Rhi Magnesita Nv · LSE:RHIM
Rhi Magnesita Nv — Investor Presentation (May 2023)
57 slides from Rhi Magnesita Nv's investor presentation, May 2023
Slide 1: RHI Magnesita Investor presentation May 2023
» RHI MAGNESITA RHI Magnesita Investor presentation May 2023
Slide 2: Agenda
> Co} © S Q. ® 690060808 Introduction FY 2022 update M&A activities Financial review Sustainability Strategic outlook and Summary Q&A Appendix 3 RHI MAGNESITA
Slide 3: Refractories are essential for our modern world
3 Refractories are essential for our modern world si ncn Concrete Copper Steel Glass Aluminium 1,500°C 1,350°C 1,760°C 1,650°C 1,250°C N (NON 1 tonne of STEEL 1 tonne of CEMENT 1 tonne of GLASS 1 tonne of ALUMINIUM 1 tonne of COPPER demands ~10-15 Kg demands ~1 Kg demands ~4 Kg demands ~6 Kg demands
Slide 4: Refractory applications
Refractory applications Steet Cement Glass Non-ferrous [J industrial met appli 1% of revenues Relractory ‘demand foritenne 1010 15 kg ma Lietime cc. hours - 6 months hot 6.3% ‘Yo global market share by custorner ‘market » 15% 1% of revenues Ratroct ‘demand. {orltoone ~tkg lox Letime Annually hot 6.0
Slide 5: Global leader in a highly fragmented market
3 Global leader in a highly fragmented market sian Growth opportunity through consolidation Global market share Regional market share %' Total market size: Cc. €20bn South America Africa VESUVIUS North America 34% A Middle East ex-Iran Medium &small / Chinese OO SHINAGAWA companies India oth, Europe
Slide 6: Customers and end user markets
Customers and end user markets Customer : } Industrial Non-ferrous industries Cement Steel applications metals %of2022revenue. 11% 1% N% T% End markets 45% 17% 10% 15% Other 5% outlook : The outlook for end H H H peste ere Construction! Automotive? Machinery* Electronics and Energy® 2023: 1.2% 2023:
Slide 7: Raw material and refractory process overview
3 Raw material and win eacncara refractory process overview Raw material production Heat management solutions -- Ad AL Mining Ww “== @ —— ‘2 Logistics ‘ 1) v | bib
Slide 8: Vertical integration benefits
3 Vertical integration benefits Ri MAGHESITA Our magnesite raw material assets are amongst the lowest cost globally DBM 98: Indicative cost curve EBITA margin contribution RHI standalone RHI Magnesita 13.9% 14.0% > 2016 2017 2018 2019 2020 2021 2022 Eskisher Brumado Hl RHIM assets I Vertical integra
Slide 9: Global footprint with local for local strategy
3 RHI MAGNESITA Global footprint with local for local strategy Europe/Tarkiye Exports Investor presentation | May 2023
Slide 10: Solutions contracts
3 Solutions contracts sua naoncara RHI Magnesita can offer full heat management solutions to its customers Client benefit v Reduced downtime v Lower refractory consumption v Lower energy and other raw materials consumption v Higher productivity and cost savings RHI Magnesita benefit v Market share g
Slide 11: Heat management solutions
Heat management solutions Growing our solutions offering * RHI Magnesita’s unique global footprint, service offering and comprehensive product range allows it to offer full heat management solutions to its customers ® Solutions contracts are: c.5-7 years long, usually renewed on expiry Offered at a
Slide 12: EAF transition in the steel industry
3 RHI MAGNESITA EAF transition in the steel industry Use of EAF technology is key to reducing CO, emissions BF: Blast furnace BOF: Basic oxygen furnace DRI: Direct reduced iron EAF: Electric arc furnace BF Scrap steel DRI* ESF* DRI? v v v v rH.) Green hydrocarbon ® ais ® 4 Renewable electricity 1. R
Slide 13: Resilient track record through the cycle
