Aperam S.A. (APAM) Q1 2025 (Q&A) earnings summary

Executive summary

• Q1 2025 results were in line with guidance, with adjusted EBITDA declining amid challenging market conditions, but sales and shipments increased sequentially.

• Universal Stainless & Alloy Products Inc. was fully consolidated from January 23, 2025, strengthening the Alloys & Specialties segment.

• Leadership Journey® Phase 5 delivered EUR 21 million in gains in Q1, with a cumulative EUR 116 million toward a EUR 200 million target by 2026.

• ESG initiatives advanced, including a EUR 250 million IFC loan to support forest growth and decarbonization.

• Brazil delivered strong results, becoming the main EBITDA contributor, while Europe remained just profitable.

Financial highlights

• Q1 2025 sales were EUR 1,658 million, up 12.7% sequentially; shipments rose 14% to 575 thousand tonnes.

• Adjusted EBITDA was EUR 86 million, down 26% sequentially and up 56% year-over-year; margin at 5.2%.

• Net financial debt increased to EUR 1,235 million, mainly due to the Universal acquisition and higher working capital.

• Free cash flow before dividend was negative at EUR 574 million, reflecting seasonal working capital needs and acquisition effects.

• Net loss of EUR 18 million, or EUR (0.24) per share, compared to net income of EUR 12 million in Q4 2024.

Outlook and guidance

• Q2 2025 adjusted EBITDA and shipments are expected to be higher, driven by seasonality, Universal consolidation, and improved volumes.

• Net financial debt is expected to decrease as working capital normalizes and free cash flow improves.

• FY 2025 base dividend maintained at EUR 2.00/share; capex guidance at EUR 200 million, with EUR 150 million for sustenance and EUR 30 million for alloys growth.

• Universal's synergy plan of $30 million over 4-5 years remains on track, with potential upside from defense sector opportunities.

• Guidance is subject to volatility in metal and product prices and macroeconomic uncertainty.