Acerinox Sa · BME:ACX
Acerinox Sa — Investor Day (November 2023)
118 slides from Acerinox Sa's investor day presentation, Nov 29, 2023
Slide 1: Acerinox Capital Markets Day, Düsseldorf
Acerinox Düsseldorf, November 29-30, 2023
Slide 2: Opening remarks
Capital Markets Day Opening remarks Carlos Lora-Tamayo Chief Investor Relations & Communication Officer
Slide 3: Acerinox CMD 2023 Agenda
Acerinox CMD 2023 AGENDA November 29 November 30 12:30–13:45 Welcome and lunch at Rheinterrasse* 13:45–13:50 Opening remarks – Carlos Lora-Tamayo 8:00 Departure from the Wellem Hotel and Living Medici 13:50–14:00 Welcome – Niclas Müller Hotel* 10:00–13:30 Welcome reception in Unna | Plant tour 14:00
Slide 4: Welcome
Capital Markets Day Welcome Dr. Niclas Müller President and Chief Executive Officer of VDM Metals Group
Slide 5: A new way for a new world
A new way for Bernardo Velázquez Chief Executive Officer of Acerinox
Slide 6: We contribute to sustainable development
We contribute to sustainable development Acerinox is firmly committed to contributing to the achievement of the United Nations Sustainable Development Goals (SDGs). We manufacture entirely and endlessly recyclable products, while also promoting innovation, education, equality policies, and climate c
Slide 7: Create materials for each application
Create for each application, thus contributing to the progress and quality of life of a sustainable society 3
Slide 8: New global environment: supply chain disruptions
New global Russia Ukraine Covid-19 Suez Panama Disruptions in the supply chain 4
Slide 9: New global environment: trade measures and protectionism
New global Europe Anti-dumping Anti-subsidy USA Section 232 Safeguard measures CBAM Anti-circumvention South Africa Trade measures and protectionism 5
Slide 10: New global environment: Deglobalization
VDM New global New Jersey Nevada VDM environment: Germany Disruptions in the supply chain Bahru Malaysia Trade measures and Acerinox Europa Spain protectionism NAS Columbus South Africa Kentucky Strategic autonomy Importance of sustainability Deglobalization
Slide 11: A new way for a new world
A new way for a new world PAST PRESENT FUTURE Proposition / Stainless steel (#1 N. Am) Stainless steel (#1 N. Am) Broadest portfolio market reach Cost oriented #1 High-performance alloys Customer centric Circular economy Circular economy Sustainability Megatrends Globalization Sustainability Excelle
Slide 12: Acerinox in the best shape in its history
• Excellence • Broadest portfolio • Deglobalization Contribution by HPAs: results and synergies Acerinox Acerinox Group’s previous situation in the best shape in its history 8
Slide 13: Facing tomorrow's challenges
Facing tomorrow’s Antonio Gayo Strategy Director ACERINOX CAPITAL MARKETS DAY 2023 1
Slide 14: Main opportunities and challenges
Main opportunities and challenges SEIZE KEY SEIZE KEY opportunities challenges Leadership in HPAs Overcapacity in Asia Access to higher-added- Production costs value sectors Redefinition of the supply chain Demand increase in sustainable Energy Inflation products and companies Regionalization Access
Slide 15: Strategic Plan 2021–2025: four key pillars
Strategic Plan 2021–2025 Centered around four key pillars Added Financial Excellence Sustainability value strength PREMIUM LEADER CORE EFFICIENT Shifting revenue mix Main operational Core to our business Accountable, to HPAs and added- pillar to increase model and a driver transparent through- value
Slide 16: Strategic pillars: Added value - Premium
Strategic pillars Added value - Premium Organic Inorganic Change our sales mix to include more HPAs and added-value products 01 +8 pp Development and Consolidated Stainless- expansion into added- HPA platform that allows value products in USA, us to expand our portfolio Europe, and South Africa 02 I
Slide 17: Strategic pillars: Excellence - Leader
Strategic pillars Excellence - Leader Main operational pillar to increase competitiveness Excellence Plans: Beyond Excellence: 2024-2026 15 years of operational success Holistic approach to create value in all areas of the company 311M€ achieved M€ 500 Decarbonization Efficiency 32 & environment 400
Slide 18: Strategic pillars: Sustainability - Core
