Befesa S.A.

Investor Presentation • Aug 27, 2019

Befesa Presentation Commerzbank Sector Conference 2019 Frankfurt, 27 - 29 August 2019

BEFESA

BEFESA 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 statements reflect the current views of Befesa and its affiliates or of such third parties with respect to future events and are subject to risks, uncertainties and assumptions.

Many factors could cause the actual results, performance or achievements of Befesa and its affiliates to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements, including, among others: changes in general economic, political, governmental and business conditions globally and in the countries in which Befesa and its affiliates do business; changes in interest rates; changes in inflation rates; changes in prices; changes to national and international laws and policies that support industrial waste recycling; legal challenges to regulations, subsidies and incentives that support industrial waste recycling; extensive governmental regulation in a number of different jurisdictions, including stringent environmental regulation; management of exposure to credit, interest rate, exchange rate and commodity price risks; acquisitions or investments in joint ventures with third parties; inability to obtain new sites and expand existing ones; failure to maintain safe work environments; effects of catastrophes, natural disasters, adverse weather conditions, unexpected geological or other physical conditions, or criminal or terrorist acts at one or more of our plants; insufficient insurance coverage and increases in insurance cost; loss of senior management and key personnel; unauthorized use of Befesa's intellectual property and claims of infringement by Befesa of others' intellectual property; Befesa's ability to generate cash to service its indebtedness changes in business strategy and various other factors. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated, expected or targeted.

Befesa and its affiliates do not assume any guarantee that the assumptions underlying forward-looking statements are free of errors nor do they accept any responsibility for the future accuracy of the opinions expressed herein or the actual occurrence of the forecasted developments. No representation (express or implied) is made as to, and no reliance should be placed on, any information, including projections, estimates, targets and opinions, contained herein, and no liability whatsoever is accepted as to any errors, omissions or misstatements contained herein or otherwise resulting, directly or indirectly, from the use of this document.

This presentation is intended for information only and should not be treated as investment advice. It is not intended as an offer for sale, or as a solicitation of an offer to purchase or subscribe to, any securities in any jurisdiction. Neither this presentation nor anything contained therein shall form the basis of, or be relied upon in connection with, any commitment or contract whatsoever. This presentation may not, at any time, be reproduced, distributed or published (in whole or in part) without prior written consent of Befesa.

Second quarter and first half 2019 figures contained in this presentation have not been audited or reviewed by external auditors.

This presentation includes Alternative Performance Measures (APMs), including EBITDA, EBITDA margin, EBIT, EBIT margin, net debt and capital expenditures which are not measures of liquidity or financial performance under International Financial Reporting Standards (IFRS). EBITDA is defined as operating profit for the period (i.e. EBIT) before the impact of amortisation, depreciation, impairment and provisions. EBITDA margin is defined as EBITDA divided by revenue. EBIT is defined as Operating profit for the year. The Company uses EBIT to monitor its financial return after both operating expenses and a charge representing the cost of usage of both its property, plant and equipment and definite-life intangible assets. EBIT margin is defined as EBIT as a percentage of revenue. These non-IFRS measures should not be considered in isolation or as an alternative to results from operating activities, cash flow from operating, investing or financing activities, or other financial measures of Befesa's results of operations or liquidity derived in accordance with IFRS. Befesa believes that the APMs included in this report are useful measures of its performance and liquidity. Other companies, including those in the industry in which Befesa operates, may calculate similarly titled financial measures differently than Befesa does. Because all companies do not calculate these financial measures in the same manner, Befesa's presentation of such financial measures may not be comparable to other similarly titled measures of other companies. These APMs are not audited.

