Rhi Magnesita Nv · LSE:RHIM
Rhi Magnesita Nv — H1 2020 Earnings Presentation
36 slides from Rhi Magnesita Nv's earnings presentation, Aug 5, 2020
Slide 1: RHI Magnesita 2020 Half Year Results
8 RHI MAGNESITA 5 August 2020
Slide 2: Agenda
@ Summary and outlook © oss © Appendix 2020 Half Year Results | August 2020 8 RHI MAGNESITA
Slide 3: ” — & RY < R <c
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Slide 4: H1 2020 - Operational highlights
8 RHI MAGNESITA H1 2020 - Operational highlights Resilient performance in difficult markets « Responded swiftly to a very challenging environment; safe working conditions established, and liquidity, production and supply chains maintained # Resilient margin performance of 11.4% and positive operatin
Slide 5: H1 2020 Health and Safety summary
8 RHI MAGNESITA H1 2020 Health and Safety summary « Health and Safety has been our priority during the pandemic Continuous improvement in — Strict restrictions/precautions in place at all sites Lost Time Injury Frequency Rate AC . a (LTIF) — ACoronavirus Update channel providing employees with regul
Slide 6: Our 2025 Sustainability targets
8 RHI MAGNESITA Our 2025 Sustainability targets @@ 2-060 CO, emissions Reduce by 15% per tonne of product by 2025! Energy Reduce by 5% per tonne of product by 2025 NO, and SO, emissions Reduce by 30%2, starting with China by 2021 Recycling Increase use of secondary raw materials to 10% by 2025 Safet
Slide 7: H1 2020 - Financial highlights
8 RHI MAGNESITA H1 2020 - Financial highlights Revenue Adjusted EBITA Adjusted EBITA margin Adjusted EPS €1.2bn wovw €133M wsnew 11.4% 207 €1.77 uoomw per share Cash conversion? Working capital intensity Net debt Available liquidity* 70% 15 ppts 2 23.4% 240 bps! a €666m 25a €1.1bn Notes: 1) H12020 v
Slide 8: Operational review
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Slide 9: H1 2020 revenue bridge
8 RHI MAGNESITA H1 2020 revenue bridge €m -195 H12019 Constant currency H12019 Iran market exit Price and mix Volume COVID-19 H12020 Revenue adjustment Revenue (including raw impact (Volume) Revenue material on aconstant . pricing effects)! currency basis 0. Includes €30 milti duction from price and
Slide 10: Divisional review: Steel
8 RHI MAGNESITA Divisional review Steel Revenue (€m) H1 2020 performance -@© Gross margin (%) ¢ Further weakness in Steel Europe, South America and India ¢ More resilient performance in MEA and Asia NAM mixed: Strong in QI, weak Q2 Nh a g x . Lower fixed cost absorption, especially due to higher cos
Slide 11: Divisional review: Industrial
Divisional review Industrial Revenue (€m) -® Gross margin (%) 28.0% 27.3% 27.2% o——___+_____e 464 440 351 H1 2019! H2 2019! H12020! Notes: 1) Reported figures 2020 Half Year Results | August 2020 8 RHI MAGNESITA H1 2020 performance ¢ Robust performance in Cement/Lime — Strong first quarter, reflecti
Slide 12: RHIM's end markets are broad based, with construction the most important
3 RHIM’s end markets are broad based, with Rll MAGNESITA construction the most important RHIM BU End user industry %of2019 12% revenue % share of RHIM revenue 69% 4% 8% 5% 3% 2020 Half Year Results | August 2020 12
Slide 13: Strategy remains consistent
3 RHI MAGNESITA Strategy remains consistent STRATEGIC PILLA KEY INITIATIVES H2 2019 / | Capital Markets Day | H12020 | H2 2020 | ; | | 1 Benefits | Sales Strategy / Price Management Programme Competitiveness Optimisation Plan - Phase 1 Business Raw material supply review model SG&A review Short term
