Befesa Sa · XETR:BFSA
Befesa Sa — Q4 2022 Earnings Presentation
35 slides from Befesa Sa's earnings presentation, Mar 2, 2023
Slide 1: 2022 Preliminary Earnings
2022 Preliminary Earnings 2 March 2023
Slide 2: Disclaimer
Disclaimer This presentation contains forward-looking statements and information relating to Befesa and its affiliates that are based on the beliefs of its management, including assumptions, opinions and views of Befesa and its affiliates as well as information cited from third party sources. Such s
Slide 3: Today's presenters
Today’s presenters Javier Molina Asier Zarraonandia Wolf Lehmann Executive Chair CEO CFO Leading Befesa >20 years with Befesa Befesa’s CFO for >20 years since 2014 3 2022 Preliminary Earnings
Slide 4: Highlights
01 Highlights
Slide 5: Executive summary
Executive summary Record 2022 revenue, EBITDA, net profit & operating cash flow: - Total revenue increased by 38% to €1,136m (2021: €822m), mainly driven by the US operations and higher metal prices - Adj. EBITDA up 9% to €215m (2021: €198m), in a challenging year - Reported EBITDA at €235m, +24% (2
Slide 6: Business highlights
Business highlights Steel Dust Alu Salt Slags • EAFD throughput: • Salt slags volumes / normalised for Hanover 2022 up 35% to 1,194 kt 2022 down 18% to 322 kt / +7% yoy Q4 down 8% to 296 kt, +11% qoq Q4 down 11% to 82 kt, +23% qoq / +3% yoy • Plant utilisation: close to 80% • 2nd aluminium alloys: 2
Slide 7: Financial results
02 Financial results
Slide 8: Consolidated key financials
Consolidated key financials 2022 adjusted EBITDA increased by 9% to record €214.6m, driven mainly by US zinc operations contributing full year; higher base metal prices offset by unfavourable zinc TC, energy inflation and minor aluminium volume decrease; Net profit up 6% to record €106.2m, equal to
Slide 9: Steel Dust Recycling Services
Steel Dust Recycling Services Adjusted EBITDA up 14% to €168.6m in 2022, driven mainly by US operations contributing full year; higher zinc market prices offset by unfavourable TC and energy inflation Adjusted EBITDA bridge 2021 to 2022 (€m) +€20.3 / +13.7% 12 -20 168.6 148.3 28 +23 Zinc LME Inflati
Slide 10: Aluminium Salt Slags Recycling Services
Aluminium Salt Slags Recycling Services Adjusted EBITDA down 6% to €46.0m in 2022; Inflation fully offset by higher metal prices; Only minor volume decrease Adjusted EBITDA bridge 2021 to 2022 (€m) -€2.8 / -5.7% 48.8 27 -25 46.0 -5 Lower aluminium alloys Higher alu alloys FMB Inflation incl. energy,
Slide 11: Cash flow, net debt & leverage
Cash flow, net debt & leverage Operating cash flow up 16% to €137m in 2022, a new high; Approx. balanced cash flow normalised for >€50m self-funded zinc refining acquisition & related costs; Net leverage of x2.56 (2021: x2.38) Adjusted EBITDA to total cash flow (€m) Total capex = €151.4m 214.6 Incl.
