Slide 1: Q1 2024 Earnings Presentation
Q1 2024 Earnings Presentation 25 April 2024
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 Rafael Pérez Executive Chair CEO CFO Leading Befesa >20 years with Befesa >15 years with Befesa for >20 years 3 Q1 2024 Earnings Presentation
Slide 4: Highlights
O7 / Highlights
Slide 5: Quarter on quarter improvement since Q3 despite weak zinc price environment
Quarter on quarter improvement since Q3 despite weak zinc price environment Revenue Adjusted EBITDA Operating cash flow €298 million €49 million €15 million -7% yoy / +8% QoQ -3% yoy / +7% QoQ -27% yoy / -77% QoQ — Lower zinc and alu prices — Lower zinc and alu prices — Lower earnings + Favourable z
Slide 6: Business & financial results
02 Business & financial results
Slide 7: EBITDA
EBITDA Total Adjusted EBITDA at €49m in Q1 2024, QoQ improvement of 7%. However, still -3% yoy driven by lower zinc LME prices and aluminium metal margin partially compensated by favourable zinc TC, improved volumes & hedges, and lower energy prices Adjusted EBITDA1 Q1 2023 to Q1 2024 50.1 5 48.6 -1
Slide 8: Steel Dust Recycling Services
Steel Dust Recycling Services Adjusted EBITDA at €36m in Q1 2024, QoQ improvement of 12%. However, -3% yoy driven by lower zinc LME prices partially compensated by favourable zinc TC, improved volumes & hedges, and lower coke price Adjusted EBITDA Q1 2023 to Q1 2024 yoy Q1 2023 Q1 2024 change Revenu
Slide 9: Aluminium Salt Slags Recycling Services
Aluminium Salt Slags Recycling Services EBITDA at €13m in Q1 2024, QoQ improvement of 5%. However, -8% yoy driven by lower aluminium metal margin partially compensated by improved volumes (Hanover) and lower energy prices EBITDA Q1 2023 to Q1 2024 yoy Q1 2023 Q1 2024 change Revenue1 106.0 111.5 +5%
Slide 10: Key volume drivers & impact on Befesa: Q1 2024
Key volume drivers & impact on Befesa: Q1 2024 Key volume drivers Befesa’s volumes % vs prior year • European Steel Dust plants at solid levels despite yoy lower crude steel production Crude steel production1 • Aluminium salt slags volumes grew yoy mainly driven by 6.7% Hanover back in operation 0.5
Slide 11: Zinc TC settled at $165/t for 2024 (vs $274/t in 2023)
Zinc TC settled at $165/t for 2024 (vs $274/t in 2023) will drive 2024 earnings; However, zinc LME price environment remains volatile $4,530 (April ‘22) Zinc TC Zinc LME1 Peak: $300 (2008 & 2020) $2,814 $2,467 (March ‘08) (Jan ‘20) $2,405 Peak (May ‘15) $2,224 C902 (May ‘23) $1,774 $1,454 (March ‘20
Slide 12: Befesa's hedging strategy provides price visibility and lowers impact from zinc price volatility
Befesa’s hedging strategy provides price visibility and lowers impact from zinc price volatility • Befesa’s hedging strategy unchanged Zinc LME1 • 1—3 years forward • Targeting 60% to 75% of zinc equivalent volume • Befesa providing no collateral c. €2,650 • Befesa’s hedging strategy has Befesa’s c.
