Slide 1: Business Update 2021: Post First Half 2021 Earnings Presentation
Business Update 2021 Post First Half 2021 Earnings Presentation September 2021
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: Business update
EAFD recycling plant at Asúa-Erandio, Spain 01 Business update
Slide 4: H1 record EBITDA; AZR acquisition closed; MDAX
H1 record EBITDA; AZR acquisition closed; ✓MDAX €94.1m €70.2m FY’21 guidance H1’21 EBITDA H1’21 Operating cash flow • FY EBITDA of €165 to €190m, 70% up yoy (H1’20: €55.3m), €59.0m up yoy (H1’20: €11.2m) +30% to +50% yoy 24% margin (vs. 18% in H1’20) 18% or €14m up vs. H1’19 €196.6m of cash on hand1
Slide 5: Mid-term growth roadmap
Mid-term growth roadmap Executing well defined growth roadmap even during COVID-19; Focus 2021: Ramping up operations at the first two EAFD recycling plants in China; Integrating AZR in the US 1 HEDGING • Befesa ex US’s hedge book fully extended to Oct ´24, c. 3 years; Befesa Zinc US (AZR) hedged fo
Slide 6: Zinc prices & hedging strategy
Zinc prices & hedging strategy Befesa ex US fully hedged up to Oct’24, c. 3 years (Zinc US hedged for c. 2 years); Improving earnings & cash flows visibility Zinc LME price vs. hedges (€/t) € 3,500 Zinc LME Forwards Average blended € 2,500 €2,317 c. €2,300 c. €2,330 €2,239 c. €2,200 c. €2,150 €2,280
Slide 7: EAF steel production and Befesa's steel portfolio growth & diversification
EAF steel production -&- Befesa’s steel portfolio growth & diversification China is the largest and growing EAF steel producer worldwide; Befesa growing and diversifying its portfolio to capture China and US addressable markets EAF steel production: EU-27 / US / China, million tonnes Befesa’s EAFD r
Slide 8: Befesa closed AZR acquisition; Creating a global leader in EAFD recycling
Befesa closed AZR acquisition on 17 August; Creating a global leader1) in EAFD recycling BEFESA #1 Europe (Steel Dust & Salt Slags) a US / North American leader (Steel Dust) #1 Asia1) (Steel Dust) EAFD recycling EAFD recycling Zinc refining EAFD annual installed recycling capacity1) 2), kt 1,665 1,0
Slide 9: China I and China II
China I Changzhou plant, Jiangsu province Key facts of the plant: 1 • 1st EAFD recycling plant in China • Capacity to recycle 110kt EAFD p.a. • Total investment: c. €42m • Location: Changzhou (Jiangsu province) Status update: Long-term financing closed Jul’20 Construction completed, on time & on bud
Slide 10: Sustainability at Befesa
Sustainability at Befesa Key player within the circular economy, with c. 2 million tonnes recycled and c. 1.5 million tonnes of valuable materials recovered annually, that contributes significantly to increase efficiency of raw material use in the metals industry and promotes the transition towards
Slide 11: Befesa FY'21 EBITDA guidance & assumptions
Befesa FY’21 EBITDA guidance & assumptions H1 annualised and expected strong H2 indicating upper end of FY’21 guidance range; Updating FY’21 guidance after consolidation of AZR acquisition, as part of the Q3 reporting cycle (28 October 2021) Lower-end: €165m EBITDA Upper-end: €190m EBITDA EBITDA (ab
Slide 12: Befesa acquired AZR, creating a global leader in EAFD recycling
BEFESA acquired creating a global leader in EAFD recycling 02 Acquisition of AZR closed on 17 August 2021
Slide 13: Transaction highlights
Transaction highlights • On 16 June 2021, Befesa signed the acquisition of 100% of American Zinc Recycling (AZR)’s recycling assets for a purchase price of $450m / €372m – implying an attractive c. 6x post near-term synergies EBITDA acquisition multiple, about half of Befesa’s current 2021E trading
Slide 14: Acquired 100% of recycling assets upfront; option for zinc refining plant
Acquired 100% of recycling assets upfront; incremental add-on option for new zinc refining plant (ramping up) AZR is one of the largest EAFD recycler in North America1) with 4 plants with c. 620kt total capacity EAFD recycling assets Zinc refining 1 Barnwell, SC 2 Rockwood, TN 5 Rutherford County, N
