DERICHEBOURG - Universal registration document 2018-2019

3

Group management report Earnings from businesses and financial position

Environmental Services 3.2.2

Change %

2019

2018

In millions of euros

Revenue

1,846.7

2,116.4

(12.7%)

Recurring Ebitda in % of revenue

162.1 8.8% 88.2 4.8%

173.1 8.2% 102.9

(6.4%)

Recurring operating profit (loss)

(14.3%)

in % of revenue

4.9%

Italy – balance of CRS-Scrap litigation

(0.6) (3.7)

Waste collection – loss against Veolia in first-instance ruling

Other

(0.7) 87.5

Operating profit (loss)

98.6

(11.3%)

The revenue of the Environmental Services division decreased by 12.7% to €1.8 billion (-13.1% at constant exchange rates). Tonnages sold changed as follows:

2019

2018

Change

In thousand tons

Ferrous metals

3,445.8

3,746.0

(8.0%) (1.0%) (7.1%)

Non-ferrous metals Total volumes

535.1

540.7

3,980.9

4,286.6

2019

2018

Change

In millions of euros

Ferrous metals

858.9 674.7 313.1

1,016.4

(15.5%) (11.3%)

Non-ferrous metals

760.6 339.4

Services

(7.8%)

Total revenue Environmental Services

1,846.7

2,116.4

(12.7%)

Ferrous metals As indicated previously, market conditions began to deteriorate gradually in the autumn of 2018 following the reduction in Turkish ferrous metal purchases. The reduction in ferrous metal prices accelerated from the summer of 2019 onwards. In this context of lower prices, and with demand from steelmakers also down, the Group has striven to maintain its unit margins. By region, changes in volumes were as follows: France (excluding trading): -6.0%; p Other European subsidiaries (excluding trading): -8.1%; p Europe Trading: -19% (scope for intervention clearly lower than the p volumes transiting recycling centers); Americas Region: -6%. p The price of ferrous metal sold was on average 8% lower than in the previous fiscal year, with a sharp sales price reduction at the end of the 2019 fiscal year.

Non-ferrous metals Volumes of non-ferrous metals processed by the Group (535,100 t) were almost unchanged, with the downturn limited to 1.0%. By family, volumes of aluminum ingots sold increased by 12% (notably influenced by the addition of volumes from the Prémery refinery), with other aluminum families down 6%. Thanks to annual contracts signed (with volume commitments, but at indexed prices), aluminum ingot volumes were not affected by lower production from automotive sector subcontractors who are the main outlet for this stream. Copper volumes (including brass and copper cables) were maintained overall (3% growth). The stainless steel market was extremely challenging throughout the fiscal year (stainless steel waste tonnage down by 12%), with production from European customers facing competition from Asian stainless steel production using Indonesian nickel. The Group continued its investments aimed at sorting its non-ferrous metals (excluding aluminum) in Europe using the flotation process, in order to reduce its dependence on the Chinese and Southeast Asian markets, where access is more difficult because of the growing requirements for the absence of impurities in the containers shipped.

DERICHEBOURG p 2018/2019 Universal Registration Document 92