RHI Magnesita N : Halfjaarlijkse financiële verslaggeving

RHI Magnesita N.V.

("RHI Magnesita" or the "Company" or the "Group")

Strong pricing, strategic sales initiatives and M&A contribution offset lower

demand to deliver increase in EBITA and deleveraging

RHI Magnesita, the leading global supplier of high-grade refractory products, systems and solutions, today announces its unaudited results for the six months ended 30 June 2023 ("H1 2023" or the "Period").

Financial results
(€m unless stated otherwise)	H1 2023	H1 2022	Change	H1 2022	Change
				Constant Currency	Constant Currency
				Adjusted1	Adjusted
Revenue	1,734	1,594	9%	1,593	9%
Adjusted EBITDA	265	245	8%	258	2%
Adjusted EBITA2	200	188	7%	202	(1)%
Adjusted EBITA margin	11.6%	11.8%	(20)bps	12.7%	(110)bps
Adjusted EPS	2.53	2.58	(2)%
Net debt	1,124	1,231	(9)%
Pro forma Net debt to LTM	2.1x	2.7x	(0.6)x
Adjusted EBITDA3

	H1 2023	H1 2022
		Reported
Revenue	1,734	1,594
Reported EBITA	184	177
Profit before tax	111	142
EPS	€1.71	€2.06
Dividend per share	€0.55	€0.50

1. H1 2022 adjusted for constant currency for H1 2023 average FX rates.
2. Adjustments of €16 million to reported EBITA include €11 million relating to non-recurring restructuring costs and €5 million was spent on M&A integration costs in the Period.
3. Includes trailing 12 months EBITDA contribution from businesses acquired during the period, including prior to the date of acquisition.

Operational and strategic highlights

• Steel revenues 5% higher, reflecting an 8% volume reduction in line with subdued market demand globally, more than offset in the Period by strong pricing
• Industrial division performance benefited from strong pricing recovery and later cycle nature of project business, to deliver gross margin of 29.0% (H1 2022: 25.9%), highlighting benefits of sector diversification
• Low plant capacity utilisation of 76% (H1 2022: 83%) delivers planned inventory reduction excluding M&A. Associated fixed cost under-absorption results in flat gross margins for Steel, despite lower input costs

1

• Inventory now at or approaching target demand coverage ratios, through focus on stock management without impacting customer performance. Record high PIFOT ("produced in full and on time") and record low customer complaints
• Recycling rate increased to 13.0% (H1 2022: 9.3%). Over the period January 2018 to June 2023, approximately 1.1 million tonnes of CO2 emissions has now been avoided through the use of secondary raw materials
• Five acquisitions completed during H1 2023 in India, China and Europe for a total cash consideration of €208 million, including working capital investments of €23 million. Significant synergies and earnings accretion expected as new businesses are integrated into the Group

Financial highlights

• Revenue increased 9% to €1,734 million (H1 2022: €1,594 million), as higher pricing and M&A contribution offset the negative impact of lower sales volumes
• Adjusted EBITA of €200 million (H1 2022: €188 million) and margin of 11.6% (H1 2022: 11.8%) as currency tailwind, higher pricing, M&A contribution and strategic sales initiatives offset lower volumes:
• • Price increases contributed €167 million to Adjusted EBITA versus H1 2022
  • Adjusted EBITDA from M&A in H1 2023 of €19 million (EBITA: €14 million) against previous full year guidance of €25-€30 million, with contribution weighted towards H2 2023 due to timing of completion. Guidance for 2023 increased to approximately €40 million
  • Strategic initiatives cumulative annual EBITA contribution since 2019 now at €131 million, achieving the FY 2023 guided range of €125-€145 million
• Adjusted EPS of €2.53 per share in line with H1 2022 (H1 2022: €2.58 per share) as higher EBITA was offset by higher debt interest charges, as guided, and currency movements
• Significant step up in free cash flow to €167 million (H1 2022: €146 million outflow) driven by working capital release in base business and strong operating cash flow conversion of 114%
• Net Debt reduced to €1,124 million (31 December 2022: €1,163 million) and pro forma Net Debt
  to Adjusted EBITDA reduced to 2.1x (31 December 2022 Net Debt to Adjusted EBITDA: 2.3x), strong cash flow and €100 million equity raise in India funded cash invested into M&A of €208 million during the Period, including €23 million of working capital investments
• Interim dividend of €0.55 per share declared