Slide 15: Decarbonisation driving further growth of EAF steel production in the US
Decarbonisation driving further growth of EAF steel production in the US EAF method expected to grow further to >70% share by 2025 Crude steel production by process in the US, % share 37% 29% 28% BOF • US has one of the largest and growing markets of EAF steelmakers globally EAF 63% 71% 72% • EAF is
Slide 16: Befesa closed the AZR acquisition; Creating a global leader in EAFD recycling
Befesa closed the AZR acquisition 17 August; Creating a global leader1) in EAFD recycling BEFESA #1 Europe (Steel Dust & Salt Slags) a US / North American leader (Steel Dust) #1 Asia1) (Steel Dust) EAFD recycling EAFD recycling Zinc refining EAFD annual installed recycling capacity1) 2), kt 1,665 1,
Slide 17: Attractive acquisition multiple with additional upside potential
Attractive acquisition multiple with additional upside potential – 2021E pro forma view1) BEFESA (Steel Dust – current perimeter) (Recycling operations) 2) Further EBITDA8), €m 138 mid-term potential 62 45 3) 17 4) 2021E 2021E PF Near-term 2021E PF mid-point pre near-term synergies post near-term sy
Slide 18: Strong near- & mid-term synergy potential identified
Strong near– & mid– term synergy potential identified Total pre-tax near-term synergies of c. $20/€17m expected within first three years of combination (Recycling operations) EBITDA / ton throughput Up to Near-term synergies c. €185/t of c. $20m / €17m c. 35% mid-term efficiency potential €138/t €10
Slide 19: Leverage-neutral transaction with expected strong double-digit EPS accretion
Leverage–neutral transaction with expected strong double–digit EPS accretion1) Funding of transaction (at closing) Financial profile – 2021E Combined Pro Forma3) Total price, $m EBITDA, €m 2) Mid-point of 450 10 460 €165 to €190m 2021E guidance 240 62 178 Price for Price for Zinc Total BEFESA Befesa
Slide 20: Diversifying the highest margin business unit and improving profitability
Diversifying the highest margin business unit and further improving Befesa’s overall profitability EAFD recycling capacity1) EBITDA by segment c. 1,665kt c. €240m4) 2nd Alu 6% Salt Slags 10% US 620 €178m3) 1,045kt2) 8% 14% 550 Asia 550 Steel Dust 84% 78% 495 Europe 495 BEFESA Befesa BEFESA Befesa+AZ
Slide 21: AZR's zinc refining asset: strategic integration opportunity
AZR’s zinc refining asset: strategic integration opportunity to support EAFD recycling operations in the US Plant footprint • Close proximity to AZR recycling plants, at Rutherford County, NC • Applies new solvent extraction technology for zinc refining • Restarted operations in 2020; Ramping up; Ca
Slide 22: Secured option to acquire AZR's zinc refining asset upon milestones
Secured option to acquire AZR’s zinc refining asset only upon fulfilling operational & financial performance milestones Payment schedule to acquire AZR’s zinc refining asset1), $m $135m for remaining 93.1% stake in AZR’s zinc refining asset: • Only upon fulfillment of 2-phased operational and financ
Slide 23: AZR acquisition represents a key step on Befesa's accelerated growth path
The acquisition of AZR’s recycling business represents a key step on Befesa’s accelerated growth path … 2007 2017 2021E PF European leader1) European & European & Asian in EAFD recycling Asian leader1) & North American = a global leader1) 37% 37% 33% Befesa’s EAFD 495kt 780kt c. 1,665kt recycling ca
Slide 24: H1 2021 results
Nanjing City, Location of Befesa China’s HQ 03 H1 2021 results
Slide 25: Consolidated key financials
Consolidated key financials H1 EBITDA at €94.1m, all-time-high, driven by strong base metal prices as well as continued solid volumes with strong plant utilisation at pre-COVID levels EBITDA bridge H1 2020 to 2021 (€m) +€38.9 / +70.4% 94.1 - Operational excellence 39.3 Inflation 55.3 FX -0.5 Other +
