Rhi Magnesita Nv · LSE:RHIM
Rhi Magnesita Nv — H1 2021 Earnings Presentation
44 slides from Rhi Magnesita Nv's earnings presentation, Jul 28, 2021
Slide 1: Half Year 2021 results
8 RHI MAGNESITA Half Year 2021 results 28 July 2021
Slide 2: RHI Magnesita
2021 Half Year Results | July 2021 3 RHI MAGNESITA
Slide 3: Stefan Borgas, CEO
8 RHI MAGNESITA Stefan Borgas, CEO
Slide 4: Pandemic well managed globally
3 Pandemic well managed globally ni MAGNESITA Occupational injury rates remain low Sustained improvement in « Health and safety is our most important value Lost Time Injury Frequency Rate . (LTIF) ¢ LTIF and TRIF remain low — LTIF 0.2 (H1 2020: 0.1) 2.5 5 — TRIF 0.6 (H1 2020: 0.5) * Covid-19 effects
Slide 5: Revenue momentum offset by supply chain cost headwinds
3 Revenue momentum offset by supply chain cost RH MAGNESITA headwinds Revenue (€m) iy i 1 688 1,200 H12020 H2 2020 H12021 Adjusted EBITA (€m) and margin (% ) 1.4% 17% 10.7% - _— = 133 127 128 H12020 H2 2020 2021 Half Year Results | July 2021 H12021 « Demand recovery continues with order book visibil
Slide 6: Financial highlights
Financial highlights Revenue! Adjusted EBITA' Adjusted EBITA margin €1.2bn €128m 10.7% BP 25% ¥ 4.0% J 7Oybps Operating Cash flow? Capex Working Capital intensity® €(55)m €91m 18.5% R57% J 4.9ppt 1. Denoted on a reported basis 2. Operating cash flow comprises Adjusted EBITA, plus changes in working
Slide 7: Strong outlook for end markets
3 Strong outlook for end markets Re MAGNESITA % of 2020 revenue by BU % share of RHIM revenue by end market Construction YoY (%)! 2020 2021 2022 Vehicle production YoY (%)! 2020 2021 2022 2020 2021 2022 1. Source: company estimates 2021 Half Year Results | July 2021
Slide 8: Freight rates and supply chain disruption
3 Freight rates and supply chain disruption RI MAGNESITA Freight rates have surged since H1 2020! Indexed 0100 900 800 700 600 500 400 300 200 100 fe) July-16 — July-17 July-18 July-19— July-20— July-21 Shanghai shipping exchange == Balti Containerized freight index Ete ylcits 2021 Half Year Results
Slide 9: Steel division overview
Steel division overview Revenue! (€m) 24.6% | +5% 1 814 756 855 H1 2020 H2 2020 H1 2021 -@ Gross margin (%) 2021 Half Year Results | July 2021 3 RHI MAGNESITA @ Steel division revenue increased by 5.1% to €855 million driven by volume demand — +12.8% on aconstant currency basis # Global steel produc
Slide 10: Industrial division overview
Industrial division overview Revenue! (€m) 27.3% 9 2% asm I -3% 7 357 332 346 160 13 163 197 219 183 Hl Cement/Lime Hl Industrial projects H12020 H2 2020 H1 2021 -@ Gross margin (%) 2021 Half Year Results | July 2021 3 RHI MAGNESITA « Industrial division revenue decreased by 3.2% to €346 million « S
Slide 11: Sustainability
3 Sustainability ai MAGNESITA *# Commenced €50 million R&D investment to produce technology solution for geogenic CO, capture and utilization — MoU signed with Calix Limited to develop flash calciner at pilot plants — Alternative technologies being developed to pilot plant stage Use of secondary raw
Slide 12: Financial review
8 RHI MAGNESITA Financial review lan Botha, CFO
Slide 13: Profit and loss summary
Profit and loss summary Top line growth offset by margin pressures in first half €m H1 2021 H1 2020! Change Revenue 1,200 1171 2.5% Gross profit 272 279 (2.2% Gross margin (%) 22.6% 23.8% (120)bps Adjusted EBITA 128 133 (4.0)% Adjusted EBITA margin (%) 10.7% 11.4% (70)bps Finance charges? (4) (26) (
Slide 14: EBITA bridge
3 EBITA bridge RHI MAGNESITA Increased volumes and strategic savings offset by price/mix and supply chain cost inflation €m 133 *s 126 128 1H 2020 FX 1H2020 at = Sales Volume Price / mix Higher Supply chain Strategic Strategic Reversal of Costs of Lower 1H 2021 constant purchased raw cost inflation
