2020 half-year results Christel BORIES Chairman and CEO 30 July 2020
Disclaimer Certain information contained in this presentation including any information on Eramet’s plans or that express management’s future financial or operating performance and any other statements expectations or estimates of future performance, constitute forward-looking statements. Such statements are based on a number of estimates and assumptions that, while considered reasonable by management at the time, are subject to significant business, economic and competitive uncertainties. Eramet cautions that such statements involve known and unknown risks, uncertainties and other factors that may cause the actual financial results, performance or achievements of Eramet to be materially different from the company’s estimated future results, performance or achievements expressed or implied by those forward-looking statements. Past performance information given in this presentation is solely provided for illustrative purposes and is not necessarily a guide to future performance. No representation or warranty is made by any person as to the likelihood of achievement or reasonableness of any forward-looking statements, forecast financial information or other forecast. Nothing contained in this presentation is, or shall be relied upon as, a promise, representation, warranty or guarantee as to the past, present or future performance of Eramet. Nothing in this presentation should be construed as either an offer to sell or a solicitation to buy or sell securities nor shall there be any offer or sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful under the securities laws of any such jurisdiction. Eramet – 2020 half-year results 2
Contents Introduction 1 – Safety 2 – Financial results 3 – Operational performance 4 – Strategic transformation Conclusion and outlook Eramet – 2020 half-year results 3
Strong impact of the crisis on the Group's end markets: drop in metal prices and aerospace crisis (~€350m EBITDA impact) Deteriorated price environment, o/w: -22% on average for manganese ore 1 prices ~- €280m -10% on average for ferronickel’ 2 prices, due to significant discount EBITDA impact to LME in H1 2020 (zero in H1 2020) vs H1 2019 -8% and -3% on average for refined and standard manganese alloys’ 1 prices, respectively A&D hard hit by aerospace crisis ~- €50m Cancellation of 33% orders in the aerospace business EBITDA impact FCF of - €156m in H1 2020 vs H1 2019 European and US steel decline - €25m Swift adjustment of manganese alloys plants production (- 20% to 30% in May-June) EBITDA impact vs H1 2019 1 CRU index: manganese ore CIF China 44% ; MC FeMn (Europe) ; SiMn (Europe) Eramet – 2020 half-year results 4 2 Eramet calculation based on average LME prices
Excellent operating performance of the mining activities in H1 2020, confirming the success of the organic growth strategy c.€120m of intrinsic progress in H1 2020 vs H1 2019, despite the sanitary crisis Start-up of the 4 2.8 Mt of manganese 2.2 Mwmt of nickel 371 kt of mineral production lines at ore produced in ore produced in New sands produced in Weda Bay in May Gabon , +31% vs H1 Caledonia , +12% Senegal , despite 2019 lower grade of deposit 1.1 Mwmt of ore 1.6 Mwmt of nickel OEE 1 at a high level 2.9 Mt of ore exports, +120% ore produced since transported, +42% Oct. 2019 4.2 kt 2 of nickel ferroalloys produced 1 Overall Equipment Efficiency of the mine Eramet – 2020 half-year results 2 In nickel content 5
EBITDA drop ; net income further penalised by impairment charge due to crisis (€284m) & lithium project mothballed (€142m) High Performance Mining and Metals Erasteel Alloys Division Division 5% 20% Sales €1,687m 80% Aubert & Duval -7% vs H1 2019 15% €1,687m Mineral Sands BU Manganese BU 8% 50% Nickel BU 22% EBITDA €120m vs H1 2019 (€307m) FCF - €210m Net debt €1,536m Net income – Group share Gearing 1 before impairment - €623m 113% vs H1 2019 (- €37m) Covenant holidays for H1 and H2 2020 Eramet – 2020 half-year results 6 1 Net debt-to-equity ratio, incl. IFRS 16 impact
