eramet shareholders' meeting 2014 mr buffet ceo · combined general shareholders' meeting...

ALLOYS,ORES AND PEOPLE.

ALLOYS,ORES AND PEOPLE.

ERAMETCombined General Shareholders' Meeting

May 14, 2014

Mr Patrick BUFFETChairman and CEO

ACTIVITY IN THE DIVISIONS 14

2013 RESULTS 3

THE ERAMET GROUP'S STRATEGIC PROJECT 38

OUTLOOK 31

CONTENTS

ERAMET ‐ Combined General Shareholders' Meeting – May 14, 2014 2

CONCLUSION 40

ERAMET ‐ Combined General Shareholders' Meeting – May 14, 20143

2013 RESULTS

The Eramet Group's results for 2013 reflect the extremely low nickel prices during the year.

ERAMET demonstrated its agility in a tough global environment in fiscal 2013, based on the strength ofERAMET Manganese.

2014 will see the Group further sharpen its existing focus on implementing measures to adjust to the crisisand on maintaining sound financial health, by introducing further initiatives to reduce costs and trimworking capital requirements. ERAMET will also curb capital expenditure to cap it at under €400 million.

The ERAMET Group enjoys robust strengths anchored in its strong business portfolio, with world leadingpositions in manganese, a targeted industrial investment policy, excellence in R&D and strongly motivatedteams to deliver continuous improvement and sustainable performance results. A record for manganeseore production was achieved in Gabon in 2013.

2014 will bring benefits for the Group as its two largest single investments in new sites come on stream:• The Moanda metallurgy complex in Gabon;• The Grande Côte mineral sands deposit in Senegal.

INTRODUCTION


ERAMET GROUP FINANCIAL POSITION AT DECEMBER 31, 2013

Moderate debt: • At December 31, 2013, ERAMET's net debt amounted to €218 million;• A consistently low debt‐to‐equity ratio (7%).

Financial liquidity boosted at end‐2013, notably by:• The inaugural €400 million, 7‐year bond issue, added to by new bonds totaling €125

million issued on May 14, 2014, and supplemented by a €50 million 12‐year private placement in April 2014.

• The successful renegotiation of a syndicated credit line, which increased the €800 million facility to €981 million.


2012 2013M€

Turnover 3,447 3,162

EBITDA 407 231

Current operating income 153 ‐45

Net income ‐ Group share before depreciation of assets 9 ‐74

Depreciation of assets ‐ Group share ‐ ‐296

Net income ‐ Group share after depreciation of assets 9 ‐370

Cash / net debt 448 ‐218

KEY FIGURES


CURRENT OPERATING INCOME

7

Group

Alloys

Manganese

4‐5

‐38

153

240

Nickel ‐222

218

‐45

2012 2013

-250

-100

50

200

350

500

650

800

950

1 100

1 250

1 400

2007 2008 2009 2010 2011 2012 2013

M€

NickelManganeseAlloysGroup ERAMET ‐ Combined General Shareholders' Meeting – May 14, 2014

M€2012

2013 Before

depreciationDepreciation 2013

Turnover 3,447 3,162 3,162

EBITDA 407 231 231% Turnover 12% 7% 7%

Current operating income 153 ‐45 ‐45% Turnover 4% ‐1% ‐1%

Other operating income and expenses ‐74 ‐ 80 ‐503Depreciation of assets ‐423Operating income 79 ‐125 ‐423 ‐548

Net cost of debt 8 ‐7 ‐7Other financial income and expenses ‐15 ‐25 ‐25Earnings before tax 72 ‐157 ‐423 ‐580

Share of income from equity‐accounted companies 0 1 1Taxes ‐29 72 72% Taxes 40% 46% 12%Net income 43 ‐84 ‐423 ‐507

Minority interests ‐34 10 127 137Net income, Group share 9 ‐74 (*)‐296 ‐370

2013 INCOME STATEMENT

ERAMET ‐ Combined General Shareholders' Meeting – May 14, 2014 8(*) Weda Bay: €224 million ‐ Recycling: €39 million ‐ High‐speed steels: €33 million

DEPRECIATION IN 2013(WITH NO IMPACT ON THE GROUP'S CASH)

