Elkem Asa · OSL:ELK
Elkem Asa — Elkem Asa Ord — Q4 2024 Earnings Presentation
47 slides from Elkem Asa's earnings presentation, Feb 12, 2025
Slide 1: Fourth quarter results 2024
Fourth quarter results 2024
Slide 2: Agenda
Agenda Business update 01 2 Elkem Markets & Outlook O02 Financial performance O03 Appendix O04
Slide 3: Business update
j Business update @ Elkem 3
Slide 4: Elkem is delivering steadily improving results
664 Elkem is delivering steadily improving results. A strategic review of the Silicones division is underway to streamline the company and accelerate growth in Silicon Products and Carbon Solutions Helge Aasen Chief Executive Officer @ Elkem
Slide 5: Highlights
Highlights Improved Silicones profitability and strategic review initiated = Elkem has initiated a strategic review of the Silicones division to streamline the company’s business portfolio = EBITDA in the fourth quarter was NOK 1,161 million, giving an EBITDA margin of 14% Total operating income = S
Slide 6: Elkem initiates strategic review of the Silicones division
Elkem initiates strategic review of the Silicones division The review is initiated with a target to streamline Elkem, as well as to enable allocation of capital to accelerate growth in the Silicon Products and Carbon Solutions divisions The decision follows a thorough review of the growth and return
Slide 7: Strong ESG performance
Strong ESG performance Green leadership = Elkem received two prestigious SEAL business sustainability awards for successful recycling of acid waste into valuable raw materials for specialty silicones, and foam control used in plastic recycling = Elkem’s shipping partner NCL takes delivery of green m
Slide 8: Improvement programme
Improvement programme Improvement programmes exceeding targets = Realised effects of the EBITDA improvement programme was BNOK 1.7 in 2024. This exceeded the target of BNOK 1.5 = On group level the effects were partly countered by continued market headwinds as the sales prices for commodity silicone
Slide 9: Energy cost position
Energy cost po New power contracts in Norway securing favourable cost position = In December 2024, Elkem and Hafslund entered into a long-term power agreement for the period 2028 to 2035 = The annual contract volume is approximately 400 GWh, with delivery in the NO3 price area = In the first quarter
Slide 10: General markets
General markets Elkem’s business model is strategically designed to mitigate potential trade barriers " Elkem’s strategy is to secure supply chain resilience through geographical diversification " Elkem has a regional business model and most of raw material sourcing, production, and sales take place
Slide 11: Markets
Slide 12: General markets
General markets China aiming to boost growth = Following the September 2024 stimulus package, China has implemented additional monetary, property, and fiscal measures to boost the economy = These measures are expected to positively impact domestic consumption in 2025, with robust growth in manufactu
Slide 13: General markets
General markets Cautious optimism amid economic pressures in the automotive industry = The auto industry continues to face uncertain terrain, impacted by potential tariff measures and specific market factors = The production of light vehicles in China is expected to continue to grow steadily to 30 m
Slide 14: Silicones market
Sil et Chinese overcapacity persists = The silicones markets remain challenging, due to weak market sentiment and Chinese overcapacity DMC reference price China (CNY/mt) = Demand has however, improved in China and the production of upstream siloxane increased by 12% in 2024 compared to 2023 70,000 =
Slide 15: Silicon and ferrosilicon markets
Silicon and ferrosilicon markets Stable prices in EU — China reaching new lows = Weak demand for silicon and ferrosilicon, prices in EU remain stable at a low level Prices for silicon and ferrosilicon in the US also remain stable, but at a significantly higher level than in EU In China, silicon pric
