Elkem Asa · OSL:ELK
Elkem Asa — Q1 2019 Earnings Presentation
25 slides from Elkem Asa's earnings presentation, Apr 30, 2019
Slide 1: First quarter results 2019
First quarter results 2019 «Elkem
Slide 2: Agenda
Agenda Helge Aasen, CEO Highlights Business update Outlook Morten Viga, CFO Financial performance
Slide 3: Solid margins despite challenging market conditions
Solid margins despite challenging market conditions First quarter result in line with expectations, affected by weak market conditions and reduced capacity utilisation Total operating income of NOK 6,007 million, down 7% from first quarter 2018 EBITDA of NOK 852 million, down 41% from first qu
Slide 4: Health and safety our main priority
Health and safety Total recordable injury rate (H1 & H2 per 1,000,000 working hours) our main priority Elkem has a zero harm philosophy when it comes to health and safety. The target is zero H1 & H2 incidents The total recordable injury rate in 1Q-2019 is 3.4 Regretfully the Xinghuo plant in C
Slide 5: Strategic focus areas 2019
Strategic Competitive strengths focus areas 2019 Further developing attractive market positions e.g. in speciality silicones in China and foundry products in Paraguay Construction of a new pilot plant for synthetic graphite for batteries, leveraging on strong R&D capabilities Bolt-on acquisiti
Slide 6: Silicones optimising the value chain
Silicones optimising the value chain Estimated industry margins 5 – 20% 15 - 25% > 25% Upstream Intermediates Downstream Volume Value Siloxane Core products specialties specialties Siloxane is generally not Core products/intermediates Volume specialities generally Value specialities generally market
Slide 7: Silicones growth and specialisation
Silicones Silicones - demand forecast growth and specialisation The global demand for silicones is expected grow by more than 5% CAGR from 2018 to 2023 More than 60% of the growth will be in China, India and rest of Asia Elkem is well positioned to capitalise on expected growth opportunities b
Slide 8: Operational improvements proceeding as planned
Operational improvements proceeding as planned Continuous improvement is one of Elkem’s core values and part of EBS An accelerated improvement programme targeting realised effects of MNOK 500 in 2019 has been initiated to counter weaker market conditions The programme is based on continuous im
Slide 9: Market update mixed pricing picture, demand picking up
DMC reference price China (RMB/mt) Market update mixed pricing picture, demand picking up Silicones DMC prices in China down by approx. 10% (avg.) from fourth quarter Wait-and-see attitude before Chinese New Year (CNY) CRU silicon 99 price EU (EUR/mt) Strong demand and rising prices after CN
Slide 10: Elkem group weaker than previous quarters but in line with expectations
Elkem group weaker than previous quarters but in line with expectations Total operating income EBITDA ‒ is down from first ‒ is reduced from first quarter last year and fourth quarter last year ‒ mainly explained by ‒ mainly due to lower lower revenue for market prices Silicones division 10 First qu
Slide 11: Elkem group strong financial position
Elkem group Consolidated key figures strong financial position (NOK million, except where specified) 1Q 2019 1Q 2018 YTD 2019 YTD 2018 FY 2018 Total operating income 6,007 6,451 6,007 6,451 25,887 EBITDA 852 1,454 852 1,454 5,793 EBIT 514 1,150 514 1,150 4,522 Other items 151 -201 151 -201 -380 Ot
Slide 12: Silicones strong quarter for specialties
Total operating income Silicones NOK million strong quarter for specialties Total operating income down 13% from first quarter last year EBITDA and margin NOK million and % EBITDA of MNOK 436, down from high levels last year Lower income and EBITDA mainly explained by lower sales prices for co
Slide 13: Silicon Materials affected by overcapacity
Total operating income Silicon Materials NOK million affected by overcapacity Total operating income in line with first quarter last year EBITDA and margin NOK million and % EBITDA down 46% compared to first quarter last year Lower EBITDA mainly explained by lower sales prices and higher costs
Slide 14: Foundry Products weak ferrosilicon markets
Total operating income Foundry Products NOK million weak ferrosilicon markets Total operating income down 4% from first quarter last year EBITDA and margin NOK million and % EBITDA down 42% to MNOK 179 Lower EBITDA mainly explained by lower sales prices for ferrosilicon, negative sales mix eff
Slide 15: Carbon higher operating income and result
Total operating income Carbon NOK million higher operating income and result Total operating income up 5% from first quarter last year EBITDA and margin NOK million and % EBITDA up 9% to MNOK 83, generating a margin of 18% Higher income and EBITDA explained by higher sales prices and improved
Slide 16: Elkem group strong equity and EPS
Elkem group strong equity and EPS Earnings per share (NOK) Earnings per share (EPS) EPS amounts to NOK 0.84 in the first quarter Total equity amounts to BNOK 14.1 as at 31 March 2019 Equity ratio in % Equity ratio of 46% Equity increased by BNOK 0.4 from 31 December 2018 due to profit for
Slide 17: Elkem group low leverage
Elkem group low leverage Net interest-bearing debt (NIBD) MNOK Net interest bearing debt of BNOK 3.7 by end of 1Q-19 Net interest-bearing debt increased by BNOK 0.4 from 4Q-18 mainly due to recognition of lease liabilities in accordance with IFRS 16 Leverage ratio of 0.7x based on LTM EBITDA B
Slide 18: Elkem group seasonally low investments
Elkem group seasonally low Cash flow from operations MNOK investments Cash flow from operations(1) was MNOK 491 in 1Q-2019, down from the corresponding quarter last year due to lower operating profit Cash flow is negatively affected by seasonally higher working capital Investments Investments
Slide 19: Meeting targets in challenging markets
Meeting targets Financial targets in challenging markets Target metric Revenue growth Financial target 5 – 10% Performance LTM 1Q-2019 9% EBITDA 15 – 20% 20% Reinvestments % of DA 80 – 90% 82% Debt leverage ratio 1.0 – 2.0x 0.7x Dividend target 30–50 % of net profit 45% for 2018 Revenue growth for
Slide 20: Outlook for the second quarter
Outlook for the second quarter Elkem continues to benefit from fundamentally strong positions, holding up in a currently weak market sentiment Markets are expected to remain weak for silicon and ferrosilicon during second quarter Demand and pricing for silicones have developed favourably and i
Slide 21: 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 22: Appendix
Appendix
Slide 23: Currency sensitivity
Currency sensitivity Currency development The cash flow is exposed to operating income and costs in different currencies. The main currencies are EUR and USD EUR - net cash flow approx. MEUR 360 USD - net cash flow approx. MUSD 120 Current cash flow hedging programme 90% hedging of net cas
Slide 24: Other financial sensitivities
Other financial sensitivities POWER SALES PRICES Electric power is a key input factor in Elkem’s production. Total consumption for Changes in sales prices could significantly affect operating income and EBITDA the group was 6.2 TWh in 2018. Near term exposure to spot power prices is 1% margin
Slide 25: «Elkem
«Elkem