Strategic pillars Sustainability - Core Decarbonization is Core of our an opportunity for the group business model 01 Be more efficient Excellence Opportunity to increase value of 02 Sell a premium product ECO ACX our products We have a sustainability plan to support our 2030 target 03 Regionalizati
Slide 19: Strategic pillars: Financial strength - Efficient
Strategic pillars Financial strength - Efficient Allows efficient capital allocation Capex to increase value NFD/EBITDA for all stakeholders < 1.2 through the cycle NAS capacity increase of IRR 20–25% Consistent shareholder +244M$ remuneration 7
Slide 20: Deep dive into high-performance alloys
Deep dive into high- performance alloys: Dr. Niclas Müller President and Chief Executive Officer of VDM Metals Group ACERINOX CAPITAL MARKETS DAY 2023
Slide 21: Snapshot: HPA Division
Snapshot: HPA Division Technology leader in metallic high-performance € 1.072B alloys for mission-critical applications YTD through Sept. 2023 Revenue production sales(1) 7 production facilities in € 129M YTD through Sept. 2023 Germany and the US EBITDA(2) 12 subsidiaries, 6 sales offices, ~ 12 % YT
Slide 22: Our core competence
Our core competence We produce high- performance alloys (HPAs) based mainly on nickel for products of the future 3
Slide 23: HPAs are used if properties of other materials are insufficient
To sum it up: HPAs are used if properties of other materials are insufficient Excellent corrosion High-temperature Controlled expansion resistance strength up to behavior (acids and alkalis) 1,200°C Magnetic Good characteristics fabricability/ weldability 4
Slide 24: Agenda
Agenda Applications: The world of VDM Metals Market characteristics and global reach Innovation as growth driver and corporate responsibility Facts and figures Summary 5
Slide 25: VDM Metals' materials in a wide range of applications
VDM Metals’ materials are indispensable and invisible in a wide range of applications 6
Slide 26: Oil & Gas
Oil & Gas A strong global market driven to a large extent by project business Selection of subsea applications Piping • Cladded (hot roll bonded, for HPA material mechanically lined pipe, overlay welded) Welding • Solid consumables Umbilicals Offshore platform Heat Flowlines exchangers Completion to
Slide 27: Chemical process industry (CPI)
Chemical process industry (CPI) Growth of world population as main driver Reactors for Geothermal energy acid production and processing Filtration systems Pressure vessels Fuel cell Heat exchangers Copyright all images except process plant by ASE Apparatebau GmbH 8
Slide 28: HPA product portfolio covers all process steps
HPA product portfolio covers all process steps from upstream to downstream Upstream Midstream Downstream • Pressure tubes in umbilicals and • Longitudinal welded/cladded pipes for • Pressure vessels, tubing, heat flowlines, riser pipes the transport of crude oil/gas from the exchangers in refineries
Slide 29: Aerospace
Aerospace A growing industry with an ever-increasing demand for high-tech materials Molds Engine mounts Shafts Landing gear Casings Bearings and gears Rings Blades and Discs fans 10
Slide 30: Automotive
Automotive Increased individual mobility is a strong driver, with environmental impact as a challenge Exhaust system (elbows, lambda probes) Spark plugs Catalytic converter Turbo Valve rods charger Bellows Fuel injection Copyright of “turbo charger” by BorgWarner 11
Slide 31: Electronics and electrical engineering
Electronics and electrical engineering The main markets for soft-magnetic, resistance, and expansion alloys OLED screens Ceramic hobs Toaster Leakage circuit Hair dryer breaker (fuse) Copyright “turbo charger” by BorgWarner 12
Slide 32: VDM Metals is the world market leader in a niche market
VDM Metals is the world market leader in a globally competitive niche market Market for nickel-based alloys (2022) Competitive environment Annual demand Zirconium ATI Titanium Carpenter Requirements regarding material Special Metals properties Nickel-based 361 KT” alloys Aperam Stainless 46,000 KT H
Slide 33: Majority of VDM's products are nickel-based
In contrast to carbon and standard stainless steels, the majority of VDM’s products are nickel-based Nickel alloys & Carbon steel Stainless steel special stainless steel S275JR AISI 304 VDM® Alloy 625 18% 21% 62% 10% < 1,000(1) ~2,600(1) ~30,000(2) €/metric ton €/metric ton €/metric ton Fe C Ni Cr M