Outlook

• Outlook for key end markets remains uncertain, with order books suggesting continued weakness into the second half
• Pricing currently resilient but competitive pressure expected in the remainder of the year
• Benefit of lower input costs expected to be offset by reduced fixed-cost absorption due to low production volumes
• Following strong first half profitability, full year Adjusted EBITA margin is now expected to be between 10.5% and 11.5%, delivering full year Adjusted EBITA including M&A of at least €360 million
• Net debt to EBITDA expected to remain above 2.0x at the FY 2023 as the Group further executes on its M&A pipeline, in line with its guidance range

2

Commenting on the results, Chief Executive Officer, Stefan Borgas, said:

"In the first half of the year we continued to experience challenging conditions in the steel market as a result of low demand volumes in all geographies with the exception of India. However, I am pleased to report that the resilience of our business model and strategy has been demonstrated by strong pricing, sector diversification, the delivery of material benefits from our strategic sales initiatives and a growing contribution from acquisitions. We have generated free cash flow of €167 million compared to an outflow of €146 million in H1 2022 and we are now on course to deliver full year EBITA of at least €360 million with a margin of between 10.5% and 11.5%. This is higher than we expected at the beginning of this year, but with the benefits from lower input costs eroded by fixed cost under-absorption due to low production volumes. Five acquisitions completed in 2023 year to date have been funded through operating cash flows and an equity raise in India, enabling us to reduce gearing to 2.1x pro forma EBITDA, in line with our targeted range. We are continuing to progress the transformation of our business and the delivery of our strategy, despite the challenging overall demand conditions."

A presentation for investors and analysts will be held today starting at 8:15am UK time (9:15am CET). The

presentation will be webcast live and details can be found on: https://ir.rhimagnesita.com/. Alternatively the webcast can be accessed here.

For further enquiries, please contact:

Chris Bucknall, Head of Investor Relations

Tel [phone]

E‐mail:[e-mail]

Media:

Hudson Sandler

Mark Garraway, Emily Dillon, Nick Moore

Tel [phone]

E-mail:[e-mail]

About RHI Magnesita

RHI Magnesita is the leading global supplier of high-grade refractory products, systems and solutions which are critical for high-temperature processes exceeding 1,200°C in a wide range of industries, including steel, cement, non-ferrous metals and glass. With a vertically integrated value chain, from raw materials to refractory products and full performance-based solutions, RHI Magnesita serves customers around the world, with around 15,000 employees in 47 production sites, 7 recycling facilities and more than 70 sales offices. RHI Magnesita intends to build on its leadership in revenue, scale, product portfolio and diversified geographic presence to expand further in high growth markets.

The Group maintains a premium listing on the Official list of the London Stock Exchange (symbol: RHIM) and is a constituent of the FTSE 250 index, with a secondary listing on the Vienna Stock Exchange (Wiener Börse). For more information please visit: www.rhimagnesita.com

3

HEALTH & SAFETY

A core value of the Group is to maintain a safe working environment for its employees and contractors. During H1 2023 the lost time injury frequency ("LTIF"), excluding recently acquired businesses, increased slightly to 0.25 per 200,000 hours worked (H1 2022: 0.22), whilst the total recordable injury frequency ("TRIF") reduced to 0.58 per 200,000 hours worked (H1 2022: 0.63). RHI Magnesita aims to reduce all accidents to zero over the long term.

During the Period, the main focus areas for improvement were protocols for workplace inductions and safety training for new hires. Further initiatives related to safety-awareness on specific topics such as prevention of finger and hand injuries were rolled out in response to an increase in incidents of this nature in Q1.

FINANCIAL OVERVIEW

Reported revenue increased by 9% to €1,734 million (H1 2022: €1,594 million) as the contribution from M&A, price increases and benefits from strategic sales initiatives in India and in Cement and Lime offset 9% lower volumes across Steel and Industrial, excluding recycling and minerals sales. Revenue increased on a constant currency basis by 9% (H1 2022: €1,593 million). Total revenue contribution in the Period from M&A was €119 million.

Cost inflation began to ease during the Period but absolute costs were higher compared to H1 2022 largely due to M&A, with cost of goods sold increasing by 8% on a reported basis to €1,320 million (H1 2022: €1,221 million).

