Rhi Magnesita Nv · LSE:RHIM
Rhi Magnesita Nv — FY2022 Earnings Presentation
46 slides from Rhi Magnesita Nv's earnings presentation, Feb 27, 2023
Slide 1: Full Year 2022 results
RHI Magnesita , | Full Year : 2022 results 27 February 2023
Slide 2: 2022 Full Year Results agenda
> Co} © S Q. ® oo66086 2022Full Year Resul FY 2022 update M&A activities Financial review Sustainability Strategic outlook and Summary Q&A Appendix Its | February 2023 3 RHI MAGNESITA
Slide 3: Stefan Borgas, CEO
» RHI MAGNESITA Stefan Borgas CEO
Slide 4: Strong revenue growth
Strong revenue growth 3 RHI MAGNESITA Market share gains and price increases deliver strong revenue and EBITA growth Revenues supported by significant price increases € million, kt 2,325 2,357 2,347 —> Volume 2,992 R049 S517 Mi Revenue SS 2,551 2019 2020 2021 2022 Higher cost offset by price increas
Slide 5: Health & Safety
3 Health & Safety fv MAGNESIA Acore value at RHI Magnesita ¢ LTIF and TRIF stable or decreasing LTIF and TRIF stabl d . + LTIF 0.20 (2021: 0.19) an stable or decreasing in FY 2022 - TRIF 0.54 (2021: 0.60) ® Lost time injury factors: 2.0 + Staff returning to workplace following the pandemic = Plants
Slide 6: Financial highlights
Financial highlights Revenue! €3.3bn B® 30% Capex €157m 38% 1. De 2. We 3. Including IFRS16 Leases of €64m \oted on a reported basis 2022Full Year Results | February 2023 not joking capital includes working capital financi Adjusted EBITA' €384m PB 37% Working Capital intensity? 25.4% PB 21ppt ing of
Slide 7: Steel division overview
Steel division overview 3 RHI MAGNESITA Shipped refractory volumes for steel (1)%, outperforming world steel association production volumes ex-China (7)% Revenue (€m)' 23.4% 21.6% 22.0% 2.371 1,823 1,570 IM revenue @ Gross margin (%)! 1. Denoted on a reported basis 2020 2021 2022 2022Full Year Resul
Slide 8: Steel division performance by region in 2022
Steel division performance by region in 2022 » RHI MAGNESITA Improved delivery reliability drives market share growth in each region RHIM North America €694m 2022 versus 2021% Il Steel production (WSA) HB RHIM Volumes Hl PHIM Revenue (constant currency) 2022Full Year Results | Feb Europe/Tirkiye Chi
Slide 9: Industrial division overview
Industrial division overview » RHI MAGNESITA Revenue +30% due to pricing as higher shipments in NFM offset softer cement volumes 1 Revenue (€m) 26.4% 261% 25.8% oe —e— —e 946 689 729 HB Cement/Lime Hl industrial projects -@ Gross margin (%)! 2020 2021 2022 1. Denoted on a reported basis 2022Full Yea
Slide 10: Our response to energy market volatility
Our response to energy market volatility ¢ European plant network of 10 refractory production plants and 4 raw material plants was reliant on natural gas @ €7 million capex invested during the year to access alternative fuels including LPG ® Direct purchase of 75GWh of natural gas for physical stora
Slide 11: M&A
M&A Stefan Borgas CEO
Slide 12: M&A footprint: Europe, China, Türkiye, India
Europe China Recycling Non-basic Flow control Türkiye Industrial India Industrial Flow control
Slide 13: Türkiye remains a core targeted geography
Türkiye remains a core targeted geography for growing our market share Creation of MIRECO brand as a new SÖRMAŞ1 refractories key secondary raw material provider for the industry Strategic focus Strategic focus
Slide 14: India offers significant growth potential
India offers significant growth potential… Indian refractory business Refractory business of Dalmia Bharat refractories of Hi-Tech Chemicals Strategic focus Strategic focus
Slide 15: Jinan New Emei and Chongqing progress update
Jinan New Emei Chongqing Industries Co. progress update Strategic focus Strategic focus
Slide 16: Capital allocation
