we have been able to see the clear benefits from the Leadership Journey in our profitability when compared to the fourth quarter of 2010, the trough of the previous year.

Looking forward and to face the new uncertainty of 2012, we have decided to accelerate and enhance our current management gains program to further strengthen the cost position of Aperam.”

Health and Safety frequency rate2 of 0.9x compared to 0.8x in Q2 2011
Shipments of 429 thousand tonnes in Q3 2011, a 2% decrease compared to shipments of 439 thousand tonnes in Q2 2011 due to seasonal slowdown
EBITDA3 of USD 62 million in Q3 2011
Basic earnings per share of USD (0.53) in Q3 2011
Cash inflows from operations amounted to USD 120 million in Q3 2011 compared to cash outflows from operations of USD 198 million in Q2 2011
Net debt of USD 1,038 million at September 30, 2011, representing a gearing of 29%, compared to net debt of USD 1,107 million at June 30, 2011
Acceleration and USD 100 million increase of the “Leadership Journey”4 resulting in an overall total program size of USD 350 million by 2013
Prospects

EBITDA in Q4 2011 is expected to be comparable to Q3 2011
Net debt is expected to continue to decrease in Q4 2011 compared to Q3 2011
Financial Highlights (on the basis of IFRS)
(USDm) unless otherwise shown Q3 ‘11 Q2 ‘11 Q3 ‘10 9M ‘11 9M ‘10
Sales 1,520 1,708 1,372 4,909 4,170
EBITDA 62 102 66 303 388
Operating (loss) income (20) 24 (6) 74 170
Net (loss) income (41) 2 (12) (14) 102

Steel shipments (000t) 429 439 460 1,320 1,375
EBITDA/tonne (USD) 145
232 143 230 282
Basic earnings per share (USD) (0.53) 0.02 N/A (0.19) N/A

Health & Safety results analysis
Health and Safety performance, based on Aperam personnel figures and contractors lost time injury frequency rate2, was 0.9 in the third quarter of 2011 compared to 0.8 in the second quarter of 2011.

Financial results analysis
Sales in the third quarter of 2011 decreased by 11% to USD 1,520 million compared to USD 1,708 million in the second quarter of 2011. Shipments in the third quarter of 2011 decreased by 10 thousand tonnes or 2% to 429 thousand tonnes compared to 439 thousand tonnes in the second quarter of 2011.

EBITDA was USD 62 million in the third quarter of 2011 compared to EBITDA in the second quarter of 2011 of USD 102 million. The decrease in EBITDA quarter versus quarter was primarily driven by lower activity resulting from the seasonal slowdown in Europe, a decrease in base prices and the negative stock effect resulting mainly from the decline in nickel prices. These factors impacting EBITDA were partially offset by the full consolidation of Aperam Bioenergia in the third quarter and the continuing progress of the “Leadership Journey”, which has contributed USD 123 million to EBITDA since the beginning of the year.

Depreciation and amortization expense in the third quarter of 2011 was USD 82 million.

Aperam had an operating loss in the third quarter of USD 20 million compared to an operating income of USD 24 million in the previous quarter.

Net interest expense and other financing costs in the third quarter of 2011 were USD 24 million, including financing costs of USD 20 million. Unrealized foreign exchange and derivative losses were USD 32 million which come primarily from the accounting revaluation of US dollar denominated external debt in Brazil at the end of the third quarter of 2011.

The Company recorded a net loss of USD 41 million in the third quarter of 2011, inclusive of an income tax benefit of USD 35 million.

Cash flows from operations in the third quarter were a positive USD 120 million, with working capital decrease of USD 58 million. CAPEX in the third quarter was USD 48 million.

At September 30, 2011, shareholder’s equity was USD 3,580 million and net financial debt was USD 1,038 million (gross financial debt as of September 30, 2011 was USD 1,340 million and cash & cash equivalents were USD 302 million).

The Company had liquidity of USD 502 million at September 30, 2011, consisting of cash and cash equivalents (including short-term investments) of USD 302 million and USD 200 million of available credit lines.

