Rhi Magnesita Nv · LSE:RHIM
Rhi Magnesita Nv — H1 2022 Earnings Presentation
41 slides from Rhi Magnesita Nv's earnings presentation, Aug 1, 2022
Slide 1: Half Year 2022 Results
Half Year 2022 Results 1 August 2022
Slide 2: Agenda
3 RHI MAGNESITA Agenda Hi update Financial review Strategic initiatives Summary and outlook Qé&A Appendix 2022 Half Year Results | A\
Slide 3: H1 Update
H1 Update Stefan Borgas, CEO
Slide 4: Pricing and market share gains
2022 Half Year Results| Augu Pricing and market share gains 3 RHI MAGNESITA Price and volume growth drive higher revenues and margins Price increases pass through higher costs € million L] 8 188 136 233 H12021 Price Cost Other Hi 2022 EBITA' increases _ inflation EBITA Steel market share gain H1 202
Slide 5: Health and safety
Health and safety Focus on prevention and leading indicators Sustained improvement in injury rates since 2017 1.5 1.0 0.5 TRIF! LTIF2 0.0 2017 2018 2019 2020 2021 H1 2022 1, Total recordable injury frequency rate per 200,000 hours worked 2. Lost time injury frequency rate per 200,000 hours worked 20
Slide 6: Financial highlights
3 Financial a highlights Revenue! Adjusted EBITA' Adjusted EBITA margin Cash returned to shareholders €1.6bn €188m 11.8% €47m ® 32.8% PB 47.0% PF tobps Operating Cash flow? Capex Working Capital Net debt to adjusted intensity> EBITDA4 €(76)m €58m 29.3% 2.7x BH 38.5% B 66.% AP 10.8ppt PB O05« 1. Deno
Slide 7: Steel business overview
Steel business | overview Revenue! (€m) H1 2021 H2 2021 H1 2022 -® Gross margin (%) 1. Denoted on a reported basis 2022 Half Year Results | August 2022 3 RHI MAGNESITA ® Steel revenue increased by 35% to €1,150 million, +26% constant currency ® RHIM steel volume growth of 4% materially ahead of mark
Slide 8: Steel performance by region
Il Steel production (WSA) 3 Steel performance by region menace Market share growth and pricing power RHIM Steel Division HI North America Revenue H1 2022 HM Evrope/ClS/Turkey West Asia/India/Africa South America RHIM North America Europe/ClS/Turkey China and East Asia 1% China/East Asia €327m €281m
Slide 9: Industrial business overview
Industrial business overview Revenue! (€m) 253% a 28.9% +28% 444 346 ae 181 159 163 HE Cement/Lime 183 224 263 Hl industrial projects ® Gross margin (%) H1 2021 H2 2021 H1 2022 2022 Half Year Results | Aug 1. Denoted on a reported basis » RHI MAGNESITA ® Industrial division revenue increased by 28%
Slide 10: Sustainability leadership
3 RHI MAGNESITA Sustainability leadership Step change in recycling rate following creation of Joint Venture with Horn & Co ® Higher recycling volumes driven by improving customer engagement and better sourcing of secondary raw Use of secondary materials, with rate increasing to 9.3% (H1 2021: 6.1%)
Slide 11: Europe's largest source of reclaimed refractory material
ZS RHI MAGNESITA Europe's largest source of reclaimed refractory material ® RHI Magnesita has entered into a Joint Venture with Horn & Co (51% share) ® Horn & Co sources refractory scrap from iron, steel, glass, lime, cement and non-ferrous metal plants ® Crushing, grinding and drying takes place at
Slide 12: Opening of recycling centre Mitterdorf
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Slide 15: Profit and loss summary
Profit and loss summary High revenue and margin growth versus weaker H1 2021 ® Gross profit increased to £373 million (H1 2021: €272 million) as price increases restore absolute profitability and margin * Adjusted EBITA +47% to €188 million and margin increased by 11Obps to 11.8% ® Adjusted profit a
Slide 16: H1 2022 revenue bridge
3 H1 2022 revenue bridge mu acne €2935 million price increase delivers revenue recovery €m 2935 -34 12 1,594 H1 2021 Constant H1 2021 revenue Volume Price increase Revenue mix Strategic H1 2021 Revenue currency ona constant initiatives revenue adjustment currency basis 2022 Half Year Results | Augus
Slide 17: H1 2022 EBITA Bridge
» H1 2022 EBITA Bridge me macs Increased volumes and strategic savings offset by mix and supply chain cost inflation €m 293 24 128 H1 2021 Constant H12021 EBITA Sales Price Mix Higher costs Other H12022 EBITA currency constant volume increase EBITA adjustments currency increase 2022 Half Year Result
Slide 18: Cost outlook
Cost outlook Further cost inflation expected from energy and labour Cost of Goods Sold ® Cost inflation in energy, labour, raw material and freight ® Shipped volumes increased by 5% and costs by 19% 1,221 986 H1 2021 (constant H1 2022 currency adjusted) Hl Rew materials I Personnel expenses! I Depre
Slide 19: % movement from 30 June 2021 % movement from
% movement from 30 June 2021 % movement from 31 December 2021
Slide 20: EBITA margin restored to 11.8%
