Rhi Magnesita Nv · LSE:RHIM
Rhi Magnesita Nv — Investor Presentation (March 2024)
51 slides from Rhi Magnesita Nv's investor presentation, March 2024
Slide 1: RHI Magnesita Investor Presentation March 2024
3 RHI MAGNESITA RHI Magnesita Investor Presentation March 2024
Slide 2: Content
» RHI MAGNESITA Content @ Introduction to RHI Magnesita 2 } 2023 financial results . 3) Appendix Investor Presentation | March 2024
Slide 3: Refractories are essential for our modern world
» RHI MAGNESITA Refractories are essential for our modern world Concrete Copper Steel Glass Aluminium 1,500°C 1,350°C 1,760°C 1,650°C 1,250°C N CN CN 1 tonne of STEEL 1 tonne of CEMENT 1 tonne of GLASS 1 tonne of ALUMINIUM 1 tonne of COPPER demands ~10-15 Kg demands ~1 Kg demands ~4 Kg demands ~6 Kg
Slide 4: Refractory applications
Refractory applications Industrial division Project businesses Investor Presentation | Marc! » RHI MAGNESITA Customer industries Main application Lifetime and costs Refractory characteristics Steel 69% of revenues Cement/Lime 1 2% of revenues Non-ferrous metals 8% of revenues Glass'& Energy, Environ
Slide 5: Leading global supplier of refractories
» RHI MAGNESITA Leading global supplier of refractories Example - Electric Arc Furnace (“EAF”) Key product ranges refractories Roof centre piece Bricks Mixes SSreotproductrovenve 257 productrevenue ‘erageseling pce ‘rerageseling pce C£1800per tonne c€800perionne Injector area Slag door area Flow Ser
Slide 6: End markets and customer industries
» RHI MAGNESITA End markets and customer industries Cement/ Non-ferrous Lime Steel Glass &EEC metals Customer 12% 69% 9% 8% industries % of 2023 revenue. End markets 45% 7% 10% 15% 8% 5% Construction Transportation Machinery Electronicsand Other Energy consumer goods Investor Presentation | March 20
Slide 7: Raw material and refractory process overview
» RHI MAGNESITA Raw material and refractory process overview Raw material production Heat management solutions Logistics | { SEEERSSEEEESSRENSSSES=CS01-| | L 4 a Firing in rotary kiln, a i Vv | Monitoring, ropair and Refractory production process efciencios Vv ane ress
Slide 8: Solutions contracts
» RHI MAGNESITA Solutions contracts RHI Magnesita offers full heat management solutions to its customers Client benefit v Reduced downtime v Lower refractory consumption v Lower energy and other raw materials consumption v Higher productivity and cost savings RHI Magnesita benefit v Market share gai
Slide 9: Vertical integration benefits
Vertical integration benefits » RHI MAGNESITA Our magnesite raw material assets are amongst the lowest cost globally DBM 98: Indicative cost curve Eskisher Brumado HB RHIM assets Global DBM assets (non RHIM) Investor Presentation | EBITA margin contribution RHI standalone RHI Magnesita 13.9% 14.0% 2
Slide 10: Raw material vertical integration
Inv » Raw material vertical integration na MAGNESIA Extent of vertical integration Key raw material sites and shipment routes 2023 Magnesite-and dolomite-based (basic) raw material volume} Total volume of raw material usage} Total value of raw material usage} Hl Own production I Recycling Il Purchas
Slide 11: Finished goods
» RHI MAGNESITA Finished goods Regional finished goods production - local versus imports Europe finished goods exports % value by destination region, 2023 Hl (38%) North America g Hl (22%) Asia & Australasia a @ %imported @ % produced in region t ¢ (16%) Africa (9%) India (8%) South America fl (6%)
Slide 12: Low carbon steel production
