CropEnergies : Analyst Conference

Analyst Conference

13 May 2020

Joachim Lutz, CEO Dr Stephan Meeder, CFO

Overview

 Changes in executive board	Revenues / EBITDA [M€]
1,.000			250
 Financial year 2019/20 with record revenues and profit	882		899	200
 Climate discussion sets new impulses, RED II in force		779		150
 Dividend proposal: 30 (15) eurocent per share	800	146
		100
	111
 Corona pandemic
	72		50
 Lockdown reduces energy demand	600			0
 Fight against virus increases demand for disinfectants and sanitizers	17/18	18/19	19/20
 Outlook 2020/21	European ethanol prices [€/m3]
750
 Impact of corona on ethanol demand and prices unclear	650
 Operating result well below previous year, Q1 approx. balanced	550
 Strategic outlook	450
 Climate change remains a challenge: GHG targets still valid
FY 18/19	FY 19/20	FY 20/21
 Diversification of portfolio towards bio-based products	350
	ANALYST CONFERENCE	2

Changes in executive board

New on executive board

Dr Fritz Georg von Graevenitz (42)

Joined board on 1 October 2019 / CSO since 1 March 2020

Jürgen Böttcher (59)

CTO as of 1 May 2020

Retirement

Michael Friedmann (65, CSO)

on 29 February 2020

Joachim Lutz (63, CEO)

at the end of the annual general meeting on 14 July 2020

As of 15 July 2020

Dr Stephan Meeder (CEO), Jürgen Böttcher (CTO), Dr Fritz Georg von Graevenitz (CSO)

ANALYST CONFERENCE

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Two challenges of our times

GHG emissions: worldwide >50 bn. t CO2eq./a	Corona: worldwide more than 4 million infected
	As of 11 May 2020

Source: EEA	Source: https://www.worldometers.info/coronavirus/worldwide-graphs/#total-cases

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More climate protection for Germany & Europe

• EU targets in transport 2020
• • - 6% GHG emissions in fuels; 10% renewables
• EU: on the way to climate neutrality in 2050
• • Currently: 40% less GHG - thereof non-ETS (e.g. transport): -30%
  • "Green Deal": EU climate target 2030 to be increased to 50-55%

DE: GHG emissions [Mt CO2eq.]

900		866	813			Industry
196			Energy
	186
			other non-ETS
600			543
311	280		Transport
	140

300	162 197	150 197	95 133175	375
0

• EU: RED II demands more renewable energy by 2030

• In transport at least 14% (total at least 32%)

GHG emissions from fuels [kg CO2eq./liter]

thereof crop-based: level of 2020 + 1%-point (max. 7%)	4	3.4		combustion	upstream
	3.0
	3		2.7
thereof min. 3.5% from waste and residues; add. increase renew. electricity
 DE: climate protection law and "Brennstoffemissionshandels-Gesetz"	2	2.8	2.3	2.1
1				0.3
 Legal GHG limit in transport: 95 (150) Mt CO2eq. 2030 (2020)		0.7	0.7	0.7
0

 CO2 pricing of fossil fuels: from 25 €/t (2021) to 55 €/t (2025)

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Market development: volumes

• Ethanol market in the EU27 & UK in 2019 (in million m³)

 Production:	7.5	-4%	(5.1 fuel | 2.4 non-fuel)
 Consumption:	8.4	+4%	(5.8 fuel | 2.6 non-fuel)

• • Production in EU27 increases by 1% - decline in UK
  • Corona crisis 2020: fuel drops, disinfectants (industrial) increase
• Premium E10 availability in the EU is gaining pace
• • E10 established among others in Belgium and France as #1 petrol
  • The Netherlands: since 1 Oct 2019 available with high acceptance
  • Denmark, Lithuania, Slovakia und Hungary: since 1 Jan 2020
  • Plans in Austria and Latvia

EU27: ethanol sales [1,000 m3]

7.,500		6,748	7,016			7,324	7,130
	860			870	800
		855				(2020)
5.,000		1,420			1,417	1,900
	1,323
2.,500		4,570	4,736			5,037	4,430		F.O. Licht
0																	Source:
2017	2018			2019	2020
				Fuel				Industrial			Potable

