Slide 1: H1 2023 Earnings Presentation
H1 2023 Earnings Presentation 27 July 2023
Slide 2: Disclaimer
Disclaimer This presentation contains forward-looking statements and information relating to Befesa and its affiliates that are based on the beliefs of its management, including assumptions, opinions and views of Befesa and its affiliates as well as information cited from third party sources. Such s
Slide 3: Today's presenters
Today’s presenters Javier Molina Asier Zarraonandia Rafael Pérez Executive Chair CEO CFO Leading Befesa >20 years with Befesa >15 years with Befesa for >20 years 3 H1 2023 Earnings Presentation
Slide 4: Highlights of H1 2023
0 1 / Highlights of H1 2023
Slide 5: Executive summary of H1 2023
Executive summary of H1 2023 Revenue Adjusted EBITDA Operating cash flow €615 million €95 million €42 million 8% yoy -20% yoy -34% yoy + US zinc refining operations — Lower zinc price — Lower earnings — Lower zinc and aluminium — Unfavourable zinc TC — Higher interests market prices — Higher coke pr
Slide 6: Business & financial results
02 Business & financial results
Slide 7: Consolidated key financials
Consolidated key financials Adjusted EBITDA decreased by 20% yoy to €95m in H1 2023, mainly due to lower zinc market prices Adjusted EBITDA bridge H1 2022 to H1 2023 (€m) -19.7% 118.0 -2 Lower EAFD throughput (US and -29 94.7 earthquake in Turkey) 7 -27 Lower zinc LME +7 Lower cost in alu +6 Higher
Slide 8: Steel Dust Recycling Services
Steel Dust Recycling Services Adjusted EBITDA decreased by 29% yoy to €67m in H1 2023, mainly due to lower zinc LME and minor volume decrease; Higher hedging prices offset by unfavourable zinc TC; Higher coke prices offset by productivity and synergies Adjusted EBITDA bridge H1 2022 to H1 2023 (€m)
Slide 9: Zinc LME prices have historically bounced off the 90th percentile of the global cost curve
Zinc LME prices have historically bounced off the 90th percentile of the global cost curve • Zinc LME prices have historically rebounded strongly Zinc LME1 upon touching the C90 curve • Only during periods of strong economic stress, e.g., COVID- 19 pandemic, zinc traded below the C90 curve • Zinc cu
Slide 10: Coke price has started to moderate in Q2; Electricity & gas prices decreased further
Coke price has started to moderate in Q2; Electricity & gas prices decreased further Befesa’s energy price evolution by source Coke • After reaching an all-time-high 2019/20 2021 2022 H1 2023 level in Q1 2023, Befesa’s coke price started to moderate in Q2 (-3% versus Q1) 250 250 • However, H1 2023 a
Slide 11: Aluminium Salt Slags benefited from favourable market environment while Steel Dust still challenged
Aluminium Salt Slags benefited from favourable market environment while Steel Dust still challenged Crude steel production H1 2022 H1 2023 % vs prior year US EU China Turkey & S. Korea Global 1% -2% -1% -3% -4% -5% -5% -5% -6% -11% Car sales1 % vs prior year US EU China 18% 11% 11% -4% -14% -17% 1 S
Slide 12: Aluminium Salt Slags Recycling Services
Aluminium Salt Slags Recycling Services EBITDA increased by 17% yoy to €28m in H1 2023; Lower cost (mainly lower energy prices) partially offset by lower aluminium market prices EBITDA bridge H1 2022 to H1 2023 (€m) +17.0% 27.7 23.6 0 -3 7 Lower cost, Lower aluminium FMB mainly energy prices partial
Slide 13: Befesa's hedging strategy provides price visibility and lowers impact from zinc price volatility
Befesa’s hedging strategy provides price visibility and lowers impact from zinc price volatility • Befesa’s hedging strategy unchanged Zinc LME1 • 1—3 years forward • Targeting 60% to 75% of zinc equivalent volume • Befesa providing no collateral c. €2,650 • Befesa’s hedging strategy has Befesa’s c.
