ENP Newswire -
Release date- 21022014 - In a difficult global economic context, in 2013 the
ERAMET Nickel: results hit by very low nickel prices in 2013, cost reduction plans stepped up,
ERAMET Alloys: profitability improved
ERAMET Manganese: very sound 2013 results, production records for high grade manganese ore and for refined alloys
WCR reduced, lower capital expenditure marking the end of substantial expenditure for Moanda metallurgical complex and
Debt still moderate, financial liquidity preserved
ERAMET Alloys' operating income became positive again.
Nevertheless, the Group's results in 2013 were essentially impacted by extremely low nickel prices (according to some analysts, at the end of 2013 almost 60% of the world's nickel production was made at a loss). ERAMET Nickel therefore posted a substantial decrease in current operating income, which totalled - 222 MEUR.
Given current nickel price conditions, the likely short-term outlook and the negotiations still needed with the Indonesian government in order to benefit from a suitable legal and tax framework,
We remain confident in the nickel market's outlook. In that respect, the implementation in
In addition, the 1st half of 2014 will see the completion of two major capital expenditure programmes with the start-up of Moanda metallurgical complex in
In 2014, the priority given for several years to crisis adaptation measures and to maintaining a sound financial situation will be enhanced with further measures to reduce both costs and working capital requirement. Moreover, capital expenditure will be brought below 400 MEUR (40% less than the 2012/2013 average).'
The Group's key figures
The Group's revenue totalled 3,162 MEUR in 2013, an 8% decrease.
Its current operating income was lower in the 2nd half of 2013 than in the 1st half of 2013, due to the fall in nickel prices. The other divisions held out well in a deteriorated environment.
The productivity efforts made by the Group enabled it to achieve savings of 85 MEUR in 2013.
The Group's share of net income amounted to -74 MEUR before the effect of extraordinary impairments and -370 MEUR after their effect. These impairments have no impact on the Group's cash and concern three entities:
Thanks to the measures taken, the Group ended 2013 with moderate debt and stronger financial liquidity
Working capital requirement decreased in 2013, which had a positive effect of 87 MEUR on cash. At the same time, capital expenditure was reduced to 587 MEUR (641 MEUR invested in 2012), marking the final year of heavy capital expediture for Moanda metallurgical complex in
The issue of the Group's first bond, for 400 MEUR and 7 years;
The issue of a 'Schuldschein' for 60 MEUR with a 7-year maturity;
Successful renegotiation of a syndicated credit line, of which the amount was increased from 800 MEUR to 981 MEUR and the maturity for the most part extended by one year, from
Over the next few months
The Board of Directors will submit to the shareholders' vote at the Combined General Meeting on
ERAMET Nickel: results hit by especially low prices in 2013
ERAMET Nickel's turnover decreased 22% compared with 2012, totalling 704 MEUR. ERAMET Nickel's production amounted to 53,000 tons in 2013, a slightly lower amount in line with market trends. Shipments were close to production at 52,400 t. ERAMET Nickel's current operating income totalled -222 MEUR in 2013, compared with -38 MEUR in 2012.
These results reflect difficult conditions on the nickel market:
Despite a 5% increase in global stainless steel production, the nickel market was affected by a fall in prices to very low levels, especially towards the end of the year. LME prices fell 14% on average to
This further drop in nickel prices results from continued excessive growth relating to
Nickel ore prices sold in
This development resulted in building up excess nickel inventories to even higher levels, particularly on the LME;
Given the deterioration observed on the nickel market in 2013 and the short-term outlook for nickel prices,
The particularly low levels of nickel prices would not enable the project to be financed on satisfactory terms. Furthermore, discussions are ongoing with the Indonesian government to clarify some important points in the regulatory and tax framework that would apply to the project.
This postponement of the project led the
The postponement decision in no way calls into question the quality of the project, based on one of the largest world-class nickel deposits, nor the performance of the hydrometallurgical process successfully developed by
Finally, as regards Societe le Nickel, further productivity improvement and cost reduction plans were defined for 2014. Furthermore, extensive thought was given to a substantial reduction of ERAMET Nickel's fixed costs.
ERAMET Alloys: profitability improved by ongoing reconfiguration and by improvement plans in phase with highly contrasting trends between different sectors of activity
ERAMET Alloys' turnover decreased 9% in 2013 compared with 2012.
Thanks to substantial productivity efforts made in 2013 (31 MEUR), current operating income was positive at 4 MEUR, which was an improvement on the previous year (-5 MEUR in 2012).
Nevertheless, the European economic climate remains highly unfavourable to some of ERAMET Alloys' activities and continues to weigh on its profitability.
In 2013, the performance of ERAMET Alloys' different activities varied widely:
Sales to the aerospace sector rose slightly (+2%), despite the postponements of some new aircraft programmes;
Sales to the tooling sector fell 27% and remain penalised above all by the crisis in the European automotive sector. Sales for power generation equipment also fell, by 22%;
Given the excess capacities built in high speed steel production in recent years,
ERAMET Manganese: resilient results in 2013, production records for high grade manganese ore and for refined alloys ERAMET Manganese's results remained very sound in 2013. Its turnover was stable at 1,562 MEUR, while current operating income remained firm at 218 MEUR, compared with 240 MEUR in 2012.
Global production of carbon steel rose more than 3% in 2013, reflecting slower production outside
CRU CIF China spot prices for high-grade manganese ore rose 10% on average in 2013 compared with 2012, buoyed by high steel production in
New production records were achieved in ERAMET Manganese's two main areas of leadership: high-grade manganese ore and refined manganese alloys. Ore and sinter production totalled 3.7 million tons (+22%) in
Manganese alloy production increased by almost 2% to 746,000 tons, with a production record for refined alloys (366,000 tons), thanks to the start-up of the New Guilin,
Manganese chemistry, in which ERAMET Manganese is one of the world leaders, maintained its turnover at a level close to 2012, at 165 MEUR, while its current operating margin decreased slightly but was still over 13%. In
The 1st half of 2014 will be marked by the start-up of two major projects:
The production of ilmenite (an ore upstream of the titanium dioxide chain) and zircon at Grande-Cote represents the development of a new deposit outside nickel and manganese for the Group, as well as its first base in Senegal. The Senegalese state has a 10% capital stake in the project alongside
Moanda metallurgical complex, which consists of two plants next to the mine, will produce silico manganese and manganese metal for the first time on Gabonese soil. Through this COMILOG project,
Given the outlook for economic conditions and for markets, which in early 2014 are in line with the end of 2013 overall, the Group will keep up its competiveness efforts in each of its divisions. The Group's 2014 target in terms of productivity improvement is approximately 110 MEUR, following the 85 MEUR savings already achieved in 2013.
WEBCAST OF RESULTS PRESENTATION
The presentation of the 2013 results will be webcast at
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.
Tel: +33 (0)1 4538 4202
Tel: +33 (0)1 4538 4286
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