Eramet: EBITDA at €982m, continued Group deleveraging in
first-half 2022
Paris, 27 July 2022, 6:30 p.m.
PRESS RELEASE
Eramet: EBITDA at
€982m1, continued Group
deleveraging in
first-half 2022
-
High price levels for all of the Group’s markets,
in particular for manganese alloys (from +45% to +70% in Europe vs.
H1 2021) and high-grade manganese ore (+34%), combined with a
favourable €/$ currency
effect.
-
Strong growth in volumes, continued development
plans:
- +16% of
manganese ore produced and transported in Gabon (vs. H1 2021)
- +31% of exported
volumes of nickel ore from New Caledonia
- +33% of nickel ore
produced in Weda Bay
-
In the new Eramet scope, excluding operations sold or in the
process of being sold1:
-
Group half-year EBITDA more than tripled to
€982m
- Very strong
increase in Free Cash-Flow (FCF) to €429m, including €86m
linked to the sale of Sandouville in February
- Continued
Group debt reduction with leverage of 0.4x
-
Net income, Group share at
€677m
-
Construction of the lithium plant in Argentina started, in line
with the initial schedule
-
Continued studies as part of the partnership with BASF for the
production of battery-grade nickel and cobalt
-
Signing of the Share Purchase Agreement for Aubert & Duval in
June; completion expected by the end of the year, marking the
refocusing on Mining and Metals activities
-
2022 Outlook:
-
Production volume targets
confirmed, except SLN
- Favourable
seasonality in H2, leading to a positive intrinsic
performance over the year
- Prices
expected to decline in H2:
- Significant
trend reversal in H2 for manganese alloys invoiced selling prices,
as expected
- Consensus2 for
average manganese ore prices at $6.4/dmtu for the year ($6/dmtu in
H2) and LME nickel prices at $25,600/t ($24,500/t in H2);
ferronickel price at a level well below the LME nickel price
-
Input costs to remain at
high levels
-
Strongly negative
impact of all external factors in
H2
- In an inflationary context which
remains uncertain, and based on the consensus of the abovementioned
prices, forecast EBITDA revised up to around
€1.6bn3 in
2022
Christel Bories, Eramet group Chair and
CEO:
We achieved a very good first half-year,
characterised by an increase in our production volumes in a
particularly favourable price environment.
We enter the second semester by strengthening
our mobilisation on operational excellence and cash optimisation,
in a more uncertain macroeconomic context.
Eramet continues to refocus itself on a
portfolio of competitive and cash-generating mining and
metallurgical assets and now has a more solid financial
structure.
This strengthened position enables us to support
our future growth, supported by an increasingly exemplary approach
to social responsibility.
The Group continued to successfully implement
its CSR roadmap.
Safety is constantly and regularly improving.
The accident frequency rate declined 19% in H1 2022 vs. end-2021
(Group TRIR4 at 1.8), with no serious accidents recorded since
April 2021.
With the certification of Gabon’s mining and
industrial sites in June, all of Eramet’s mining and metallurgical
sites are now ISO 50001 certified, attesting to the implementation
of effective energy management.
The Group has also developed contributive
programmes with local communities located near its operations:
- In Senegal, the
first half-year was marked by the commissioning of an 8 km pipeline
extension, now enabling access to water for 7 districts of the town
of Mékhé,
-
In Argentina, a programme to improve farming conditions at high
altitudes was started with local farmers, as well as the
installation of solar heaters on top of houses to provide access to
water in winter for nearly 25 families in the village of Santa Rosa
de los Pastos Grandes,
-
In Gabon, works to improve infrastructures and support education
continue in the neighbouring towns of the Moanda mine. The first
half-year achievements notably include the completion of works to
renovate public lighting in Bakoumba and to build drilling sites
and standpipes in five neighbouring towns, as well as the launch of
a new training programme for digital professions in the new FabLab
in Moanda, inaugurated in the spring. These works address the
priorities identified with all local stakeholders and are financed
by the two CSR funds created in 2021 with the Gabonese state,
-
In New Caledonia, an agreement signed by SLN in February 2022 with
the government provides that CSR efforts are increased and
regularly shared site by site with all institutions. Through its
partnerships with municipal authorities and provinces, SLN aims for
positive impacts contributing to the territorial rebalancing,
particularly between the municipalities on the East and West
coasts.
In addition, the Group pays particular attention
to the rehabilitation of sites and the preservation of
biodiversity, with a commitment to a ratio above 1 between
rehabilitated areas and cleared areas for the 2019-2023 period. It
amounted to 0.98 in H1 2022, a significant improvement on H1 2021
(0.71), and to 1.09 for the 2019-H1 2022 period. To help nature
regenerate by preserving biodiversity, local plant nurseries have
been developed at each mining location, accompanied by the
implementation of effective revegetation methods.
In terms of extra-financial performance, the
Group was awarded a score of 73/100 by EcoVadis in respect of 2022.
Eramet thus retains the Gold level and remains ranked among the top
3% of companies in the sector.
Lastly, in preparation for its adhesion to the
Initiative for Responsible Mining Assurance (IRMA), the
international standard for responsible mining, a self-assessment
mission was conducted in June at the Lithium project site in
Argentina. The results of this mission confirmed the teams’
appropriation of the process, as well as a current level of
performance with regard to the 400 criteria of the reference system
which validates progress towards the next stage of an external
audit, necessary for obtaining IRMA certification.
-
Eramet2 group key
figures
(Millions of euros)1 |
H1 20222 |
H1
2021Restated2 |
Chg. (€m) |
Chg.3 (%) |
Turnover |
2,635 |
1,471 |
1,164 |
+79% |
EBITDA |
982 |
301 |
681 |
+226% |
Current operating income (COI) |
853 |
175 |
677 |
+386% |
Net income from continuing operations |
783 |
123 |
660 |
+537% |
Net income from discontinued operations |
(13) |
(53) |
39 |
n.a. |
Net income, Group share |
677 |
53 |
624 |
n.a. |
Group Free Cash-Flow |
429 |
166 |
264 |
+159% |
|
|
|
|
|
|
|
30/06/222 |
31/12/212 |
Chg. (€m) |
Chg.3 (%) |
Net debt |
(748) |
(936) |
188 |
-20% |
Shareholders' equity |
2,155 |
1,335 |
820 |
+61% |
Leverage (Net debt-to-EBITDA ratio)4 |
0.4 |
0.9 |
-0.5pts |
n.a. |
Gearing (Net debt-to-equity ratio) |
35% |
70% |
-35pts |
n.a. |
Gearing within the meaning of bank covenants5 |
21% |
51% |
-30pts |
n.a. |
ROCE (COI/capital employed6 for previous
year) |
57% |
30% |
+27pts |
n.a. |
1 Data rounded to the nearest million.2
Excluding Aubert & Duval, Sandouville and Erasteel which, in
accordance with the IFRS 5 standard – “Non-current assets held for
sale and discontinued operations”, are presented as operations in
the process of being sold in 2022 and 2021. See reconciliation
tables in Appendix 1.3 Data rounded to higher or lower %.4
Calculated on a 12-month rolling basis at 30 June.5 Net
debt-to-equity ratio, excluding IFRS 16 impact and French state
loan to SLN.6 Total shareholders' equity, net debt, site
restoration provisions, restructuring and other social risks, less
long-term investments, excluding Weda Bay Nickel capital employed.
At 30 June 2022, ROCE is calculated on a 12-month rolling
basis.
N.B. 1: all the commented changes in H1 2022 are
calculated with respect to H1 2021, unless otherwise specified.
N.B. 2: all the commented figures for H1 2022
and H1 2021 correspond to figures in accordance with the IFRS 5
standard as presented in the Group’s consolidated financial
statements, unless otherwise specified.
N.B. 3: mentions of Q1, Q2, Q3 and Q4 refer to
the four quarters of the financial year
The Group’s turnover amounted
to €2,635m in H1 2022, up very significantly by
79% (+67% at constant scope and exchange rates5, and +12% currency
effect). This growth was driven by a particularly favourable price
environment (notably for manganese alloys activity) as well as
growth in volumes sold (particularly for manganese ore activity and
nickel ore exports from New Caledonia).
Group EBITDA totalled
€982m, very strongly increasing (more than
tripling), in a context of slowdown in activity in China, mainly
linked to the lockdowns.
