Elkem

Investor Presentation • Feb 8, 2024

@ Elkem

Fourth quarter results 2023

Agenda

Business update

By CEO Helge Aasen

Financial performance By CFO Morten Viga

Outlook

By CEO Helge Aasen

@ Elkem

Highlights

Fourth quarter concludes a challenging year, signs of recovery

• Elkem's EBITDA was NOK 632 million in the fourth quarter 2023
• = Silicones delivering positive EBITDA in challenging markets, as internal improvement programmes take effect
• · Silicon Products negatively impacted by lower contract prices, maintenance stop at Iceland, and fire at the Salten plant
• · Carbon Solutions with strong results despite lower demand, delivering the best full-year result ever
• Due to low earnings per share (EPS), the board has proposed to the annual general meeting not to pay dividends for 2023

Total operating income MNOK 8,436

EBITDA MNOK 632

EBITDA margin 7%

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Elkem celebrates anniversary as 120 years young company

• · Elkem celebrates its 120 years anniversary in 2024, having grown from a Norwegian industrial start-up into a position as one of the world's leading providers of advanced silicon-based materials
• Our focus is always on the future Elkem's more than 600 researchers are working to create solutions for the green transition, digitalisation and other global megatrends
• Elkem received two nominations in R&D World Magazine's R&D 100 2023 Awards: PURESIL™ for lower carbon footprint, and silicone elastomers as modifiable excipient for drug delivery devices
• In January 2024, Elkem announced a new specialised iron-silicon powder for 3D printing of components for electrical motors, with a first use-case for electric scooters

Environmental, Social & Governance

Strong ESG performance

Green leadership

• Elkem has been awarded A score from CDP on Forests and A- on Climate and Water Security for 2023
• In December 2023, an agreement was reached with reindeer district 7 (Rákkonjárga) for the expansion of Elkem's quartz mining in Tana
• Elkem has completed the pilot for carbon capture at the Rana plant. The pilot recorded high capture rates of CO2, up to 95%

Safety

Ambition: Zero injuries

Total injury rate (per million working hours)

Rated among the world's leading companies

Security Change

EcoVadis: Gold rating for 2023, in the 99th percentile

Sustainability targets

Reduction in CO2 product footprint by 2031

S&P Global

S&P Global CSA: Top 94th percentile

Net zero CO2 emissions by 2050

ESG100

Rated A+ for ESG reporting in 2023

Fire at the Salten plant

• A fire broke out at the Salten plant in Norway on 10 December 2023. The plant has three furnaces and a total capacity of 80 kt/p.a.
• The fire started in a building housing raw materials, including carbon materials
• The fire was under control and mostly extinguished within 24 hours. No people were injured
• Furnace #1 was restarted on 29 January 2024. Furnace #2 and #3 are still out – start-up dates yet to be confirmed
• Elkem has adequate insurance cover for property damage and business interruption

Silicon production capacity 80,000 t/p.a.

Operating status Furnace #1 restarted

Insurance cover Property and business interruption

Weak macro-economic sentiment, signs of recovery

• The macro-economic sentiment has been weak in 2023, characterised by high inflation, interest rate hikes, slow recovery in China, and geopolitical uncertainties. Markets also impacted by Chinese exporters discounting prices to get over slump in demand
• The weak sentiment has resulted in weak demand and negative sales price development in Elkem's main markets
• Market recovery expected in 2024
  • · Silicones prices in China up 14% from trough in August 2023
  • Silicon prices in EU up 25% from trough in September 2023
  • Interest rate reductions widely expected in 2024 as inflation comes down in EU and the US

@ Elkem

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EBITDA improvements – Target 2024 > BNOK 1.5

Capex reductions – Target 2024 > BNOK 2.0

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Well managed financing position

• Scope affirmed the BBB issuer rating of Elkem in December 2023 and changed the outlook from stable to negative
• Elkem has a good liquidity position as at 31 December 2023
  • · Available cash BNOK 6.4
  • Available undrawn credit lines BNOK 6.3
• Well managed debt profile with low upcoming maturities
• Financial covenant waiver process initiated
  • Elkem has two financial covenants in its loan agreements; Equity Ratio > 30%, and Interest Cover Ratio > 4.0x
  • Waiver process initiated with lenders due to risk that the Interest Cover Ratio could drop below threshold in 2024

ට Elkem

Growth rate of investment in real estate development in China in 2023

Europe and North America – Light vehicle production (million units)

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• DMC reference price China (KCNY/mt) ▪
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DMC reference prices are based on quotes incl. VAT and transportation. Quotes may not always reflect accurate sales prices.

