ERAMET group: sales are down 14% in first-quarter 2016 compared with first-quarter 2015, mainly due to the evolution of nickel prices. Manganese ore prices rose sharply at the end of the first quar...
(Thomson Reuters ONE) -
Paris, 22 April 2016
PRESS RELEASE
ERAMET group: sales are down 14% in first-quarter 2016 compared with first-
quarter 2015, mainly due to the evolution of nickel prices. Manganese ore prices
rose sharply at the end of the first quarter.
* ERAMET Nickel sales fell by 39% and ERAMET Manganese sales by 10% compared
with first-quarter 2015.
* ERAMET Alloys sales were stable (down 2% compared with first-quarter 2015).
* On average in the first quarter, nickel and manganese prices hit their
lowest level in around 15 years.
* However at the end of March manganese ore prices were up more than 40% on
the record low level reached in February 2016.
* The strengthening of measures to reduce costs and improve productivity at
ERAMET Nickel was already reflected in the first quarter by a 10% fall in
Société Le Nickel (SLN)'s cash cost compared with the 2015 average at
identical economic conditions.
* Changes in the shareholder structure of the Weda Bay Nickel project in
Indonesia.
* Changes in governance: Mr. Patrick Buffet has appointed
Mr. Denis Hugelmann as CEO in charge of ERAMET Alloys and Mr. Philippe
Vecten as CEO in charge of ERAMET Nickel and ERAMET Manganese.
ERAMET Group sales by activity:
--------------------------------------------------------------
Sales(1) Q1 2016 Q1 2015 Change
(? million)
ERAMET Nickel 118 192 (39%)
ERAMET Alloys 250 256 (2%)
ERAMET Manganese 297 329 (10%)
Holding company & eliminations 1 -
ERAMET Group 666 777 (14%)
--------------------------------------------------------------
(1 )Adjusted data from Group reporting in which the joint ventures are
accounted for under the proportional consolidation method.
* ERAMET Nickel: sales down 39% in first-quarter 2016 compared with first-
quarter 2015.
Global stainless steel production remained stable in the first three months of
2016 compared with the same period in 2015, at 10.2 million tonnes. World
production has increased slightly since the end of March 2016.
The slowdown in Chinese growth in 2015 and the high level of nickel stocks led
to extremely low nickel prices in early 2016. LME nickel prices reached their
lowest level since first-quarter 2003, with the average price standing at USD
3.86/lb in first-quarter 2016. At that price level, estimates are that over 70%
of the nickel industry is producing at a loss.
At end-March 2016, the metal nickel reserves held at LME and SHFE (Shanghai
Futures exchange) remained higher than 500,000 tonnes of nickel.
The wide-scale destocking of nickel ore observed since 2014, the production cuts
announced by several nickel producers (including a decrease in the production of
Chinese nickel pig iron) and slightly positive growth in nickel demand in 2016
might contribute to the beginning of a market rebalance.
Against this backdrop, the plan to reduce costs and improve productivity,
affirmed as the absolute priority in the short term, has already led to swift
and significant results. The average SLN cash cost has improved by 10% on the
2015 average, for a stated objective of USD 4.50/lb at end-2017 at an annual
rate on the basis of the economic conditions of early 2016.
Nickel metallurgical production at the Doniambo plant in New Caledonia was
stable in first-quarter 2016 compared with first-quarter 2015. Demand for
ferronickel, a product really appreciated by stainless steel producers, was
especially strong in first-quarter 2016.
* ERAMET Alloys: first-quarter 2016 sales stable (-2%) compared with first-
quarter 2015.
ERAMET Alloys is strongly positioned in the aerospace sector through new
programmes from aircraft manufacturers requiring high value-added parts for
structures and engines.
However, the high-speed steel sector is still in large excess capacity
worldwide, with prices remaining at a very low level.
Initiatives on reducing costs and improving productivity are being pursued at
all ERAMET Alloys sites.
In January 2016, ERAMET Alloys, with considerable support from the Safran group
and the Auvergne Rhône Alpes Region, began the construction in Les Ancizes,
Auvergne, of a powder atomisation tower for superalloys for the aerospace engine
parts market. At the same time, it contributes to strengthen its production base
of powders for additive manufacturing.
* ERAMET Manganese: sales down 10% compared with first-quarter 2015.
Gross world production of carbon steel, the main outlet for manganese, decreased
by 4% in first-quarter 2016 compared with first-quarter 2015. Nevertheless, some
sectors, including construction in China, recovered slightly in the first
quarter, and empty housing stocks in large cities dropped sharply on second-half
2015.
The contraction in the carbon steel market led to a plunge in manganese ore
prices CIF China 44% (Source: CRU), which hit its lowest registered level since
the creation of the index in first-quarter 2016 (USD 2.07/dmtu on average in
first-quarter 2016).
As such, ERAMET decided to suspend the production of manganese ore at its Moanda
plant in Gabon for nearly four weeks in first-quarter 2016.
In March 2016, the price of CIF China 44% ore (Source: CRU) rose by over 40% on
the low in February to USD 2.53/dmtu.
Manganese alloy prices also remained low in first-quarter 2016, but started to
increase slightly in March.
* TiZir (50/50 joint venture with Mineral Deposits Limited)
Grande Côte Operations (GCO, Senegal) production of heavy mineral concentrate
(HMC) rose by nearly 7% compared with first-quarter 2015.
The TiZir Titanium and Iron plant (TTI) in Tyssedal, Norway, continued to
successfully ramp up its production of titanium feed stocks after the restart of
the furnace in December 2015. TTI investment allows Tizir to fully integrate its
titanium dioxide value chain by producing Chloride Slag from GCO ilmenite. The
first commercial shipments of Chloride slag have started in first-quarter 2016.
