AMG Advanced Metallurgical Group N.V. ("AMG", EURONEXT AMSTERDAM: "AMG") reported second quarter 2012 revenue of $319.6 million, a 13% decrease from $368.3 million in the second quarter 2011.

EBITDA decreased 25% to $23.6 million in the second quarter 2012 from $31.4 million in the second quarter 2011. Net loss attributable to shareholders for the second quarter 2012 was $2.6 million, or ($0.10) per fully diluted share, down from a net profit attributable to shareholders of $3.4 million, or $0.12 per fully diluted share, in the second quarter 2011.

Dr. Heinz Schimmelbusch, Chairman of the Management Board and CEO, said, "Demand and pricing for Advanced Materials products, particularly in critical materials for the aerospace and energy markets, remained stable in the second quarter. Delayed order intake and increased pricing pressure in the Engineering Systems Division resulted in lower profitability in the quarter. Unfavorable product mix in natural graphite and lower than expected silicon metal production marginally reduced Graphit Kropfmühl's second quarter earnings. Following the completion of the squeeze out, AMG intends to fully integrate GK and address cost savings opportunities. Given the challenging markets, AMG's number one priority is increasing its operational efficiency across all of AMG's units, under the leadership of Eric Jackson, AMG's recently appointed COO."

(1) EBITDA is defined as earnings before interest, tax, depreciation and amortization and excludes nonrecurring items

Key Figures

 In 000's US Dollar Q2'12 Q2'11 Change Revenue $319,591 $368,318 (13%) -------------------------------------------------------------------------- Gross profit 53,996 68,993 (22%) Gross margin 16.9% 18.7% -------------------------------------------------------------------------- Operating profit 7,827 22,787 (66%) Operating margin 2.4% 6.2% Net (loss) profit attributable to shareholders (2,647) 3,351 N/A -------------------------------------------------------------------------- EPS- Fully diluted (0.10) 0.12 N/A EBIT (1) 16,603 24,592 (32%) EBITDA (2) 23,639 31,447 (25%) EBITDA margin 7.4% 8.5% --------------------------------------------------------------------------

Note:

(1) EBIT is defined as earnings before interest, tax and excludes non- recurring Items

(2) EBITDA is defined as earnings before interest, tax, depreciation and amortization and excludes non-recurring items

Operational Review

Advanced Materials Division

 Q2'12 Q2'11 Change --------------------------------------------------- Revenue $211,656 $235,580 (10%) Gross profit 31,435 37,747 (17%) Operating profit 9,725 12,865 (24%) EBITDA 14,549 17,534 (17%) Capital expenditures 6,225 6,194 1%

The Advanced Materials Division's second quarter 2012 revenue decreased $23.9 million, or 10%, to $211.7 million. The decrease in revenue was primarily the result of 18% and 16% decreases in aluminum products and antimony revenue, respectively, slightly offset by 12% and 10% increases in titanium master alloys and chrome products revenue, respectively, compared to the second quarter 2011.

The second quarter 2012 gross margin declined to 15% from 16% in the second quarter 2011. Higher operating and raw material costs, particularly in antimony and chrome products, more than offset higher gross margins in aluminum products, which were the result of operational improvements.

The second quarter 2012 EBITDA decreased $3.0 million to 7% of revenue, which was consistent with the 7% of revenue level achieved in the second quarter 2011. The EBITDA decrease was the result of the $6.3 million decrease in gross profit slightly offset by a $3.3 million, or 14% decrease in SG&A. The SG&A decline was the result of a reduction in personnel expenses, primarily long- term incentive costs.

Capital expenditures were $6.2 million for the second quarter 2012, essentially flat compared to the second quarter 2011. Significant growth capital investments made in the second quarter included a $1.4 million investment in the expansion of the spent catalyst recycling facility for ferrovanadium production, $1.3 million related to expansion of the Brazilian tantalum mine, and maintenance expenditures of $1.4 million.

Engineering Systems Division

 Q2'12 Q2'11 Change -------------------------------------------------------- Revenue $65,400 $89,812 (27%) Gross profit 14,929 22,661 (34%) Operating (loss) profit (5,387) 5,047 N/A EBITDA 3,725 7,671 (51%) Capital expenditures 2,911 2,984 (2%)

The Engineering Systems Division's second quarter 2012 revenue decreased $24.4 million, or 27%, to $65.4 million. Revenue from Heat Treatment Services for the production of automotive components for fuel-efficient vehicles increased 16% to $12.5 million and revenue from heat treatment furnaces, primarily for the transportation industry, increased 3% to $18.0 million. These increases were more than offset by 71% and 38% decreases in solar silicon and sintering furnace revenue, respectively, compared to the second quarter 2011.