Slide 26: Steel Dust Recycling Services
Steel Dust Recycling Services H1 EBITDA at €69.2m, performing at strongest earnings level at 35% margin, driven mainly by favourable zinc prices; Overall plant utilisation continued at pre-COVID levels EBITDA bridge H1 2020 to 2021 (€m) +€24.5 / +54.7% 69.2 - 25.0 Operational excellence 44.7 -0.5 In
Slide 27: Aluminium Salt Slags Recycling Services
Aluminium Salt Slags Recycling Services H1 EBITDA at €24.8m, delivered record level results, doubling yoy; Mainly driven by higher aluminium metal prices yoy; Overall plant utilisation continued at solid pre-COVID-19 levels ≥ 90% EBITDA bridge H1 2020 to 2021 (€m) +€12.6 / +103.1% 24.8 - 12.6 12.2 -
Slide 28: Cash flow, net debt & leverage
Cash flow, net debt & leverage Record cash balance at €197m & liquidity at €272m with €75m RCF entirely undrawn; Net leverage improved to x2.24 at Q2 closing, triggering next interest ratchet of 1.75% vs. 2.0% EBITDA to total cash flow (€m) 94.1 -7.0 -7.6 70.2 -9.3 -13.1 42.1 -30.0 15.0 Mainly China
Slide 29: Befesa overview
Secondary aluminium production plant at Bernburg, Germany 04 Befesa overview
Slide 30: Befesa at a glance
Befesa at a glance Global leader in Europe, Asia and US in providing regulated critical hazardous waste recycling services to the steel and aluminium industries 3–year average (2018-2020)1) Steel Dust Recycling1) Aluminium Salt Slags Recycling €657m Revenue2) #1 #1 Position in Europe Position in Eur
Slide 31: Key milestones
Key milestones EAFD expansion China Befesa has grown successfully through organic initiatives and acquisitions Developing first two EAFD recycling plants in China: Changzhou, Jiangsu: Ramping up; Delivering first commercial output EAFD expansion Korea & Turkey Xuchang, Henan: Secondary aluminium pla
Slide 32: Investment highlights
Investment highlights Environmental Favourable Global Strong solutions mega trends leader regulation in high demand supporting secondary steel in Europe, Asia & US, getting stricter and for the steel and and aluminium markets in niche recycling markets, expanding into aluminium industry e.g. CO2 red
Slide 33: Global leader in Europe, Asia & North America
Global leader in Europe, Asia & North America Befesa is the global leader in steel dust and salt slags recycling services EAFD recycling plants with a competitive advantage due to its close-proximity to key clients Salt slags & SPL recycling plants Lünen Clients Duisburg Hannover Fouquières-lès-Lens
Slide 34: Highly regulated & critical service model
Highly regulated & critical service model Befesa is the leading environmental services partner in the circular economy of the 2 nd steel and aluminium industry by recycling and avoiding the landfilling of c. 2 MT hazardous residues and recovering c. 1.5 MT of new valuable materials HAZARDOUS WASTE B
Slide 35: Experienced management team
Experienced management team Senior management team delivering results through long-standing industry expertise, entrepreneurial spirit and focus on operational excellence as well as governance and compliance processes Javier Molina Wolf Lehmann Key achievements / track record CEO CFO; incl. responsi
Slide 36: Investor agenda & appendix
Waelz kiln at EAFD recycling plant in Gyeongju, South Korea 05 Investor agenda & appendix
Slide 37: Investor agenda
Investor agenda Financial calendar Next investor conferences Q3 2021 Q4 2021 Extraordinary General Meeting ✓ Commerzbank Corporate Conference London – Global Natural Resources Tuesday, 5 October 2021 2021 (virtual) Conference 2021 31 Aug – 2 Sep – Commerzbank 11 Nov – Goldman Sachs Q3 2021 Statement
Slide 38: Q2 2021/20 – Key financials
Q2 2021/20 – Key financials (€m, unless otherwise stated) Steel Salt Secondary Corporate & Total Dust Slags Aluminium eliminations Befesa Revenue1) €94.4 €17.5 €89.8 -€10.2 €191.6 yoy change +€20.2 / +27.1% +€1.7 / +10.9% +€50.1 / +125.9% -€2.5 / - +€69.4 / +56.8% EBITDA €32.7 €5.2 €7.3 €0.0 €45.3 y
