Acerinox S A : Q4 2023 Results Presentation

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FY 2023

Results Presentation

FY 2023 RESULTS PRESENTATION

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Disclaimer

This document may contain forward looking information and statements about ACERINOX, S.A., its subsidiaries and/or its management, including but not limited to financial projections and estimates and their underlying assumptions, and statements regarding the intent, belief or current expectations or forecasts of ACERINOX, S.A. and/or its management, as well as statements regarding future performance, plans, objectives, operations, business, strategy, capital expenditures, results of operations, markets and products.

This communication also includes certain disclosures which contain "forward-looking statements". These forward-looking statements generally include statements related to the proposed transaction, including financial estimates and statements as to the expected timing, completion and effects of the proposed transaction. These forward looking statements also include financial projections and estimates and their underlying assumptions, and statements regarding the intent, belief or current expectations or forecasts of ACERINOX, S.A. and/or its management, as well as statements regarding future performance, plans, objectives, operations, business, strategy, capital expenditures, results of operations, markets and products. In most cases, words or phrases such as "anticipates," "believes," "confident," "could," "estimates," "expects," "intends," "target," "potential," "may," "will," "might," "plans," "path," "should," "approximately," "our planning assumptions," "forecast", "outlook" and variations or the negative of these terms and similar expressions identify forward-looking statements. These forward-looking statements, including statements regarding the proposed transaction and financial projections and estimates, are based largely on information currently available to ACERINOX's management and ACERINOX's management's current expectations and assumptions and are subject to various risks and uncertainties that could cause actual results to differ materially from historical results or those expressed or implied by such forward-looking statements. These forward looking statements or forecasts may also include assumptions regarding future economic and other conditions, such as future nickel or chrome prices and, in general, are subject to risks, uncertainties and variables beyond ACERINOX's control that can adversely affect them. Although ACERINOX, S.A. believes its expectations are based on reasonable estimates and assumptions, they are not guarantees of performance, prices, results of operations, benefits or dividend payout policies. There is no assurance that ACERINOX's expectations will occur or that our estimates or assumptions will be correct, and ACERINOX, S.A. cautions investors and all others not to place undue reliance on such forward-looking statements.

Important factors, risks and uncertainties that could cause actual results to differ materially from such plans, estimates or expectations include but are not limited to: (i) the completion of the proposed transaction on the anticipated terms and timing, including obtaining required shareholder and regulatory approvals, and the satisfaction of other conditions to the completion of the proposed transaction; (ii) the risk that disruptions from the proposed transaction (including the ability of certain customers to terminate or amend contracts upon a change of control) can harm the business of the parties involved, including current plans and operations, including during the pendency of the proposed transaction;

1. potential adverse reactions or changes to business relationships resulting from the announcement or completion of the proposed transaction; (iv) unpredictability and severity of catastrophic events, including but not limited to acts of terrorism, outbreaks of war or hostilities or the COVID-19 pandemic, as well as management's response to any of the aforementioned factors; (v) the possibility that the proposed transaction may be more expensive to complete than anticipated, including as a result of unexpected factors or events; (vi) the occurrence of any event, change or other circumstance that could give rise to the termination of the proposed transaction; and (vii) those risks and uncertainties set forth in ACERINOX's most recent annual report, as such risk factors may be amended, supplemented or superseded from time to time by other reports filed by ACERINOX, S.A. with the Spanish National Securities Market Commission (the "CNMV") from time to time, which are available via the CNMV's website at https://www.cnmv.es.

These risks, as well as other risks associated with the proposed transaction, will be more fully discussed in the proxy statement that will be filed with the SEC in connection with the proposed transaction. There can be no assurance that the proposed transaction will be completed, or if it is completed, that it will close within the anticipated time period. These factors should not be construed as exhaustive and should be read in conjunction with the other forward-looking statements. The forward-looking statements relate only to events as of the date on which the statements are made. Except as required by applicable law, ACERINOX, S.A. does not undertake any obligation to publicly update or revise any forward looking statements and information, even in the event of new information being published or new events occurring. If one or more of these or other risks or uncertainties materialize, or if ACERINOX's underlying assumptions prove to be incorrect, ACERINOX's actual results may vary materially from what ACERINOX may have expressed or implied by these forward-looking statements. ACERINOX cautions that you should not place undue reliance on any of its forward-looking statements. All subsequent oral or written forward looking statements or information attributable to ACERINOX, S.A. or any of its members, directors, officers, employees or any persons acting on its behalf are expressly qualified in their entirety by this cautionary statement. You should specifically consider the factors identified in this communication that could cause actual results to differ. Furthermore, new risks and uncertainties arise from time to time, and it is impossible for ACERINOX to predict those events or how they may affect ACERINOX.

No representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or opinions contained herein. None of ACERINOX or any of its affiliates, advisors or representatives shall have any liability whatsoever for any loss arising from any use of this document, or its contents, or otherwise arising in connection with this document. Moreover, this document nor any part of it constitutes a contract, nor may it be used for incorporation into or interpretation of any contract or other type or agreement.

The points contained in this disclaimer must be taken fully into account by all persons or entities obliged to take decisions or to draw up or to publish opinions on securities issued by ACERINOX, S.A., in particular, by the analysts and investors reading this document. All the aforesaid persons are invited to consult the public documentation and information that ACERINOX, S.A. reports to or files with the bodies responsible for supervising the main securities market and, in particular, with the CNMV.

FY 2023 RESULTS PRESENTATION

Acerinox: 2023 another milestone year

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Financial & operating

Net sales

of €6.6 billion

EBITDA

of €703 million

Operating cash flow

of €481 million

Adjusted ROCE(1)

of 17.9%

Strategy

Value added:

Diversification through HPA

• VDM record EBITDA of €175 million
• Potential Haynes acquisition

Organic growth:

Investments in NAS and VDM

Excellence:

Beyond Excellence:

target of €100 million at EBITDA level

Increasing shareholder returns to €0.62 in 2024

ESG

Highest recognition by

EcoVadis: Platinum

award

SAFETY performance:

24% reduction in

accident rate vs FY 2022

CARBON EMISSIONS

performance:

3% reduction in Scope 1+2

intensity vs FY 2022

(1): ROCE stripping out €156 million of Bahru Stainless impairment in Q4 2023

FY 2023 Results Presentation

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Contribution to circular economy and sustainable development

Sustainability targets 2030

360º Positive Impact Plan

Eco-efficiency

and

climate change

mitigation

GHG emissions (Scope 1&2): 11%

reduction [2030 target: 20% intensity reduction from 2015 baseline]

Water withdrawal: 18% reduction

[2030 target: 20% intensity reduction from

2015 baseline]

Energy(*): 8% increase [2030 target: 7.5 % intensity reduction from 2015 baseline]

Engaged team,

culture, diversity,

and safety

Safety: 24% reduction from FY 2022

[target: 10% YoY reduction in LTIFR]

Diversity: 13.28% women [2030 target: women account for 15% of workforce]

Most significant

sustainability initiatives

in 2023

Eco-efficiency and	●	Energy efficiency initiatives allows
climate change		~3% carbon intensity reduction
mitigation	●	Renewable energy increased 50%
Circular economy and	●	Launch of ECO ACX
●	Slag CE marks for different
sustainable products		applications
	●	Water footprint for more sustainable
		use
Committed team,

Circular economy and
sustainable products	Recycling
	100% of:
	Grinders / Oily paper / Oil
	(decantation, flame-retardant
Waste reduction: 80% valorization	and hydraulic) / Process scrap
& metal recovered / Machined
[2030 target: 90% valorization]
electrodes /
	Paper / Plastic /
	Cardboard / Others

culture, diversity,	●	Implementation of HSE Cardinal Rules
	led to safety improvements
and safety	●	Multicultural diversity
Supply chain and	●	ESG Supplier Assessment
impact in the	●	Social Action Framework
community		implementation
Ethical, responsible,	●	New whistleblowing channel
and transparent
●	Updated Code of Conduct for business
governance
	partners

(*) Low capacity utilization impacted this KPI

FY 2023 Results Presentation

Q4 & FY 2023: Destocking cycle

USA

EUROPE

Sources: CRU, LME.

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Q4 & FY MARKET HIGHLIGHTS

STAINLESS STEEL

Apparent demand of flat products up 7% YoY in Q4, down 20% in 2023 Inventories already normalized

Imports of flat products down 28% in 2023 Less base price volatility

Apparent demand of flat down 2% in Q4, down 22% in 2023 Inventories already normalized

Imports of flat down 45% in Q4, down 55% in 2023

Prices remain at historical lows but slight recovery in Q4

EU investigating anti-circumvention in Taiwan-Turkey-Vietnam

HIGH-PERFORMANCE ALLOYS (HPA)

HPA market driven by strong demand

Oil and gas market continued to recover from investments postponed during the pandemic

