Slide 1: Third Quarter 2022 Earnings Presentation
Third Quarter 2022 Earnings Presentation 27 October 2022
Slide 2: Disclaimer
Disclaimer This presentation contains forward-looking statements and information relating to Befesa and its affiliates that are based on the beliefs of its management, including assumptions, opinions and views of Befesa and its affiliates as well as information cited from third party sources. Such s
Slide 3: Today's presenters
Today’s presenters Javier Asier Wolf Molina Zarraonandia Lehmann Executive CEO CFO Chair Leading Befesa for >20 years >20 years with Befesa Befesa’s CFO since 2014 3 Third Quarter 2022 Earnings Presentation
Slide 4: Highlights
Electric arc furnace steel dust (EAFD) recycling plant at Asúa-Erandio, Spain 01 Highlights
Slide 5: Executive summary
Executive summary • Continuing solid yoy EBITDA growth: Q3 +8%, 9M +20% - Q3 at €46m, +8% / +€3m yoy; - 9M at €164m +20% / +€27m yoy; LTM at €225m • Metal prices decreased QoQ with recessionary & lower China market sentiment – although – energy inflation continued at high levels • FY’22 guidance: co
Slide 6: Business highlights
Business highlights Steel Dust Alu Salt Slags • EAFD throughput: • Salt slags volumes / normalised for Hanover: 898 kt 9M, +59% yoy; 240 kt 9M, -21% / +9% yoy; 268 kt Q3, +20% yoy 67 kt Q3, -38% / -9% yoy; • Plant utilisation: 77% 9M, 68% Q3; • 2nd aluminium alloys: Lower EU volume 122 kt 9M, -14% y
Slide 7: Managing through "Zero COVID", ready for '23
Managing through “Zero COVID”, ready for ‘23 China I, Changzhou plant, Jiangsu province 1 Key facts of the plant: • 1st EAFD recycling plant, 110 kt EAFD p.a. • Total investment: c.€42m Status update: Construction completed on budget In commercial production & selling WOX Contracted for >80% EAFD vo
Slide 8: Financial results
Secondary aluminium production plant at Bernburg, Germany 02 Financial results
Slide 9: Consolidated key financials
Consolidated key financials 9M adjusted EBITDA at €163.9m, +20% yoy, driven mainly by US zinc operations delivering as planned; yoy higher base metal prices offsetting energy inflation & unfavourable Zinc TC Adjusted EBITDA bridge 9M 2021 to 9M 2022 (€m) +€27.1 / +19.8% 51 -50 1) 163.9 136.8 26 +36
Slide 10: Steel Dust Recycling Services
Steel Dust Recycling Services 9M EBITDA at €131.0m, +28% yoy, driven mainly by US operations delivering as planned; yoy higher zinc market prices offsetting energy inflation & unfavourable TC Adjusted EBITDA bridge 9M 2021 to 9M 2022 (€m) +€28.3 / +27.5% 25 -27 131.0 102.7 30 +36 Zinc LME Inflation
Slide 11: Aluminium Salt Slags Recycling Services
Aluminium Salt Slags Recycling Services 9M EBITDA at €34.2m, flat yoy; Energy inflation and some volume pressure mitigated with higher aluminium metal prices EBITDA bridge 9M 2021 to 9M 2022 (€m) +€0.1 / +0.4% 34.1 25 -21 34.2 -4 Higher alu alloys FMB Inflation incl. energy, Lower aluminium alloys &
Slide 12: Cash flow, net debt & leverage
Cash flow, net debt & leverage €139m cash on hand at Q3’22 closing vs. €239m at Q2’22 closing; Balanced cash flow normalised for €50m dividend distributed and $47m zinc refining acquisition; Net leverage of x2.56 at Q3’22; Targeting lower leverage towards year end 9M adjusted EBITDA to total cash fl
Slide 13: Zinc prices & hedging strategy
