Slide 1: Business Update 2023 Post Q1 Earnings
Business Update 2023 Post Q1 Earnings May 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: Business update
01 Business update
Slide 4: Executive summary
Executive summary - Revenue increased by 23% to €322m (Q1’22: €261m) driven by the US operations - Adj. EBITDA at €50.1m, approx. stable qoq (Q4’22: €50.7m); -18% yoy (Q1’22: €61.1m); lower zinc LME prices, unfavourable 19% higher TC and continued coke inflation - Operating cash flow at €13m (Q1’22:
Slide 5: Q1 business highlights
Q1 business highlights Steel Dust Alu Salt Slags • EAFD throughput: • Salt slags & SPL volumes: -19% yoy to 274 kt, -8% qoq, mainly due to -6% yoy to 82 kt, stable qoq Turkey operations impacted by earthquake (restarted in March), and the US • 2nd aluminium alloys: +3% yoy to 44 kt, +13% qoq • Plant
Slide 6: US Zinc refining asset acquired; integration progressing, ramping up
✓ US Zinc refining asset acquired on 30 Sep 2022; Integration progressing, ramping up operations 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 5
Slide 7: Refurbishing Palmerton in 2023/24 to drive efficiencies
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; 165
Slide 8: Operating 2 plants in 2023; Preparing 3rd province, Guangdong
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 operations China III, Yunfu (Guangdong) ✓ LOI signed in Q4 2022 Befesa’s EAFD rec
Slide 9: Outlook 2023
Outlook 2023 Lower-end: €200m Upper-end: €230m -€15m / -7% yoy +€15m / +7% yoy • Lower end: Continued c. €50m per quarter run-rate; Coke prices remain high; Zinc prices c. $2,800-2,900/t rest of the year EBITDA • Upper-end: Coke prices reducing to H1’22 levels; China momentum accelerates; Zinc price
Slide 10: Zinc prices & hedging strategy
Zinc prices & hedging strategy Hedge book extended further up to July 2025, c. 2 years; Improving earnings & cash flows visibility Zinc LME vs. Befesa’s hedges & blended prices (€/t) Zinc LME1) Befesa’s hedges c. €2,650 c. €2,400 c. €2,500 €2,627 c. $2,9002) c. $2,6502) c. $2,7502) €2,317 €2,239 €2,
Slide 11: Zinc & alu metal prices correlated with electricity & gas prices
Zinc & alu metal prices directly correlated with electricity & gas prices over the last >20 years Indexed annual price trend1), 2000 to Q1 2023 (Index, 2000 = 100) 1500 European energy crisis 1200 Natural gas, Europe ($/kWh) 900 600 Electricity, DE/ES/FR ($/kWh) 300 LME Zinc ($/t) 0 LME Primary Alum
Slide 12: EAF steel production and Befesa's steel portfolio growth & diversification
EAF steel production -&- Befesa’s steel portfolio growth & diversification Befesa growing and diversifying its portfolio to capture Europe, the US and China addressable markets EAF steel production: EU-27, US & China, Mt Befesa’s EAFD recycling capacity trend, kt Capacity additions 2,175 1,665 +150
Slide 13: Proven track record since IPO; Megatrends driving growth
Proven track record since IPO; Megatrends driving growth over next 5 years EBITDA (€m) +5% CAGR €160m growth capex + €380m AZR (Ex Zinc Refining) €215 Committed & delivered since IPO: ✓ Growth: Global #1 in Steel Dust €172 + + ✓ Dividend: > 50% net profit payout ✓ Conservative financial management:
Slide 14: SGGP indicative timeline; Befesa in control
SGGP indicative timeline; Befesa in control; Adjusting timing to macroeconomic developments €410-450m total capex requirement over the next five years Steel Dust Alu Salt Slags SGGP Timing EBITDA Pay- Capex €m IRR2) growth projects 2022 2027e run-rate €m back1) 1 Zinc refining Refurbishing / €110-12
Slide 15: 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 16: Committing to growth through the cycle
Committing to growth through the cycle € € Strong financial backbone and high cash flow generation B … allows to self-fund SGGP €€ €€ € % € Targeting to continue dividend distribution at 40-50% of net profit Prudent risk and liquidity management; Modular SGGP growth initiatives timing in control of
