Elkem Asa · OSL:ELK
Elkem Asa — Elkem Asa Ord — Q3 2024 Earnings Presentation
43 slides from Elkem Asa's earnings presentation, Oct 24, 2024
Slide 1: Third quarter results 2024
~ Elkem Third quarter results 2024
Slide 2: Agenda
Agenda Business update Financial performance Outlook 2 Elkem
Slide 3: Highlights
Highlights Elkem continues to improve profitability despite weak markets * Elkem’s EBITDA was NOK 1,235 million in the third quarter 2024, the highest since first quarter 2023 = The improvement in EBITDA was mainly driven by Silicones, and explained by higher sales volumes and operational improvemen
Slide 4: Corporate strategy
Corporate strategy Creating value through profitable & sustainable growth Dual-play growth = > Driving growth & value creation in all ( & three divisions > Securing supply chain resilience through geographical diversification fereating yelaet rout profitable & sustainable growth —=== Growth >5% per
Slide 5: Environmental, Social & Governance
Environmental, Social & Governance Strong ESG performance Green leadership Safety Ambition: Zero injuries Total injury rate (per million working hours) = Elkem received top rating from 37 32 35 EcoVadis for 2024. The Platinum 22 _ rating is awarded to the top 1% — companies 2020 2021 «= 2022,» 2023:
Slide 6: Funding for groundbreaking Sicalo project
Funding for groundbreaking Sicalo project = Elkem is researching a groundbreaking concept to eliminate CO, emissions. Sicalo (silicon production with carbon looping) is one of Elkem’s projects to reach zero emissions by 2050 " The project has collaborated with SINTEF, with support from The Research
Slide 7: EBITDA improvement programme delivering good results
EBITDA improvement programme delivering good results = Elkem’s EBITDA improvement programme reached realised effects of BNOK 1.0 YTD 30 September 2024. The full year effect of these measures is estimated to BNOK 1.4 = The programme has improved Elkem’s EBITDA despite continued market headwind, with
Slide 8: Capex reductions ahead of target
Capex reductions ahead of target = Elkem’s target is to reduce capex by > BNOK 2.0 compared to 2023 = Reinvestment target approx. BNOK 2.0 (80-90% of D&A) " Strategic capex target approx. BNOK 1.2 = Capex YTD 3Q-2024 was BNOK 1.9, ahead of target = The Silicones expansion project in China was finali
Slide 9: Silicones projects driving improved performance
Silicones projects driving improved performance = Elkem’s silicones projects in China and France will deliver improved financial and operational performance = The Silicones project in China was successfully completed in May. Based on current market conditions, the new production line is expected to
Slide 10: New stimulus package in China to boost growth
General markets New stimulus package in China to boost growth China Construction - New housing projects YTD-August (million m2) = In September, China’s central bank announced its biggest stimulus package since the pandemic " The package offered funding and interest rate cuts to revitalise the i . YT
Slide 11: Elkem's business model mitigating global trade tensions
General markets Elkem’s business model mitigating global trade tensions = Elkem is well positioned to handle trade restrictions based on regional value chains. The importance is underlined by recent international trade developments = US have increased tariffs on Chinese-made EVs from 25% to 100% = E
Slide 12: Silicones market
Silicones market Chinese commodity prices improving, price increases on speciality grades implemented * Silicones markets remain challenging, due to weak market sentiment and Chinese overcapacity = Several producers, including Elkem, have announced global price increases for specialities. This has a
Slide 13: Silicon and ferrosilicon markets
Silicon and ferrosilicon markets Prices in EU remain stable — still weak demand = Weak demand for silicon and ferrosilicon, but prices in EU have remained stable in the third quarter = Prices for silicon and ferrosilicon in the US have declined slightly but from significantly higher levels than in E
Slide 14: Carbon market
Carbon market Market conditions remain unchanged = Demand for carbon products varies across regions driven by steel, Crude steel production (million mt) ferroalloys, and aluminium Europe mNorth America = Global steel production in 3Q-2024 down 4% compared to last year 60 = Global decline y-o-y drive
Slide 15: Elkem group: highest EBITDA since first quarter 2023
