Aperam S.A.

Hello, good morning, everybody. Thank you for attending Aperam's earnings conference call.

Next to me is Sandeep Jalan, Aperam's CFO. And together, we'll present the results of the fourth quarter 2019.

Please take note of our disclaimer regarding forward-looking statements. We start from Health and Safety on page 3.

In Q4, our LTI frequency rate remained elevated at 1.9. This is due to the high cap expense for new projects and maintenance, we employ them -- a high share of contracts from third parties [ph] during Q4 that are more accident prone than our regular employees.

This is another reminder that we constantly need to work hard and diligently towards our goal of becoming a zero accident company. Now let's move it to the key developments in the fourth quarter on slide 4.

The market environment remained challenging during Q4. The seasonal improvement was soft in Europe, while Brazil was seasonally weak.

In total 2019 was the most challenging year since the inception of Aperam. In this context, we achieved a solid adjusted EBITDA, in line with guidance and a very strong free cash flow both for the year and during Q4.

Cost savings are one of the drivers for this. We realized gains of €90 million through the Leadership Journey in 2019, and we remain well on track to achieve the target of €200 million by the end of this year.

Imports continued to flow into Europe during Q4. So we welcome the decision of the European Commission for registration of hot rolled imports from China, Taiwan and Indonesia from January 24.

We remain nicely optimistic for additional measure from the antidumping and CVD investigation, but we will discuss this later. Aperam published ambitious environmental targets for 2030.

We also plan to become a carbon neutral company by 2050. Today we have an industry leading CO2 footprint, which we want to defend by reducing CO2 emission by another 15% till 2030.

We also target a 40% reduction in water intake and plan to cap that emission by 70% versus 2015 baseline. We are today an integral part of the European recycling landscape with our owned Recyco unit and more than 85% scrap input in our European alternative [ph] production.

We seek to improve our position further by increasing the recycling rates of our own waste to over 97% till 2030. Independent agency rate us highly for our ESG achievements, but we constantly strive to minimize our environment footprint, and we will continue to be a fair employer with highest corporate governance standards.

Finally, I would like to share good news from Brazil, with a positive outcome of a longstanding dispute regarding PIS/Cofins with tax authorities. We have booked €16.8 million credit in Q4 and expect further earnings before taxes of up to €200 million to come during 2020.

Let me now elaborate on the environment on the next slide. The market environment in 2019 was the most challenging since the inception of Aperam.

We experienced a substantial volume contraction together with massive price deterioration. We experienced both on such a scale only in the recessionary year so far.

On the volume side, we see two major reasons at work. First, weak real demand across all the sectors, due to the slowdown growth in both Europe and Brazil.

Second, is pivotal destocking amplify the market contraction. This caused 9.5% decline in our shipment, as we hold a strict margin over volume strategy to continue to be the most profitable and cash generative stainless steel producer.

Imports also had some effect on volume, but the major impact was on pricing. Asian competitors dumped the materials in Europe.

According to CRU, the average base price in 2019 was 35% lower than in 2017. This was the last undistorted year before the global trade war started impacting Europe in 2018.

Putting this into perspective, with 9% lower volumes and a 35% price decline, not many company would remain profitable. However, despite recessionary like environment we generated a solid adjusted EBITDA of $340 million, and the cash flow that fully cover an 11% shareholder return via dividends and share buybacks.

This is not a small achievement and was made possible by completely transforming the company through the Leadership Journey over the past year, a program that will continue beyond Phase 3. I hand over now to Sandeep.

Thank you, Tim. Good morning, and a very warm welcome from my side as well.

Moving on to slide number six, quarter four is usually a seasonally stronger quarter than quarter three, but this year volumes declined by 4% compared to quarter three. A soft seasonality in Europe, weak demand in Brazil, the skyrocketing import, nickel price induced destockings were the main reason for this slower volumes in quarter four.

Despite this, we were able to achieve a slightly higher adjusted EBITDA compared to quarter three. Margin expanded on the back of the Leadership Journey gain and inventory valuation gains.

EBITDA during quarter four additionally has benefited from an exceptional €17 million gains from the positive PIS/Cofins decision in Brazil. PIS/Cofins is a federal tax toward social security contribution that is levied on sales.