3 Capital allocation am MAGNESIA New gearing target @ Previous target ratio 0.5 - 1.5x and over 2.0x for M&A @ Board considers that it is in shareholders’ interests to increase this flexibility: - Strong M&A pipeline presents opportunity to accelerate consolidation of the refractory industry = Resil
Slide 17: Financial review, Ian Botha CFO
lan Botha Financial review CFO 3 RHI MAGNESITA
Slide 18: Adjusted EPS and dividend per share
⁃ ⁃ ⁃ Adjusted EPS (€) Dividend per share (€)
Slide 19: 2022 revenue bridge
2022 revenue bridge €m 2,551 — 77 2,729 \ 600 68 3 RHI MAGNESITA 3,317 —_| 2021 Revenue 2022Full Year Results | February 2023 FX effect 2021 Revenue at constant currency Sales volumes excluding strategic initiatives sales Price Increase Programme Strategic Initiatives - sales 2022 Revenue 19
Slide 20: 2022 EBITA bridge
2022 EBITA bridge EBITA margin of 11.6% achieved through material price increases €m 280 38 Ye 318 16 600 » RHI MAGNESITA 542 Purchased RM cost (202) Energy (85) SG&A and R&D (69) Fixed cost absorption (63) Freight (43) Plant related personnel (33) Supplies (27) Other (20) 24 384 Let Sales initiativ
Slide 21: Backward integration margin under pressure from higher cost in Europe
Backward integration margin under pressure from higher cost in Europe RHI standalone RHI Magnesita 3 RHI MAGNESITA 13.9% 14.0% Refractory EBITA (€m) 199 134 = 167-302 11.5% 11.6% Backward integrated 11.0% EBITA (€m) 81 54 29 8i 9.7% Refractory EBITA margin 7.8% 84% 97% 91% Backward integrated 32% 34
Slide 22: RHIM COGS increased by 22% YoY
Freight indices have normalised materially back Energy prices peaked in Q3 2022, and have since decreased RHIM COGS have increased by 22% YoY (on a to 2020 levels constant currency basis), mainly from increase in energy, raw materials and labour costs Raw material prices CPI (YoY %) by key geographi
Slide 23: Inventory volume reduction offset by higher cost & FX
Inventory volume reduction offset by higher cost & FX 3 RHI MAGNESITA Strategic decision to maintain higher levels of inventory intensity for improved customer service levels Working capital balances 2019 2020 2021 2022 II Working capital before deducting working capital finance I Working copital fi
Slide 24: Gearing and liquidity
3 Gearing and liquidity su nacncra Net debt : EBITDA reduced to 2.3x, below year end target of 2.4x due to higher EBITDA Net debt and liquidity (€m) @ Leverage of 2.3x net debt : EBITDA is below latest guidance of 2.4x 26x 3s and in line with new target range of 1.0-2.0x or 2.5x for M&A 3x 1 ® Signi
Slide 25: 2018-2023F financial trends
⁃ ⁃ ⁃ ⁃ ⁃ ⁃ ⁃ 1 2 3 2018 2019 2020 2021 2022 2023F
Slide 26: 2023 guidance
» 2023 guidance mu Agnes P&L guidance 2023F 2022 actual Revenues. (i) Volumes Up to (5)% lower Broadly flat Revenues (ii) Pricing Softening €600m price increases Depreciation €130m! €116m Incremental EBITA from strategic initiatives? c.€25m €24m EBITDA from recent M&A €25 — 30m - EBITA margin c.10%
Slide 27: Sustainability, Stefan Borgas CEO
» RHI MAGNESITA Stefan Borgas CEO
Slide 28: Sustainability leadership
Sustainability leadership Delivering against our sustainability targets Use of secondary raw material % of total raw material used 10.5 6.8 5.0 4.2 : LU i L 2018 2019 2022Full Year Results | February 2023 2020 2021 2022 3 RHI MAGNESITA * MIRECO helped us to reach our 2025 recycling target (10%) thre
Slide 29: Decarbonisation pathway
Decarbonisation pathway Theoretical decarbonisation plan 6 External support & partnerships crucial to achieving long term carbon reduction 2018 2030 2040 2050 2060 Sustainable Miccsu I Green energy Supply Chain Hl CO2 avoidance RHIM has successfully reduced CO, emissions intensity by 8.2% 19 2,0 ie
Slide 30: Stefan Borgas, CEO
