1 © Aperam 1
Exane BNP Paribas Basic Materials Conference April 7th, 2016
Timoteo Di Maulo – Chief Executive Officer
2
Disclaimer
Forward-Looking Statements
This document may contain forward-looking information and statements about Aperam and its subsidiaries. These
statements include financial projections and estimates and their underlying assumptions, statements regarding
plans, objectives and expectations with respect to future operations, products and services, and statements regarding future performance. Forward-looking statements may be identified by the words “believe,” “expect,”
“anticipate,” “target” or similar expressions. Although Aperam’s management believes that the expectations
reflected in such forward-looking statements are reasonable, investors and holders of Aperam’s securities are cautioned that forward-looking information and statements are subject to numerous risks and uncertainties, many
of which are difficult to predict and generally beyond the control of Aperam, that could cause actual results and
developments to differ materially and adversely from those expressed in, or implied or projected by, the forward-looking information and statements. These risks and uncertainties include those discussed or identified in
Aperam’s filings with the Luxembourg Stock Market Authority for the Financial Markets (Commission de
Surveillance du Secteur Financier). Aperam undertakes no obligation to publicly update its forward-looking statements or information, whether as a result of new information, future events, or otherwise.
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Aperam’s fundamentals
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4
Solid and diversified sources of profitability
Aperam is number 1 in South America, number 2 in Europe in stainless steel and world number 4 in Nickel Alloys
Source: Aperam
Aperam’s fundamentals
Aperam EBITDA breakdown (FY 2015)
Stainless & Electrical Steel
Stainless & Electrical Steel -
Brazil 37%
Services & Solutions
8%
Alloys & Specialties
8%
Aperam sales breakdown by destination (FY 2015)
Europe 65%
Brazil & Latin America
18%
Asia & Africa 10%
USA 7%
Europe 46%
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A restructured and efficient European footprint able to seize market opportunities
Aperam’s fundamentals
Aperam is well positioned in the core markets in Europe, with optimal loading of its most efficient assets
* Full time equivalent excluding Bioenergia ** Quarterly average
HAP 3
CR 4 CR 3 CR 2
CAP 1 BAL CAP2
Skin 3 Skin 1
HAP 3
CR 2
Skin
CR 1
CAP 2
LC2I
RD 79
CR 2 CR 4 CR 3 CR 5 CR 6
CAP10 BA 6
BA 8
Skin 3 Skin 1
BA 11
Skin 2
HA&P lines
CR mills
CA&P/ BA lines
Skins Skin 2
GENK ISBERGUES GUEUGNON
Long term suspension
Mothballing & Swing
Combination of RD7 and HAP9 and investment
Aperam downstream rationalization in EU from 29 tools to 17 tools
Core Markets
Capital goods, chemicals & energy
Auto, distribution & 1st transformation
Decoration trim, heat exchanges & white goods
On-going investments focused on performance improvement
0
100
200
300
400
500
600
7 500
8 000
8 500
9 000
9 500
10 000
10 500
Aperam productivity evolution, average
Q4 2010
av. 2011
av. 2012
av. 2013
av. 2014
Number of employees* (LHS) Shipments** in kt (RHS)
av. 2015
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Unique asset base in South America perfectly adapted to the domestic market
Aperam’s fundamentals
The sole stainless steel producer in South America with a complete range of products and flexible production equipments to support it customers’ needs and projects
Montevideo (Uruguay)
Ribeirão Pires
Buenos Aires (Argentina)
Range of products
Grain oriented electric steel (GO) has the magnetic properties optimized in the rolling direction, aiming its use in stationary machines such as transformers.
South American Footprint
A complete range of stainless steel grades (austenitics, ferritics, duplex, martensitics)
Stainless steel
Grain oriented electrical steel
Non-grain oriented electrical steel
Special carbon steel
Non-grain oriented electric steel (NGO) has similar magnetic properties in all directions, aiming its use in electric motors and generators with moving parts.
Completing product portfolio with alloyed, high, medium other special carbon steel.