CRU silicon 99 price EU (EUR/mt)

CRU ferrosilicon 75 price EU (EUR/mt)

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Crude steel production (million mt)

Elkem group

Challenging markets, but signs of recovery and Silicones back to positive EBITDA

Total operating income (MNOK)

Down 19% from 4Q-2022, and up 7% from the preceding quarter

Reduction from 4Q-2022 mainly explained by lower sales prices

4Q 2022 Silicones Si. Prod. Carbon Elm/Oth. 4Q 2023

Reduction from 4Q-2022 mainly explained by lower sales prices in Silicon Products

4Q 2022 Silicones Si. Prod. Carbon Elm/Oth. 4Q 2023

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Elkem Group

Overview financial ratios

• · EBITDA MNOK 632
  • = Segment Other included realised currency hedging losses of MNOK -85
• Other items MNOK 84
  • Mainly consisting of gains on power and currency derivatives MNOK 165, partly offset by currency loss on working capital items MNOK -33 and restructuring expenses MNOK -43
• Net finance income (expenses) MNOK -261
  • Consisting of net interest expenses MNOK -170, currency losses of MNOK -89, and other financial expenses of MNOK -2
• Tax MNOK -90
  • · Tax expenses of MNOK -90 despite negative profit before tax. Positive results in most countries more than offset by negative results in France and China where losses are not capitalised as deferred tax assets

Consolidated key figures

(NOK million, except where specified)	40 2023		40 2022 YTD 2023 YTD 2022		FY 2022
Total operating income	8,436	10,404	35,545	45,898	45,898
EBITDA	632	1,825	3,771	12,925	12,925
(1) EBIT	-111	1,267	1,365	10,898	10,898
Other items	84	215	516	2,151	2,151
Net finance income (expenses)	-261	-208	-668	-161	-161
Profit (loss) before income tax	-351	1,178	051	12,236	12,236
ax	-90	-254	-781	-2,594	-2,594
(2) Profit (loss) for the period	-461	894	12	9,561	9,561
Key ratios
EPS (NOK per share)	-0.73	1.41	0.11	15.09	15.09
Equity ratio (%)	48 %	55 %	48 %	55 %	55 %
Net interest bearing debt (NIBD) (3)	9,450	2,615	9,450	2,615	2,615
Leverage ratio	2.5	0.2	2.5	0.2	0.2
Reinvestments % of D&A	107 %	146 %	102 %	84 %	84 %
ROCE (annualised) (%)	-1 %	16 %	4%	39 %	39 %

(1) Operating profit before other items and hedge adjustments

(2) Owners of the parent's share of profit (loss)

(3) Excluding non-current restricted deposits and interest-bearing financial assets

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Total operating income

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Total operating income

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Total operating income

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Earnings per share (EPS)

Equity ratio

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Cash flow from operations

Delivering good results over the business cycle

• Lower earnings in 2023 due to challenging market conditions and weak macro-economic sentiment
• Elkem is well positioned to benefit from an economic recovery due to good cost positions and robust financials
• Elkem delivering on its financial targets over the cycle
  • √ Operating income CAGR 13% vs target of > 5% per year
  • ✓ EBITDA margin 18% vs target of 15 20%
  • ✓ Leverage ratio 1.6x vs target of 1.0 2.0x