BEFESA Today's Presenters

Since 2008

Rafael Pérez

Director of Investor Relations & Strategy

▪ Director of Investor Relations and Strategy of Befesa since 2008

BEFESA Highlights

H1 at €80m EBITDA; down -10%/€-9 YoY as anticipated per guidance & sensitivities:

• - Lower volume due to Turkey upgrade & Plant maintenance schedule H1>H2
• - Unfavourable market prices: \$245/t TC; €2,420 Avg. LME Zinc; €1,460 avg. Alu Alloy
• + Partially offset by higher hedges, recovering Stainless and Alu furnace upgrades

Expecting stronger H2 vs. H1: Turkey back with higher capacity August onwards; Less plant maintenance shutdowns scheduled in H2; Continuing Stainless recovery; Monitoring volatile zinc spot price levels ~€2,200/t vs. assumed ~€2,520/t

H1 volumes in core segments as anticipated: Steel Dust throughput 318kt (-12% YoY) due to Turkey upgrade & maintenance schedule; Salt Slags ~flat (-4% YoY)

H1 profitability continues at solid 23% EBITDA margin, stable YoY; Cash up €20 to €170m in H1; Op Cash Flow LTM up at €116; Leverage stable x2.2

Growth projects on track: Completed Turkish plant expansion in August; Korea washing plant scheduled for ~Nov/Dec -&- Final 2nd Alu furnace upgrade during Q3; Driving progress in China in parallel at both sites - Jiangsu and Henan provinces

Refinancing completed 9 July: Long 7-yr maturity (2026); Attractive interest rates; Increased baskets to accommodate growth roadmap / China

Extended hedges by 3 months to Oct 2021; Hedge prices continue ~€2,200 in ´21

Free float at 100% after Triton Exit (June) … Distributed dividend €1.32/share 03 July

Consolidated Net Debt / Leverage / Cash Flow / Capital Structure

Successfully closed long-term capital structure with 7-year tenor up to 2026 at attractive interest rates; €170 cash and leverage ~stable at x2.2 in Q2'19

Capital Structure

• Successfully closed (09 July) long term capital structure up to 2026 with 7 year tenor on cov-lite term loan B; No impact on leverage
• ~Doubled loan baskets to accommodate China growth
• Secured attractive interest rates: 9 months at E+250bps; Thereafter reduction opportunity alongside leverage ratchets down to e.g. E+175bps at leverage lower than x1.75
• Moody's and S&P corporate ratings unchanged at Ba2 / BB; stable

H1'19 EBITDA to total cash flow – main drivers

Total Cash Flow	+€20	€170m cash & x2.2 leverage 
CapEx & other investing activities	€-29	Combined Maintenance & Growth CapEx; Focus on Turkey upgrade, Korea washing plant, China expansion; Tilting furnaces
Interest & other	€-9
Taxes	€-13
WC change & other	€-10	Mainly trade payables
EBITDA	€80
(€m)

Operating cash flow(2)

(1) From 1 January 2019, implemented IFRS 16 amendment affecting accounting for renting and leasing results in €14 million higher debt or ~0.1 higher leverage compared to year-end 2018 (2) Operating cash flow per audited consolidated statement of cash flows; after WC, taxes & interests; pre capex & dividend; Last Twelve Month (LTM) Q2'19 operating cash flow is unaudited

Hedging up to Oct. ´21 improves earnings & cash flows visibility for next 2+ yrs

Zinc hedges & blended average prices

• Hedges in place until and including October 2021
• Continuous monitoring of the market to close further hedges
• Majority of hedges Euro based
• Befesa providing no collateral

* Assumes reference TC of \$245/t with escalators between \$2,700 to \$3,000/t LME zinc – mid-point \$2,850/t – similar to April price level. \$2,850/t at FX USD/EUR 1.13 equal to €2,522/t.

Accelerating growth through well defined business plan; Hedging in place and executing top 5 growth projects + China

1 Hedging

• 2019: 92.4kt at ~€2,310/t
• 2020: 92.4kt at ~€2,250/t
• 9M 2021: 56.7kt at ~€2,200/t
• 2 Organic growth

2019/20 focus – top 5 projects:

• Steel Dust:
  • ✓ Completed Turkey 65110kt in Aug´19; On Time and Budget
  • Korea washing plant; Completion Q4´19
• Aluminium Salt Slags:
  • 2x tilting furnaces (✓Bilbao, Barcelona in process H2´19)
  • Expand Hannover (130kt 170kt)

3 China

• Developing two EAF dust recycling plants in two provinces:

  • 1 Jiangsu: broke ground Apr´19; Started construction; Ramp-up ~H2´20

  • 2 Henan: agreement signed; breaking ground in Q4´19; Ramp-up ~H1´21

Note: Chart is illustrative and size of respective arrows in the chart is not indicative to the underlying growth potential