Order backlog decreased 15% to $150.0 million as of June 30, 2012, from $176.2 million as of March 31, 2012. The division generated order intake of $36.4 million in the second quarter 2012, which represents a 59% decrease compared to the second quarter 2011 and a 0.56x book to bill ratio. Order intake for heat treatment systems accounted for 29% of total order intake.

The second quarter 2012 gross margin of 23% decreased from 25% achieved in the second quarter 2011. Favorable product mix was more than offset by increased end market pricing pressure and a decline in the economies of scale, resulting in decreased gross margins.

The second quarter 2012 EBITDA decreased $3.9 million, to 6% of revenue. EBITDA declined from 9% of revenue in the second quarter 2011. The EBITDA decrease was the result of the $7.7 million decrease in gross profit slightly offset by a $3.2 million, or 19% decrease in SG&A. The SG&A decline was the result of a reduction in personnel costs, primarily long-term incentive costs.

Capital expenditures were $2.9 million, 2% less than the second quarter of 2011. Capital investments in the second quarter were primarily maintenance and expansion capital expenditures for the Heat Treatment Services business.

Graphit Kropfmühl

 Q2'12 Q2'11 Change ---------------------------------------------------- Revenue $42,535 $42,926 (1%) Gross profit 7,632 8,585 (11%) Operating profit 3,489 4,875 (28%) EBITDA 5,365 6,242 (14%) Capital expenditures 2,781 2,486 12%

Graphit Kropfmühl's second quarter 2012 revenue decreased $0.4 million, or 1%, to $42.5 million. Natural graphite revenue decreased $0.7 million, or 5%, primarily caused by a 6% decrease in average pricing. Silicon metal revenue increased $0.3 million, or 1%, as an unfavorable product mix offset a 7% increase in volumes.

The second quarter 2012 gross margin decreased to 18% from 20% in the second quarter of 2011. The decrease in gross margin was primarily the result of unfavorable product mix for silicon metal and natural graphite products.

The second quarter 2012 EBITDA declined $0.9 million to 13% of revenue. This was a decrease from 15% of revenue in the second quarter 2011. The lower EBITDA was attributable to the decreased gross profit for both silicon metal and natural graphite, slightly offset by a 7% decline in SG&A due to a decline in personnel costs.

Capital expenditures were $2.8 million in the second quarter 2012, 12% more than the second quarter 2011, primarily because of upgrading the electric arc furnaces and storage facilities at the silicon metal operation.

Financial Review

Tax

AMG recorded a tax expense of $5.5 million in the second quarter 2012 as compared to a tax expense of $7.8 million in the second quarter 2011. The second quarter 2012 effective tax rate was adversely impacted by the reversal of previously recognized deferred tax assets in several jurisdictions, including Brazil. In addition, a significant portion of the restructuring and asset impairment expense in the quarter relates to entities for which a tax benefit cannot be booked. For the first half of 2012 AMG's effective tax rate is 103%. The expected full year effective tax rate is expected to be approximately 65% which is higher than the normalized statutory rate due to the items noted above.

SG&A

AMG's second quarter 2012 SG&A expenses were $38.0 million, a 15% decrease from $44.8 million in the second quarter 2011. The $6.7 million decrease in SG&A expenses was due to a reduction in long-term incentive expenses and external consulting costs.

Non-Recurring Items

AMG's second quarter 2012 operating profit of $7.8 million includes non-recurring items, which are not included in the calculation of EBITDA. These items are comprised of income and expense items that, in the view of management, do not arise in the normal course of business and items that, because of their nature and/or size, should be presented separately to enable more accurate analysis of the results. AMG incurred $8.4 million of non-recurring items in the second quarter 2012, consisting of $6.8 million write down and restructuring of AMG Idealcast assets, $0.6 million in environmental costs, $0.5 million restructuring charge related to the closure of a UK entity and $0.5 million management restructuring in the Advanced Materials Division. AMG incurred $2.3 million of non-recurring items in the second quarter 2011, related to the closure of Silmag joint venture.

