Aperam S.A. (APAM) Q2 2024 (Q&A) earnings summary

Executive summary

• Q2 2024 saw early signs of market normalization, with improved European pricing, volumes, and margins, though both remain below normal levels; Brazil showed solid demand despite shipment delays from hot rolling mill ramp-up.

• Product mix improvements and cost competitiveness initiatives, including Leadership Journey® Phase 5, supported results, delivering €12–15 million in gains in Q2 and ongoing benefits expected.

• Free cash flow reached €111 million, driven by higher profitability and a €92 million working capital release, with net financial debt reduced to €607 million.

• Automotive segment remains resilient, especially in Brazil and through unique export solutions, despite broader market weakness.

• ESG focus continued, maintaining employee relations amid cost pressures.

Financial highlights

• Q2 2024 sales were €1,634 million, down 1% sequentially and 4% year-over-year, with shipments stable at 583 thousand tonnes.

• Adjusted EBITDA rose to €86 million, up 56% sequentially but down 17% year-over-year; margin improved to 5.3%.

• Net income was €49–59 million, reversing a Q1 net loss, with basic EPS at €0.82.

• Free cash flow before dividends reached €111 million, with net financial debt reduced to €607 million.

• Leadership Journey 5 targets €75 million in gains for 2024, with €12–15 million realized in H1 and ramp-up expected in H2.

Outlook and guidance

• Q3 2024 expected to be seasonally low in Europe, with pricing and volume below normal; shipments expected to remain stable and adjusted EBITDA anticipated to be slightly higher than Q2.

• Net financial debt projected to rise in Q3 due to higher activity-related working capital, but targeted to decline by €120 million by year-end.

• FY 2024 base dividend confirmed at €2.00/share; group capex guidance at ~€150 million.

• Leadership Journey initiatives are on track, targeting >€200 million cumulative gains by 2026.

• Brazil's competitiveness is expected to improve as ramp-up issues are resolved, with further guidance in Q4.