Slide 16: Carbon market
Carbon market Weak markets affecting demand of core products = Demand for carbon products varies across regions driven by steel, ferroalloys, and aluminium Crude steel production (million mt) = Global steel production in 4Q-2024 up 3% compared to last year " Global increase driven by higher producti
Slide 17: Outlook for the first quarter 2025
Outlook for the first quarter 2025 = Elkem continues to benefit from the effects of the 2024 improvement programme. The focus on operational improvements will continue as markets are characterised by high uncertainty going into 2025 = Silicones markets expected to remain stable and Elkem will benefi
Slide 18: Financial performance
Financial performance ih 8
Slide 19: Elkem group
Elkem group Improved EBITDA for all divisions compared to 40-2023 Total operating income (MNOK) Total operating income up 5% from 4Q-2023 9,044 Ti if EBITDA (MNOK) EBITDA clearly up compared to 4Q-2023 16% 15% 565 1% 12% bid 1235 f 9% 030) PE 7, o% Bi 72 Higher operating income driven by the Silicon
Slide 20: Overview financial ratios
Elkem Gi Overview financial ratios = Silicones division reclassified as discontinued operations and assets held for sale = Financial figures in this presentation refer to Elkem Group including Silicones. This table also shows comparable figures for Elkem continuing operations (ex. Silicones) = EBITD
Slide 21: Silicones
Total operating income Significant EBITDA improvement in weak markets EBITDA and margin " Total operating income of MNOK 4,129, up 22% from the fourth NOK million and % quarter last year = Higher sales volume, partly countered by lower commodity sales prices = EBITDA of MNOK 376, substantially up fr
Slide 22: Silicon Products
Silicon Products Challenging markets and low demand = Total operating income of MNOK 3,748, down 9% from the fourth quarter last year = Lower operating income mainly explained by lower sales volume = EBITDA of MNOK 624, up 56% from the fourth quarter last year = Lower raw material costs and improved
Slide 23: Carbon Solutions
Carbon Solutions Good result despite continued low demand = Total operating income MNOK 923, unchanged from the fourth quarter last year = Slightly higher sales volume was offset by lower sales prices = EBITDA of MNOK 281, up 14% from the fourth quarter last year = Mainly explained by positive produ
Slide 24: Robust equity — dividend proposal in line with policy
Robust equity — dividend proposal in line with policy Earnings per share (EPS) amounted to NOK -0.03 in the fourth Total equity amounted to BNOK 26.0 as at 31 December 2024, up quarter BNOK 1.6 from year-end 2023 = EPS YTD-2024 was NOK 0.77 = Equity to total assets (equity ratio) at 49% = The board
Slide 25: Well managed financing position
Well managed financing position Net interest-bearing debt (NIBD) BNOK 10.3 as at 31 December 2024 = Leverage ratio of 2.5x based on LTM EBITDA of BNOK 4.1 = Elkem downgraded to BBB- by Scope in December 2024, now placed under review for possible upgrade following strategic review of the Silicones di
Slide 26: Good cash flow generation and lower investments
Gi ie) Good cash flow generation and lower investments "Cash flow from operations“ was MNOK 318 in the fourth quarter 2024 and MNOK 1,484 YTD-2024 = Cash flow was negatively impacted by higher inventory levels, which will be reduced in 19-2025 = Investments ex. M&A of MNOK 1,164 in the fourth quarte
Slide 27: Fourth quarter 2024 key take-aways
Four quarter 2024 Key take-aways = Elkem has initiated a strategic review of the Silicones division to streamline Elkem and accelerate growth in Silicon Products and Carbon Solutions Silicones delivered the best result since the third quarter 2022, driven by operational improvements and higher sales
Slide 28: 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 29: Appendix
Appendix
Slide 30: Why invest in Elkem?