Currency Fluctuations

AMG transacts business in many currencies other than the U.S. dollar, the Company's reporting currency. AMG's financial statements are prepared in U.S. dollars, so fluctuations in the exchange rates between the U.S. dollar and other currencies have an effect both on the results of operations and on the reported value of assets and liabilities as measured in U.S. dollars. The appreciation in the value of the U.S. dollar as of June 30, 2012 compared to March 31, 2012, resulted in a decrease in the assets and liabilities on the balance sheet of $40.5 million and $29.3 million, respectively. The net result of the appreciation in the value of the U.S. dollar in the second quarter 2012 compared to the second quarter 2011, resulted in a decrease in revenue and EBITDA of $21.1 million and $2.3 million, respectively.

Liquidity

 June 30, 2012 December 31, 2011 Change --------------------------------------------------------------------------- Total debt $305,906 $268,621 14% Cash & short-term investments 93,624 79,571 18% --------------------------------------------------------------------------- Net debt 212,282 189,050 12%

AMG had a net debt position of $212.3 million as of June 30, 2012. AMG's net debt position increased $23.2 million since December 31, 2011 primarily due to $22.4 million increase in working capital, $23.4 million in capital investments, $9.3 million of cash tax payments, $9.0 million of cash interest payments and $6.6 million in Graphit Kropfmühl share purchases, reduced by EBITDA of $45.5 million. Including the $93.6 million of cash, AMG had $156.2 million of total liquidity as of June 30, 2012.

Cash Flow

 H1'12 H1'11 -------------------------------------------------------------------- Net cash flows from (used in) operations $3,134 $(12,080) -------------------------------------------------------------------- Capital expenditures (23,443) (19,913) Acquisitions, net of cash (1,920) (26,816) Cash flows from other investing activities 534 2,844 -------------------------------------------------------------------- Net cash flows used in investing activities (24,829) (43,885) -------------------------------------------------------------------- Cash flows from financing activities 36,091 23,899 --------------------------------------------------------------------

Cash flows from operations were $3.1 million in the first half of 2012 compared to cash flows used in operations of $12.1 million in the first half of 2011. Cash flows from operations in the first half of 2012 are primarily the result of $45.5 million in EBITDA less $22.4 million increase in working capital, $9.3 million in cash tax payments and $9.0 million in cash interest payments.

Cash used in investing activities was $24.8 million in the first half of 2012. The $19.1 million decrease compared to the first half 2011 is composed of a $24.9 million decrease in cash used in acquisitions, slightly offset by a $3.5 million increase in capital investments and a $2.3 million increase in cash flows from other investing activities due to a decrease in restricted cash for project work in the Engineering Systems Division. In the first half of 2012, AMG acquired 5.5% of Graphit Kropfmühl's outstanding common shares for $6.6 million, for which $1.9 million is shown as a cash flow used in investing activities while $4.7 million is shown as a cash flow used in financing activities.

Cash from financing activities was $36.1 million in the first half 2012, a $12.2 million increase from the first half 2011. This increase was primarily attributable to a net increase of $40.7 million in existing credit facilities, compared to $34.4 million in net draws in new and existing lines of credit offset by $10.5 million in transaction costs related to debt issuance in the first half of 2011. The increase in the credit facility during the first half of 2012 was used to fund the Brazilian mine expansion and the acquisition of Graphit Kropfmühl shares as well as to retire Graphit Kropfmühl's external debt.

Outlook

The slowdown in Europe is impacting AMG. In the Advanced Materials Division, its European centric businesses, particularly antimony and other non- aerospace businesses, are being affected. The Engineering Systems Division is responding to the deterioration in demand for capital goods across most end markets through operational improvements. Higher input prices and moderating demand are affecting Graphit Kropfmühl's ability to maintain current profitability levels. While AMG cannot affect the direction of the markets, it is addressing profitability issues through companywide improvement initiatives, specifically focused on AMG Mining and the Engineering Systems Division to reduce costs. AMG is also working to improve cash flow and reduce indebtedness through working capital and capital expenditure reductions. Despite these changes, achieving the prior year's revenue and earnings levels will be difficult, as the growth previously anticipated in the second half of 2012 is not expected to materialize.

AMG Advanced Metallurgical Group N.V.