This increase notably reflects a positive net
impact of external factors (€729m):
- A favourable
price effect (+€844m), including +€439m for manganese alloys,
+€187m for manganese ore and +€160m for nickel,
- A positive
currency effect (+€85m), factoring in a more favourable €/$
exchange rate (effective exchange rate at 1.13 vs. 1.23 in H1
2021),
- Partly offset by
a strong increase in input costs of (-€201m), mainly energy,
reducing agents and freight.
Energy costs (notably electricity and fuel oil)
continued to increase in H1, against the backdrop of the war in
Ukraine. Sea freight prices, which had reached historically high
levels in 2021 in a context of post-Covid logistics congestion,
eased during the period versus H2 2021. However, they remained at
historically high levels (spot price x 4 for containers and x 2.5
for bulk compared to the average of recent years).
Intrinsic performance benefitted from a
favourable volume effect. Conversely, in order to support growth
and factoring in inflation, the Group saw its operating costs
increase. Overall, intrinsic performance was slightly negative at
€37m.
Current operating income came
to €853m, after booking a depreciation expense on
fixed assets of -€130m.
Net loss for discontinued
operations amounted to -€13m.
As a result, net income, Group
share for H1 2022 was €677m, including
the share of income in Weda Bay (+€147m).
Free Cash-Flow (“FCF”) amounted
to €429m in the new scope of the Group. It
included a €121m contribution from Weda Bay in addition to net
proceeds from the sale of the Sandouville plant (€86m). The
increase in prices and activity led to an increase in
working capital requirement (WCR) of €324m over
the period.
Capex disbursements accounted
for €250m, excluding operations in the process of
being sold (€21m in H1 2022). They include €118m
in growth capex, notably in Gabon to support organic development in
mining production and rail transport capacity (€101m), as well as
€33m in investment linked to the lithium project, entirely financed
by Tsingshan via a capital increase of the Argentine subsidiary.
Current capex increased, amounting to €100m in H1 2022.
Net debt stood at
€748m6 at 30 June 2022, a reduction
of nearly €190m7 due to the Group’s
strong cash generation, and factoring in a negative FCF of
-€136m in discontinued operations (A&D and Erasteel),
strongly affected by the increase in energy and raw material
prices. The change in net debt also includes dividends paid to
Eramet shareholders (-€72m) and Comilog minority shareholders
(-€32m) in respect of the 2021 financial year.
The leverage ratio was
0.4x, the lowest level achieved by the Group for
the last five years.
The Group’s liquidity increased
to €2.2bn at 30 June 2022. Eramet refinanced the
Revolving Credit Facility (“RCF”) in June. The maturity is five
years with two successive 1-year upfront extension options (June
2023 and June 2024), potentially leading to June 2029. The
agreement also includes an incentive scheme for achieving two of
the Group’s main CSR indicators.
(Millions of euros)1 |
H1 20222 |
H1
2021Restated2 |
Change (€m) |
Change3 (%) |
CONTINUING OPERATIONS |
Manganese BU |
Turnover |
1,647 |
887 |
760 |
+86% |
|
EBITDA |
831 |
280 |
551 |
+197% |
Manganese ore activity4.5 |
Turnover |
747 |
432 |
315 |
+73% |
|
EBITDA |
343 |
151 |
192 |
+127% |
Manganese alloys activity4 |
Turnover |
901 |
455 |
446 |
+98% |
|
EBITDA |
488 |
128 |
360 |
+281% |
|
|
|
|
|
|
Nickel BU |
Turnover |
762 |
438 |
323 |
+74% |
|
EBITDA |
118 |
24 |
94 |
+395% |
|
|
|
|
|
|
Mineral Sands BU |
Turnover |
224 |
138 |
86 |
+62% |
|
EBITDA |
97 |
47 |
50 |
+107% |
|
|
|
|
|
|
Lithium BU |
Turnover |
0 |
0 |
0 |
n.a. |
|
EBITDA |
(8) |
(2) |
(6) |
n.a. |
|
|
|
|
|
|
Total Mining and Metals
operations |
Turnover |
2,633 |
1,464 |
1,169 |
+80% |
|
EBITDA |
1,038 |
348 |
689 |
+198% |
|
|
DISCONTINUED OPERATIONS |
Aubert & Duval |
Turnover |
278 |
244 |
34 |
+14% |
|
EBITDA |
(30) |
(15) |
(15) |
n.a. |
|
|
|
|
|
|
Erasteel |
Turnover |
138 |
86 |
52 |
+61% |
|
EBITDA |
12 |
3 |
9 |
+300% |
|
|
|
|
|
|
Sandouville |
Turnover |
11 |
77 |
(66) |
-85% |
|
EBITDA |
(2) |
(14) |
11 |
n.a. |
1 Data rounded to the nearest million.2
Excluding Aubert & Duval, Sandouville and Erasteel which, in
accordance with the IFRS 5 standard – “Non-current assets held for
sale and discontinued operations”, are presented as operations in
the process of being sold in 2022 and 2021. See reconciliation
tables in Appendix 1.3 Data rounded to higher or lower %.4 See
Financial glossary in Appendix 8.5 Turnover linked to external
sales of manganese ore only, including €41m linked to Setrag
transport activity other than Comilog's ore (stable vs. H1
2021).
Manganese BU
In H1 2022, in Gabon, Moanda confirmed
its status as the world’s leading high-grade manganese mine with a
positioning in the first quartile of the cash cost curve. Volumes
produced increased by 17% to 3.6 Mt.
The Manganese BU posted strong growth in
turnover to €1.6bn (+86%) and EBITDA which almost tripled, to more
than €800m.
EBITDA for the manganese alloys activity
was up very significantly to €488m (c.
x4), driven by the strong increase in selling prices, and
this despite a slight decline in volumes sold
(- 4%) and a less favourable
product mix.
EBITDA for the manganese ore activity
also increased to €343m8 (x2), reflecting the
growth in ore volumes sold externally (+17%) in a favourable price
environment.
Market trends & prices
Global production of carbon steel, the main
end-product for manganese, reached 967 Mt9 in H1 2022, down by
nearly 5%9. This decrease mainly reflects the decline in production
in China (54% of the global total) of 6.2%9. The decline in the
rest of the world was less marked (-2.5%9): production in North
America and Europe was down by 2.0%9 and 4.1%9 respectively. Only
production in India was up, by 8.5%9.
In this context, manganese ore consumption fell
by more than 3%9 to 10.7 Mt9, while global ore supply remained
almost stable (-0.1%9) at 10.3 Mt9. The increase in production in
Gabon and South Africa offset the decline, resulting from operating
difficulties, in production in the rest of the world, particularly
in Australia and Brazil – two of the main high-grade ore producing
countries. The supply/demand balance remained in deficit in H1 2022
with Chinese port ore inventories ending at 5.2 Mt9, down slightly
versus end-2021, representing approximately 9 weeks’
consumption.
The average CIF China 44% manganese ore price
index stood at $6.8/dmtu10 in H1 2022, up +34%10 on H1 2021
($5.1/dmtu). It reached a high of $8/dmtu in April. In a context of
rising energy costs and a relative shortage of supply, the price
differential between high-grade ore (44%), which is coveted for its
better energy performance, and lower grade South African ore (37%)
thus substantially increased over the period. These price levels
are, however, largely resulting from high freight costs in the
half-year.
Manganese alloys prices remained at high levels
during the period. The price index (CRU) for refined alloys in
Europe (MC Ferromanganese) ended at €3,254/t in H1 2022 (+73%10)
and that of standard alloys (silicomanganese) ended at €1,739/t
(+46%10). These half-year indices do not, however, reflect the
decline in prices initiated in Q2 2022 and which will be invoiced
in Q3 2022. Indeed, faced with uncertainty weighing on future
demand, steelmakers began a destocking process at end-Q2 and
reduced their contractual commitments to volume floor levels, in
order to increase their purchasing flexibility at spot prices. As a
result, invoiced prices on average in Q3 2022 should be largely
de-correlated from Q2 2022 average price index levels by posting
significant discounts, particularly for refined alloys (mainly used
for steel in the automotive industry).
Activities
In Gabon, thanks to the mine expansion programme
combined with continuous operational improvements,
manganese ore production strongly increased to
nearly 3.6 Mt in H1 2022 (+17%). The improvement in Setrag’s
logistical performance enabled the transportation of nearly 3.4 Mt
in ore (+16%) compared to H1 2021, impacted by incidents on the
railway line. External sale volumes amounted to 2.9 Mt (+17%).
