Befesa S.A. — Investor Presentation 2019

Mar 28, 2019

Befesa Presentation MainFirst Corporate Conference, Copenhagen, 28 March 2019

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 our intellectual property and claims of infringement by us of others intellectual property; our ability to generate cash to service our 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.

Full year figures contained in this presentation have been audited by external auditors.

This presentation includes Alternative Performance Measures (APMs), including EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, EBIT, Adjusted EBIT, Adjusted EBIT margin, net debt, leverage and capital expenditures which are not measures of liquidity or financial performance under International Financial Reporting Standards (IFRS). 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 our results of operations or liquidity derived in accordance with IFRS. We include APMs in this presentation because we believe that they are useful measures of our performance and liquidity. Other companies, including those in our industry, may calculate similarly titled financial measures differently than we do. Because all companies do not calculate these financial measures in the same manner, our presentation of such financial measures may not be comparable to other similarly titled measures of other companies. These APMs are not audited. All amounts are stated in million euros (€ million) unless otherwise indicated.

BEFESA Today's Presenters

Since 2008

Rafael Pérez

Director of Investor Relations & Strategy

▪ Director of Investor Relations and Strategy of Befesa since 2008

BEFESA 2018 Key Highlights

Record volumes in both core segments: Steel dust throughput at 718kt (+8.6% YoY); Salt slags & SPL at 517kt (+1.4% YoY)

Delivered earnings at upper end of latest guidance range: EBITDA +2.1% YoY to €176.0m; EBIT +2.1% YoY to €147.0m

Strongly improved net profit to €90.2m, up €40.9m or 83.1% YoY; Targeting 50% dividend distribution equal to €1.32 per share

Cash generation: Up €33m YoY to €151m cash at YE 2018; Leverage reduced to x2.1 vs. x2.4 YE 2017 … Triggering next interest reduction of 25bps to E+225bps

Befesa's rating upgraded by Moody's (from Ba3 to Ba2, outlook stable) and S&P (from BB- to BB, outlook stable)

Execution of organic growth projects on track; China: Developing 1st steel dust recycling plant; Operations start expected for H2'20

Consolidated Net Debt / Leverage / Cash Flow / Ratings

Leverage further reduced to x2.1 at YE'18 (x2.4 at YE'17) triggering additional 25 bps interest rate reduction to E +225 bps; Cash up €33m YoY to €151m

Credit ratings for Befesa S.A.

Oct 2017 (Pre-IPO)		Dec 2017	Dec 2018
Moody's	B2	Ba3 (Outlook positive)	Ba2 (Outlook stable)
S&P	B	BB- (Outlook stable)	BB (Outlook stable)

2018 EBITDA to total cash flow – main drivers

Total Cash Flow	€33	 Record €151 cash & x2.1 leverage
Dividends	€-29	Turkey plant upgrade (65kt  110kt) Paid in May 2018
CapEx & other investing activities	€-40	Regular annual maintenance spend; Growth: Alu furnace upgrades Spain &
Interest & other(2)	€-15	Reduced ~60% YoY; Improving further
Taxes	€-25	Nominal 25% vs. Cash tax rate <20%
WC change & other	€-33	€15 less factoring & confirming YoY; €9 less Accounts Payables (hedging accrual from €10 to €1); €6 IPO/Dual track related 1-time costs accrued at YE'17; paid out at 2018
EBITDA	€176	+€3.6 / +2.1% YoY

(1) Gross debt at YE'18 includes approx. €7m under current financial indebtedness (mainly accrued bi-annual interests of term loan B paid in Jan'19)

(2) At YE'18, €13.8m of interests (approximately €7m accrued for bi-annual interest payment in Jan'19) and €0.9m of debt repayment & FX rate cash effects

(3) Operating cash flow per audited consolidated statement of cash flows; after WC, taxes & interest; pre capex & dividend; 2018 figures are preliminary & unaudited

Befesa's share price has developed positively since the IPO outperforming DAX / SDAX indices; Free-float increased to 68.1%

Performance of Befesa Share vs. Market(1)

Key Highlights

• Befesa share developed positively, closing 2018 at €37.50, up by 34% (vs. the issue price) backed by strong operational performance
• Befesa shares outperformed the benchmark stock market indices DAX as well as SDAX since IPO
• Strong broker consensus with 6 brokers giving a buy recommendation; 1 neutral(2)
• In 2019, Befesa targets to distribute dividends at 50% of net reported profit for FY 2018 of €90.2m … dividend distribution would amount to €45.1m or €1.32 / share at 2018 closing price of €37.50 / share, would represent a dividend yield of 3.5%

(1) Closing prices in Base 100; (2) 7 broker analysts covering Befesa: Berenberg, Citi, Commerzbank, Goldman Sachs, JP Morgan, Santander, Stifel; (3) Post sale of 3 million shares by Triton in January 2019

Hedging up to July ´21 improves earnings & cash flows visibility for next 3 years

Zinc hedges & blended average prices – 2018 / 2019

• Hedges in place until & incl. July 2021
• Majority of hedges Euro based
• Befesa providing no collateral

Source: London Metal Exchange (LME) zinc daily cash settlement prices; Company information

