Over the past few days, all of Europe has been looking to France in the wake of the presidential elections. The victory of the incumbent, Emanuel Macron, was applauded by the EU, as it secures the viability of the community of states and the euro and thus ensures calmness on the capital market. Meanwhile, the French mining and metallurgy company Eramet is much less in the spotlight. Unjustifiably: While the overall market is clearly in the red zone in the current year, the share price has almost doubled.
It is a combination of strong business performance and a new strategic direction that is currently convincing market participants. For example, the Paris-based mining group achieved an annual profit before interest, taxes, depreciation and amortization (Ebitda) of EUR 1.05 billion in 2021, more than double the previous year's figure. This also exceeded the group's own targets, as it had "only" aimed for an Ebitda of just under EUR 1 billion. The bottom line was also sufficient for a profit of EUR 298 million, after a loss of EUR 426 million in 2020 due to discontinued operations. These include, the spin-off of Aubert & Duval, a supplier of parts and materials to the aerospace, defense and nuclear industries.
The producer of nickel and manganese for the steel sector is currently realigning itself. In the coming years, for example, the Group intends to increasingly focus on materials for electric vehicles. Just recently, as part of an extended partnership with environmental services provider Suez, Eramet announced plans to explore industrial-scale recycling solutions this year with a view to setting up a recycling plant for lithium-ion batteries in France by 2024. Recycling could meet one-fifth of the European Union's nickel and lithium needs by 2030, as well as 12% of cobalt demand for EV batteries. The company is also exploring with chemical company BASF the possibility of processing nickel and cobalt into battery materials in Indonesia.
In general, Eramet is committed to developing critical metals - lithium, nickel/cobalt salts, battery recycling - for the energy transition. "Our goal is to continuously drive value creation in all our businesses by being more agile and efficient and focusing on the areas where we can make a difference," says CEO Christel Bories, describing the new strategy. Ultimately, the CEO wants to restore competitiveness in a changing environment and create sustainable value for shareholders.
The outlook is already impressive: Increased production of nickel in Indonesia and manganese in Gabon have recently helped the company benefit from rising market prices. Investors will find out how this has affected the business figures on April 28. That is when Eramet will present its figures for the first quarter. For the year as a whole, management expects further growth in mine production and also assumes that metal prices will continue to rise. In terms of figures, a full-year Ebitda of around EUR 1.2 billion is on the agenda for 2022, which corresponds to an increase of slightly more than 14%. The forecast already takes into account the current high energy and freight prices.
On the stock market, Eramet's price curve has been pointing steeply upward this year. Although there was a consolidation after cracking the EUR 160 mark, a gain of 82% occured since New Year's Eve. The current breather offers the opportunity to reap attractive returns with conditional partial protection. With the new Softcallable Barrier Reverse Convertibles, an additonal rally is not necessary to generate double-digit percentage gains. The CHF version offers an extraordinary interest rate of 18.00% p.a. with a maximum term of 12 months, the first time the product can be redeemed early is after 6 months. The EUR-denominated product even comes with a coupon of 18.50% p.a. On the downside, the BRCs give the French underlying a decent amount of room. The barrier is fixed at 55% of the starting value.
We look forward to answering all of your questions about our products and how they are traded. Please don't hesitate to get in touch! Phone: 058 800 11 11, email info@leonteq.com or contact us here.