Zinc prices & hedging strategy Hedge book fully extended up to Jan’25, c.2.5 years; Improving earnings & cash flows visibility Zinc LME price vs. Befesa’s prices (€/t) Zinc LME1) Befesa’s hedges2) c.€2,500 c.€2,600 €2,317 €2,239 c.€2,375 €2,275 €2,280 €2,136 €2,151 Befesa’ avg. blended3) 2019 2020 2
Slide 14: Growth projects
Nanjing City, location of Befesa China’s HQ 03 Growth projects
Slide 15: US Zinc refining asset acquisition: Transaction highlights
US Zinc refining asset acquisition: Transaction highlights Zinc refining plant Location: Rutherford County, NC Installed capacity: c. 140kt SHG zinc p.a. • Acquired remaining 93% of zinc refining asset on 30 Sept ’22 for $47m cash transaction; 65% or $88m below original purchase option of $135m • At
Slide 16: New 5-year Sustainable Global Growth Plan (SGGP)
New 5-year Sustainable Global Growth Plan (SGGP) Around €410-450m investment, similar expansion focus & size like last 5 years Targeting around double-digit earnings growth Globally balanced growth, in 1/3 Asia/China, US & Europe Organically funding investments, no capital increase, keeping leverage
Slide 17: ESG at Befesa
EAFD recycling plant at Gyeongju, South Korea 04 ESG at Befesa
Slide 18: ESG at Befesa
ESG at Befesa Key player within the circular economy, with c.2 Mt recycled and c.1.5 Mt of valuable materials recovered annually, that contributes significantly to increase efficiency of raw material use in the metals industry and promotes the transition towards a more sustainable economy Lost Time
Slide 19: Environmental highlights
Environmental highlights Baseline 2030 commitment • Holistic CO2 impact analysis: -20% Befesa prevents emissions of >2.4 mtpa CO₂eq, plus, 0.56 additional environmental benefits of reduced landfill 0.06 0.45 0.50 0.45 • Committing to CO2 Reduction Plan: 2021 PF 2030E 20% CO2 emission intensity reduc
Slide 20: Investor agenda & appendix
Waelz kiln at EAFD recycling plant in Gyeongju, South Korea 05 Investor agenda & appendix
Slide 21: Investor's agenda
Investor’s agenda Financial calendar Next investor conferences 2023 Q4 2022 Q1 2023 Prelim. YE Results 2022 & Conf. Call BBVA Iberian Forum (virtual) Lyon – ODDO BHF Forum 2023 Thursday, 3 Mar 2023 6 & 7 Oct – BBVA 5-10 Jan – ODDO BHF Annual Report 2022 London – Befesa 1st Capital Markets Day New Yo
Slide 22: Q3 2022/21 – Key financials
Q3 2022/21 – Key financials (€m, unless otherwise stated) Steel Salt Secondary Corporate & Total Dust Slags Aluminium eliminations Befesa Revenue1) €179.5 €29.6 €72.2 €4.0 €285.3 yoy change +€70.7 / +65.0% +€9.6 / +48.1% +€0.2 / +0.3% +€14.8 / - +€95.4 / +50.2% Reported EBITDA €56.3 €7.3 €3.2 -€1.5
Slide 23: 9M 2022/21 – Key financials
9M 2022/21 – Key financials (€m, unless otherwise stated) Steel Salt Secondary Corporate & Total Dust Slags Aluminium eliminations Befesa Revenue1) €533.3 €70.9 €290.0 -€36.3 €857.9 yoy change +€229.2 / +75.4% +€13.6 / +23.7% +€45.7 / +18.7% -€4.8 / - +€283.7 / +49.4% Reported EBITDA €151.3 €22.0 €1
Slide 24: Multi-year trend – Key financials
Multi-year trend – Key financials1) (€m, unless otherwise stated) 2017 2018 2019 2020 2021 Revenue €667.42) €720.1 €647.9 €604.3 €821.6 Reported EBITDA €153.0 €176.0 €159.6 €123.5 €189.6 Reported EBITDA margin % 22.9%2) 24.4% 24.6% 20.4% 23.1% Adjusted EBITDA €172.43) €176.0 €159.6 €127.03) €197.63)
Slide 25: Q3 2022/21 – Operational data – Steel Dust Recycling Services