Turkey upgrade completed on time and budget …

Including "Hot Commissioning" & Ramp Up in August overall in 7 months

New Ki Iskenderun, Turkey – Expanded 110k Tonnes Steel Dust Recycling Capacity

Comments

• ✓ Electric Arc Furnace (EAF) dust recycling plant "brownfield" capacity expansion from 65kt to 110kt
• ✓ On time and budget; Overall in 7 months Started shutdown end of January and back in operations in August
• ✓ "Cold" commissioning in July; "Hot" commissioning and Ramp Up in August

To Date on Schedule … Targeting Ramp Up in Nov/Dec 2019

2

New Ki Pohang, South Korea – Status of Construction of Zinc Oxide Washing Plant

Comments

• ➢ "Greenfield" investment in first Zinc Oxide washing plant of Befesa at Asia
• ➢ To date on time and budget
• ➢ Commissioning and Ramp Up scheduled for 4Q´19 – Nov /Dec

BEFESA ³ China – Plant #1: Jiangsu – Construction in Process

Changzhou plant construction in process after breaking ground in April 2019; Ramp-up scheduled during H2 2020

Key facts of the plant

• 1 st Electric Arc Furnace (EAF) dust recycling plant in China with capacity to recycle 110kt / year
• Total investment: ~€45m

Status

• ✓ Ground breaking ceremony on 10 April 2019
• ➢ Construction in process
• ➢ Scheduling to ramp up operations in H2 2020

Signed development agreement on 8 April 2019; Ground breaking scheduled for Q4 2019

Henan is located in central China, with a population of 95 million people and a GDP of \$726 billion. Over the past two decades, Henan has developed rapidly, and is one of the most important producers of EAF steel in China.

Plant location

Changge Dazhou Industrial Cluster, XuChang City. Potential to also service Hu Bei province (on the southern border of Henan province).

Key facts of the plant

• 2 nd EAF dust recycling plant in the country
• Capacity to recycle 110kt EAF dust / year
• Total investment: ~€45m

Status

• ✓ Signed development contract on 8 April 2019
• ➢ Ground breaking scheduled for Q4´19
• ➢ Targeting to ramp up operations in H1 2021

BEFESA Consolidated Key Financials

Q2 EBITDA at €37m (€-7m YoY): Lower volume due to Turkey upgrade & plant maintenance schedule; Unfavourable TC & market prices; Partially offset by higher hedges, recovering Stainless and Alu furnace upgrades

Highlights

• • Lower volumes in Turkey due to scheduled six-month downtime to upgrade capacity from 65kt to 110kt
  • Rigorous plant maintenance schedule
  • Unfavourable zinc TC for 2019 ~\$245/t vs. \$147/t '18
  • Lower market prices: LME zinc prices down 6% (Q2'19: €2,459/t; Q2'18: €2,611/t); aluminium alloys market prices down 24% (Q2'19: €1,390/t; Q2'18: €1,826/t)
  • Revenue decrease partially offset by: (i) Improved hedging prices (Q2'19: €2,315/t; Q2'18: €2,040/t) improved blended zinc prices (Q2'19: €2,277/t; Q2'18: €2,214/t) (ii) Recovered YoY performance in Stainless

▪ Q2 EBITDA at €37.1m (-16% YoY) / 22% EBITDA margin; following the above drivers:

• Turkey (~€-5) shutdown, unfavourable TC (~€-5) and lower metal market prices (Zinc ~€-2, Alu Alloy ~€-2);

• Partially offset by better zinc hedges (~€+5.5), recovering Stainless operations (~€+0.5) -as well as-

• 2nd Alu furnaces ´18 upgrades (~€+1) delivering results

Q2 EBITDA at €27.7m, (€-6.0m YoY); driven by lower volume in Turkey, scheduled maintenance & unfavourable TC; partially offset by improved hedges & Stainless

