Elkem Asa · OSL:ELK
Elkem Asa — Digital Autumn Conference 2020 (Kepler Cheuvreux)
27 slides from Elkem Asa's conference presentation, Sep 11, 2020
Slide 1: Digital Autumn Conference
Digital Autumn Conference Kepler Cheuvreux 7 – 11 September 2020
Slide 2: Agenda
Agenda Introduction Business update Second quarter results
Slide 3: Elkem: a global company with more than 110 years of history in advanced materials
Elkem: a global company with more than 110 years of history in advanced materials Elkem has a strong global platform combining the historic and cultural traditions of three unique business platforms Elkem started as a Norwegian company founded in 1904 by Sam Eyde, representing strong industrial tr
Slide 4: Three strong business areas
Three strong business areas Silicones Silicon Products Carbon Solutions BNOK 11.3* BNOK 9.3* BNOK 1.7* 51% of 42% of 7% of group sales group sales group sales End-markets End-markets End-markets Paper & Film Release Silicones Ferroalloys Automotive Automotive Silicon Silicone Rubber
Slide 5: Our products are vital for modern societies
Our products are vital for modern societies Low cost sustainable input factors High temperature/chemical production processes Examples of high value applications and markets Quartz Silicones Windmills Infrastructure Airbags Coal Silicon, foundry products Solar and microsilica Biocarbon Automotive Co
Slide 6: The world of Elkem
The world of Elkem Production site Sales Office HQ Digital Autumn Conference 7 - 11 September 2020 6
Slide 7: Environment, Social and Governance: A key priority
Environment, Social and Governance A key priority Safety Environment Ambition zero injuries Fossil CO2 emissions in Norway reduced by 18% by use of biocarbon Ambition 40% biocarbon by 2030 NOx emissions down 13% since 2015 Ambition 10% reduction in 2020 83 % share of renewables of 2019 total electri
Slide 8: Biocarbon strategy for environmental sustainability
Biocarbon strategy for environmental sustainability The production of silicon and ferrosilicon require use of carbon materials Carbon is used as a reducing agent in the smelting process to remove oxygen from the quartz, resulting in CO2 emissions The strategy is to reduce the use of fossil coa
Slide 9: Specialisation and growth: Polysil acquisition a key strategic move
Specialisation and growth Polysil acquisition a key strategic move Polysil’s main product areas Electrical applications i.e. wire and cable accessories, insulation and connectors Medical applications, i.e. catheters, drainage tubes, laryngeal masks and tubes, negative pressure ball etc. Auto
Slide 10: Productivity improvement programme ahead of plan
Productivity improvement programme ahead of plan The Productivity Improvement Programme was launched in 2020 with an identified potential of more than MNOK 350 in annual improvements Permanent savings related to personnel costs The programme will be finalised by the end of 2021 The programme
Slide 11: Strong competitive position demonstrated in weak markets
Strong competitive position demonstrated in weak markets Elkem had high capacity utilisation and good sales volumes in the second quarter despite very challenging market conditions EBITDA was NOK 644 million in the second quarter 2020, including a one-off gain of NOK 61 million from an arbitrati
Slide 12: Covid-19 impacting global markets
Covid-19 impacting global markets Elkem has generally strong sales volumes in the second quarter despite weak market conditions impacted by Covid-19 In the third quarter, capacity utilisation will on average be reduced to around 90% across all divisions due to maintenance and weak demand. Howeve
Slide 13: Silicones: low visibility, but China is picking up
Silicones low visibility, but China is picking up The global silicones market is negatively impacted by the Covid-19 situation Automotive and construction are generally weak Consumer products are generally holding up well DMC prices in China were at low levels, but recovered towards the end
Slide 14: Silicon: weak market development
Silicon weak market development CRU EU reference prices for silicon were holding up for most of 2Q-2020 However, reference prices were lagging the underlying market development The delayed impact was reflected in a clear downturn in reference prices at the end of the quarter CRU silicon 99 pri
