Aperam’s Earnings Call: Mixed Sentiments and Future Prospects

Aperam ((APEMY)) has held its Q2 earnings call. Read on for the main highlights of the call.

During the recent earnings call, Aperam’s management conveyed a mixed sentiment, highlighting positive developments in Brazil and the alloys division, while acknowledging ongoing challenges in the European market and uncertainties within the Recycling and Renewables division. Despite these immediate hurdles, the management expressed confidence in the future, particularly with anticipated regulatory changes in Europe.

Brazil’s Strong Performance

Brazil continues to be a bright spot for Aperam, with a robust order book driven by strong domestic demand. The region remains cost-competitive, relying less on exports and more on internal consumption, which has bolstered its performance amidst global uncertainties.

Positive Outlook for Alloys Division

The alloys division is poised for growth despite a recent plant failure. The division is expected to see improved volumes as the aerospace sector moves past its destocking phase, signaling a positive trajectory for the future.

Confidence in European Steel and Metal Action Plan

Aperam views the European Commission’s engagement with the Steel and Metal Action Plan favorably. The company anticipates that the plan will have significant impacts starting in 2026, which could enhance its competitive position in the region.

Stable Bioenergia Performance

Bioenergia has maintained stability, with seasonal fluctuations typically occurring at the year’s end. This steady performance contributes to the overall resilience of Aperam’s portfolio.

Alloys Division Plant Failure

A plant failure in the alloys division resulted in a EUR 10 million impact, split between repair costs and production losses. This incident affected the third quarter but is not expected to have long-term detrimental effects.

Weak Scrap Market for Recycling and Renewables

The Recycling and Renewables division faced challenges due to declining scrap prices and reduced offtake in certain regions, leading to a soft start for the year. However, the division aims to normalize its EBITDA in the coming quarters.

European Market Challenges

The European market continues to present challenges with low demand and high import levels. Nevertheless, Aperam maintains flexibility in its production processes to adapt to these conditions and sustain its cost leadership.

CBAM Parameters Unclear

Uncertainty surrounds the Carbon Border Adjustment Mechanism (CBAM) as key parameters remain undefined. This creates planning challenges, although CBAM is expected to positively impact Aperam from 2026 onwards.

Forward-Looking Guidance

Aperam’s guidance reflects a cautious yet optimistic outlook. The alloys division, despite recent setbacks, is expected to maintain a strong EBITDA run rate. Brazil’s performance is projected to remain robust despite external tariff pressures. The European market’s challenges persist, but Aperam plans to leverage its flexible production to maintain cost leadership. The Recycling and Renewables division aims for a normalized EBITDA, while CBAM is anticipated to benefit the company starting in 2026.

In conclusion, Aperam’s earnings call highlighted a balanced view of current strengths and challenges. The company’s confidence in future regulatory changes and strategic adaptability in key markets underscores its commitment to maintaining a competitive edge. Investors and stakeholders can take away a sense of cautious optimism as Aperam navigates a complex global landscape.