Rhi Magnesita Nv · LSE:RHIM
Rhi Magnesita Nv — Investor Presentation (March 2025)
55 slides from Rhi Magnesita Nv's investor presentation, March 2025
Slide 1: RHI Magnesita Investor Presentation March 2025
RHI Magnesita Investor Presentation March 2025 2024 Half Year Results | August 2024 1
Slide 2: Content
Content 1 Introduction to RHI Magnesita 2 FY 2024 financial results 3 Appendix 2024 Half Year Results | August 2024 2
Slide 3: Refractories are essential for our modern world
Refractories are essential for our modern world Concrete Copper Steel Glass Aluminium 1,500°C 1,350°C 1,760°C 1,650°C 1,250°C 1 tonne of STEEL 1 tonne of CEMENT 1 tonne of GLASS 1 tonne of ALUMINIUM 1 tonne of COPPER demands ~10-15 Kg demands ~1 Kg demands ~4 Kg demands ~6 Kg demands ~3 Kg of refrac
Slide 4: Refractory applications by customer industry
Refractory applications Customer industries1 Main application Lifetime and costs Refractory characteristics Part of customers’ operational Steel 20 minutes to 2 months expenditure Basic oxygen furnace, 69% of revenues Electric arc furnace, ladles, flow control c.3% of customers’ costs Systems and so
Slide 5: Leading global supplier of refractories
Leading global supplier of refractories Example - Electric Arc Furnace (“EAF”) refractories Key product ranges Roof centre piece Bricks Mixes 63% of product revenue 25% of product revenue Average selling price Average selling price c.€1,500 per tonne c.€900 per tonne Injector area Slag door area Flo
Slide 6: Financial highlights FY 2024
Financial highlights FY 2024 Significant cash generation driven by resilient profitability and working capital release WSA steel production Revenue Adjusted EBITA Adjusted EBITA margin Adjusted operating cash flow -1% €3.5bn €407m 11.7% €419m -80 bps 2% 0% 30 bps 0% M&A Adjusted EBITDA Dividend Work
Slide 7: End markets and customer industries
End markets and customer industries 2024 Half Year Results | August 2024 7
Slide 8: Raw material and refractory process overview
Raw material and refractory process overview 2024 Half Year Results | August 2024 8
Slide 9: Global refractory production network
Global refractory production network Regional finished goods production - local versus imports Europe finished goods exports % value by destination region, 2023 % imported % produced in region North America 38% Asia & Australasia 22% Africa 16% India 9% South America 8% NME 5% China 2% Europe &Türki
Slide 10: Raw material vertical integration
Raw material vertical integration Key raw material sites and shipment routes 2023 Extent of vertical integration Key % raw materials sites and shipment routes 2023 % % Magnesite-and dolomite-based (basic) Internal raw materials raw material volume 64 8 28 External raw materials Total volume of raw m
Slide 11: Brumado, Brazil
Brumado, Brazil 2024 Half Yearraw Magnesite Results | August 2024 materials 11
Slide 12: Hochfilzen, Austria
Hochfilzen, Austria 2024 Half Yearand Magnesite Results | August 2024 dolomite raw materials 12
Slide 13: Capital allocation framework
Capital allocation framework After maintenance capex and dividend, M&A, organic investments and buybacks compete for capital Leverage target 1.0 - 2.0x and up to c.2.5x for compelling M&A opportunities M&A pipeline presents opportunity to continue consolidation of the refractory industry Resilient m
Slide 14: M&A growth opportunity
M&A growth opportunity Strengthening a global leadership position in the refractory industry USA Europe India China Areas of focus for P-D Refractories Refrattari Trezzi Jinan New Emei future M&A Resco Group 1 Dalmia GSB ✓ East Asia Chongqing SORMAS MIRECO ✓ Middle East Hi-Tech Seven DBRL ✓ Alumina
Slide 15: Low carbon steel opportunity
Low carbon steel opportunity Transition to EAF, DRI and ESF is a strong positive growth driver for RHI Magnesita Tonnes of CO2 per tonne of steel 1. Electric smelting furnace (“ESF”) is required to be paired with a Direct Reduced Iron (“DRI”) furnace for 97% of global iron ore supply that does not m
Slide 16: Our performance in context
Our performance in context RHIM has navigated the downturn in steel production without margin decline, whilst executing significant M&A at the bottom of the refractory market EBITDA margin Global financial China China raw COVID-19 Energy crisis/ World Steel Production YoY change crisis downturn mate