Resilient track record through the cycle 3 RHI MAGNESITA The Group has a strong track record of maintaining margins throughout economic cycles * Refractories are essential for modern life, a non-discretionary product that is vital for industrial production - Customer margins are volatile, refractory
Slide 14: FY 2022 update
» RHI MAGNESITA Stefan Borgas CEO
Slide 15: Strong revenue growth
Strong revenue growth 3 RHI MAGNESITA Market share gains and price increases deliver strong revenue and EBITA growth Revenues supported by significant price increases € million, kt 2.325 2,357 2,347 —> Volume 2.992 2,045 S317 Ml Revenue Bee 2,551 2019 2020 2021 2022 Higher cost offset by price incre
Slide 16: Health & Safety
Health & Safety Acore value at RHI Magnesita LTIF and TRIF stable or decreasing in FY 2022 2.0 15 1.0 0.0 T T T 1 2018 2019 2020 2021 2022 1. Total recordable injury frequency rate per 200,000hours 2. Lost time injury frequency rate per 200,000 hours Investor presentation | May 2023 3 RHI MAGNESITA
Slide 17: Financial highlights
Financial highlights Revenue! €3.3bn B® 30% Capex €157m 38% 1. De 2. We 3. Including IFRS16 Leases of €64m \oted on a reported basis not joking capital includes working capital financi Adjusted EBITA' €384m PB 37% Working Capital intensity? 25.4% PB 21ppt ing of €314m and is denoted on a L3M revenue
Slide 18: Steel division overview
Steel division overview 3 RHI MAGNESITA Shipped refractory volumes for steel (1)%, outperforming world steel association production volumes ex-China (7)% Revenue (€m)' 23.4% 21.6% 22.0% 2.371 1,823 1,570 IM revenue @ Gross margin (%)! 1. Denoted on a reported basis 2020 2021 2022 Investor presentati
Slide 19: Steel division performance by region in 2022
Steel division performance by region in 2022 » RHI MAGNESITA Improved delivery reliability drives market share growth in each region RHIM North America €694m 2022 versus 2021% Il Steel production (WSA) HB RHIM Volumes Hl PHIM Revenue (constant currency) Investor presentation| May 2023 Europe/Tirkiye
Slide 20: Industrial division overview
Industrial division overview » RHI MAGNESITA Revenue +30% due to pricing as higher shipments in NFM offset softer cement volumes 1 Revenue (€m) 26.4% 261% 25.8% oe —e— —e 946 689 729 HB Cement/Lime Hl industrial projects -@ Gross margin (%)! 2020 2021 2022 1. Denoted on a reported basis Investor pre
Slide 21: Our response to energy market volatility
Our response to energy market volatility ¢ European plant network of 10 refractory production plants and 4 raw material plants was reliant on natural gas @ €7 million capex invested during the year to access alternative fuels including LPG ® Direct purchase of 75GWh of natural gas for physical stora
Slide 22: M&A
M&A Stefan Borgas CEO
Slide 23: Acquisitions in Europe, China, Türkiye and India
Europe China Recycling Non-basic Flow control Türkiye Industrial India Industrial Flow control
Slide 24: Türkiye remains a core targeted geography
Türkiye remains a core targeted geography for growing our market share Creation of MIRECO brand as a new SÖRMAŞ1 refractories key secondary raw material provider for the industry Strategic focus Strategic focus
Slide 25: India offers significant growth potential
India offers significant growth potential… Indian refractory business Refractory business of Dalmia Bharat refractories of Hi-Tech Chemicals Strategic focus Strategic focus
Slide 26: Jinan New Emei and Chongqing progress update
Jinan New Emei Chongqing Industries Co. progress update Strategic focus Strategic focus
Slide 27: Capital allocation