The issue was that the taxable basis for this PIS/Cofins federal taxes also included the state tax, ICMS. So this was like a tax on tax, which many companies in Brazil, including Aperam, were disputing for the last two decades.

Now pursuant to a favorable decision by the Supreme Court and also by relevant courts during the last quarter and our own cases €17 million credit has been booked during quarter four 2019 in our Brazilian results. Aperam will potentially be able to also recoup overpaid amount and account for additional pretax income of up to €200 million after approval of the court and confirmation by the tax department for recovery of these overpaid amounts.

These €200 million pretax income is roughly -- will be 50% in EBITDA and roughly 50% in the financial income as interest for these past few years. And these are expected to be recognized in the profit and loss during the year 2020 while the cash collection net of tax would take several years.

Tax expense includes €26 million non-cash impairment of deferred tax assets in several jurisdictions. Due to these items earnings per share during this quarter has declined to $0.36 despite the higher level of EBITDA planned [ph] in quarter three.

Cash flow is again the star performance this quarter. We could deliver the promise release of working capital and further with our low cash costs below EBITDA we were able to convert 160% of EBITDA into operating cash flows.

Part of the working capital release is seasonal and will flow back in quarter one, but structurally, we could still release some working capital during 2020. Capital expenditure at €52 million was seasonally elevated due to the ongoing Genk Cold-rolling mill project and 2019 CapEx were fully in line with our guidance.

Adding €30 million cash flow from the complete divestment of the Gerdau equity stake resulted in a final total of €140 million free cash flow during this quarter and a low net debt of just €75 million. We’re happy with these solid set of results in an extremely challenging market environment.

I hand now back to Tim for in-depth look at the market environmental on slide seven.

Thank you, Sandeep. Let's look at the imports first.

To cut a long story short, these were in line with our projections and sum here [ph]. There was no change in the fourth quarter despite the revised set [ph] measure having including Indonesia.

So annual accounts a quarter [ph] allowed the imports to capture a disproportionate share of 32% in Q4 and 30% for the full year. Quarter until June, but China has already exhausted its whole quota for third quarter at the end of January, and Taiwan use the 72% of its quota.

Imports accounted for 46% in European hot rolled market in Q4, and in December, it was the highest ever number at 59%. This clearly show that reduction is quite an issue and we are encouraged by the European Commission to start registration of hot rolled import from China, Indonesia, Taiwan from January 24.

The three countries under investigation accounted for 84% of all HR hot rolled imports into the European Community in 2019. So the anti-dumping decision could make a difference.

Also the CVD case on countervailing duties, anti subsidies on China, Indonesia, should be concluded by July this year. The cold rolled market share of import at the 26% in '19 and 28% in Q4 remains high versus the bid line of 22% that was [indiscernible].

Turkey, India, Taiwan, Malaysia and Vietnam also ran visibly above their product share of the quota. We urgently need to discuss with European Commission to align quota with the market developments in Europe, and smooth flows by making country quotas quarterly.

Nickel price remained volatile during Q4 and had a large decrease reverted the Q3 unusual spike. Obviously, this promote destocking as stainless steel price followed nickel lower.

Stainless steel inventories are below last year's level in absolute tons, but slightly elevated from this time at the year. Also the weak real demand is high inventories days, which is the core driver for the actuals in particular distributors, besides a soft seasonal recovery for Q1.

The price delta versus Asia has declined to a relatively low level, which indicates high price pressure in Europe. Base price remains substantially below historical normal level.

Concerning demand this has not changed during the quarter. In Europe, automotive white goods and capital goods remain stable at a low level.

We continue to see good demand in construction and general industry, by real demand has been clearly declining in 2019. In Brazil automotive remains good, and capital goods growth is coming from pulp and paper and ethanol.

White goods are held back by low consumer sentiment. Construction growth has been weak despite improving sentiment, because infrastructure spending remained low.

Oil and gas has not started to recover. So I hand over to Sandeep for a review of the Leadership Journey.

Thank you, Tim. Let's now take a look at page 3 of the Leadership Journey results on Slide 8.

We are happy with the continued good progress towards our targets. During the fourth quarter, we added annualized gains of EUR18 million and the total gains for 2019 to EUR19 million and the cumulative gain for Phase 3 so far amount EUR223 million.