Campinas
Timoteo
Caxias do Sul
Peru
Ecuador
Caracas (Venezuela)
Colombia
Rep offices, sales agencies
Melt shop, Hot/Cold rolling
Service Centers
Tubes mills and Cutting centers
Sumaré
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Services & Solutions Division offers a key competitive advantage to sustain market share and capture growth opportunities
An industrial footprint in Europe and South America, perfectly complemented with global service centres and sales network
Aperam’s fundamentals
Sales subsidiaries and representative offices Steel Service Centers Sales agencies Finishing line Steel making
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A leading position in nickel alloys
Source: SRM, Aperam
Global nickel alloys producers (kt in 2014)
0
5
10
15
20
25
30
35
40
Spe
cial
Met
als
Alle
ghen
y
VD
M
Ape
ram
A&
S
Car
pent
er
Nip
pon
Yaki
n
Hay
nes
Hita
chi
Sum
itom
o
Dai
do
Aperam’s fundamentals
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Aperam Alloys & Specialties geographical footprint
Imphy
Meltshop, wire mill, cold rolling, bars, R&D
Amilly
The magnetic parts company
Rescal
Wire drawing
ICS (JV)
Diversification into industrial clads
Imhua
Transformation workshop
World #4 in nickel alloys, the largest on Wire Rods
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0
100
200
300
400
500
600
2016 2017 2018 > 2019
A solid funding structure
A robust balance sheet and debt structure
Aperam’s fundamentals
[1] Assuming convertible bonds 2017 & 2019 reimbursement. BBF fully undrawn at end of 2015.
Convertible bonds BBF Others
Total Financial Debt breakdown as of December 31, 2015 [1]
Financial Debt maturity profile (USD million) as of December 31, 2015 [1]
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Environment and markets
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Asian stainless steel overcapacity remains
Pace of new production capacities coming onstream is starting to come down
Environment and markets
Source: CRU and Aperam estimates
-
5
10
15
20
Upstream operational capacity of the Chinese industry Downstream operational capacity of the Chinese industry
-
10
20
30
40
12
European restructuring is completed
European capacity is now adapted to the European stainless steel flat market
Source: CRU and Aperam estimates
Environment and markets
3,5
4,0
4,5
2011 2012 2013 2014 2015E 2016F2015
Upstream operational capacity of the European industry, mt Downstream operational capacity of the European industry, mt
6,5
7,0
7,5
8,0
8,5
2011 2012 2013 2014 2015E 2016F2015
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South American stainless steel apparent demand impacted by slowdown in Brazil
Long term fundamentals remain encouraging in South America with an expected CAGR of 2-3% looking ahead
Sources: CRU and Aperam estimate
Environment and markets
Brazilian Stainless steel apparent demand (in kt)
0
50
100
150
200
250
300
350
400
2011 2012 2013 2014 2015E
Stainless steel flat stainless steel consumption per capita (kg/year)
0
1
2
3
4
5
6
7
8
South America USA Western Europe
China
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Chinese marginal cost
FOB, CIF, clearance and transportation
costs
Imports duty
Anti-dumping Chinese landed cost in Brazil
Chinese marginal cost
FOB, CIF, clearance and
transportation costs
Anti-dumping Chinese landed cost in Europe
Both domestic markets of Aperam have tariff measures
Anti-dumping in both Europe and Brazil against unfair market behavior were announced for a period of 5 years
Source: SBB/Platts, Steelfirst, http://www.eurofer.be/News%26Media/Press%20releases/20150827%20antidumping%20SSCR%20China%20Taiwan.fhtml
Environment and markets
Chinese marginal cost player to landed costs in Brazil (USD/t) Chinese marginal cost player to landed costs in Europe (USD/t)
• 14% of imports duties on all products categories of Aperam.
• Anti-dumping ranging from 133 up to 1077USD/t on Stainless and non-grain oriented electrical steel products
• Anti-dumping duty rates of up to 25.3% on SSCR imports from China, and up to 6.8% on imports from Taiwan.