Slide 17: ESG: Enhanced transparency & performance
ESG: Enhanced transparency & performance Transparency / reporting External ratings Health & safety Detailed ESG Report Lost Time Injury Rate (LTIR)1) improved by 90% since 2015 LTIR CO2 holistic approach CO2 intensity targets Sustainability Committee Saving >2mt CO2eq -20% by 2030 vs. virgin product
Slide 18: Sustainable Global Growth Plan (SGGP), 2022-2027
02 Sustainable Global Growth Plan (SGGP), 2022-2027
Slide 19: Megatrends and Befesa's approach by market
Megatrends and Befesa’s approach by market EAF steel production (million tonnes, EAF % share of total steel production) x2 x1.2 x1.2 200 70 64 67 >80 103 98 109 49 61 51 60 63 58 47 '15 '19 '20 '21 '30e '15 '19 '20 '21 '30e '15 '19 '20 '21 '30e 1) 2) 63% 70% 71% 69% c.72% 41% 41% 41% 44% >50% 6% 10%
Slide 20: Decarbonisation investments & Infrastructure Programme will support EAF growth by 2030
Decarbonisation investments & Infrastructure Programme will support EAF growth by 2030 c.$10-11 Bn capex equal to c.13-14 Mt EAF announced; Plus, $1.2 T infrastructure plan requires more steel overall in the US → generating >300 kt incremental EAFD Overview of selected steelmakers (€ billion capex,
Slide 21: SGGP – Steel Dust – US
SGGP – Steel Dust – US EAFD generation in the US expected to increase >0.3 Mt by 2030 … Befesa to fully utilise existing c.620 kt annual installed capacity EAF steel production EAFD generation (million tonnes, EAF % of total crude steel output) (million tonnes) >0.3 x1.2 60 70 $1.2 T infrastructure
Slide 22: US Zinc refining asset acquired on 30 Sep 2022
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 invest
Slide 23: Refurbishing Palmerton in 2023/24 to drive efficiencies
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; 165
Slide 24: Accelerating decarbonisation investments in EU will support EAF share
Accelerating decarbonisation investments in EU will support EAF share growing to >50% by 2030 c.€14-15 Bn investments in new steel EAF projects in Europe announced … Representing c.20-21 Mt incremental steel EAF capacity → generating c.350 kt EAFD Overview of selected steelmakers (€ billion capex, m
Slide 25: SGGP – Steel Dust – Europe
SGGP – Steel Dust – Europe EAFD generation in Europe expected to increase >0.3 Mt by 2030 … Befesa adding 140-160 kt new EAFD recycling capacity to maintain its current c.45% market share EAF steel production EAFD generation (million tonnes, EAF % of total crude steel output) (million tonnes) x1.2 >
Slide 26: Adding new EAFD recycling capacity and WOX washing expansion
Adding new EAFD recycling capacity –and– WOX washing expansion c.€105-115m total investment; c.€30-35m total incremental EBITDA p.a.; Low-risk & high-return projects New EAFD recycling plant • Grow with EAFD addressable market and invest in a new 140-160 kt state-of-the-art EAFD plant • Construction
Slide 27: Largest producer of steel, transitioning from BOF to EAF
Largest producer of steel, rapidly transitioning from BOF to EAF; a strong growth opportunity >60 Mt new EAF capacity announced, representing c.1 Mt EAFD incremental generation; Befesa strategically located in provinces with high EAFD generation Overview of selected steelmakers (million tonnes of ne
Slide 28: Largest producer of steel, transitioning from BOF to EAF
Largest producer of steel, rapidly transitioning from BOF to EAF; a strong growth opportunity >60 Mt new EAF capacity announced, representing c.1 Mt EAFD incremental generation; Befesa strategically located in provinces with high EAFD generation Overview of selected steelmakers (million tonnes of ne
Slide 29: SGGP – Steel Dust – China
SGGP – Steel Dust – China EAFD generation in China expected to increase about 1.6 Mt by 2030 as it transitions from BOF to EAF; Befesa to add 3x 110 kt = 330 kt new capacity which will increase market share to 15-20% EAF steel production EAFD generation (million tonnes, EAF % of total crude steel ou