Quarter four gains were dominated by procurement of raw materials and purchasing in general. The top line strategy also contributed to the good results.

EUR77 million remain to be captured now during 2020. And we are well on track for realizing our goal of €200 million gains by year-end 2020.

Please be assured that we are working additionally on new ideas both for costs and growth. And that we will share with you in due course of time.

Phase 3 of the Leadership Journey will definitely not be the end of Aperam's transformation, and we expect to continue strengthening Aperam's performance. Capital expenditure associated with the Leadership Journey was EUR5 million during this quarter and EUR19 million during the full year 2019.

The cumulative capital expenditure was EUR83 million against a total plan of EUR100 million implying a remaining EUR17 million spend mostly within this year. The realization thus remains well within the plan.

We have updated slide 20 in our quarterly presentation to allow you to keep easy track of the improvements in Aperam's results over time, thanks to the Leadership Journey actions despite a very difficult market environment. I now hand back to Tim for the outlook.

Thank you, Sandeep. We go to the next page of Q1 outlook on slide 9.

Despite the first quarter being seasonally stronger, we only expect the comparable adjusted EBITDA. Real demand has remained soft in European and Brazil.

We also expect a negative inventory valuation during Q1. While the registration of the import is clearly positive news, any impact should be felt only in Q2.

We expect net financial debt to increase seasonally due to higher working capital. After taking a close look at analyst estimates, we conclude that for a given level of earnings, our operating cash flow is systematically underestimated, as we are providing some detailed guidance to assist you in your EBITDA and cash modeling.

We plan with a CapEx budget between €110 million and €120 million for 2020. Obviously, lower volumes require lower maintenance.

The budget also includes the remaining €17 million for the leadership journey and CapEx to finish the Genk project. We expect a tax rate of 20%, 25% for 2020 only about half our P&L interest payment and the expected tax rate cash items reflected in the cash flow statements, due to non-cash financial charges and deferred tax asset.

Please bear in mind that on top of above the PIS/Cofins results will add EBITDA and cash flow later in 2020. We maintain a stable dividend in line with our progressive dividend policy and our earnings.

That implies a sector leading yield of 6.5%. We've also simplified our dividend policy to avoid confusion.

We have the [ph] intention of 50% to 100% payout ratio. Aperam has a progressive dividend strategy with a base dividend of €1.75.

We will review this only in the unlikely event that the net debt-to-EBITDA is above the 1x. Due to our strong balance sheet, and in line with our financial policy to hand back excess cash to investor we also announced €100 million share buyback for up to 3.8 million shares.

You can take this as a sign of confidence in Aperam's ability to generate a very attractive free cash flow even in the most difficult market condition. Finally, you have seen that Sandeep has decided to leave for personal reasons.

After a long career in steel and mining industry, he has decided to give his carrier an entire new orientation, leave his comfort zone and start an adventure in a new industry. I'm really grateful for Sandeep's tremendous contribution during these seven years with Aperam.

He will still be with us till May which give us enough time to find a suitable successor. I regret that he's leaving and I wish him all the best for his new career.

Next page; as usual, we conclude our presentation with the corporate schedule. We are looking forward to meet you at one of these events and provide you plenty of opportunity to address your question in person.

We are ready now to take your questions.

Yes, good morning, gents. Two questions from my side, firstly, on the maintenance CapEx level that you have guided for 2020.

I'm just trying to get a sense of how sustainable that level is given that it's materially below your depreciation levels. Should we expect an understanding in 2020, and then a ramp up again in 2021?

That's one. And then two is on the outlook for Q1.

You mentioned demand remains soft in Europe and Brazil. Can you give a bit more granularity on the order books, inventory levels, any evidence that we are seeing of the restock in any of the regions?

Thank you.

Hi, Alain. Regarding your first question regarding the maintenance CapEx, we have always given a guidance that our maintenance CapEx is anywhere around €70 million to €100 million, and this includes several improvements in the Leadership Journey.

So during this year, you can see that we are giving a guidance for next year €85 million and we are very happy to cover all our maintenance requirements while continuing to progress with new investments like Genk line for which we are allocating €35 million during next year.