*
* Changes in the shareholder structure of the Weda Bay Nickel project in
Indonesia
Following its decision to reconsider its mining assets portfolio, Mitsubishi
Corporation exercised a put option to ERAMET, on 21 April 2016, in the stake it
holds with Pacific Metals Co. Ltd (Pamco) in Strand Minerals Pte Ltd, which
holds a 90% interest in the Indonesian PT Weda Bay Nickel industrial and mining
project.
In accordance with the rules of the agreement between Strand Minerals Pte Ltd's
shareholders, ERAMET will acquire Mitsubishi Corporation and Pamco's ownership
interests. This transaction has no impact on the Group's income statement.
ERAMET will become a 100% shareholder in Strand Minerals Pte Ltd, which owns
90% of PT Weda Bay Nickel. The ERAMET Group's net debt will increase by nearly
?100 million as a result of this transaction.
The Weda Bay deposit is one of the largest nickel deposits in the world. Its
measured, indicated, and inferred resources are valued at more than 9.3 million
tonnes of nickel, an increase of more than 5 million tonnes compared with
estimates made when ERAMET acquired Weda Bay in May 2006.
However, due to a significant downturn in metal markets, it should be remembered
that the ERAMET Group's major projects, including Weda Bay, are currently
suspended.
* Changes in ERAMET Group governance
At the ERAMET Board meeting held on 22 April 2016 in Paris,
Georges Duval, CEO in charge of ERAMET Alloys, and Philippe Vecten, Deputy CEO
in charge of ERAMET Nickel and ERAMET Manganese, resigned from their Deputy CEO
positions. Their resignations were accepted by the Board with immediate effect.
On the same day, Patrick Buffet, Chairman and Chief Executive Officer of ERAMET,
appointed Denis Hugelmann as CEO in charge of ERAMET Alloys and Philippe Vecten
as CEO in charge of ERAMET Nickel and ERAMET Manganese.
The ERAMET Group Executive Committee now comprises:
* Mr. Patrick Buffet, Chairman and Chief Executive Officer;
* Mr. Thomas Devedjian, Chief Financial Officer;
* Mr. Philippe Vecten, CEO in charge of ERAMET Nickel and ERAMET Manganese;
* Mr. Denis Hugelmann, CEO in charge of ERAMET Alloys;
* Mr. Michel Carnec, Executive Senior Vice President, Human Resources, Health,
Safety and Security;
* Mrs. Catherine Tissot-Colle, Executive Senior Vice President, Communication
and Sustainable Development.
In addition, the Board noted the resignation of Valérie Baudson, independent
director, owing to her professional development at CPR Asset Management.
* Financial position
At end-March 2016, ERAMET had a satisfactory level of financial liquidity.
* Outlook
The reduction of surplus stocks of manganese ore in first-quarter 2016 and the
rise in manganese ore prices in March will be reflected in an increase in ERAMET
Manganese sales in second-quarter 2016 compared with the first-quarter.
However, the historically low levels of nickel and manganese prices observed in
first-quarter 2016 will lead to a decline in current operating income in the
first half-year compared with the same period in 2015. Consequently, the pursuit
of cash-flow protection measures remains the absolute operational priority for
all the Group's teams, particularly at SLN.
- 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 developing major projects in new activities with high growth
potential, such as mineral sands (titanium dioxide and zirconium), lithium and
recycling. The Group employs approximately 14,000 people in 21 countries.
CONTACT
Vice President Strategy and Financial Communication
Philippe Gundermann
Tel: +33 (0)1 45 38 42 78
Investor Relations and Strategic Analyst
Hughes-Marie Aulanier
Tel: +33 (0)1 45 38 38 04
Strategic and Financial Communication Analyst
Ludovic Donati
Tel: +33 (0)1 45 38 42 88
For more information: www.eramet.com
--------------------------------------------------------------------------------
APPENDICES
Appendix 1: Sales
-------------------------------------------------------------------------------
Sales (? million) Q1 2016 Q4 2015 Q3 2015 Q2 2015 Q1 2015
ERAMET Nickel 118 144 146 204 192
ERAMET Alloys 250 263 218 254 256
ERAMET Manganese 297 337 375 389 329
Holding company & eliminations 1 - - 2 -
ERAMET Group 666 744 739 849 777
including joint ventures
Joint ventures share (16) (19) (29) (26) (20)
ERAMET Group 650 725 710 823 757
IFRS published financial statements(1)
-------------------------------------------------------------------------------
(1) Application of IFRS 11 "Joint Arrangements".
Appendix 2: Production and shipments
-------------------------------------------------------------------------------
In tonnes Q1 2016 Q4 2015 Q3 2015 Q2 2015 Q1 2015
Nickel production(1) 13,755 13,602 13,488 13,193 13,086
Nickel sales(2) 12,392 13,790 12,550 14,798 13,452
Production of manganese ore and 688,000 918,000 1,072,800 996,700 880,500
sinter
Manganese alloy production 176,000 176,800 180,400 183,200 169,500
-------------------------------------------------------------------------------
Manganese alloy sales 185,000 183,500 184,100 175,900 169,500
-------------------------------------------------------------------------------
(1) Ferronickel and matte.
(2) Finished products.
ERAMET group Q1 2016 Results:
http://hugin.info/143395/R/2006072/741155.pdf
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other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: Groupe Eramet via GlobeNewswire
[HUG#2006072]
Unternehmensinformation / Kurzprofil:
Datum: 22.04.2016 - 17:46 Uhr
Sprache: Deutsch
News-ID 465913
Anzahl Zeichen: 14892
contact information:
Town:
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Kategorie:
Business News
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