Elkem Asa · OSL:ELK
Elkem Asa — Q1 2020 Earnings Presentation
30 slides from Elkem Asa's earnings presentation, May 8, 2020
Slide 1: First quarter results 2020
First quarter results 2020
Slide 2: Agenda
Agenda Business update By CEO Michael Koenig Financial performance By CFO Morten Viga Outlook By CEO Michael Koenig
Slide 3: Results holding up in challenging market environment
Results holding up in challenging market environment Elkem generated stable operations and results compared to previous quarters despite a challenging market environment Covid-19 impact in Asia was significant in the first quarter EBITDA was NOK 590 million in the first quarter 2020, down vers
Slide 4: Environment, Social and Governance: A key priority
Environment, Social and Governance A key priority Safety Environment Ambition zero injuries Fossil CO2 emissions in Norway reduced by 18% by use of biocarbon Ambition 40% biocarbon by 2030 NOx emissions down 13% since 2015 Ambition 10% reduction in 2020 83 % share of renewables Social Governance of
Slide 5: Covid-19 impact and response
Covid-19 impact and response With more than 3,000 employees and extensive operations in China, Elkem was early exposed to Covid-19 First confirmed case was however, in Norway and led to a temporary closure of the head office on 6 March A corporate task force established to coordinate the Covid
Slide 6: Strong basis for managing the crisis
Strong basis for managing the crisis Diversified product portfolio Strong and specialised product mix Diversified end-markets Broad geographical presence Serving customers worldwide Mitigating effects of local and regional lockdowns Financially robust position Strong balance sheet wi
Slide 7: Elkem's products key enablers for health and sustainability
Elkem’s products key enablers for health and sustainability Silicones are key for several medical applications used in hospitals Applications to health care is part of the specialisation strategy. Delivering raw materials to masks, tubes and medical devices Double digit growth from 1Q-2019 to
Slide 8: Polysil acquisition closed in April
Polysil acquisition closed in April • Located in Zhongshan in Guangdong, China • Research and development centre with more than Purchase price up to MCNY 941, consisting of base price and variable 50 engineers elements based on pre-defined criteria • Leading technology positions in production and
Slide 9: Productivity improvement programme to further streamline the organisation
Productivity improvement programme to further streamline the organisation New Productivity Improvement Programme launched with an identified potential of more than NOK 350 million in annual improvements Permanent savings related to personnel costs Implementation started in 1Q-2020 and will be
Slide 10: Looking beyond the crisis: Long-term specialisation
Looking beyond the crisis: Long-term specialisation Silicones to batteries Elkem has a strong position in cabling and insulation for EV battery packs Market position expanded from US and Europe to the Asian EV market New contracts in Asia quickly ramping up Silicon for high performance sol
Slide 11: Group results holding up despite impact from Covid-19
Group results holding up despite impact from Covid-19 Generally satisfactory results in first quarter, considering the market impact of Covid-19 Weaker Norwegian krone (NOK) has impacted the results positively, mainly in March. However, the equity and leverage ratios were negatively impacted R
Slide 12: Silicones a mixed picture
Silicones a mixed picture Silicones are very versatile and used in a large number of end-markets affected to a varying degree by Covid-19 Industrial markets, e.g. automotive and construction have been weak Consumer products e.g. home and personal care have been stable DMC reference price China
Slide 13: Silicon prices up, outlook uncertain
Silicon prices up, outlook uncertain Strong price recovery for silicon during the first quarter CRU EU reference price for March up approx. 15% from end of 4Q-2019 CRU silicon 99 price EU (EUR/mt) Stable demand from all main end-user segments in the first quarter Chemical and electronics/sol
Slide 14: Ferrosilicon prices up on low supply; Carbon stable demand
Ferrosilicon prices up on low supply Market prices for ferrosilicon (FeSi) continued to recover in the first quarter CRU EU reference price for March up approx. 20% from end of 4Q-2019 Higher prices in EU mainly driven by low supply, combined with low inventory levels and low imports. Global m
Slide 15: Elkem group stable operating income, results down vs. 1Q-2019
Elkem group stable operating income, results down vs. 1Q-2019 Total operating income EBITDA ‒ Stable compared to ‒ Down 31% compared 1Q-2019 to 1Q-2019 ‒ Lower operating ‒ Mainly explained by income in Silicones Silicones impacted by mainly offset by Silicon Covid-19 disruptions Materials 15 First q
Slide 16: Elkem group key ratios impacted by currency
Elkem group Consolidated key figures key ratios impacted by currency (NOK million, except where specified) Total operating income EBITDA 1Q 2020 5,798 1Q 2019 5,833 YTD 2020 5,798 YTD 2019 5,833 FY 2019 22,668 590 852 590 852 2,656 EBIT 197 514 197 514 1,189 Other items MNOK 129 Other items 129 15
Slide 17: Silicones impacted by Covid-19 and lower prices in China
Silicones Total operating income NOK million impacted by Covid-19 and lower prices in China Total operating income of MNOK 2,513, down 10% from first quarter last year EBITDA and margin Reduction mainly due to lower volumes and lower sales prices in China NOK million and % Lower volumes explai
Slide 18: Silicon Materials best results since 4Q-18
Total operating income Silicon Materials NOK million best results since 4Q-18 Total operating income of MNOK 1,895, up 15% compared to first quarter 2019 EBITDA and margin Higher operating income explained by weaker NOK and higher volumes NOK million and % Silicon market prices stable, but rea
Slide 19: Foundry Products lower specialty sales impacting results
Total operating income Foundry Products NOK million lower specialty sales impacting results Total operating income of MNOK 1,264, in line with first quarter last year EBITDA and margin Lower realised sales prices compared to last year due to lag-effects, but NOK million and % compensated by curr
Slide 20: Carbon strong performance
Total operating income Carbon NOK million strong performance Total operating income MNOK 475, in line with corresponding quarter last year EBITDA and margin Stable sales prices and sales volumes NOK million and % EBITDA MNOK 100, up 20% from first quarter last year Improved EBITDA mainly exp
Slide 21: Elkem group higher EPS, but lower equity ratio
Elkem group Earnings per share (EPS) higher EPS, but lower NOK per share equity ratio Earnings per share (EPS) EPS amounted to NOK 0.43 in the first quarter Positively impacted by gains in other items and foreign exchange gain, but partly offset by negative value changes in commodity contracts
Slide 22: Elkem group debt ratios impacted by NOK weakening
Elkem group Net interest-bearing debt (NIBD) debt ratios impacted NOK billion by NOK weakening Net interest bearing debt (NIBD) amounted to BNOK 6.8 as at 31 March 2020 Leverage ratio of 2.8x based on LTM EBITDA of BNOK 2.4 Increased NIBD and higher leverage partly explained by currency rates
Slide 23: Elkem group cash flow negatively impacted by working capital
Elkem group Cash flow from operations cash flow negatively NOK million impacted by working capital Cash flow from operations(1) was MNOK -88 in the first quarter, down from the corresponding quarter last year Reduced cash flow was mainly due to lower operating profit, higher working capital and
Slide 24: Outlook for the second quarter
Outlook for the second quarter Current market environment characterised by high level of uncertainty Elkem has a strong position facing the challenges ahead; competitive low-cost positions, diversified product portfolio, broad geographical footprint and robust financial position DMC prices in
Slide 25: 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 26: Appendix
Appendix
Slide 27: 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 28: 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 29: Value chains
Value chains Carbon Foundry products value chain value chain Silicon materials Silicones value chain value chain 29 First quarter results 2020
Slide 30: Elkem
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