Stefan Borgas CEO
Slide 31: Strategic initiatives
3 Strategic initiatives ww nacncra Substantial completion of the project outside of Brazil ® Good progress in Production Optimisation Programme outside Brazil - Final stage of Radenthein, Austria, Manufacturing Enterprise System Cumulative EBITA improvement about to complete in Q1 2023 : € million’
Slide 32: Sales strategies update
Sales strategies update @ % of Group revenue Hl Flow Contol revenue Flow Control revenue 3 RHI MAGNESITA Solutions contracts € million and % of Group revenue % of Group revenue 16.9% Ieee 15.8%! Hl Product plus service ~ Hl Product only I Solution 29.2% 32,1% 2020 2021 2022 2020 2021 2022 1 Slower p
Slide 33: Trading outlook and 2023 guidance
3 RHI MAGNESITA Trading outlook and 2023 guidance ® Volatility and uncertainty are expected to persist P&L guidance 2025F 2022 actual across global markets in 2023 Revenues. (i) Volumes Up to (5)% lower Broadly flat Revenues (ii) Pricing Softening €600m price increases = Growth in India and demand s
Slide 34: Resilient platform to expand industry leadership
Resilient platform to expand industry leadership Leading consolidation in the refractory industry NZS ~ RHI MAGNESITA, ~ 2022Full Year Results | Feb » RHI MAGNESITA Since the RHI Magnesita merger in 2017 we have: ® Substantially delivered the Production Optimisation Plan reducing high-cost capacity,
Slide 35: Q&A
» RHI MAGNESITA
Slide 36: RHI MAGNESITA
» y RHI MAGNESITA ‘ rr x il L.Is.M.-StE. ay x8 bern ; (sa0806 (ie vv :
Slide 37: Hochfilzen
Picture to be replaced Hochfilzen April 2022
Slide 38: Brumado
Picture to be replaced Brumado August 2022
Slide 39: Improved cash flow generation in 2022
3 RHI MAGNESITA | Improved cash flow generation in 2022 Adjusted operating cash flow and change in net debt (€m) 500 155 | Adjusted Sherebesed Working Changes Capex Adjusted Net debt Adjusted Income, OE and Netfinance Other! MBA Dividends? Proceeds Debt from Newleaso FX Net debt EBITDA Payments capi
Slide 40: Cash flow reconciliation 2022
3 Cash flow reconciliation 2022 RH MAGNESITA €m Adjusted EBITDA 500 Share based payments - gross non cash 8 Working capital changes (195) Changes in other assets and liabilities (2) Investments in PPE, IA (157) Adjusted operating cash flow 155 Income taxes paid (64) Cash effects of other income/expe
Slide 41: Net financial expenses
Net financial expenses 3 RHI MAGNESITA 2022Full Year Results | Feb (€m) 2022 2021 Net financial expenses (19) (7) Interest income 8 14 Interest expenses (27) (21) FX effects (23) 3 Balance sheet translation (10) (2) Derivatives (13) 5 Other net financial expenses (31) (21) Present value adjustment o
Slide 42: Reported vs adjusted items excluded
Items excluded Items excluded 2022 from adjusted 2022 2021 from adjusted 2021 (€m) reported performance adjusted reported performance adjusted • • • •
Slide 43: Impact of foreign currency movement
Impact of foreign currency movement 3 RHI MAGNESITA EBITA sensitivity in 2022 2022 exchange rates Appreciation vs EUR Depreciation vs EUR Increase / Increase / FY 2022 FY2022 FY2022 FY 2021 (decrease) (decrease) Opening Closing Average Average Unit in EBITA (€m) Unit in EBITA (€m) EUR: Rate Rate Rat
Slide 44: Return on invested capital
Return on invested capital 3 RHI MAGNESITA Group ROIC 2022 2021 Invested Capital (€m) 2,587 2.291 NOPAT (€m) 301 219 ROIC (%) 1.6% 9.6% Backward integration ROIC 2022 2021 Invested Capital (€m) 466 377 NOPAT (€m) 57 61 ROIC (%) 12.3% 16.2% Refractory ROIC 2022 2021 Invested Capital (€m) 2121 1.919 N
Slide 45: CO2 emissions, energy efficiency, NOx and SOx
CO2 emissions Energy efficiency NOx and SOx Recycling Diversity
Slide 46: Disclaimer
3 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