Earnings Release • Oct 27, 2011
Earnings Release
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Paris, October 27th, 2011
| Turnover (€ millions) |
Q3 2011 | Q3 2010 | Change | 9 months 2011 |
9 months 2010 |
Change |
|---|---|---|---|---|---|---|
| ERAMET Manganese | 398 | 437 | -9% | 1 320 | 1 369 | -4% |
| ERAMET Nickel | 200 | 208 | -4% | 741 | 691 | +7% |
| ERAMET Alloys | 196 | 176 | +11% | 669 | 554 | +21% |
| Holding co. & eliminations | (2) | (2) | (7) | (7) | ||
| ERAMET group | 792 | 819 | -3.3% | 2 723 | 2 607 | +4.5% |
The ERAMET group's turnover totalled 2,723 M€ for the first nine months of 2011, a 4.5 % increase compared with the same period in 2010.
3 rd quarter 2011 turnover, at 792 M€, was slightly lower than in the 3rd quarter of 2010, due to trends in exchange rates and, to a lesser extent, nickel and manganese prices. The Group's output and shipments increased overall in the 3rd quarter of 2011 compared with the same period in 2010.
Price and exchange rate levels led to a decrease in turnover to 398 M€ in the 3rd quarter of 2011, down 9 % compared with the same period in 2010, with nevertheless an increase in shipments and a quarterly record for manganese ore production.
Spot prices for manganese alloys (source: CRU) fell approximately 20 % on average in the 3rd quarter of 2011 compared with the same period in 2010. China CIF spot prices (source: CRU) for manganese ore have stabilised around 5.30 USD/dmtu for several months. This level is firm but lower than prices in the 3rd quarter of 2010 (average 7.2 USD/dmtu).
Global manganese demand was firm. Worldwide production of carbon steel rose 9 % (source: World Steel Association) in the 3rd quarter of 2011 compared with 3rd quarter
2010 and 8 % over nine months compared with the same period of the previous year. Demand was higher in September 2011 than in August 2011 for the same number of days. Manganese ore inventory in Chinese ports has been decreasing gradually since June 2011.
ERAMET Manganese's alloy shipments grew 7.4 % in the 3rd quarter of 2011 compared with the same period in 2010 and 6.5 % over nine months. External shipments of manganese ore and sinter rose 20 % over nine months compared with the first nine months of 2010.
Manganese alloy production increased 1.4 % in the 3rd quarter of 2011 compared with the 3rd quarter of 2010 to total 198,000 tons, and 2.1 % over nine months compared with the same period in 2010.
Manganese ore and sinter production rose 8.6 % in the 3rd quarter of 2011 compared with the 3rd quarter of 2010, reaching the record quarterly amount of 957,000 tons. The ramp-up of production continues with the target of 4 million tons on an annual basis at the end of 2012.
3 rd quarter turnover amounted to 200 M€ in 2011, down 4 % from the 3rd quarter of 2010, mainly due to the exchange rate effect.
LME nickel prices averaged 10.01 USD/lb. in the 3rd quarter of 2011, up 4 % compared with the same period in 2010. Nevertheless they were lower than in the 1st half of 2011 (avg. 11.61 USD/lb.) and continued to fall to around 8.5 USD/lb. in October. This decrease is leading to output cuts by Chinese nickel pig iron producers, reducing the supply available to Chinese stainless steel producers.
In the 3rd quarter of 2011, stainless steel production rose 5 % compared with the 3rd quarter of 2010. Over nine months, it grew more than 4 % year-on-year. Stainless steel inventory remains low in every zone.
Global nickel demand rose more than by 5 % over the first nine month compared with the same period in 2010. LME nickel inventories, which had gone from 107,000 tons at the end of the 2nd quarter 2011 to 97,000 tons at the end of the 3rd quarter 2011, shed another 10,000 tons in early October to total 87,000 tons.
Metallurgical nickel production in Doniambo rose 6 % in the 3rd quarter of 2011 compared with the 3rd quarter of 2010.
ERAMET Alloys' activity continued to grow. Turnover for the 3rd quarter of 2011 rose 11 % compared with 3rd quarter 2010. Business was healthy in the aerospace sector, where turnover grew 23 %. Trends on aerospace markets remained positive and aircraft makers benefit from very large order backlogs. ERAMET Alloys' activity was stable on its other markets.
By the end of 2011, ERAMET Alloys will have commissioned four strategic facilities (powder metallurgy in Sweden, titanium forging, aluminium forging and vacuum melting of nickel alloys in France).