Slide 34: Shipments HPA and stainless steel divisions
15 0 KT Q1-2016 HPA Q2-2016 Q3-2016 Q4-2016 Q1-2017 Q2-2017 Q3-2017 Q4-2017 Q1-2018 Q2-2018 Q3-2018 Q4-2018 Q1-2019 Q2-2019 Q3-2019 Q4-2019 Shipments high-performance-alloys (HPA division) Q1-2020 may lead to different cycles Q2-2020 COVID Q3-2020 Q4-2020 Q1-2021 Q2-2021 Q3-2021 Q4-2021 Make-to-orde
Slide 35: Understanding customer needs is the main success factor
Understanding customer needs is the main factor for the HPA division’s business success Research and Sales = Application Service development Engineering center With a track record of patented materials, VDM Metals offers comprehensive advise on To meet short-term demands and deliver cut VDM Metals i
Slide 36: HPA production and sales network
HPA production and sales network 5 Production site Service center Subsidiary/sales office 17
Slide 37: Sustainability-related applications open growth opportunities for HPA
Sustainability-related and climate-friendly applications open up multiple additional growth opportunities for HPA Concentrated Solar Additive Power (CSP) Plants Manufacturing High-voltage Cables eFuels Production Polysilicon Production Fuel Cells Syngas / eChemicals Production H2 Electrolysis Geothe
Slide 38: Integration of VDM Metals into Acerinox Group
Integration of VDM Metals into Acerinox Group creates new opportunities 19
Slide 39: Joint approach to enter Ni alloys wide coil market
Joint Acerinox Group approach as enabler to enter the Ni alloys wide coil market for (green) hydrogen production PROOF HPA coil width limit: 750 mm 1+1>2 Joint HPA and SS product development Melting using all Acerinox Group capabilities HPA / Unna 28 Material: Ni VDM® Nickel 201 Dimensions: 0.8/1.0/
Slide 40: Sustainability: We take our responsibility seriously
Sustainability: We take our responsibility seriously Participations, memberships, and certifications United Nations Global Compact Transparency International Deutschland Metal Alliance for Responsible Sourcing Sustainability in practice: Responsible Minerals Initiative Charging recycled feedstock ma
Slide 41: Balanced customer markets by product, industry, region
VDM Metals can rely on very balanced customer markets – in terms of product, industry, and region (2022) Shipments by product Shipments by end market Shipments by region 3% 8% 2% 10% 14% 20% 20% 31% 15% 9% 25% 37% 37% 64% Strip Plate Wire Automotive O&G CPI Asia Europe Bar Bar USA E&E Aerospace NAFT
Slide 42: People and culture
People and culture: We trust in the know-how and capabilities of our employees Occupational safety Leadership Culture Lost time injury frequency rate (LTIFR) Priciples -72.5% 8.0 The knowledge of all employees is our future 7.3 7.0 4.8 People are the focus of our actions 3.9 4.1 3.9 3.3 2.0 2.2 We l
Slide 43: Improvements and working capital deployment
We promote improvements and optimize working capital deployment Ideas management Stock level/order book (relevant) ratio As of Oct. 15, 2023 Factor: Calculated benefit in % 2.1 109% 178% 139% 137% 100% 130% 123% 112% 100% 83% 150% 2014/15 2015/16 2016/17 2017/18 2018/19 2020 2021 2022 Factor: 3.0 10
Slide 44: Strong order book and increased profitability
Strong order book and increased profitability lay the foundation for future success EBITDA development Order book development in M€ in % 261% 52 241% 47 231% 227% +11.7%* 41 39 184% 182% 164% 29 25 24 22 21 21 Ø 23 100% 15 16 15 16 79% 14 11 10 2 12/15 12/16 12/17 12/18 12/19 12/20 12/21 12/22 09/23
Slide 45: Course set for sustainable and profitable growth
In line with the Group’s mission/vision/values, the course is set for sustainable and profitable growth VDM Metals’ vision We strengthen our position as globally most attractive provider of solutions, products, and services in the world of metallic high-performance alloys year by year Prove that 1 +
Slide 46: External market forecast allows optimistic outlook
External market forecast allows for an optimistic outlook 4.5% KT 468 444 454 500 +10% 427 -15% 398 450 4.4% 377 351 363 361 400 329 311 308 350 298 291 286 273 280 276 300 246 250 200 150 100 50 0 2022 2020 2024e 2023e 2026e 2027e 2028e 2010 2025e 2014 2019 2012 2013 2016 2017 2018 2021 2015 2011 M