» RHI MAGNESITA Low carbon steel production Transition to EAF, DRI and ESF is a strong positive growth driver for RHI Magnesita Scrap steel Tonnes of CO, per tonne of steel } EAF BOF EAF s Ss 0.66 BOF BF: Blast furnace 1. Electric smelting furnace (“ESF”) is required to be paired with a Direct Reduc
Slide 13: 2023 financial results
3 RHI MAGNESITA 2. 2023 financial results
Slide 14: Health & Safety
Health & Safety A core value at RHI Magnesita Improvement in injury rates since 2018 -@- TRF -@LTIF 1.07 am 0.18 O20 0.16 2018 2019 2020 2021 2022 2023 4. Lost time injury frequency rate per 200,000 hours 2.Total recordableinjury frequency rate per 200,000 hours Investor Presentation | March 2024 »
Slide 15: Financial highlights FY 2023
Financial highlights FY 2023 » RHI MAGNESITA Significant cash generation driven by resilient profitability and working capital release Revenue Adjusted EBITA Adjusted EBITA margin €3.6bn €409m_ 11.4% PB 8% t™ B (20)bps M&A Adjusted Dividend declared Working Capital EBITDA contribution intensity! €56
Slide 16: M&A growth on resilient base business
» RHI MAGNESITA M&A growth on resilient base business Pricing and acquisitions offset organic volume decline Revenue growth driven by pricing and M&A @ Revenue growth of 10% in constant currency despite Emilion 0% 3572 very weak demand environment 3956 4% || - Steel volumes -3% excluding M&A, pricin
Slide 17: Steel business overview
Steel business overview » RHI MAGNESITA Resilient gross margin, pricing maintained and unit costs stable Revenue €m'? 21.6% 22.0% 22.3% to —© @ 2.371 2,461 1,823 —® Gross margin (%) HE Revenue 1. Denoted on a reported basis 2. Excludes recycling 2021 2022 2023 Investor Presentation | Mar 1024 ® Incl
Slide 18: Steel revenue breakdown
€239m €575m €673m €2,461m €393m €582m 2023 versus 2022 % (0.1)% (1)%
Slide 19: Industrial business overview
» Industrial business overview RHI MAGNESITA Restored gross margin of 27.7% due to catch-up price effects and later cycle timing Revenue . . . . €m ®@ Industrial segment revenue including minerals sales 277% increased by 17% to €1,111 million (+20% in constant 26.1% 25.6% currency) @ Gross margin 21
Slide 20: Sustainability leadership
» RHI MAGNESITA Sustainability leadership Recycling of reclaimed refractories continues to deliver significant CO, savings | i iy . Use of secondary raw material ° Secondary raw material use increased to 12.6% (2022: % of total raw material used 10.5%) ® Recycling activities since 2018 have avoided
Slide 21: M&A update
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Slide 22: Europe/Türkiye, China, India acquisitions
Europe/Türkiye China Industrial Non-basic v Recycling Flow Control ⁃ ⁃ ⁃ Lances, pre-casts ⁃ India Industrial ⁃ Non-basic ⁃ v ⁃ Non-basic, Industrial Flow Control ⁃ ⁃
Slide 23: Industry consolidation opportunity
Industry consolidation opportunity » RHI MAGNESITA RHI Magnesita is strengthening its clear global leadership position in the refractory industry and spreads global best technology, quality & sustainability standards Y Growth in under-represented geographies v Network or logistics synergies v Flow c
Slide 24: M&A financials
M&A financials » RHI MAGNESITA Acquisitions largely funded by cash flow and India equity raise Base business vs Group, €m as7__543__ 561 448 9498 I Base Business I Group incl. M&A Group Pro Forma EBITDA Adjusted EPS Adjusted EBITDA M&A funding bridge Group net debt bridge,€m 1163 258 M&A Net debt |
Slide 25: Sensitivity: Internal
Sensitivity: Internal
Slide 26: Profit and loss summary
Profit and loss summary Higher revenue and EBITA offset at EPS level by increased finance charges, including FX €m 2023 2022' Change Revenue 3,572 3,317 8% Gross profit 857 763 12% Gross margin (%) 24.0% 23.0% 100bps Adjusted EBITDA 543 500 9% EBITDA Margin (%) 15.2% 15.1% 10bps Adjusted EBITA 409 3