Slide 15: Raw material price movements
% movement from June 2020 % movement from December 2020 20% 50% 20% 53% 37% 70% 16% 56% Jan/16 Jan/17 Jan/18 Jan/19 Jan/20 Jan/21
Slide 16: Refractory margins temporarily depressed by supply chain cost
3 Refractory margins temporarily depressed by supply ™™= chain cost Price increases contracted with customers to improve refractory margin in H2 : Hi -H20 HT RHI standalone : RHI Magnesita 2020 2020 2021 Refractory EBITA (€m) 106 99 91 Vertical integrated EBITA (Em) a7 28 Increasing market price of
Slide 17: Desired inventory build-up to satisfy customer demand in H2
Desired inventory build-up to satisfy customer demand in H2 Working capital balances H1 2020 FY 2020 H1 2021 Hl Working capital before deducting working capital finance Hl Working capital finance — factoring and forfeiting Working capital intensity slightly above target range of 15% - 18% (after Wor
Slide 18: Net debt temporarily higher due to H2 weighting of cash flow
Net debt temporarily higher due to H2 weighting of cash flow & desired inventory growth Change in net debt (€m) 3 RHI MAGNESITA -179 Net debt Adjusted Workingcapital Otherassets Temporary Maintenance _—Net finance Cash tax Restructuring Restructuring Project Capex Shareholder, Net debt FY 2020 EBITD
Slide 19: Short term increase in leverage expected to reduce in H2
3 Short term increase in leverage expected to RI MAGNESITA reduce in H2 Net debt @ Net debt includes €51m from IFRS 16 leases {€m) « Leverage of 2.2x net debt : EBITDA, temporarily above target 2,2x range of 0.5-1.5x 1.5x 1.5x — Working capital build up ahead of customer demand — Temporarily higher
Slide 20: Capital allocation
3 Capital allocation RHI MAGNESITA « RHI Magnesita allocates capital to support its long-term strategy, seeking to deliver attractive shareholder returns over the medium term @ 2.2x leverage currently above targeted range but to reduce in H2 @ Organic investments: — €70 million project capex in H1,
Slide 21: Strategic initiatives
8 RHI MAGNESITA Strategic initiatives Stefan Borgas, CEO
Slide 22: Continued progress on strategic initiatives
3 Continued progress on strategic initiatives Rit MAGNESITA Targeting €140 — 160m of incremental EBITA in 2022 . . 1 Cumulative EBITA improvement (€m) * Cost saving initiatives: Hl Sales str oduction Optimisation Plan les strategies ; ost initiatives — SGA savings Hl Cost initiativ. VI « Sales strat
Slide 23: Production Optimisation Plan update
3 Production Optimisation Plan update RI MAGNESITA Rationalise, modernise and reduce production costs, moving capacity closer to our customers Site Completion Project IRR Payback Goal date period Hochfilzen H122 20% 6 years Consolidate European dolomite production into Austria single low-cost site,
Slide 24: Hochfilzen
Hochfilzen European dolomite hub rotary kiln installation July 2021
Slide 25: Radenthein
Radenthein Automated press commissioning July 2021
Slide 26: Brumado
Brumado »| Rotary kiln annex ) foundations July 2021
Slide 27: Contagem
Slide 28: Sales strategies
Sales strategies New markets revenue growth (€m) China India 84 69 81 130 96 ize) H119 H120 H121 H119 H120 H121 Group solutions revenue (%) 2.0%) f 29.3% fl 2019 2020 H1 2021 Hl Product plus service Hl Product only HI Solution 2021 Half Year Results | July 2021 3 RHI MAGNESITA # Sales initiatives ar
Slide 29: Technology leadership
3 Tech nology leadership RHI MAGNESITA Digital products supporting growth in our Solutions business Customer priority RHIM solution Availability RFID logistics solutions, consignment stock management Predictability APO, ARO, Stereoscopy Ordering Self-service platform, just-in-time supply, real time
Slide 30: : § G wu Fr < = =
: § G wu Fr < = = 4
Slide 31: Summary and outlook