Okay, so concerning Q1, we see two elements. The first element is Brazil, in Brazil, there is a seasonal effect, that is enormous for it's the period of their holidays around January.

And then the second part is carnival that takes a lot of importance for them. In Europe normally Q1 is a very strong quarter, is not a strong as Q2 but is a strong quarter.

But this strong quarter is some work in continuity, we’re in continuity, what has been the situation of all the years, with some sector and some countries which are weaker than usual and so we consider this has not -- really showed sign of a dramatic change from last year. So we are mostly in continuity with last year, both different from the historical level that the Europe has reached.

You see that for the first time in Europe in real consumption has been below the previous year.

Thank you.

Thanks, good morning, gentlemen. Thanks for taking my question.

Two quick ones, please. Firstly, could you help quantify maybe the raw material related inventory impact in this quarter, and to what extent we expect this to reverse in Q1, given nickel current price movements.

And then following on the outlook again, could you just give any color on your realized base pricing or product mix if there's any impact from those on your Q1 outlook just looking at CRE [ph] for example. It looks like there was a pickup in January base pricing but that doesn't really connect with some of our on the ground sources.

So any color you have on the direction of price would help. Thank you very much.

So regarding your first question regarding the raw material inventory valuation effects, all of you are well aware about the volatile movements that we have seen over past two quarters for nickel and nickel saw the massive rise during July and August, which had very important effects with the timeline that we have explained over the previous call. It had a certain positive valuation effects during quarter four, and we have seen then subsequent declines in nickel starting towards latter part of quarter four extending into quarter one and this is leading to certain negative impacts which we cannot fully quantify at the moment.

Clearly, quarter four to quarter one the net impact is negative. And this is part of our guidance that we are guiding for quarter one of net-of-EBITDA compared to quarter four.

However, when you exclude these effects, clearly we can see improvements in the underlying EBITDA.

So comparing net price, it is quite difficult to give guidance which is different from what I said before. You see in that we have a page in which we show what is the situation of the market.

We are exiting quarter, the Q4 with very high level of imports, that’s what I call high level, with a very low, let's say apparent demand and with prices which have been under pressure. So we see, let's say, more longer term possibility of improvement and in particular in with the effect of the filling of the quarter which for certain products is happening now in at the end of January, and for the possible announcement of anti-dumping measure.

But this is still to come as there is also always any inertia in this kind of movement. So price is not yet moving.

We have to see also what will be the consequence on the imports in the first quarter. So we will be let’s say more aware of what will be the evolution of this price at the end of this quarter.

For the moment we have not anticipating anything about that.

Again thanks very much and just a quick follow up on the mix. Does that play any role in your Q1 outlook or do you kind of expect flattish product back specifically Q4?

You when you refer to mix you refer to what exactly, mix of products on stainless steel?

Mix of products, yes.

So not significantly so we don't change the mix significantly unless the some industry goes up or down. So we don't see today any kind of segment which is particularly booming or dropping.

So and typically the mix is linked to the segment to which you are selling. Of course, we have an improvement, a continuous improvement in our product mix in the commercialization [ph] of our products.

So our clients [ph] have increased and the mix is playing a big part the resilience of the results of the company because on commodity, pure commodity has been the biggest problem -- drop in terms of volumes and in terms of price.

Okay, very clear. Thank you very much.

Good morning. Thank you for taking my questions today.

Two different points. First, starting with [indiscernible]…

Seth, we can’t hear you. Can you be a bit louder, please?

Sorry. Can you hear me better now, please?

Yes, much better. Thanks.

Great. Starting out with the Brazilian tax gain, can you please give us a bit more color on what tax rate you expect to be applied to this gain as we go forward?

Or like what should the cash benefit be benefiting your balance sheet over the medium term? You commented on taking several years to achieve the full €200 million net cash benefit.

Any sense of timing on that? Secondly, with regards to stainless scrap prices, can you give us a bit of a sense in terms of how you view the stainless scrap market developing into 2020 in a lower and more stable nickel price environment.

So we saw in 2019, obviously, this past summer you saw the discounts widen at near all-time highs. Do you think that those discounts in percentage terms are sustainable?

