Eramet : Interim Financial report 2021

2021

INTERIM FINANCIAL REPORT

CONTENTS

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Statement by the persons responsible
for the Eramet Interim Financial	01
Report as of 30 June 2021
Interim Business Report	02
as of 30 June 2021
Condensed interim consolidated
financial statements	09
as of 30 June 2021
Income statement	09
Statement of comprehensive income	10
Statement of cash flows	11
Balance sheet	12
Statement of changes in equity	13
Notes to the financial statements	14

Statutory Auditors' Report

4 on the interim financial

information28

Statement by the persons

1 responsible for the Eramet Interim Financial Report as of 30 June 2021

We declare that, to the best of our knowledge, the condensed interim consolidated financial statements for the past half-year have been prepared in accordance with applicable accounting standards and give a true and fair view of the assets and liabilities, financial position and results of the Company and of all the companies within the scope of consolidation and that the accompanying interim business report presents a true and fair view of the highlights of the first six months of the year and their impact on the condensed interim consolidated financial statements, the main related party transactions and a description of the main risks and uncertainties for the remaining six months of the year.

	Paris, 28 July 2021
Thomas Devedjian	Christel Bories
Deputy CEO and CFO,	Chairwoman and Chief
IT & Purchasing	Executive Officer

ERAMET 2021 - INTERIM FINANCIAL REPORT

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2	Interim Business Report
as of 30 June 2021

• FOREWORD

It is advisable to read this report on the Company's financial position and operating performance in conjunction with the condensed interim consolidated financial statements, the notes to the condensed interim consolidated financial statements for the period ended 30 June 2021 and the other financial information in the 2020 Universal Registration Document filed with the French Financial

Markets Authority (AMF) on 14 April 2021. The Company's condensed interim consolidated financial statements were drawn up in accordance with IAS 34 "Interim Financial Reporting". The information in this report also contains forecasts based on estimates of Eramet's future business activities, the realisation of which may differ materially from actual results.

• OVERVIEW

Eramet, a global mining and metallurgical group, is a key player in the extraction and beneficiation of metals (manganese, nickel, mineral sands) and the development and modification of high value-added alloys (high-speed steels, high-performance steels, superalloys, aluminium and titanium alloys). The Group supports the energy transition by developing activities with high growth potential, such as lithium mining and refining, and recycling. Eramet is positioned as the preferred partner

of our customers in the steel, stainless steel, aeronautics, pigment, energy and new generation batteries industries. Based on operational excellence, the quality of its investments and the know-how of its employees, the Group deploys a virtuous and value-creating industrial, managerial and societal model. As a corporate citizen and contributor, Eramet works to achieve a sustainable and responsible industry. Eramet has close to 13,000 employees in approximately 20 countries.

• GROUP RESULTS FOR THE FIRST HALF OF THE YEAR 2021

The Group's H1 2021 turnover totalled €1,878 m, up 11% (+18% at constant scope and exchange rates, factoring in a negative currency effect of -7%). This growth was driven by the Mining and Metals Division with a volume/mix effect of +7% and a price effect of +15%. Turnover for the High-Performance Alloys Division declined and remains heavily penalised by the aerospace crisis.

Group EBITDA was €293m, up significantly (by nearly

150%) reflecting notably:

• an intrinsic performance of +€112m, representing nearly two thirds of the increase;

• an impact of external factors of +€61m, with a positive price effect largely offset by higher input costs (freight and materials) and by a negative currency effect.

Net income, Group share totalled €53m, and included the share of income of Weda Bay Nickel (+€77m). The loss posted in H1 2020 particularly reflected asset impairments related to the health and aerospace crises.

Capex cash amounted to €109m at end-June, declining versus H1 2020 (which included investments made in the lithium project before it was mothballed), reflecting the reduction in capital expenditure in 2020. Capex cash breaks down as €67m in current capex and €42m in

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growth capex, mainly dedicated to supporting the organic development of mining production in Gabon. Capex- related disbursements will be higher in H2 than H1.

Free Cash-Flow ("FCF") came out at €111m, of which €222m for the Mining and Metals Division and -€47m for the High-Performance Alloys Division. The improvement in

Interim Business Report as of 30 June 2021	2
Group results for the first half of the year 2021

FCF of +€321m reflects the good operating performance, the Group's good cash control and the partial recovery of A&D.

Net debt ended at €1,244m at 30 June 2021. This included €88m linked to the application of IFRS 16.

3.1 Income statement

(in millions of euros)	H1 2021	H1 2020	Year 2020
Turnover	1,878	1,687	3,553
EBITDA	293	120	398
Current operating income	159	(32)	106
Operating income	132	(491)	(455)
Net income for the period	70	(639)	(676)
Net income, Group share	53	(623)	(675)
Basic earnings per share (in euros)	1.98	(23.48)	(25.46)

3.1.1 Notes by Business Unit

Mining & Metals Division

The activities of the Mining and Metals Division benefitted from positive market momentum in H1 2021 with strong demand driven by the rebound in global economic growth, resulting in overall higher price levels. However, the increase in the cost of freight, combined with an unfavourable €/$ exchange rate, weighed significantly on results.

Manganese BU

The Manganese BU continued to record excellent operating performance in H1 2021, notably with an increase in ore production by 13%.

Turnover totalled €887m (+6%) and EBITDA increased by 20% to €280m, reflecting the strong increase in manganese alloys selling prices. The increase in the cost of freight by more than 60% in the Gabon-China route nonetheless weighed significantly on the results of ore activity.

Market trends & prices

In H1 2021, global production of carbon steel, the main end-product for manganese, was up considerably by +13% ending at 1,007 Mt in H1 2021. Production in China increased strongly (+12%), driven by good momentum in the local economy and particularly in the automotive, construction and infrastructures sectors. Production in

the rest of the world also saw strong growth in H1 2021 (+15%), thanks in particular to India, but also the recovery in Europe and North America which still have not returned to their pre-crisis level. In this context, manganese ore consumption increased by 10% in H1 2021 to 10.5 Mt. Global manganese ore production was up 9% to 9.8 Mt, reflecting the increase of nearly 28% in volumes produced in South Africa compared with H1 2020, marked by the closure of mines faced with the health crisis. The supply/demand balance was thus in deficit in H1 2021 with Chinese port ore inventories declining versus end-2020, now representing 11 weeks' consumption.

The average CIF China 44% manganese ore price stood at approximately $5.1/dmtu in H1 2021, up c.2% from H1 2020 ($5.0/dmtu), but down 7% in Euros.

Driven by the increased demand in the steel market and shortage of supply in the European market, manganese alloy prices in Europe increased very considerably in H1 2021. In June, they reached a record level versus a previous high point in 2008, particularly for refined alloys (MC ferromanganese at €1,886/t, +33% vs. H1 2020; +20% in Q2 2021 vs. Q1) but also for standard alloys (silicomanganese at €1,191/t, representing +26% vs. H1 2020; +26% in Q2 vs. Q1). Given the one quarter lag between changes in market prices and those in sales contracts, the increase in prices in Q2 will again have a very favourable impact on the BU's turnover in Q3.

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