Slide 12: Zinc prices & hedging strategy
Zinc prices & hedging strategy Hedge book extended further up to July 2025, c. 2.5 years; Improving earnings & cash flows visibility Zinc LME vs. Befesa’s hedges & blended prices (€/t) Zinc LME1) Befesa’s hedges c. €2,650 c. €2,450 c. €2,550 €2,627 c. $2,9002) c. $2,6502) c. $2,7502) €2,317 €2,239 €
Slide 13: Growth
03 Growth
Slide 14: Executing next 5-year Sustainable Global Growth Plan (SGGP)
Executing next 5-year Sustainable Global Growth Plan (SGGP) Around €410-450m investment, similar expansion focus & size like last 5 years Targeting +€125-155m incremental run-rate EBITDA from 2022 baseline, 8-10% CAGR growth; >20% IRR Globally balanced expansion, c. 1/3 in the US, Europe & Asia/Chin
Slide 15: SGGP indicative timeline
SGGP indicative timeline; Befesa in control; Adjusting timing to macroeconomic developments €410-450m total capex requirement over the next 5 years Steel Dust Alu Salt Slags SGGP Timing EBITDA Pay- Capex €m IRR2) growth projects 2022e 2027e run-rate €m back1) 1 Zinc refining Refurbishing / €110-120
Slide 16: US Zinc refining asset acquired on 30 Sep 2022
1 US Zinc refining asset acquired on 30 Sep 2022 Rutherford County, NC • Acquired remaining 93% of zinc refining asset on 30 September 2022 for $47m cash transaction; 65% or $88m below original purchase option of $135m • Attractive multiple of around 5x Adj. EBITDA and at about 1/10th of >$500m inve
Slide 17: Refurbishing Palmerton in 2023/24
2 Refurbishing Palmerton in 2023/24 to drive efficiencies & increase capacity utilisation by 2026 EAFD recycling sites Palmerton refurbishment status update 1 Barnwell, SC 2 Rockwood, TN ➢ Engineering / design across 6 working areas (packages) in process ➢ Request For Quote with suppliers started; 1
Slide 18: Operating 2 plants in 2023; Preparing 3rd province, Guangdong
5 Operating 2 plants in 2023; Preparing 3rd province, Guangdong China II, Xuchang (Henan) China I, Changzhou (Jiangsu) ✓ Commissioning completed Dec 2022 ✓ Ramped up Q1 2022 ✓ Inaugurated on 23 February 2023 ➢ Ramping up Q1 2023 China III, Yunfu (Guangdong) ✓ LOI signed in Q4 2022 ✓ Signed investmen
Slide 19: Well defined growth roadmap driving EBITDA growth
Well defined growth roadmap driving +€125-155m EBITDA growth, 8-10% CAGR, globally balanced, c. 1/3 US/EU/Asia c. €340-370m c. 8-10% CAGR +€45-55m +€45-55m +€35-45m ✓ China I & II ➢ China III (✓LOI) €215m • New EAFD plant • China IV • WOX washing expansion • China V ✓ Zinc refining • 2nd Alu expansi
Slide 20: ESG
04 ESG
Slide 21: ESG highlights
ESG highlights Key player within the circular economy, with c. 1.8 Mt recycled and c. 1.5 Mt of valuable materials; LTIR further reduced by >30% yoy to new low of 0.55 Lost Time Injury Rate (LTIR)1) ESG Ratings2) • Reduced by -32% yoy 2022 2021 • Reduced by -90% vs. 2015 baseline Top 3 of 69 Top 3 o
Slide 22: Investor agenda & appendix
05 Investor agenda & appendix
Slide 23: Investor's agenda
Investor’s agenda Financial calendar Next investor conferences 2023 H1 2023 H2 2023 Annual Report 2022 ESG Event (virtual) London – Stifel 2023 London Industrials & Thursday, 23 March 2023 7 March – Jefferies Renewables Summit 6 September – Stifel Q1 2023 Statement & Conf. Call London – Pan-European
Slide 24: Q4 2022/21 – Key financials
Q4 2022/21 – Key financials (€m, unless otherwise stated) Steel Salt Secondary Corporate & Total Dust Slags Aluminium eliminations Befesa Revenue1) €197.0 €20.0 €89.6 -€11.2 €295.5 yoy change +€45.3 / +29.8% -€0.1 / -0.3% +€4.1 / +4.7% -€1.2 / - +€48.0 / +19.4% Reported EBITDA €27.4 €16.6 €6.8 €2.9
Slide 25: 2022/21 – Key financials