Adjusted EBITA increased by 7% on a reported basis to €200 million (H1 2022: €188 million) and reduced

by 1% on a constant currency basis (H1 2022: €202 million). Adjusted EBITA margin decreased by 20bps

to 11.6% (H1 2022: 11.8%). Higher pricing levels maintained from H2 2022, combined with a reducing rate

of cost inflation, resulted in a record refractory margin contribution of 9.8ppts (H1 2022: 8.4ppts). The

vertical integration margin was lower, as guided, at 1.8ppts (H1 2022: 3.4ppts) as higher energy costs increased the internal cost of raw material production, compared to global market prices which are linked to the marginal production costs of China based producers. Total Adjusted EBITDA contribution from M&A in the first half was €19 million (EBITA: €14 million) against original full year EBITDA guidance of €25-€30 million. Guidance is now increased to approximately €40 million of Adjusted EBITDA from M&A, including the expected contribution from DGSB and Seven Refractories in the second half of 2023.

Net debt decreased to €1,124 million at the end of the Period (31 December 2022: €1,163 million) and reported leverage was 2.2x net debt to Adjusted EBITDA, down from 2.3x at 31 December 2022 due to higher operating cash flow. Including a 12-month historic EBITDA contribution from businesses acquired during the period, pro forma leverage was 2.1x Net debt to Adjusted EBITDA.

M&A cash consideration, net debt consolidated on acquisition and working capital requirements of acquired businesses increased net debt by €256 million in H1 2023. Cash outflow on acquisitions was offset by strong operating cash flow in the base business and the proceeds of a Qualified Institutional Placement ("QIP") by RHI Magnesita India Ltd, raising approximately €100 million in April 2023. The QIP is to be followed by an equity investment of €22 million by the Group in RHI Magnesita India Ltd via a Preferential Issue which is expected to complete in Q3 2023.

Net Working capital, before consolidation of new M&A, decreased by €84 million to €834 million (31 December 2022: €892 million) as inventories and accounts receivables were successfully reduced, offset by decreased accounts payable due to lower raw material prices and purchases. Excluding M&A, the base

4

business recorded a working capital intensity of 25.6%. Including M&A, working capital stood at €940 million and working capital intensity was 26.0%.

Available liquidity was €1,360 million at the period end (31 December 2022: €1,121 million) including undrawn committed facilities of €600 million and cash and cash equivalents of €760 million. Adjusted operating cash flow was €228 million (H1 2022: €(84) million), resulting from higher profitability and reduced working capital requirements.

OUTLOOK

The outlook for the Group's key end markets and consequently customer volumes remains uncertain, with order books suggesting continued weakness into the second half. Pricing pressure from competitors is expected over the remainder of the year.

Supported by strong profitability in the first half of the year, the Board expects to deliver a full year Adjusted EBITA margin of between 10.5% and 11.5% and Adjusted EBITA including M&A of at least €360 million. Leverage, measured as a ratio of net debt to Adjusted EBITDA, is expected to remain above 2.0x as the Group further executes on its M&A pipeline.

CAPITAL ALLOCATION AND SHAREHOLDER RETURNS

The Board's capital allocation policy remains to support the long-term Group strategy, providing flexibility for both organic and inorganic investment opportunities and delivering attractive shareholder returns over the midterm. These opportunities will be considered against a framework of strategic fit, risk profile, rates of return, synergy potential and balance sheet strength.

The Group incurred €38 million of project capital expenditure in the first half (H1 2022: €36 million), which included investments in the Production Optimisation Plan and on recently acquired assets. Maintenance capital expenditure in the period was €25 million (H1 2022: €22 million). Total capital expenditure was therefore €63 million (H1 2022: €58 million), against unchanged full year 2023 guidance of €200 million, including M&A.

Consistent with the Company's dividend policy to pay an interim dividend equal to one third of the previous final dividend, the Board has declared an interim dividend of €0.55 per share representing €25.9 million in aggregate. The interim dividend will be paid on 22 September 2023 to shareholders on the register on 25 August 2023.

Shareholders should note that Rhône Capital reserves the right to reduce the consideration payable under its Partial Offer, including to shareholders who have already accepted the Partial Offer, by an amount equal to any such dividend payments.

M&A

During the Period, the Group completed two highly strategic acquisitions in India, including the €86 million acquisition of the refractory business of Hi-Tech in Jamshedpur and the Indian refractory business of DBRL, which has substantially improved the Group's regional positioning within the flow control and industrial segments.

Following completion the Group began the integration of these two acquisitions with its existing Indian footprint, including the relocation of some flow control and lance production to locations with a closer proximity to customer sites. The acquisitions in India have increased the Group's local market share, representing strategic progress against the Group's aim to grow in geographies where it was previously under-represented. The expanded plant network and additional low-cost production sites will increase

5