Slide 14: Cash flow, net debt & leverage
Cash flow, net debt & leverage Cash on hand at €143m providing >€200m liquidity; Net debt increased to €567m driven by lower earnings; Net leverage of x2.96 Adjusted EBITDA to Total cash flow in H1 2023 € million Total capex = €53m 94.7 Hanover -28.0 recovery and US operating No cash -13.4 excellenc
Slide 15: Growth & outlook
| \ e : ey. | : | 1 aaa —— 0 3 / Growth & outlook
Slide 16: Decarbonisation driving EAF steel production in Befesa's key markets
Decarbonisation driving EAF steel production in Befesa’s key markets EAF steel production 2022 2030e 200 Million tonnes 103 70 60 80 x2 56 x1.3 x1.3 % EAF share of total crude 69% >70% 40% >50% 10% 20% steel production • Significant infrastructure • Accelerating decarbonisation • #1 steel producer r
Slide 17: Well defined growth roadmap in execution towards 2027
Well defined growth roadmap in execution towards 2027 Steel Dust Indicative timing & progress Capex EBITDA Growth projects Alu Salt Slags 2023 2027e €m run-rate €m 1 Zinc refining €110—120 €35—45 2 Palmerton refurbishment 3 China III, 1st kiln Guangdong 4 China IV, 2nd kiln Jiangsu €115—125 €30—35 5
Slide 18: Palmerton plant refurbishment progressing well to seize market growth in 2024/25
2 Palmerton plant refurbishment progressing well to seize market growth in 2024/25 Plant overview Palmerton, Pennsylvania • 2 kilns with c. 163 kt → 220 kt (post- refurbishment) EAFD recycling capacity • Producing WOX as a marketable product Indicative timing and status Q1 2025 Other Befesa Demoliti
Slide 19: Preparing Befesa's next EAFD recycling plant in the province of Guangdong
3 Preparing Befesa’s next EAFD recycling plant in the province of Guangdong Plant overview • 1 kiln with 110 kt EAFD recycling capacity • Option for expansion on site: 2 additional kilns x 110 kt = +220 kt capacity Indicative timing and status Q1 2025 Yunfu, Guangdong Investment agreement signed Q1
Slide 20: Outlook for H2 2023: Overall expecting stronger H2 vs H1
Outlook for H2 2023: Overall expecting stronger H2 vs H1 Volume • European operations expected to continue at current solid levels • Turkish operations recovered after the earthquake in Q1 and are expected to continue delivering at usual levels in H2 • Hannover Aluminium Salt Slags plant fully rampe
Slide 21: Investor agenda & appendix
04 Investor agenda & appendix
Slide 22: Investor's agenda
Investor’s agenda Financial calendar 2023 Next investor conferences Q3 2023 Q4 2023 Q3 2023 Statement & Conf. Call Frankfurt – Commerzbank & ODDO BHF ODDO BHF Iberian Digital Forum (virtual) Thursday, 26 October 2023 Corporate Conference 4 & 5 October – ODDO BHF 5 & 6 September – Commerzbank & ODDO
Slide 23: H1 2023/22 – Key financials
H1 2023/22 – Key financials (€m, unless otherwise stated) Steel Salt Secondary Corporate & Total Dust Slags Aluminium eliminations Befesa Revenue1 €403.0 €41.3 €195.2 -€24.0 €615.5 yoy change +€49.2 / +13.9% -€0.0 / -0.1% -€22.5 / -10.3% +€16.3 / - +€43.0 / +7.5% Reported EBITDA €63.4 €14.3 €13.4 -€
Slide 24: Q2 2023/22 – Key financials
Q2 2023/22 – Key financials (€m, unless otherwise stated) Steel Salt Secondary Corporate & Total Dust Slags Aluminium eliminations Befesa Revenue1 €186.7 €20.4 €99.4 -€13.0 €293.5 yoy change -€11.2 / -5.6% -€1.7 / -7.6% -€20.4 / -17.0% +€15.6 / - -€17.6 / -5.7% Reported EBITDA €26.3 €7.7 €6.1 €1.3 €
Slide 25: Multi-year trend – Key financials
