Befesa Sa · XETR:BFSA
Befesa Sa — Berenberg EU Opportunities Conference 2025
49 slides from Befesa Sa's conference presentation, March 2025
Slide 1: Business & strategic update
Business & strategic update Berenberg EU Opportunities Conference 2025
Slide 2: Agenda
Agenda Executive Summary Executive Summary Current Trading Resiliency Resiliency USA operations USA operations China operations China operations Business Plan Business Plan Growth Strategy Growth Strategy 2
Slide 3: Executive Summary
Executive Summary FY24 Adj. EBITDA at €213m, 17% YoY, within the previous guidance range of €205-235m Strong Operating Cash in FY24 up 30% driven by solid cash conversion Leverage of x2.9 at Dec24. Below initial target of x3.0, and below x3.4 in Q3’24 Recycling operations in US improving profitabili
Slide 4: Key highlights
Key highlights €213 Full year EBITDA within the initial guidance range of €205-235m despite challenging macro situation FY24A ▪ It represents +17% EBITDA growth year on year • All-time-high quarterly EBITDA in Q4 24 at €62m • Strong volume and higher blended price in steel, partially offset by depre
Slide 5: Executive Summary 2/2
Executive Summary 2/2 China focus on improving existing operations. Expansion plan stop China ▪ Befesa invested in China in 2020 to capture the business opportunity that increased EAF steel and environmental regulation presented • Total capex invested €90m in two EAF dust recycling plants in the pro
Slide 6: Agenda
Agenda Executive Summary Executive Summary Current Trading Resiliency Resiliency USA operations USA operations China operations China operations Business Plan Business Plan Growth Strategy Growth Strategy 6
Slide 7: Robust FY24 operating and financial results despite challenging macroeconomic environment
Robust FY24 operating and financial results despite challenging macroeconomic environment 2024 Financial Highlights Revenue +5% ▪ Adj. EBITDA FY24 at €213m, up 17%. All-time-high quarterly EBITDA in Q4 24 at €62m FY24A: €1,239m ▪ Strong Operating Cash in FY24 up 30% driven by solid cash conversion €
Slide 8: FY24 Steel Dust business highlights
FY24 Steel Dust business highlights Strong Steel dust recycling operations in Europe and US partially offset by zinc refining contribution EUROPE USA ASIA Steel production in Europe at 5-year low Good utilization levels in the steel dust Robust Q4’24 for EAFD throughput in Asia impacted by wea
Slide 9: Steel Dust Recycling Services Financials
Steel Dust Recycling Services Financials Favourable blended price and TC, lower coke and energy price, partially offset by zinc refining in the US YoY change EBITDA 2023 to 2024 (€m) 2023 2024 (%) +36 / +27% Revenue €m 785.6 825.6 +5% 10 Adjusted EBITDA €m 134.1 170.4 +27% -18 170 Adjusted EBITDA %
Slide 10: FY24 Aluminium business highlights
FY24 Aluminium business highlights Strong salt slags recycling performance partially offset by weak secondary aluminium metal margin Salt Slags recycling 2nd aluminium Strong volume of salt slag recycled with plants Very weak European automotive industry Highlights running at 91% capacity utiliz
Slide 11: Aluminium Salt Slags Recycling Services Financials
Aluminium Salt Slags Recycling Services Financials EBITDA impacted by lower 2º alu metal margin, partially offset by lower energy prices and higher Salt slags volume. YoY change 2023 2024 EBITDA 2023 to 2024 (€m) (%) -5 / -10% Revenue¹ 399.0 419.4 +5% 48 - Salt Slags €m 86.3 105.9 +23% 1 - Secondary
Slide 12: Zinc price traded higher in H2'24 vs H1'24
Zinc price traded higher in H2’24 vs H1’24, with mini rallies in May and in Q4 2024 (≈$3,000/t) Peak: $300 (April ‘22) (2008 & 2020) 4.371 (Feb ‘18) Zinc LME ($/t) 3.540 C90 ($/t) (Dec‘24) 3.043 (March ‘08) (May ‘15) 2.496 2.290 Contract TCs 2.368 (Jun ‘23) $165 $143 (2024) 1.906 (2018) (March ‘20)
Slide 13: Zinc price hedging extended until Dec 2026