Expecting to continue record high utilization levels in both core segments; Steel Dust >90% and Salt Slags >95%. Volume overall stable YoY

Targeting continued EBITDA growth; Primarily driven by improved hedged zinc prices YoY, limited by higher treatment charges in the zinc industry expected in 2019

Funding top 5 growth projects and 1st plant in China with ~€75m expansion CapEx in 2019; Maintenance / Productivity / IT / Other CapEx ~ similar to 2018

Maintaining dividend policy of distributing 40 to 50% of net profit

Planning for stable leverage at approx. current levels

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 sub-segment; 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) EBIT(DA) 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; 2018 figures are preliminary and unaudited

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

growth

China

2018 Hedging Organic

Signed agreement with Jiangsu Changzhou Economic Development Zone and purchasing land use right; Developing 1st steel dust recycling plant …

• ✓ Chinese government continues to strengthen environmental regulations
• ✓ Steel dust has been classified as hazardous waste
• ➢ Steel production from Electric Arc Furnaces growing and estimated to reach ~200 million tons by 2030

… Befesa investing in proven state-of-the-art 110,000 tons facility; Expecting to complete ramp up of operations in H2 2020

EBITDA +2%, in line with latest guidance, to €176m EBITDA; Net profit up 83% to €90m YoY … Record volumes in both core businesses

Highlights

• 2018 revenue up 8% YoY on a comparable basis to €720.1m primarily due to:
• Record volumes in core businesses: EAFD throughput at 718kt (+8.6%); Salt slags & SPL at 517kt (+1.4%)

• Flat blended zinc prices: €2,168/t ´18 vs €2,160 ´17 (+0.4%)

• Revenue increase partially offset by: (i) lower volumes in 2nd Aluminium sub-segment (-8% YoY); due to downtimes in connection with furnace upgrades (Bilbao & Barcelona), which will contribute to future earnings growth; (ii) lower aluminium alloys average market prices: from €1,766/t to €1,715/t (-3%)

• Earnings in line with latest guidance and at new record levels: EBITDA at €176.0m (+2.1%) / 24% EBITDA margin; EBIT at €147.0m (+2.1%) / 20% EBIT margin; Note: Stainless €-4m YoY from downtimes to upgrade operations to latest technical requirements.

• Strong and significant improved net profit of €90.2m (+€40.9m / +83.1% YoY); corresponding improved EPS; Targeting 50% dividend distribution equal to €1.32 / share

2018 EBITDA growth +2% YoY driven by record throughput volumes, partially offset by Stainless

Highlights

• FY / Q4 revenue up 15% / 9% respectively driven by 11% / 17% higher WOX sold to new annual record of 240.9kt (2017: 217.8kt)
• FY / Q4 EBITDA impacted by Stainless earnings loss (FY: €-4m; Q4 €-1.5m YoY) from downtimes to implement improvements

• Strong growth in Korea impacts EBITDA Mix due to WOX currently sold "Unwashed" and Higher SEA Transport Cost

• 70% EAFD throughput increase YoY driven by Korea

• Turkey fully utilized with capacity upgrade started end of Jan 2019 (65kt to 110kt)
• Europe stable and growing ~with GDP

Prices (€ per ton)	Q4 2017	Q4 2018	% Var.	2017	2018	% Var.
Befesa blended(*) zinc price (€/t)	2,210	2,191	-0.9%	2,160	2,168	+0.4%
LME avg. price (€/t)	2,749	2,305	-16%	2,572	2,468	-4%

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

Solid EBITDA at €37.2m (+2.1%) driven by improved metal margin in 2 nd Aluminium partially offset by lower aluminium alloy volumes & prices

Highlights

• 2 nd Alu: FY/Q4 revenue up 1%/3% YoY mainly driven by higher revenue from tech. & equip. services partially offset by: (i) vol. decrease (-8%/-7%) due to stoppages to implement new furnaces; (ii) lower alu prices (-3%/-14%); FY/Q4 EBITDA up €3m driven by improving metal margins
• Salt Slags & SPL: FY/Q4 revenue flat; FY/Q4 EBITDA down €2m YoY mainly due to decreased aluminium prices

Salt Slags sub-segment

Secondary Aluminium sub-segment

16 (1) Total revenue after inter-segment eliminations (2) Reported revenues in Q4 2017: €79.2m; full year 2017: €353.5m; Figures shown on charts are comparable figures after amendment IFRS 15 (3) Adjusted EBIT(DA) margins refer to the Salt Slags sub-segment

BEFESA Befesa at a Glance

Befesa – European market leader 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 (SPLs) 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

Source: Company information. (1) Befesa subsequently acquired 100%.

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.

Clients

Crude Steel Plants Salt Slags Plants

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

• 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

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

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 sub-segment; 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) EBIT(DA) 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; 2018 figures are preliminary and unaudited

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

6

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

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

16 years with Befesa 25 years with Befesa

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

Wolf Lehmann CFO; including responsibilities for Operational Excellence and IT

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 CET

We cannot rule out changes of dates. We recommend checking them in the Investor Relations / Financial Calendar section of our website (www.befesa.com)