Slide 17: Investment case
Investment case (i) EBITDA and free cash flow comparable to FTSE 100 peers; (ii) highest free cash flow yield in the sector; (iii) compelling M&A growth story; (iv) high operational gearing to market recovery EBITDA 20241 Free cash flow 20241 Free cash flow yield 1 RHI Magnesita €m €m %, 2024 2 FTSE
Slide 18: 2. FY 2024 financial results
2. FY 2024 financial results 2024 Half Year Results | August 2024 18
Slide 19: Health & Safety
Health & Safety A core value at RHI Magnesita Improvement in injury rates since 2018 Step change in safety culture fully underway TRIF LTIF ⁃ Health and safety improvements prioritised at all levels of management ⁃ Complete review of safety standards, culture, 1.07 leadership and key serious injury
Slide 20: Financial highlights FY 2024
Financial highlights FY 2024 Significant cash generation driven by resilient profitability and working capital release WSA steel production Revenue Adjusted EBITA Adjusted EBITA margin Adjusted operating cash flow -1% €3.5bn €407m 11.7% €419m -80 bps 2% 0% 30 bps 0% M&A Adjusted EBITDA Dividend Work
Slide 21: M&A contribution offsets lower pricing
M&A contribution offsets lower pricing M&A contribution delivered stable performance, despite 6% weaker pricing and 1% lower volumes Revenue growth driven by pricing and M&A € million 1% revenue decline from sales volumes vs 3.529 2023 in the base business, excluding 6% 3.487 -1% contribution from M
Slide 22: Continued decline in vertical integration contribution counterbalances efficiency and M&A gains
Continued decline in vertical integration contribution counterbalances efficiency and M&A gains RHI standalone RHI Magnesita Consistent margin Vertical integration margin declined to 0.8ppts due to resilience, minimum low raw material prices and fixed cost under- 13.9% 14.0% 11% since merger absorpt
Slide 23: Steel business overview
Steel business overview Gross margin improved vs 2023 due to efficient cost management Revenue €m1,2 Steel revenues decreased by 4% compared to 2023 as a 3% increase in sales volumes supported by M&A was offset by 6% 23.2% 21.6% 22.0% 22.3% lower pricing -4% Global steel demand decreased in the key
Slide 24: Steel segment performance by region
Steel segment performance by region M&A drives strong volume growth in Europe and China & East Asia North America Europe, CIS &Türkiye China & East Asia €648m €558m €264m Steel Segment Revenue 2024 12% 7% 5% 3% 15% 0% 24% North America -2% -2% -2% 11% India, West Asia & Africa -4% €2,373m Europe, CI
Slide 25: Industrial business overview
Industrial business overview Flat revenues, gross margin declined to 26.6% from 27.7% Revenues flat compared to 2023 Revenue €m1 ⁃ Strong performance in Europe +15% and India +13%, 27.7% driven by M&A 26.1% 26.6% 25.6% Shipped volumes increased by 11% YoY, supported by M&A, 0% whilst average pricing
Slide 26: Acquisition of Resco
Acquisition of Resco Transaction completed on 28 January 2025 is a major step forward for RHI Magnesita’s US business Strategic rationale Plant footprint ✓ Complementary product offering ✓ More than doubles USA industrial business ✓ Network and logistics synergies ✓ Alumina based refractories (‘non-
Slide 27: Local production strategy
Local production strategy Resco acquisition seeks to reduce imports by growing NAM local manufacturing Resco acquisition will increase local US production in North America to c.75% 8% Onshoring Onshoring of supply chain is a response Europe 17% to clear customer feedback &Türkiye 18% China Synergy b
Slide 28: Sustainability leadership
Sustainability leadership Recycling of reclaimed refractories continues to Recycling now 14.2% despite dilution from new M&A deliver significant CO2 savings ⁃ 15% target for 2025 maintained and 20% target set for 2030 Use of secondary raw material ⁃ New business unit established for external sales o
Slide 29: Raptor
Raptor Cutting edge automated sorting equipment for recycling, successfully installed in November 2024 Mitterdorf, Austria 2024 Half Year Results | August 2024 29
Slide 30: 4PRO
Next level of RHIM solutions business: 1 8 4PRO 2 9 3 10 8. Long Term Agreements 1. Refractory Material 9. Connectivity 2. Automation Robotics 4 11 10. Data Access 3. Connectivity Sensors 11. Joint Development 4. Digital Solutions 12. CO2 Footprint 5. On site services & Supply Chain Manag. 5 12 13.