Revenue

Highlights

• Q2 revenue down 2% driven by 12% lower throughput YoY - Turkey & plant maintenance; also higher TC referenced at ~\$245/t in ´19 vs. ~\$147/t in ´18; Partially offset with higher blended zinc prices & Stainless
• Q2 EBITDA down (€-6) mainly driven by: - Turkey (~€-5) shutdown, unfavourable TC (~€-5) and lower zinc market prices (~€-2); partially offset by
  • • Zinc hedges (~€+5.5) & recovering Stainless (~€+0.5)

EAF dust throughput & capacity utilisation

▪ Throughput impacted as expected by downtime in Turkey to expand capacity from 65kt to 110kt since January ´19 as well as scheduled plant maintenance shutdowns

Prices (€ per tonne)	Q2 2018	Q2 2019	% Var.	H1 2018	H1 2019	% Var.
Befesa blended (*) average zinc price	2,214	2,277	+3%	2,240	2,326	+4%
LME average price	2,611	2,459	-6%	2,698	2,420	-10%

(*) Blended rate between hedged prices and average spot prices, weighted by the respective hedged and non-hedged volumes, reflecting the effective price to Befesa

H1 EBITDA at €18.7m (~flat YoY) mainly driven by furnace upgrades in 2018 showing results (2nd Aluminium) ~offset by lower aluminium alloy prices

Highlights

• 2 nd Aluminium: Q2 EBITDA up €1m driven by upgraded furnaces delivering (~€+1)
• Salt Slags & Spent Pot Linings (SPL): Q2 EBITDA down €-2m YoY mainly due to -24% decrease in aluminium alloy market prices (€1,390/t vs. €1,826/t)

(*) Aluminium scrap and foundry ingots aluminium pressure diecasting ingot DIN226/A380 European Metal Bulletin free market duty paid delivered works

Salt Slags subsegment

Secondary Aluminium subsegment

BEFESA Summary

Volumes and growth projects as expected … Market prices volatile; Impacting earnings per sensitivity guidance

H1 volumes ~stable in both core businesses normalizing for Turkey plant upgrade; Expecting higher volumes in H2 due to Turkey back in operations in August and fewer plant maintenance shutdowns in H2

Zinc remaining EBITDA exposure after hedges is ~€-4 full year or €-2m for half year for every €-100/t LME variance vs. ~€2,520/t initial guidance assumption

Alu Alloy EBITDA exposure is ~€-2 full year or €-1m for half year for every €-100/t FMB variance vs. ~€1,650/t initial guidance assumption

Continued solid operating cash flow Q2 LTM at €116m; Cash at €170m … Distributed dividend of €1.32/share 3 July -&- Organically funding growth projects

Growth projects on track: Completed Turkey capacity increase on time & budget; Completing final Aluminium furnace upgrade mainly Q3; Finalizing Korea washing plant prior year-end - & - expanding in China

Successfully closed (09 July) long-term capital structure with 7-year tenor up to 2026 at attractive interest rates; Increased loan baskets to accommodate China growth

BEFESA Befesa at a Glance

Befesa a market leader in Europe & Asia in providing mission critical hazardous waste recycling services to the steel and aluminium industry

+90% EBITDA generated from two core >30% EBITDA margin operations with low capital intensity

Source: Company information, International Consulting Firm based on i.a. World Steel Association's Steel Statistical Yearbooks, WBMS, industry research, expert Interviews.

(1) Excluding internal sales; sales split is calculated on revenues including internal revenues. (2) Including stainless steel.

(3) Including recycling of Spent Pot Linings (SPL) which is a hazardous waste generated in primary aluminium production. (4) Excluding China.

BEFESA Befesa at a Glance

Befesa has grown successfully through organic initiatives and acquisitions

BEFESA Investment Highlights

Each Befesa plant usually collects waste from at least 10-15 client

Befesa is the market leader in steel dust and salt slags recycling services with a competitive advantage due to its close proximity to key clients

Established market leader Proximity to clients provides strong competitive advantage

Steel Dust Recycling Services

Source: Company information. (1) Excluding China.