Operating income

Figures in NOK billion unless otherwise stated

EBITDA

EBITDA margin

Cash flow from operations

Leverage ratio

@Elkem

Outlook for the first quarter 2024

• Markets still challenging going into the first quarter. Elkem focusing on extraordinary EBITDA improvements to counter weak demand
• · Silicones markets expected to remain challenging in the first quarter and impacted by Chinese New Year. Demand in China expected to improve, but overcapacity still an issue, keeping sales prices under pressure. Specialties could improve as destocking comes to an end
• Silicon Products will see some effects of rising market prices for silicon and ferrosilicon, but this is partly offset by lower prices on specialties. Limited negative EBITDA impact from delayed start-up in Iceland and the stop at Salten
• Continued slow market conditions for Carbon Solutions, but Elkem benefitting from strong market positions

Important notice

Any statement, estimate or projection included in this presentation (or upon which any of the conclusions contained herein are based) with respect to anticipated future performance (including, without limitation, any statement, estimate or projection with respect to the condition (financial or otherwise), prospects, business strategy, plans or objectives of the company and/or any of its affiliates) may prove not to be correct.

No representation or warranty is given as to the completeness or accuracy of any forward-looking statement contained in this presentation or the accuracy of any of the underlying assumptions. Nothing contained herein shall constitute any representation or warranty as to the future performance of the company, any financial instrument, credit, currency rate or other market or economic measure.

Information about past performance given in this presentation should not be relied upon as, and is not, an indication of future performance.

2 Elkem

Appendix

㊣ Elkem

We are Elkem

Advanced silicon-based materials shaping a better & more sustainable future

Silicones

@ Elkem

Silicon Products

Carbon Solutions

B

Elkem celebrating its 120 years anniversary

• Elkem celebrates its 120 years anniversary in 2024, having grown from a Norwegian industrial start-up into a position as one of the world's leading providers of advanced silicon-based materials
• Elkem started as a Norwegian company founded in 1904 by Sam Eyde, representing strong industrial traditions and continuous improvement
• The chemical business in France was integrated in 2015 adding a strong culture for specialisation, innovation and R&D
• Our presence in China was significantly expanded in 2018, adding to the dynamic and agile business perspective, and positioning for the Asian market

e Elkem

Sustainable business model delivering good results

Elkem operates through three divisions: All with global scale, leadership positions and global footprint

Silicones

Fully integrated silicones manufacturer with focus on specialities

Silicon Products

Global producer and provider of silicon, ferrosilicon and specialties

49%

of operating

income

Carbon Solutions

Leading producer of electrode paste and specialty products

End markets

• Construction
• Automotive
• Chemical formulators
• Personal care
• Healthcare
• Paper & film release
• Silicone rubber
• Textile

14 main plants

• = Construction/industrial equipment
• Electronics
• Specialty steel
• Solar & wind turbines
• Refractories
• Oil & gas

10 main plants

11% of operating income

End markets

• = Ferroalloys
• Silicon
• Aluminium
• Iron foundries

ම Elkem

Environmental, Social & Governance Elkem is committed to reduce emissions and contribute in line with Paris agreement aim of well below 2°C warming

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We aim to contribute to a better climate through three key levers:

Reducing our emissions Achieving fully climate neutral production throughout our value chain

Supplying to the transition Providing the advanced material solutions required to enable the green transition

Enabling circular economies Enabling more circular activities in our operations, products and markets

• · By 2031: Reducing absolute emissions* by 28% from 2020-2031 while growing the business delivering 39% improvement in product footprint**
• · By 2050: Achieving fully carbon neutral production (zero fossil emissions) globally
• · Grow supplies of advanced materials to green markets such as better buildings, electric vehicles and renewable energy
• · Build new business in green markets such as battery materials, biomass and energy recovery
• · Increase recycling in our own operations
• · Increase recycling with our customers
• · Develop the eco-design of innovative products

Elkem Climate Roadmap : Elkem's actions: Reducing our emissions

Elkem will reduce fossil CO2 emissions in line with the Paris agreement: We will contribute to limiting long-term temperature according to Paris agreement

By 2031:

• Reducing absolute emissions* by 28% from 2020-2031
• = Delivering 39% improvement in product footprint**

By 2050:

· Achieving fully carbon neutral production (zero fossil emissions) globally

Our roadmap to climate neutral products

Changing to biomass as reduction material

Increasing share of bio-based materials from wood waste as reduction material in our smelters

Low-carbon supply chain

Actively pursue long-term sourcing of renewable-based silicon metal as well as emission-free logistics

Shifting to renewable power also in China

Future decarbonisation of China's power mix will support Elkem's low carbon transition

Exploring potential of more CCS at smelters

Exploring both Carbon Capture & Utilisation (CCU) and Carbon Capture & Storage (CCS) at our smelters

Elkem

(Illustrative)

Energy cost positions

Well covered by long-term power contracts

• Elkem is well-positioned with long-term power contracts in Norway with more than 80% of the electricity supply secured at competitive rates until 2026. After 2026, the hedging ratio is gradually declining
• · Elkem is continuously evaluating the market conditions for new longterm contracts
• In 2023, Elkem secured competitive access to power by entering into new contracts for up to 11 years, totaling 520 GWh p.a. The contracts are covering the plants in Bremanger, Rana and Salten in price area N03 and N04

Location of Elkem's plants in price areas

@ Elkem

Rising middle class Industry players - examples Digitalisation Industry players - examples Ageing population Industry players – examples Mobility Industry players – examples Decarbonisation Industry players – examples Total production capacity Product properties Market positions → → → → → →

Serving attractive end-markets with advanced technologies

Total production capacity Properties Silicones (50%) Aluminium (30%) Polysilicon (10%) Specialty niches (10%) Consumer goods Construction Renewable energy Electronics Automotive 205.000* mt in Norway and China → 175.000* mt silicon grades → 20.000 mt Silgrain® → 10.000 mt Silgrain® specialties → Raw material in silicones and polysilicon optimising selectivity → Alloy strengthening aluminium → Semi conductor insulating electronics → Impurity management KSF Raw materials Products Industry players** End markets Market dynamics → 16% market share ex China (second largest merchant producer) → Commodity with index linked prices

Quartz

Coal and biocarbon

Electricity

* Of which 50.000 mt at Yongdeng plant (internal supplier to Elkem Xinghuo) reported in Elkem Silicones ** Split of silicon revenues by segment – companies named are examples and not necessarily customers

America and India → Negotiated quarterly prices

Currency sensitivity

• · The result and cash flow are exposed to currency fluctuations. The main currencies are EUR, USD and CNY
  • · EUR exposure approx. MEUR 550
  • USD exposure approx. MUSD 100
  • · CNY exposure approx. MCNY 200
• · Current cash flow hedging programme
  • 90% hedging of net cash flows occurring within 0-3 months
  • 45% hedging of forecasted net cash flows within 4-12 months
• Before hedging activities, a 10% strengthening or weakening of NOK versus all other currencies would have an EBITDA effect of approx. MNOK 800 over the coming 12 months. CNY is not hedged

Currency development

• · As of 31 December 2023, the NOK closed almost unchanged against the EUR, 4% stronger against USD, and 2% stronger against CNY compared to 30 September 2023
• · In 4Q-2023, the NOK was on average 12% weaker against EUR, 6% weaker against USD, and 5% weaker against CNY compared to 4Q-2022

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FURUSL

CNYNOK&

Other financial sensitivities

POWER

• Electric power is a key input factor in Elkem's production. The normal consumption is around 6.5 TWh of which approx. 3.6 TWh is in Norway. Near term exposure to spot power prices is limited
  • Norway, hedging programme mainly consisting of long-term contracts covering around 80% of full capacity consumption until 2026. After 2026, Elkem has a high but gradually declining hedging ratio in line with its long-term hedging strategy
  • Outside Norway, power prices are mostly based on long term contracts or regulated power tariffs

SALES PRICES

• Changes in sales prices could significantly affect operating income and EBITDA
  • 10% price change on silicon metal is expected to affect result by approx. MNOK 100 per year(*)
  • 10% price change on ferrosilicon is expected to affect result by approx. MNOK400 per year(*)

^(*) Sensitivities are on group level and based on annual sales volumes. Sales prices are based on LTM CRU prices.

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