The FOB cash cost11 of manganese ore activity
was $2.22/dmtu, a slight decrease versus H1 2021. Favourable
effects linked to growth in volumes and currency were partly offset
by an increase in sales taxes12 as well as fixed costs to support
the ramp-up in production.
A solution for the transport of manganese ore by
larger vessels was deployed at the beginning of the year, with the
loading of 6 Capesize vessels in H1 2022. This solution, which
incurred implementation costs in H1 2022, should contribute to
significantly reducing sea transport costs for manganese ore over
the year.
Manganese alloys production
totalled 381 kt in H1 2022 (+4%). Sales were down 4% to 342 kt,
reflecting customer destocking in a context of falling demand and
high prices. The mix, which was favourable to refined products in
Q1 2022, reversed in Q2 2022 due to the deficit in supply of
standard alloys in Europe linked to the war in Ukraine and lower
demand for refined alloys.
The manganese alloys margin improved in H1 2022.
It has, however, started to decline in Q2 compared to Q1, driven by
the stability of selling prices, combined with the continued
increase in input costs, notably metallurgical coke (which spot
price13 is up on average c. 80% vs. H1 2021 and 40% vs. FY 2021),
and a less favourable mix (more standard alloys).
Outlook
Global carbon steel production is expected to
slightly decline in 2022, normalising after an exceptional 2021,
notably owing to the decline in production in China, due to the
economic slowdown, and macroeconomic uncertainties in the rest of
the world. Only India and Vietnam are expected to post growth.
Demand for manganese alloys is expected to
decrease, notably in Europe, while uncertainties in the automotive
market should continue to weigh on demand for refined manganese
alloys. The alloys market should thus shift to surplus in H2 2022,
pushing prices down. Adjustments in supply are to be expected in
the months ahead.
Factoring in the trend reversal expected for
prices and the continued increase in the cost of inputs and
manganese ore consumed14, the manganese alloys margin should
significantly deteriorate in H2 versus H1. Manganese alloys
production could thus be adjusted down in H2, with a less
favourable mix.
The manganese ore market is also expected to
shift to slight surplus with the expected decline in demand. Prices
are expected to adjust slightly in the months ahead. The ore
production target is maintained at 7.5 Mt in 2022, an increase of
7% from 2021.
Nickel BU
Nickel BU turnover increased to reach
€762m in H1 2022, of which
€604m for
SLN15 and €158m linked to the
trading activity of nickel ferroalloys produced at Weda Bay
(off-take contract).
The BU’s EBITDA increased very
significantly to €118m (x5 vs. H1 2021), mainly reflecting the
increase in prices over the period, combined with
a favourable €/$ currency effect, albeit
partly offset by the
strong increase in energy and freight
costs.
The contribution of Weda Bay activity to
Group FCF was very significant in H1 2022, at
€121m. The joint venture
achieved an excellent operational performance, notably reflecting
growth in the volumes of ore sold, in a favourable price
environment, partly offset by the increase in input costs (energy
in particular).
Market trends & prices
Global stainless steel production, which is the
main end-market for nickel, was down by more than 3.5% to 28.2 Mt16
in H1 2022. This slowdown is attributable to the decline in
production in China (- 6.8%16). The rest of global production,
however, continued to increase (+0.9%16), notably driven by
Indonesia (+5.6%16).
Global demand for primary nickel also increased
by more than 3%16 to 1.4 Mt16, driven by strong growth in the
batteries sector (+29.4%16), while demand for primary nickel in
stainless steel was down slightly (-0.8%16).
In parallel, global primary nickel production
grew by more than 14.5%16, reaching 1.5 Mt16. The decline in
Chinese NPI17 volumes (-10.5%16) was thus more than offset by the
increase in NPI supply in Indonesia (+25.5%16), as well as the
growth in volumes from traditional producers (+4.4%16).
The nickel supply/demand balance (class I and
II18) was thus in slight surplus in H1 2022 (+79 kt16). Conversely,
nickel inventories at the LME19 and SHFE19 (class I only), very
strongly decreased compared to end-2021, due to sustained demand
for batteries. At end-June, these inventories totalled 69 kt,
representing only approximately 3 weeks’ consumption20 (vs. 4 weeks
at end-2021).
In H1 2022, the LME price average, which
represents the price of pure nickel metal (class I nickel), was
$27,575/t, up very significantly compared to H1 2021 (+58%) and H2
2022 (+42%). In mid-July, prices fell back below $20,000/t, more in
line with market fundamentals.
The spot price of ferronickel as sold by SLN
(class II nickel) increased by 47% compared to H1 2021, thus
showing a discount versus the LME. Factoring in the slowdown in
stainless steel markets, the price of ferronickel for the rest of
the year is expected to be set at a level very significantly below
the LME and approaching prices for NPI (also class II nickel). To
date, the latter amounts to approximately $17,000/t21.
1.8% CIF China nickel ore prices continued to
evolve at high levels, recording an average increase of +31% to
$125/wmt22 in H1 2022, albeit with a discount for lower grade ores.
The nickel ore market remained tight during the period, due to
reduced ore supply, notably from New Caledonia and the Philippines,
due to bad weather conditions and longer-than-usual rainfall
seasons. This increase in prices, however, continued to be largely
offset by the high levels of freight costs.
In Indonesia, the official domestic price index
for nickel ore (“HPM Nickel”) averaged approximately $56/wmt in H1
2022, for nickel ore with 1.8% nickel content and 35% moisture
content. Indonesian prices are set according to domestic market
conditions, but with a monthly price floor based on the LME, in
compliance with a government regulation published in April
2020.
Activities
In Indonesia, mine operations
enabled the production of nearly 8.1 Mwmt23 of marketable nickel
ore in H1 2022, up more than 33%. External ore sales volumes
amounted to more than 7.5 Mwmt23, up 79% versus H1 2021.
Parallel to this, the nickel ferroalloys plant,
which is supplied by the mine, produced 19.6 kt-Ni23 over the
half-year. The volumes sold by Eramet as part of the off-take
contract accounted for 8.5 kt-Ni.
Weda Bay’s contribution to Group FCF over the
period totalled €121m, of which €107m linked to the payment of
dividends and the repayment of a shareholder loan.
In New Caledonia, SLN mining
production amounted to 2.4 Mwmt, up 6% versus H1 2021 despite the
very bad weather conditions (with a rainfall volume nearly 50%
higher than the average of the last 6 years and a 13% increase in
the number of days of rain versus H1 2021) and operating
difficulties on some of the mines. Low-grade nickel ore exports
increased 31% to nearly 1.5 Mwmt. Ferronickel production increased
(+10% to 20.4 kt-Ni), as well as sold volumes (+6% to 20 kt-Ni).
The operation of the Doniambo plant was, however, strongly
disrupted by ongoing power supply difficulties.
Cash cost24 amounted to $8.06/lb on average in
H1 2022, reflecting the increase in input costs, mainly energy,
coal (which price more than tripled) and freight (increase of
approximately 43% for nickel ore), while partly being offset by
currency impacts and favourable ore prices.
SLN's debt stood at €427m at 30 June, with Free
Cash-Flow at break-even in H1.
Outlook
In Q3 2022, demand for nickel in the stainless steel sector
should continue to be slowed by the increase in raw material prices
as well as macroeconomic uncertainties at the global level.
In H2 2022, global primary nickel production is
expected to continue growing, still largely supported by the
development of Indonesian production (NPI, matte and HPAL25).
At Weda Bay in Indonesia, nickel ferroalloys
production is confirmed at nearly 40 kt-Ni for the year. The
marketable mine production target remains at approximately 15 Mwmt
in 202226.
In New Caledonia, following in particular the
difficulties in supply from the New Caledonian electricity grid
which persist and will not be resolved before the arrival of the
Temporary Offshore Power Plant scheduled for early September,
targets were revised down to more than 40 kt-Ni in ferronickel
production from the Doniambo plant in 2022 and to more than 3.5
Mwmt for nickel ore exports.
Battery-grade nickel and cobalt production
project
As part of the Group’s strategic roadmap,
notably aimed at developing production of critical metals for the
energy transition and at positioning itself as a key European
player in the electric vehicle battery value chain, Eramet
continues, in partnership with BASF, project studies related to the
hydrometallurgical project to produce battery-grade nickel and
cobalt using laterite ore extracted from the Weda Bay mine in
Indonesia.
