Elkem Asa · OSL:ELK
Elkem Asa — Q2 2021 Earnings Presentation
27 slides from Elkem Asa's earnings presentation, Jul 16, 2021
Slide 1: Second quarter results 2021
Second quarter results 2021
Slide 2: Agenda
Agenda Business update Financial performance Outlook 2 Elkem
Slide 3: Strong quarterly result and good market conditions
Strong quarterly result and good market conditions Elkem is delivering another strong quarterly result, despite the planned maintenance stops for Silicones both in China and France Market conditions have been good in all major regions in the second quarter The strategic expansion of the Silicones pl
Slide 4: Succession process for new CEO
Succession process for new CEO ▪ ▪ ▪ ▪ ▪
Slide 5: Silicones Xinghuo expansion leveraging on growth and specialisation in Asia
Silicones Xinghuo expansion leveraging on growth and specialisation in Asia = The expansion of Silicones Xinghuo has started and the cornerstone for the project was laid in April 2021. The project is scheduled to be completed within 3 years = Integral part of Elkem’s growth and specialisation strate
Slide 6: Battery materials pilot plant in operation, preparing for industrial scale project
Battery materials pilot plant in operation, preparing for industrial scale project = Elkem aims to establish a leading position in the fast-growing market for advanced battery materials = Vianode is established as a new company and brand for production of sustainable battery materials = Environmenta
Slide 7: Environment, Social & Governance
Environment, Social & Governance ESG - a key priority 7 ye A clear focus on ESG = In 2020, Elkem received an A rating from CDP, ranking in the world’s top 5% on climate = In 2Q 2021 Elkem announced an investment of MNOK 140 in Rana, Norway to enable use of biocarbon = Elkem’s pilot plant for biocarb
Slide 8: Specialisation strategy
Specialisation strategy R&D and advanced solutions driving specialisation = Elkem opened its new R&D centre, ATRION, in Lyon on 1 July = ATRION is short for “atrium and innovation” and will host 120+ researchers. The investment amounted to NOK 250 million = Focus will be on circular economy, digital
Slide 9: Electric vehicles (EV) providing attractive growth
Specialisation strategy & EVs Electric vehicles (EV) providing attractive growth Global sales forecast by drive train 120 = EVs contain about 4 times more silicones than traditional 100 combustion engine cars (ICE) oo = — aT | 60 = The sale of EVs are projected to grow significantly towards 2030 40
Slide 10: General markets: Strong development in key sectors
General markets Strong development in key sectors All major economies except China contracted in 2020. As the markets emerge from Covid-19 effects economies are recovering = EU is expected to grow by around 4% in 2021 = The US economy is expected to grow around 6% in 2021 Automotive - units sold (mi
Slide 11: Silicones market
Silicones market Markets conditions remain attractive = Global silicones prices have remained at attractive levels in the second quarter DMC reference price China (CNY/mt) = DMC prices in China increased to above 30,000 RMB per tonne in June, impacted by a fire at a large-scale plant 358000 = Demand
Slide 12: Silicon and ferrosilicon markets
Silicon and ferrosilicon markets Tight supply resulting in continued price increases Market prices for silicon and ferrosilicon have continued to rise during the second quarter = EU silicon prices up 9% and ferrosilicon prices up 15% from end of 1Q-21 to end of 2Q-21 = Low supply resulting in a tigh
Slide 13: Carbon market
Carbon market Increasing demand, raw material prices up = Steel markets and ferroalloys are key demand drivers for carbon products World steel production = Global crude steel production has shown strong recovery since Q2-2020 mmm Total steel production (mt) | ——Change YOY (%) = Production estimated
Slide 14: Elkem group
Elkem group Another strong quarter driven by good markets and attractive market positions Total operating EBITDA income 7,129 . . 5,798 5,879 5,886 13% " Reaching all-time = Improved EBITDA a high for the third and higher consecutive margins quarter 19 29 3Q 4Q 1Q 2Q 39 4Q mo. driven by ase os 108 7
Slide 15: Elkem Group: Good EBITDA and strong financial ratios
Elkem Group Good EBITDA and strong financial ratios EBITDA MNOK 1,371 = Segment Other included realised currency hedging gains of MNOK 48 The Productivity Improvement Programme continues according to plan = By end of 2Q-2021 the annualised run-rate was MNOK 261 versus target of MNOK 350 by end of 20
Slide 16: Silicones
Silicones Strong and stable market conditions = Total operating income of MNOK 3,588 up 15% from second quarter 2020 = Increased operating income explained by higher sales prices = EBITDA of MNOK 573, up 148% from second quarter last year = Improved EBITDA explained by higher sales prices, but partl
Slide 17: Silicon Products
Silicon Products Good results reflecting strong markets = Total operating income of MNOK 3,355 up 34% from second quarter last year = Higher sales prices and higher sales volumes, partly offset by effects of stronger NOK = EBITDA of MNOK 672, up 83% compared to second quarter last year = Mainly expl
Slide 18: Carbon Solutions
Carbon Solutions Stable results, but raw material costs increasing = Total operating income MNOK 506, up 5% from second quarter last year = Higher sales volumes partly offset by currency impact = EBITDA of MNOK 118, down 2% from second quarter last year = Lower EBITDA and reduced margin mainly expla
Slide 19: Earnings per share (EPS)
Earnings per share (EPS) Elkem Group R fi . | one 147 obust financial position and = * Earnings per share (EPS) = EPS amounted to NOK 0.98 in the second quarter and is NOK 2.15 YTD-2021 0.02 -0.18 = EPS clearly up from Q2-20 due to strong improvement in 2-20 3-20 4-20 Qt-2t 2-21 results Equity ratio
Slide 20: Elkem Group Net interest-bearing debt (NIBD)
Elkem Group Net interest-bearing debt (NIBD) 86 Significant reduction in debt - and leverage * * Net interest-bearing debt (NIBD) was BNOK 5.6 as at 30 June 2021 = Leverage ratio was 1.4x based on LTM EBITDA of BNOK 4.1 = The leverage ratio down significantly due to capital increase and improved LTM
Slide 21: Elkem Group: Strong cash flow generation
Elkem Group Strong cash flow generation * Cash flow from operations™ was MNOK 911 in the second quarter and clearly improved from the corresponding quarter last year = Improvement mainly explained by higher EBITDA = Investments ex. M&A amounted to MNOK 552 in the second quarter 2021, slightly higher
Slide 22: Outlook for the third quarter 2021
Outlook for the third “i quarter 2021 = Strong market sentiment across all divisions = The market momentum for silicones is strong. Prices are at high levels in China and expected to increase in Europe and the US. The high price level in China not seen as sustainable = Market prices for silicon- and
Slide 23: Important notice
Important notice it, 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 (financial or
Slide 24: Appendix
2 Elkem Appendix 24
Slide 25: Currency sensitivity
Currency sensitivity = The result and cash flow are exposed to currency fluctuations. The main currencies are EUR and USD = EUR - net exposure approx. MEUR 300 = USD - net exposure approx. MUSD 150 = Current cash flow hedging programme = 90% hedging of net cash flows occurring within 0-3 months = 45
Slide 26: Other financial sensitivities
Other financial sensitivities POWER = Electric power is a key input factor in Elkem’s production. Total consumption for the group was 6.4 TWh in 2020. Near term exposure to spot power prices is limited = Norway, hedging programme mainly consisting of long-term contracts covering 80% of the power con
Slide 27: Delivering your potential
~ Elkem Delivering your potential