Or ultimately do you expect the scrap price to be much more stable than what we witnessed of late? Thank you.

Hi Seth. So regarding your first question regarding the PIS/Cofins gain, so we expect in addition to the €17 million that we have recorded during quarter four, we expect a further €200 million of pretax income.

And on this, yes, you are right, that there will be some taxes that will impose, as you know, like in Brazil, the statutory income tax rate is 34%. But at the same time, we do have certain [indiscernible] assets, and that includes Brazil as well.

So our net cash tax should be far lower, more in the range of around 24% or so. And this cash recovery we would expect over several years while the P&L recognition we will expect after all these procedures is completed to be recorded during quarter four, sorry during 2020 and the P&L and the cash flow during next few years.

Okay on the scrap, so I can give a guidance of what will be the scrap discount price during the year, of course, but the mechanism is the following. Scrap is one raw material and follows the trend of all the competing raw material.

So the competing raw material nickel figures around nickel, and all the nickel vectors that we really use in our latest production while the pure nickel, which is the LME grade is not used the directly for stainless steel producer. So the adaptation of scrap discounts or price let's say, because discount is only way to price again, will follow will continue to follow which we -- of this we are convinced with the general trends of the raw material.

When you see a very high discount publicly, a name that this is because there is a correlation between what is the LME and the real price of the raw material. LME has had a spike in Q3, which were not supported by a real demand of -- for nickel or real let's say consumption of nickel figure -- of nickel at much higher prices.

And the same has been for scrap. So I am expecting that scrap will continue to be usable raw material, usable means that has to compete with all the types of raw material that are being used to produce stainless steel.

Great. Thank you very much.

Yes. Thanks for taking the question.

One general question on the European market. As you mentioned in your presentation, you have been suffering a significant decrease in the volumes particularly during the second half of the year.

And you are now pointing to a rather muted recovery. What is your current thinking about the 2020 shipments overall in Europe?

Do you think a further decrease in the shipment will be most likely again, as some of the market might be lost to imports or you are still hoping that the impact from the potential anti-dumping duties would be strong enough that this could be to a certain extent corrected? That's the first question.

And the second question is in regard to your CapEx guidance, to what extent would come any -- an incremental CapEx on top in pursuant of the climate targets you're setting for the current decade? And thirdly, can you please get a bit more specific on the positive windfall affects you have benefited from in Q4?

Okay. So, it is a bit early to give a guidance on what will be the volumes on 2020.

But what are the -- let's say factual reason or the factual facts, the facts on 2020, compared to 2019. So in 2019, the effect was not including Indonesia.

This is a fact. And this will have an effect and so, we see that already in Q1, some quota filling up with the inclusion of the Indonesia.

The second factor will be that we have the registration of the input and the registration of input is let's say something positive. We can't say today that the antidumping exam is not done.

But it's something positive and we will continue to work with the European Commission, to ensure that they will level a fair market. The third point that is totally unknown today is the economy is unknown in the sense that we have heard in '19, during which many countries and sector have suffered a lot.

Now is this the end of this decline in terms of that real consumption or not to be seen, still very early to be said. But for the moment, there is a stabilization and there is a seasonal effect that will happen in Q1 and Q2.

So all these will be real facts. And then we will see during the year.

Sandeep, you want to take on the windfall and…?

So on the CapEx guidance, we already had discussion earlier. Overall, we are comfortable with the guidance of the CapEx that we are giving.

And this includes all the actions, on the environmental action, which is part of our 2030 targets. And we have concrete plans internally within the company to realize those targets that we have announced.

Now as I said earlier, we are working on additional ideas. And clearly we can see the potential to go beyond Leadership Journey 3 and both in terms of the cost and other potentials.

And we will be working on those ideas. And later on we'll be coming back to what are the kind of CapEx allocation and is there any potentials that you can focus on.

Then regarding your last question Rochus, regarding windfall during quarter four, on this call, we are not giving any concrete numbers as such. As you know, our stand, we have always considered it as part of our adjusted EBITDA.

This is the basic model of our business to work with availability of nickel and inventories and sometimes it's positive, sometimes negative. And as I said earlier, it was a clearly positive effect in quarter four, an important one.