The hydrometallurgical complex, located near the
mine, would include a HPAL25 unit. Targeted production would amount
to some 67 kt-Ni and 7 kt-Co per year (in MHP27 content), revised
upwards compared to initial estimates.
The proposed project would be 51% owned by
Eramet and 49% owned by BASF.
An investment decision is potentially expected
end-2022 or early 2023. In this case, the project could start
production in early 2026.
Mineral Sands BU
The Mineral Sands BU reported turnover
up to €224m. EBITDA more than doubled to €97m, reflecting the very
good operational performance as well as a favourable price
environment, partially offset by the increase in the cost of energy
and reducing agents.
Market trends & prices
Global demand for zircon remained strong
throughout H1 2022, driven by the ceramics sector (approximately
50% of the end-product). Parallel to this, zircon production also
slightly increased, without being able to meet the demand.
Zircon market prices ended at $2,085/t FOB28 in
H1 2022, up 56%, in a context of strong tensions on supply.
Global demand for TiO2 pigments29, the main
end-market for titanium-based products30, grew more slowly than
expected over the period as a result of the war in Ukraine and the
health situation in China. Supply continued to increase, without
being able to fully meet the demand for TiO2 pigments.
The selling price for CP titanium dioxide slag
(“CP slag”), as produced by TiZir in Norway and based on quarterly
contracts signed at end-March 2022, remained at very high levels.
It thus increased by 13% to approximately $850/t31 in H1 2022.
Activities
In Senegal, mineral sands
production continued to increase in H1 2022, reaching 386 kt (+7%),
thanks to a higher average content in the area mined compared to H1
2021.
Zircon production was up 7% to 30 kt, while
sales volumes grew by 3%, reaching 31 kt.
In Norway, titanium slag
production amounted to 100 kt in H1 2022, down 3%, owing to
maintenance operations in May. Sales volumes declined by 19% to 92
kt, due to an extremely low level of inventories at end-2021.
During the half-year, input costs for the TTI
plant continued to increase strongly (notably thermal coal, which
spot price more than tripled on average over the period compared to
H1 2021, and more than doubled vs. 202132) but are expected to be
fully offset by the increase in selling prices in H2.
Outlook
Zircon consumption could slow down in H2, but
demand should continue to increase slightly on a full-year basis.
The market is expected to remain in deficit of supply, which should
maintain prices at high levels.
Demand for the pigments market in China could
also slow down in H2, but demand for titanium-based products is
expected to remain up for the full year. With Ukrainian supply
substantially reduced, the market should remain in deficit in 2022,
enabling prices to be sustained.
In 2022, the annual production volume for
mineral sands is expected to be in excess of 750 kt, factoring in
the expected decline in average content in the area mined of the
deposit, started in May and continuing through H2.
Moreover, having obtained the environmental
permit for expansion from the Senegalese authorities in early July,
the organic growth programme for mineral sands through dry
processing is expected to start in early Q4. It aims to increase
mining capacity by approximately 10% by end-2024 with limited
investment of around €30m.
Lithium BU
Lithium carbonate prices continued to strongly
increase in H1 2022, in a context of very significant growth in
demand for this critical metal for the energy transition. They now
amount to more than $70,000/t33.
The construction of the lithium plant started in
Argentina in Q2. The amount of investments made during the period
was €33m, entirely financed by a capital increase by Tsingshan.
Factoring in the continued increase in material
and freight prices, the overall amount of capex for the project was
revalued to €150m. In line with the agreement signed in November,
this additional capex will be 50.1% financed by Eramet and 49.9% by
Tsingshan. Factoring in the long-term price trend, the very high
Internal Rate of Return (IRR) is confirmed.
In accordance with the IFRS 5 standard –
“Non-current assets held for sale and discontinued operations”, the
Aubert & Duval, Erasteel and Sandouville entities are presented
in the Group’s consolidated financial statements as operations in
the process of being sold for the 2021 and 2022 financial
years:
- The sale
of the Sandouville plant to Sibanye-Stillwater was closed in early
February, for a net sale price of €86m,
-
The Share Purchase Agreement for Aubert & Duval was signed in
June with a consortium formed by Airbus, Safran and Tikehau ACE
Capital; the operation should be completed by the end of the year,
subject to the waiver of certain conditions precedent, including
the obtaining of regulatory approvals34,
-
With regards to the sale project of Erasteel, the Group is
expecting to launch an auction process in the coming weeks.
Aubert & Duval
After a historic decline in traffic over the
last two years, the global aerospace sector, which represents
approximately 60% of A&D turnover, confirmed the gradual
recovery engaged since mid-2021, essentially driven by regional and
medium-haul flights. As a result, orders for single-aisle aircraft
parts – a market to which A&D is less exposed – picked up since
the start of the year, in line with the acceleration in production
rates expected by aircraft manufacturers. The market, however, must
face increasing tensions in the supply chain (raw materials and
electronics components) against a background of high inflation,
steep rise in energy costs and labour shortages.
A&D35 turnover ended at €278m36 in H1 2022,
up 14%, including a 21% increase in sales for the aerospace sector
which posted €174m. Energy and Defence sales declined slightly
(-9%) to €66m.
It should be noted, however, that deliveries
remained disrupted in H1 2022 by bottlenecks at the end of flows
and at the control stage, notably due to labour shortages. A
specific action plan has been put in place.
Activity was strongly affected by the very
strong increases in electricity (which cost tripled on average in
H1) and raw material prices with an impact on both EBITDA and FCF,
in the absence of an automatic pass-through in commercial
contracts.
Negative EBITDA thus totalled -€30m36, despite
the growth in volumes.
In the first half of the year, the subsidiary's
cash consumption amounted to €107m36, notably factoring in the high
level of raw material purchases made in response to the increase in
the order book, the price of energy and the price of raw materials
(net impact of €37m in H1). It also includes €38m of disbursements
related to the clearance of Quality applications and to the
restructuring plan, as part of the contract for the sale of the
subsidiary.
Cost inflation and labour shortage should
continue to weigh on activity in H2 2022.
Erasteel
Erasteel’s turnover increased 61% versus H1
2021, totalling €138m36 in H1 2022.
This growth reflects the strategy to win market
share in new regions and new applications, as well as the very good
sales momentum in Q1, driven by the increase in the number of new
automotive platforms (notably EV), and the strong acceleration of
its other underlying markets (aerospace, electronics).
Sales were also driven by the positive impact of
reinvoicing raw material and energy price increases to customers.
Recycling activity continued its ramp-up (+30% to €12m).
EBITDA thus quadrupled compared to H1 2021,
ending at €12m36.
The increase in working capital requirement (WCR), resulting
from very strong growth in material prices, led to cash consumption
of €20m over the period. This trend is expected to reverse in H2
2022.
In a climate of geopolitical and macroeconomic
uncertainties, signs of a slowdown are observed in all of the
Group's markets: fears of recession in Europe and the United
States, high inflation, and a slow recovery in China following the
lifting of Covid-related restrictions.
As a result, a weakening demand is expected, to
a greater or lesser extent depending on markets and regions, as
well as the continued price adjustment already started in Q2 for
certain commodities. The level of uncertainty is also rising in
terms of supply’s ability to continue its growth or to withstand
the strong increase in energy costs.
Against this background, the capex target for
the year is revised slightly down to €500m in 2022, including the
operations in the process of being sold, yet excluding the lithium
project financed by Tsingshan. On the one hand, this capital
expenditure includes approximately €250m in current capex and, on
the other, organic growth capex including approximately €200m
intended to support and sustain growth in Gabon.
Production volume targets confirmed, except
SLN:
- 7.5 Mt of manganese
ore production in Gabon,
-
Approximately 15 Mwmt of marketable nickel ore production in
Indonesia37.
Nickel ore exports in New Caledonia are revised
to more than 3.5 Mwmt for the year.
Factoring in these targets and a favourable
seasonality, intrinsic performance of activities will have a
positive impact on EBITDA in H2 and over the year.
Prices are expected to decline in H2, with:
-
A significant trend reversal in manganese alloys invoiced selling
prices, as expected; they should however remain above 2021 on
average for the year,
-
Consensus38 for average manganese ore prices at $6.4/dmtu for the
year ($6/dmtu in H2) and LME nickel prices at $25,600/t ($24,500/t
in H2); ferronickel price should be at a level well below the LME
nickel price.
Input costs should remain at high levels.
All external factors should thus lead to a
strongly negative impact on EBITDA in H2.
