PRESS RELEASE DANIELI GROUP

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1 DANIELI & C. OFFICINE MECCANICHE S.P.A Buttrio (UD) via Nazionale n. 41 Fully paid-up share capital of euro 81,304,566 Registration Number with the Register of Companies of Udine, tax number and VAT registration number PRESS RELEASE DANIELI GROUP Danieli s Board of Directors met today, November 12, 2015, to examine and approve the interim report on operations for the quarter ended September 30, 2015, and to acknowledge the result for the first three months of the tax year. INTERIM REPORT FOR THE PERIOD ENDED SEPTEMBER 30, 2015 drawn up according to IAS/IFRS international accounting principles (millions of euro) to 30/09/2015 to 30/09/2014 Variation Revenues % Gross operating margin (EBITDA) % EBIT % Net profit for the period % Net profit attributable to the Group % to 30/09/2015 to 30/06/2015 Variation Net positive financial position % Number of employees 10,573 10,954-4% Group order book 3,094 3,155-2% (Steel Making) % Summary of results for the first three months of the tax year Group revenues show a declining sales volume for the first quarter of 2015/2016, which is essentially due to slower progress on job orders in the Plant Making segment (engineering and manufacture of plants for metals production steel and aluminum). Turnover is holding steady in the Steel Making segment represented by the ABS Group (Acciaierie Bertoli Safau e ABS Sisak), and sales volumes are stable. The Board of Directors acknowledges the results and notes that: The lower revenues of Danieli s Plant Making segment are only temporary and tied to compliance with construction programs that were contractually agreed with customers, while profitability (EBITDA) continues to be interesting and in proportion to turnover, which, although lower, is in line with the forecast production targets. The turnover of ABS Steel Making, with the same volumes produced during the same quarter last year (about 216,000 tons), shows a drop in sales prices and slightly lower margins and plant utilization. 1

2 Consolidated profit for the period is basically in line with the forecasts made at the beginning of the year, even if it is lower than the figure reported for the same period last year, which was positively influenced by the exchange rate. The Group s financial position continues to be solid. In the Steel Making (ABS) segment the Rotoforge rolling mill was started up, and together with the new reversing mills, allows the company to diversify production by making efficient use of all the liquid steel that is produced. The significant investments made in ABS have important innovative content that will allow the company to considerably improve quality and broaden the range of products on offer, competitively covering new market segments. Worldwide prospects for the metals producing sector that affect Danieli s Plantmaking business In the third quarter of 2015, world steel production was almost 1,212 million tons, with a decrease of approximately 2.4% over the same period last year. In 2014 yearly production reached approximately 1,660 million tons, and forecasts for 2015 point to an overall drop of 3%, with China slowing down by 3.5%, while advanced countries together with emerging countries will experience a smaller drop of about 2.5%. At the end of September, the plant utilization factor as compared to the maximum theoretical figure was down to about 70%, less than the average data reported for The slowing down of the Chinese economy, especially in the manufacturing and construction sectors, and the availability of ore and energy at low prices, have generated a combined negative effect on the market, resulting in lower steel demand and a drop in prices. World steel consumption continues to be weak but basically stable, showing a temporary rebalancing, with Chinese operators, faced with declining domestic volumes, boosting exports at highly competitive prices in order to rationalize inventories. Production quality continues to be an important factor in order to obtain more profitable prices from the market and greater continuity in the items being supplied to customers, who tend to reduce their minimum inventories, favoring on-time supply. However, a general improvement is expected beginning in the second half of 2016 and then in 2017, thanks to the numerous private investment and public infrastructure projects that are planned, especially in countries with emerging economies. 2

3 Summary of results by business segment (millions of euro) Revenues 30/09/ /09/2014 Variation Plant Making % Steel Making % Total % Gross operating margin (EBITDA) 30/09/ /09/2014 Variation Plant Making % Steel Making % Total % Operating income (EBIT) 30/09/ /09/2014 Variation Plant Making % Steel Making % Total % Profit attributable to the Group 30/09/ /09/2014 Variation Plant Making % Steel Making % Total % Strategies Below are some of Danieli s mottos: - Passion to innovate and perform but also We do not shop around for noble equipment. The Danieli Group will continue to consolidate and expand internationally in order to ensure greater competitiveness in terms of innovation, technology, quality, costs, productivity and customer service. Not only is Danieli known for its plant engineering know-how but also for its manufacturing capabilities, in Europe with its noble and high-tech products, and in Asia with the design and manufacture of consolidated, proven products having the same quality as those made in Europe. - A step ahead which aims to set up a new Group organizational model to develop its existing structure so that it can better meet the new market requirements. In particular, in order to consolidate these strategies, the company continues to expand the Danieli Academy to train junior employees, provide refresher courses for senior staff, and make the most of talented youths. Order Book The Group s order book is in line with the figures expressed at the end of the last fiscal year, and is well diversified according to geographical area and product line, and for the quarter ended September 30, 2015, it amounts to 3,094 million euro (of which 154 million euro in the special steelmaking sector) compared to 3,155 million euro for the year ended June 30, 2015 (of which 169 million euro for special steels). 3

