Rhi Magnesita Nv · LSE:RHIM
Rhi Magnesita Nv — H1 2023 Earnings Presentation
37 slides from Rhi Magnesita Nv's earnings presentation, Jul 26, 2023
Slide 1: Half Year Results 2023
3 RHI MAGNESITA Half Year Results 20235
Slide 2: 2023 Half Year Results agenda
2023 Half Year Resul Hi overview M&A update Financial review Summary and outlook Qé&A Appendix Uts | July 2023, » RHI MAGNESITA
Slide 3: M&A delivers revenue growth with support from pricing
@ RHIMAGNESITA M&A delivers revenue growth with support from pricin Lower volumes offset by higher pricing and sales initiatives. Acquisitions add 7% to revenue “3 Revenue growth driven by pricing and M&A ® Underlying organic revenue growth +2%, as market million Di 1734 demand weakness globally was
Slide 4: LTIF TRIF safety performance
⁃ LTIF TRIF ⁃ 1.07 0.93 0.60 0.54 0.58 ⁃ 0.45 0.45 0.32 0.25 ⁃ 0.18 0.20 0.11 ⁃ 2018 2019 2020 2021 2022 2023
Slide 5: Financial highlights
» Financial highlights oe Revenue! Adjusted EBITA' Adjusted EBITA margin Cash invested in M&A2 €1.7bn €200m 11.6% €208m 9% R™ B 20)bps @® 112022: €18m Adjusted operating cash flow> Cash conversion Working Capital Pro forma Net debt to intensity Adjusted EBITDA® €228m 114% 26.0% 2.1x @® 12022: €(84)m
Slide 6: Steel business overview
» RHI MAGNESITA Steel business overview Resilient gross margin as price increase implementation balances out impact of higher unit costs Revenue (€m)'? ® Steel revenue increased by 5% to €1,203 million and by 5% in 22. A% constant currency . ‘0 e 21.5% 21.6% ® RHIM steel volume excluding recycling a
Slide 7: Key customer plant stoppage in Vietnam
Key customer plant stoppage in Vietnam 25 24 6 M&A revenue contribution +19%, organic +5%
Slide 8: Industrial business overview
» RHI MAGNESITA Industrial business overview High gross margin of 29.0% due to pricing recovery Revenue (€m) © Industrial division revenue including minerals sales increased by 20% to €531 million, +21% constant currency 29.0% - Gross margin 310bps higher versus Hi 2022 25.9% 25.3% ® Strong performa
Slide 9: Sustainability: recycling, renewable electricity, fuel switches, energy efficiency
13.0 10.5 6.8 5.0 4.2 3.5 ⁃ 15.0% ⁃ 12.0% 0.5% 2.0% 0.5% ⁃ ⁃ Recycling Renewable Fuel switches Energy 2025 target electricity efficiency
Slide 10: M&A update
M&A update Stefan Borgas, CEO
Slide 11: Acquisitions by region and product
Europe/Türkiye China India Industrial Non-basic Recycling Non-basic Industrial Lances/pre-casts Flow Control Flow Control
Slide 12: Industry consolidation opportunity
» Industry consolidation opportunity RHI Magnesita is building a clear global leadership position in the refractory industry ® M&A consolidation strategy is focused on geographic and product segments where the Group is under-represented SORMAS MIRECO Seven Dalmia GSB Chongqing Jinan New Emei DBRL Hi
Slide 13: M&A financials
M&A financials » RHI MAGNESITA Acquisitions fully funded by free cash flow and India equity raise ® €208 million of cash outflow on M&A in H1 2023: - €185 million cash consideration = €23 million working capital investments ® €48 million of net debt consolidated on acquisition ® €90 million further
Slide 14: Financial Review
Sensitivity: Internal Financial Review Ian Botha, CFO
Slide 15: Adjusted EPS and dividend per share
Sensitivity: Internal Adjusted EPS (€) Dividend per share (€)3
Slide 16: H1 2023 revenue bridge
» H1 2023 revenue bridge RHI MAGNESTA Revenue growth of 9% delivered as price increases, strategic initiatives and M&A contribution exceed sales volume reduction Em 1734 1594 1593 293 H12023 revenue Constantcurrency 12023 revenue Sales volumes Price increase Strategic initiatives M&A H1 2023 EBITA a
Slide 17: H1 2023 EBITA bridge
» H1 2023 EBITA bridge RHI WAGNESIT EBITA broadly flat adjusted for currency as pricing, M&A and strategic initiatives offset lower volume and higher costs year on year €m 83 a 200 is Et ll OElO—TLULUMCUCCUCLee 25 79 H1 2023 Constant H12023EBITASalesvolumes Fixedcost Priceincrease Highercosts SG&A &
Slide 18: Consistent margin resilience, minimum 11% since merger
Sensitivity: Internal Consistent margin resilience, minimum 11% since merger Vertical integration margin declined to 1.8% in line with H2 2022 margin levels and as guided, due to higher cost of production and softer Chinese raw material prices Refractory margin further strengthened in H1 2023, drive
Slide 19: Sensitivity: Internal
Sensitivity: Internal 180 1600 140 170 1400 120 160 1200 150 100 1000 140 80 130 800 60 120 600 110 40 400 100 200 20 90 80 0 0 Jan 21 Jan 22 Jan 23 Jan 21 Jan 22 Jan 23 500 200 14 450 180 12 400 160 350 140 10 300 120 8 250 100 200 80 6 150 60 4 100 40 2 50 20 0 0 0 Jan 21 Jan 22 Jan 23 Jan 21 Jan