The estimated effective €/$ exchange rate is
1.09 for 2022.
In an inflationary context that remains
uncertain, and based on the consensus of the abovementioned prices,
forecast EBITDA is revised up to around €1.6bn in 2022.
Calendar
28.07.2022: Presentation of 2022 half-year results
A live Internet webcast of the 2022 half-year
results presentation will take place on Thursday 28 July 2022 at
10:30 a.m. (Paris time), on our website: www.eramet.com.
Presentation material will be available at the time of the
webcast.
27.10.2022: Publication of 2022 third-quarter turnover
ABOUT ERAMET
Eramet transforms the Earth’s mineral resources
to provide sustainable and responsible solutions to the growth of
the industry and to the challenges of the energy transition.
Its employees are committed to this through
their civic and contributory approach in all the countries where
the mining and metallurgical group is present.
Manganese, nickel, mineral sands, lithium, and
cobalt: Eramet recovers and develops metals that are essential to
the construction of a more sustainable world.
As a privileged partner of its industrial
clients, the Group contributes to making robust and resistant
infrastructures and constructions, more efficient means of
mobility, safer health tools and more efficient telecommunications
devices.
Fully committed to the era of metals, Eramet’s
ambition is to become a reference for the responsible
transformation of the Earth’s mineral resources for living well
together.
www.eramet.com
INVESTOR
CONTACT Director of Investor Relations
Sandrine Nourry-Dabi T. +33 1 45 38 37 02
sandrine.nourrydabi@eramet.com |
PRESS
CONTACT Communications Director
Pauline Briand pauline.briand@eramet.com
Image 7 Marie Artzner T. +33 1 53
70 74 31 | M. +33 6 75 74 31 73 martzner@image7.fr |
APPENDICES
Appendix 1: Reconciliation tables
H1 2022 reported reconciliation table
before IFRS 5
|
|
|
|
|
|
|
|
|
|
|
(in millions of
euros) |
|
H1 |
|
Aubert & Duval CGU |
Erasteel CGU |
Sandouville CGU |
Restatementsand eliminations
|
Total |
|
1er semestre |
|
|
2022 |
|
|
|
Operations sold/ |
|
2022 |
|
|
Before IFRS 5 treatment |
|
|
|
|
held for sale |
|
Publié |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
3 063 |
|
278 |
138 |
11 |
|
427 |
|
2 635 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
operating income |
|
843 |
|
(36) |
11 |
(2) |
17 |
(10) |
|
853 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income |
|
845 |
|
(14) |
(21) |
13 |
18 |
(4) |
|
850 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
Net
income from operations sold/held for sale |
|
|
|
(18) |
(27) |
13 |
19 |
(13) |
|
(13) |
|
|
|
|
|
|
|
|
|
|
|
H1 2021 reported restated reconciliation
table
|
|
|
|
|
|
|
|
|
|
|
(in millions of
euros) |
|
H1 |
|
Aubert & Duval CGU |
Erasteel CGU |
Sandouville CGU |
Restatementsand eliminations
|
Total |
|
1er semestre |
|
|
2021 |
|
|
|
|
Operations sold/ |
|
2021 |
|
|
Published |
|
|
|
|
|
held for sale |
|
Retraité |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
1 878 |
|
244 |
86 |
77 |
|
407 |
|
1 471 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current operating income |
|
159 |
|
(21) |
2 |
(14) |
18 |
(15) |
|
175 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income |
|
132 |
|
(50) |
6 |
(14) |
18 |
(40) |
|
174 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income from operations sold or held for sale |
|
|
|
(62) |
5 |
(19) |
23 |
(53) |
|
(53) |
|
|
|
|
|
|
|
|
|
|
|
Appendix 2: Quarterly turnover (IFRS
5)
€ million1 |
Q2 2022 |
Q1 2022 |
Q4 2021 |
Q3 2021 |
Q2 2021 |
Q1 2021 |
Manganese BU |
926 |
722 |
782 |
598 |
498 |
389 |
Manganese ore activity2 |
439 |
308 |
329 |
304 |
242 |
189 |
Manganese alloys activity2 |
487 |
414 |
453 |
294 |
256 |
200 |
Nickel BU3 |
409 |
352 |
348 |
260 |
237 |
201 |
Mineral Sands BU |
134 |
90 |
118 |
93 |
82 |
56 |
Lithium BU |
0 |
0 |
0 |
0 |
0 |
0 |
Holding, elim. & others |
1 |
1 |
-2 |
1 |
4 |
3 |
Eramet grouppublished IFRS 5
financial4statements4 |
1,470 |
1,165 |
1,246 |
951 |
821 |
650 |
1 Data rounded to the nearest million.2 See
Financial glossary in Appendix 8.3 Nickel BU excluding Sandouville
(discontinued operation).4 Excluding Aubert & Duval,
Sandouville and Erasteel which, in accordance with the IFRS 5
standard – “Non-current assets held for sale and discontinued
operations”, are presented as operations in the process of being
sold in 2022 and 2021. See reconciliation tables in Appendix 1.
Appendix 2b: Reconciliation of quarterly
turnover
€ million1 |
Q2 2022 |
Q1 2022 |
Q4 2021 |
Q3 2021 |
Q2 2021 |
Q1 2021 |
Eramet grouppublished IFRS 5 financial
statements2 |
1,470 |
1,165 |
1,246 |
951 |
821 |
650 |
Aubert & Duval |
137 |
141 |
142 |
107 |
131 |
113 |
Erasteel |
74 |
64 |
55 |
44 |
47 |
39 |
Sandouville |
0 |
11 |
36 |
40 |
41 |
36 |
Eramet group before IFRS 5 |
1,682 |
1,381 |
1,479 |
1,142 |
1,040 |
838 |
1 Data rounded to the nearest million.2
Excluding Aubert & Duval, Sandouville and Erasteel which, in
accordance with the IFRS 5 standard – “Non-current assets held for
sale and discontinued operations”, are presented as operations in
the process of being sold in 2022 and 2021 See reconciliation
tables in Appendix 1.