Covid-19: swift adaptation to ensure business’ continuity at mines and plants Eramet fully mobilised to face the Covid-19 situation Protecting employees and their families as well as local communities: Group’s top priority Strict application of sanitary protocols, Specific sanitary expenses in Gabon, Senegal and France Eramet solidarity plan c . € 10m to fund combat against the spread and pandemic consequences in all Eramet locations Consistent with Eramet's strategy for local communities ( € 13m/yr spent on average) Transgabonese railway pivotal in supporting local communities in Gabon Solidarity action towards local populations, Setrag, Gabon Eramet – 2020 half-year results 7
1 Safety
Further strong decline in accident frequency rate in H1 2020, but still too many severe accidents Eramet accident frequency rate (FR2 1,2 ) 22 20 20.0 18 17.3 16.8 16 14 13.6 13.4 12 10.9 10 ~-50% 8.3 vs 2018 8 6 5.4 4.3 4 -20% 2 vs 2019 0 2012 2013 2014 2015 2016 2017 2018 2019 H1 2020 Continued push of management in daily 1 fatal accident at subcontractors in H1 operations for safety routines: 2020: Focus on risk analysis , prior to any Continued roll-out of Essential Safety action Requirements to avoid severe accidents, particularly at subcontractors 1 FR2 = number of lost time and recordable injury accidents for 1 million hours worked Eramet – 2020 half-year results 9 2 Including employees and subcontractors since 2016
2 Financial results
Robust contribution of Manganese and Mineral Sands activities in H1 2020 Group EBITDA -61% 1 €307m Despite price drop, continued solid €120m EBITDA contribution from Manganese BU €316m -26% 2 1 €234m Mineral Sands BU driven by robust M&M operational performance €52m Division 1 -15% €44m 2 3 €208m - €25m Nickel BU impacted by a depressed -180% - €5m stainless-steel and Sandouville’s markets - €70m 3 - €31m SDV (- €21m) - € 61m H1 2019 4 High Performance Alloys Division - €66m 4 contribution hard hit by aerospace and Erasteel (- €15m ) automotive crisis - €22m H1 2020 Manganese BU High Performance Alloys division Mineral Sands BU Holding & other Nickel BU Eramet – 2020 half-year results 11 1 Excl. Lithium project (- €2m) included in Holding & other
EBITDA strongly affected by decline in metal prices and aerospace crisis, despite significant operating progress in mining activities €m H1 2020 H1 2019 Sales 1,687 1,809 EBITDA 120 307 % Sales 7% 17% Current operating income (32) 169 % Sales n.a. 9% Net income – Group share (623) (37) €m 30/06/2020 31/12/2019 Net debt (Net cash) 1,536 1,304 Shareholders’ equity 982 1,639 Gearing before impairment (Net debt-to-equity ratio, incl. IFRS 16 113% 78% impact) ROCE (COI / capital employed 1 for previous 12 rolling months) n.a. 12% 1 Sum of shareholders' equity, net debt, provisions for site rehabilitation, restructuring and other social risks, less financial fixed assets, excluding Weda Bay Eramet – 2020 half-year results 12 Nickel capital employed. ROCE at 30 June is calculated based on 12 rolling months
Net income further penalised by the accounting of a non- recurring expense of €459m €m H1 2019 H1 2020 Sales 1,687 1,809 Current operating income (32) 169 Other operating income and expenses (459) (25) o/w Provisions on asset impairment tests (381) (0) 1 Lithium project (45) (11) 2 Financial result (82) (54) 3 Share in income from associated companies 7 (4) Pre-tax result (566) 90 Income tax (73) (101) 4 Net income (639) (16) o/w Minority interests’ share (16) 21 Net income – Group share (623) (37) 1 2 In addition to €97m of impairment, non-recurring expenses ( €45m ) Sandouville related to costs to terminate contracts and mothball project €53m 3 €197m - €28m vs H1 2019, of which - €12m increase in interest charges €97m A&D Lithium €34m 4 - €28m decrease, mainly related to taxes in Gabon and Norway Erasteel Eramet – 2020 half-year results 13
Income highly sensitive to metal prices Annual impact on EBITDA SENSITIVITIES Change (+/-) c.€175m 1 Manganese ore prices (CIF China 44%) +$1/dmtu Manganese alloys’ prices c.€60m 1 +$100/t c.€100m 1 Nickel prices (LME) +$1/lb c.€15m 1 Nickel ore prices (CIF China 1.8%) +$10/wmt - $/€0.1 c.€140m Exchange rates c.€(20)m 1 Oil price per barrel +$10/bbl 1 For an exchange rate of $/€1.13 Eramet – 2020 half-year results 14
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