Befesa offers a crucial service taking care of highly regulated hazardous waste in the value chain of secondary steel and aluminium producers

• Consequences of non-compliance
• Major European steel producer struggles with large plant (producing 8% of European steel) due to breaching environmental regulations (contamination of environment)
• Court ordered to partly shut down the plant
• Owner prompted to invest \$3.8bn to bring the plant back to required standards
• In 2002 the owners of a metal foundry in Italy faced prison time for illegal transport and landfilling of hazardous waste
• In 2004 a big aluminium refinery in Italy abandoned 450kt of hazardous waste in the open air over half an hectare
• More than 10 years later the local administration is still collecting funds to proceed to the removal and cleaning of the area
• In 2011 a big producer of aluminium alloys in Spain was involved in the transport without authorisation and illegal landfilling of 1.5kt of salt slags on a vacant lot
• Befesa was ultimately contracted to treat the waste properly
• Befesa collects and recycles hazardous waste from steel producers and aluminium recyclers
• Recycling is mandatory for Befesa's clients due to environmental regulations
• Befesa takes off and effectively takes care of environmental liability for their clients
• Without timely and regulatory compliant offtake of hazardous waste clients face risk of complete shut-down of production as well as severe penalty payments
• Befesa therefore offers a critical element of its clients value chain

5 Highly Resilient Business

Continue profitable growth trend … strong operational cash flow funds growth initiatives

(1) Total revenue excludes internal revenues and are comparable figures after amendment IFRS 15 affecting the revenue recognition of non-operating sales in the 2nd Aluminium subsegment; These non-operating sales have limited margin contribution; Reported revenues amounted to €611.7m in fiscal year 2016 and €724.8m in fiscal year 2017

(2) Total EBITDA and EBIT figures of 2016 and 2017 are adjusted for one-off items; Reported EBITDA amounted to €128.8m in 2016 and €153.0m in 2017;

Reported EBIT amounted to €84.3m in 2016 and €122.4m in 2017; EBITDA and EBIT margins as a % of comparable revenue

(3) Operating cash flow per audited consolidated statement of cash flows; after WC, taxes & interest; pre capex & pre dividend

BEFESA Mid-Term Growth Roadmap

Accelerating growth through well defined business plan; Hedging in place and executing top 5 growth projects + China

1 Hedging

6

• 2019: 92.4kt at ~€2,310/t
• 2020: 92.4kt at ~€2,250/t
• 9M 2021: 56.7kt at ~€2,200/t

2 Organic growth

2019/20 focus – top 5 projects:

• Steel Dust:
  • ✓ Completed Turkey 65110kt in Aug´19; On Time and Budget
  • Korea washing plant; Completion Q4´19
• Aluminium Salt Slags:
  • 2x tilting furnaces (✓Bilbao, Barcelona in process H2´19)
  • Expand Hannover (130kt 170kt)

3 China

• Developing two EAF dust recycling plants in two provinces:

  • 1 Jiangsu: broke ground Apr´19; Started construction; Ramp-up ~H2´20

  • 2 Henan: agreement signed; breaking ground in Q4´19; Ramp-up ~H1´21

Senior management team delivering results through long standing industry expertise, entrepreneurial spirit and focus on operational excellence as well as governance and compliance processes

Wolf Lehmann

CFO; including responsibilities for Operational Excellence and IT

CEO since 2000

Has run Befesa for >15 Years Became President of Abengoa's Environmental Services Division in 1994

Asier Zarraonandia Vice President Steel Dust Recycling Services

Javier Molina

CEO

>15 yrs with Befesa >25 yrs with Befesa

Has run the Steel Dust Recycling Services Business for >10 years

CFO since 2014

20+ years in finance and operational leadership roles 50/50 General Electric / Private Equity

Federico Barredo Vice President Aluminium Salt Slags Recycling Services

Has run the Aluminium Salt Slags Recycling Service Business for >15 years

Key achievements / track record

Extensive experience in steel and aluminium recycling business

Strong performance results through focus on operational excellence

Building strong business foundation of ESG, compliance and health & safety processes

Successful international expansion

Track record of successful acquisitions and turnarounds (BUS, Agor, Alcasa, Hankook, Silvermet etc.)

Experience in developing greenfield projects (South Korea, Gravelines, Bernburg)

BEFESA Investor Agenda

Note: Befesa's financial reports and statements are published at 7:30 am CEST

Befesa cannot rule out changes of dates and recommends checking them in the Investor Relations / Financial Calendar section of our website www.befesa.com