Slide 39: H1 2021/20 – Key financials
H1 2021/20 – Key financials (€m, unless otherwise stated) Steel Salt Secondary Corporate & Total Dust Slags Aluminium eliminations Befesa Revenue1) €195.3 €37.3 €172.3 -€20.7 €384.2 yoy change +€19.8 / +11.3% -€0.6 / -1.5% +€67.1 / +63.8% -€3.3 / - +€83.0 / +27.6% EBITDA €69.2 €11.1 €13.7 €0.1 €94.1
Slide 40: Multi-year trend – Key financials
Multi-year trend – Key financials1) (€m, unless otherwise stated) 2017 2018 2019 2020 Revenue €667.42) €720.1 €647.9 €604.3 Reported EBITDA €153.0 €176.0 €159.6 €123.5 Reported EBITDA 22.9%2) 24.4% 24.6% 20.4% margin Adjusted EBITDA €172.43) €176.0 €159.6 €127.04) Adjusted EBITDA 25.8%2) 24.4% 24.6%
Slide 41: Q2 2021/20 – Operational data – Steel Dust Recycling Services
Q2 2021/20 – Operational data – Steel Dust Recycling Services Q2 2020 Q2 2021 yoy change EAFD 155.6 159.6 +4.0 / +2.6% throughput (kt) EAFD average 75.8% 77.6% +173 bps capacity utilisation (%) Waelz oxide 58.7 52.6 -6.1 / -10.4% (WOX) sold (kt) Zinc LME price €1,780 €2,418 +€639 / +35.9% (€/t) Zinc
Slide 42: H1 2021/20 – Operational data – Steel Dust Recycling Services
H1 2021/20 – Operational data – Steel Dust Recycling Services H1 2020 H1 2021 yoy change EAFD 341.2 340.7 -0.6 / -0.2% throughput (kt) EAFD average 83.1% 83.2% +9 bps capacity utilisation (%) Waelz oxide 126.5 119.3 -7.1 / -5.6% (WOX) sold (kt) Zinc LME price €1,855 €2,349 +€494 / +26.7% (€/t) Zinc
Slide 43: Q2 2021/20 – Operational data – Aluminium Salt Slags Recycling Services
Q2 2021/20 – Operational data – Aluminium Salt Slags Recycling Services Q2 20201) Q2 2021 yoy change Salt Slags & 105.7 91.3 -14.4 / -13.6% SPL treated (kt) Salt Slags & 80.2% 81.4% +117 bps SPL avg. cap. utilisation (%) Aluminium 31.3 48.2 +16.8 / +53.7% alloys produced (kt) Secondary Alu 61.5% 94.
Slide 44: H1 2021/20 – Operational data – Aluminium Salt Slags Recycling Services
H1 2021/20 – Operational data – Aluminium Salt Slags Recycling Services H1 20201) H1 2021 yoy change Salt Slags & 230.4 195.8 -34.7 / -15.0% SPL treated (kt) Salt Slags & 87.4% 87.7% +29 bps SPL avg. cap. utilisation (%) Aluminium 79.3 99.5 +20.2 / +25.5% alloys produced (kt) Secondary Alu 77.7% 97.
Slide 45: Multi-year trend – Operational data
Multi-year trend – Operational data 2017 2018 2019 2020 EAFD throughput (kt) 661.0 717.1 665.8 687.0 EAFD average capacity 84.7% 92.0% 80.7% / 90.1%1) 83.0% utilisation (%) Waelz oxide (WOX) 217.8 240.9 217.6 239.2 sold (kt) Zinc LME price (€/t) €2,572 €2,468 €2,276 €1,979 Zinc hedging €1,876 €2,051
Slide 46: Consolidated key financials
Consolidated key financials Q2 EBITDA at €45.3m; benefited from favourable market prices; Volumes continued solid with plant utilisation at pre-COVID levels EBITDA bridge Q2 2020 to 2021 (€m) +€23.6 / +108.7% 45.3 - Operational excellence 21 Inflation FX 21.7 3 Other +1 Steel dust +7 Zinc LME +2 2nd
Slide 47: Steel Dust Recycling Services
Steel Dust Recycling Services Q2 EBITDA at €32.7m; Favourable zinc LME prices and TC, partially offset by slightly lower zinc hedging prices EBITDA bridge Q2 2020 to 2021 (€m) +€13.9 / +74.1% 32.7 - Operational excellence 13 18.8 Inflation 1 FX +7 Zinc LME Other -1 Hedges below LME +8 Favourable TC
Slide 48: Aluminium Salt Slags Recycling Services
Aluminium Salt Slags Recycling Services Q2 EBITDA at €12.5m, all-time-high, mainly driven by higher aluminium alloys & market prices partially offset by lower salt slags & SPL treated (UK closure) EBITDA bridge Q2 2020 to 2021 (€m) +€8.9 / +245.6% 12.5 7 - Operational excellence Inflation 3.6 2 Alu
Slide 49: Cash flow, net debt & leverage
Cash flow, net debt & leverage Record cash balance at €197m & liquidity at €272m with €75m RCF entirely undrawn; Net leverage improved to x2.24 at Q2 closing, triggering next interest ratchet of 1.75% vs. 2.0% EBITDA to total cash flow (€m) 45.3 5.6 -1.3 43.7 -5.9 -8.6 32.6 -6.6 4.1 Mainly China Mai