Slide 1: Third quarter results 2019
Third quarter results 2019 « Elkem
Slide 2: Agenda
Agenda Introduction of Michael Koenig Morten Viga, CFO Business update Financial performance Outlook
Slide 3: Introduction of Michael Koenig
Introduction of Michael Koenig 3
Slide 4: Michael Koenig new CEO starting 1 December
Michael Koenig new CEO starting 1 December Changes to Elkem management and board of directors effective from 1 December 2019 Michael Koenig will assume the position of CEO of Elkem ASA Hao Zhigang, current member of the board, has been appointed as new chairman of the board following Michael K
Slide 5: Morten Viga, CFO
Morten Viga, CFO Business update Financial performance Outlook 5
Slide 6: Robust results in challenging markets
Robust results in challenging markets Elkem delivers robust results in a challenging market environment Total operating income was NOK 5,540 million in the third quarter, down 5% from the corresponding quarter last year EBITDA was NOK 640 million including a negative impact of MNOK 42 due to c
Slide 7: ESG our key priorities
ESG our key priorities Elkem has a zero harm philosophy For health and safety, the target is zero recordable injuries For environment, the strategy is to work towards our goal of zero emissions The total recordable injury rate as at 30 September 2019 was 2.0 This represents 20 recordable i
Slide 8: Strategic priorities good progress on key elements
Strategic priorities Competitive strengths good progress on key elements Acquisition of Basel Chemie concluded Leading technology in silicones for cosmetics and construction, providing a strong platform for further development and growth Strengthening presence in major growth markets. Expandin
Slide 9: Improvement programme realised improvements ahead of plan
Improvement programme realised improvements ahead of plan The accelerated improvement programme was initiated early 2019 to counter weaker market conditions The target was to realise effects of MNOK 500 in 2019 The programme is progressing well and realised effects by end of 3Q-2019 amounted t
Slide 10: Automotive sales declining in all regions
Light vehicles sales – World (quarterly unit sales in 1,000) (*) Automotive sales declining in all regions Automotive weak in all major regions Light vehicles sales – Europe (quarterly unit sales in 1,000) (*) World sales down 7% in 1H-2019 compared to 1H-2018 Sales in Europe down 4% in 1H-201
Slide 11: Sales of EVs increasing in main markets
Sales of EVs increasing in main markets Total EV sales in Europe is rising Total EV sales in Europe (quarterly unit sales in 1.000) Sales increased by almost 40% from 1H-2018 to 1H-2019 and has close to doubled since 1H-2017 EV’s share of total car sales was approx. 3% in 1H-2019 up from appro
Slide 12: Silicones price recovery for DMC but uncertain outlook
Silicones price recovery for DMC but uncertain outlook DMC prices in China recovered in third quarter after a steep decline in the second quarter following additional US tariffs DMC reference price China (RMB/mt) Price increases supported by seasonal upturn in Chinese construction market and dis
Slide 13: Silicon approaching historic low prices
Silicon approaching historic low prices Market prices have continued to decline during the third quarter Recent price declines primarily driven by low demand, especially due to CRU silicon 99 price EU (EUR/mt) weakness in automotive Current price levels not considered sustainable as many produ
Slide 14: Ferrosilicon steel and automotive weak; Carbon
Ferrosilicon steel and automotive weak Modest market price decline in the third quarter EU prices well below US and Asian price levels Current price level not considered sustainable long-term Foundry markets affected by weak steel market and weakness in automotive EU steel demand falling 4
Slide 15: Elkem group results impacted by weak markets
Elkem group results impacted by weak markets EBITDA impacted negatively in the quarter by MNOK 42 due to changed revenue periodisation of Norwegian CO2 compensation Total operating income EBITDA ‒ down 5% compared to ‒ down 54% vs. third the corresponding quarter last year mainly quarter last year
Slide 16: Elkem group financial position remain strong
Elkem group Consolidated key figures financial position remain (NOK million, except where specified) 3Q 2019 3Q 2018 YTD 2019 YTD 2018 FY 2018 strong Total operating income EBITDA 5,540 640 5,842 1,395 17,109 2,139 19,138 4,819 25,230 5,793 EBIT 282 1,078 1,097 3,883 4,522 Other items 35 86 211 -268
Slide 17: Silicones lower prices, good volumes
Silicones Total operating income NOK million lower prices, good volumes Total operating income of MNOK 2,876, down 5% from third quarter last year EBITDA and margin Lower operating income was due to lower sales prices in China, partly NOK million and % offset by higher volumes compared to third
Slide 18: Silicon Materials higher sales volumes in weak markets
Silicon Materials Total operating income NOK million higher sales volumes in weak markets Total operating income of MNOK 1666, up 13% compared to third quarter last EBITDA and margin year NOK million and % Higher operating income explained by higher sales volumes compared to third quarter 2018,
Slide 19: Foundry Products challenging market conditions persist
Foundry Products Total operating income NOK million challenging market conditions persist Total operating income of MNOK 1,005, down by 18% from third quarter last EBITDA and margin year NOK million and % Lower operating income was due to lower sales prices for ferrosilicon and lower sales volum
Slide 20: Carbon impacted by weaker metal markets
Carbon Total operating income NOK million impacted by weaker metal markets Total operating income MNOK 430, down 10% from third quarter last year EBITDA and margin NOK million and % EBITDA MNOK 68, down 31% from the corresponding quarter last year Lower total operating revenue and EBITDA expla
Slide 21: Elkem group stable equity, EPS impacted by weak markets
Elkem group Earnings per share (EPS) stable equity, EPS impacted NOK per share by weak markets Earnings per share (EPS) EPS amounted to NOK 0.35 in the third quarter EPS YTD 2019 was NOK 1.44 Total equity amounted to BNOK 13.0 as at 30 September 2019 Equity ratio of 44% Equity ratio In %
Slide 22: Elkem group leverage in line with target
Elkem group Net interest-bearing debt (NIBD) leverage in line with NOK billion target Leverage ratio of 1.8x based on LTM EBITDA of BNOK 3.1 Net interest bearing debt (NIBD) of BNOK 5.6 as at 30 September 2019 NIBD has increased by BNOK 0.5 from 30 June 2019 mainly due to the acquisition of Ba
Slide 23: Elkem group good cash flow generation
Elkem group Cash flow from operations good cash flow NOK million generation Cash flow from operations(1) was MNOK 539 in the third quarter, down from the corresponding quarter last year due to lower operating profit Lower operating profit has been partly offset by positive working capital moveme
Slide 24: Outlook for the fourth quarter
Outlook for the fourth quarter Continued weak outlook in main market segments due to macro-economic uncertainty The price for silicones in China improved during third quarter but has had a declining trend beginning of fourth quarter. Seasonally lower demand from construction is expected Elkem
Slide 25: 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 26: Appendix
Appendix
Slide 27: Currency sensitivity
Currency sensitivity Currency development The cash flow is exposed to operating income and costs in different currencies. The main currencies are EUR and USD EUR - net cash flow approx. MEUR 360 USD - net cash flow approx. MUSD 120 Current cash flow hedging programme 90% hedging of net cas
Slide 28: Other financial sensitivities
Other financial sensitivities POWER SALES PRICES Electric power is a key input factor in Elkem’s production. Total consumption for Changes in sales prices could significantly affect operating income and EBITDA the group was 6.2 TWh in 2018. Near term exposure to spot power prices is 1% margin
Slide 29: « Elkem
« Elkem