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0
100
200
300
400
500
2013 2014 2015E
Chinese NPI production Ferronickel imports (Ni content)
The nickel price has reached a level below the cost of NPI production
Subsequent to the Indonesian ban, with tightening NPI supplies, Chinese imports of Ferro Nickel are rising
Environment and markets
Breakdown of Chinese nickel imports, in kt
Nickel – LME Cash (USD/t)
* Nickel Pig Iron – Blast Furnace – Electric Arc Furnace - Rotary Kiln Electric Furnace Source: SBB, Heinz Pariser & Aperam estimates
NPI – BF*
NPI – RKEF*
NPI – EAF*
6 000
8 000
10 000
12 000
14 000
16 000
18 000
20 000
22 000
24 000
26 000
28 000
30 000
16
0%
10%
20%
30%
2012 2013 2014 2015E*
Chinese prices European prices
European stainless steel prices have shown the best resilience
Europe remains an open market with anti-dumping measures targeting unfair imports
Source: SBB, SPAS and Aperam estimates * Q4 2015 estimated based on Eurofer figures
Environment and markets
Chinese versus European CR 304 2B 2mm coil transaction price (USD/t)
Colled rolled stainless steel products imports in Europe, in %
1 500
2 000
2 500
3 000
3 500
4 000
4 500
5 000
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Aperam performance
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18
0
1
2
3
4
5
6
7
2007 2008 2009 2010 2011 2012 2013 2014 2015
ISSF Aperam
Health & Safety remains the first priority
Continue journey of progress and avoid unacceptable accidents and fatalities
* LTI Frequency Rate = lost time Injuries per 1.000.000 worked hours; based on own personnel and contractors
# ISSF 2015 data not yet available
Aperam performance
Aperam LTI frequency rate* Aperam and industry LTI frequency rate*
0
1
2
3
4
2007 2008 2009 2010 2011 2012 2013 2014 2015
N.A
. #
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Aperam performance Year on Year evolution of profitability
Continuous solid improvement of the operating performance as well as the net result
-111 -100
95
172
2012 2013 2014 20152012 2013 2014 2015
Ebitda evolution (mUSD)
Net result evolution (mUSD)
4,1%
5,7%
10,0% 10,6%
Ebitda from operations Ebitda from sale of electricity surplus X Basic EPS (USD)
2,21
1,21
-1,28 -1,39
Total Ebitda as % of Sales
498 490
292 217
X Ebitda (mUSD)
217
292
547 501
234
428 437
9
87
4260 58 44
2013 2014 2015 2013 2014 2015 2013 2014 2015
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Aperam performance Fourth quarter operating performance
EBITDA of 266 USD/t in 2015 compared to 302 USD/t in 2014
[1] Difference with total Aperam’s quarterly Ebitda comes from the Others & Eliminations. [2] Gains from electricity surplus of USD 57 m in 2014 and USD 3 m in 2015.
Yearly EBITDA evolution per division (USD million) [1] , [2]
Yearly shipments evolution (‘000t)
Stainless & Electrical Services & Solutions Alloys & Specialties
1.6831.728
1.8131.886
2012 2013 2014 2015
Brazil 195
Europe
243
Brazil 223
Europe
204 Brazil 159
Europe
76
94 95
28 9 8
Q3 2015 Q4 2015 Q3 2015 Q4 2015 Q3 2015 Q4 2015
439
469
486
455
476
Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015
104129
108 105
Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015
155133
117
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Aperam performance Fourth quarter operating performance
EBITDA of 221 USD/t in Q4 2015 compared to 237 USD/t in Q3 2015
[1] Difference with total Aperam’s quarterly Ebitda comes from the Others & Eliminations.
