Aperam, full year and fourth quarter 2011 results

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Beleggingsadvies 06/02/2012 18:57
Highlights
Aperam (referred to as “Aperam” or the “Company”) (Amsterdam, Luxembourg, Paris: APAM and NYRS: APEMY), today announced results1 for the three and twelve month periods ending December 31, 2011

Philippe Darmayan, CEO of Aperam, commented:

“Despite a more difficult environment than anticipated, Aperam has been able to maintain a comparable performance in Q4 2011 to Q3 2011 and to reduce debt levels significantly.

Since the beginning of the year, we have started to see the signs of a rebound in the business but we continue to remain cautious considering the global economic uncertainty for 2012.

Finally, we welcome recent steps towards industry consolidation and we believe that Aperam is well-positioned to benefit from it.”

Health and Safety frequency rate2 of 0.7x in 2011 compared to 2.1x in 2010
Shipments of 1,749 thousand tonnes in full year 2011, flat compared to shipments of 1,741 thousand tonnes in full year 2010
EBITDA3 of USD 356 million in full year 2011, compared to USD 410 million in full year 2010. A charge of USD 36 million relating to the implementation of the “Leadership Journey”iv was recorded within the EBITDA of Q1 2011.
Basic earnings per share of USD (0.76) in 2011
Cash inflows from operations amounted to USD 189 million in 2011
Net debt of USD 878 million at December 31, 2011, representing a gearing of 25%
Prospects

EBITDA in Q1 2012 is expected to improve compared to Q4 2011 due to stainless steel market rebound and the continuing progress of the Leadership Journey
Net debt is expected to increase in Q1 2012 compared to Q4 2011 due to increased activity

Health & Safety results analysis
Health and Safety performance, based on Aperam personnel figures and contractors lost time injury frequency rate2, was 0.3 in the fourth quarter of 2011 compared to 0.9 in the third quarter of 2011.

Financial results analysis
Sales in the fourth quarter of 2011 decreased by 6% to USD 1,436 million compared to USD 1,520 million in the third quarter of 2011. Shipments in the fourth quarter of 2011 were flat at 429 thousand tonnes compared to 429 thousand tonnes in the third quarter of 2011.

EBITDA was USD 53 million in the fourth quarter of 2011 compared to EBITDA in the third quarter of 2011 of USD 62 million. The decrease in EBITDA quarter versus quarter was primarily driven by lower activity resulting from the seasonal slowdown in South America and a decrease in base and transaction prices. These factors impacting EBITDA were partially offset by the continuing progress of the “Leadership Journey”, which has contributed USD 176 million to EBITDA since the beginning of the year.

Depreciation, amortization and impairment expense in the fourth quarter of 2011 was USD 82 million.

Aperam had an operating loss in the fourth quarter of USD 29 million compared to an operating loss of USD 20 million in the previous quarter.

Net interest expense and other financing costs in the fourth quarter of 2011 were USD 27 million, including financing costs of USD 16 million. Unrealized foreign exchange and derivative gains were USD 2 million in the fourth quarter of 2011.

The Company recorded a net loss of USD 46 million, inclusive of an income tax benefit of USD 8 million in the fourth quarter of 2011.

Cash flows from operations in the fourth quarter were a positive USD 227 million, with a working capital decrease of USD 253 million. CAPEX in the fourth quarter was USD 51 million.

As of December 31, 2011, shareholder’s equity was USD 3,443 million and net financial debt was USD 878 million (gross financial debt as of December 31, 2011 was USD 1,125 million and cash & cash equivalents were USD 247 million).

The Company had liquidity of USD 647 million as of December 31, 2011, consisting of cash and cash equivalents (including short-term investments) of USD 247 million and available credit lines of USD 400 million.