Condensed interim consolidated income statement

For the three months ended June 30

 In thousands of US Dollars 2012 2011 Unaudited Unaudited Continuing operations Revenue 319,591 368,318 Cost of sales 265,595 299,325 Gross profit 53,996 68,993 Selling, general and administrative expenses 38,022 44,765 Restructuring and asset impairment expense 7,821 2,174 Environmental expense 560 141 Other income, net (234) (874) Operating profit 7,827 22,787 Finance expense 6,250 8,915 Finance income (457) (1,158) Foreign exchange loss 100 1,302 Net finance costs 5,893 9,059 Share of profit (loss) of associates 83 (1,694) Profit before income tax 2,017 12,034 Income tax expense 5,452 7,828 (Loss) profit for the period (3,435) 4,206 Attributable to: Shareholders of the Company (2,647) 3,351 Non-controlling interests (788) 855 (3,435) 4,206 (Loss) earnings per share Basic earnings per share (0.10) 0.12 Diluted earnings per share (0.10) 0.12 AMG Advanced Metallurgical Group N.V. Condensed interim consolidated income statement For the six months ended June 30 In thousands of US Dollars 2012 2011 Unaudited Unaudited Continuing operations Revenue 643,575 686,317 Cost of sales 536,168 557,544 Gross profit 107,407 128,773 Selling, general and administrative expenses 77,096 87,702 Restructuring and asset impairment expense 10,664 2,459 Environmental expense 1,288 246 Other income, net (702) (1,827) Operating profit 19,061 40,193 Finance expense 12,941 10,920 Finance income (612) (2,658) Foreign exchange loss 509 1,285 Net finance costs 12,838 9,547 Share of profit (loss) of associates 249 (6,071) Profit before income tax 6,472 24,575 Income tax expense 6,696 12,792 (Loss) profit for the period (224) 11,783 Attributable to: Shareholders of the Company 856 10,323 Non-controlling interests (1,080) 1,460 (224) 11,783 Earnings per share Basic earnings per share 0.03 0.37 Diluted earnings per share 0.03 0.37 AMG Advanced Metallurgical Group N.V. Condensed interim consolidated statement of financial position In thousands of US Dollars June 30, December 31, 2012 2011 Unaudited Audited Assets Property, plant and equipment 261,427 263,586 Goodwill 22,750 23,535 Intangible assets 14,666 14,557 Investments in associates and joint ventures 5,188 5,085 Derivative financial instruments - 1 Deferred tax assets 22,781 29,142 Restricted cash 10,692 11,074 Notes receivable 264 250 Other assets 18,250 17,866 Total non-current assets 356,018 365,096 Inventories 223,665 228,887 Trade and other receivables 201,092 188,103 Derivative financial instruments 3,573 3,956 Other assets 43,286 35,184 Cash and cash equivalents 93,624 79,571 Total current assets 565,240 535,701 Total assets 921,258 900,797 AMG Advanced Metallurgical Group N.V. Condensed interim consolidated statement of financial position (continued) In thousands of US Dollars June 30, December 31, 2012 2011 Unaudited Audited Equity Issued capital 742 742 Share premium 377,245 381,921 Other reserves 10,311 14,157 Retained earnings (deficit) (190,506) (191,362) Equity attributable to shareholders of the Company 197,792 205,458 Non-controlling interests 11,411 15,160 Total equity 209,203 220,618 Liabilities Loans and borrowings 259,462 210,448 Employee benefits 88,360 90,078 Provisions 27,304 27,019 Government grants 479 732 Other liabilities 8,545 9,276 Derivative financial instruments 9,821 8,122 Deferred tax liabilities 27,424 26,434 Total non-current liabilities 421,395 372,109 Loans and borrowings 14,144 17,436 Short term bank debt 32,300 40,737 Government grants 53 34 Other liabilities 48,873 51,673 Trade and other payables 136,084 128,493 Derivative financial instruments 8,208 10,661 Advance payments 32,110 30,204 Current taxes payable 5,443 14,468 Provisions 13,445 14,364 Total current liabilities 290,660 308,070 Total liabilities 712,055 680,179 Total equity and liabilities 921,258 900,797 AMG Advanced Metallurgical Group N.V. Condensed interim consolidated statement of cash flows For the six months ended June 30 In thousands of US Dollars 2012 2011 Unaudited Unaudited Cash flows from (used in) operating activities (Loss) profit for the period (224) 11,783 Adjustments to reconcile (loss) profit to net cash flows: Non-cash: Depreciation and amortization 14,152 14,169 Restructuring expense 4,331 2,459 Asset impairment expense 6,333 - Environmental expense 1,288 246 Net finance costs 12,838 9,547 Share of (profit) loss of associates (249) 6,071 Equity-settled share-based payment transactions 856 1,833 Income tax expense 6,696 12,792 Change in working capital and provisions (22,413) (46,736) Other (2,113) 2,528 Finance costs paid, net (9,017) (5,136) Income tax paid, net (9,344) (21,636) Net cash flows from (used in) operating activities 3,134 (12,080) Cash flows used in investing activities Proceeds from sale of property, plant and equipment 147 49 Acquisition of property, plant and equipment and intangibles (23,443) (19,913) Acquisition of non-controlling interests and subsidiaries (net of cash acquired of nil and $690, respectively) (1,920) (26,816) Change in restricted cash 388 1,839 Other (1) 956 Net cash flows used in investing activities (24,829) (43,885) Cash flows from financing activities Proceeds from the issuance of debt 59,981 221,626 Payment of transaction costs related to debt issuance - (10,457) Repayment of borrowings (19,248) (187,276) Premium paid for non-controlling interests (4,673) - Other 31 6 Net cash flows from financing activities 36,091 23,899 Net increase (decrease) in cash and cash equivalents 14,396 (32,066) Cash and cash equivalents at January 1 79,571 89,311 Effect of exchange rate fluctuations on cash (343) 3,891 Cash and cash equivalents at June 30 93,624 61,136