Appendix 3: Productions and
shipments
In thousands of tonnes |
Q2 2022 |
Q1 2022 |
Q4 2021 |
Q3 2021 |
Q2 2021 |
Q1 2021 |
H1 2022 |
H1 2021 |
|
|
|
|
|
|
MANGANESE BU |
Manganese ore and sinter production |
1,862 |
1,762 |
1,964 |
1,951 |
1,597 |
1,512 |
3,624 |
3,109 |
Manganese ore and sinter transportation |
1,765 |
1,620 |
1,793 |
1,832 |
1,542 |
1,377 |
3,385 |
2,919 |
External manganese ore sales |
1,535 |
1,409 |
1,637 |
1,602 |
1,314 |
1,212 |
2,944 |
2,526 |
Manganese alloys production |
193 |
188 |
191 |
189 |
173 |
194 |
381 |
367 |
Manganese alloys sales |
186 |
156 |
201 |
158 |
183 |
174 |
342 |
357 |
|
|
|
|
|
|
NICKEL BU |
Nickel ore production (in thousands of wet
tonnes) |
|
|
|
|
|
|
|
|
SLN |
1,290 |
1,154 |
1,392 |
1,682 |
1,254 |
1,050 |
2,444 |
2,304 |
Weda Bay Nickel (100%) – marketable
production1 |
3,552 |
4,563 |
605 |
3,193 |
3,486 |
2,615 |
8,115 |
6,101 |
Ferronickel production – SLN |
10.5 |
9.9 |
10.1 |
10.4 |
8.5 |
10.0 |
20.4 |
18.5 |
Low-grade nickel ferroalloys production –
Weda Bay Nickel (kt of Ni content – 100%) |
9.6 |
10.0 |
9.5 |
9.4 |
10.0 |
10.1 |
19.6 |
20.1 |
Nickel ore sales (in thousands of wet
tonnes) |
|
|
|
|
|
|
|
|
SLN |
830 |
632 |
957 |
875 |
684 |
433 |
1,462 |
1,117 |
Weda Bay Nickel (100%) |
3,576 |
3,875 |
0 |
2,386 |
2,967 |
1,205 |
7,451 |
4,172 |
Ferronickel sales – SLN |
10.8 |
9.2 |
10.6 |
9.8 |
10.0 |
8.8 |
20.0 |
18.8 |
Low-grade nickel ferroalloy sales – Weda
Bay Nickel/Off-take Eramet (kt of Ni content) |
4.2 |
4.3 |
4.3 |
3.0 |
4.1 |
4.3 |
8.5 |
8.4 |
|
|
|
|
|
|
MINERAL SANDS BU |
Mineral Sands production |
188 |
198 |
238 |
204 |
191 |
171 |
386 |
362 |
Zircon production |
15 |
15 |
19 |
17 |
15 |
13 |
30 |
28 |
Titanium dioxide slag production |
48 |
52 |
54 |
52 |
55 |
48 |
100 |
103 |
Zircon sales |
16 |
15 |
16 |
17 |
16 |
14 |
31 |
30 |
Titanium dioxide slag sales |
52 |
40 |
62 |
45 |
71 |
42 |
92 |
113 |
1 The Q1 to Q3 2021 figures presented in the
above table do not include 1,705 kwmt of limonites, which is
non-recoverable under current conditions, and which had been
reported in the Group's turnover press release at end-Q3
2021Appendix 4: Price and index
|
H1 2022 |
H2 2021 |
H1 2021 |
Chg. H1 2022 – H1 20216 |
Chg. H1 2022 – H2 20216 |
|
|
|
|
|
|
MANGANESE BU |
|
|
|
|
|
Mn CIF China 44% ($/dmtu)1 |
6.79 |
5.49 |
5.06 |
+34% |
+24% |
Ferromanganese MC – Europe
(€/t)1 |
3,254 |
2,996 |
1,886 |
+73% |
+9% |
Silicomanganese – Europe
(€/t)1 |
1,739 |
1,607 |
1,191 |
+46% |
+8% |
|
|
|
|
|
|
NICKEL BU |
|
|
|
|
|
Ni LME ($/lb)2 |
12.51 |
8.83 |
7.93 |
+58% |
+42% |
Ni LME ($/t)2 |
27,575 |
19,472 |
17,485 |
+58% |
+42% |
Ni ore CIF China 1.8%
($/wmt)3 |
124.8 |
115.4 |
95.4 |
+31% |
+8% |
|
|
|
|
|
|
MINERAL SANDS BU |
|
|
|
|
|
Zircon ($/t)4 |
2,085 |
1,655 |
1,338 |
+56% |
+26% |
CP-grade titanium dioxide
($/t)5 |
850 |
810 |
753 |
+13% |
+5% |
1 Quarterly average for market prices, Eramet
calculations and analysis.2 LME (London Metal Exchange) prices.3
CNFEOL (China FerroAlloy Online), “Other mining countries”.4 TZMI,
Eramet analysis (premium zircon).5 Market analysis, Eramet
analysis.6 Eramet calculation (based on CRU monthly price index for
manganese ore and alloys only), rounded to the nearest decimal.
Appendix 5: Half-year performance indicators of
continuing operations (IFRS 5)
€ million1 |
H1 20222 |
H1 2021
Restated2 |
2021Restated2 |
H1 Change (€m) |
H1 Change3
(%) |
|
|
|
|
|
|
Manganese BU |
Turnover |
1,647 |
887 |
2,267 |
760 |
+86% |
|
EBITDA |
831 |
280 |
910 |
551 |
+197% |
|
COI4 |
765 |
219 |
769 |
546 |
+249% |
|
FCF |
395 |
157 |
490 |
239 |
+152% |
Manganese ore activity5 |
Turnover |
747 |
432 |
1,063 |
315 |
+73% |
|
EBITDA |
343 |
151 |
387 |
192 |
+127% |
|
FCF |
71 |
65 |
126 |
6 |
+9% |
Manganese alloys activity5 |
Turnover |
901 |
455 |
1,204 |
446 |
+98% |
|
EBITDA |
488 |
128 |
522 |
360 |
+281% |
|
FCF |
324 |
92 |
364 |
232 |
+252% |
Nickel BU |
Turnover |
762 |
438 |
1,046 |
323 |
+74% |
|
EBITDA |
118 |
24 |
113 |
94 |
+395% |
|
COI |
78 |
(16) |
37 |
94 |
n.a. |
|
FCF |
99 |
22 |
111 |
77 |
+346% |
Mineral Sands BU |
Turnover |
224 |
138 |
349 |
86 |
+62% |
|
EBITDA |
97 |
47 |
137 |
50 |
+107% |
|
COI |
76 |
25 |
94 |
51 |
+201% |
|
FCF |
4 |
51 |
108 |
(47) |
-92% |
Lithium BU |
Turnover |
0 |
0 |
0 |
0 |
n.a. |
|
EBITDA |
(8) |
(2) |
(5) |
(6) |
n.a. |
|
COI |
(8) |
(2) |
(5) |
(6) |
n.a. |
|
FCF |
(64) |
(13) |
(24) |
(51) |
n.a. |
|
|
|
|
|
|
|
Holding, elim. |
Turnover |
2 |
7 |
6 |
(5) |
-71% |
and others |
EBITDA |
(55) |
(47) |
(103) |
(8) |
n.a. |
|
COI |
(58) |
(52) |
(112) |
-7 |
n.a. |
|
FCF |
(5) |
(51) |
(159) |
46 |
n.a. |
|
|
|
|
|
|
|
GROUP total |
Turnover |
2,635 |
1,471 |
3,668 |
1,164 |
+79% |
(IFRS5)3 |
EBITDA |
982 |
301 |
1,051 |
681 |
+226% |
|
COI |
853 |
175 |
784 |
677 |
+386% |
|
FCF |
429 |
166 |
526 |
264 |
+159% |
1 Data rounded to the nearest million.2
Excluding Aubert & Duval, Sandouville and Erasteel which, in
accordance with the IFRS 5 standard – “Non-current assets held for
sale and discontinued operations”, are presented as operations in
the process of being sold in 2022 and 2021 See reconciliation
tables in Appendix 1.3 Data rounded to higher or lower %.4 Current
operating income.5 See Financial glossary in Appendix
8.Appendix 5b: Half-year performance indicators of
operations in the process of being sold (IFRS 5)
€ million1 |
H1 2022 |
H1 2021Restated |
2021Restated |
Change (€m) |
Change2 (%) |
|
|
|
|
|
|
Aubert & Duval |
Turnover |
278 |
244 |
493 |
34 |
+14% |
|
EBITDA |
(30) |
(15) |
(44) |
(15) |
n.a. |
|
COI4 |
(36) |
(21) |
(57) |
(15) |
n.a. |
|
FCF |
(107) |
(51) |
(124) |
(55) |
n.a. |
Erasteel |
Turnover |
138 |
86 |
184 |
52 |
+61% |
|
EBITDA |
12 |
3 |
13 |
9 |
+300% |
|
COI |
11 |
2 |
12 |
9 |
+366% |
|
FCF |
(20) |
(9) |
(11) |
(12) |
n.a. |
Sandouville |
Turnover |
11 |
77 |
154 |
(66) |
-85% |
|
EBITDA |
(2) |
(14) |
(27) |
11 |
n.a. |
|
COI |
(2) |
(14) |
(27) |
13 |
n.a. |
|
FCF |
3 |
(15) |
(48) |
17 |
n.a. |
1 Data rounded to the nearest million.2 Data
rounded to higher or lower %.