Pursuant to IAS 36, with no impact on the ERAMET Group's solvency and liquidity


2013 depreciation in M€ O/w Group O/w Minorities’Share share

Weda Bay ‐337 ‐224 ‐113

Recycling ‐53 ‐39 ‐14

ERASTEEL ‐33 ‐33

Group total ‐423 ‐296 ‐127

Total

CHANGE IN COI


2013 COI

85

‐45

Provisions & other*

‐40

Productivity

‐29

Currencies

‐2

2012 COI Cost offactors

Volumes

‐11

Price

‐201

153

* including amortisation of €18 million

M€

448

74

87

‐587

‐252

12‐218

Trésorerie nette2012

MBA Variation duBFR

Investissementsindustriels

Dividendesversés*

Autres Trésorerie nette2013

Net cash2012

Gross cashflow

Variation in WCR

Dividends paid*

Industrial capital expenditure

Net cash2013

Others

CHANGE IN NET CASH


* O/w €218 million paid to minority shareholders of COMILOG and SLN

Flows fromoperating activities

M€

CONSOLIDATED FINANCIAL LIQUIDITY

ERAMET Group liquidity in M€


12

989911

365 252

0

400

800

1 200

1 600

2 000

2 4002 1442 154

981

2012

800

2013

Revolving credit lineAvailable cashUndrawn commercial paper

Notes:1 excluding €85 million maturing in January 2017

Revolving credit line• A multi‐currency credit facility of

approximately €1 billion• Undrawn to date• Maturing in: January 20181

Commercial paper• €400 million in total• Amount drawn: €148 million at 31/12/2013

ERAMET EMBARKED ON REDUCING ITS INDUSTRIAL CAPITAL EXPENDITURE IN 2013:20% REDUCTION IN CURRENT CAPITAL EXPENDITURE IN 2013 VS. 2012


050

100150200250300350400450500550600650

2013

Major projects*

492

2010

326

2009

286

2008

419

Current capex

2012 2013

587

2011

641-8%

587

Capexin M€

Nickel Manganese Alloys

* Weda Bay , CMM, 4 MT, New Guilin, Tizir.

‐20%


World number 2 producer of ferronickel One of only three producers of high‐purity nickel in the world Leading global producer of nickel chloride One of the three main producers of nickel carbonate worldwide

ACTIVITY IN THE DIVISIONS

ERAMET NICKEL

0

4

8

12

16

20

24

28

0

4

8

12

16

20

24

28

104

2 3 4 105

2 3 4 106

2 3 4 107

2 3 4 108

2 3 4 109

2 3 4 110

2 3 4 111

2 3 4 112

2 3 4 113

2 3 4 114

Stocks of nickel ore in China (in nickel equivalent), in weeks' consumptionStocks of nickel (LME + nickel producers), in weeks' consumptionLME average , USD/lb

Nickel price in USD/lb and nickel inventories

In weeks' consumption USD / lb

GLOBAL NICKEL MARKET ONCE AGAIN IN SURPLUS AND LME NICKEL PRICES DOWN 14% TO 6.81 USD/lb IN 2013 VS. 2012


Over‐supply


Other producers

NPI (Nickel

pig iron)

New projects

0

200

400

600

800

1 000

1 200

1 400

1 600

1 800

2008

2009

2010

2011

2013

8%

2005

2006

2007

2012

Global primary nickel production, in KT

In KT

SURPLUS PRODUCTION OF NICKEL ROSE IN 2013, FUELLED PRIMARILY BY THE RAMP‐UP IN NICKEL PIG IRON PRODUCTION IN CHINA (UP 20 %)

0

100

200

300

400

500

2007

2008

2009

2010

2011

2012

2013

NPI BF NPI EAF NPI RKEFIn KT

Nickel pig iron production in China, in KT of nickel

Up 300 KT in four years, to account for 25% of global production

* Blast furnace

* ** ***

** Electric Arc Furnace

*** Rotary Kiln Electric Furnace

The mining law was approved by the Indonesian parliament in 2009. It introduces a ban on theexport of unprocessed metals, particularly nickel, from January 2014 in a move designed toencourage the development of the domestic processing sector and industry.

The Indonesian ban took effect on January 12, 2014, with no major change in the provisions foreither nickel or bauxite:

The ruling requires mineral ore to be processed or refined in Indonesia

To be eligible for export, processed products must meet specified purity levels: 70% fornickel matte, 10% for ferronickel, 4% for nickel pig iron and 93% for nickel metal

INDONESIAN BAN ON EXPORTS OF UNPROCESSED NICKEL ORE IN FORCE FROM JANUARY 2014


17

NICKEL SUPPLY/DEMAND BALANCE


Growing nickel surplus in 2013

* LME + producers' inventories** ERAMET Nickel estimates*** This figure is greater than 24 weeks' consumption (see slide 15), if we include the nickel inChinese ore stocks.