Slide 13: Coke price continued further normalisation in Q1; Gas & electricity prices stabilised
Coke price continued further normalisation in Q1; Gas & electricity prices stabilised around 2021 levels Befesa’s energy price evolution by source Coke 2019/20 2021 2022 2023 Q1 2024 • Befesa’s coke price continued further normalisation in Q1’24 to levels below the 2022 average price (-25% yoy; -3%
Slide 14: Cash flow, net debt & leverage
Cash flow, net debt & leverage Cash on hand at €90m providing >€150m liquidity; Net debt increased to €622m mainly explained by the decrease in cash balance; Net leverage of x3.45 Adjusted EBITDA to Total cash flow Q1 2024 Total capex = €18.9m 48.6 -33.9 Palmerton -0.1 14.5 refurbishment -16.0 -2.9
Slide 15: Outlook & growth
| \ e : ey. | : | 1 aaa —— 0 3 / Outlook & growth
Slide 16: Guidance 2024
Guidance 2024 Lower-end: €195m Upper-end: €235m +€13m / +7% yoy +€53m / +29% yoy • Lower end: Zinc prices continue at Q1 average of c. $2,450/t for the rest of the year; Zinc refining and China operations still at breakeven levels; Coke price recovering at slow pace; Aluminium metal margin depressed
Slide 17: Positive mid-term outlook; balancing capex across markets with different dynamics
Positive mid-term outlook; balancing capex across markets with different dynamics Favourable decarbonisation and EV macrotrends: - Shift towards EAF steel mills will increase the generation of steel dust - Transition to EV will drive higher aluminium demand Globally balanced in core businesses €110—
Slide 18: Well defined growth roadmap in execution
Well defined growth roadmap in execution • Market fundamentals remain strong and favourably support Befesa’s business model & growth plan Decarbonisation trend will drive increase of EAF steel production in the key markets where Befesa operates EV trend will drive demand for aluminium in Europe & th
Slide 19: Palmerton plant refurbishment progressing well to seize market growth in 2025
2 Palmerton plant refurbishment progressing well to seize market growth in 2025 Plant overview Palmerton, Pennsylvania • 2 kilns with c. 163 kt → 220 kt (post-refurbishment) EAF steel dust recycling capacity • Producing WOX as a marketable product Indicative timing and status H1 2025 Other Befesa EP
Slide 20: Growth opportunity in China is attractive and Befesa's plan is being adapted
Growth opportunity in China is attractive and Befesa’s plan is being adapted to current market challenges Challenging market environment in the short term Steel Utilisation • Crude steel production in 2023 stable yoy production Mt BOF rate 100 100% • EAF mills running at 55—60% versus 80 80% BOF at
Slide 21: Bernburg expansion: Moving forward with permits and commercial contracts
8 Bernburg expansion: Moving forward with permits and commercial contracts Plant overview • Expand alu alloy production capacity at existing Other Befesa 2nd Alu Bernburg plant from current 75 kt to 135 kt (+60 kt) locations in Europe • 2 rotary furnaces (and 2 holding furnaces) • Total 2nd Alu capa
Slide 22: Appendix & Investor's agenda
04 Appendix & Investor’s agenda
Slide 23: Key financials Q1 2024 vs 2023
Key financials Q1 2024 vs 2023 (€m, unless otherwise stated) Steel Salt Secondary Corporate & Total Dust Slags Aluminium eliminations Befesa Revenue1 188.0 27.2 98.3 -15.2 298.3 yoy change -28.3 / -13.1% +6.4 / +30.6% +2.5 / +2.6% -4.2 / - -23.7 / -7.3% Reported EBITDA 32.8 9.9 2.9 -0.2 45.3 yoy cha
Slide 24: Operational data Q1 2024 vs 2023 – Steel Dust Recycling Services
Operational data Q1 2024 vs 2023 – Steel Dust Recycling Services Q1 2023 Q1 2024 yoy change EAF steel dust 287.1 303.1 +16.0 / +5.6% throughput (kt) EAF steel dust 68.8% 70.9% +210 bps avg. capacity utilisation (%) Waelz oxide 99.8 100.0 +0.2 / +0.2% (WOX) sold (kt) Zinc LME price 2,916 2,256 -660 /
Slide 25: Operational data Q1 2024 vs 2023 – Aluminium Salt Slags Recycling Services
Operational data Q1 2024 vs 2023 – Aluminium Salt Slags Recycling Services Q1 2023 Q1 2024 yoy change Salt slags & SPL 82.3 111.3 +29.0 / +35.2% treated (kt) Salt slags & SPL 71.0% 95.2% +2,420 bps avg. capacity utilisation (%) Aluminium 43.7 44.3 +0.7 / +1.5% alloys produced (kt) Secondary alu 86.4
Slide 26: Investor's agenda
Investor’s agenda Financial calendar Next investor conferences May / June 2024 Q3 2024 Annual General Meeting New York – Berenberg European London – 4th Stifel London Industrials Conf. 20 June 2024 Conference 2024 4 & 5 September – Stifel 23 May – Berenberg London – Citi’s Growth Conference 2024 H1