On September 19th, 2011, ERAMET Alloys and its Kazakh partner opened UKAD, their titanium ingot processing unit in Saint Georges de Mons (Auvergne, France), which will create around 60 jobs.
UKAD's aim is to manufacture and sell titanium products (billets, bars, wire and sheets), mostly for the aerospace market. Completion of this €47 million investment will enable both partners to become a major player in the global titanium market.
In October 2011, ERAMET Alloys commissioned a second powder atomisation tower at its Erasteel plant in Söderfors, Sweden, doubling its production capacity.
The new facility, a 20 M€ investment, will strengthen ERAMET Alloys' world leadership in the fast-growing powder metallurgy sector.
On October 25th, 2011, ERAMET and MDL announced the effective implementation of their joint venture combining the ERAMET Titanium & Iron (ETI) site in Norway (titanium dioxide enrichment) and the Grande Côte mineral sands site being developed in Senegal by MDL (mainly titanium dioxide and zircon). Titanium dioxide is primarily sold to the pigments market and zircon is used on the ceramics market in particular. The short and medium-term outlooks are highly favourable for both markets because of the constraints that are likely to restrict growth in global supply.
Construction of the "Grande Côte" project in Senegal began on schedule and production should start in late 2013. Total capital expenditure for the project is estimated at approximately USD 520 million.
As at the end of September 2011, the ERAMET group's consolidated net cash remained very sound.
The ERAMET group confirms that the nickel and manganese prices observed since the start of the 2nd half of 2011 have remained below 1st half 2011 levels. Consequently, the Group's current operating income for full-year 2011 will be lower than in 2010, when it totalled 739 M€.
Patrick BUFFET, ERAMET group Chairman & CEO, stated, "In the medium and long terms, trends are healthy for the fundamentals of the Group's businesses, which are driven by market growth in emerging countries, particularly China. The Group will continue the modernisation of its current sites, which has already been widely implemented, the ramp-up of its organic growth projects, the in-depth study of its transformative projects and its policy of selective acquisitions and partnerships in all its businesses."
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.
Moreover, ERAMET is studying or developing major projects in new metals with high growth potential, such as lithium, niobium and rare earths, and in recycling.
The Group employs approximately 15,000 people in 20 countries. ERAMET is part of Euronext Paris Compartment A.
Philippe Joly Vice President Strategy and Investor Relations Tel.: +33 (0)1 45 38 42 02
For more information: www.eramet.com
| Turnover (M€) | Q3 2010 | Q4 2010 | Q1 2011 | Q2 2011 | Q3 2011 |
|---|---|---|---|---|---|
| ERAMET Manganese | 437 | 489 | 467 | 455 | 398 |
| ERAMET Nickel | 208 | 274 | 271 | 270 | 200 |
| ERAMET Alloys | 176 | 210 | 237 | 236 | 196 |
| Holding company & eliminations |
(2) | (4) | (2) | (3) | (2) |
| ERAMET group | 819 | 969 | 973 | 958 | 792 |
| Metric tons | Q3 2010 | Q4 2010 | Q1 2011 | Q2 2011 | Q3 2011 |
|---|---|---|---|---|---|
| Manganese ore and sinter production | 881, 000 | 746, 000 | 797, 000 | 884, 000 | 957, 000 |
| Manganese alloy production | 195, 200 | 179, 500 | 212, 000 | 203, 000 | 198, 000 |
| Manganese alloy sales | 185, 500 | 180, 300 | 206, 000 | 205, 000 | 199, 000 |
| Nickel production* | 13, 168 | 13, 767 | 12, 995 | 12, 813 | 13, 947 |
| Nickel sales** | 11, 369 | 14, 148 | 12, 591 | 13, 822 | 11, 315 |
| Metric tons | Q3 2011 | Q3 2010 | Change | 9 months 2011 |
9 months 2010 |
Change |
|---|---|---|---|---|---|---|
| Manganese ore and sinter production |
957, 000 | 881, 000 | +8.6% | 2, 638, 000 | 2, 454, 000 | +7.5% |
| Manganese alloy production |
198, 000 | 195, 000 | +1.4% | 612, 000 | 600, 000 | +2.1% |
| Manganese alloy sales | 199, 000 | 185, 500 | +7.4% | 610, 000 | 573, 000 | +6.5% |
| Nickel production* | 13, 947 | 13, 168 | +6% | 39, 756 | 39 ,952 | -0.5% |
| Nickel sales** | 11, 315 | 11, 369 | -0.5% | 37, 727 | 39,502 | -4.5% |
* Ferronickel and matte
** Finished products
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