Slide 30: Operating 2 plants in 2023; Preparing 3rd province, Guangdong
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 operations China III, Yunfu (Guangdong) ✓ LOI signed in Q4 2022 Befesa’s EAFD rec
Slide 31: Decarbonisation trend drives transition to Electric Vehicles
Decarbonisation trend drives transition to Electric Vehicles (EV) Automotive industry switching from combustion to EV EV unit sales in Europe1) (million units) • EU approved plan to ban sales of vehicles x5 with combustion engines (ICE) by 20352) 10.9 • EV unit sales forecasted to grow x5 from c.2 m
Slide 32: EV requiring higher aluminium content per car
EV requiring higher aluminium content per car to achieve light-weight targets Average aluminium content per vehicle1), net weight (kg per passenger car) • Average aluminium content per vehicle +75 kg per car (passenger cars) has steadily been increasing, from 121 kg/car in 2006 to 193 kg/car in 2022
Slide 33: Driving higher aluminium demand with increased needs for 2nd alu & salt slags recycling
… driving higher aluminium demand with increased needs for 2nd alu & salt slags recycling Aluminium demand from Auto1) in Europe, net weight (million tonnes) • Automotive aluminium demand will continue to grow to address light-weighting needs +2 million tonnes alu demand • OEMs aim to reduce their c
Slide 34: Expansion of 2nd Aluminium and New Salt Slags recycling plant
Expansion of 2nd Aluminium –and– New Salt Slags recycling plant Expansion of 2nd Aluminium New Salt Slags recycling plant • Expand 2nd aluminium production capacity • Invest in a new c.120 kt state-of-the-art salt by c.90 kt at existing site (Bernburg) slags recycling plant in line with incremental
Slide 35: Befesa can self-fund SGGP while keeping leverage c. x2.5
Befesa can self-fund SGGP while keeping leverage c. x2.5 -&- distributing dividends EBITDA to Cash flow management walk, Illustrative conceptual annual view within SGGP period (€m) +125 to +155 215 2022 WC change / Interests Taxes Op. cash Maintenance Growth Dividend Cash Flow EBITDA other flow PF c
Slide 36: Diversifying Befesa's global footprint
Diversifying Befesa’s global footprint … 2017 IPO 2022 PF Post SGGP Capacity, kt 41% 30% 28% 32% 27% 63% 29% 40% +140 kt Zinc refining Steel Dust 780 1,555 2,1451) Salt Slags 2nd Alu 205 205 295 509 470 590 Total Alu / 3402) Salt Slags 714 675 / 5452) 885 kt Utilisation Steel Dust 85% 77% c. 85% rat
Slide 37: Core-business focus drives portfolio growth
… core-business focus drives portfolio growth 2017 IPO 2022 PF Post SGGP Revenue, €m Total1) €725 €1,136 c. €1,650-1,800 Steel Dust incl. Zinc refining 730 332 Salt Slags 85 77 2nd Alu 353 376 EBITDA, % margin % margin % margin €m Total1) €172 24% €215 19% c. €340-370 19-23% Steel Dust - - incl. Zin
Slide 38: Q1 2023 results
a ? _ 0 3 JY Q1 2023 results
Slide 39: Consolidated key financials
Consolidated key financials Q1 adjusted EBITDA at €50.1m, approx. stable qoq with Q4’22 at €50.7m; -18% yoy, mainly due to lower zinc prices incl. unfavourable TC partially offset with stronger aluminium margins, and lower volumes incl. Turkey earthquake Adjusted EBITDA bridge Q1 2022 to Q1 2023 (€m
Slide 40: Steel Dust Recycling Services
Steel Dust Recycling Services Q1 EBITDA at €37.0m, approx. stable qoq with Q4’22 at €37.6m; -32% yoy, mainly due to lower zinc prices incl. unfavourable TC at $274/t (+19% yoy), continued record high coke prices (+6% qoq, +41% yoy) and lower EAFD volumes EBITDA bridge Q1 2022 to Q1 2023 (€m) -€17.8
Slide 41: Aluminium Salt Slags Recycling Services
Aluminium Salt Slags Recycling Services Q1 EBITDA at €13.8m, up €2m qoq from Q4’22 at €11.8m; up €6m or 82% yoy; mainly due to strong aluminium metal margins and lower gas and electricity prices EBITDA bridge Q1 2022 to Q1 2023 (€m) +€6.2 / +81.9% 13.8 2 7.6 5 Lower gas & -0.5 electricity prices Low
Slide 42: Cash flow, net debt & leverage