Q3 2022/21 – Operational data – Steel Dust Recycling Services Q3 20211) Q3 2022 yoy change EAFD 222.6 267.9 +45.3 / +20.4% throughput (kt) EAFD average 77.7% 68.3% -939 bps capacity utilisation (%) Waelz oxide 73.2 97.5 +24.2 / +33.1% (WOX) sold (kt) Zinc LME price €2,538 €3,245 +€707 / +27.9% (€/t)
Slide 26: 9M 2022/21 – Operational data – Steel Dust Recycling Services
9M 2022/21 – Operational data – Steel Dust Recycling Services 9M 20211) 9M 2022 yoy change EAFD 563.3 897.6 +334.3 / +59.4% throughput (kt) EAFD average 81.0% 77.2% -381 bps capacity utilisation (%) Waelz oxide 192.6 311.3 +118.7 / +61.6% (WOX) sold (kt) Zinc LME price €2,412 €3,422 +€1,010 / (€/t)
Slide 27: Q3 2022/21 – Operational data – Aluminium Salt Slags Recycling Services
Q3 2022/21 – Operational data – Aluminium Salt Slags Recycling Services Q3 2021 Q3 2022 yoy change Salt slags & SPL 107.2 66.9 -40.3 / -37.6% treated (kt) -6.91) / -9.3%1) Salt slags & SPL 94.5% 59.0% -3,556 bps avg. capacity / 82.9%1) / -854 bps1) utilisation (%) Aluminium 42.9 37.3 -5.6 / -13.1% a
Slide 28: 9M 2022/21 – Operational data – Aluminium Salt Slags Recycling Services
9M 2022/21 – Operational data – Aluminium Salt Slags Recycling Services 9M 2021 9M 2022 yoy change Salt slags & SPL 303.0 239.8 -63.1 / -20.8% treated (kt) +19.41) / +8.8%1) Salt slags & SPL 90.0% 71.3% -1,876 bps avg. capacity / 100.2%1) / +809 bps1) utilisation (%) Aluminium 142.4 121.9 -20.4 / -1
Slide 29: Multi-year trend – Operational data
Multi-year trend – Operational data 2017 2018 2019 2020 2021 EAFD throughput (kt) 661.0 717.1 665.8 687.0 885.7 EAFD average capacity 84.7% 92.0% 80.7% / 90.1%1) 83.2% 83.3%2) utilisation (%) Waelz oxide (WOX) sold (kt) 217.8 240.9 217.6 239.2 291.0 Zinc LME price (€/t) €2,572 €2,468 €2,276 €1,979 €
Slide 30: Consolidated key financials
Consolidated key financials Q3 adjusted EBITDA at €45.9m, +8% yoy, mainly driven by yoy US zinc offsetting lower aluminium volumes; higher base metal prices offsetting energy inflation and unfavourable Zinc TC Adjusted EBITDA bridge Q3 2021 to Q3 2022 (€m) +€3.2 / +7.6% -13 1) 16 45.9 42.7 1 Inflati
Slide 31: Steel Dust Recycling Services
Steel Dust Recycling Services Q3 EBITDA at €36.0m, +7% yoy, mainly driven by yoy US zinc, higher zinc market prices offsetting energy inflation and unfavourable TC Adjusted EBITDA bridge Q3 2021 to Q3 2022 (€m) +€2.5 / +7.4% 33.5 5 -6 36.0 4 +6.5 Zinc LME Inflation incl. energy, US zinc & Stainless
Slide 32: Aluminium Salt Slags Recycling Services
Aluminium Salt Slags Recycling Services Q3 EBITDA at €10.6m, +14% yoy; Energy inflation and some volume pressure offset with higher aluminium metal prices EBITDA bridge Q3 2021 to Q3 2022 (€m) +€1.3 / +14.4% -7 10.6 9.2 11 -3 Inflation incl. energy, Lower aluminium alloys Higher alu alloy FMB operat
Slide 33: Cash flow, net debt & leverage
Cash flow, net debt & leverage €139m cash on hand at Q3’22 closing vs. €239m at Q2’22 closing; Balanced cash flow normalised for €50m dividend distributed and $47m zinc refining acquisition; Net leverage of x2.56 at Q3’22; Targeting lower leverage towards year end Q3 adjusted EBITDA to total cash fl
Slide 34: FY'22 guidance: confirmed at lower end; Normalising for Zinc Refining acquisition
FY’22 guidance: confirmed at lower end; Normalising for Zinc Refining acquisition • Confirming FY’22 guidance at lower end, ≥ €220m, +11% yoy LTM Q3’22 at €225m EBITDA • Acquired US Zinc Refining asset at $47m on 30 Sept ’22; All cash transaction • Total capex guidance normalised for US Zinc Refinin