Solid demand in chemical process industry (CPI) led by the hydrogen sector

Weaker demand in electronics and electrical engineering

industry	favorable	challenging

FY 2023 Results Presentation

Q4 2023: Resilient results

Reflects strategy of growth, diversification & strength

Income statement	Cash flow statement
Sales of €1.5 billion		Strong
	operating cash flow
			of €260 million
Resilient EBITDA
of €96 million	Operating working capital
			reduction of
Impairment of Bahru		€258 million
Stainless: €156 million

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Balance sheet

Net financial debt (NFD)

reduction: €159 million

NFD / EBITDA 0.49x

Strong adjusted ROCE(1): 18%

Inventory reduction of €211 million in Q4

(1): ROCE stripping out €156 million of Bahru Stainless impairment in Q4 2023

FY 2023 Results Presentation

Q4 & FY 2023: Consolidated group highlights

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Remarkable

2023 EBITDA

of €703 million:

Q4:€96 million

+6% YoY

Downward

inventory adjustment

of €65 million

Strong cash generation in Q4

NFD of €341 million

• Adjusted EBIT: Stripping out €156 million of Bahru Stainless impairment in Q4 2023 (€204 million in Q4 2022)

	Q4 2023
Melting production	486
(thousands of metric tons)
Net sales	1,529

EBITDA	96
EBITDA margin	6%
* Adjusted EBIT	52
Adjusted EBIT	3%
margin
EBIT	-105
EBIT margin	-7%
Results before taxes	-111
and minorities
Results after taxes	-119
and minorities
Operating cash flow	260
(before investments)
Net financial debt	341

Q4 2022	% Q4 23 /	FY 2023	FY 2022	% FY 23 /
Q4 22	FY 22
397	+22%	1,946	2,190	-11%
1,693	-10%	6,608	8,688	-24%
90	+6%	703	1,276	-45%
5%		11%	15%
41	+26%	530	1,080	-51%
2%		8%	12%
-163	+36%	374	876	-57%
-10%		6%	10%
-178	+38%	355	831	-57%
-185	+36%	228	556	-59%
517	-50%	481	544	-12%
440	-23%	341	440	-23%

FY 2023 Results Presentation

Q4 & FY 2023: Stainless steel highlights

Million EUR	Q4 2023 Q4 2022	% Q4 23 /	FY 2023 FY 2022	% FY 23 /
		Q4 22		FY 22

Melting production	468	379	+24%	1,869	2,108	-11%
(thousands of metric tons)
Net sales	1,166	1,351	-14%	5,195	7,426	-30%
EBITDA	50	70	-28%	533	1,151	-54%
EBITDA margin	4%	5%		10%	16%
Amortization and depreciation	-35	-41	-15%	-138	-161	-14%
* Adjusted EBIT	15	29	-48%	393	987	-60%
Adjusted EBIT margin	1%	2%		8%	13%
EBIT	-141	-175	-19%	237	783	-70%
EBIT margin	-12%	-13%		5%	11%
Operating cash flow	179	446	-60%	475	648	-27%
(before investments)

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FY EBITDA: €533 million 10% margin

FY operating cash flow

of €475 million

Efficient working capital

management

* Adjusted EBIT: Stripping out €156 million of Bahru Stainless impairment in Q4 2023 (€204 million in Q4 2022)

FY 2023 Results Presentation

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Q4 & FY 2023: High-performance-alloys highlights

Record full-year

EBITDA of

€175 million

Decrease of €47 million in

operating working capital in Q4

Operating cash flow of €81 million in Q4

Million EUR	Q4 2023 Q4 2022	% Q4 23/	FY 2023
	Q4 22

Melting production	18	19	-2%	76
(thousands of metric tons)
Net sales	366	341	+7%	1,437
EBITDA	46	21	+122%	175
EBITDA margin	13%	6%		12%
Amortization and depreciation	-6	-6	-4%	-24
EBIT	40	15	+170%	151
EBIT margin	11%	4%		11%
Operating cash flow
81	72	+13%	7
(before investments)

FY 2022	% FY 23/
FY 22

82-7%

1,262 +14%

125 +40%

10%

-24 +1%

102 +49%

8%

-104 -

FY 2023 Results Presentation

Q4 & FY 2023: Capital allocation

Q4 Million EUR

FY

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Q4 Highlights

Strong operating cash flow (OCF) of €260 million

Debt reduction of €159 million

driven by €258 million

operating working capital (OWC) reduction

FY Highlights

OCF €481 million

OWC decreased €79 million

Shareholder returns of €150 million