Slide 27: 2023 revenue bridge
2023 revenue bridge Pricing, strategic sales initiatives and M&A offset lower sales volumes €m 356 3317 81 ee en m 116 — | — | » RHI MAGNESITA 3,572 — | 2022 Revenue FX effect 2022Revenueat Sales volumes Price Strategic Initiatives M&A constant currency Investor Presentation | M 2023 Revenue 27
Slide 28: 2023 EBITA bridge
» 2025 EBITA bridge RAI MAGNESIA EBITA increased 7% as M&A delivers growth whilst pricing offsets volume and cost impacts €m N16 48 300 409 ea 4 38 54 6 2022 EBITA FX effect 2022 EBITA Salesvolumes Fixed cost Price Labour costs other SG&A Strategic M&A 2023 EBITA at constant under Initiatives curren
Slide 29: Vertical integration margin
» RHI MAGNESITA Vertical integration margin for the time being lower at 1.7ppts due to cyclical low in refractory raw material prices RHI standalone RHI Magnesita Consistent margin resilience, minimum 13.9% 14.0% 11% since merger 1.5% 11.0% 1.6% 1.4% 9.7% 2016 2017 2018 2019 2020 2021 2022 2023 Vert
Slide 30: Cost detail
Cost detail » RHI MAGNESITA Cost deflation in some key categories offset by low capacity utilisation in H2 Cost of goods sold Absolute COGS +10%, shipped volumes +11% 2714 2.474 I Raw materials I Personnel Wl Freight I Energy Depreciation wt epreciatio aT 174 Supplies Other 2022 2023excl.M&A 2023 Pl
Slide 31: Working capital
Working capital » RHI MAGNESITA Disciplined reduction in inventory and receivables contributes €123 million release of working capital in base business Working capital balances 23.3% 25.4% 23.0% 24.2% + —e - 997 1,232 1,092 1,272 320 S14 298 2021 2022 2023 excluding M&A 2023 Hl Working capital after
Slide 32: Capital expenditure
Capital expenditure Peak capex has passed, now returning to levels closer to depreciation 252 180 170 156 157 7 156 ip 13 46 123 74 86 66 110 71 75 7 oo 2018 2019. -«-2020.~=«-2021:+~=«2022-—« 2023 2024e Investor Presentation | March 2024 Hl M&A Capex Hl Project Capex Il Maintenance Capex » RHI MAGN
Slide 33: Strong cash flow generation in 2023
8 RHI MAGNESITA Strong cash flow generation in 2025 Adjusted operating cash flow of €413 million driven by strong profitability and working capital release Adjusted operating cash flow and Cash Conversion Net debt bridge €m! €m 102% 88% 1% mS cay 101% 50 al 20 i ew. 0} H1: €(84)m H2: €239m M&A Net d
Slide 34: Stable gearing supports M&A strategy
Stable gearing supports M&A strategy » RHI MAGNESITA €443 million 2023 M&A programme funded by operating cash flow and India equity raise Net debt and liquidity 1.181 4.121 1.168 1.304 1.304 a HB Liquidity’ 589) SOT 561 BB Netdebe Gl cairo @ Leverage* 2021 2022 2023 Debt amortisation profile én 1,30
Slide 35: ,
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Slide 36: Trading outlook and 2024 guidance
Trading outlook and 2024 guidance » RHI MAGNESITA M&A annualisation will be offset by lower vertical integration margin and pricing pressure e Key end markets of construction and transportation remain subdued, glass and non-ferrous metals volumes to reduce and pricing pressure from competitors e RHI
Slide 37: Our performance in context
» Our performance in context sia MAGRESIA RHIM has navigated the recent downturn in steel production without margin decline, whilst executing significant M&A at the bottom of the refractory market — EBITDA margin Global China financial crisis China raw downturn material crisis Energy Il World Steel
Slide 38: Investment case
