Rhi Magnesita Nv · LSE:RHIM
Rhi Magnesita Nv — FY2024 Earnings Presentation
45 slides from Rhi Magnesita Nv's earnings presentation, Feb 27, 2025
Slide 1: Full Year Results 2024
Sensitivity: Internal Full Year Results 2024 Safety, resilience and progress 27 February 2025 2024 Full Year Results | February 2025 1
Slide 2: Agenda
Agenda 1 FY overview 2 Strategy update 3 Financial review 4 Summary and outlook 5 Q&A 6 Appendix 2024 Full Year Results | February 2025 2
Slide 3: Safety Moment
Safety Moment At RHI Magnesita, at the start of every meeting, we allocate one minute to discuss crucial and recent safety matters 2024 Full Year Results | February 2025 3
Slide 4: 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 5: 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 6: 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 7: Continued decline in vertical integration contribution counterbalances efficiency and M&A gains
Sensitivity: Internal 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
Slide 8: 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 23.2% 21.6% 22.0% 22.3% 6% lower pricing -4% Global steel demand decreased in the key
Slide 9: 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 10: 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 11: Strategy update
Strategy update Stefan Borgas, CEO
Slide 12: Acquisition of Resco
Sensitivity: Internal 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 bas
Slide 13: Local production strategy
Sensitivity: Internal 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 &Türki
Slide 14: Sustainability leadership
Sustainability leadership Recycling of reclaimed refractories continues to deliver significant CO2 savings Recycling now 14.2% despite dilution from new M&A ⁃ 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 15: Raptor
Sensitivity: Internal Raptor Cutting edge automated sorting equipment for recycling, successfully installed in November 2024 Mitterdorf, Austria 2024 Full Year Results | February 2025 15
Slide 16: 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 17: Financial Review
Sensitivity: Internal Financial Review Ian Botha, CFO 2024 Full Year Results | February 2025 17
Slide 18: Profit and loss summary
Sensitivity: Internal 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
Slide 19: 2024 revenue bridge
Sensitivity: Internal 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 Full Year Results | February 2025 19
Slide 20: 2024 EBITA bridge
Sensitivity: Internal 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 3
Slide 21: 2024 EBITA adjusted items
Sensitivity: Internal 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
Slide 22: Cost detail
Sensitivity: Internal Cost detail Significant spike in purchased alumina raw material cost weighs on H1 profitability 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%
Slide 23: 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 24: 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 25: 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 26: 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 27: 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 28: 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 29: Summary & outlook
Summary & outlook
Slide 30: 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 31: 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 32: Q&A
Sensitivity: Internal Q&A 2024 Full Year Results | February 2025 32
Slide 33: Appendix
Sensitivity: Internal Appendix 2024 Full Year Results | February 2025 33
Slide 34: 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 35: 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 36: 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 37: 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 38: 2024 P&L overview
Sensitivity: Internal 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 Full Year Results | February 2025 38
Slide 39: Free cash flow history
Sensitivity: Internal 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 Ful
Slide 40: 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 41: 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 42: 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 43: 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 44: 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 45: 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