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

Executive summary

• Q2 profitability rebounded as destocking faded and cost initiatives and improved product mix took effect; adjusted EBITDA rose to €86m from €55m sequentially.

• Free cash flow before dividends reached €111m, and net financial debt fell to €607m at June 30.

• H1 remained challenging in European and Brazilian steelmaking, while Services & Solutions and Alloys & Specialties supported results.

• Management described the second-half outlook as cautiously optimistic amid constrained global growth and improving industrial production prospects.

Financial highlights

• Q2 sales were €1,634m, down 1% sequentially and 4% year over year; shipments were stable at 583,000 tonnes.

• Adjusted EBITDA margin rose to 5.3% from 3.3% in Q1; Q2 basic EPS was €0.82 versus a loss of €0.26 in Q1.

• H1 sales were €3.291bn, down 8.0% year over year; shipments rose 2.4% to 1.168m tonnes, while lower average selling prices weighed on sales.

• H1 EBITDA was €133m versus €230m; net income attributable to equity holders was €40m versus €175m.

• Q2 free cash flow was €111m, supported by a €92m working capital release; H1 free cash flow before dividends and buybacks was negative €30m.

Outlook and guidance

• Q3 adjusted EBITDA was expected to be slightly higher than Q2, with net financial debt also expected to rise due to activity-related working capital.

• Q3 shipments were expected to remain stable; European pricing and volumes were expected to stay below normal amid seasonal weakness.

• Leadership Journey Phase 5 targets €75m of gains in 2024 and >€200m cumulatively over 2024–2026.

• 2024 base dividend was confirmed at €2.00 per share; capex guidance was ~€150m.

• Outlook assumptions included metal and product prices remaining at current levels.