Slide 47: Summary
Summary The high-performance alloys division is in good shape and looking forward to future growth VDM Metals is the world VDM Metals participates in VDM Metals acts sustainably – market leader for high- growing markets that follow in a social, environmental, performance alloys, highly the world’s m
Slide 48: Stainless steel and HPAs: Materials of the future
Stainless steel and HPAs: Dr. Helena Alves Senior Vice President of Research & Development, VDM Metals ACERINOX CAPITAL MARKETS DAY 2023
Slide 49: Agenda
Agenda R&D at ACX: The power of working together Pursuing innovation leadership Selected innovation deep dives R&D: The way forward
Slide 50: R&D structure within the Group
R&D structure within the Group Global Innovation Committee Stainless steel product development HPA materials development Process development Integrated computational materials engineering Corrosion TCC welding New circular materials & valorization Powder for AM Innovation & support Innovation & know
Slide 51: Strategic lines of action
Strategic lines of action HPA Material development • For traditional applications Develop new materials, • For future technologies with customers Process development • Improve cost, productivity, and quality Pursuit of operational excellence and • New processes for future technologies process innova
Slide 52: The power of working together (1+1>2)
The power of working together ( 1 + 1 > 2) Stainless steel excellence: HPA excellence: Process efficiency and premium Specialties portfolio with laboratory services tailor-made alloys Nickel Approach: Development from stainless steels via Complement and special stainless steel Stainless steel cross-
Slide 53: HPA clear peer-leader in innovative portfolio
HPA clear peer-leader in innovative portfolio Innovation leadership as a strong differentiation strategy Total (1) Ni-Alloy NiCr-Alloy FeNi-Alloy FeCr-Alloy FeCrNi-Alloy #1 53 14 20 5 10 4 Leading portfolio of alloy patents 17 1 4 0 2 10 14 0 1 0 2 11 9 1 6 0 0 2 (SMC Division) 9 1 8 0 0 0 (1) Numbe
Slide 54: Long development cycles supported by customer intimacy
Long development cycles supported by strong customer intimacy Acerinox anticipates today what … in cooperation with trendsetting customers, technology providers… will be needed in 10+ years… Expected product lifetime >40y >20y >10y … and best in class universities and research institutes >3y >3y >5y
Slide 55: Innovation process
Innovation process Innovation is a conscious decision Idea generation ACX workshops for the future ACX Stage-Gate process Customers Innovations • Market • Competitors • Associations • Universities • Conferences Project management • Research Idea database Megatrends 8
Slide 56: Materials for the Day after Tomorrow
“Materials for the Day after Tomorrow” Workshop methodology to evaluate megatrends and generate new ideas for long-term future topics at ACX group level with customers STEP 1: Common vision – Futuristic thought STEP 2: Methodology – Tools and training STEP 3: Analysis of trends – Workshop 1 “How to
Slide 57: Materials in energy transition and decarbonization
Acerinox materials in all areas of energy transition and decarbonization Renewable energies Bio- CO2 Deep dive CPI mass From atmosphere synthesis C Syngas, eFuel Deep dive O2 Aerospace HT electrolysis Synthesis CO2 storage & fuel cell O2 Oil & gas CGH2 trailer/ship H2 Hydrogen Hydrogen Electrical gr
Slide 58: HPA material developments for hydrogen
HPA material developments for hydrogen Crofer 22 H / APU for highest efficiency in high-temperature electrolysis and fuel cell H2 Hydrogen cycle H2 Solid oxide H2O + energy storage and + H2O Solid oxide fuel electrolyzer cell [SOFC](2) delivery(1) cell [SOEC] O2 O2 Proven concept Crofer Efficiency i
Slide 59: HPA materials for eFuels / eChemicals synthesis
HPA materials for synthesis of eFuels / eChemicals HT co-electrolysis(1) Syngas eFuels (3) Cooling phase (2) • Methanol H2O H2 • Fischer-Tropsch • Ethanol + CO2 • Alcohol synthesis • Naphtha CO Danger of metal dusting • Methanation • Methane (MD) Alloy MD resistance 699XA Efficiency increase of syng
Slide 60: Stainless steel solutions at the forefront of the market