Why invest in Elkem? ras Creating value through profitable & sustainable growth & Global leader in advanced silicon- based materials @ Elkem i Leading cost positions and strong results over the cycle alld Geographically diverse and resilient business model 6 Ga Supplier of critical Strong commitment
Slide 31: Creating value through profitable & sustainable growth
gy Creating value through profitable & sustainable growth Dual-play growth > Driving growth & value creation in all three divisions > Securing supply chain resilience through geographical diversification Green leadership > Cutting emissions & resource-use to reach climate- neutral production > Enabl
Slide 32: We are Elkem
We are Elkem Advanced silicon-based materials shaping a better and more sustainable future Silicones Silicon products Carbon solutions
Slide 33: Sustainable business model delivering good results
Sustainable business model delivering good results Low-cost sustainable input factors Quartz Coal Biocarbon Power 6386" High temperature/chemical production processes aa) ey Silicones Silicon, ferrosilicon, foundry products and microsilica Carbon solutions Examples of high value applications and mar
Slide 34: Delivering good results over the business cycle
Delivering good results Operatna neone mares over the business cycle mm Hag 2020 2021 2022 2023 2024 2020 202! 2022 20232024 Cash flow from operations aii 2020 2021 2022 20232024 2020 2021 2022 2023 ©2024 Leverage ratio Equity ratio 0.4 on | 2020 2021 2022 2023-2024 2020 2021 2022 2023-2024 Figures
Slide 35: Elkem operates through three divisions
Elkem operates through three divisions: All with global scale, leadership positions and global footprint Silicones Silicon products Carbon solutions Fully integrated silicones manufacturer Leading producer of electrode paste and specialty with focus on specialities products 46% of operating income E
Slide 36: Elkem's portfolio is well-balanced
Elkem’s portfolio is well-balanced @Elkem ,, = . . s. . a¥ = = . . Revenue split Revenue split By geography By division Carbon Solutions 10% Silicones Asia 46% EMEA & pees Americas Silicon 60% Products 44% 36
Slide 37: Elkem will contribute to limit global warming through three key levers
Elkem will contribute to limit global warming through three key levers ES Spe Achieve fully climate-neutral production Supply key input factors required to throughout our value chain enable the green transition By 2031: * Increase development and supply of advanced Reducing scope 1 & 2 emissions by
Slide 38: Commitment to reduce CO2 emissions through the value chain
& governance Commitment to reduce CO, emissions through the value chain Reduce our emissions and achieve fully climate-neutral production = Target to reduce scope 1 and 2 emissions by 28%, and deliver a carbon footprint reduction (scope 1-3) by 39% by 2031 = Supply key input factors required to SG e
Slide 39: Solutions to global megatrends
Solutions to global megatrends Total production capacity Product properties > 100,000 mt in France > 360,000 mt in China. ~ Downstream specialty plants: 6 in EMEA/AMS. and 4 in APAC management, electrical & fire safety, Ageing population Rising middle class Digitalisation Prosthetics precision mould
Slide 40: Serving attractive end markets with advanced technologies
Serving attractive end markets with advanced technologies = —" > Medical adhesives, a > Leading position in ~ > Intermediates long-term implants, Release coatings for (silicones medical devices etc. food & label industries polymers) sold to chemical > Leader in Orthosis & > Solventless, emulsion, Pr
Slide 41: Silicon - attractive cost position and downstream integration
Silicon - attractive cost position and downstream integration Electricity @ Elkem Total production capacity 205.000* mt in Norway and China > 175.000" mt silicon grades > 20.000 mt Silgrain® > 10.000 mt Silgrain® specialties Properties > Raw material in silicones and polysilicon optimising selectivi
Slide 42: Ferrosilicon — high quality products to specialty steel
Ferrosilicon — high quality products to specialty steel Coal and biocarbon Electricity Total production capacity > 185.000 mt in Norway and Iceland > 40% High Purity grades > 35% Refined grades > 25% Standard grades > Flexibility to switch grades Properties > Deoxidising steel > Impurity management
Slide 43: Foundry Alloys — global leader into cast iron metal treatment
30% of division’s Foundry Alloys — global leader into cast iron metal treatment Ferrosilicon Alloying elements @ Elkem Total production capacity > 190.000 mt globally > 60% FSM > 20% Low potent inoculants > 20% High/Medium potent inoculants > Residual capacity utilised for ferrosilicon Properties >
Slide 44: Microsilica — tailor made products to wide range of specialty applications
Microsilica — tailor made products to wide range of specialty applications Construction (30%) Hmeuw @marg lNIPPON STEEL C unteon etex Nonserons Total production capacity oo > 300.000 mt microsilica globally (40% sourced externally) Refractories (30%) > 35,000 mt other specialty materials 7 » » VESUV
Slide 45: 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 350 — USD - exposure approx. MUSD 100 — CNY - exposure approx. MCNY 500 = Current cash flow hedging programme - 90% hedging of net cash flows o
Slide 46: Other financial sensitivities
Other financial sensitivities 7 , Power Sales prices = Electric power is a key input factor in Elkem’s production. The normal consumption is around 6.5 TWh of which approx. 3.6 TWh is in Norway. Near term exposure to spot power prices is limited = Changes in sales prices could significantly affect o
Slide 47: Elkem
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