Slide 31: Profit and loss summary
Profit and loss summary Adjusted EPS growth of 7% driven by favourable foreign exchange movements reducing finance charges €m 2024 20231 Change Revenue 3,487 3,572 -2% Reported revenue and Gross profit decreased by 2% and 1% due to weak market environment impacting pricing, and product mix Gross pro
Slide 32: 2024 revenue bridge
2024 revenue bridge Weaker organic pricing and sales mix, partially offset by M&A €m 3,572 43 3,529 46 221 224 3,487 2023 Revenue FX effect 2023 Revenue at Sales volumes Price / mix M&A 2024 Revenue constant currency 2024 Half Year Results | August 2024 32
Slide 33: 2024 EBITA bridge
2024 EBITA bridge EBITA driven by record low vertical integration margin and weaker prices/sales mix, offset by M&A and lower costs M&A in 2023 Vertical integrated EBITA Refractory EBITA 30 33 2 Lower volumes 409 40 38 407 Price less cost 26 -40 66 61 28 Base business 383 322 313 341 FY 2023 M&A FX
Slide 34: 2024 EBITA adjusted items
2024 EBITA adjusted items €m €125 million adjusted items mainly spending to Restructuring costs 11 EBITA Plant closures 5 Digital architecture 52 improve operating efficiency and future Other Operating M&A related costs 14 Impairment Brazil 29 profitability: Expenses Oberhausen provision (11) Restru
Slide 35: Cost detail
Cost detail Significant spike in purchased alumina raw material cost Cost of goods sold Raw materials Energy Absolute COGS flat YoY on a constant currency basis, - DBM prices softening since Q1 22 Gas prices have normalized; oil prices remain flat 3% on reported basis DBM 97% (China) Rebased to 100
Slide 36: M&A financials
M&A financials 2023 M&A contributed €77 million to Adjusted EBITDA versus guidance of c.€80 million Base business vs Group 2024 EBITDA from M&A guidance €80m €m 2022 acquisitions Base Business 543 5.32 2023 acquisitions 466 4.33 Group incl. 56 2023 M&A 35 77 21 Adjusted EBITDA Adjusted EPS M&A EBITD
Slide 37: Working capital
Working capital €115m working capital release driven by improved inventory management and lower input costs Working capital balances % of L3M annualised revenue Inventory % of L3M annualised revenue 33.6% 29.0% 24.9% 26.1% 23.3% 25.4% 24.4% 23.4% 977 1,049 1,001 962 2021 2022 2023 2024 1,278 1,232 1
Slide 38: Capital expenditure
Capital expenditure Capex broadly in line with depreciation. Excludes digital upgrade investment as required by IFRS 2024 capex of €145 million (close to 252 depreciation of €136 million): ⁃ €65 million maintenance capex ⁃ €68 million project capex 180 19 ⁃ €12 million M&A related capex 156 157 177
Slide 39: Network optimisation investments
Network optimisation investments Planned restructuring and capital expenditure to realise benefits of 2022-23 M&A and Resco Network optimisation investment 2025-27 Planned network optimisation expenses in Europe, South €m America and USA plant footprint adjustments, following 60 Resco acquisition an
Slide 40: Strong cash flow generation in 2024
Strong cash flow generation in 2024 Adjusted operating cash flow of €419 million driven by strong profitability and working capital release Adjusted operating cash flow and Cash Conversion Net debt bridge €m1 €m 1,304 419 102% 88% 111% 102% 103% 62 1,251 40% -84% 77 438 418 419 87 359 71 290 69 Post
Slide 41: Stable gearing supports M&A strategy
Stable gearing supports M&A strategy Pro forma leverage maintained within guided range for M&A, significant available liquidity Pro forma leverage of 2.3x4 (2023: 2.3x), within target gearing range Net debt and liquidity €m ⁃ Leverage expected to be controlled within 2.0-2.5x range in 2025 2.6x 2.3x
Slide 42: Outlook and guidance summary
Outlook and guidance summary Refractory demand remains weak No recovery in end market demand is visible P&L 2025 guidance 2024 actual Falling domestic demand in China results in exports, reducing 1% lower sales customer output in most world markets Revenue Weak demand, no recovery volumes in base vi