Slide 14: COVID-19 business response
COVID-19 business response Our assumptions Potential for more prolonged period of subdued demand Regionalisation focus, ahead of globalisation Need for more flexibility — continued volatility / uncertainty likely Digitalisation — less personal contacts, but more data interfaces ‘e) @ i) 2020 Half Ye
Slide 15: Financial review
8 RHI MAGNESITA Financial review
Slide 16: Profit and loss summary
Profit and loss summary H1 2019 Change at constant vs constant €m H12020 H1 2019 Change currency currency Revenue 1,171 1,541 (24.0)% 1,515 (22.)% Gross profit 279 400 (80.2)% 405 (31.1% Gross margin (%) 23.8 25.9 (210) bps 26.8 (300) bps Adjusted EBITA 133 234 (43.11% 244 (45.4)% Adjusted EBITA mar
Slide 17: H1 2020 EBITA bridge
H1 2020 EBITA bridge €m -64 8 RHI MAGNESITA -14 244 -63 133 H12019 Constant H12019 lran Price and mix Volume COVID- COVID-19_ Operational Production H12020 Adjusted currency atConstant Marketexit — (including 19 impact response issues Optimisation Adjusted adjustment raw material (volumes) recovery
Slide 18: COVID-19 had a wide ranging impact on Q2 performance
8 RHI MAGNESITA COVID-19 had a wide ranging impact on Q2 performance ... although the revenue performance of the business units was very mixed Q2 2020 vs. Q1 2020, except otherwise stated TB Revenue (€m) ; Steel MEA A d EBITA djuste (€m) Steel Asia 05% Steel CIS Steel China Steel Europe (10)% -17% C
Slide 19: Margin progression
Margin progression Refractory margin continued to improve against H2 2019; contribution from Backward Integration further reduced RHI standalone RHI Magnesita 6 15.2% 14 12 10 8.5% 8 Backward integration margin 6 4 6.8% 7.3% 6.7% 67% 5.7% 5.1% 5.9% 8.4% 9.5% 85% 9.1% 2 Refractory margin fe} 2010 201
Slide 20: Raw material prices fell materially in H1 20
3 RHI MAGNESITA Raw material prices fell materially in H1 2020 Rebased to 100 Jan 16 Jan 17 Jan 18 = High grade DBM (97% - China) = Low grade DBM (90% - China) Source: Asian Metal 2% 2020 Half Year Results | August 2020 —=> Jan 19 % % 2016 Jan‘20 21% (33)% 22% (17)% 8% (10)% (23)% (34)% (39)% (30)%
Slide 21: Continued focus on working capital
Continued focus on working capital Working capital movement 813 > | 720 1,004 223% H1 2019 FY 2019 H1 2020 TB Working capital before deducting Trade Finance I Trade Finance — Factoring and forfeiting Note: 1) Accounts receivable calculated as trade receivables plus contract assets less contract liab
Slide 22: Capital expenditure
Capital expenditure Capital expenditure (€m) 215 g Z = 5 8 156 155 3 ; = e = 30 e g e 5 A 2x 95 Ee 3S 3s 2019 H12020' 2020? 2021 2022 li Sales strategies ll Maintenance Capex ll Production Optimisation Plan li Small, fast payback projects 2020 Half Year Results | August 2020 8 RHI MAGNESITA * Capex
Slide 23: Cash generation remains robust
ZS RHI MAGNESITA Cash generation remains robust Operating cash flow (€m) Net debt change (€m) 70% cash conversion Adjusted Working Other Capex? Depreciation Operating Net debt Operating Cashtax Net Dividends Restructuring MORCO FXimpact Rightof Others Net debt EBITA capital!’ assets and unit FY 2019
Slide 24: Net debt position remains stable
