Rhi Magnesita Nv · LSE:RHIM
Rhi Magnesita Nv — Non-Deal Roadshow (May 2018)
42 slides from Rhi Magnesita Nv's roadshow presentation, May 2018
Slide 1: The driving force of the refractory industry
The driving force of the refractory industry Roadshow May 2018 RHI Magnesita May18 Roadshow
Slide 2: Disclaimer
Disclaimer The consolidated financial statements to subscribe for or purchase any securities, presented here are consistent with the and neither any part of this presentation nor criteria of international accounting standards any information or statement contained - IFRS issued by the International
Slide 3: Compelling investment case
Compelling investment case Solid strategy and Strong market position with 15% global market share, clear leadership in Americas, 1 Europe and Middle East with broadest value-added solution offering competitive Highest level of vertical integration in the industry with unique mineral sources and adva
Slide 4: Refractory industry
Refractory industry RHI Magnesita May18 Roadshow
Slide 5: Refractories are critical to all high-temperature industrial processes
Refractory industry Refractories are critical to all high-temperature industrial processes ⬢ Refractories are critical consumable or Main end markets investment goods for high-temperature €20 billion worldwide industry manufacturing processes ⬢ Fireproof materials consumed whilst ◼ Steel 7% protecti
Slide 6: Refractories are continuously consumed during finished goods production
Refractory industry Refractories are continuously consumed during finished goods production Key industries Applications Replacement % of clients’ Refractory characteristics costs Basic oxygen-, 20 minutes to ~3.0% Consumable product Steel electric arc furnace 2 months casting ladles Systems and solu
Slide 7: A complex range of tailored refractory products are required for each application
Refractory industry A complex range of tailored refractory products are required for each application Bricks Example of refractory application for steel ladle 2 3 1 Permanent lining 2 Non-basic, 3 Basic, ex. ex. Alumina Mag-Carbon 4 1 Monolothics and pre casts 5 6 8 4 Mixes 5 Pre Castables Functiona
Slide 8: The driving force of the refractory industry
The driving force of the refractory industry RHI Magnesita May18 Roadshow
Slide 9: The driving force of the refractory industry
The driving force of the refractory industry Providing everything, for everyone, everywhere €2.7bn 10,000 14,000 2017 adjusted pro-forma revenue Customers served globally Employees spread over 37 countries 35 180 Main production sites across Countries shipped worldwide 16 countries 13 €37m Raw mater
Slide 10: Adding value through a full suite of products and services
The driving force of the refractory industry Adding value through a full suite of products and services Iron Ore Steel Refining Facility Technology Flow Solutions Coal Control Injection Natural Electric Arc Gas Furnace Direct Reduction Coal Scrap Basic Oxygen Continuous Furnace Casting Blast Coke Ov
Slide 11: Serving all blue chip clients in every industry
The driving force of the refractory industry Serving all blue chip clients in every industry Steel Cement Glass Metals Serving 1376 Serving 800 Serving 650 Serving 1060 of 1250 plants1 of 1537plants1 of 900 plants1 of 2000 plants1 1ex-China 11 RHI Magnesita May18 Roadshow
Slide 12: Optimally positioned to reach clients everywhere
The driving force of the refractory industry Optimally positioned to reach clients everywhere Europe 23% North America 24% APAC 20% MEA-CIS 15% South America 18% Production facilities + More than 70 sales Raw material sites offices worldwide % revenues (2017) 12 RHI Magnesita May18 Roadshow
Slide 13: Amongst the leading FTSE 250 industrial companies
The driving force of the refractory industry Amongst the leading FTSE 250 industrial companies Revenue (€ Bn) 3.7 2.7 2.7 2.6 3.7 2.5 2.0 2.01.9 1.7 1.7 2.6 1.7 2.5 1.2 1.2 1.2 1.1 1.1 1.1 1.0 2.0 1.1 1.0 0.80.8 0.8 0.7 0.7 0.6 0.6 1.7 0.6 Weir RHI Magnesita Imi Vesuvius Spectris Morgan Halma Spirax
Slide 14: Strategy
Strategy RHI Magnesita May18 Roadshow
Slide 15: Build a global refractory leader with a distinctive customer proposition