And in quarter one, it would be a negative effect at least lays on the nickel position, that we see as of today, and this position is developing and based on that we will see those impacts in our books.

All right, thank you very much.

Can you hear me now?

Yes, yes. Now it's okay.

Perfect. Good morning, gentlemen.

I've got two questions left. And my first one is actually just on the seasonality in volumes in the first quarter, and maybe what you can already see for the second.

I think you talked about weaker than usual improvement in Europe in the first quarter. Could you please let us know whether are you seeing just any notable change in the patterns of your customer behavior since the beginning of the import registrations, which was also was fairly recent and maybe give us some color and whether you expect that to impact the market in the second quarter already.

And then my second question is just a follow up on the Brazilian social insurance over payments. Can you please be a bit more specific on the period which we should expect you to collect the majority of the cash?

Are we looking here at a 5 year timeframe or maybe rather 20 year time frame, I guess it may depend on the earnings performance which you obviously don't know but any color on that would be great. Thank you.

Okay, concerning Q2, you have the typical effect that [indiscernible]. So Q2 is the strongest quarter for Europe, in term of consumption, in number of day of the opening of the industries.

But it also is the full opening of Brazil, and so it is a seasonally also a quarter which is strong for Brazil. Now as always Q2 tend to be the stronger internal volumes for Aperam, due to the addition of these two facts.

We don't see for the moment and we are not anticipating major disruption in the behavior of customers. But okay, this is very common [ph] in this kind of an industry to pretend to know what the customer will do in four to six months.

So hi, Bastian, regarding your second question concerning the cash flows. So as you have seen that we have delivered very strong cash flows during the last year.

And going into quarter one, we do have seasonal effects as you have seen during all the previous years. We do have stronger pickups in volumes and some seasonal effects in the working capital that is needed to build up inventories et cetera.

Overall we are of course, as you have seen in our past years, we have been generating very strong cash flows, thanks to profitability [ph] as well as below EBITDA items they very, very low in terms of the cash flow impact as you can see from our cash interest, which is about €10 million as per our guidance, and cash taxes be around half of our EPS guidance expected effective tax rate being around 20% to 25%, and only half of that, converting into cash taxes. So overall cash generation ability of Aperam remained high apart from the seasonality, but this universe.

In particular about PIS/Cofins, PIS/Cofins should further strengthen this cash generating ability of Aperam, as I mentioned earlier. All these additional amounts €17 million that we accounted for in Q4, as well as €200 million that will be accounted for during this year.

These amounts, net of the taxes impact would be recovered towards over several years. And this would of course lead to additional cash flows for Aperam.

Thanks, Sandeep, just to follow-up on this, I mean that's got to support your cash flow. But can you give us any guidance on whether we're looking at a maybe five year time horizon for you to collect those Brazilian cash benefits?

Or is this more like a very wide 20 year time frame, which we have to?

So we are looking more at a five year horizon. Again there are a lot of, let’s say, complexities involved in this documentation and the process where we are not entering, there are certain approvals needed as well.

So we are following that very closely. And during next quarter, we should come out with a bit more precise guidance and clarity concerning that.

But yes, I mean, and overall, we see like a five year horizon at the moment.

Okay, perfect. Thanks Sandeep.

Hi, thank you just two quick ones remaining from my side. And just firstly on what we're talking about on Bastian’s question there on tax, can you just confirm whether this will definitely come into your proceeds or is there any kind of decision you're still waiting for to get confirmation on it?

Yes. So regarding the €17 million that we have accounted for, these are the credits that already belong to us, so they are already in our returns and we will start [indiscernible] this very shortly.

Regarding the other €200 million as we mentioned earlier, there is still a part of the documentation and process left to be followed. And clearly we are trying to accelerate to complete it as soon as possible.

And at the moment, as the decision stands today, both the Supreme Court and the local courts, the position stands at amounts like we are indicating, which is around €200 million, half in EBITDA and half in financial income. And of course, as we go along the process we will be able to give you more clarity.

Okay, thank you. And I'm going to try one last time around negative inventory evaluation for Q1.

I know you mentioned its provision, and part of that is going to depend on where nickel prices trend, in remaining part of the quarter. If nickel prices in the quarter where they were today, can you give us a very rough number of what you think that negative inventory valuation might be?