Cash flow, net debt & leverage Cash on hand at €143m providing >€200m liquidity; Net leverage of x2.81 Adjusted EBITDA to total cash flow (€m) Usual Q1 seasonality & timing; Remaining 50.1 Hanover insurance Total capex = €31.7m Incl. first of the -27.9 two bi-annual TLB interest payments Incl. c. €1
Slide 43: Befesa overview
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Slide 44: Befesa at a glance
Befesa at a glance Global leader in Europe, the US and Asia in providing regulated critical hazardous waste recycling services to the steel and aluminium industries 2022 Steel Dust Recycling Aluminium Salt Slags Recycling €1,136m Revenue1) #1 Position Global #1 Position in Europe in salt slags subse
Slide 45: Key milestones
Key milestones EAFD expansion China First to market with state-of-the-art EAFD recycling plants in China: Befesa has grown successfully through organic initiatives and acquisitions Changzhou, Jiangsu: ✓ Completed on budget ✓ In commercial operations since Dec’21 Xuchang, Henan: ✓ Completed construct
Slide 46: Leader in circular economy for >30 years
Leader in circular economy for >30 years Environmental Recycling Proven track Global regulations service solutions record leader getting stricter and expanding critical to the steel and to grow and diversify with balanced footprint, into new geographies; aluminium industries; Befesa’s portfolio; clo
Slide 47: 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. 1.8 Mt hazardous residues and recovering > 1.5 Mt of new valuable materials HAZARDOUS RESIDU
Slide 48: Proven resilience & growth through cycles
Proven resilience & growth through cycles Attractive growth track record with proven margin resilience despite volatile environment – driven by a successful service-focused business model & prudent financial practices Key COVID pandemic Global European macro financial crisis debt crisis Global suppl
Slide 49: 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 / 2021 600 1000 2019 2020 2021 240 >1.1Mt incl. 240 US 550 900 Befesa EAFD 500 474 482 220 220 throughput, kt 800 687 701kt excl.
Slide 50: Global leader in Europe, North America & Asia
Global leader in Europe, North America & Asia EAFD recycling plants Befesa is the global leader in steel dust and the European leader in salt slags recycling services with a competitive advantage due to its close-proximity to key clients; 24 plants globally Salt slags & SPL recycling plants Lünen Cl
Slide 51: Decarbonisation megatrend favouring EAF steel growth
Decarbonisation megatrend favouring & driving EAF steel growth Global crude steel production1), 2016-2030e CAGR CAGR (million tonnes) 2016-21 2022-30e 2,064 +3.6% +1.0% 1,951 Total crude 1,633 564 37%2) +6.2% +4.2% 29% EAF 26% BOF consumes c.7x more CO2 per tonne vs. EAF2) BOF Each tonne of steel th
Slide 52: Zinc global production growth; demand from transition to renewable energy
Zinc global production grew at 1.4% CAGR over L15 years; Incremental demand from transition to renewable energy Global refined zinc metal production1) Zinc annual demand from wind, solar & batteries2) (million tonnes) (thousand tonnes) 15.0 13.0 11.0 9.0 7.0 5.0 WOX, mixed with virgin zinc concentra
Slide 53: Decarbonisation and EV driving aluminium market growth in Europe
Decarbonisation and EV driving aluminium market growth in Europe EV unit sales in Europe1) Alu content per vehicle2) Auto alu demand in Europe2) (million units) (kg per passenger car) (million tonnes) +75 kg per car +2 million tonnes x5 249 4 5 11 174 3 121 2 0 2015 2020 2030e 2006 2019 2030e 2022e
Slide 54: Strong financial backbone
Strong financial backbone Long-term and efficient capital structure with no maturities up to Jul’26 → Resilient earnings & cash flows … to self-fund growth Prudent zinc hedging → Stable & high liquidity roadmap in the approach US, Europe & Asia → Moderate leverage at c.x2.5 Rigorous cash management
Slide 55: Experienced & stable management team