Stainless steel solutions at the forefront of the market Very high reflectance of stainless steel New process design to get tailored specular reflectance (<5 to >55%). Patent in progress. 13
Slide 61: R&D: The way forward
R&D: The way forward Current and future new technologies cannot be mastered without our (new) stainless steels and our high-performance alloys. R&D vision Together we develop the materials of the future! New grades, products, and applications Maintain innovation leadership with higher margins Streng
Slide 62: Achieving excellence
Achieving excellence Hans Helmrich Chief Operating Officer ACERINOX CAPITAL MARKETS DAY 2023
Slide 63: Mission, values and vision
MISSION VALUES To create the most appropriate Employer Safety Sustainability high-performance materials for of choice each application, thus contributing Long-term to the progress and quality of life of Integrity Commitment focus a sustainable society. Excellence Innovation Quality VISION To become
Slide 64: Excellence at Acerinox: Customer-centric organization
Excellence at Acerinox Customer-centric VDM organization New Jersey Nevada VDM Germany Global Focus on Acerinox footprint customer support NAS Europa Spain Kentucky Bahru Malaysia Columbus South Africa 3
Slide 65: Excellence at Acerinox: Customer-centric organization
Excellence at Acerinox Customer-centric VDM. organization New Jersey Nevada VDM. Germany Global Focus on Acerinox footprint customer support NAS. Europa Spain Kentucky Bahru. Malasia Widest Expansion into First to launch product added-value sustainable product Columbus. South Africa portfolio produc
Slide 66: Main contributors to excellence at Acerinox
Main contributors to excellence at Acerinox Build a culture of Have an open Embrace Look outside our continuous mindset challenging change “four walls” improvement the status quo Internal Exchange of Use of Development and external best business technology of talent benchmarking practices and digita
Slide 67: Excellence: Main focus areas
Excellence Main focus areas Decarbonization & Efficiency Excellence environment Commercial Productivity & excellence automation Leader Main operational pillar to increase competitiveness Quality & Purchasing customer service 6
Slide 68: Columbus: The most flexible plant
Excellence at Acerinox Columbus: The most flexible plant Maximizes asset Supports local Uses local raw utilization market development materials Develops added- Creates the most flexible value products plant in the industry 7
Slide 69: NAS capacity increase
Excellence at Acerinox NAS capacity increase Increase capacity to support US market growth Maximize existing assets through continuous improvement Use digital twins to optimize processes Optimize investment to create additional 200 KT/year capacity Rebalance production mix to improve return on inves
Slide 70: Predictive quality
Excellence at Acerinox Predictive quality Remain laser-focused on becoming the supplier of choice Autonomous prognosis Deliver on exceeding customer expectations Support our end customer and added-value strategies Use digitalization, artificial intelligence, machine learning, and advanced Algorithm:
Slide 71: Predictive quality
Excellence at Acerinox Predictive quality Remain laser-focused on becoming the supplier of choice Deliver on exceeding customer expectations Support our end customer and added-value strategies Use digitalization, artificial intelligence, machine learning, and advanced Live alert sensors to prevent p
Slide 72: Sustainable product
Sustainable product Maximizes scrap content for each application Low Scope 1 CO2 emissions Highest percentage of renewable energy 11
Slide 73: Sustainability: It's our nature
Sustainability: Carlos Ruiz & Deniza Puce Chief Sustainability Officer & Global Director of Indirect Purchasing ACERINOX CAPITAL MARKETS DAY 2023 1
Slide 74: Sustainability milestone: EcoVadis Platinum
Sustainability milestone Acerinox has achieved the highest possible EcoVadis rating, placing the Group in the top 1% of its sector in recognition of its commitment to sustainability Acerinox was awarded the EcoVadis Platinum Medal for the second year in a row The EcoVadis Platinum Medal distinguishe
Slide 75: Commitment to sustainability
