Rhi Magnesita Nv · LSE:RHIM
Rhi Magnesita Nv — FY2017 Earnings Presentation
30 slides from Rhi Magnesita Nv's earnings presentation, March 2018
Slide 1: The driving force of the refractory industry
The driving force of the refractory industry 2017 Full Year Results March 2018 RHI Magnesita 2017FYR
Slide 2: Disclaimer
Disclaimer The consolidated financial statements to subscribe for or purchase any securities, presented here are consistent with the and neither any part of this presentation nor criteria of international accounting standards any information or statement contained - IFRS issued by the International
Slide 3: Agenda
Agenda 1 Overview 2 Financial Results & Divisional Performance 3 Strategy 4 Investment Case 5 Q&A 3 RHI Magnesita 2017FYR
Slide 4: Overview
Overview RHI Magnesita 2017FYR
Slide 5: 2017 in review
Overview 2017 in review c. €2.7bn 11% €304m 39% 2017 adjusted pro-forma revenue 2017 adjusted pro-forma EBITA 1.9x 0.5x 11.4% 230bps Net Debt / adjusted pro-forma EBITDA 2017 adjusted pro-forma EBITA margin 1.06 0.68 days 22.2% 560bps Lost time injury rate Working capital intensity 5 RHI Magnesita 2
Slide 6: A strategic combination that captures synergies and drives efficiencies
Overview A strategic combination that captures synergies and drives efficiencies Establish leading market position Leverage technology capabilities ⬢ Complementary asset portfolio ⬢ Enhanced value-added products and tailored solutions ⬢ Transaction to support regional best fitting customer needs in
Slide 7: First 150 days: focus on integration whilst maintaining momentum
Overview First 150 days: focus on integration whilst maintaining momentum People & Culture Process, Systems and Operations ⬢ Senior management and sales team in place and ⬢ Ongoing alignment of all back-office IT systems operating from Day 1 ⬢ “One face to the customer” in sales team, client service
Slide 8: Financial Results
Financial Results RHI Magnesita 2017FYR
Slide 9: Adjusted pro-forma revenue breakdown
Financial Results Adjusted pro-forma revenue breakdown Total Revenue: c.€2.7 bn by Industry1 by Geography ◼ South America 46% Cement / Lime ◼ North America ◼ Europe ◼ MEA-CIS Non Ferrous Metals ◼ Asia Pacific 26% Other Process Industries 28% 18% 20% 26% 15% 24% 74% 23% ◼ Industrial ◼ Steel 1 Revenue
Slide 10: Adjusted pro-forma results
Financial Results Adjusted pro-forma results Revenue (€m) EBITA (€m) +11% 11.4% 9.1% +38.7% 2,409 2,677 1,259 1,369 304 219 2016 2017 2016 2017 Leverage (€m) Working Capital Intensity (€m) 2.4 27.8% 1.9 22.2% 733 751 668 610 309 389 2016 2017 2016 2017 Leverage Ratio Net Debt EBITDA 10 RHI Magnesita
Slide 11: Group P&L
Financial Results Group P&L Adjusted Adjusted Adjusted pro-forma analysis Reported Reported Pro- Pro- %∆ 2016 2017 forma forma Revenue: 20161 20171 Consolidated: +11.1% €m Steel Division: +14.3% Revenue 1,651 1,946 2,409 2,677 11.1% Industrial Division: +2.7% CoGS (1,295) (1.486) (1,822) (1,999) 9.7
Slide 12: 2017 exceptional items
Financial Results 2017 exceptional items Adjusted Cash impact Adjusted pro-forma P&L impact €m Pro-forma Items P&L Impact 2017 2018 2019 Foreign exchange variations: on balance sheet itens (mostly AR/AP): 9.3m Foreign exchange on inter-company balances: 38.9m (48.2) variations Transacation Expenses:
Slide 13: Capital structure
Financial Results Capital structure Solid credit profile and commitment to de-leveraging current business Leverage at 1.9x, within our long-term target range Capitalization Table € millions Increase in liquidity with business disposals and working capital monetization Schuldscheindarlehen 178 Perpet
Slide 14: Faster realisation of synergies by one year
Financial Results Faster realisation of synergies by one year ⬢ At least €40m synergies in the 2018 €70m P&L and €70m in synergies to be captured fully by 2019 ⬢ Expected total cash restructuring costs are projected to amount to ~€70m, with SG&A cash outflows disbursed throughout 2018 ⬢ Interest exp
Slide 15: Steel