Q4 2015 EBITDA per division (USD million) [1]
Shipments (‘000t)
Stainless & Electrical Services & Solutions Alloys & Specialties Gains from sale of electricity surplus in Brazil
EBITDA (USD million)
440 455 466 478510
575
250
300
350
400
450
500
550
600
Q1 2015 Q2 2015 Q3 2015 Q4 2015 End of 2016
End of 2017
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Aperam performance
Profit improvement in Q1 due to market and internal initiatives but Q2 expected to be more challenging Continuous solid progress on the Leadership Journey reaching USD 478 million at the end of December 2015
Leadership Journey®
Cumulated gains (USD million) Key projects completed since beginning of 2011 • In Brazil, VSS*, switch from LPG to natural gas and conversion of blast
furnace number 2 from coke to biomass.
• In Europe, - Suspension of traditional cold roll mill in Isbergues - Completion of the new hot annealing and pickling line in Gueugnon - Industrial optimization and rationalization (from 29 to 17 tools)
• In Services & Solutions, Service Center expansion in Campinas
• Alloys & Speciality, completion of the Imphy meltshop enhancement
• Closure of Firminy (Precision)
• Yield and Quality improvement, Sourcing initiative, SG&A reduction through organisation simplification
• Debottlenecking the finishing line of the Imphy Wire Rod mill (A&S)
• Productivity increase of the downstream facilities in Genk, Gueugnon, Isbergues and Timoteo
• Upgrade of the Grain Oriented Electrical Steel operations in Timoteo
Key projects progressing
2,60
2,20
3,76
2,36
0,98
0,63
0,0
0,5
1,0
1,5
2,0
2,5
3,0
3,5
4,0
2010 2011 2012 2013 2014 2015
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Aperam performance Sustainable cash flow from operations across the cycles
Profit improvement in Q1 due to market and internal initiatives but Q2 expected to be more challenging Healthy Balance Sheet at the end of 2015 with a Net Debt of USD 316 million, representing a gearing of 14% and a Net Debt / EBITDA ratio of 0.6
[1] Debt Gearing defined as Net Debt divided by Equity. Net Debt / EBITDA is equal to Net Debt at end of the years divided by last 12 month rolling EBITDA
Aperam net debt and gearing[1] evolution (USD million)
Aperam Net Debt / Ebitda evolution, x
1066 878 816690
536
316
29%
26% 26%23%
20%
14%
0%
5%
10%
15%
20%
25%
30%
0
200
400
600
800
1 000
1 200
2010 2011 2012 2013 2014 2015
Net debt Gearing
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Aperam’s value strategy: A customer driven company focused on its self-help story
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Leverage Aperam’s unique position in Europe
The closest location to the scrap generating regions in Europe as well as the major stainless consumers
Aperam’s value strategy
Outokumpu
Acerinox
Aperam
Finishing line Steel making
Terni
European stainless steel industry footprint after restructuring Key strengths of the European operations of Aperam
Sourcing
Logistics
• The only integrated upstream operations in the heart of Europe, with the best access to scrap supply
• Best location to serve the biggest consumption areas of Europe
• Performant logistics between sites for a working capital management at the benchmark of the industry
Production
• Full range of products
• Flexibility and available capacity
• A strategy to be a cost benchmark on the key products of Aperam
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Optimise value creation in South America thanks to a perfectly adapted asset base and flexible sales management
The mitigation plan put in place by Aperam South America has enabled to fully offset the negative impacts in 2015 and further develop loyalty of domestic customers
Aperam’s value strategy
Key pillars of the mitigation plan in Brazil
Portfolio management
Domestic penetration
• Preferred supplier plan with best in class deliveries,
• Performant logistics with integrated service centers
• Support stainless steel substitution in South America
Cost competitiveness
• Ensure full utilisation rate with the best margin thanks to a wide range of products and geographical sales optimisation
• Develop new grades with higher added value (stainless substitution, HGO)
• Benchmark and best practice with European operations
• Leadership Journey on-going to improve equipments productivity
• Continuous improvement to at least compensate the inflation
Aperam’s assets optimisation in South Amercia
Timoteo meltshop 900kt capacity
• Stainless steel
• Electrical steel • Non grain oriented • Grain oriented • High grain oriented *
• Special carbon
Product mix Geographical mix
• Brazilian asset running at optimal utilisation rate with the current demand • Projects on-going to debottleneck the cold rolling operations • Upgrade of the Grain Oriented products with the development of HGO • Continuous margin optimization between products mix and deliveries in South America
Brazilian penetration
Exports
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Unlocking value of Aperam’s best performing assets
Leadership Journey program additional gains of about USD 100 million targetted over next 2 years to reach USD 575 million by end 2017, partially also from asset base upgrade projects
Aperam’s value strategy
Upgrade program launched on best performing assets since 2014 Leadership Journey initiatives since 2011 by typology
Launched at the early stage of the program, the restructuring initiatives are focused on the closure or mothballing of non-competitive capacities and the reduction of fixed costs through, in particular, process simplification
Restructuring
Cost cutting projects
Performance projects
In parallel to the restructuring initiatives, major cost cutting investments have been launched with the goal to improve the industrial footprint and to reduce the number of tools.