Commitment to sustainability Contribution of sustainability to business strategy The Acerinox Group understands its commitment to sustainability as essential to the company’s long-term continuity. This commitment is set up in five pillars that will help to address the upcoming challenges the company
Slide 76: 2030 sustainability targets
2030 sustainability targets Eco-efficiency and mitigation of climate change GHG EMISSIONS (vs. 2015) (*) 2% 20% ENERGY EFFICIENCY (vs. 2015) (*) 0% 7.5% WATER (vs. 2015) 16% 20% (*) Low capacity utilization impacted some of our sustainable KPIs Circular economy and sustainable products WASTE RECYCLE
Slide 77: Decarbonization roadmap
Decarbonization roadmap TARGETS INNOVATION AND METRICS AND INVESTMENT EPDs Carbon footprint verified* Renewables, green H2, CCS&U, scrap, etc. _GROUP EMISSIONS INTENSITY (SCOPES 1, 2 AND 3) _GROUP EMISSIONS INTENSITY (SCOPES 1, 2 AND 3) 305-4 305-1 / 305-2 / 305-3 Stainless (1+2) High performance al
Slide 78: Decarbonization roadmap
Decarbonization roadmap Sustainable product recycled material in (+) 90% raw materials intensity (ton CO2/ton (-) CO2 stainless steel) of renewable (+) % energy used 6
Slide 79: Sustainability achievements
Sustainability achievements The Group’s participation in the most internationally recognized sustainability assessments shows its firm commitment to responsible transparency and accountability towards stakeholders ESG RATINGS 7
Slide 80: Five-pillar philosophy in procurement
Acerinox’s five-pillar philosophy in procurement Operational Digital Innovation Risk Talent efficiency transformation management incl. ESG 8
Slide 81: Roadmap to a sustainable and efficient Supply Chain
Our roadmap to a sustainable and efficient Supply Change Operational efficiency 60% • Supplier portal (one space - one face to supplier) • e-Procurement • Contract management • • Total cost of ownership Strategic purchasing & category management complete • Process optimization • Rightsizing – Simpli
Slide 82: Roadmap to a sustainable and efficient Supply Chain
Our roadmap to a sustainable and efficient Supply Change Digitalization 70% • AI and advanced analytics • Automation & methodology in procurement processes • Market intelligence and category dossier • • Delivery and in-house stock optimization Real-time digital spend cube complete 01/2023 – 12/2024
Slide 83: Roadmap to a sustainable and efficient Supply Chain
Our roadmap to a sustainable and efficient Supply Change Talent 20% • Talent strategy and digital transformation as an objective to enhance our company's value creation – investing in people to turn teams into value orchestrators • Shaping talent for the future Supply Change: strategic purchasing, c
Slide 84: Building a sustainable, responsible, strong supply chain
Building a sustainable, responsible, and strong supply chain Build a sustainable and strong supply chain Build smart solutions for suppliers STAGE 1 MATURITY STAGE 2 MATURITY STAGE 3 MATURITY Fix the basics Analytics and reporting Supplier improvement Risk monitoring & metric platform Data intellige
Slide 85: ESG inside risk management / responsible purchases
ESG inside risk management / responsible purchases Monitoring up to eight risk types Business Cyber- ESG Financial continuity security / quality Geopolitical Supply Data Compliance risk chain protection Covering all risks – including complete ESG CORE coverage aligned with Acerinox’s strategic goals
Slide 86: From global to local
From global Manuel Landeta Head of Business Intelligence ACERINOX CAPITAL MARKET DAY 2023
Slide 87: Content
From global to local Content Deglobalization • Towards strategic autonomy Acerinox’s positioning • Global presence, local focus • Leading the way to a sustainable future Market overview & prospects 2 • Focus on our core markets
Slide 88: Deglobalization: Towards strategic autonomy
Deglobalization Towards strategic autonomy Geoeconomic fragmentation Protectionism Long-term drivers Green transition 3
Slide 89: Deglobalization: Geoeconomic fragmentation
Deglobalization: Towards strategic autonomy Geoeconomic fragmentation Brexit Global divide into two blocks exacerbated by increased geopolitical shocks in Ukraine Los Angeles recent years Shanghai Israel The pandemic exposed the vulnerability and fragility of globalization Suez Canal Governments acr
Slide 90: Deglobalization: Protectionism