Elkem group Highest EBITDA since first quarter 2023 = Total operating income up 3% from 3Q-2023 = Increased operating income for Silicones partly offset by the other divisions Total operating income (MNOk) 9,755 9,044 ‘J : 12 2Q 3Q 4Q 7931 | | = °° 8,056 3Q 2023 Silicones Si. Prod. Carbon Elm/Oth. 3
Slide 16: Elkem Group: overview financial elements
Elkem Group Overview financial elements » EBITDA MNOK 1,235 = Segment Other included realised currency hedging losses of MNOK -38 = Other items MNOK -68 = Consisting of losses on power and currency derivatives MNOK -35, restructuring expenses MNOK -54, partly countered by currency gains of MNOK 12,
Slide 17: Silicones
Total operating income NOK million Silicones Operational improvements, stable market conditions EBITDA and margin " Total operating income of MNOK 3,843, up 20% from the third NOK million and % 5% quarter last year " Mainly explained by higher sales volume = EBITDA of MNOK 202, up from MNOK -268 in
Slide 18: Silicon Products
Silicon Products Stable results despite low sales volume " Total operating income of MNOK 3,643, down 8% from the third quarter last year = Lower operating income explained by lower sales prices and lower sales volume = EBITDA of MNOK 821, up 56% from the third quarter last year = 3Q-2023 was negati
Slide 19: Carbon Solutions
Carbon Solutions Challenging markets compensated by strong business model = Total operating income MNOK 886, down 13% from the third quarter last year = Lower operating income mainly explained by lower sales prices = EBITDA of MNOK 269, down 14% from the third quarter last year = Lower EBITDA mainly
Slide 20: Elkem Group: robust equity position
Elkem Group Robust equity position = Earnings per share (EPS) amounted to NOK 0.15 in the third quarter = EPS YTD-2024 was NOK 0.80 = Total equity amounted to BNOK 25.7 as at 30 September 2024, up BNOK 1.2 from year-end 2023 = Equity to total assets (equity ratio) at 49% 2 Elkem Earnings per share (
Slide 21: Elkem Group: well managed financing position
. “baari * Elkem Group Net interest-bearing debt (NIBD) Well managed financing position me 69 * Net interest-bearing debt (NIBD) of BNOK 9.9 as at 30 September 2024 r T : = Leverage ratio of 2.7x* based on LTM EBITDA of BNOK 3.6 39-23 49-23 19-24 29-24 39-24 Maturity profile* m Group level China loa
Slide 22: Elkem Group: investments significantly reduced
Elkem Group Investments significantly reduced according to plan * Cash flow from operations” was MNOK 32 in the third quarter 2024 Weak cash flow generation in the quarter was explained by negative working capital changes due to higher inventory levels = Investments ex. M&A of MNOK 537 in the third
Slide 23: Outlook for the fourth quarter 2024
Outlook for the fourth quarter 2024 = While market sentiment continues to be relatively weak, Elkem benefits from strong cost and market positions, and well-defined improvement programmes = Silicones markets are still challenging, however the division expects to continue benefitting from the EBITDA
Slide 24: 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 25: Appendix
2 Elkem Appendix 25
Slide 26: We are Elkem
We are Elkem Advanced silicon-based materials shaping a better and more sustainable future i bn Ef} — (aap Silicones Silicon Products Carbon Solutions 2 Elkem
Slide 27: Elkem celebrating its 120 years anniversary
Elkem celebrating its 120 years anniversary = Elkem celebrates its 120 years anniversary in 2024, having grown from a Norwegian industrial start-up into a position as one of the world's leading providers of advanced silicon-based materials = Elkem started as a Norwegian company founded in 1904 by Sa
Slide 28: Sustainable business model delivering good results
Sustainable business model delivering good results Low-cost sustainable input factors é Quartz Coal Biocarbon Power vy High temperature/chemical production processes ey Silicones Silicon, ferrosilicon, foundry products and microsilica Carbon solutions Examples of high value applications and markets
Slide 29: Delivering good results over the business cycle
Figures in NOK billion unless otherwise stated Delivering good results Operating isoe coma over the business cycle : CAGR 13% 28 Avg 68 2020 2021 2022 2023 2020 2021 2022 2023 m BITDA margin Cash flow from operations Avg ; 18% " Elkem delivering on its financial targets over the cycle v¥_ Operating
Slide 30: Elkem operates through three divisions