3 Capital allocation am MAGNESIA New gearing target @ Previous target ratio 0.5 - 1.5x and over 2.0x for M&A @ Board considers that it is in shareholders’ interests to increase this flexibility: - Strong M&A pipeline presents opportunity to accelerate consolidation of the refractory industry = Resil
Slide 28: Financial review
lan Botha Financial review CFO 3 RHI MAGNESITA
Slide 29: Adjusted EPS and dividend per share
⁃ ⁃ ⁃ Adjusted EPS (€) Dividend per share (€)
Slide 30: 2022 revenue bridge
2022 revenue bridge €m 2,551 — 77 2,729 \ 600 68 3 RHI MAGNESITA 3,317 —_| 2021 Revenue Investor presentation | May 2023 FX effect 2021 Revenue at constant currency Sales volumes excluding strategic initiatives sales Price Increase Programme Strategic Initiatives - sales 2022 Revenue 30
Slide 31: 2022 EBITA bridge
» 2022 EBITA bridge ae ncn EBITA margin of 11.6% achieved through material price increases 600 542 €m Purchased RM cost (202) Energy (85) SG&A and R&D (69) Fixed cost absorption (63) Freight (43) Plant related personnel (33) Supplies (27) Other (20) 24 384 38 318 16 280 a <= Sales initiatives 14 Cos
Slide 32: Backward integration margin under pressure from higher cost in Europe
Backward integration margin under pressure from higher cost in Europe RHI standalone RHI Magnesita 3 RHI MAGNESITA 13.9% 14.0% Refractory EBITA (€m) 199 134 = 167-302 11.5% 11.6% Backward integrated 11.0% EBITA (€m) 81 54 29 8i 9.7% Refractory EBITA margin 7.8% 84% 97% 91% Backward integrated 32% 34
Slide 33: RHIM COGS increased by 22% YoY
Freight indices have normalised materially back Energy prices peaked in Q3 2022, and have since decreased RHIM COGS have increased by 22% YoY (on a to 2020 levels constant currency basis), mainly from increase in energy, raw materials and labour costs Raw material prices CPI (YoY %) by key geographi
Slide 34: Inventory volume reduction offset by higher cost & FX
Inventory volume reduction offset by higher cost & FX 3 RHI MAGNESITA Strategic decision to maintain higher levels of inventory intensity for improved customer service levels Working capital balances 2019 2020 2021 2022 II Working capital before deducting working capital finance I Working copital fi
Slide 35: Gearing and liquidity
3 Gearing and liquidity su nacncra Net debt : EBITDA reduced to 2.3x, below year end target of 2.4x due to higher EBITDA Net debt and liquidity (€m) @ Leverage of 2.3x net debt : EBITDA is below latest guidance of 2.4x 26x 3s and in line with new target range of 1.0-2.0x or 2.5x for M&A 3x 1 ® Signi
Slide 36: 2018–2023F financial charts
⁃ ⁃ ⁃ ⁃ ⁃ ⁃ ⁃ 1 2 3 2018 2019 2020 2021 2022 2023F
Slide 37: 2023 guidance
» 2023 guidance mu Agnes P&L guidance 2023F 2022 actual Revenues. (i) Volumes Up to (5)% lower Broadly flat Revenues (ii) Pricing Softening €600m price increases Depreciation €130m! €116m Incremental EBITA from strategic initiatives? c.€25m €24m EBITDA from recent M&A €25 — 30m - EBITA margin c.10%
Slide 38: Sustainability
» RHI MAGNESITA Stefan Borgas CEO
Slide 39: Sustainability leadership
Sustainability leadership Delivering against our sustainability targets Use of secondary raw material % of total raw material used Investor presentation | Ma 2019 2020 2021 10.5 6.8 5.0 ; i L 2022 3 RHI MAGNESITA * MIRECO helped us to reach our 2025 recycling target (10%) three years early in 2022 ©
Slide 40: Decarbonisation pathway
Decarbonisation pathway Theoretical decarbonisation plan 6 External support & partnerships crucial to achieving long term carbon reduction 2018 2030 2040 2050 2060 Sustainable Miccsu I Green energy Supply Chain Hl CO2 avoidance RHIM has successfully reduced CO, emissions intensity by 8.2% 19 2,0 ie
Slide 41: Strategic outlook and Summary
Stefan Borgas CEO
Slide 42: Strategic initiatives