Slide 20: Working capital
Working capital » RHI MAGNESITA Disciplined reduction in inventory and receivables drives release of working capital in base business since FY 2022 Working capital balances +> %of L3M annualised revenue 23.3% 25.4% 251% 26.0% - 1.232 1144 1.250 918 314 310 2021 2022 H1 2023 excluding M&A H12023 Work
Slide 21: ⁃ ⁃ ⁃ ⁃ ⁃ ⁃ ⁃ 2018 20191 20202 20213 2022 H1 2023
⁃ ⁃ ⁃ ⁃ ⁃ ⁃ ⁃ 2018 20191 20202 20213 2022 H1 2023 2023F
Slide 22: Strong cash flow generation in H1 2023
Strong cash flow generation in Hi 2025 » RHI MAGNESITA H1 2023 adjusted operating cashflow of €228m exceeded full year 2022 Adjusted operating cash flow (€m)' 438 359 290 228 155 Working capital Sama increase -236 2018 2019 2020 2021 2022 Hi2023 Notes: 1) 2018 through 2021 adjusted operating cashflo
Slide 23: Gearing reduced due to higher EBITDA and cash flow
» Gearing reduced due to higher EBITDA and cash flow “""" Acquisitions funded by operating cash flow and India equity raise, Group retains €1.4 billion of liquidity Net debt and liquidity (€m) 57, 2.3x 2K BB Liquidity! Hl Net debi? fl EBITDA’ @ Leverage H12022 FY 2022 12023 Debt amortisation profile
Slide 24: eee POA NO NS Ae
eee POA NO NS Ae i » RHI MAGNESITA,
Slide 25: Trading outlook and 2023 guidance
Trading outlook and 2023 guidance Pricing resilient but outlook uncertain Outlook for key end markets remains uncertain, with order books suggesting continued weakness into the second half Pricing currently resilient but competitive pressure expected in the remainder of the year Benefit of lower inp
Slide 26: RHI Magnesita is executing on its strategy
» RHI MAGNESITA RHI Magnesita is executing on its strategy Production Optimisation Plan substantially complete, M&A consolidation phase now underway RHI Magnesita has: v Transformed its cost base and production network, achieving the EBITA from strategic sales and cost initiatives targeted cumulativ
Slide 27: RHI Magnesita
3 RHI MAGNESITA
Slide 28: Appendix
3 RHI MAGNESITA Appendix
Slide 29: Strategic initiatives
Strategic initiatives » RHI MAGNESITA Target cumulative run-rate EBITA savings of €125-145 million achieved in H1 2023 ® Production Optimisation Programme substantially complete outside Brazil Cumulative EBITA improvement € million! I Sales strategies Hl Cost initiatives - 13 2020 2021 2022 H12023 -
Slide 30: Leverage
Leverage 1.0 – 2.0x ~2.5x for M&A Resilient margins through the cycle
Slide 31: Cash flow reconciliation
» RHI MAGNESITA Cash flow reconciliation €m H1 2023 H1 2022 Adjusted EBITDA 265 245 Share based payments - gross non-cash 4 4 Working capital changes 4 (267) Changes in other assets and liabilities (18) (9) Investments in PPE (63) (58) Adjusted operating cash flow 228 (84) Income taxes paid (24) (36
Slide 32: Net financial expenses
» RHI MAGNESITA Net financial expenses €m H1 2023 H1 2022 Net financial expenses (18) (10) Interest income 9 3 Interest expenses (27) (13) FX effects (15) 4 Balance sheet translation (23) 7 Derivatives 8 (3) Other net financial expenses (19) (16) Present value adjustment on provisions (incl. onerous
Slide 33: H1 2023 reported to adjusted
Items excluded Items excluded €m H1 2023 from adjusted H1 2023 H1 2022 from adjusted H1 2022 reported performance adjusted reported performance adjusted ⁃ ⁃
Slide 34: Impact of foreign currency movement
Impact of foreign currency movement EBITA sensitivity in H1 2023 Appreciation vs EUR Depreciation vs EUR H1 2023 exchange rates » RHI MAGNESITA Increase / Increase / HY 2023 HY 2023 HY2023 HY 2022 (decrease) (decrease) Opening Closing Average Average Unit in EBITA (€m) Unit in EBITA (€m) EUR: Rate R
Slide 35: Return on invested capital
Return on invested capital » RHI MAGNESITA Group ROIC H1 2023 H1 2022 Invested Capital (€m) 2,973 2,692 NOPAT (€m) 154 139 ROIC (%) 10.4% 10.3% Vertical integration ROIC H1 2023 H12022 Invested Capital (€m) 454 467 NOPAT (€m) 21 40 ROIC (%) 9.4% 16.9% Refractory ROIC H1 2023 H1 2022 Invested Capital
Slide 36: 2023 guidance
2023 guidance P&L 2023 guidance (Previous) 2023 guidance (New) » RHI MAGNESITA H1 2023 (Actual) Revenues (i) Volumes Up to (5)% lower Continued weak volumes 9% revenue decline from volumes Revenues (ii) Pricing Slight softening Competitive pressure in H2 11% revenue growth from pricing Depreciation
Slide 37: Disclaimer
» RHI MAGNESITA Disclaimer Financial information contained herein, as well as other operational information, were not audited by independent auditors and may include forward- looking statements and reflects the current views and perspectives of the management on the evolution of macro-economic envir