About AMG

AMG creates and applies innovative metallurgical solutions to the global trend of sustainable development of natural resources and CO2 reduction. AMG produces highly engineered specialty metal products and advanced vacuum furnace systems for the Energy, Aerospace, Infrastructure and Specialty Metals and Chemicals end markets. AMG consists of two operating divisions, Advanced Materials and Engineering Systems, and owns interests in publicly-listed companies Graphit Kropfmühl AG (Deutsche Börse: GKR.DE) and Timminco Limited (TSX: "TIM").

The Advanced Materials Division develops and produces specialty metals, alloys and high performance materials. AMG is a significant producer of specialty metals, such as ferrovanadium, ferronickel-molybdenum, aluminum master alloys and additives, chromium metal and ferrotitanium, for Energy, Aerospace, Infrastructure and Specialty Metal and Chemicals applications. Other key products include specialty alloys for titanium and superalloys, coating materials, tantalum and niobium oxides, vanadium chemicals and antimony trioxide.

The Engineering Systems Division designs, engineers and produces advanced vacuum furnace systems and operates vacuum heat treatment facilities, primarily for the Aerospace and Energy (including solar and nuclear) industries. Furnace systems produced by AMG include vacuum remelting, solar silicon melting and crystallization, vacuum induction melting, vacuum heat treatment and high pressure gas quenching, turbine blade coating and sintering. AMG also provides vacuum case-hardening heat treatment services on a tolling basis.

Graphit Kropfmühl AG is a majority controlled, publicly listed subsidiary of AMG. Based on its secure raw material sources in Africa, Asia and Europe, Graphit Kropfmühl is a specialist in the production of silicon metal and the extraction, processing and refining of natural crystalline graphite for a wide range of energy saving industrial applications.

Timminco Limited is a publicly listed affiliate of AMG. Timminco produces silicon metal for the chemical, aluminum, electronic and solar industries. Timminco also produces solar grade silicon, using its proprietary technology for purifying silicon metal, for the solar energy industry.

With over 3,000 employees, AMG operates globally with production facilities in Germany, the United Kingdom, France, Czech Republic, United States, China, Canada, Mexico, Brazil, Turkey, Poland, India and Sri Lanka and also has sales and customer service offices in Belgium, Russia and Japan ([ www.amg-nv.com ]).

Disclaimer

Certain statements in this press release are not historical facts and are "forward looking." Forward looking statements include statements concerning AMG's plans, expectations, projections, objectives, targets, goals, strategies, future events, future revenues or performance, capital expenditures, financing needs, plans and intentions relating to acquisitions, AMG's competitive strengths and weaknesses, plans or goals relating to forecasted production, reserves, financial position and future operations and development, AMG's business strategy and the trends AMG anticipates in the industries and the political and legal environment in which it operates and other information that is not historical information. When used in this press release, the words "expects," "believes," "anticipates," "plans," "may," "will," "should," and similar expressions, and the negatives thereof, are intended to identify forward looking statements. By their very nature, forward looking statements involve inherent risks and uncertainties, both general and specific, and risks exist that the predictions, forecasts, projections and other forward looking statements will not be achieved. These forward looking statements speak only as of the date of this press release. AMG expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward looking statement contained herein to reflect any change in AMG's expectations with regard thereto or any change in events, conditions or circumstances on which any forward looking statement is based.

AMG reports second quarter 2012 results: [ http://hugin.info/138060/R/1632874/523846.pdf ]

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Source: AMG Advanced Metallurgical Group N.V. via Thomson Reuters ONE

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AMG reports second quarter 2012 results

AMG reports second quarter 2012 results