ERAMET Group: turnover up 4% in 3rd quarter 2014 compared with the same period in 2013

Paris, October 29th, 2014

PRESS RELEASE

ERAMET Group:  turnover up 4% in 3rd quarter 2014 compared with the same period in 2013

Upturn in Eramet Nickel's turnover in 3rd quarter 2014  due to price rises
 Significant recovery in manganese ore production  

             

Turnover1
(€ millions)  Q3 2014Q3 2013Change9 months 20149 months 2013Change ERAMET Manganese 358  401 -11%1 041  1 178 -12% ERAMET Nickel 217  150 45%598  518 15% ERAMET Alloys 211  204 3%685  677 1% Holding company & eliminations 1  (1) -(3)  (6) -ERAMET Group787  754 4%2 321  2 367 -2%

1 Adjusted data from the Group's reporting, which consolidates joint ventures under the equity method.
Reconciliation with published financial statements is presented in appendix.

ERAMET Manganese: turnover decreased by 11% at 358 M€ in 3rd quarter 2014, compared with the 3rd quarter of 2013 and by 12% for the first
9 months of 2014 compared with the corresponding period in 2013.

Global production of carbon steel rose 2.1% over the first 9 months of 2014 compared with the same period in 2013 and 1.6% in the 3rd quarter of 2014 compared with 3rd quarter 2013, mainly driven by developed countries (European Union, USA). Chinese steel production increased 2.3% over the first 9 months of 2014 compared with the corresponding period in 2013.

Because of the Chinese slowdown, manganese ore prices (44% CIF China -
source: CRU) averaged 4.62 USD/dmtu for the first 9 months of 2014, a 16% drop from the same period in 2013. They have levelled out since May. 

Inventories of manganese ore at Chinese ports decreased in July and remained stable at normal levels.

Ore production returned to the record production levels of late 2013 in the 3rd quarter of 2014 (961,100 tons), after a decrease in manganese ore and sinter production in the 1st quarter of 2014 because of maintenance operations and a one-off railway incident in Gabon.

Despite the decrease in average manganese ore prices, alloy prices remained stable outside China, due to healthy steelmaking activity in North America and Europe, as well as the uncertainties in Ukraine. ERAMET Manganese's alloy shipments decreased 9% over the first 9 months of 2014 compared with the same period in 2013 and 7% in the 3rd quarter of 2014 compared with the 3rd quarter of 2013, mainly because of maintenance operations in Norway in the 1st and 3rd quarters of 2014.

ERAMET Nickel: turnover increased by 45% at 217 M€ in the 3rd quarter of 2014, compared with the 3rd quarter of 2013 and by 15% for the first
9 months of 2014 compared with the corresponding period in 2013.

Global production of stainless steel grew approximately 11% in the first 9 months of 2014 compared with the same period in 2013 and 10% in the 3rd quarter of 2014 compared with the 3rd quarter of 2013.

Metallurgical nickel production at Doniambo (New Caledonia) rose 4% over the first
9 months of 2014 compared with the corresponding period in 2013. It was stable in the 3rd quarter of 2014 compared with the 3rd quarter of 2013. Furthermore, over the same periods nickel sales increased 10% and 11%, respectively.

The rise in ERAMET Nickel's turnover results primarily from a 12% increase in LME nickel prices to 7.81 USD/lb. on average for the first 9 months of 2014 compared with the corresponding period in 2013 and a 33% increase, at 8.42 USD/lb. on average in the 3rd quarter of 2014 compared with the 3rd quarter of 2013.

However, since mid-September, in a context of downward trends in raw material prices and build-up of nickel inventory on the LME, LME nickel prices have decreased and they are currently at around 6.8 USD/lb. According to most experts, the introduction of an export ban on non-processed Indonesian ore, which is now effective, should lead, following the consumption of the inventories previously built up, to
a significant upturn in nickel prices during 2015.

ERAMET Alloys: turnover rose by 3% at 211 M€ for the 3rd quarter of 2014, compared with the 3rd quarter of 2014 and was stable in the first 9 months  
of 2014 compared with the same period in 2013.

ERAMET Alloys' activity benefited from continued high demand on the aerospace market. Energy-related activities remained at insufficient levels and were heavily affected by trends on their specific markets.

ERAMET Alloys extended its performance improvement program, which was already implemented at Aubert & Duval, to all of its units. It also began and informed employee representative bodies of a restructuring project for Erasteel that is intended, in particular, to adjust production assets to market trends.

