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2016-02-18

ERAMET group: 2015 Results

RELEASE

ERAMET group: 2015 Results

* 2015 results have been very significantly impacted by struggling world
crisis of metal and mining sector with prices at their lowest in 15 years -
nickel and manganese have been specifically and simultaneously affected.
ERAMET group sales remained nevertheless steady at ?3,109 million. Current
operating income stood at -?207 million and net income - Group share was
-?714 million, after taking account of ?668 million total impairment of
assets and tax receivables.
* 2014-2017 plan to cut costs and strengthen productivity has been rigorously
implemented. Target is reached at midpoint with savings of around ?180
million at the end of 2015, on the total savings of ?360 million at the end
of the plan.[1] A specific project to strengthen the plan to cut costs and
boost productivity is launched at SLN, with a view to making major inroads
into lowering cash cost.

* The strong cash preservation measures were pursued with among others: the
suspension of the Group's major projects and the limitation of capital
expenditure to safety and strict maintenance. Capital expenditure was
reduced to ?267 million in 2015, down by 23% against 2014, and by 55%
against 2013. Net financial debt stood at ?878 million at 31 December 2015
and Group financial liquidity totalled ?1.6 billion at 31 December 2015.

- ooOoo -
ERAMET's Board of Directors met on 17 February 2016 under the chairmanship of
Patrick BUFFET to approve the financial statements for 2015.[2]The 2015
financial statements will be submitted for approval at the General Meeting on
27 May 2016.

* Key figures for the ERAMET Group

In a context of a downturn in metal markets, the duration and extent of which
are quite exceptional, ERAMET Group sales remained steady at ?3,109 million
(down by 1% against 2014).

The Group's current operating income, however, experienced a sharp drop with
respect to 2014 to -?207 million, deeply hit by SLN current operating income
(-?260 million), which positive performances by ERAMET Alloys and ERAMET
Manganese were unable to offset.

Historically low metal prices also led ERAMET to recognize impairment - assets
and tax receivables - of ?668 million.

Net loss, Group share came out at -?714 million.

Industrial investments stood at ?267 million, down by 23% against 2014, and by
55% against 2013. The restriction of investment to safety and strict
maintenance will continue into 2016. This was made possible in the wake of a
period of large outlays to modernise the production tool at the start of the
current decade.

Net financial debt stood at ?878 million at 31 December 2015. The net
debt-to-equity ratio (before impairment in 2015) stood at 36%. After the 2015
impairment the ratio was 49%.

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| Key figures for the ERAMET Group (? million)* 2015 2014 |
| Sales 3,109 3,144 |
| EBITDA 92 363 |
| Current operating income (207) 75 |
| Impairment of assets and tax receivables (668) (27) |
| Net income, Group share (714) (159) |
| Net debt (878) (547) |
| Net debt-to-equity ratio before impairment in 2015 36% 20% |
| Net debt-to-equity ratio after impairment in 2015 49% - |
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* Adjusted data from Group reporting, in which joint ventures are accounted
for using proportionate consolidation. The reconciliation with the published
financial statements is presented in Appendix.
* Financial position

The ERAMET Group's financial liquidity is still strong, totalling ?1.6 billion
at 31 December 2015, including ?980 million on a revolving credit facility
drawn down at the beginning of January 2016.

* Dividends

The Board will submit a vote proposal to the General Meeting of Shareholders
on 27 May 2016 for a zero dividend to be distributed in respect of 2015.

* ERAMET Nickel: sales down by 12% in 2015 against 2014, to ?686 million.
Current operating income well into negative territory at -?261 million,
pointing to the present slump on the nickel market.

World production of stainless steel, the main outlet for the nickel market,
remained steady in 2015 with respect to 2014, breaking the trend observed
between 2010 and 2014, when annual growth was between 6% and 9%.

The economic slowdown in China and continued high output by nickel producers
helped increase stocks. They hit an all-time high at year-end 2015, with more
than 480,000 tonnes of metal on the LME (London Metal Exchange) and the SHFE
(Shanghai Futures Exchange).

LME nickel prices continued to fall throughout the year to their lowest ever
level in 12 years, one of the largest drops in the metal sector (down by 42%
between December 2014 and December 2015).

At these prices, industry experts claim more than 70% of nickel manufacturers
are producing at a loss.

In this context, nickel metallurgy production in Doniambo (New Caledonia)
totalled 53,369 tonnes of nickel, down by 1,643 tonnes with respect to 2014.
The current operating income of ERAMET Nickel was hit hard, and came out at
-?261 million.

Cost-cutting and better operational performance by ERAMET Nickel accounted for
a cumulative ?64 million in 2014 and 2015, bringing the SLN cash cost to
approximately USD 6/lb (in the economic conditions of Q4 2015).

Moreover, ERAMET Nickel targets to strengthen the plan to cut costs and boost
SLN productivity in H1 2016, with a view to making major inroads into
lowering cash cost.
* ERAMET Alloys: sales up by 6% in 2015, to ?991 million. Current operating
income rose to ?27 million, including ?50 million by Aubert&Duval
confirming growth, and -?23 million by ERASTEEL, drastically affected by
the high-speed steel market. ERAMET Alloys still holds a good position in
the aerospace sector.