WORLD ( ‘000 t.) 2010 2011 2012 2013** %

Stainless steel production 30,904 33,207 35,336 37,788 6.9%

Apparent nickel consumption 1,447 1,588 1,683 1,760 4.6%

Nickel production 1,434 1,608 1,764 1,910 8.3%

Supply/demand balance ‐ 13 20 81 150

Nickel inventories in weeks' consumption*

12.1 12.2 13.4 16.9***

WEDA BAY NICKEL

In light of current nickel prices, the conditions are not ripe (particularly with regard to financingand the preparation of the legal and fiscal framework) to consider an investment decision in2014;

The quality of the project is not called into question, which is based on world‐class deposits anda hydrometallurgy process specially developed by ERAMET for this type of deposit.



World number 2 producer of high‐power closed‐die forged parts World number 2 producer of high‐speed steel World leader in gas atomised powder metallurgy One of the leading producers of high‐performance special steels


ERAMET ALLOYS

CONTINUED GROWTH IN THE AEROSPACE MARKET

1 348

1 274

1 011972979

858894

832

668605553684

852

1 189

400

600

800

1 000

1 200

1 400

1 600

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014


Further rise in Boeing and Airbus deliveries in 2013 compared with 2012

Number of aircraft Actual Forecast

Deliveries

STRATEGIC VISION FOR ERAMET ALLOYS' CORE BUSINESS


Aerospace and energy closed‐die forged parts

Aerospace long parts and specialty parts (medical and others)

Nuclear and Defense Products

Powder metallurgy

RAMP‐UP OF STRATEGIC INVESTMENTS


Powder metallurgy: DurinTMatomisation tower IV 30

PS 27

UKAD

2013: FAR‐REACHING TRANSFORMATION UNDER WAY


A whole series of breakthrough actions was launched and is being implemented in all areas of ERAMETAlloys:• Initiated with the support of an outside firm, these measures included the formation and training of

Change Leader teams to gradually implement change projects across the division.• The aims of the transformation programme are clear:

eliminate anything that does not add value, simplify flows and reduce in‐process materials, address anomalies immediately, cut production costs.

Hand‐in‐hand with the advanced steps introduced to boost productivity and operating performance, whichhave delivered €20 million in productivity gains (equating to 5% of direct production costs), additionalradical measures are aimed at reducing general expenses.

ERAMET Alloys is undertaking a root‐and‐branch review of the operation of its support functions to movetowards Lean operation and thereby reduce general costs.

The target is to achieve €23 million in annual savings by end 2015, or 15% of general expenses as at end‐2012.

Closure of the historic Gennevilliers site on 31/07/2013

Shutdown of the Söderfors steel mill during H1 2013

Headcount cut by 25% at Firminy (in process)

Currently examining options to return Erasteel to profitability in the long term, taking intoaccount the excess production capacity for conventional high‐speed steel and refocusing onErasteel's strengths:

Powder metallurgy Processing


INDUSTRIAL RECONFIGURATION OF ERAMET ALLOYS


World number 2 producer of high‐grade manganese ore World number 2 producer of manganese alloys Leading global producer of refined manganese alloys Leading global producer of manganese chemical derivatives World number 3 supplier of titanium dioxide for the pigments industry


ERAMET MANGANESE

Global carbon steel production

Source: World Steel Association

2013 GLOBAL CARBON STEEL PRODUCTION ROSE 3.5% YEAR‐ON‐YEAR


0

300

600

900

1 200

1 500

1 800

2009

1 216

47%

53%

2008

1 330

38%

62%

2007

1 345

36%

64%

2006

1 252

34%

66%

2005

1 147

31%

69%

2004

1 067

26%

74%

2013

49%

51%

1 5821 519

46%

54%

China

1 529

201220112010

53%Rest of world

47%

1 426

45%

55%

3,5%

Mt

CIF CHINA MANGANESE ORE SPOT PRICES (SOURCE: CRU) UP 10% TO 5.43 USD/DMTU IN 2013 VS. 2012


CIF China manganese ore prices (Source: CRU)and manganese ore inventories in Chinese ports

$/dm

tu

000 metric tons

Ore price Stockpile level in Chinese ports

3 201 3 434

0

1 000

2 000

3 000

4 000

2013

+22%

2012

3 037

20112010

3 703

Output of manganese ore rose 22% in 2013 from 2012 levels

Kt

RECORD PRODUCTION OF HIGH‐GRADE MANGANESE ORE BY ERAMET MANGANESE IN 2013


MANGANESE ORE AND SINTER PRODUCTION

ERAMET MANGANESE INCREASED PRODUCTION OF MANGANESE ALLOYS IN 2013

ERAMET ‐ Combined General Shareholders' Meeting – May 14, 2014 30Manganese alloy production

0

150

300

450

600

750

900

Refined alloys

Standard alloys

730

48%

52%

784

46%

54%

779

42%

58%

+2%

2013

49%

51%

2010 2011 2012

746

Kt

RECORD PRODUCTION OF REFINED ALLOYS


OUTLOOK

2014 OUTLOOK

Significant rebound in nickel prices since March 2014.