Deglobalization: Towards strategic autonomy Protectionism Excess production as a result of Chinese overcapacity remains the biggest challenge for the stainless industry (but not HPAs). Impact on global trade flows resulting in a proliferation of trade measures worldwide. China + 21 countries Indones
Slide 91: Deglobalization: Green transition
Deglobalization: Towards strategic autonomy Green transition We are entering a new era, affecting a level playing field from a sustainable perspective. Moving from trade policies to environmental policies, which will be crucial for the future of the industry… and the world. IRA NZIA (Inflation Reduc
Slide 92: Acerinox's positioning
Acerinox’s positioning Stainless Stainless steel steel and and high-performance high-performance alloys alloys are are crucial crucial for for aa sustainable sustainable future future Our products are essential, sustainable, versatile, and most efficient Profitable Aesthetic Corrosion Reusable Hygie
Slide 93: Acerinox's positioning: global leader
Acerinox’s positioning The global leader for stainless and high-performance alloys Global presence with a local focus 37.0% Sales in more than 80 countries on 5 continents Europe #1 in stainless steel in the United States 50.1% Americas #1 in high-performance alloys in the world 7.8% #1 on the Afric
Slide 94: Main actions on trade defense
Acerinox’s positioning Main actions on trade defense Trade defense measures have been increasingly important for stainless steel in recent years EU27 SFG (tariff rate quota system with 25% over quota) USA AD CR vs. China (≈25%), Taiwan (≈6.8%) AD HR vs. Indonesia (≈17%), China (≈14 to 19%), Taiwan (
Slide 95: Market overview: Bullwhip effect
Market overview Bullwhip effect Market evolution for cold-rolled stainless steel. Comparison of apparent consumption vs. real demand. Source: SMR October 2023 Volumes in KT US EU 600 50 1,400 250 Forecast 40 Forecast 200 500 1,200 30 150 20 1,000 400 100 10 - 800 50 300 -10 600 - -20 200 -50 -30 400
Slide 96: Market overview: imports back to fair levels
Market overview Imports back to ”fair” levels. US S232 has been more efficient than EU SFG. Import volumes and imports market share for stainless steel flat products Source: USITC, Eurostat, ACX Volumes in KT US EU 250 30 250 35 31.2 25.8 29.3 200 25.0 200 30 25 150 22.4 150 25 20 22.5 22.2 100 100
Slide 97: Market overview: normalization of inventories
Market overview Aftermath of Bullwhip Effect. Normalization of Inventories Taking Over a Year Evolution of Inventories. Correlation with Imports Source: USITC, MSCI, Eurostat, EHV, ACX Volumes in KT US EU 600 160 90 450 140 550 85 400 120 80 350 500 100 75 300 450 80 70 250 60 65 400 200 40 60 350 2
Slide 98: Market prospects
Market prospects Steady growth in real demand expected for both divisions Source: SMR October 2023 Volumes in KT Stainless 4.1% 10% -3% 55,000 -2% 5.4% 45,000 35,000 25,000 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 HPAs 4.5% 500 +10% 450 +7% 400 4
Slide 99: Market prospects: core stainless markets
Market prospects Focus on stainless steel core markets Source: SMR October 2023 Volumes in KT North America 1% Consumer Goods & Medical 232 5% 3,800 2,805 3,387 5% Chemical / Petrochemical & Energy 117 3.8% 24% 17% 1% 35% 34% 3,300 Automotive & Heavy Transport -127 2,800 ABC & Infrastructure 347 21%
Slide 100: Conclusions
Conclusions Leading the way to a sustainable future Global presence with a local focus Stainless steel and high-performance alloys are essential and the most efficient materials for a sustainable future The Acerinox Group is solidifying its position as the supplier of choice, benefiting from its uni
Slide 101: Acerinox: A sustainable investment
Acerinox as a Miguel Ferrandis Chief Financial Officer ACERINOX CAPITAL MARKETS DAY 2023
Slide 102: Main financial KPIs
EBITDA MARGIN EBITDA >+10% Main (9M 2023: 12%) financial Deliver KPIs ROCE 15% through-cycle value creation through (9M 2023: 19%) the cycle NFD / EBITDA CAPITAL ALLOCATION <1.2x (9M 2023: 0.62x) 2
Slide 103: Peak EBITDA years throughout our history
EBITDA Peak EBITDA years throughout our history % EBITDA Gross margin Million euros % % 60% 1400 1200 % 50% 1000 40% 800 30% 600 20% % 400 10% 200 0% 0 1995 2000 2006 2022 Increase in results as a consequence of long-term strategy even though margin decreased 3