The aerospace sector is showing regular growth and accounts for almost 60% of
sales by ERAMET Alloys on programmes by aircraft manufacturers requiring high
added-value parts for structures or engines. Aubert&Duval's quality and
services were acknowledged with the "Space Award".

In 2015 ERAMET Alloys entered a new phase in the structuring of its business
targeting aerospace titanium markets:

* An industrial workload for UKAD, a joint venture between Aubert&Duval and
UKTMP, to forge aerospace titanium ingots.
* Continuation of construction of EcoTitanium, Europe's first producer of
aerospace quality titanium producer using recycled materials, in
partnership with France's ADEME agency and Cr?dit Agricole.
* Creation of MKAD, a joint venture between Aubert&Duval and Mecachrome to
supply machined titanium parts.

ERAMET Alloys also continued to expand its powder metallurgy business:

- deliveries stepped up on the Rafale programme.
- positioning in the emerging 3D printing sector.

Developments in the division's other markets were less favourable, in
particular with smaller volumes of high-speed steel pulling down ERASTEEL's
results.

Cost-cutting and a better operational performance by ERAMET Alloys accounted
for a cumulative ?56 million in 2014 and 2015.

* ERAMET Manganese: sales steady at ?1.430 million and positive current
operating income at ?58 million, despite much lower prices for manganese
ore (-49% in December 2015 compared to December 2014). The Moanda deposit
is one of the world's most competitive.

Gross world production of carbon steel, the main outlet for manganese, fell by
around 3% against 2014, for the first time in a long period. Construction,
which accounts for more than 40% of carbon steel consumption in China,
stagnated in 2015, with extremely high levels of empty housing stocks at the
end of the year.

Chinese producers offset falling domestic demand with an increase of more than
25% in exports, bringing much pressure to bear on foreign steel
manufacturers. Production fell by approximately 1% in Europe, by 8% in North
America, and between 3% and 5% in Russia, the Middle East, Africa and Latin
America. Steel prices fell across the board.

In this context, manganese ore prices CIF China 44% (Source: CRU) plunged in
2015, by 49% between December 2014 and December 2015. The sharp fall was
chiefly caused by new producers in South Africa, spurred on by a considerable
depreciation of local currency. Manganese alloy prices have shown the same
downward trend since the summer of 2015.

ERAMET Manganese held out well against much lower prices thanks to its
competitive position in terms of manganese ore and alloys. In Gabon, ore
production by ERAMET Manganese notched up a new record of 3.9 million tonnes
transported in 2015. This was thanks to simultaneous progress by the mine and
by the trans-Gabon railway (SETRAG) between Moanda and the port of Owendo.

Cost-cutting and a better operational performance by ERAMET Manganese
accounted for a cumulative ?54 million in 2014 and 2015.

SETRAG should also benefit from a major 7-year modernisation programme to
increase transport capacity and improve railway reliability.

* TiZir (a joint venture operated 50/50 with Mineral Deposits Limited)

TiZir continued to ramp up production in 2015 with almost 633,000 tonnes of
heavy mineral sands produced (ilmenite, zircon, rutile and leucoxene) at GCO
(Grande C?te Operations
) in Senegal. The pace of industrial operations at year-end was in keeping
with expectations.

In Norway, investment to modernise and increase the production capacity of the
TTI plant (TiZir Titanium and Iron
) was finalized during the last quarter of the year, enabling production to
resume at the beginning of January 2016. This operation materialises the
completion of the integration strategy of the two industrial units from the
mineral sands extraction in Senegal to the titanium dioxide feedstock
production from ilmenite in Norway.

* Outlook

At the conclusion of the Board meeting, Patrick BUFFET said:

"The slowdown in China and massive overproduction in recent years have led to
a huge crisis in the metal sector, and all industrial players have been hit
hard.

Faced with this exceptional scenario, ERAMET has made a number of major
decisions in order to make good the Group cash flow as soon as possible:

* restriction of industrial investment to safety and strict maintenance.
* suspension of major Group projects.
* ongoing asset disposal programme.
* continuation of the 2014-2017 plan to reduce costs and boost productivity
in the amount of ?360 million annual impact on current operating income at
the end of the period, with respect to 2013. At midpoint, the plan has
already achieved half of the target.
* H1 2016 project to significantly strengthen SLN specific plan to cut costs
and boost productivity.

Growth in the aerospace sector, on the other hand, is still well on target,
and the profit of Aubert&Duval in ERAMET Alloys rose in 2015.

The ERAMET Group's financial liquidity is strong.

The crisis in the metal sector calls for the utmost rigour. ERAMET will
address these difficult circumstances by accelerating and extending measures
to cut costs and boost our performances. "

- ooOoo -

WEBCAST OF PRESENTATION OF 2015 RESULTS

The presentation of the 2015 results will be webcasted 18 February 2016, at 10
am (Paris time) in French and with a simultaneous translation in English.
To sign up, please click on the link on the Group's website:www.eramet.com

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ABOUT ERAMET

ERAMET is a leading global producer of:

* alloying metals, particularly manganese and nickel, used to improve the
properties of steel,
* high-performance special steels and alloys used in industries such as
aerospace, power generation and tooling.

ERAMET is also de...

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