Elkem Asa · OSL:ELK
Elkem Asa — Debt Investor Presentation (September 2022)
23 slides from Elkem Asa's debt investor presentation, Sep 28, 2022
Slide 1: SEB Investment Grade Seminar
SEB Investment Grade Seminar 28 September 2022
Slide 2: Agenda
Agenda Brief introduction Strategy Market update Financial performance 2
Slide 3: We are Elkem
We are Elkem Advanced material solutions shaping a better and more sustainable future Silicones Silicon Products Carbon Solutions 3
Slide 4: Elkem operates through three divisions
Elkem operates through three divisions: All with global scale, leadership positions and global footprint Silicones Silicon Products Carbon Solutions Fully integrated silicones manufacturer Global producer and provider of silicon, Leading producer of electrode with focus on specialities ferrosilicon
Slide 5: Sustainable business model delivering record results
Sustainable business model delivering record results Low cost sustainable input factors High temperature/chemical production processes Examples of high value applications and markets Quartz Silicones Wind Infra- turbines structure Airbags Coal Silicon, ferrosilicon, foundry Solar Automotive EV produ
Slide 6: Growing and strengthening competitive positions through operational excellence and increased specialisation
Growing and strengthening competitive positions through operational excellence and increased specialisation SILICONES SILICON PRODUCTS CARBON SOLUTIONS NEW INITIATIVES We are Elkem Further improve underlying Further improve underlying Strengthen already good Battery Materials profitability profitabi
Slide 7: Robust and integrated value chain securing cost competitiveness
Elkem’s strategy – integrated value chain Robust and integrated value chain securing cost competitiveness Silicon metal (cost distribution based on industry average) Siloxane (cost distribution based on industry average) Predominately long-term contracts Power ~35% securing low prices, combined with
Slide 8: Xinghuo and Roussillon capacity increase update
Elkem’s strategy – Growth Xinghuo and Roussillon capacity increase update ▪ Competitive capacity upstream supporting downstream Xinghuo capacity increase Rousillon capacity increase investments by 2024 Total investment → ~3,800 MNOK → ~360 MNOK ▪ Main capex in 2022 & 2023 EBITDA margin (%) → +35% →
Slide 9: Specialisation, a key strategy
Elkem’s R&D centre in Lyon Elkem’s strategy – Specialisation • Elkem opened its new R&D centre, ATRiON, in Lyon on 1 July 2021 Specialisation, a key strategy • ATRiON is short for “atrium and innovation” and will host 120+ researchers. The investment amounted to NOK 250 million • Focus will be on ci
Slide 10: ESG – a key priority
Environmental, Social & Governance ESG – a key priority A clear focus on ESG Safety Environment Ambition: Zero injuries ▪ 22% biocarbon in production ▪ > 80% of electrical consumption ▪ Awarded Platinum sustainability rating from renewable energy from EcoVadis for 2022 ▪ CO2 emissions (scope 1 & 2)
Slide 11: Vianode invests NOK 2 billion in battery materials plant in Norway
Vianode – advanced battery materials Vianode invests NOK 2 billion in battery materials plant in Norway ▪ The agreement between Elkem, Hydro and Altor has been closed following approval from the competition authorities Produced with up to 90% ▪ Hydro and Altor Equity Partners have each acquired 30%
Slide 12: Strong results explained by attractive market positions
Strong results explained by attractive market positions ▪ Elkem has delivered 7 consecutive quarters with improved EBITDA results, reaching a new all-time high in 2Q-2022 2Q-2022 figures EBITDA four last quarters ▪ Elkem continues to benefit from strong market positions and integrated value chains i
Slide 13: Soft demand, market prices held up by high raw material costs
Silicones market Soft demand, market prices held up by high raw material costs ▪ Mixed market sentiment for silicones products in 3Q-2022 DMC reference price China (CNY/mt) ▪ Demand and prices holding up well for speciality grades e.g. EV, healthcare and consumer products ▪ Challenging market condit
Slide 14: Prices down from peak levels, but still attractive
Silicon and ferrosilicon markets Prices down from peak levels, but still attractive CRU silicon 99 price EU (EUR/mt) ▪ Market prices for silicon and ferrosilicon are down from peak levels but still high in historical context ▪ Current CRU prices in Europe for silicon and ferrosilicon not sufficient
Slide 15: 2Q-2022 - Another record result
Elkem group 2Q-2022 - Another record result Total operating EBITDA income ▪ New all-time high ▪ Another record driven by high sales quarter prices ▪ Increased revenue ▪ Mainly driven by generation in all Silicon Products. divisions New all-time high for Carbon Solutions 15
Slide 16: Silicones: Good quarter, but impacted by maintenance stop
Total operating income Silicones NOK million Good quarter, but impacted by maintenance stop ▪ Total operating income of MNOK 5,211, up 45% from the second quarter last EBITDA and margin year NOK million and % ▪ Increased operating income driven by higher sales prices and higher sales volumes ▪ EBITD
Slide 17: Silicon Products: Another strong quarter
Total operating income Silicon Products NOK million Another strong quarter ▪ Total operating income of MNOK 6,517 up 94% from the second quarter last EBITDA and margin year NOK million and % ▪ Increased operating income driven by high sales prices ▪ EBITDA of MNOK 2,965, up 341% from second quarter
Slide 18: Carbon Solutions: Record results driven by good operations and strong markets
Total operating income Carbon Solutions NOK million Record results driven by good operations and strong markets ▪ Total operating income MNOK 906, up 79% from the second quarter last EBITDA and margin year NOK million and % ▪ Operating income reached all-time high, explained by high sales prices and
Slide 19: Strong cash flow and robust equity
Cash flow from operations Elkem Group NOK million Strong cash flow and robust equity ▪ Cash flow from operations(1) was MNOK 2,809 in the second quarter ▪ Strong cash flow generation explained by high operating profit ▪ Increase in working capital mainly explained by higher inventories ▪ Disciplined
Slide 20: Low leverage, refinancing of bank facilities
Net interest-bearing debt (NIBD) Elkem Group NOK billion Low leverage, refinancing of bank facilities ▪ Net interest-bearing debt (NIBD) of BNOK 4.1 as at 30 June 2022 ▪ Leverage ratio of 0.3x based on LTM EBITDA of BNOK 13.0 Maturity profile NOK billion ▪ Refinancing of bank facilities to secure lo
Slide 21: Summary & investment highlights
Summary & investments highlights ▪ Strong market positions and integrated value chains ▪ Well balanced business model with long-term energy contracts ▪ Low leverage and well managed maturity profile ▪ Robust financial position and strong equity ratio ▪ Strong cash flow generation and disciplined cap
Slide 22: Important notice
Important notice Any statement, 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 (f
Slide 23: Delivering your potential
«~ Elkem Delivering your potential