Slide 104: Deliver through-cycle value creation
EBITDA Deliver through-cycle value creation EBITDA Million euros Years 2001-2005 Years 2006-2009 Years 2010-2014 Years 2015-2018 Years 2019-2022 Stainless Best margin Chinese Chindonesia VDM acquisition consumption of the century overcapacity overcapacity depending on (2006) economic cycles COVID Eu
Slide 105: EBITDA margin
EBITDA EBITDA MARGIN % % % % % Years 2001-2005 Years 2006-2009 Years 2010-2014 Years 2015-2018 Years 2019-2022 Deliver through-cycle value creation 5
Slide 106: ROCE evolution and through-the-cycle target
ROCE ROCE Evolution and through-the-cycle target Historical ROCE trends ROCE (return on capital employed) target: % average over one complete cycle % % % ROCE structurally higher than history, reflecting Group strength % % Return on capital employed (ROCE) Operating profit = (Net equity + NFD) 2010-
Slide 107: Capital allocation
CAPITAL ALLOCATION Capital allocation Steady payments Fund organic investment to shareholders Stable through Strong the cycle Annual dividend of Annual Capex of ~€200 million balance sheet at least €150 million When strategic NFD / EBITDA and < 1.2x through prudent Fund M&A investment Supplementary
Slide 108: Capital allocation: strong free cash flow generation
CAPITAL ALLOCATION Capital allocation: Strong free cash flow generation Free cash flow Million euros 2017 2018 2019 2020 2021 2022 9M 2023 *Acquisition of VDM Metals 8
Slide 109: Capital allocation: balance sheet strength remains priority
CAPITAL ALLOCATION Capital allocation: Balance sheet strength remains priority Strong Flexible working capital balance sheet NFD / EBITDA Competitive cost of debt < 1.2x through Low leverage the cycle Proper cash remuneration TOP PRIORITY 9
Slide 110: Capital allocation: fund stable investments through the cycle
CAPITAL ALLOCATION Capital allocation: Fund stable investments through the cycle Sustain Capex through the cycle: Fund growth, maintenance, environmental, etc. organic investment Balanced appraisal from a suite of metrics: ROCE > WACC IRR > 20% Annual Capex of ~€200 million Capex at least in line wi
Slide 111: Capital allocation: shareholder returns via dividend
CAPITAL ALLOCATION Capital allocation: Maintain shareholder returns via dividend +20% DPS increase in year 2023 Stable payments to shareholders Dividend covered through free cash flow Annual dividend of at least Million euros €150 million Share buyback STABLE THROUGH Dividend THE CYCLE FCF Return to
Slide 112: Capital allocation: strategic organic & inorganic growth
CAPITAL ALLOCATION Capital allocation: Pursue strategic organic & inorganic growth options Fund Transformative, further strategic growth is an important strategic lever for Acerinox’s future expansion and diversification growth and M&A investment Growth must: Strategic through Align with strategy Of
Slide 113: Capital allocation: distribution of surplus capital
CAPITAL ALLOCATION Capital allocation: Distribution of surplus capital Where prudent Acerinox will return surplus cash to shareholders Supplemental shareholder Requires four conditions to be satisfied: returns Confidence in Fundamentally Subject to strategic Market leverage target undervalued growth
Slide 114: Acerinox market valuation
Acerinox market valuation: Group´s EV/EBITDA evolution We generate value through the cycle Years 2001-2005 Years 2006-2009 Years 2010-2014 Years 2015-2018 Years 2019-2022 Sooner than later, market Group’s P/E evolution should reflect Acerinox’s value creation 14 Years 2001-2005 Years 2006-2009 Years
Slide 115: Acerinox in the best shape in its history
• Excellence • Broadest portfolio • Deglobalization Contribution by HPAs: results and synergies Acerinox Acerinox Group’s previous situation in the best shape in its history 15
Slide 116: Closing remarks
Capital Markets Day Closing remarks Bernardo Velázquez CEO of Acerinox
Slide 117: Conclusions
Conclusions 01 02 03 04 R&D: Acerinox Our strategy: New technologies cannot be Well integrated with HPAs: mastered without our is in the best shape Deliver through-cycle stainless steels, high- of its history value creation 1+1>2 performance alloys, and new developments 05 06 07 08 Firm commitment t
Slide 118: Whi
@:|))) \) Whi anf neal)