Financial Results Steel €m Increased demand in the US due to stronger economic +14% activity led to a 5% increase in capacity utilization in steel production year-over-year as well as 1,913 1,675 outperformance in refractory sales Higher deliveries in Latin America were driven by the 7.7% growth in
Slide 16: Industrial
Financial Results Industrial €m Sales to the cement segment improved the second half +3% of the year, but performance was lacklustre in 2017 659 642 In the Process Industries business, the strategic decision to exit the fused cast segment led to higher profitability in the glass business, despite lo
Slide 17: Strategy
Strategy RHI Magnesita 2017FYR
Slide 18: Strategy: overview
Strategy: overview Build a global refractory leader with a differentiated customer proposition based on technology and cost competitiveness to ensure manufacturing of essential materials for the world Markets Competitiveness Worldwide presence with strong Cost competitive and safe local organization
Slide 19: Strategy: markets
Strategy: markets High market share in Europe and Americas with opportunities to occupy ‘white spaces’ in India, China and CIS RHI Magnesita revenue by region vs market size Steel Production South America HIGH MEA 800m tonnes Europe North RHI Magnesita America Market Share India 100m tonnes LOW Othe
Slide 20: Strategy: portfolio
Strategy: portfolio Extend market position in high quality applications and strengthen non-basic mixes and functional products Portfolio Main Applications Opportunity ⬢ Great capability and logistics: Production in all continents and short lead-time to everyone, everywhere ⬢ Steel: converters and la
Slide 21: Strategy: technology
Strategy: technology Top solution provider in the industry, investing in innovative technologies and digitalization Continue investing in R&D Develop into a system 1 to create products, which 4 supplier based on R&D, have a distinct competitive partnerships and selective advantage by costs or by acq
Slide 22: Unrivalled competitive advantage through vertical integration
Strategy: competitiveness Unrivalled competitive advantage through vertical integration, in multiple sites 1.6 million 70%+ tonnes of raw vertical integration in materials produced basic raw materials and Raw material sites per year 50%+ for all raw materials Certainty of supply High quality materia
Slide 23: Cost competitive and safe production network
Strategy: competitiveness Cost competitive and safe production network supported by lowest cost G&A services ⬢ Create a sustainable competitive cost production base through the most efficient usage of the global production footprint ⬢ Run the lowest cost G&A services to support the daily business ⬢
Slide 24: Compelling investment case
Strategy Compelling investment case Solid strategy and Strong market position with 15% market share, clear leadership in Americas, 1 Europe and Middle East with broadest value-added solution offering competitive Opportunity to develop and leverage technology across regions and portfolio advantages H
Slide 25: Q&A
Q&A 25 RHI Magnesita 2017FYR
Slide 26: Appendix
Appendix RHI Magnesita 2017FYR
Slide 27: Combined adjusted pro-forma reconciliation
Appendix Combined adjusted pro-forma reconciliation a + b + c –d a b c d e f g –e–f –g Non- Merger Foreign merger Adjusted Adjusted Reported Magnesita Prelim. related Disposed exchange related Pro-forma Pro-forma 2017 Oct YTD PPA effect adjustment Business variations Other 2017 2016 s €m inc./Exp. R
Slide 28: Integrated offer overview
Appendix Integrated offer overview ⬢ RHIM launched a tag-along offer to Magnesita’s minority shareholders on the same terms and conditions as that made to the Control Group: ⬢ Cash + shares: R$445.6m1 + 5 million shares ⬢ Cash only: (i) R$31.091 or (ii) R$35.56 per Magnesita share whichever is highe
Slide 29: FX EBITDA sensitivity and exchange rates
Appendix FX EBITDA Sensitivity 2017 Exchange Rates ∆ in EBITDA vs € Unit 1€= Closing Rate Average rate (€m) USD +1 cent 4.27 USD 1.20 1.12 CNY +0.01 yuan -0.31 CNY 7.78 7.61 BRL +0.10 reais 0.02 BRL 3.96 3.60 INR +1 rupee 0.31 INR 76.40 73.36 29 RHI Magnesita 2017FYR
Slide 30: Find out more at rhimagnesita.com
Find out more at rhimagnesita.com RHI Magnesita 2017FYR