Strategy Build a global refractory leader with a distinctive customer proposition based on technology and cost competitiveness to ensure manufacturing of essential materials for the world Markets Competitiveness Cost competitive and safe Worldwide presence with strong production network supported lo
Slide 16: High market share in Europe and Americas with opportunities in India, China and CIS
Markets High market share in Europe and Americas with opportunities to occupy ‘white spaces’ in India, China and CIS RHI Magnesita revenue by region vs market size Steel Production South America HIGH MEA 800m tonnes Europe North RHI Magnesita America India Market Share 100m tonnes LOW Other CIS Asia
Slide 17: Extend market position in high quality applications and strengthen non-basic mixes
Portfolio Extend market position in high quality applications and strengthen non-basic mixes and functional products Portfolio Main Applications Opportunity ⬢ Great capability and logistics: Production in all continents and short lead-time to everyone, everywhere ⬢ Steel: converters and ladles Basic
Slide 18: Top solution provider in the industry, investing in innovative technologies and digitalization
Technology Top solution provider in the industry, investing in innovative technologies and digitalization Continue investing in R&D Develop into a system 1 to create products, which 3 supplier based on R&D, have a distinct competitive partnerships and selective advantage by costs or by acquisitions
Slide 19: The industry's largest dedicated research team
Technology The industry’s largest dedicated research team, pushing the boundaries of what is possible We drive innovation in every aspect of our Global research team of 270+ employees, of which 98 have masters and PHDs, working out of 2 research hubs and 3 business, from materials, robotics and Big
Slide 20: On-site technical experts consult, develop and deliver innovative solutions
Technology On-site technical experts consult, develop and deliver innovative solutions directly to clients 340+ technical engineers across 90 countries, working on-site with clients to provide custom-made solutions, installation support, recycling, post-mortem analysis and more. A combination of… …e
Slide 21: Cost competitive and safe production network supported by lowest cost G&A services
Competitiveness Cost competitive and safe production network supported by lowest cost G&A services ⬢ Reduce conversion & logistics costs and optimize FX changes tactically through the most efficient usage of the global production footprint ⬢ Run the lowest cost G&A services to support the daily busi
Slide 22: Unrivalled competitive advantage through vertical integration
Competitiveness Unrivalled competitive advantage through vertical integration, in multiple sites 1.6 million 70% tonnes of raw vertical integration in materials produced dolomite and magnesite and Main raw material sites per year 50% for all raw materials Certainty of supply High quality materials C
Slide 23: Faster realisation of synergies by one year
Competitiveness Faster realisation of synergies by one year ⬢ At least €40m synergies in the 2018 €70m P&L and €70m in synergies to be captured fully by 2019 ⬢ Expected total cash restructuring costs are projected to amount to ~€70m, with SG&A majority of cash outflows disbursed throughout 2018 ⬢ In
Slide 24: Synergy opportunities across a range of business activities
Competitiveness Synergy opportunities across a range of business activities Opportunities SG&A ⬢ Rationalization of sales network ⬢ Streamlining corporate management and back-office ⬢ Ramp-up of shared service centers Procurement ⬢ Best sourcing prices in overlapping countries and spend categories ⬢
Slide 25: Additional 'below the line' synergies are expected post-integration
Competitiveness Additional ‘below the line’ synergies are expected post-integration Opportunities Capex ⬢ Footprint optimization to reduce maintenance capex over next 2-3 years ⬢ Shift overall capex towards higher share of value & growth projects Working Capital ⬢ Reallocate production and shorten s
Slide 26: Financials
Financials RHI Magnesita May18 Roadshow
Slide 27: Resilient business model with little volatility across the cycle
Financials Resilient business model with little volatility across the cycle and low level of commoditisation Historic Gross Margin¹ Basic Materials 40% RHI Magnesita Markets 30% ⬢ Commoditized ⬢ Lower volatility 20% in cost due to Raw ⬢ Price takers of significant 10% Materials key raw vertical RHI