E10 shares in selected countries

100%		100%	100%	98%	90%	79%	70%	70%	50%	45%	13%		ePURESource:(2020)
50%
0%

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Market development: prices

 FY 2019/20: considerable increase of ethanol prices		European ethanol prices [€/m3]
 Ethanol*: 620 (500) €/m3	750
 CO2 reduction as a price component	650
	550
 Feedstock market 2019/20	450
 Grain**: 180 (190) €/t	350	FY 18/19	FY 19/20	FY 20/21

	EU grain harvest: 320 Mt (+10%) exceeds consumption of 290 Mt
	Word grain harvest***: 2,175 Mt (+2%) and stocks of 608 Mt (-3%)	Euronext Paris Wheat [€/t]

	 IGC expects balanced market for 2020/21 with about 2,225 Mt	250
	Corona effect on ethanol prices in spring 2020		200
			150
			FY 18/19	FY 19/20	FY 20/21
			100
	* Ethanol T2 FOB Rdam, rounded ** wheat (Euronext Paris), next date of expiry, rounded	*** all varieties, except rice
			ANALYST CONFERENCE	7

Production in the CropEnergies group

 Capacity utilisation 2019/20 follows market situation

 Ethanol production 1,002 (967),000 m³ (+4%)

1.,200

Production

[1,000 m3 / 1,000 t]

9671,002

 Production of food and animal feed on high level

900

600

574580

 Outlook 2020/21

 Rededication of techn. alcohol as main component of disinfectants & sanitizers -

challenge in production, sales and logistics mastered successfully

 Regular maintenance stoppage at BioWanze in Q1 2020/21 -

restart of factory was severely delayed due to corona restrictions

 Biorefinery concept of CropEnergies

 Diversified production and product range

 Complete utilisation of all feedstock components

300

0

2018/192019/20

ethanol		dried food and animal feed

Product mix 2019/20

[by weight, DM]

fuel

42% non-fuel*

58%

* proteins, neutral alcohol, liquefied CO2

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Corona crisis: shifting priorities

• WHO: COVID-19 is declared a pandemic on 11 March 2020
• • Increasing mobility restrictions in European countries
  • Collapse of energy prices - weakest oil demand in 30 years
  • EU petrol price decreases from 40 (Jan) to under 10 (Apr) eurocents/litre
• Soaring demand for disinfectants
• • Enhanced hygiene requirements in hospitals, medical practices and pharmacies
  • Germany, among others, facilitates use of ethanol
  • Biocidal approval of technical alcohol and exemption from alcohol tax
• CropEnergies assumes social responsibility
• • Alcohol for about 20 million litres of disinfectants and sanitizers
  • Fair prices and high availability of technical alcohol mitigates shortage
  • Priority for public health - fuel sales reduced

			Energy price development
					[€/m³]		750
													500
			NYMEX Ethanol T2 FOB Rdam		250
			Prem. Gas. 10 PPM FOB ARA
			Light Sweet Crude Oil (WTI)
			ICE Brent Crude		0
	Alcohol from Zeitz for disinfectants		-250

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Outlook: short-term

• Trend in FY 2020/21 depends on containment of coronavirus
• • EU Commission expects recession (GDP 2020: -7,4%)
  • Pandemic and "lock-down" measures in Europe starting in mid-March affect 1st quarter of CE (1 Mar - 31 May 2020)
• Ethanol: demand stabilisation and chance for impulses









Ethanol industry is part of system-relevant infrastructure CE is facing high demand for disinfectants and sanitizers Normalisation of fuel demand expected in 2nd half of the year Targets for GHG reduction and renewable energy in force

• Price expectations in the EU: uncertainty will remain
• • Volatility of ethanol prices will remain high

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Strategic outlook

• Our strategy: bio-based products for a climate friendly world
• • Climate change remains challenge: GHG targets remain in place
• Short-termfocus is the optimisation of our sites
• • Diversification of feedstock flexibility and expansion of feed production in Zeitz completed
  • Extension of cooperation with SOL group - construction of CO2 liquefaction in Wanze in preparation
• Mid-term:diversification under investigation
• • R&D process innovation, alternative feedstocks
  • R&D renewable chemicals, portfolio expansion/growth

Renewable chemicals

Liquefied CO2

Ethanol	Neutral alcohol

Gluten

Fuel ethanol

ProtiGrain®

Animal feed

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Overview 2019/20

• Ethanol production
• Revenues
• EBITDA
• Operating profit
• Income from operations
• Net income
• Net financial assets (vs. 28/02/2019*)