Zinc price hedging extended until dec 2026 at all-time high level of 1 Befesa’s hedging strategy unchanged €2,650. Next hedging Q1 2027 • 1-3 years forward • Targeting 60% - 75% of zinc equivalent • Befesa provides no collateral Zinc LME1 €2,549 €2,425 2 Befesa’s hedging strategy has proven successf
Slide 14: Coke price normalisation; gas & electricity prices stabilised
Coke price continued further normalisation in FY24; Gas & electricity prices stabilised around 2021 levels Coke ▪ Befesa’s coke price Befesa’s energy price evolution by source continued further normalisation in Q4’24 to levels below 2022 and 2023 2019/20 2021 2022 2023 2024 average ▪ 2024 price aver
Slide 15: EBITDA to Cash Flow
EBITDA to Cash Flow Operating Cash Flow in 2024 amounts to €192m, up 30% YoY. Cash on hand as of Dec24 stands at €103m. Adjusted EBITDA to Total cash flow in 2024 (€ million) 213 Total capex = €119m -26 192 4 -56 -23 -40 -48 -29 -4 1 2 Adj EBITDA WC Change Taxes Operating CF Maintenance Growth Capex
Slide 16: Achieved <x3 leverage target at Dec24
Achieved <x3 leverage target at Dec24, ongoing reduction through disciplined capital allocation Capital structure Net Debt / EBITDA • TLB of €650m x3.4 x3.3 • Maturity in July 2029 • E+275 bps (25 bps reduction when leverage <x3.0 and <x2.5) • Expecting E+250 bps in FY25 x2.9 Historical avg x2.7 • C
Slide 17: Befesa expects strong double digit EBITDA growth in 2025
Befesa expects strong double digit EBITDA growth in 2025 Commentary 2025 Outlook Europe: stable/strong volume expected, despite current challenging steel industry Steel dust USA: higher EAF steel dust volume driven by volume from new contracts Neutral to positive volume China/Asia: stable vo
Slide 18: Agenda
Agenda Executive Summary Executive Summary Current Trading Current Trading Resiliency USA operations USA operations China operations China operations Business Plan Business Plan Growth Strategy Growth Strategy 18
Slide 19: Unique business model with high barriers to entry
Unique business model with high barriers to entry resulting in high margins over time and strong performance through the cycle ▪ Strategically located plants near customers and long-term service relationships providing high barriers to entry ▪ Proven track record of resilience through cycles and vol
Slide 20: Unique business model with high barriers to entry
Unique business model with high barriers to entry resulting in high margins over time Strategic locations and strong performance through the cycle Locked-in captive demand as Befesa’s plants strategically located in close proximity to client locations Short distance Plants located nearby EAF produce
Slide 21: Befesa's Resilience During Latest Crises
Befesa’s Resilience During Latest Crises Befesa has demonstrated resilient volumes and capacity utilisation levels during the latest crises 2008 / 2009 / 2010 2019 / 2020 / 20213) 600 1000 2019 2020 2021CE 240 >1.1Mt Incl.240US acquisition 550 900 Befesa EAFD 220 500 474 482 220 800 throughput, kt 6
Slide 22: C90 growing at 6% CAGR over the last 15 years
C90 growing at 6% CAGR over the las 15 years, consistently acting as a solid floor of the zinc price (April ‘22) 4.371 C90 as solid floor for zinc (Feb ‘18) 3.540 ▪ C90 represents the zinc (Dec‘24) 3.043 price level at which 10% of (March ‘08) the most expensive mines 2.496 (May ‘15) break even 2.29
Slide 23: Agenda
Agenda Executive Summary Executive Summary Current Trading Current Trading Resiliency Resiliency USA operations China operations China operations Business Plan Business Plan Growth Strategy Growth Strategy 23
Slide 24: Operational improvement of recycling assets on plan
Operational improvement of recycling assets on plan, ready to capture market growth. Stabilizing refining plant ▪ Steel dust recycling operations increasing efficiency according to initial plan based on operational synergies and best practices – Resulting in an increase of EBITDA/ton of 63%, from €7
Slide 25: US recycling operations improving gradually profitability