Slide 43: Safety, resilience and progress
Safety, resilience and progress Executing our strategy to grow through acquisition in the fragmented refractory industry 2024 results were a strong performance in a very difficult market environment ⁃ Weaker pricing and mix offset by M&A contribution ⁃ Adjusted EBITA increased to 11.7% with refracto
Slide 44: Appendix
Appendix 2024 Half Year Results | August 2024 44
Slide 45: Regional steel production trends
Regional steel production trends Continued downturn in developed markets as China exports surplus production NAM: 2024 weaker versus 2023, close to lows SAM: weak domestic output due to increased Europe & Türkiye: no recovery forecast in 2025 Monthly steel production, million tons imports Monthly st
Slide 46: Capital allocation framework
Capital allocation framework After maintenance capex and dividend, M&A, organic investments and buybacks compete for capital Leverage target 1.0– 2.0x and up to c.2.5x for compelling M&A opportunities M&A pipeline presents opportunity to continue consolidation of the refractory industry Leverage Res
Slide 47: 2024 P&L overview
2024 P&L overview 1. Adjusted EBITA excludes amortisation of intangible assets of € 39 million, which is partially accounted for in COGS and partly in SG&A. 2024 Half Year Results | August 2024 47
Slide 48: Free cash flow history
Free cash flow history Free cash flow €m 2023 free cash flow yield 21% ⁃ Based on average market 282 258 capitalisation during 2023 247 225 2024 free cash flow yield 14% 186 ⁃ Based on average market capitalisation during 2024 43 -347 2018 2019 2020 2021 2022 2023 2024 2024 Half Year Results | Augus
Slide 49: Cash flow reconciliation
Cash flow reconciliation €m 2024 2023 Adjusted EBITDA 543 543 Share based payments - gross non-cash 9 9 Working capital changes 105 53 Changes in other assets and liabilities (93) (7) Investments in Property, Plant & Equipment and Intangible assets (145) (180) Adjusted operating cash flow 419 418 In
Slide 50: Net financial expenses
Net financial expenses €m 2024 2023 Net financial expenses (39) (38) Interest income 22 20 Interest expenses (61) (58) FX effects 11 (30) Balance sheet translation 29 (41) Derivatives (18) 11 Other net financial expenses (14) (32) Present value adjustment on provisions (inc. Oberhausen onerous contr
Slide 51: Reconciliation of adjusted earnings
Reconciliation of adjusted earnings Items excluded Items excluded 2024 from adjusted 2024 Items excluded from adjusted EPS: 2023 from adjusted 2023 €m1 reported performance adjusted reported performance adjusted ⁃ €52 million digital architecture EBITA2 282 125 407 378 31 409 Amortisation (39) 39 0
Slide 52: Impact of foreign currency movement
Impact of foreign currency movement EBITA sensitivity in 2024 2024 exchange rates Appreciation vs EUR Depreciation vs EUR Increase / Increase / FY 2024 FY 2024 FY 2024 FY 2023 (decrease) (decrease) Opening Closing Average Average Unit in EBITA (€m) Unit in EBITA (€m) EUR: Rate Rate Rate Rate USD -1
Slide 53: Return on invested capital
Return on invested capital Group ROIC1 2024 2023 Average Invested Capital (€m) 3,043 2,854 NOPAT (€m) 298 305 ROIC (%) 9.8% 10.7% Vertical integration ROIC 2024 2023 Average Invested Capital (€m) 471 483 NOPAT (€m) 16 43 ROIC (%) 3.5% 8.9% Refractory ROIC 2024 2023 Average Invested Capital (€m) 2,57
Slide 54: Important notice
Important notice 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 environment, con
Slide 55: Investor Relations
Investor Relations Chris Bucknall Head of Investor Relations and Sustainability +43 699 1870 6490 | chris.bucknall@rhimagnesita.com Biko Hüster Investor Relations Manager +43 699 1870 6128 | biko.huester@rhimagnesita.com investor.relations@rhimagnesita.com RHI Magnesita Kranichberggasse 6 1120 Vienn