Elkem operates through three divisions: All with global scale, leadership positions and global footprint 40% , 49% of ° perating of operating income , income End markets 13 main plants End markets 12 main plants = Construction = Automotive = Automotive = Construction/industrial = Chemical formulator
Slide 31: Elkem's portfolio is well-balanced
Elkem’s portfolio, is well-balanced _ | LT pn t.S sel CASES A £ 4 8 f vs {- Revenue split - by division ‘\ } | iS = Carbon \ \ / “ EMEA Solutions es _—— & ipericas ae 1% Silicones Cea ) \ 60% : @ 40% Hh Sates office mio \ ee \ 5 Asia aA ) Silicon . 9 Oo Products 49% 2 Elkem 31
Slide 32: Energy cost positions
Energy cost positions Well-positioned with long-term power contracts in Norway Location of Elkem’s plants in price areas Forward market prices 2024-2026 @ <50 EUR/MWh (©) 50-75 EUR/MWh © »>75 EUR/MWh = In the first quarter 2024, Elkem signed a new power contract in Norway. The new contract is for 9
Slide 33: Elkem will contribute to limit global warming through three key levers
Environmental, Social & Governance Elkem will contribute to limit global warming through three key levers GS Cpa Achieve fully climate-neutral Supply key input factors required to Drive circular economies in our production throughout enable the green transition operations, products and markets our v
Slide 34: Decarbonisation levers continued
▪ ▪ Increase share of bio- Reduce CO2 emissions based raw materials in through decarbonisation our processes (scope 1) of China’s power mix (scope 2) ▪ Pursue sourcing of Scale R&D projects such renewable-based silicon as Capture & Storage ▪ metal and emission-free (CCS) and Sicalo to ▪ logistics. D
Slide 35: Silicones: solutions to global megatrends
Silicones Solutions to global megatrends Mai +t positions > 80,000 mt in France (exp. to 100,000 mt in 2024) > 360,000 mt in China Downstream specialty plants : 6 in EMEA/AMS and 4 in APAC > Silicones bring unparalleled properties and performances : long-term reliability, thermal management, electri
Slide 36: Silicones - Sales distribution
Silicones - Sales distribution Serving attractive end markets with advanced technologies Healthcare & Personal Consumer & Care packagi > Leading position in > Medical adhesives, Release coatings for long-termimplants, food & label ==, > Intermediates medical devices etc. industries (Silicones polyme
Slide 37: Silicon Products - Business lines: Silicon
Silicon Products - Business lines 30% Silicon — attractive cost position and downstream ee integration ee —> Oc > Oc > es Coal and biocarbon Electricity Total production capacity 208.000* mt in Norway and China > 175,000* mt silicon grades > 20.000 mt Silgrain® > 10.000 mt Silgrain® specialties Prop
Slide 38: Silicon Products - Business lines: Ferrosilicon
Silicon Products - Business lines 25% Ferrosilicon — high quality products to specialty steel sacra. Electricity Total production capacity > 185,000 mt in Norway and Iceland > 40% High Purity grades > 35% Refined grades > 26% Standard grades > Flexibility to switch grades Properties > Deoxidising st
Slide 39: Silicon Products - Business lines: Foundry Alloys
Silicon Products - Business lines Foundry Alloys — global leader into cast iron metal staves treatment a —> Oc > A > Iron foundries Automotive (50%) Ferrosilicon As Total production capacity Engineering (35%) i E , ee | Alloying elements > 190.000 mt globally > 60% FSM > 20% Low potent inoculants >
Slide 40: Silicon Products - Business lines: Microsilica
Silicon Products - Business lines Microsilica — tailor made products to wide range of specialty applications -Rewmeterils Products Industry players => End markets | > Elkem pioneered the development to collect and process the off-gas of silicon and ferrosilicon, and is now the world’s leading suppli
Slide 41: Currency sensitivity
Currency sensitivity = The result and cash flow are exposed to currency fluctuations. The main currencies are EUR, USD and CNY = EUR - exposure approx. MEUR 550. = USD - exposure approx. MUSD 100. = CNY - exposure approx. MCNY 200 = Current cash flow hedging programme = 90% hedging of net cash flows
Slide 42: Other financial sensitivities
Other financial sensitivities POWER = Electric power is a key input factor in Elkem’s production. The normal consumption is around 6.5 TWh of which approx. 3.6 TWh is in Norway. Near term exposure to spot power prices is limited = Norway, hedging programme mainly consisting of long-term contracts co
Slide 43: Delivering your potential
~ Elkem Delivering your potential