Aperam’s Earnings Call: European Optimism Amid Challenges

Aperam ((APEMY)) has held its Q3 earnings call. Read on for the main highlights of the call.

Aperam’s Recent Earnings Call: A Mixed Sentiment with Promising European Prospects

The recent earnings call from Aperam painted a mixed picture, highlighting a positive outlook for European volumes and progress in the CBAM policy, while also addressing challenges in Brazil and the oil and gas market. The aerospace sector shows potential for recovery by 2026, but concerns linger over CBAM implementation and rising financing costs.

Positive Outlook for European Volumes

Aperam expressed optimism regarding European volumes, anticipating an increase due to seasonal demand recovery. This positive outlook stands in contrast to the guidance provided by competitors, suggesting a unique position for Aperam in the European market.

CBAM Policy Progress

The Carbon Border Adjustment Mechanism (CBAM) policy is progressing well, with a planned ramp-up starting in January 2026. Key components, such as precursor inclusion and melt reports, are expected to enhance traceability, marking a significant step forward for the policy.

Strong Aerospace Market Fundamentals

Despite current destocking challenges, the aerospace market remains robust, supported by a healthy order book. Aperam anticipates a recovery in this sector by 2026, underscoring its strong market fundamentals.

Expected Recovery in Import Levels

With the implementation of CBAM and other policies, Aperam expects an improvement in European market utilization rates. This is likely to lead to better margins, providing a positive outlook for the company.

Price Pressures in Brazil

Aperam is facing price pressures in Brazil, particularly in the non-stainless steel segment, due to imports. While this affects profitability, the impact is not deemed significant, allowing the company to maintain a stable outlook.

Weakness in Oil and Gas Market

The oil and gas market is experiencing temporary weakness, affecting Aperam’s alloys business. This has impacted the company’s ability to achieve its EUR 100 million EBITDA target for the year.

Challenges with CBAM Implementation

Concerns were raised about potential loopholes and circumvention in the CBAM policy. Aperam emphasized the need for quick adaptation to prevent exploitation, highlighting a key challenge in the policy’s implementation.

Increased Financing Costs

Rising interest rates and recent refinancing activities are expected to increase Aperam’s financing costs. This is anticipated to impact the company’s financial performance, presenting a challenge moving forward.

Forward-Looking Guidance

Aperam’s guidance for the future includes addressing price pressures in Brazil and the gradual implementation of the CBAM policy starting in January 2026. The company expects European volumes to increase due to seasonal effects, while Brazilian volumes may decrease but remain aligned with seasonality. The aerospace market is anticipated to recover by 2026, and the company aims to achieve an annualized EUR 100 million EBITDA for the alloys segment, with synergy benefits from the Universal acquisition expected next year. However, increased financing costs are expected due to recent refinancing.

In summary, Aperam’s earnings call presented a mixed sentiment with a positive outlook for European volumes and progress in CBAM policy. While challenges persist in Brazil and the oil and gas market, the company remains optimistic about its future prospects, particularly in the aerospace sector. The guidance provided suggests a strategic focus on overcoming current challenges and leveraging opportunities for growth.