Several performance projects have been launched In order to reinforce the existing continuous improvement program and accelerate cost reduction. In particular, specific action plans have been implemented for sourcing, IT and SG&A.
• Productivity improvement of the downstream facilities in Genk (CAP2), Gueugnon (CAP10) and Timoteo (Sendzimir Mill #1).
• Upgrade of the Wire Rod mill in A&S
• Upgrade of GO operations in Brazil with development of HGO
• Upgrade of CAP 2 in Genk
• Upgrade of LC2i in isbergues
Tranche 1 USD52m of Capex
2014 - 2015
Tranche 2 USD30m of Capex
2015 - 2016
• Efficiency and competitiveness improvement of the lines CR6 and BA8 in Gueugnon
• Upgrade of compact box annealing furnaces of the Wire Rod mill in A&S
Tranche 3 USD30m of Capex
2015 - 2017
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Strengthening product and service differentiation Aperam’s value strategy
Shipments of Top Line products developments in kT
Good progress on Top Line development and innovation plan to support European growth and mitigate the impact of the current Brazilian environment
0
50
100
150
200
250
2014 2015E 2016F
• Toplines are commercial projects focusing on development of Aperam’s most profitable product, segment, client or geographical areas.
Top Line mindset
Innovation focus
• Among the Top Line products, specific focus is allocated to develop the innovative products (new products or application development). This allows niche presence as well as much higher margins.
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Aperam’s value strategy Priority on maintaining a strong Balance Sheet consistent with Investment Grade Financial ratios with cash resources allocated to:
Profit improvement in Q1 due to market and internal initiatives but Q2 expected to be more challenging A financial policy to maximize the long term growth of the company and the value accretion for its shareholders. The 2016 quarterly dividends will be paid on March 30, June 14, September 12 and December 12.
Invest in sustaining and upgrading the company’s assets base to continuously reinforce Leadership Journey and Top Line Strategy
Company sustainability
A base dividend of $1.25/sh (subject to AGM approval), anticipated to progressively increase over time (as the company continues to benefit from its strategic actions and capture growth opportunities). The company targets a NFD/EBITDA ratio of <1x (through the cycle). In the (unlikely) event that NFD/EBITDA exceeds 1x then the company will suspend the cash dividend.”
Dividend Policy
Compelling Growth and M&A opportunities with high hurdle rate 3 Value Accretive Growth & M&A
Remaining excess cash will be utilized in the most optimal way 4 Extra Cash Utilization
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• LITFR : 1 • Absenteeism: 2.2% • Performance review 87% Blue &
White collars • Among Brazilian top companies to
work for [2]
Sustainability is fully embedded in Aperam Strategy Aperam’s value strategy
[1] 2015 figures pertaining to environment are in final preparation and will be published with the sustainability report [2] For the fifth consecutive year, Aperam South America was selected as one of the best companies to work for by Guia Você S/A, in recognition of our work on employee health and wellbeing. [3] Per ton of crude steel
A clear program strenghthening Aperam strategic objectives and sustainability
Consider Safety as our first duty to our People.