3 RHI MAGNESITA EBITA margin restored to 11.8% Pass through of raw material, freight and energy costs RHI standalone RHI Magnesita HI H2 HI 2021 2021 2022 Refractory EBITA (€m) 91 108 134 13.9% 14.0% Vertical integrated 1.8% — EBITA(€m) sr 4884 * Increasing market price of raw materials offset by hi
Slide 21: H1 2022
H1 2022 H1 2022 H1 2022 H1 2022 H1 2022
Slide 22: Net debt, gearing and liquidity
Net debt, gearing and liquidity 3 RHI MAGNESITA Modest reduction in net debt over H2 2022 expected, with gearing towards 2.0x Net debt and liquidity (€m) 2.6x 2.7x 2.1x WB Liquidity! Wl Net debt? Wi EBITDA® H1 2021 FY 2021 H1 2022 Debt amortization profile (€m) eR 1184 bo Z Mi Undrawn RCF 330 Term L
Slide 23: Strategic initiatives
Strategic initiatives Stefan Borgas, CEO
Slide 24: Sales strategies update
Sales strategies update Flow Control revenue € million and % of Group revenue 16.9% ots g% =@- % of Group revenue 249 Hl Flow Contol revenue! 203 H1 2021 H1 2022 India € million and % of Group revenue 10.0% 10.6% —@- % of Group revenue ——__ au Hl india revenue! 168 120 H1 2021 H1 2022 2022 Half Year
Slide 25: July 2022
July 2022
Slide 26: Production Optimisation Plan update
3 RHI MAGNESITA Production Optimisation Plan update Rationalise, modernise and reduce production costs, moving capacity closer to our customers Project Status ® Strategic initiatives aim to generate cumulative annual EBITA - contribution of £110 million from cost savings Hochfilzen v a . ; y ® Major
Slide 27: Opening of the European Dolomite Hub
Welcome to plant Hochfilzen Hochfilzen Opening of the European Dolomite Hub April 2022
Slide 28: Radenthein Automation
Radenthein Automation
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Slide 30: Resilient track record through the cycle
Resilient track record through the cycle 3 RHI MAGNESITA The Group has a strong track record of maintaining margins throughout economic cycles ® Refractories are essential for modern life, a non-discretionary product that is vital for industrial production = Customer margins are volatile, refractory
Slide 31: The leader of the global refractory industry
ZS RHI MAGNESITA The leader of the global refractory industry ® We are continuing our strategic transformation Production Optimisation Plan completion in 2023 Strong growth in new markets of India and China Successful trial to sales conversions in Flow Control M&A progress in Turkey, China and Recyc
Slide 32: Summary and outlook
Slide 33: Q&A
Slide 34: 2022 guidance
ZS RHI MAGNESITA * Total capital expenditure: €200m Maintenance capex: €85m Project capex: €115m * Depreciation: €125m * Amortisation: €25m ® Net interest expense: €25m (excluding pensions of €6m) * Adjusted effective tax rate: 23 - 25 %! * Strategic initiatives in 2023: £150 — 170 million Cumulativ
Slide 35: Capital allocation
Capital allocation ® RHI Magnesita allocates capital to support its long-term strategy, seeking to deliver attractive shareholder returns over the medium term ® 2.7x leverage currently above targeted range but to reduce in H2 * Organic investments: = £€36 million project CAPEX in H1, further c.€80 m
Slide 36: Net debt increase driven by working capital
Net debt increase driven by pa AGNES working capital Change in net debt (€m) 18 10 14 1,238 a — 12 36 12 36 Ci, _ 1014-245 0 Net debt Adjusted Working Other assets Maintenance Net Cash tax Restructuring Project Dividend M&A‘ FX Other Net debt FY 2020 EBITDA capital and capex finance Capex H1 2021 li
Slide 37: Impact of foreign currency movement
3 hd RHI MAGNESITA Impact of foreign currency movement EBITA sensitivity in H1 2022 H1 2022 exchange rates Appreciation vs EUR Depreciation vs EUR Increase / Increase / HY 22 HY 22 HY 22 HY 21 (decrease) (decrease) in EBITA in EBITA Opening Closing Average Average Unit (€m) Unit (€m) EUR: Rate Rate
Slide 38: Reconciliation of adjusted earnings
Reconciliation of adjusted earnings HY 2022 Adjustment HY 2022 €m Reported items Adjusted EBITA 77 1 188 Amortisation (13) 13 Net finance costs (22) 3 (19) Profit before tax 142 27 169 Income tax' (38) (3) (41) Profit after tax 104 25 129 Effective tax rate 26.8% (280)bps 24.0% Non controlling inter
Slide 39: Capital expenditure returning to lower levels
Capital expenditure returning to lower levels Capital expenditure (€m) Hl Project Capex HB Maintenance Capex 252 200 160 156 157 77 15 130 123 46 15 86 58 no a 75 36 85 85 22 2018 2019! 2020? 20215 H12022 2022 2023 2024 2022 Half Year Results | A\ 1. Excludes €5 million in sever » RHI MAGNESITA ® €2
Slide 40: ESG 2025 targets
3 ESG 2025 targets ae aces 2018 H1 2022 Base year COz emissions Reduce by 15% COs per tonne of product by 2025 and aim for 18 19 (t/t) carbon neutrality in the long term . . Energy efficiency Reduce by 5% per tonne of product by 2025 21 20 (MWh/t) . . NO, and SO, Reduce by 30% by 2027 (vs 2018), Vv
Slide 41: Disclaimer
2022 Half Year Results | Au 3 RHI MAGNESITA Disclaimer 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 evolut