Appendix 6: Sensitivities of Group EBITDA
Sensitivities |
Change |
Impact on EBITDA |
Manganese ore prices (CIF China 44%) |
+$1/dmtu |
c. €250m1 |
Manganese alloys prices |
+$100/t |
c. €70m1 |
Nickel prices (LME) |
+$1/lb |
c. €80m1 |
Nickel ore prices (CIF China 1.8%) |
+$10/wmt |
c. €35m1 |
Exchange rate |
-$/€0.1 |
c. €265m |
Oil price per barrel (Brent) |
+$10/bbl |
c. €(15)m1 |
1 For an exchange rate of $/€1.09.
Appendix 7: Performance indicators
Operational performance by
division
|
|
|
|
|
|
|
|
|
|
|
(in millions of
euros) |
Mining and metals |
Holding company |
Total |
Erasteel |
|
|
Total |
|
Manganese |
Nickel |
Sand |
Lithium |
Eliminations, |
from operations |
and |
Sandouville |
Eliminations |
from operations |
|
|
|
Minerals |
|
Restatementsand Other Entities |
continuing |
Aubert & Duval |
|
and Restatements |
continuing and held for sale |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
H1
2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
1 647 |
762 |
224 |
- |
2 |
2 635 |
416 |
11 |
|
3 063 |
|
|
|
|
|
|
|
|
|
|
|
EBITDA |
831 |
118 |
97 |
(8) |
(55) |
982 |
(18) |
(2) |
17 |
979 |
|
|
|
|
|
|
|
|
|
|
|
Current
operating income |
765 |
78 |
76 |
(8) |
(58) |
853 |
(25) |
(2) |
17 |
843 |
|
|
|
|
|
|
|
|
|
|
|
Net cash flow
from operating activities |
548 |
26 |
30 |
(31) |
(85) |
488 |
(92) |
5 |
(11) |
390 |
|
|
|
|
|
|
|
|
|
|
|
Industrial
investments (intangible assets and property, plant &
equipment) |
144 |
37 |
26 |
28 |
5 |
240 |
22 |
0 |
- |
262 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
H1 2021
Restated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
887 |
438 |
138 |
- |
7 |
1 471 |
330 |
77 |
|
1 878 |
|
|
|
|
|
|
|
|
|
|
|
EBITDA |
280 |
24 |
47 |
(2) |
(47) |
301 |
(12) |
(14) |
18 |
293 |
|
|
|
|
|
|
|
|
|
|
|
Current
operating income |
219 |
(16) |
25 |
(2) |
(52) |
175 |
(18) |
(14) |
18 |
159 |
|
|
|
|
|
|
|
|
|
|
|
Net cash flow
from operating activities |
222 |
(17) |
59 |
(11) |
(59) |
194 |
(45) |
(13) |
20 |
155 |
|
|
|
|
|
|
|
|
|
|
|
Industrial
investments (intangible assets and property, plant &
equipment) |
72 |
9 |
8 |
0 |
4 |
93 |
15 |
2 |
- |
110 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial year 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
2 267 |
1 046 |
349 |
- |
6 |
3 668 |
677 |
154 |
- |
4 499 |
|
|
|
|
|
|
|
|
|
|
|
EBITDA |
910 |
113 |
137 |
(5) |
(103) |
1 051 |
(32) |
(27) |
38 |
1 031 |
|
|
|
|
|
|
|
|
|
|
|
Current
operating income |
769 |
37 |
94 |
(5) |
(112) |
784 |
(45) |
(27) |
38 |
751 |
|
|
|
|
|
|
|
|
|
|
|
Net cash flow
from operating activities |
728 |
39 |
129 |
(20) |
(164) |
713 |
(84) |
(42) |
58 |
644 |
|
|
|
|
|
|
|
|
|
|
|
Industrial
investments (intangible assets and property, plant &
equipment) |
244 |
35 |
21 |
5 |
7 |
312 |
46 |
6 |
- |
364 |
|
|
|
|
|
|
|
|
|
|
|
Turnover and investments by
region
|
|
|
|
|
|
|
|
|
|
(in millions
of euros) |
France |
Europe |
North |
China |
Rest of |
Oceania |
Africa |
South |
Total |
|
|
|
America |
|
Asia |
|
|
America |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue (destination of sales) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
H1
2022 |
168 |
718 |
138 |
453 |
331 |
372 |
89 |
366 |
2 635 |
|
|
|
|
|
|
|
|
|
|
H1 2021
restated |
50 |
400 |
318 |
230 |
391 |
13 |
55 |
14 |
1 471 |
|
|
|
|
|
|
|
|
|
|
Financial year
2021 |
253 |
966 |
657 |
604 |
985 |
57 |
115 |
31 |
3 668 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Industrial investments (intangible assets and property,
plant & equipment) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
H1
2022 |
6 |
15 |
4 |
- |
- |
37 |
150 |
28 |
240 |
|
|
|
|
|
|
|
|
|
|
H1 2021
restated |
3 |
18 |
1 |
- |
- |
9 |
61 |
0 |
93 |
|
|
|
|
|
|
|
|
|
|
Financial year
2021 |
9 |
42 |
2 |
- |
- |
35 |
219 |
5 |
312 |
|
|
|
|
|
|
|
|
|
|
Consolidated performance indicators –
Income statement
|
|
|
|
|
(in millions
of euros) |
H1 |
H1 |
Financial year |
|
|
2022 |
2021 |
2021 |
|
|
|
Restated |
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
2 635 |
1 471 |
3 668 |
|
|
|
|
|
|
|
|
|
|
|
EBITDA |
982 |
301 |
1 051 |
|
|
|
|
|
|
|
|
|
|
|
Depreciation
of fixed assets |
(130) |
(123) |
(259) |
|
Provisions for
contingencies and losses |
1 |
(3) |
(8) |
|
|
|
|
|
|
|
|
|
|
|
Current operating income |
853 |
175 |
784 |
|
|
|
|
|
|
|
|
|
|
|
Impairment of
assets |
(2) |
(0) |
117 |
|
Other
operating income and expenses |
(1) |
(1) |
(22) |
|
|
|
|
|
|
|
|
|
|
|
Operating income |
850 |
174 |
879 |
|
|
|
|
|
|
|
|
|
|
|
Financial
profit (loss) |
(56) |
(71) |
(111) |
|
Share of
income from associates |
147 |
77 |
121 |
|
Income
taxes |
(158) |
(57) |
(98) |
|
|
|
|
|
|
|
|
|
|
|
Net
income from continuing operations |
783 |
123 |
791 |
|
|
|
|
|
|
|
|
|
|
|
Net income
from operations held for sale(1) |
(13) |
(53) |
(426) |
|
|
|
|
|
|
|
|
|
|
|
Net
income for the period |
770 |
70 |
365 |
|
|
|
|
|
|
|
|
|
|
|
- attributable
to non-controlling interests |
93 |
17 |
67 |
|
-
Group share |
677 |
53 |
298 |
|
|
|
|
|
|
|
|
|
|
|
Basic earnings
per share (in euros) |
23,54 |
1,98 |
10,42 |
|
|
|
|
|
|
|
|
|
|
|
(1) Pursuant to IFRS 5 – "Non-current assets held for sale and
discontinued operations”, the CGU of Sandouville, Erasteel and
Aubert & Duval are presented as operations held for sale. |
Consolidated performance indicators –
Net financial debt flow table
|
|
|
|
|
(in millions
of euros) |
H1 |
H1 |
Financial year |
|
|
2022 |
2021 |
2021 |
|
|
|
Restated |
|
|
|
|
|
|
|
|
|
|
|
|
Operating activities |
|
|
|
|
|
|
|
|
|
EBITDA |
982 |
300 |
1 051 |
|
Cash impact of
items below EBITDA |
(220) |
(107) |
(258) |
|
|
|
|
|
|
|
|
|
|
|
Cash
flow from operations |
762 |
193 |
793 |
|
|
|
|
|
|
Change in
WCR |
(273) |
1 |
(80) |
|
|
|
|
|
|
|
|
|
|
|
Net
cash flow from continuing operations (A) |
489 |
194 |
713 |
|
|
|
|
|
|
|
|
|
|
|
Investing activities |
|
|
|
|
|
|
|
|
|
Industrial
investments |
(240) |
(93) |
(312) |
|
Other
investment cash flows |
180 |
65 |
125 |
|
|
|
|
|
|
|
|
|
|
|
Net
cash used in investing activities of continuing operations
(B) |
(60) |
(28) |
(187) |
|
|
|
|
|
|
|
|
|
|
|
Net
cash used in financing activities of continuing
operations |
(55) |
(8) |
21 |
|
|
|
|
|
|
|
|
|
|
|
Impact of
fluctuations in exchange rates and others |
(10) |
(9) |
(25) |
|
Acquisition of
IFRS 16 rights of use |
(14) |
(5) |
(10) |
|
|
|
|
|
|
|
|
|
|
|
Change
in the net financial debt of continuing operations before flows
from operations sold/held for sale |
350 |
144 |
512 |
|
|
|
|
|
|
|
|
|
|
|
Net cash flow
from continuing operations generated from operations sold or held
for sale(4) |
(161) |
(58) |
(114) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change
in net financial debt of continuing operations |
189 |
86 |
398 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change
in net financial debt of operations sold/held for sale before flow
from continuing operations |
(138) |
(57) |
(125) |
|
|
|
|
|
|
|
|
|
|
|
Net cash flow
from operations sold or held for sale generated from continuing
operations(4) |
161 |
58 |
114 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change
in net financial debt of operations sold or held for
sale |
23 |
1 |
(11) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Increase)/Decrease in net financial debt |
212 |
87 |
387 |
|
|
|
|
|
|
|
|
|
|
|
Opening (net financial debt) of continuing
operations |
(936) |
(1 378) |
(1 378) |
|
Opening (net financial debt) of operation sold or held for
sale |
(54) |
N/A |
N/A |
|
|
|
|
|
|
Closing (net financial debt) of continuing
operations |
(748) |
(1 289) |
(936) |
|
(Net financial debt) of operations sold or held for
sale |
(30) |
N/A |
(54) |
|
|
|
|
|
|
|
|
|
|
|
Free