Multi-year trend – Key financials1 (€m, unless otherwise stated) 2017 2018 2019 2020 2021 2022 Revenue €667.42 €720.1 €647.9 €604.3 €821.6 €1,136.0 Reported EBITDA €153.0 €176.0 €159.6 €123.5 €189.6 €234.9 Reported EBITDA margin 22.9%2 24.4% 24.6% 20.4% 23.1% 20.7% % Adjusted EBITDA €172.43 €176.0 €
Slide 26: H1 2023/22 – Operational data – Steel Dust Recycling Services
H1 2023/22 – Operational data – Steel Dust Recycling Services H1 2022 H1 2023 yoy change EAFD 629.7 592.3 -37.3 / -5.9% throughput (kt) EAFD average 81.6% 70.6% -1,109 bps capacity utilisation (%) Waelz oxide 213.9 197.2 -16.7 / -7.8% (WOX) sold (kt) Zinc LME price €3,510 €2,624 -€886 / -25.3% (€/t)
Slide 27: Q2 2023/22 – Operational data – Steel Dust Recycling Services
Q2 2023/22 – Operational data – Steel Dust Recycling Services Q2 2022 Q2 2023 yoy change EAFD 292.3 305.3 +13.0 / +4.4% throughput (kt) EAFD average 75.4% 72.3% -306 bps capacity utilisation (%) Waelz oxide 110.2 97.4 -12.8 / -11.6% (WOX) sold (kt) Zinc LME price €3,683 €2,331 -€1,352 / -36.7% (€/t)
Slide 28: H1 2023/22 – Operational data – Aluminium Salt Slags Recycling Services
H1 2023/22 – Operational data – Aluminium Salt Slags Recycling Services H1 2022 H1 2023 yoy change Salt slags & SPL 172.9 171.1 -1.9 / -1.1% treated (kt) Salt slags & SPL 74.2% 73.4% -80 bps avg. capacity utilisation (%) Aluminium 84.6 87.2 +2.5 / +3.0% alloys produced (kt) Secondary alu 83.3% 85.7%
Slide 29: Q2 2023/22 – Operational data – Aluminium Salt Slags Recycling Services
Q2 2023/22 – Operational data – Aluminium Salt Slags Recycling Services Q2 2022 Q2 2023 yoy change Salt slags & SPL 85.5 88.8 +3.3 / +3.8% treated (kt) Salt slags & SPL 73.0% 75.8% +280 bps avg. capacity utilisation (%) Aluminium 42.4 43.5 +1.1 / +2.5% alloys produced (kt) Secondary alu 83.0% 85.1%
Slide 30: Multi-year trend – Operational data
Multi-year trend – Operational data 2017 2018 2019 2020 2021 2022 EAFD throughput (kt) 661.0 717.1 665.8 687.0 885.7 1,193.8 EAFD average capacity 84.7% 92.0% 80.7% / 83.2% 83.3%2 76.8% utilisation (%) 90.1%1 Waelz oxide (WOX) sold 217.8 240.9 217.6 239.2 291.0 407.4 (kt) Zinc LME price (€/t) €2,572
Slide 31: Consolidated key financials
Consolidated key financials Adjusted EBITDA decreased by 22% yoy to €45m in Q2 2023; Lower zinc and aluminium market prices partially offset by improved volumes, lower gas & electricity prices as well as productivity & synergies Adjusted EBITDA bridge Q2 2022 to Q2 2023 (€m) -21.5% 56.9 4 Turkey bac
Slide 32: Steel Dust Recycling Services
Steel Dust Recycling Services Adjusted EBITDA decreased by 25% yoy to €30m in Q2 2023, mainly due to lower zinc market price; Unfavourable zinc TC offset by higher hedging prices and volumes; Higher coke prices more than offset by productivity and synergies Adjusted EBITDA bridge Q2 2022 to Q2 2023
Slide 33: Aluminium Salt Slags Recycling Services
Aluminium Salt Slags Recycling Services EBITDA decreased by 14% yoy to €14m in Q2 2023, mainly due to lower aluminium market prices partially offset by lower cost (mainly through lower energy prices) EBITDA bridge Q2 2022 to Q2 2023 (€m) -13.6% 16.1 0.5 13.9 -8 6 Lower aluminium FMB Lower cost, main
Slide 34: Cash flow, net debt & leverage
Cash flow, net debt & leverage Cash on hand at €143m providing >€200m liquidity; Net leverage of x2.96 Adjusted EBITDA to Total cash flow in Q2 2023 € million Total capex = €22m Hanover recovery and 44.6 US operating Henan & -0.1 -6.6 excellence -9.0 29.0 Palmerton 16.8 refurbishment 4.8 -7.0 0.5 Ad