Experienced & stable 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 Asier Zarraonandia Key achievements / track record Executiv
Slide 56: ESG
05 ESG
Slide 57: 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 31 March 31 December 2023 2022 • Reduced by -90% vs. 2015 baselin
Slide 58: ESG: Enhanced transparency & performance
ESG: Enhanced transparency & performance Transparency / reporting External ratings Health & safety Detailed ESG Report Lost Time Injury Rate (LTIR)1) improved by 85% since 2015 LTIR CO2 holistic approach CO2 intensity targets Sustainability Committee Saving >2mt CO2eq -20% by 2030 vs. virgin product
Slide 59: Sustainability at the core of Befesa
Sustainability at the core of Befesa Befesa’s operations have a direct net positive environmental impact as well as multiple positive indirect effects by enabling EAF steel and aluminium recycling BEFESA Direct environmental benefits Indirect sustainability benefits Circular Avoidance of GHG emissio
Slide 60: Climate action plan
Climate action plan Committing to a 20% GHG emissions intensity reduction by 2030 and aiming at net zero emission by 2050 Baseline 2030 commitment 2050 vision -20% Net zero emission 0.56 Scope 2 0.06 0.45 Scope 1 0.50 0.45 tonne of CO₂ equivalent per tonne of waste treated - 2021 pro forma 2030e 205
Slide 61: Selected ESG targets
Selected ESG targets Environmental Social Governance 1) 3) >2.4mt -50% IT improve CIS assessment waste recycled by 2025 LTIR by 2024 rating until 2023 >1.8mt 2) new materials admin employees trained recovered by 2025 BEzero maintain zero fatalities ≥90% in compliance each year ISO ISO certification
Slide 62: Investor agenda & appendix
06 Investor agenda & appendix
Slide 63: Investor's agenda
Investor’s agenda Financial calendar Next investor conferences 2023 Q2 2023 H2 2023 Annual General Meeting Paris – SMID Mega Trend Days Frankfurt – Commerzbank & ODDO BHF Thursday, 15 June 2023 10 May – Kepler Cheuvreux Corporate Conference 5 & 6 September – Commerzbank & ODDO Barcelona – BofA Secur
Slide 64: Q1 2023/22 – Key financials
Q1 2023/22 – Key financials (€m, unless otherwise stated) Steel Salt Secondary Corporate & Total Dust Slags Aluminium eliminations Befesa Revenue1) €216.3 €20.8 €95.9 -€11.0 €322.0 yoy change +€60.3 / +38.7% +€1.6 / +8.6% -€2.1 / -2.1% +€0.7 / - +€60.6 / +23.2% Reported EBITDA €37.0 €6.6 €7.2 -€1.5
Slide 65: 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 66: Q1 2023/22 – Operational data – Steel Dust Recycling Services
Q1 2023/22 – Operational data – Steel Dust Recycling Services Q1 2022 Q1 2023 yoy change EAFD 337.4 273.8 -63.5 / -18.8% throughput (kt) EAFD average 88.0% 71.4% -1,657 bps capacity / 75.1%1) utilisation (%) Waelz oxide 103.7 99.8 -3.9 / -3.8% (WOX) sold (kt) Zinc LME price €3,337 €2,916 -€421 / -12
Slide 67: Q1 2023/22 – Operational data – Aluminium Salt Slags Recycling Services
Q1 2023/22 – Operational data – Aluminium Salt Slags Recycling Services Q1 2022 Q1 2023 yoy change Salt slags & SPL 87.5 82.3 -5.2 / -5.9% treated (kt) Salt slags & SPL 75.5% 71.0% -445 bps avg. capacity / 104.3%1) / 98.1%1) utilisation (%) Aluminium 42.2 43.7 +1.4 / +3.4% alloys produced (kt) Secon
Slide 68: 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 69: Top-15 EAF steel producing countries
Top-15 EAF steel producing countries Top-15 EAF steel producing countries represent close to 90% of global EAF output; Befesa present in key & growing markets – Europe, Asia/China and the US Top–15 EAF steel producing countries1), 2022 (million tonnes) Befesa is present / growth focus Focus of 5-Yea
Slide 70: EAF steel production: Regional overview
EAF steel production, MT % EAF share EAF steel production: Regional overview Outlook Befesa is present Decarbonization driving accelerated growth of EAF CAGR: -1% 103 56 64 60 49 47 2015 2022 2015 2022 2015 2022 63% 69% 41% 44% 6% 10% CAGR: 0% 20 25 21 21 World 2015 2022 2015 2022 538 65% 72% 30% 32