In addition, if recent trends in US dollar-euro exchange rates continue, they will be favourable to ERAMET Alloys' competitiveness in relation to its North American competitors.

HighlightsUnder its performance improvement program, a high priority, the ERAMET group set itself the goal of significantly reducing the cost of its central structures and services. For that purpose it began discussions on studying this project with the relevant employee representation bodies in October 2014. In addition, major competitiveness improvement programs are continuing in all of the Group's operating units. TiZir (a 50/50 joint venture owned by ERAMET with Mineral Deposits Limited): ramp-up resumed satisfactorily on the Grande Côte site in Senegal, following the temporary decrease in production as a result of the technical incident announced on August 20th, 2014. Grande Cote is a major new producer of mineral sands (ilmenite for titanium dioxide pigments, zircon) that started ramping up in April 2014.On October 2nd, 2014, the ERAMET group announced that, after comparing three competing bids for the power plant that will take over from the current facility supplying the Société Le Nickel (SLN) plant in Doniambo, New Caledonia, with electricity, the Eiffage group was selected as preferred bidder.
 The ERAMET group's financial situation

As part of the diversification and strengthening of its financing, in October 2014 the ERAMET group signed a long-term loan for 80 M€ with Banque Européenne d'Investissements (BEI). This amount will be used to fund the ERAMET group's research & development work.

As of the end of September 2014, the Group's liquidity remains high at more than
 €2 billion and the debt-to-equity ratio is 19%.

The ERAMET group's short-term outlook

Despite the nickel and manganese prices observed since the beginning of the 2nd half of 2014, which remain below their 1st half 2014 levels, the Group's current operating income for the 2nd half of 2014 should be higher than for the 1st half.

- ooOoo -

ABOUT ERAMET

ERAMET is a leading global producer of:

alloying metals, particularly manganese and nickel, used to improve the properties of steel, high-performance special steels and alloys used in industries such as aerospace, power generation and tooling.

ERAMET is also studying or developing major projects in new activities with high growth potential, such as mineral sands (titanium dioxide and zircon), lithium, niobium and rare earths, as well as in recycling.
The Group employs approximately 14,000 people in 20 countries. ERAMET is part of Euronext Paris
Compartment A.

CONTACT

Head of Financial Communiction and Economic Studies
Philippe Joly
Tel: +33 (0)1 4538 4202

Investor Relations and Economic Analyst
David Fortin
Tel: +33 (0)1 4538 4286

For more information:www.eramet.com

APPENDIX

Appendix 1: Turnover

Turnover (M€)Q3 2013Q4 2013Q1 2014Q2 2014Q3 2014 ERAMET Manganese 401 384  326  357  358  ERAMET Nickel 150 186  166  215  217  ERAMET Alloys 204 227  224  250  211  Holding company & eliminations (1) (2)  (2)  (2)  1  ERAMET Group
Including joint ventures 754  795 714820  787  Share of joint ventures (26) (14) (14)(16)(18)ERAMET Group
IFRS published statements1728781700804769

1 Application of IFRS 11 "Joint Arrangements" as of 1/1/2014, with retrospective impact on 2013.

 

Following application of IFRS 11 "Joint Arrangements" as of January 1, 2014, proportionally consolidated companies (Ukad and the TiZir sub-group) in the financial statements to December 31, 2013 are consolidated according to the equity method from FY 2014, with retrospective impact on 2013.
To reflect the economic reality of the Group's companies, the operating performance of jointly controlled companies continues to be proportionally consolidated in the Group's internal reporting, which is used by senior management and the Board of Directors as the basis for monitoring activity.
As a result, in accordance with IFRS 8 "Operating Segments", segment information included in the consolidated financial statements will be aligned with this internal information. As of 2014, the Group's financial communications will be based on this financial operating information, which is also reconciled with the financial statements reported under IFRS.

Appendix 2: Production and deliveries

Metric tonsQ3 2014Q3 2013Change9 months
20149 months
2013Change Manganese ore and sinter production 961 100  969 400 -1%2 605 200  2 736 700 -5% Manganese alloy production 175 500  194 400 -10%513 800  579 800 -11% Manganese alloy sales 165 600  178 600 -7%518 500  572 400 -9% Nickel production* 14 155  14 177 0%41 234  39 657 4% Nickel sales** 13 378  12 045 11%41 005 37 325 10%

*     Ferronickel and matte

**   Finished products

Eramet Q3 sales 2014 in PDF


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Source: Groupe Eramet via Globenewswire
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