Rhi Magnesita Nv · LSE:RHIM
Rhi Magnesita Nv — FY2020 Earnings Presentation
38 slides from Rhi Magnesita Nv's earnings presentation, Mar 8, 2021
Slide 1: Full Year 2020 results
» RHI MAGNESITA Full Year 2020 results Demonstrating resilience and accelerating strategic delivery 8 March 2021
Slide 2: RHI MAGNESITA
2020 Full Year Results | March 2021 3 RHI MAGNESITA
Slide 3: RHI MAGNESITA
» RHI MAGNESITA
Slide 4: 2020 - Operational highlights
3 2020 - Operational highlights RI MAGNESITA Demonstrating resilience and accelerating strategic delivery « Resilient financial performance delivered against a challenging market environment — Responded swiftly and effectively to COVID-19, maintaining production and safe operations — Gross profit ma
Slide 5: Increased focus on Health and Safety
» Increased focus on Health and Safety RI MAGNESITA « Health and safety is our first priority during the pandemic Sustained improvement in — Strict precautions remain in place at all production and Lost Time Injury Frequency Rate customer sites and the Group is well equipped to (LTIF) navigate furth
Slide 6: FY 2020 - Financial highlights
FY 2020 - Financial highlights Resilient margin and strong operating cash flow generation Revenue €2.3bn B (23)%' Net debt to adjusted EBITDA 1.5x RP 0.3x Denoted on a reported basis Compared with 2019 including IFRS 16 Leases of €57m gawNe Adjusted EBITA margin 11.5% ¥ (250)bps' Liquidity* €1.2bn #
Slide 7: COVID-19 impact
» COVI D-19 impact RHI MAGNESITA. Customer demand weakness was greatest in H1 2019 vs 2020 refractory sales volume by quarter # Volume (12)% - COVID related demand impact M2019 Mm 2020 @ Revenue (23)% - reflects lower raw material prices « Normal seasonal pattern evident « Demand recovered in Q4, wi
Slide 8: Lower volumes across end markets during 2020
3 RHI MAGNESITA Lower volumes across end markets during 2020 Temporary deferral of new project capital expenditure by customers, construction demand recovering in 2021 % share of RHIM revenue by end market % of 2020 revenue by BU 1 (12%) (6%) Refractory production by Market growth Steel MZ (12%) sus
Slide 9: Steel performance
Steel performance Reduced sales with stable margin Revenue (€m) —®@- Gross margin (%) 2018' 2019' 2020 2020 Full Year Results | March 2021 » RHI MAGNESITA Steel Division revenue was impacted by COVID-19 and lower raw material prices; however gross margin improved slightly given increased efficiencie
Slide 10: Industrial performance
Industrial performance Reduced sales with stable margin Revenue (€m) 676 2018' 2019' 2020 2020 Full Year Results | March 2021 » RHI MAGNESITA Volume impact of COVID-19 was greater on the Industrial Division than the Steel Division, impacting gross margin by 130bps # Cement/Lime had a very strong Q1,
Slide 11: Accelerated progress on strategic initiatives
3 Accelerated progress on strategic initiatives RI MAGNESITA Targeting €140 — 160m of incremental EBITA in 2022 Annual EBITA improvement (€m)' ¢ Cost savings initiatives include the Production Optimisation Plan and SG&A initiatives: — Closure of three small plants and investments in two 140-160 larg
Slide 12: Sustainability leadership
3 Sustainability leadership ah MAGNESITA Creating the path to de-carbonisation €50 million R&D investment in CO, reduction technologies @ Capture of geogenic CO, emissions (>50% of our emissions) We aim to have the technology solution @ Utilisation of captured CO, through external partnerships by 20
Slide 13: Financial review
RHI MAGNESITA Financial review
Slide 14: Profit and loss summary
Profit and loss summary Resilient margin and strong cash flow generation €m 2020 2019! Change Revenue 2,259 2,922 (23)% Gross profit 550 77 (23)% Gross margin (%) 24.4% 24.5% (10)bps Adjusted EBITA 260 408 (36)% Adjusted EBITA margin (%) 11.5% 14.0% (250)bps Adjusted Profit before tax 197 358 (45)%
Slide 15: Stable margin and improving momentum in H2
3 Stable margin and improving momentum in H2 RHI MAGNESITA Measures taken leave Group well positioned for recovery Stable gross profit margin - Mixed regional gross Improving momentum supported by cost reduction profit performance’ in H2 2020 Gross margin %* (€m) 2020 vs. 2019? Gross profit per quar
Slide 16: FY20 Profit bridge
3 FY20 Profit bridge all WAGNESITA Swift management measures limited COVID-19 impact to €(80)m €m = pen enn eee nn ene ; 420 1 €(80)m EBITA net ! 408 1 impact from COVID-19 | sesessnnenne i a... ! 1 i) 1 i) i) { \ 1 1 i) wee eee ee ee ee ee 1 FY 2019 Constant currency FY 2019 Iran market exit Raw ma
Slide 17: Refractory margin maintained
3 Refractory margin maintained RH MAGNESITA Strategic initiatives will drive further growth in refractory and backward integration margins EBITA margin % 16 RHI standalon: 14 12 10 On KR DO 2016 2017 2020 Full Year Results | March 2021 RHI Magnesita 13.9% 14.0% High Gra , d ple Unique Backward integ
Slide 18: Raw material prices
Raw material prices Prices oscillating around historic averages Raw material prices' Rebased to 100 550 4 500 4 450 4 400 | 350 4 300 4 250 4 % movement from dan 2019 % movement from Jan 2020 Jan-16 Jan-17 — High grade DBM (97% - China) 1. Asian metal 2020 Full Year Results | March 2021 Jan-18 Jan-1