2022/21 – Key financials (€m, unless otherwise stated) Steel Salt Secondary Corporate & Total Dust Slags Aluminium eliminations Befesa Revenue1) €730.3 €77.3 €375.9 -€47.5 €1,136.0 yoy change +€274.5 / +60.2% +€0.0 / +0.0% +€46.0 / +13.9% -€6.0 / - +€314.4 / +38.3% Reported EBITDA €178.8 €38.6 €19.0
Slide 26: Multi-year trend – Key financials
Multi-year trend – Key financials1) (€m, unless otherwise stated) 2017 2018 2019 2020 2021 2022 Revenue €667.42) €720.1 €647.9 €604.3 €821.6 €1,136.0 Reported EBITDA €153.0 €176.0 €159.6 €123.5 €189.6 €234.9 Reported EBITDA margin 22.9%2) 24.4% 24.6% 20.4% 23.1% 20.7% % Adjusted EBITDA €172.43) €176
Slide 27: Q4 2022/21 – Operational data – Steel Dust Recycling Services
Q4 2022/21 – Operational data – Steel Dust Recycling Services Q4 2021 Q4 2022 yoy change EAFD 322.4 296.2 -26.2 / -8.1% throughput (kt) EAFD average 87.8% 75.6% -1,223 bps capacity utilisation (%) Waelz oxide 98.4 96.2 -2.2 / -2.3% (WOX) sold (kt) Zinc LME price €2,942 €2,944 +€2 / +0.1% (€/t) Zinc
Slide 28: 2022/21 – Operational data – Steel Dust Recycling Services
2022/21 – Operational data – Steel Dust Recycling Services 20211) 2022 yoy change EAFD 885.7 1,193.8 +308.1 / +34.8% throughput (kt) EAFD average 83.3% 76.8% -657 bps capacity utilisation (%) Waelz oxide 291.0 407.4 +116.5 / +40.0% (WOX) sold (kt) Zinc LME price €2,544 €3,302 +€758 / +29.8% (€/t) Zi
Slide 29: Q4 2022/21 – Operational data – Aluminium Salt Slags
Q4 2022/21 – Operational data – Aluminium Salt Slags Recycling Services Q4 2021 Q4 2022 yoy change Salt slags & SPL 92.0 82.2 -9.8 / -10.6% treated (kt) +2.61) / +3.3%1) Salt slags & SPL 77.7% 69.4% -826 bps avg. capacity / 96.0%1) / +307 bps1) utilisation (%) Aluminium 43.4 38.7 -4.7 / -10.9% alloy
Slide 30: 2022/21 – Operational data – Aluminium Salt Slags
2022/21 – Operational data – Aluminium Salt Slags Recycling Services 2021 2022 yoy change Salt slags & SPL 395.0 322.1 -72.9 / -18.5% treated (kt) +22.01) / +7.3%1) Salt slags & SPL 84.0% 68.5% -1,552 bps avg. capacity / 94.7%1) / +647 bps1) utilisation (%) Aluminium 185.8 160.6 -25.1 / -13.5% alloy
Slide 31: Multi-year trend – Operational data
Multi-year trend – Operational data 2017 2018 2019 2020 2021 2022 EAFD throughput (kt) 661.0 717.1 665.8 687.0 885.7 1,193.8 EAFD average capacity 84.7% 92.0% 80.7% / 83.2% 83.3%2) 76.8% utilisation (%) 90.1%1) Waelz oxide (WOX) sold 217.8 240.9 217.6 239.2 291.0 407.4 (kt) Zinc LME price (€/t) €2,5
Slide 32: Consolidated key financials
Consolidated key financials Q4 adjusted EBITDA at €50.7m, -17% yoy, mainly driven by yoy higher energy inflation; Higher base metal prices offset with unfavourable zinc TC and minor volume decrease Adjusted EBITDA bridge Q4 2021 to Q4 2022 (€m) -€10.0 / -16.5% 60.8 -3 3 -10 1) -2 Lower steel volumes
Slide 33: Steel Dust Recycling Services
Steel Dust Recycling Services Q4 adjusted EBITDA at €37.6m, -18% yoy, mainly driven by yoy higher energy inflation and lower volumes; Zinc metal prices offset unfavourable TC Adjusted EBITDA bridge Q4 2021 to Q4 2022 (€m) -€8.0 / -17.6% 45.6 -6.5 -2 0.5 37.6 Lower steel volumes +1 Zinc LME Inflation
Slide 34: Aluminium Salt Slags Recycling Services
Aluminium Salt Slags Recycling Services Q4 adjusted EBITDA at €11.8m, -20% yoy; Minor volume decrease & inflation partially offset by higher alu metal prices Adjusted EBITDA bridge Q4 2021 to Q4 2022 (€m) -€2.9 / -19.9% 14.7 -1 2 -4 11.8 Lower aluminium alloys Higher alu alloy FMB Inflation incl. en
Slide 35: Cash flow, net debt & leverage
Cash flow, net debt & leverage Q4 operating cash flow of €59m, +34% or +€15m yoy, a new high; Net leverage of x2.56 at YE’22, stable qoq (x2.56 at Q3’22 closing) Q4 adjusted EBITDA to total cash flow (€m) Total capex = €30.7m -4.5 59.0 50.7 14.1 -1.4 WC seasonal -28.7 improvement Hanover insurance r