4 Human Resources As of September 30, 2015, the Danieli Group employed 10,573 people - a decrease of 381 over the number for the period ended June 30, Danieli continues to pursue innovation, efficiency and quality of customer service at a fast pace, so it follows that team excellence takes on a highly significant and strategic role for the success of the company. Consequently, this confirms the importance of carefully managing and making the most of the potential and aptitude of people in order to ensure that the Group s training programs are in line with the best practices. Danieli Group Operations The Danieli Group essentially runs two main businesses: The first (Plant Making) is in the field of engineering and manufacture of plants including turnkey plants for the production of metals. Its principal operating companies in the Plant Making segment are in Europe (Italy, Sweden, Germany, France, Austria, The Netherlands, the United Kingdom, Russia, Spain) and in Asia (China, Thailand, India, Vietnam), with service centers in the US, Brazil, Egypt, Turkey and Ukraine. In the Plant Making sector Danieli is one of the top three manufacturers in the world for metal making plants and machines, leader in meltshops and plants for the production of long products (these plants produce steel in electric arc furnaces sometimes from direct reduced iron and in addition to being competitive in terms of Capex and Opex, are also environment-friendly, compared to integrated plants that use blast furnaces and coke), and second in the manufacture of plants for flat products. The second business (Steel Making) makes special steels through the companies of Acciaierie Bertoli Safau S.p.A. (ABS) and ABS Sisak d.o.o. (ABS Sisak). The steels produced in these facilities supply the automotive industry, heavy-duty vehicles, engineering, energy and petroleum industries. ABS is the number one steelmaker in Italy and among the leading ones in Europe in its field. In Friuli-Venezia Giulia the Danieli Group provides employment for about 6,000 people, either directly or through linked industries, and represents almost 40% of the yearly exports of the province of Udine, and 20% of those of the region of Friuli. Attached are the Group s profit and loss account, assets and liabilities statement and consolidated financial position for the period ended September 30, 2015, compared to the data for the periods ended June 30, 2015, and September 30,

5 Consolidated Financial Statements of the Danieli Group (millions of euro) to 30/09/2015 to 30/06/2015 CONSOLIDATED STATEMENT OF ASSETS AND LIABILITIES (*) Assets Non-current assets 1, ,165.0 Current assets 3, ,991.8 Total Assets 4, ,156.8 Liabilities and shareholders equity Share capital Other reserves and profits carried forward, including profit for the year 1, ,631.5 Shareholders' equity 1, ,712.8 Minority interest in shareholders equity Non-current liabilities Current liabilities 2, ,854.1 Total liabilities and shareholders equity 4, ,156.8 (millions of euro) to 30/09/2015 to 30/09/2014 CONSOLIDATED INCOME STATEMENT (*) Revenues Raw materials and consumables (261.6) (359.2) Personnel costs (108.4) (101.6) Other operating costs (134.3) (130.2) Depreciation, amortization and write-downs (23.6) (23.4) Operating income Net financial income (charges) (3.6) 30.5 Income from valuation of shareholdings in affiliates according to the net equity method 0.0 (4.3) Profit (loss) before taxes Income taxes (2.3) (15.4) After-tax profit Net loss (profit) attributable to non-controlling interests Group Profit (*) Please note that some items of the consolidated balance sheet and income statement are presented in abridged form compared to the schedules of the annual report. 5

6 CONSOLIDATED NET FINANCIAL POSITION (millions of euro) 30/09/ /06/2015 Variation Current financial assets - Securities and other financial receivables cash at banks 1, ,359.3 (224.8) Total current financial assets 1, ,699.8 (115.2) Non-current financial liabilities - Bank debts Total non-current financial liabilities Current financial liabilities - bank debts and other financial liabilities (42.5) Total current financial liabilities (42.5) Non-current net financial position (317.5) (314.7) (2.8) Current net financial position 1, ,270.7 (72.7) Net positive financial position (75.5) Gross financial indebtedness (704.1) (743.8) 39.7 Gross financial indebtedness represents the total of payables to banks and other financial liabilities. 6

7 The officer in charge of drawing up the corporate accounting documents, Mr. Alessandro Brussi, declares, pursuant to paragraph 2 of article 154 bis of the Financial Consolidation Act, that to the best of his knowledge, the accounting data in this press release correspond to the results in the accounting records, account books and book entries for the period ended September 30, CORPORATE CONTACTS: Investor relations: Mr. Alessandro Brussi (tel ) Department of Corporate Affairs: Daniela Boz (tel ) investors@danieli.it d.boz@danieli.it DANIELI & C. OFFICINE MECCANICHE S.P.A. Via Nazionale Buttrio (Udine) Fully paid-up share capital of euro 81,304,566 Tax number, VAT registration number and registration number with the Register of Companies of Udine n Economic/administrative registration number UD84904 Telephone fax info@danieli.com Financial statements and publications at the company s headquarters on the authorized storage mechanism SDIR & STORAGE and on the company s Web Site: Investors section 7