Operating segment results analysis
Stainless & Electrical Steel
The Stainless & Electrical Steel segment had sales of USD 1,143 million in the third quarter of 2011. This represents a decrease of 18% compared to sales of USD 1,388 million in the second quarter of 2011. Shipments during the third quarter were 390 thousand tonnes, including 222 thousand tonnes in Europe and 168 thousand tonnes in South America. This is a decrease of 41 thousand tonnes compared to the previous quarter’s shipments of 431 thousand tonnes (272 thousand tonnes in Europe and 159 thousand tonnes in South America). Although volumes in South America increased by 6% in the quarter, overall volumes decreased mainly as a result of the 18% fall in volumes in Europe due to the impact of seasonality. Average steel selling prices for the Stainless & Electrical Steel segment were lower for the quarter.

The segment had EBITDA of USD 23 million in the third quarter of 2011 compared to USD 93 million in the second quarter of 2011. EBITDA from South America decreased from USD 43 million in the second quarter of 2011 to USD 26 million in the third quarter of 2011. EBITDA from Europe decreased from USD 50 million in the second quarter of 2011 to negative USD 3 million in the third quarter of 2011.

The Stainless & Electrical Steel segment had an operating loss of USD 45 million during the third quarter compared to an operating income of USD 24 million in the second quarter of 2011. Depreciation and amortization expense was USD 68 million in the third quarter of 2011.

Services & Solutions
The Services & Solutions segment had a 10% decrease in sales during the period, from USD 699 million in the second quarter of 2011 to USD 630 million in the third quarter of 2011. In the third quarter of 2011, shipments were 164 thousand tonnes compared to 168 thousand tonnes in the previous quarter. In addition to lower shipments, the Services & Solutions segment also had lower average selling prices for the period.

The segment had negative EBITDA in the third quarter of USD 1 million compared to negative EBITDA of USD 11 million in the second quarter of 2011. EBITDA for the quarter is again impacted by the seasonality in Europe and lower average selling prices. Although the segment was also impacted by a negative stock effect resulting primarily from the decline in nickel prices that occurred during the quarter, it was not to the same degree as the negative stock effect in the previous quarter.

Depreciation and amortization expense in the third quarter of 2011 was USD 7 million.

The Services & Solutions segment had an operating loss of USD 8 million in the third quarter of 2011 compared to an operating loss of USD 18 million in the second quarter of 2011.

Alloys & Specialties
The Alloys & Specialties segment had sales in the third quarter of USD 164 million, representing a decrease of 26% compared to USD 223 million in the second quarter of 2011. Shipments decreased from 11 thousand tonnes in the second quarter to 7 thousand tonnes in the third quarter, while average selling prices increased slightly quarter over quarter.

The Alloys & Specialties segment achieved EBITDA of USD 11 million in the third quarter of 2011 compared to USD 23 million in the second quarter of 2011. The lower EBITDA was primarily the result of lower volumes which again resulted from the seasonality experienced in Europe during the summer months.

Depreciation and amortization expense for the quarter was USD 1 million.

The Alloys & Specialties segment had operating income of USD 10 million in the third quarter of 2011 compared to operating income of USD 21 million in the second quarter of 2011.

Recent developments
On July 26, 2011, as part of the Leadership Journey, Aperam announced that its Brazilian operations (Timóteo) have finalized the conversion of blast furnace number two and will henceforth use biomass (charcoal) instead of coke.
On August 11, 2011, Aperam joined OTCQX International as the 250th issuer on the platform.
On September 20, 2011, Aperam announced the appointment of Philippe Darmayan as the Company's new Chief Executive Officer, following the resignation of Bernard Fontana. Philippe Darmayan, 59, is a French citizen with extensive experience in various industrial fields and will become a member of Aperam's Management Committee and CEO of Aperam effective December 1, 2011. Bernard Fontana is leaving Aperam to become the CEO of Holcim, a leading producer of cement and aggregates based in Zurich, Switzerland.
On September 27, 2011, Aperam signed a EUR 17.5 million bilateral credit facility agreement. The purpose of the two year facility is general corporate purposes and/or the repayment of existing indebtedness.
On October 25, 2011, S&P revised the outlook on Aperam from Stable to Negative. At the same time, they affirmed their ‘BB’ long-term corporate credit rating on the company.
New developments
On November 2, 2011, Aperam announces that in response to the current economic uncertainty and in a continuing effort to improve Aperam’s cost competitiveness and profitability the company targets an additional USD 100 million of management gains and profit enhancement under the Leadership Journey. This initiative is in addition to the current USD 250 million program with a new combined target of USD 350 million of management gains and profit enhancement by 2013. As part of this increase, Aperam will focus on further industrial optimization and rationalization in Europe, systematic benchmarking in Brazil and new sourcing initiatives.