1,002 (967) ,000 m³		+ 4%
€ 899 (779) million	+ €	120 million
€ 146.1 (72.1) million	+ €	74 million
€ 103.9 (32.8) million	+ €	71 million
€ 104.1 (43.1) million	+ €	61 million
€ 74.6 (21.3) million	+ €	53 million
€ 107 (27) million	+ €	80 million

*incl. adjustments from IFRS 16

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Revenues

(in € million)			2019/20				2018/19
Ethanol	696.5				575.6	+ 21%
Food and animal feed products	192.5				189.3	+ 2%
Other revenues	10.2				13.8	- 26%
Revenues			899.2			778.6			+ 15%

 Increase in total revenues due to higher ethanol sales prices and the expansion of production and sales volumes

Revenues 2019/20

 Ethanol prices in reporting period with € 620/m3 significantly higher than in the previous year (€ 502/m3)

78%

21%

					1%
		Ethanol		Food and animal feed products		Other revenues
				ANALYST CONFERENCE	13

EBITDA

(in € million)			2019/20				2018/19
Revenues	899.2				778.6	+ 15%
Overall performance	890.9				782.7	+ 14%
Cost of materials*	-652.2				-617.1	- 6%
Spread (gross)			238.7			165.6			+ 44%
in % of overall performance	26.8%	21.2%	-
Further operating expenses/income*	-92.5	-93.5	+ 1%

180	EBITDA [M€]
150			146
120	111
90		72
60
30
0
	BY	BY	BY
	17/18	18/19	19/20

EBITDA*

146.1

72.1

> + 100%

Spread (gross) / in % of overall

300

performance [M€]

*without restructuring costs and special items

 First-time adoption of IFRS 16 has positive effect on other operating	250			239
200	206
expenses and therefore on EBITDA		166
		27%
 Significant improvement of the gross margin despite a slight increase in	150	23%
raw material costs	100		21%
 With € 146.1 (72.1) million, EBITDA reaches its highest level in company
50
history	0
		BY	BY	BY
		17/18	18/19	19/20
	ANALYST CONFERENCE	14

Operating profit

				Operating profit [M€]
				120		104
(in € million)	2019/20	2018/19
Revenues	899.2	778.6	+ 15%	90
72
EBITDA*	146.1	72.1	> + 100%	60
Margin	16.3%	9.3%	-
Depreciation*	-42.2	-39.3	- 8%	30	33
Operating profit	103.9	32.8	> + 100%
Margin	11.6%	4.2%	-	0
BY	BY	BY
*without restructuring costs and special items
			17/18	18/19	19/20

	Rise in depreciation to € 42.2 (39.3) million due to first-time adoption of	40	Operating profit [M€]
	IFRS16					33.6
 The striking increase in EBITDA results into a trebling of operating profit	30		28.6	26.6
	to € 103.9 (32.8) million
 Operating margin improves accordingly to 11.6 (4.2)%	20	15.2
		10
		0
			Q1	Q2	Q3	Q4
			19/20	19/20	19/20	19/20
		ANALYST CONFERENCE		15

Net earnings for the year

(in € million)			2019/20				2018/19
Operating profit	103.9				32.8	> + 100%
Restructuring costs / special items	0.0				10.1	- 100%
At equity result	0.2				0.2	+ 4%
Income from operations	104.1				43.1	> + 100%
Financial result			-3.3			-0.5			< - 100%
Earnings before income taxes	100.7				42.5	> + 100%
Taxes on income	-26.2				-21.3	- 23%
Net earnings for the period			74.6			21.3			> + 100%

• Unrealized currency effects result in reduction of the financial result to € -3.3(-0.5) million
• Net earnings amounting to € 74.6 (21.3) million also reached a record level

100	Net earnings for the year [M€]
75			75
	51
50
25		21
0
	BY	BY	BY
	17/18	18/19	19/20

ANALYST CONFERENCE

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Cash flow

(in € million)

Cash flow

Change in net working capital

Net cash flow from operating activities

Investments in property, plant et al. Payments into current financial investments

Cash flow from investing activities Cash flow from financing activities

		2019/20				2018/19
		120.2			59.1			+ 61.1
		5.0		-24.7	+ 29.7
		125.1			34.4			+ 90.7
		-29.8		-13.2	- 16.6
		-15.0		0.0	- 15.0
		-44.8			-13.2			- 31.6
		-71.2			-55.8			- 15.4

