Elkem Asa · OSL:ELK
Elkem Asa — Q3 2020 Earnings Presentation
26 slides from Elkem Asa's earnings presentation, Oct 27, 2020
Slide 1: Third quarter results 2020
Third quarter results 2020 «Elkem
Slide 2: Agenda
Agenda Business update By CEO Michael Koenig Financial performance By CFO Morten Viga Outlook By CEO Michael Koenig
Slide 3: Demand recovery in China, market conditions still weak
Demand recovery in China, market conditions still weak Elkem maintained good operating performance in the third quarter, but the results were hampered by weak markets In China, the construction and automotive markets show strong recovery. Silicones prices in China were up during the third quarte
Slide 4: Environment, Social and Governance: new ESG organisation implemented
Environment, Social and Governance New ESG organisation implemented to drive improvements Safety Environment Ambition zero injuries Biocarbon strategy to reduce fossil CO2 emissions 40% by 2030 Silicones contribute to greenhouse gas reductions that are approx. 9 times greater than emissions from sil
Slide 5: European Green Deal EU policy update
European Green Deal EU policy update The European Commission recently decided on a 55% CO2 reduction target by 2030, subject to approval by EU member states If implemented, the new target would require changes in the EU Emission Trading System (ETS) and the State Aid Guidelines (SAG) ETS is th
Slide 6: Battery materials project, an attractive ESG growth opportunity
Battery materials project, an attractive ESG growth opportunity Demand for rechargeable lithium-ion batteries expected to increase more than ten times from today’s level by 2030, mainly driven by EVs Elkem aims to take a competitive position in the market for anode materials based on sustainable
Slide 7: Digitalisation to ensure competitiveness
Digitalisation to ensure competitiveness Digitalisation is important to drive improvements and value creation Elkem has established a Digital Office as a new special focus area directly reporting to the CEO The goal is to make Elkem a data-driven company by implementing digital initiatives D
Slide 8: Strategic acquisitions enhancing growth and specialisation
Strategic acquisitions enhancing growth and specialisation Polysil and Basel Chemie strengthening Elkem’s position in silicones specialities Polysil complements the product and market positions providing a solid platform for further specialisation and growth in China and globally POLYSILTM PURES
Slide 9: Markets show signs of recovery after Covid-19
Automotive – units sold (million) Markets show signs of recovery after Covid-19 Global automotive sales recovering China already back to pre-Covid levels EU Industrial Production YOY EU industrial production also show a recovery However, automotive still down approx. 20% YOY China with new
Slide 10: Silicones market update, prices in China up from second quarter
Silicones market update, prices in China up from second quarter Silicones prices in China have improved compared to the second quarter Price increases mainly driven by increased domestic demand supported by the government’s CNY 50 trillion infrastructure policy Demand development in China expe
Slide 11: Silicon and ferrosilicon market update, signs of recovery
Silicon and ferrosilicon market update, signs of recovery CRU silicon 99 price EU (EUR/mt) Silicon Market prices have levelled out and increased slightly Demand picking up driven by recovery in automotive Approx. 35% of market capacity still idled Ferrosilicon Market prices have recovere
Slide 12: Carbon market update, recovery in steel output driving demand
Carbon market update, recovery in steel output driving demand Steel markets are key demand drivers for carbon products General market conditions impacted by low steel production Stainless steel output Chinese steel markets have recovered Output for stainless steel in Q3-2020 estimated to be
Slide 13: Elkem group signs of recovery but markets still weak outside of China
Elkem group signs of recovery but markets still weak outside of China Total operating income EBITDA ‒ Total operating income ‒ Down 19% from up 6% from 3Q-2019 MNOK 640 in 3Q-2019 ‒ Increase driven by ‒ But Carbon Solutions higher silicones with excellent volumes in China performance 13 Third quarte
Slide 14: Elkem group financial items impacted by currency losses
Elkem group Consolidated key figures financial items impacted (NOK million, except where specified) 3Q 2020 3Q 2019 YTD 2020 YTD 2019 FY 2019 by currency losses Total operating income EBITDA 5,886 512 5,540 640 17,563 1,746 17,109 2,139 22,668 2,656 EBIT 99 282 508 1,097 1,189 Other items -18 35 4 2
Slide 15: Silicones market recovery in China
Total operating income Silicones NOK million market recovery in China Total operating income of MNOK 3,170, up 10% from third quarter last year EBITDA and margin Increased operating income explained by higher sales volumes and NOK million and % integration of Polysil EBITDA of MNOK 363, down 1
Slide 16: Silicon Products results impacted by low prices
Total operating income Silicon Products NOK million results impacted by low prices Total operating income of MNOK 2,674 in line with third quarter last year EBITDA and margin Higher volumes partly offset by low sales prices NOK million and % EBITDA of MNOK 124, down 25% compared to third quart
Slide 17: Carbon Solutions stable and good performance
Total operating income Carbon Solutions NOK million stable and good performance Total operating income MNOK 452, up 5% compared to third quarter last year EBITDA and margin Higher sales volume and favourable currency effects NOK million and % EBITDA of MNOK 111, up 56% from third quarter last
Slide 18: Elkem group low EPS, but robust equity
Elkem group Earnings per share (EPS) low EPS, but robust equity NOK per share Earnings per share (EPS) EPS amounted to NOK -0.18 in the third quarter EPS negatively impacted by low operating profit and foreign exchange losses in the third quarter Equity ratio Total equity amounted to BNOK 12
Slide 19: Elkem group debt level increased due to investments
Elkem group Net interest-bearing debt (NIBD) debt level increased NOK billion due to investments Net interest bearing debt (NIBD) of BNOK 8.6 as at 30 September 2020 Leverage ratio of 3.8 based on LTM EBITDA of BNOK 2.3 Increase in leverage ratio explained by combination of lower EBITDA and hi
Slide 20: Elkem group - cash flow impacted by reinvestments and working capital
Elkem group - cash flow Cash flow from operations impacted by reinvestments NOK million and working capital Cash flow from operations(1) was MNOK 182 in the third quarter, down from the corresponding quarter last year Lower EBITDA combined with higher reinvestments and increased working capital
Slide 21: Outlook for the fourth quarter
Outlook for the fourth quarter There are signs of recovery, but the market outlook is still characterised by uncertainty Elkem is actively working to counter weak market conditions by accelerating cost reductions, optimising investments and by leveraging on strong market positions Elkem’s stro
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
Appendix
Slide 24: 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 350 USD - net cash flow approx. MUSD 100 Current cash flow hedging programme 90% hedging of net cas
Slide 25: 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 6.0 TWh in 2019. Near term exposure to spot power prices is 1% margin
Slide 26: «Elkem
«Elkem