Slide 15: Ferrosilicon low demand driving prices down; Carbon
Ferrosilicon low demand driving prices down Market prices for ferrosilicon (FeSi) have dropped significantly in the second quarter Weak ferrosilicon demand impacted by low steel consumption, which has been largely driven by weakness in automotive and construction Low European price level for f
Slide 16: Elkem group stable operating income and EBITDA
Elkem group stable operating income and EBITDA Total operating income EBITDA ‒ Operating income up ‒ In line with 2Q-2019 2% compared to 2Q- 2019 ‒ Increase driven by ‒ Lower result in Silicones and Silicon Silicones offset by Materials Silicon Materials and Carbon 16 Digital Autumn Conference 7 - 1
Slide 17: Elkem group currency losses in financial items and other items
Elkem group Consolidated key figures currency losses in financial items and other items (NOK million, except where specified) 2Q 2020 2Q 2019 YTD 2020 YTD 2019 FY 2019 Total operating income 5,879 5,736 11,677 11,569 22,668 EBITDA 644 647 1,234 1,499 2,656 EBIT 212 300 409 815 1,189 Other items -107
Slide 18: Silicones high volumes but low prices
Total operating income Silicones NOK million high volumes but low prices Total operating income of MNOK 3,106, up 11% from second quarter last year EBITDA and margin Increased operating income mainly explained by higher sales volumes and NOK million and % the consolidation of Polysil, partly off
Slide 19: Silicon Materials strong result supported by one-off
Total operating income Silicon Materials NOK million strong result supported by one-off Total operating income of MNOK 1,842, up 15% compared to second quarter EBITDA and margin 2019 NOK million and % Higher operating income explained by higher prices and positive currency impact EBITDA of MNO
Slide 20: Foundry Products weak steel and automotive markets
Total operating income Foundry Products NOK million weak steel and automotive markets Total operating income of MNOK 944, down 21% from second quarter last year EBITDA and margin Explained by lower sales volumes for both specialty alloys and ferrosilicon NOK million and % EBITDA of MNOK 80, in
Slide 21: Carbon another strong quarter
Total operating income Carbon NOK million another strong quarter Total operating income MNOK 480, in line with corresponding quarter last year EBITDA and margin Better pricing and favourable currency compensating for lower sales NOK million and % volumes EBITDA MNOK 119, up 38% from second qua
Slide 22: Elkem group lower EPS, equity ratio affected by currency
Elkem group Earnings per share (EPS) lower EPS, equity ratio NOK per share affected by currency Earnings per share (EPS) EPS amounted to NOK -0.02 in the second quarter Negatively impacted by losses in other items and foreign exchange losses in financial items Total equity amounted to BNOK 1
Slide 23: Elkem group higher net debt due to acquisition
Elkem group Net interest-bearing debt (NIBD) higher net debt due NOK billion to acquisition Net interest bearing debt (NIBD) amounted to BNOK 8.1 as at 30 June 2020 Leverage ratio of 3.4 based on LTM EBITDA of BNOK 2.4 Increase in leverage ratio compared to previous quarter explained by divide
Slide 24: Elkem group cash flow impacted by working capital
Elkem group Cash flow from operations cash flow impacted NOK million by working capital Cash flow from operations(1) was MNOK 363 in the second quarter, down from the corresponding quarter last year 2Q-2019 contained a significant reduction of working capital Investments ex. M&A amounted to MN
Slide 25: Outlook for the third quarter
Outlook for the third quarter Markets characterised by low visibility due to Covid-19 effects Elkem’s competitive position is strong, based on good cost positions, diversified product and geographic positions and robust financial structure Silicones demand in China is good, driven by governmen
Slide 26: Important notice
Important notice Any statement, estimate or projection included in this presentation (or upon which any of the conclusions contained herein are based) with respect to anticipated future performance (including, without limitation, any statement, estimate or projection with respect to the condition (f
Slide 27: Elkem
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