3 Summary and outlook RHI MAGNESITA On track for full year guidance, with second half EBITA weighting as expected * RHI Magnesita is delivering operationally and financially despite significant supply chain challenges in H1 2021 @ The near term outlook for H2 2021 is positive: — Sales momentum incre
Slide 32: Q&A
8 RHI MAGNESITA Q&A
Slide 33: Appendix
8 RHI MAGNESITA Appendix
Slide 34: 2021 Guidance
3 2021 Guidance RHI MAGNESITA « Total capital expenditure: €260m — Maintenance capex: €8O0m — Project capex: €180m @ Depreciation: €115m'? (reduced by currency changes and smaller production network) # Amortisation: €18m' (reduced by currency changes) @ Net interest expense: €20m (excluding pensions
Slide 35: Strategic initiatives
Strategic initiatives Presented in €m Cost savings initiatives EBITA improvement 2019 2020 H12021 2021 2022 Cumulative amount 3 RHI MAGNESITA Commentary All cost-saving initiatives largely on track and on budget, and on track to deliver €100m of EBITA savings per annum = Production Optimisation Plan
Slide 36: H1 2021 revenue bridge
3 H1 2021 revenue bridge RHI MAGNESITA €m -72 7 -45 H12020 Revenue Constant currency H12020 revenue Higher raw Volume Price and mix COVID-19 impact Sales strategies H1 2021 revenue adjustment onaconstant —_ material prices currency basis 2021 Half Year Results | July 2021 36
Slide 37: Impact of foreign currency movement
Impact of foreign currency movement EBITA sensitivity in H1 2021 H1 2021 exchange rates 3 RHI MAGNESITA Appreciation vs EUR Depreciation vs EUR HY 21 HY 21 HY 21 HY 20 Increase / Increase / (decrease) (decrease) Opening Closing Average Average Unit in EBITA (€m) Unit in EBITA (€m) EUR: Rate Rate Rat
Slide 38: Reconciliation of adjusted earnings
3 Reconciliation of adjusted earnings RHI MAGNESITA HY 2021 Adjustment HY 2021 €m Reported items Adjusted EBITA 136 8.1 128 Amortisation -10 -10 Net finance costs oT 3 -4 Share of profit of joint ventures 5 - 5 Profit before tax 4 130 Income tax! (3) -29 Profit after tax 2 101 Efi Profit attributabl
Slide 39: Cash flow reconciliation
Cash flow reconciliation €m Adjusted EBITA 128 Working capital “75 Changes in other assets and liabilities 68 Depreciation 51 Operating cash flow Cash tax Net interest expense Restructuring and transaction costs _Dividends Share buyback Right of use assets acquisition a Free cash flow -232 Legacy de
Slide 40: Return on invested capital
Return on invested capital Group ROIC H1 2021 H1 2020 Invested Capital (€m) 1,975 1,963 NOPAT (€m) 99 108 ROIC (%) 10.0 10.4 Vertical integration ROIC H1 2021 H1 2020 Invested Capital (€m) 430 429 NOPAT (€m) 30 18 ROIC (%) 14.2% 8.6% Refractory ROIC H1 2021 H1 2020 Invested Capital (€m) 1,545 1,532
Slide 41: Debt maturity profile
Debt maturity profile Amortisation schedule (€m as at 30 June 2021) 932 848 332 600 391 226 67 | 1 248 53 51 7 |_| 1 ee Liquidity 2021 20222 2023 2024 2025 2026 2027+ — IFRS16 1. €33 million becomes payable in 2021 2. €192 million becomes payable in 2022 2021 Half Year Results | July 2021 3 RHI MAGN
Slide 42: Deploying capital in 2021 to advance strategic projects
3 Deploying capital in 2021 to advance RI MAGNESITA strategic projects « Peak capital expenditure in 2021 as we invest to deliver Capital expenditure (€m) cost reduction and sales initiatives # Projects are proceeding largely on budget and on-time, 260 despite COVID-19: - Plant closures - Refractory
Slide 43: ESG 2025 targets
ESG 2025 targets 3 RHI MAGNESITA 2020! 2018 CO, emissions Energy efficiency NO, and SO, Recycling Diversity Reduce by 15% CO, per tonne of product! by 2025 and aim for carbon neutrality in the long term Reduce by 5% per tonne of product by 2025 Reduce by 30% by 2027 (vs 2018), starting with China by
Slide 44: Disclaimer
3 Disclaimer RHI WAGNESITA 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