Outlook less favourable for manganese

ERAMET Group turnover should pick up in Q2 2014, compared with Q1 2014.

Nonetheless, in view of the relative movement in nickel and manganese prices, currentoperating income for first‐half 2014 should be approximately the same as in second‐half 2013.

The measures introduced to improve productivity and trim costs at all levels of the Group willcontinue during 2014.

Sharp reduction in capital expenditure (< €400 million)

ERAMET intends to pursue its strategy of diversifying financing resources. The Group's financialstructure will remain sound.



MAJOR PROJECTS COMING ON STREAM

Construction of a silicomanganese plant (65,000 t/yr) and a manganese metal plant (20,000 t/yr) in Moanda

Capital expenditure of some €240 million

Start‐up in 2014

MOANDA (GABON) METALLURGICAL COMPLEX


MINERAL SANDS: START‐UP IN Q1 2014 OF THE "GRANDE CÔTE" PROJECT IN SENEGAL


There is significant potential demand for the Group's metals and alloys, especially in emergingmarkets.

In the long term, the depletion of older deposits and the need to meet growing demand willrequire specific technologies, developed by ERAMET's R&D, to exploit increasingly complexdeposits.

With world‐class deposits and innovative technologies, the Group has the capability to deliverefficient and value‐generating solutions across the entire value chain, from processing throughto the finished product.

OUTLOOK ‐MEDIUM AND LONG TERM


MABOUMINE PROJECT IN GABON: BENEFICIATION OF RARE EARTHS AND NIOBIUM


A potentially world‐class polymetallic deposit near Lambaréné in Gabon.

An innovative hydrometallurgy process developed by ERAMET Research.

Trials under way to bring a pilot plant on stream at the site in September 2016.


THE ERAMET GROUP'S STRATEGIC PROJECT

A sustainable and profitable growth strategy to strengthen and diversify the Group's currentpositions.

• Expand our global leadership positions in alloying metals (existing and new metals)

• Strengthen our positions in high‐end metallurgy

• Diversify our portfolio into special metals with high growth potential (e.g.: zircon andtitanium dioxide)

• Increase the Group's geographical diversification

THE ERAMET GROUP'S STRATEGIC PROJECT



CONCLUSION


APPENDIX

2 532

2 994

4 779

970

815

4 084

218

856

478

863

773

64

448

4 084

3 305

4 779

3 465

Provisions and net deferred taxesMinority interests

Shareholders’ equity – Group share

Net debtFinancial instrumentsNet cashWCR requirementsNon‐current assets

12/31/2012 12/31/2013 12/31/2013 12/31/2012

Assets Liabilities

in millions of €

BALANCE SHEET AS AT DECEMBER 31, 2013


SHAREHOLDING AS AT DECEMBER 31, 2013


Number of issued shares: 26,543,218Shareholders' agreement: FSI Equation, Sorame and CEIR

1.07%

Bpi France

Others

Treasury shares

Breakdown by sector

0

100

200

300

400

500

600

700

800

900

1 000

H2 20

12

H1 20

12

H2 20

11

H1 20

11

H2 20

10

H1 20

10

H1 20

13

H2 20

13

Millions of €

ERAMET MANGANESE: BREAKDOWN OF 2013 TURNOVER


Ore / Alloys79%

Chemicals / Recycling

16%

Titanium dioxide and

high‐grade pig iron5%

Breakdown by sector

Millions of €

0

100

200

300

400

500

600

H1 20

12

H2 20

11

H1 20

11

H2 20

10

H1 20

10

H1 20

13

H2 20

13

H2 20

12

ERAMET NICKEL: BREAKDOWN OF 2013 TURNOVER


Stainless steels and alloys

82%

Chemicals, Nickel plating, Electronics

11%

Tooling (Eurotungsten)

7%

0

100

200

300

400

500

600

H2 2012

H1 2012

H2 2011

H1 2011

H1 2013

H2 2010

H1 2010

S2 2013

Breakdown by sector

Millions of €

ERAMET ALLOYS: BREAKDOWN OF 2013 TURNOVER


Aerospace55%

High‐speed steel & Tooling

19%

Specialties13%

Energy13%

Acier au carbone37%

Stainless steels18%

Other Ni 4%

Aerospace16%

Tooling5%

Energy4%

Other Alloys4%

Autres MN 5%

Pigments 2%

Piles &Batteries2% Specialty Chemicals

3%

BREAKDOWN OF 2013 TURNOVER BY MARKET

ERAMET – GROWTH MARKETS IN THE LONG TERM


Steels: 55%

Carbon steels

Batteries

Other MN

eramet shareholders' meeting 2014 mr buffet ceo · combined general shareholders' meeting...

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