US recycling operations improving gradually profitability as planned Steel dust throughput & Plant utilisation 90% 60% 65% 570-690 Gradual recovery of EAF volume since 2021: 450 * 416 Customer 100 ▪ Loss of an EAF steel dust supply contract with a major steelmaker loss before acquisition 350 ▪ Volu
Slide 26: Synergies focused on operational efficiency and coke consumption
Synergies focused on operational efficiency and coke consumption, mostly captured already Coke consumption US plants (Kt) 133 128 113 Coke consumption reduced by 21% driven by operational efficiencies. 105 Coke-to-throughput ratio decreased from 38% to 25% by implementing best practices Coke average
Slide 27: Palmerton plant refurbishment progressing well
Palmerton plant refurbishment progressing well to seize growth in the US EAF steel dust market Plant overview ▪ 2 kilns with c. 163 kt → 220 kt (post-refurbishment) EAF steel dust recycling capacity Palmerton, Pennsylvania ▪ Producing WOX as a marketable product Indicative timing and status H1 2025
Slide 28: New EAF announcements supported by strong infrastructure programs
New EAF announcements supported by strong infrastructure programs requiring steel 60kt additional EAF steel dust already contracted Steelmaker Location New capacity, Mt Start up 1 Calvert, Alabama 1.5 H2’24 Arcelor 2 Hamilton, Ontario, Canada 2.4 2026 3 Kingman, Arizona 0.6 Q3’24 4 Lexington, North
Slide 29: Zinc refining asset being turnaround to improve profitability
Zinc refining asset being turnaround to improve profitability Zinc refining plant: Key facts Implementing a 3-phase plan since acquisition ▪ Vertical integration in the US which makes sense as there is Improving the quality of the product to the SHG zinc specification to 1 lack of smelting capacity
Slide 30: Turnaround plan to improve profitability of zinc refining plant
Turnaround plan to improve profitability of zinc refining plant Quality improvement Plant Utilization Cost Reduction % In Spec SHG over total production % Load factor +18% +36% 100% 100% 100% 82% 86% 82% 65% 50% Q4’23 Q1’24 Q2’24 Q3’24 Q4’24 Q4’22 FY23 FY24 ▪ In Spec SHG (Special High Grade) zinc ▪
Slide 31: Agenda
Agenda Executive Summary Executive Summary Current Trading Current Trading Resiliency Resiliency USA operations USA operations China operations Business Plan Business Plan Growth Strategy Growth Strategy 31
Slide 32: China focus on improving existing operations. Expansion plan stop
China focus on improving existing operations. Expansion plan stop ▪ Befesa invested in China in 2020 to capture the business opportunity that increased EAF steel and environmental regulation presented – Total capex invested €90m in two EAF dust recycling plants in the provinces of Jiangsu and Henan
Slide 33: Befesa invested in China in 2020
Befesa invested in China in 2020 to capture the business opportunity that increased EAF steel and environmental regulation presented Total capex invested €90m in two EAF dust recycling plants in the provinces of Jiangsu and Henan 1 Key milestones 2 Environmental Regulation ▪ In 2017, steel mill dust
Slide 34: Real estate crisis in China driving low EAF utilization
The real estate crisis in China is driving low utilization on EAF steel makers, resulting in low EAF dust generation 1 EAF steel output is being impacted by the real estate crisis, with a low utilisation rate 2 2024 represents the fifth year with a double-digit decline 3 Long products production is
Slide 35: Differences between the two provinces drive performance
Differences in EAF steel production and regulation enforcement between the two provinces drive performance Jiangsu Henan Tier 1 province with strong enforcement of the Tier 2 province, with utilisation rate expected to remain environmental regulation, high plant utilisation rate and subdued for a wh
Slide 36: Investment plan in China stop until market recovery
