Aperam S.A. (APAM) Q3 2024 earnings summary

Executive summary

• Q3 2024 performance improved with investments in Brazil and Europe yielding results, and Brazil returning to full operations post-upgrade, while Europe faced seasonal softness and soft demand.

• Leadership Journey® Phase 5 and the Booster program delivered €27 million and €25 million in gains respectively, with cost and ESG initiatives advancing.

• The acquisition of Universal Stainless for $539 million expands into the US aerospace market, targeting €27 million annual synergies, with closing expected in H1 2025.

• Net income surged to €179 million, mainly due to a €142 million income tax benefit from deferred tax asset recognition.

• ESG initiatives progressed, with BioEnergia gaining new customers and ongoing decarbonization efforts.

Financial highlights

• Q3 2024 sales were €1,493 million, down 8.6% sequentially but up 2% year-over-year; operating income rose to €49 million.

• Adjusted EBITDA rose 15% sequentially to €99 million, with margin improving to 6.6% from 5.3% in Q2 2024.

• Basic EPS was €2.47, up from €0.82 in Q2; adjusted EPS was €0.25, reflecting one-time tax effects.

• Free cash flow before dividends dropped to €9 million, impacted by a €100 million working capital increase.

• Net financial debt increased to €641 million from €607 million at June 30, 2024.

Outlook and guidance

• Q4 2024 EBITDA is expected to be higher than Q3, with shipments and adjusted EBITDA anticipated to rise and net financial debt projected to decrease by year-end.

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

• Leadership Journey® Phase 5 targets over €200 million in cumulative gains by 2026, with €75 million in 2024.

• H2 performance is considered a clean base for 2025, as one-offs have smoothed out.

• Pricing remains a headwind, but differentiated products and improved mix are expected to support margins.