8 RHI MAGNESITA Net debt position remains stable Net debt (€m as at 30 June 2020) 1.2x 554 443 2019 H1 2020 HB Net debt! ~=—@- Net debt to LTM EBITDA EBITDA Note: 1). Includes IFRS 16 leases 2020 Half Year Results | August 2020 « Leverage of 1.5x net debt to EBITDA, at top end of target range of 0.5
Slide 25: Business improvement initiatives on track and expanded
Business improvement initiatives on track and expanded Potential annual EBITA upside (€m) 8 RHI MAGNESITA 2020 H1 2020 target achieved Status 2022 target Commentary Turnaround of 15 aa oe 4 15 9 On track (Completed in 2020) « Programme complete and extracting final savings Programme on-track with th
Slide 26: Summary and outlook
RHI MAGNESITA Summary and outlook
Slide 27: Summary and outlook
8 RHI MAGNESITA Summary and outlook @ Overall, resilient performance in tough market conditions — Liquidity, production and supply chains maintained — Double digit margin performance — Stable net debt position @ Activity levels likely to remain subdued into Q3, with limited visibility beyond that e
Slide 28: RHI MAGNESITA
RHI MAGNESITA
Slide 29: Appendix
RHI MAGNESITA Appendix
Slide 30: Technical guidance for 2020
Technical guidance for 2020 * Total capital expenditure: €150m (unchanged) — Maintenance capex: €85m — Additional project capex: €65m — Production Optimisation Plan: €45m — Sales Strategies: €10m — Small fast payback projects: €10m ® Depreciation: €120m! (reduced by currency changes) ® Amortisation:
Slide 31: Impact of foreign currency movement
Impact of foreign currency movement EBITDA sensitivity in H1 2020 Ain EBITDA! vs € Unit (€m) USD +1 cent +2.37 CNY +0.01 yuan -0.09 BRL +0.10 reais +0.25 INR +1 rupee +0.29 H1 2020 exchange rates 8 RHI MAGNESITA H120 H120 H120 H119 Opening Closing Average Average 1€+ Rate rate rate Rate USD 112 1 11
Slide 32: Reconciliation of adjusted earnings
Reconciliation of adjusted earnings H1 2020 Reported Adjustment items HI Adjusted Amortisation Net finance costs (37) 1 (26) “Share of proft of joint ventures —_ cco Profit before tax 70 2 Income tax! (19) 6 (25) i res a re Non controling interest TD ret tot c0 a EPS €1.03 €1.77 Note: 1) Effective t
Slide 33: Net finance costs
RHI MAGNESITA Net finance costs €m H1 2020 Recurring Non-recurring H1 2019 Recurring Non-recurring Interest income 25 25 = 3.5 3.5 - Interest expense (9.3) (9.3) = (19.4) (19.4) - Foreign exchange (15.5) (8.1) (7.4) (9.5) (5.8) (3.6) Other net financial expenses (14.8) (11.3) (3.5) (19.9) (13.8) (6.
Slide 34: Strong debt maturity profile
8 RHI MAGNESITA Strong debt maturity profile Amortisation schedule (€m as at 30 June 2020) 1,133 Ly a - I = a } 197 | | 112_| as Liquidity H2 2020! 20212 20225 2023 2024 2025 2026 _—IFRS 16 Leases Mi Amortisation Mi Cash i) Undrawn RCF Notes: 1). €16 million not extended in period and payable in H2
Slide 35: Balanced and dynamic capital allocation
8 RHI MAGNESITA Balanced and dynamic capital allocation enabling long term growth & shareholder returns * Committed to resuming dividend at Leverage the earliest opportunity Shareholder. y.,ceting 3.0x dividend cover over Returns medium-term * Share buybacks when appropriate Net operating cash * Mai
Slide 36: Disclaimer
8 RHI MAGNESITA Disclaimer Financial information contained herein, as well as other operational information, were not audited by independent auditors and may include forward- looking statements and reflects the current views and perspectives of the management on the evolution of macro-economic envir