Slide 28: 2017 adjusted pro-forma revenue breakdown
Financials 2017 adjusted pro-forma revenue breakdown Total Revenue: c.€2.7 bn by Industry1 by Geography ◼ North America 46% Cement / Lime ◼ Europe ◼ Asia Pacific ◼ South America Non Ferrous Metals ◼ MEA-CIS 26% Other Process Industries 28% 15% 26% 24% 18% 74% 23% 20% ◼ Industrial ◼ Steel 1 Revenue s
Slide 29: 2017 adjusted pro-forma results
Financials 2017 adjusted pro-forma results Revenue (€m) EBITA (€m) +11% 11.4% 9.1% +38.7% 2,409 2,677 1,259 1,369 304 219 2016 2017 2016 2017 Leverage (€m) Working Capital Intensity1 (€m) 2.4 27.8% 1.9 22.2% 733 751 668 610 309 389 2016 2017 2016 2017 Leverage Ratio Net Debt EBITDA 1: Working capita
Slide 30: Capital structure
Financials Capital structure Solid credit profile and commitment to de-leveraging current business Leverage at 1.9x, within our long-term target range Capitalization Table (as of Dec17) € millions Increase in liquidity with business disposals and working capital monetization Schuldscheindarlehen 178
Slide 31: Capital strategy
Financials Capital strategy Dynamic capital allocation over time, supporting long term strategy, providing flexibility for market opportunities and increasing shareholder returns Dividends Shareholder Returns Share buybacks Delever Operating Cash Flow Sustainability Capex Capital Allocation Drivers:
Slide 32: Compelling investment case
Compelling investment case Solid strategy and Strong market position with 15% global market share, clear leadership in Americas, 1 Europe and Middle East with broadest value-added solution offering competitive Highest level of vertical integration in the industry with unique mineral sources and adva
Slide 33: Taking innovation to 1200ºC and beyond
Taking innovation to 1200ºC and beyond RHI Magnesita May18 Roadshow
Slide 34: Appendix
Appendix RHI Magnesita May18 Roadshow
Slide 35: 2017 adjusted pro-forma reconciliation
Appendix 2017 adjusted pro-forma reconciliation a + b + c –d a b c d e f g –e–f –g Non- Merger Magnesita Foreign merger Adjusted Adjusted Reported Prelim. related Disposed Jan - Oct exchange related Pro-forma Pro-forma 2017 PPA effect adjustment Business 2017 variations Other 2017 2016 s €m inc./Exp
Slide 36: 2017 exceptional items
Appendix 2017 exceptional items Adjusted Cash impact Adjusted pro-forma P&L impact €m Pro-forma Items P&L Impact 2017 2018 2019 Foreign exchange variations: on balance sheet items (mostly AR/AP): 9.3m Foreign exchange on inter-company balances: 38.9m (48.2) variations Transacation Expenses: Merger r
Slide 37: Driving client performance improvements
Appendix Driving client performance improvements Equipment/Application Service Starting point End game Improvement Client A (Integrated) Basic Oxygen Furnace (B.O.F.) Refractories 1,900 heats 7,200 heats +385% Assembly 145 h 40 h 3.8X faster Blast Furnace Runners 1,600 h 330 h 4.8X faster Torpedo Ca
Slide 38: Management team
Appendix Management team Executive Management Team Joined Background Stefan Borgas 2016 ⬢ Former CEO of Israel Chemicals Ltd and Lonza Group CEO ⬢ Several management positions at BASF Octavio Lopes 2012 ⬢ Former CEO of Magnesita and Equatorial Energia CFO ⬢ Several management positions at GP Investm
Slide 39: Premium UK listing and corporate governance
Appendix Premium UK listing and corporate governance Listing in the UK underscores the RHI Magnesita’s international scope ⬢ Listed in the Premium Market on the London Stock Exchange ⬢ Strong commitment and full adherence to the UK corporate governance code RHIM ⬢ Majority independent Board targette
Slide 40: Integrated offer overview
Appendix Integrated offer overview ⬢ RHIM launched a tag-along offer to Magnesita’s minority shareholders on the same terms and conditions as that made to the Control Group: ⬢ Cash + shares: R$445.6m1 + 5 million shares ⬢ Cash only: (i) R$31.091 or (ii) R$35.56 per Magnesita share whichever is highe
Slide 41: FX EBITDA Sensitivity
Appendix FX EBITDA Sensitivity 2017 Exchange Rates ∆ in EBITDA vs € Unit 1€= Closing Rate Average rate (€m) USD +1 cent 4.27 USD 1.20 1.12 CNY +0.01 yuan -0.31 CNY 7.78 7.61 BRL +0.10 reais 0.02 BRL 3.96 3.60 INR +1 rupee 0.31 INR 76.40 73.36 41 RHI Magnesita May18 Roadshow
Slide 42: Find out more at rhimagnesita.com
Find out more at rhimagnesita.com RHI Magnesita May18 Roadshow