Then Training & Career Development ensures motivation & efficiency.
Stainless Steel is greenest material being fully recyclable.
Aim to reduce our production costs & impacts to provide 100% recyclable
energy-efficient steel solutions.
Lead by example with strong sense
of ethics & integrity and through constant engagement
with all our Stakeholders in quest of mutually beneficial
solutions
• LITFR : 1 • Absenteeism: 2 • Performance reviews coverage:
100%
• Reduce by 35% CO2 intensity[2] by 2020 vs. 2007
• Reduce by 5% Energy intensity[2] by 2020 vs. 2012
• Become a zero-waste firm for landfill
• Maximize usage of charcoal from self cutivated forests in Brazil
• Majority BOD members being independent
• Executive remuneration linked to CSR indicators
• Full Compliance plan deployment • Become ‘Preferred Supplier’ • Strong audit and risk management
including whistleblowing policy
Priorities & targets Recent achievements[1]
People
Environment
Governance
Our vision
• 35% CO2 reduction[3] cuts realised
• 3.3% Energy intensity[3] reduction • 88.6% of our waste was recycled
or reused
• 4 independent members out of BOD of 7
• H&S KPI account for 10% of Annual Bonuses
• 100% employees trained. • Customer satisfaction: 7.8/10 • Aperam’s quality of corporate
governance disclosure recognized by Luxembourg Stock Exchange
Q&A
Waves Commercial Center, Metz, France
Gianni Ranaulo © Pino Musi 31
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Brazilian protections against unfair market behaviour
Tariff measures to support fair market environment in Brazil
Sources: SBB/Platts, Steelfirst
Environment and markets
Type of products Import duties status Anti-dumping status
Stainless Steel Flat Products
Normal import duties are 14% AD duties starting October 4th, 2013 for 5 years from 236 USD/t to 1,077 USD/t. The case involves CR 304 and 430, in thicknesses between 0.35mm and 4.75mm from China, Finland, Germany, Korea, Taiwan and Vietnam.
Stainless Steel Welded Tubes
14% of Import duties Stainless Steel welded tubes. AD duties starting July 29th, 2013 for 5 years and up to 911USD/t. Countries involved are China and Taiwan.
Electrical steel – Non Grain Oriented
14% of Import duties on NGO.
AD duties imposed for NGO on July 17th 2013 with fixed USD/t values ranging from 133 USD/t to 567 USD/t for 5 years. The countries involved are China, Korea and Taiwan.
On August 15, 2014, Camex released NGO AD partially, giving 45Kt of imports in the next 12 months without AD penalties.
On November 4, 2015, Brazilian authorities decided to end up the existing quota of imports without AD and fixed the AD duties from 90 USD/t to 132,5 USD/t
Electrical steel – Grain Oriented
Normal import duties are also 14%
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Definitive European anti-dumping duties on China and Taiwan stainless steel imports from August 27, 2015
Recent anti-dumping measures should create a stable and fair European market environment for next 5 years
Source: http://www.eurofer.be/News%26Media/Press%20releases/20150827%20antidumping%20SSCR%20China%20Taiwan.fhtml
Environment and markets
• On May 13, 2014, Eurofer filed an antidumping complaint to European Commission
• On June 26, 2014, European Commission started investigation on CR imports from China and Taiwan
• On March 25, European Commission implemented provisional duties from 24-25% for China and 10-12% for Taiwan.
Anti-dumping duties were applicable during this period with regularisation to be done once final decision would be taken.
• On August 27, 2015, the European Commission Implementing Regulation largely confirmed existing provisional measures and imposes definitive anti-dumping duty rates of up to 25.3% on SSCR imports from China, and up to 6.8% on imports from Taiwan.
“China and Taiwan have a structural overcapacity problem, and have been using the openness of the EU market to shed their excess production. This dumping has seriously undermined the profitability of the European stainless steel industry, and has ensured that European producers have not faced a level playing field for their products.”
Said EUROFER Director General Axel Eggert.
Anti-dumping development