» RHI MAGNESITA Investment case (i) EBITDA and free cash flow comparable to FTSE 100 peers; (ii) highest free cash flow yield in the sector; (iii) compelling M&A growth story; (iv) high operational gearing to market recovery EBITDA 2023' I RHI Magnesita Free cash flow 2023! Free cash flow yield ' €m
Slide 39: Slide 39
Slide 40: Appendix
3 RHI MAGNESITA Appendix
Slide 41: Delivering our strategic sales initiatives
» RHI MAGNESITA Delivering our strategic sales initiatives Strong organic and/or M&A led revenue growth over last 5 years in key target areas A + ® Solutions contracts China €m Ml Base business Ml 2023 M&A India €m ‘Acquisition of on DBRL & He Tech reduced to 27% of Acquisition of Chongqing Requisit
Slide 42: Leverage 1.0 – 2.0x
Leverage 1.0 – 2.0x ~2.5x for M&A Resilient margins through the cycle
Slide 43: P&L overview
» RHI MAGNESITA P&L overview Adjusted Profit after Tax Adjusted EBITA* €241m Adjusted Profit attributable to shareholders €235m 3 Net interest Minorities €6m . ‘expense €35m 3 Solutions.............€856m Other net financial contacts ‘expenses €57m ‘Tax €76m R&D €43m SG&A €449m Product/........€1,605
Slide 44: 2023 EBITA - Adjusted items
2023 EBITA - Adjusted items Restructuring costs Plant closures a M&A related costs 4 Oberhausen provision (2) Others 9 Total 1 Adjusted EBITA 2022 Investor Presentation | Mar Adjusted EBITA 2023 Restructuring costs Plant closures M&A related costs Oberhausen provision Board response to tender Others
Slide 45: Disciplined inventory management
» RHI MAGNESITA Disciplined inventory management Production volumes held consistently below sales over last eight quarters to reduce inventory Production and sales volumes Hl Production Volume Inventory volumes excluding M&A — Finished Product excluding M&A I Sales Volume kt — Raw Material kt 500 4
Slide 46: Cash flow reconciliation
Cash flow reconciliation Investor Presentation | March €m 2023 2022 Adjusted EBITDA 543 500 Share based payments - gross non cash 9 8 Working capital changes 53 (195) Changes in other assets and liabilities (12) (2) Investments in Property, Plant & Equipment and Intangible assets (180) (157) Adjuste
Slide 47: Net financial expenses
Net financial expenses » RHI MAGNESITA €m 2023 2022 Net financial expenses (39) (19) Interest income 20 8 Interest expenses (58) (27) FX effects (30) (23) Balance sheet translation (41) (10) Derivatives 1 (13) Other net financial expenses (32) (31) Present value adjustment on provisions (inc. Oberha
Slide 48: Items excluded from adjusted performance
Items excluded Items excluded €m 2023 2023 2022 2022 from adjusted from adjusted reported adjusted reported adjusted performance performance ⁃ ⁃ ⁃ ⁃ ⁃
Slide 49: Impact of foreign currency movement
Impact of foreign currency movement » RHI MAGNESITA EBITA sensitivity in 2023 2023 exchange rates Appreciation vs EUR Depreciation vs EUR Increase / Increase / FY 2023 FY2023 FY2023 FY 2022 (decrease) (decrease) Opening Closing Average Average Unit in EBITA (€m) Unit in EBITA (€m) EUR: Rate Rate Rat
Slide 50: Return on invested capital
» RHI MAGNESITA Return on invested capital Group ROIC! 2023 2022 Average Invested Capital (€m) 2,854 2,439 NOPAT (€m) 305 301 ROIC (%) 10.7% 12.3% Vertical integration ROIC 2023 2022 Average Invested Capital (€m) 483 424 NOPAT (€m) 43 60 ROIC (%) 8.9% 14.1% Refractory ROIC 2023 2022 Average Invested
Slide 51: 2024 guidance detail
2024 guidance detail P&L 2024 guidance » RHI MAGNESITA 2023 actual Revenues (i) Volumes Base business flat volumes, M&A full year effect adds 10% 3% revenue decline from volumes Revenues (ii) Pricing Pricing pressure to patially offset benefit of M&A 13% revenue growth from pricing and M&A Depreciat