Cash flow (+)/
Investments (-) [M€]
150
	120
100
59
50
0
-13
-50	-30
BY	BY
18/19	19/20

Exchange rate changes	1.4	0.5	+ 0.9		Net financial position [M€]
				120
Change in cash and cash equivalents	10.5	-34.1	+ 44.6			107
				90
	29/02/2020	28/02/2019*
Net financial assets	107.3	26.9	+ 80.4	60
	37
 Capex higher at € 29.8 (13.1) million in order to improve production
30		27*
facilities
 Net financial assets increased significantly to € 107 (27) million		0	28/02/18	28/02/19	29/02/20
*incl. adjustments from IFRS 16
				ANALYST CONFERENCE	17

Balance sheet

(in € million)			29/02/2020				28/02/2019
Assets
Non-current assets	384.7				382.7	+ 2.0
Current assets	285.0				203.1	+ 81.9
Total assets			669.6			585.7			+ 83.9
Liabilities
Shareholders' equity	502.9		448.7	+ 54.2
Non-current liabilities	65.5		48.5	+ 17.0
Current liabilities	101.3		88.5	+ 12.8
Total liabilities and equity			669.6			585.7			+ 83.9
Capital Employed	456.1		462.3	- 6.2
ROCE	23%		7%	-
Net financial assets	107.3		26.9	+ 80.4
Equity ratio	75%		77%	-

• The balance sheet total increases to € 669.6 (585.7) million
• ROCE improves significantly to 22.8 (7.1)%

Shareholders' equity [M€]
520
		503
490
460	449
446
430
400
28/02/18	28/02/19	29/02/20

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Dividend

(in € per share)			2019/20				2018/19
Earnings	0.85				0.24
Cash flow	1.38				0.68
Dividend			0.30*			0.15
Payout ratio	35%		62%
*proposal
Share price end of financial year	€ 9.31				€ 5.29
Dividend yield	3.2%		2.8%

• Payout ratio: 35 (62)% from consolidated net income IFRS

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Outlook 2020/21

• Climate protection will remain an important environmental policy goal in the medium term
• The operating and mobility restrictions imposed throughout Europe since mid-March as a result of the corona pandemic are weighing on sales volumes and prices, at least in the short term
• Business development in the 1st quarter is being weighed down considerably due to the delayed maintenance work at the plant in Wanze, Belgium
• For the 1st quarter, only an approximately balanced operating result is currently expected
• CropEnergies expects an improvement in the course of the financial year, but with a significant decline in revenues and operating profit in comparison to the previous record year
• To what extent the increased use of ethanol for disinfectants can at least compensate for the reduced sales of renewable ethanol as a climate-friendly fuel is not yet foreseeable
• The forecast will therefore be substantiated in line with the course of the corona pandemic

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Financial Calendar
10	July 2019:	Statement for the 1st quarter of 2019/20
16	July 2019:	Annual General Meeting 2019 (virtual)
09	October 2019:	Report for the 1st half of 2019/20
13	January 2020:	Statement for the 1st-3rd quarter of 2019/20
13	May 2020:	Annual report and press and analysts' conference
		financial year 2019/20
Stock Information
ISIN:	DE000A0LAUP1
Symbol:	CE2
Bloomberg / Reuters:	CE2 GY / CE2G.DE
Transparency standard:	Prime Standard

Disclaimer

Contact

CropEnergies AG

Maximilianstraße 10

68165 Mannheim

www.cropenergies.com

Investor Relations

Heike Baumbach

Phone: [phone]

[e-mail]

Public Relations / Marketing

Nadine Dejung-Custance/

Clarissa Sonnenschein

Phone: [phone]

[e-mail]

This presentation contains forward-looking statements based on assumptions and estimates made by the executive board of CropEnergies AG. Although the executive board may be convinced that these assumptions and estimates are reasonable, the future actual developments and future actual results may vary considerably from the assumptions and estimates due to many external and internal factors. For example, matters to be mentioned in this connection include changes in the general economic conditions, competitive product and pricing pressures and developments in the regulatory framework. CropEnergies AG assumes no responsibility and accepts no liability for future developments and future actual results achieved being the same as the assumptions and estimates included in this presentation. This presentation includes percentage and number rounding.

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Thank you!

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