Elkem Asa · OSL:ELK
Elkem Asa — Q1 2022 Earnings Presentation
26 slides from Elkem Asa's earnings presentation, Apr 27, 2022
Slide 1: First quarter results 2022
First quarter results 2022
Slide 2: Agenda
Agenda Business update By CEO Helge Aasen Financial performance By CFO Morten Viga Outlook By CEO Helge Aasen 2
Slide 3: All-time high results
All-time high results ▪ Elkem’s results again reached all-time high, especially driven by strong performance in Silicon Products and Carbon Solutions ▪ General value chain conditions are challenging due to high energy costs, raw material constraints and transportation problems, but Elkem’s strong in
Slide 4: ESG – a key priority
Environment, Social & Governance ESG – a key priority A clear focus on ESG Safety Environment Ambition: Zero injuries ▪ 22% biocarbon in production ▪ Elkem’s CO2 roadmap will reduce emissions in line with the Paris ▪ > 80% of electrical consumption agreement from renewable energy ▪ 70% of process wa
Slide 5: Vianode – partnership established to accelerate growth in battery materials
Vianode Vianode – partnership established to accelerate growth in battery materials ▪ On 6 April, Elkem, Hydro and Altor announced a partnership with the intention to accelerate the growth of Vianode, aiming to become a leading With full-scale plant: Improving >1,000,000 electric vehicles/year produ
Slide 6: Impact from the Russian invasion of Ukraine
Impact from the Russian invasion of Ukraine ▪ Our hearts and minds are with the people affected ▪ Elkem’s first priority is to ensure the health and safety of our people and business partners and to make sure we comply with international sanctions ▪ Elkem does not have any plants or own employees in
Slide 7: Strong integrated value chain is providing sustainable competitive advantage
Well positioned with long-term renewable contracts Elkem’s strategy – integrated value chain Strong integrated value chain is providing sustainable competitive advantage Silicon and ferrosilicon plants based on renewable energy Silicones plants based on ▪ Elkem’s business model has shown resilience
Slide 8: Specialisation strategy, a lever to secure future growth
Elkem’s strategy – specialisation Specialisation strategy, a lever to secure future growth ▪ Elkem’s silicones specialisation strategy is giving results ▪ 26% of sales by the Silicones division generated from products < 5years ▪ Leadership positions in Release Coatings, Textile Coatings and Health C
Slide 9: Automotive hit by new supply disruptions, attractive EV growth
General markets Automotive hit by new supply disruptions, attractive EV growth ▪ Global sales of light vehicles were around 80 million in 2021, which was 13% below pre-covid level Light vehicles sales (in million) ▪ Auto production in Europe was reduced by more than 10% in 1Q-2022 compared to 1Q-202
Slide 10: Strong underlying demand, prices stabilising in China after new Covid outbreak
Silicones market Strong underlying demand, prices stabilising in China after new Covid outbreak ▪ Silicones prices in China were up after Chinese New Year, but prices dropped in March due to negative impact from Covid restrictions. DMC-prices have DMC reference price China (CNY/mt) now stabilised ar
Slide 11: Continued strong price momentum
Silicon and ferrosilicon markets Continued strong price momentum CRU silicon 99 price EU (EUR/mt) ▪ Market prices have remained at a high level in the first quarter ▪ Energy crisis in Europe leading to capacity closures in silicon and ferrosilicon strengthening Elkem’s competitive advantage and resu
Slide 12: Stable steel production outside China supporting demand for Elkem's products
Carbon market Stable steel production outside China supporting demand for Elkem’s products ▪ Steel production outside China was 2% lower in 1Q-2022 compared to Total steel production million mt 1Q-2021 ▪ China restricting steel production - estimated production down 8% in 1Q-2022 compared to 1Q-2021