Operating segment results analysis
Stainless & Electrical Steel

The Stainless & Electrical Steel segment had sales of USD 1,107 million in the fourth quarter of 2011. This represents a decrease of 3% compared to sales of USD 1,143 million in the third quarter of 2011. Shipments during the fourth quarter were 396 thousand tonnes, including 238 thousand tonnes in Europe and 158 thousand tonnes in South America. This is an increase of 6 thousand tonnes compared to the previous quarter’s shipments of 390 thousand tonnes (222 thousand tonnes in Europe and 168 thousand tonnes in South America). Volumes in South America decreased by 6% in the quarter due to seasonality. Despite this decrease in South America, overall volumes for the segment increased slightly as a result of the 7% increase in volumes in Europe due to the reduced impact of seasonality in the quarter compared to the previous quarter.

The segment had EBITDA of USD 26 million in the fourth quarter of 2011 compared to USD 23 million in the third quarter of 2011. EBITDA from South America decreased from USD 26 million in the third quarter of 2011 to USD 23 million in the fourth quarter of 2011. EBITDA from Europe increased from negative USD 3 million in the third quarter of 2011 to USD 3 million in the fourth quarter of 2011. Average steel selling prices for the Stainless & Electrical Steel segment were lower for the quarter.

The Stainless & Electrical Steel segment had an operating loss of USD 37 million during the fourth quarter compared to an operating loss of USD 45 million in the third quarter of 2011. Depreciation and amortization expense was USD 63 million in the fourth quarter of 2011.

Services & Solutions

The Services & Solutions segment had a 13% decrease in sales during the period, from USD 630 million in the third quarter of 2011 to USD 546 million in the fourth quarter of 2011. In the fourth quarter of 2011, shipments were 149 thousand tonnes compared to 164 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 fourth quarter of USD 6 million compared to negative EBITDA of USD 1 million in the third quarter of 2011. EBITDA for the quarter was again impacted by the seasonality at the end of the year and lower average selling prices. In addition, the segment was also impacted by a negative stock effect resulting primarily from the decline in nickel prices that occurred during the quarter.

Depreciation, amortization and impairment expense in the fourth quarter of 2011 was USD 11 million.

The Services & Solutions segment had an operating loss of USD 17 million in the fourth quarter of 2011 compared to an operating loss of USD 8 million in the third quarter of 2011.

Alloys & Specialties

The Alloys & Specialties segment had sales in the fourth quarter of USD 153 million, representing a decrease of 7% compared to USD 164 million in the third quarter of 2011. Shipments were comparable at 8 thousand tonnes in the third quarter to 8 thousand tonnes in the fourth quarter.

The Alloys & Specialties segment achieved EBITDA of USD 12 million in the fourth quarter of 2011 compared to USD 11 million in the third quarter of 2011. Average selling prices in the quarter were down as a result of lower nickel prices.

Depreciation and amortization expense for the quarter was USD 2 million.

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

Recent developments
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.
On November 2, 2011, Aperam announced that in response to the current economic uncertainty and in a continuing effort to improve Aperam’s cost competitiveness and profitability the company targeted 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.
On November 8, 2011, Moody’s downgraded the corporate family rating for Aperam S.A. to Ba3 from Ba2 and changed the company’s ratings outlook to negative from stable.
On December 1, 2011, Philippe Darmayan became a member of Aperam's Management Committee and Chief Executive Officer of Aperam. Philippe Darmayan is a French citizen with extensive experience in various industrial fields and was appointed as the new Chief Executive Officer of Aperam following the announcement on September 20, 2011 that Bernard Fontana was leaving Aperam to become the CEO of Holcim, a leading producer of cement and aggregates based in Zurich, Switzerland.
On January 23, 2012, Aperam joined the United Nations Global Compact, the world’s largest corporate responsibility initiative with over 8,000 business and non-business participants in 135 countries.
New developments
On February 6, 2012, Aperam announces that the Board of Directors will submit to a shareholder’s vote, at the next annual general meeting, a proposal to maintain the quarterly dividend payment at USD 0.1875 per share. The dividend payments would occur on a quarterly basis for the full year 2012 on March 13, 2012, June 14, 2012, September 10, 2012 and December 10, 2012 taking into account that the first quarterly dividend payment to be paid on March 13, 2012 shall be an interim dividend.

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http://www.aperam.com/news/27/80/Full-year-and-fourth-quarter-2011-results



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