cash flow (A) + (B) |
429 |
166 |
526 |
|
|
|
|
|
|
|
|
|
|
|
(1) Pursuant to IFRS 5 – "Non-current assets held for sale and
discontinued operations”, the CGU of Sandouville, Erasteel and
Aubert & Duval are presented as operations held for sale. |
(4)
The amounts are essentially related to financing flows from
operations sold/held for sale by the continuing operations |
|
Consolidated performance indicators –
Balance sheet
|
|
|
|
(in millions
of euros) |
30 June |
31 December |
|
|
2022 |
2021 |
|
|
|
|
|
|
|
|
|
Non-current assets |
3 313 |
3 083 |
|
|
|
|
|
|
|
|
|
Inventories |
723 |
577 |
|
Trade
receivables |
605 |
375 |
|
Trade payables |
(456) |
(403) |
|
Simplified Working Capital |
872 |
549 |
|
Other Working
Capital items |
(275) |
(233) |
|
|
|
|
|
|
|
|
|
Total
Working Capital Requirement (WCR) |
597 |
316 |
|
|
|
|
|
|
|
|
|
Derivatives |
43 |
- |
|
|
|
|
|
|
|
|
|
Assets
held for sale(1) |
671 |
651 |
|
|
|
|
|
|
|
|
|
Total
assets |
4 624 |
4 050 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions
of euros) |
30 June |
31 December |
|
|
2022 |
2021 |
|
|
|
|
|
|
|
|
|
Shareholders’
equity – Group share |
1 729 |
1 012 |
|
Minority
interests |
426 |
323 |
|
|
|
|
|
|
|
|
|
Shareholders’ equity |
2 155 |
1 335 |
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents and other current financial assets |
(1 239) |
(1 176) |
|
Borrowings |
1 987 |
2 112 |
|
|
|
|
|
|
|
|
|
Net
financial debt |
748 |
936 |
|
|
|
|
|
|
|
|
|
Provisions and employee-related liabilities |
900 |
899 |
|
|
|
|
|
|
|
|
|
Net
deferred tax |
200 |
184 |
|
|
|
|
|
|
|
|
|
Derivatives |
- |
11 |
|
|
|
|
|
|
|
|
|
Liabilities associated with assets held for
sale(1) |
621 |
685 |
|
|
|
|
|
|
|
|
|
Total
liabilities |
4 624 |
4 050 |
|
|
|
|
|
|
|
|
|
(1) In accordance with IFRS 5 “Non-current assets held for sale and
discontinued operations”, the assets and liabilities of the CGUs
Aubert et Duval, Erasteel and Eramet Sandouville are presented in
the consolidated balance sheet at 31 December 2021 as “assets held
for sale”. |
Appendix 8: Financial
glossary
Consolidated performance indicators
The consolidated performance indicators used for
the financial reporting of the Group’s results and economic
performance and presented in this document are restated data from
the Group’s reporting and are monitored by the Executive
Committee.
Turnover at constant scope and exchange
rates
Turnover at constant scope and exchange rates
corresponds to turnover adjusted for the impact of the changes in
scope and the fluctuations in the exchange rate from one financial
year to the next.
The scope effect is calculated as follows: for
the companies acquired during the financial year, by eliminating
the turnover for the current period and for the companies acquired
during the previous period by integrating, in the previous period,
the full-year turnover; for the companies sold, by eliminating the
turnover during the period considered and during the previous
comparable period.
The exchange rate effect is calculated by
applying the exchange rates of the previous financial year to the
turnover for the financial year under review.
EBITDA (“Earnings before interest,
taxes, depreciation and amortisation”)
Earnings before financial revenue and other
operating expenses and income, income tax, contingencies and loss
provision, and amortisation and impairment of property, plant and
equipment and tangible and intangible assets.
Manganese ore activity
Manganese ore activity corresponds to Comilog's
mining activities (excluding the activity of the Moanda
Metallurgical Complex, “CMM”, which produces manganese alloys) and
Setrag's transport activities.
Manganese alloys activity
Manganese alloys activity corresponds to the
plants that transform manganese ore into manganese alloys. It
includes the three Norwegian plants comprising Eramet Norway
(“ENO”, i.e., Porsgrunn, Sauda, and Kvinesdal), Eramet Marietta
(“EMI”) in the United States, Comilog Dunkerque (“CDK”) in France
and the Moanda Metallurgical Complex (“CMM”) in Gabon.
Manganese ore FOB cash cost
The FOB (“Free On Board”) cash cost of manganese
ore is defined as all production and overhead costs (R&D
including exploration geology, administrative expenses, sales
expenses, overland transport expenses), which cover all stages of
ore extraction through to shipping to the port of shipment and
loading, and which impact the EBITDA in the company's financial
statements, over tonnage sold for a given period. This cash cost
does not include sea transport or marketing costs. Conversely, it
includes the mining taxes and royalties from which the Gabonese
state benefits.
SLN’s cash cost
SLN’s cash cost is defined as all production and
overhead costs (R&D including exploration geology,
administrative expenses, logistical and commercial expenses), net
of by-products credits (including exports and nickel ore) and local
services, which cover all the stages of industrial development of
the finished product until delivery to the end customer and which
impact the EBITDA in the company’s financial statements, over
tonnage sold.
1 In accordance with the IFRS 5 standard – “Non-current assets
held for sale and discontinued operations”. See reconciliation
tables in Appendix 12 Consensus of main market analysts3 Based on
an effective exchange rate at $/€1.094 TRIR (total recordable
injury rate) = number of lost time and recordable injury
accidents for 1 million hours worked (employees and
subcontractors)5 See Financial glossary in Appendix 86 Includes
€89m linked to the application of IFRS 167 Reduction in net debt of
€213m, before application of the IFRS 5 standard8 Includes €12m
linked to Setrag transport activity other than Comilog’s ore (€21m
in H1 2021)9 Eramet estimates based on Worldsteel production data
available until end-May 202210 Average for market prices, Eramet
calculations and analysis; Manganese ore: CRU CIF China 44% spot
price; Manganese alloys: CRU Western Europe spot price11 See
Financial glossary in Appendix 8. Cash cost calculated excluding
sea transport and marketing costs (€160m in H1 2022 vs. €97m in H1
2021, mainly corresponding to the cost of sea transport)12 Export
duties and proportional mining royalties13 Source: Resources-net
CAMR, Nut coke spot price, Europe14 Considering an average lag of 4
to 5 months between the entry of ore in inventories and the sale of
alloys15 SLN, ENI and others16 Eramet estimates17 Nickel Pig Iron18
Class I: produced with a nickel content above or equal to 99%;
Class II: produced with a nickel content below 99%19 LME: London
Metal Exchange; SHFE: Shanghai Futures Exchange20 Including
producers’ inventories21 SMM NPI 8-12% index 22 Source: CNFEOL
(China FerroAlloy Online)23 On a 100% basis24 See Financial
glossary in Appendix 825 HPAL: High-Pressure Acid Leach 26
Subject to finalisation of administrative approval for increase in
production capacity27 MHP: Mixed Hydroxyde Precipitate28 Source
Zircon premium (FOB prices): Eramet analysis29 c.90% of
titanium-based end-products30 Titanium dioxide slag, ilmenite,
leucoxene and rutile31 Source CP slag (FOB prices): Market
consulting, Eramet analysis32 Source: Argus, thermal coal spot
price, ARA, Europe33 Source: Fastmarkets – Lithium Carbonate
Battery-Grade Prices CIF Asia34 Notably with regard to competition
and market concentration; all documentation was submitted and is
currently being reviewed35 Aubert & Duval and others, excluding
EHA36 In accordance with the IFRS 5 standard – “Non-current assets
held for sale and discontinued operations”37 Subject to
finalisation of administrative approval for increase in production
capacity38 Consensus of main market analysts
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