3 Strategic initiatives ww nacncra Substantial completion of the project outside of Brazil ® Good progress in Production Optimisation Programme outside Brazil - Final stage of Radenthein, Austria, Manufacturing Enterprise System Cumulative EBITA improvement about to complete in Q1 2023 : € million’
Slide 43: Sales strategies update
Sales strategies update @ % of Group revenue Hl Flow Contol revenue Flow Control revenue 3 RHI MAGNESITA Solutions contracts € million and % of Group revenue % of Group revenue 16.9% Ieee 15.8%! Hl Product plus service ~ Hl Product only I Solution 29.2% 32,1% 2020 2021 2022 2020 2021 2022 1 Slower p
Slide 44: Trading outlook and 2023 guidance
3 RHI MAGNESITA Trading outlook and 2023 guidance ® Volatility and uncertainty are expected to persist P&L guidance 2025F 2022 actual across global markets in 2023 Revenues. (i) Volumes Up to (5)% lower Broadly flat Revenues (ii) Pricing Softening €600m price increases = Growth in India and demand s
Slide 45: Resilient platform to expand industry leadership
Resilient platform to expand industry leadership Leading consolidation in the refractory industry NZS ~ RHI MAGNESITA, ~ Investor presentation | May 2023 » RHI MAGNESITA Since the RHI Magnesita merger in 2017 we have: ® Substantially delivered the Production Optimisation Plan reducing high-cost capa
Slide 46: Q&A
» RHI MAGNESITA
Slide 47: RHI MAGNESITA
» y RHI MAGNESITA ‘ rr x il L.Is.M.-StE. ay x8 bern ; (sa0806 (ie vv :
Slide 48: Hochfilzen
Picture to be replaced Hochfilzen April 2022
Slide 49: Brumado
Picture to be replaced Brumado August 2022
Slide 50: Improved cash flow generation in 2022
3 RHI MAGNESITA | Improved cash flow generation in 2022 Adjusted operating cash flow and change in net debt (€m) 500 155 | Adjusted Sherebesed Working Changes Capex Adjusted Net debt Adjusted Income, OE and Netfinance Other! MBA Dividends? Proceeds Debt from Newleaso FX Net debt EBITDA Payments capi
Slide 51: Cash flow reconciliation 2022
3 Cash flow reconciliation 2022 RH MAGNESITA €m Adjusted EBITDA 500 Share based payments - gross non cash 8 Working capital changes (195) Changes in other assets and liabilities (2) Investments in PPE, IA (157) Adjusted operating cash flow 155 Income taxes paid (64) Cash effects of other income/expe
Slide 52: Net financial expenses
Net financial expenses 3 RHI MAGNESITA Investor presentation | \ (€m) 2022 2021 Net financial expenses (19) (7) Interest income 8 14 Interest expenses (27) (21) FX effects (23) 3 Balance sheet translation (10) (2) Derivatives (13) 5 Other net financial expenses (31) (21) Present value adjustment on
Slide 53: Items excluded from adjusted performance
Items excluded Items excluded 2022 from adjusted 2022 2021 from adjusted 2021 (€m) reported performance adjusted reported performance adjusted • • • •
Slide 54: Impact of foreign currency movement
Impact of foreign currency movement 3 RHI MAGNESITA EBITA sensitivity in 2022 2022 exchange rates Appreciation vs EUR Depreciation vs EUR Increase / Increase / FY 2022 FY2022 FY2022 FY 2021 (decrease) (decrease) Opening Closing Average Average Unit in EBITA (€m) Unit in EBITA (€m) EUR: Rate Rate Rat
Slide 55: Return on invested capital
3 RHI MAGNESITA Return on invested capital Group ROIC 2022 2021 Invested Capital (€m) 2,587 2.291 NOPAT (€m) 301 219 ROIC (%) 11.6% 9.6% Backward integration ROIC 2022 2021 Invested Capital (€m) 466 377 NOPAT (€m) 57 61 ROIC (%) 12.3% 16.2% Refractory ROIC 2022 2021 Invested Capital (€m) 2,121 1.919
Slide 56: CO2 emissions, energy efficiency, NOx and SOx
CO2 emissions Energy efficiency NOx and SOx Recycling Diversity
Slide 57: Disclaimer
3 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