Investment plan in China stop for the coming years until a clear market recovery Despite de challenging short term, in the medium term the opportunity in China remains very attractive Investment plan stop: Positive trends still in place for the mid-term ▪ The two main drivers for the investment appr
Slide 37: Agenda
Agenda Executive Summary Executive Summary Current Trading Current Trading Resiliency Resiliency USA operations USA operations China operations China operations Business Plan Growth Strategy Growth Strategy 37
Slide 38: 5-year Business Plan to be executed keeping leverage around x2
5-year Business Plan presented in CMD in November 2022 to be executed keeping leverage around x2 ▪ Growth going forward maintaining leverage between x2.0 and x2.5 – Only committed capex is Palmerton and Bernburg expansion, which are ongoing – European projects (expansion of steel dust and new salt s
Slide 39: What we said at the CMD in November 2022
What we said at the CMD in November 2022 39
Slide 40: Befesa is adjusting and adapting its business plan
Befesa is adjusting and adapting its business plan to the temporary macroeconomic challenges CMD Nov 2022 Today Outlook Capex Total capex: €410-450m 20% invested, €87m: US refining and Recytech 30%: Europe steel dust & salt slags, €120-140m 20% being invested, €90m: Palmerton & Bernburg 30
Slide 41: Capex already invested will deliver growth
Capex already invested will deliver 1 Total invested before 5Y Growth Plan €480m growth over the coming years • Today delivering €50m • Potential to deliver €80-90m EBITDA EBITDA Project Capex • >15% ROCE today potential US recycling €390 €47 €70 2 20% of the 5Y Growth Plan invested • €80m invested
Slide 42: Remaining 50% of Recytech acquired
Remaining 50% of Recytech acquired in a highly-accretive deal, advancing strategic global growth plan in Europe Befesa’s EAF steel dust recycling plants in Europe 1 Fouquières-lès-Lens/Recytech Key facts about Recytech: 2 Duisburg 2 1 ▪ Former 50/50 JV between Befesa and Recylex, 3 3 Freiberg 4 Asúa
Slide 43: Bernburg expansion: permits and commercial contracts
Bernburg expansion: Moving forward with permits and commercial contracts Plant overview ▪ Expand alu alloy production capacity at existing Bernburg plant from current 75 kt to 135 kt (+60 kt) • 2 rotary furnaces (and 2 holding furnaces) ▪ Total Befesa 2nd Alu capacity from 205 kt to 265 kt Bernburg,
Slide 44: Agenda
Agenda Executive Summary Executive Summary Current Trading Current Trading Resiliency Resiliency USA operations USA operations China operations China operations Business Plan Business Plan Growth Strategy 44
Slide 45: Growth strategy driven by favourable mega trends
Growth strategy driven by favourable mega trends of decarbonization, energy transition and environmental regulation ▪ The strategy of Befesa remains unchanged, focus on the two-core business – Steel dust and salt slags recycling services to the steel and aluminium industries as well as secondary alu
Slide 46: Befesa's industries benefited from favourable mega trends
Befesa’s industries are benefited from favourable mega trends driven by decarbonization and energy transition FAVOURABLE MEGA TRENDS Rising population Focus on circular economy Increase in middle classes in emerging countries / urbanisation Stricter environmental regulations Resource scarcity STEEL
Slide 47: Decarbonisation megatrends driving EAF steel growth
Decarbonisation megatrends favouring and driving the electric arc furnace (EAF) steel growth Global crude steel production1 Key takeaways million tonnes, 2016—2030e CAGR CAGR 2016—21 2022—30e 2,064 +3.6% +1.0% ▪ Ongoing swift from BOF to 1,951 Total EAF steel — Global EAF crude 1,633 564 steel produ
Slide 48: Energy transition megatrend requiring incremental zinc
Energy transition megatrend requiring incremental zinc, in addition to regular GDP related growth Key takeaways Zinc annual demand from wind, solar & batteries 1 thousand tonnes ▪ Global zinc demand grew with GDP at 2-3% CAGR over the L10y ▪ Zinc consumption expected to be supported as governments i
Slide 49: BEFESA
BEFESA