Is it for the sake of this say, less than €5 million or above €5 million?

Look, we have never given a guidance because this is a very difficult number to give and even if I gave you should not trust me at all, because this is not a number that any of us can control as part of our results and it will be an important number based on the nickel as it stands today. You remember the nickel went up last year from $10,000 to $18,000, $19,000 leading into these positive effects mostly during quarter four.

And yes, it is unwinding a little bit now, a lot actually went back to level below 13,000. So yes, it is having an important effect on the quarter one results as we stand today.

I'm sorry, I won't be able to give a number there.

Yeah, I thought I'd give a shot anyways. All right.

Thank you very much, guys.

Thank you very much and good morning. Two questions.

As always on the specialty division you did about €50 million EBITDA this year? So it looks like we are pretty much normalized.

Is this an area where you see some potential for further improvement as far as profitability is concerned or is this more likely to become a running rate? That's my first question.

And my second question is with regards to Chinese production, we've had the ban on ore exports in January, and now we see because this virus issue in China, I mean do you see a potentially certain impact on the Chinese stainless steel production in the first half of the year between the two factors? Thank you.

So thanks a lot for the question of alloys on specialty. Because this is really an area in which we are fully confident that we are not at the end of our goal.

And the result of proving that this is a business which is sustainable, which is -- which has behind the demand, which is not volatile on the contrary, continues to grow -- continuing to grow. And that we see also that we have plans in which we are positioned like for example, in the very high end of the -- some aeronautics application or automotive application or in LNG.

So the liquid gas in which the potential of our division is tremendous. So we are working on this and we are very confident on the continuation of the growth of this sector.

Now concerning the consequences of nickel ore ban on China and what will happen, we see that there is a lot of factors at play in the game. So there is an abundant nickel coming also from ferronickel, more and more investments of nickel pig iron in Indonesia, which will provide nickel pig iron which is raw material for China.

So I'm not an expert of this nickel, but doesn't seem a sector in which there is -- there will be a shortage in the short term.

Great, thank you. But just one last question, the spike of the nickel price in the last quarter that suggests that the inventories of electrolyte and of nickel in China at stainless steel mills have got quite a high value.

Would you agree with that?

No, we don't know, absolutely not, because there are two effects. The first effect is what is in L&E [ph]?

L&E is linked to financial transition and position that some operators take. And what is the reality of the nickel content in the vector that we use in the stainless steel which are scrap and nickel pig iron or nickel ore or ferronickel which has been the correlated from this spike which has been temporary and we have been resolved after a few months.

Okay, very clear. Thank you very much.

Okay, thank you very much for having listened to us and ask these very relevant questions. So I would like to conclude this 2019 year, because I think is a pillar of what we are at Aperam.

We have been facing, really a market which I personally have never seen. So we can [indiscernible] in terms of the imports in terms of price, probably never in my life of 30 years life in stainless steel.

We have seen imports which sometimes were unbelievable in figures, like 59% of imports in December for hot rolled is something which in an industry should never exist. We have seen strong difficulties in convincing European Commission in going for faster implementation of efficient measure.

So we have seen a lot and despite these, we have had an EBITDA which is let's say, not what we can expect from this company, but a sustainable EBITDA with the generation of free cash flow, which is extremely high and with the capacity of this company to focus at the fundamentals, when this kind of situation counts. And the fundamentals for me are the focus on the cost competitiveness, on the customers, on the fact to that on the cache location and the discipline even in the CapEx spending, in the way we do everything, we are mounting the resilience and the long-term sustainability of the company.

You see also that we are very actively working on environment and on ESG in general, with good results that are -- that then the progress and the result are -- and weaknesses by the recognition by the competent auditors. So I'm very happy of this set of results at the end of the year, which gives a lot of hope for the -- what will come now from now on.

What will come from now on is embedded in our strategy leadership journey, in the new investment of Genk, which will ramp up during the last part of the year, in all the investments we have done to improve the competitiveness of the company in the last years. And the fact that we still have potential to further decrease our working capital and continue to be a very cash generative company.

So thank you very much and see you in the next roadshow or meeting that we have already planned. Bye-bye.

Thank you. Bye-bye.