Slide 19: Disciplined working capital management
3 Disciplined working capital management RHI MAGNESITA Working capital balances Working capital intensity Inventory (after Working Capital Finance) 211% 20.6% o—___—__e 18.2% *——_is 0% 603 avr 519 2019 2020 Accounts Receivable” 97% 9.0% 2019' 2020 2019' 2020 2019' 2020 : ; Accounts Payable* mae) ori
Slide 20: 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 on budget and largely on-time, 260 despite COVID-19: - Plant closures - Refractory
Slide 21: Strong and sustainable cash generation
3 Strong and sustainable cash generation RHI MAGNESITA 112%' cash conversion More than €1.3bn of operating cashflow generated since 2017 (€m) 438 Net financial Shareholder Re- Othe Free cash ‘Adjusted Working Working Other Capex Depreciation Operating Cash tax EBITA Capital Capital FX assets and cas
Slide 22: Net debt position improved
3 Net debt position improved Ril MAGNESITA « Net debt includes €57m from IFRS 16 leases Net debt . (€m as at 31 December 2020) # Strong liquidity of €1.2bn, with RCF extended to 2026 ag — No material debt repayment until 2023 OX 1.3x « Leverage of 1.5x net debt to EBITDA, within target range 2s of O
Slide 23: Resilient value creation; positioned to accelerate recovery
Resilient value creation; positioned to 3 RHI MAGNESITA accelerate recovery as our markets improve Leveraged our strengths Largest global footprint 15% market share Deep customer relationships Technology leadership & innovation Backwards integration Operational excellence Lowest cost operator Relent
Slide 24: : £ G w z < = = in
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Slide 25: The leader in heat management solutions
3 The leader in heat management solutions RHI MAGNESITA A clear and compelling strategy to drive long term growth and shareholder returns Global megatrends underpin long-term structural growth Global Connectivity and unbenatacitten Regionalisation digitalis Climate change Volatility RHI Magnesita’s
Slide 26: Summary and outlook
3 Summary and outlook RHI MAGNESITA # Sequential improvement in end markets and order book e Whilst volatility and uncertainty likely to remain elevated in the short term, we expect overall recovery trends to continue in both the Steel and Industrial divisions during 2021, with earnings likely to be
Slide 27: Q&A
» RHI MAGNESITA Q&A
Slide 28: Appendix
» RHI MAGNESITA Appendix
Slide 29: Guidance for 2021
Guidance for 2021 « 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 of €6m) « A
Slide 30: FY 2020 revenue bridge
FY 2020 revenue bridge €m -132 Raw material price ae 2,807 -27 -28 Price/mix -391 FY 2019 Constant currency FY 2019 Iran Price & mix COVID-19 impact FY 2020 Revenue adjustment Revenue market exit driven volume Revenue onaconstant currency basis 2020 Full Year Results | March 2021 3 RHI MAGNESITA 30
Slide 31: Strategic initiatives
Strategic initiatives Presented in €m 2019 Cost savings initiatives EBITA improvement 2020 2021 2022 Cumulative amount 3 RHI MAGNESITA Commentary All cost-saving initiatives on track in 2020, and on track to deliver €100m of EBITA savings per annum by 2022 = Production Optimisation Plan (POP) 5 = SG
Slide 32: Impact of foreign currency movement
Impact of foreign currency movement EBITA sensitivity in FY 2020 Ain EBITA vs € Unit (€m) USD +1 cent 2.02 CNY +0.01 yuan -0.04 BRL +0.10 reais -0.71 INR +1 rupee 0.57 TRY +0.1 lira -0.16 FY 2020 exchange rates 2020 Full Year Results | March 2021 FY 20 FY 20 FY 20 FY 19 Opening Closing Average Avera
Slide 33: Reconciliation of adjusted earnings
3 Reconciliation of adjusted earnings RHI MAGNESITA FY 2020 Adjustment €m Reported items FY Adjusted EBITA 140 120 260 Amortisation (19) 19 - Net finance costs (87) 16 (ri) Share of profit of joint ventures 8 - 8 Profit before tax 42 155 197 Income tax! (14) (19) (33) Profit after tax 28 136 164 Eff
Slide 34: Cash flow reconciliation
Cash flow reconciliation €m Adjusted EBITA 260 Working capital 98 ies (31) Changes in other assets and liabil Depreciation 120 Operating cash flow 295 Cash tax (48) Net interest expense (25) Restructuring and transaction costs (52) Dividends (49) “Share buyback (3) Dividends from associates 1 MORCO
Slide 35: Research and development
3 Research and development PI MAGNESITA Increase in R&D spending demonstrates commitment to technology @ R&Dis essential to maintaining our position as the leading R&D and technical marketing spend heat management solutions provider (€m) ® % of revenue @ Target investment of 2.2% per annum of revenu
Slide 36: Strong debt maturity profile
Strong debt maturity profile Amortisation schedule (€m as at 31 December 2020) 3 RHI MAGNESITA ll Assets held for sale (cash) Anea Cash , MM RCF a Hl Debt 587 848 600 387 188 133 mz — Liquidity 2021 2022 2023 2024 2025 2026 2027+ IFRS 16 2020 Full Year Results | March 2021 36
Slide 37: We remain committed to our ESG 2025 targets
We remain committed to our 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 20
Slide 38: Disclaimer
» 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