Slide 13: Strong results, mainly driven by Silicon Products
Elkem group Strong results, mainly driven by Silicon Products Total operating EBITDA income ▪ New all-time high ▪ New all-time high driven by increased sales prices ▪ Strong revenue ▪ Silicon Products and generation in all Carbon Solutions divisions, especially reaching new record in Silicon Product
Slide 14: Overview financial ratios
Elkem Group Consolidated key figures Overview financial ratios (NOK million, except where specified) 1Q 2022 1Q 2021 YTD 2022 YTD 2021 FY 2021 Total operating income 11,876 7,193 11,876 7,193 33,717 EBITDA 3,875 1,231 3,875 1,231 7,791 ▪ EBITDA MNOK 3,875 EBIT 3,399 806 3,399 806 5,899 ▪ Segment Oth
Slide 15: Strong quarter, but impacted by high raw material costs
Total operating income Silicones NOK million Strong quarter, but impacted by high raw material costs ▪ Total operating income of MNOK 5,234, up 41% from the first quarter last year EBITDA and margin ▪ Increased operating income driven by higher sales prices in all markets NOK million and % ▪ EBITDA
Slide 16: All-time high results
Total operating income Silicon Products NOK million All-time high results ▪ Total operating income of MNOK 6,430 up 105% from the first quarter last year EBITDA and margin ▪ Increased operating income driven by high sales prices NOK million and % ▪ EBITDA of MNOK 3,272, new all-time high, already ap
Slide 17: Record results driven by strong steel markets
Total operating income Carbon Solutions NOK million Record results driven by strong steel markets ▪ Total operating income MNOK 727, up 50% from the first quarter last year ▪ Operating income reached all-time high, explained by high sales EBITDA and margin volumes and improved sales prices NOK milli
Slide 18: Strong EPS and robust equity
Earnings per share (EPS) Elkem Group NOK per share Strong EPS and robust equity ▪ Earnings per share (EPS) amounted to NOK 4.20 in the first quarter ▪ EPS was all-time high, explained by strong results Equity ratio In percent of total assets ▪ Total equity amounted to BNOK 22.9 as at 31 March 2022,
Slide 19: Low leverage and strong financing position
Net interest-bearing debt (NIBD) Elkem Group NOK billion Low leverage and strong financing position ▪ Net interest-bearing debt (NIBD) of BNOK 3.8 as at 31 March 2022 ▪ Leverage ratio of 0.4x based on LTM EBITDA of BNOK 10.4 ▪ Adjusted for the dividend payment for 2021, pro-forma NIBD would amount t
Slide 20: Strong cash flow generation
Cash flow from operations Elkem Group NOK million Strong cash flow generation ▪ Cash flow from operations(1) was MNOK 2,798 in the first quarter, representing a new all-time high ▪ Strong cash flow generation was explained by high operating profit ▪ Increase in working capital mainly explained by in
Slide 21: Outlook for the second quarter 2022
Outlook for the second quarter 2022 ▪ Elkem continues to see strong demand going into the second quarter, explained by strong market positions, and robust and integrated value chains ▪ In Silicones, Elkem’s operations in EMEA and US will gradually benefit from somewhat lower silicon prices. In APAC,
Slide 22: 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 23: Appendix
2 Elkem Appendix 23
Slide 24: Currency sensitivity
Currency sensitivity ▪ The result and cash flow are exposed to currency fluctuations. The main currencies are EUR, USD and CNY ▪ EUR - exposure approx. MEUR 430 in 2022 ▪ USD - exposure approx. MUSD 250 in 2022 ▪ CNY - exposure approx. MCNY 1,700 in 2022 ▪ Current cash flow hedging programme ▪ 90% h
Slide 25: Other financial sensitivities
Other financial sensitivities POWER SALES PRICES ▪ Electric power is a key input factor in Elkem’s production. The normal consumption is ▪ Changes in sales prices could significantly affect operating income and EBITDA around 6.5 TWh of which approx. 3.7 TWh is in Norway. Near term exposure to spot ▪
Slide 26: Delivering your potential
«~ Elkem Delivering your potential