Elkem Asa · OSL:ELK
Elkem Asa — ABGSC Nordic Opportunities Seminar London 2019
38 slides from Elkem Asa's conference presentation, Nov 28, 2019
Slide 1: Elkem ASA Nordic opportunities
Elkem ASA Nordic opportunities 28 November 2019 London
Slide 2: Agenda
Agenda Brief Introduction Strategy Market update Results for 3rd quarter 2019 Morten Viga, CFO morten.viga@elkem.no Mobile +47 416 09 752 Odd-Geir Lyngstad, Investor Relations odd-geir.lyngstad@elkem.no Mobile +47 976 72 806
Slide 3: Brief Introduction
Brief Introduction 3
Slide 4: Michael Koenig new CEO from 1 December
Michael Koenig new CEO from 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 Koeni
Slide 5: Elkem: More than 110 years of history as a technology provider
Elkem More than 110 years of history as a technology provider Founded in 1904 by Sam Eyde Listed on Oslo stock exchange since March 2018 Total operating income EBITDA EBITDA margin Head office in Norway Employees worldwide R&D centres in Norway, France and China NOK 25.9 bn. NOK 5.8 bn. 22% 27 plant
Slide 6: Four strong business areas
Four strong business areas Silicones Silicon Materials Foundry Products Carbon BNOK 13.1 BNOK 6.6 BNOK 5.1 BNOK 1.9 50% of 23% of 20% of 7% of group sales group sales group sales group sales End-markets End-markets End-markets End-markets Paper & Film Release Chemicals Automotive Ferroalloys
Slide 7: The world of Elkem
The world of Elkem
Slide 8: Our products are vital for modern societies
Our products are vital for modern societies Low cost sustainable input factors High temperature/chemical production processes Examples of high value applications and markets Quartz Silicon and microsilica Windmills Infrastructure Airbags Coal Silicones Solar Biocarbon Foundry products Automotive Coo
Slide 9: Strategy
Strategy 9
Slide 10: Competitive strengths
Competitive strengths Elkem has strong markets positions, a fully integrated value chain and a strong financial position The strategy is to capitalise on competitive strengths to ensure profitable growth The goal is to improve and stabilise Elkem’s financial results through cost efficiencies,
Slide 11: ESG Sustainability
ESG Sustainability Elkem has a zero harm philosophy Sustainable and renewable energy For health and safety, the target is zero recordable injuries All plants outside China run on hydro power For environment, the strategy is to work towards our goal of zero emissions EcoVadis has given Elke
Slide 12: Leader in attractive markets
Leader in attractive markets Elkem is the largest silicones producers in China Silicones to electric vehicles Strong position in growing EV market Elkem has leading positions in silicon metal and ferrosilicon outside China Elkem’s is the only true global player in the carbon products segment
Slide 13: Strong presence in major growth markets
Strong presence in major growth markets The global demand for silicones is expected grow by 5% CAGR from 2018 to 2023 60% of the growth is expected in China, India and rest of Asia Silicones - demand forecast Elkem is expanding its silicones offering in the Americas Elkem is gaining specialt
Slide 14: Integrated value chain and low cost positions
Integrated value chain and low cost positions Accelerated improvement programme Integrated value chain from quartz to highly specialised silicones Accelerated improvement Leading cost positions programme initiated to counter weaker market conditions Low cost positions in silicon metal and fe
Slide 15: R&D capabilities for further specialisation
R&D capabilities for further specialisation Strong focus on further specialisation through R&D and bolt-on acquisitions R&D centres Significant opportunities in specialised products for battery insulation and Elkem has 13 innovation centres with > 400 R&D high quality rubber for cables in elec
Slide 16: Strong financial position
Strong financial position Strong equity Total equity was BNOK 13.0 as at 30 September 2019 Target metric Targets Comment Equity ratio of 44% Grow faster than market through Revenue growth 5 – 10% specialisation, organic growth and acquisitions Target average margin through the EBITDA margin (%)
Slide 17: Strategy
Strategy Continue transition into a specialty chemicals company Continuous improvement to ensure cost competitiveness Leverage on integrated value chain and take out synergies Buliding blocks of continued profitable growth Growth through specialisation, organic growth and acquisitions Furthe
Slide 18: Silicones optimising the value chain
Silicones optimising the value chain Estimated industry EBITDA margins 0-15 % 15-25 % > 25 % Pricing votality High Low/medium Low Upstream Intermediates Downstream Siloxane Core products Volume specialities Value specialities Siloxane is generally not Core products/intermediates Volume specialities
Slide 19: Market update
Market update 19
Slide 20: 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 21: 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 22: Silicones lower, but stable prices for DMC
Silicones lower, but stable prices for DMC DMC prices in China declined shortly before the Chinese national holiday in October DMC reference price China (RMB/mt) Prices have then remained stable and are expected to remain stable also going forward Downstream silicones markets still relatively
Slide 23: Silicon prices have started to increase
Silicon prices have started to increase Market prices have increased in October and November CRU reference price in Europe up 5% since the end of third quarter CRU silicon 99 price EU (EUR/mt) Weak price levels primarily driven by low demand, especially due to weakness in automotive Current
Slide 24: Ferrosilicon recent price increase; Carbon
Ferrosilicon recent price increase Market price for ferrosilicon increased in November following a decline in October Prices up 7% in November Current price 3% higher than end of third quarter Current price level not considered sustainable long-term Foundry markets affected by weak steel m
Slide 25: Results for 3rd quarter 2019
Results for 3rd quarter 2019 25
Slide 26: 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 27: 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 28: 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 29: Silicones lower prices, good volumes
Total operating income Silicones 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 30: Silicon Materials higher sales volumes in weak markets
Total operating income Silicon Materials 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 31: Foundry Products challenging market conditions persist
Total operating income Foundry Products 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 32: Carbon impacted by weaker metal markets
Total operating income Carbon 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 33: 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 34: 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 35: 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 36: 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 37: 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 38: Elkem
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