Elkem

Earnings Release • Apr 28, 2023

First quarter results 2023

Agenda

Business update

By CEO Helge Aasen

Financial performance

By CFO Morten Viga

Outlook

By CEO Helge Aasen

@ Elkem

Highlights

Good results, but impacted by more challenging markets

• Elkem delivered an EBITDA of NOK 1,565 million (16% margin) in the first quarter 2023
• Strong results for Silicon Products and Carbon Solutions, based on superior cost and markets positions
• Weak results for the Silicones division due to challenging markets. Actions taken to optimise costs, production and investments
• · Given the market situation, Elkem will move forward planned maintenance and temporarily reduce production at Silicon Products' Thamshavn and Rana plants
• In the first quarter, Elkem signed new long-term power agreements for the Salten, Rana and Bremanger plants at competitive terms

Total operating income MNOK 9,934

EBITDA MNOK 1,565

EBITDA margin 16%

Rated among the world's leading companies

Delivering on carbon footprint reductions

• Product carbon footprint reduced by 7% from 2021 to 2022
• World's first carbon capture pilot for smelters inaugurated at Elkem Rana
• Awarded double A- scores from CDP for the company's efforts on climate and forests. B score on water security

Safety

Ambition: Zero injuries

Total injury rate (per million working hours)

Social

• Company-wide human rights risk assessment & qlobal employee engagement survey in 2022
• New upgraded HSE training programme developed

Environmental

• · Target to reduce product carbon footprint by 39% by 2031
• · Biodiversity mapping project to be conducted in 2023

Governance

• · 45% of revenue in 2022 defined as EU Taxonomy eligible
• Comprehensive analysis of climate risk according to TCFD prepared in 2023

Corporate strategy

Dual-play growth & green leadership - a balanced strategy for changing markets

Profitable growth: Top 3 in silicones worldwide We are Elkem Number 1 in silicon products and carbon solutions in the West Advanced siliconbased materials shaping a better & Green leadership Dual-play growth more sustainable → Strengthening position as best in the → Balanced between geographic Dual-play growth regions (East & West) industry on low CO2 future & green leadership -> Growing supplies to green transition & > Balanced across the value chain creating green ventures (Upstream & Downstream) Silicones Carbon solutions Silicon products Growth EBITDA → Balanced geographical growth → Selective growth → Selective growth in West >5% per year >15% per year -> Improve cost position → Secure leading cost positions → Sustainable low-cost position → Higher degree of specialisation > Lower carbon emissions > Preferred supplier with high quality Reduce CO2 Net zero -28% 2020-31 By 2050

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Silicones are critical components EVs:

Battery modules & packs

Electronic control units (ECU)

Global EV production forecast, 2023-2029 (in million)

Supplying the green transition

European Green Deal implies opportunities for Elkem

• EU's Green Deal Industry Plan & Net Zero Industry Act aims to offer financial incentives for clean technologies - this could drive demand for both silicones and silicon
• EU's Solar Energy Strategy aims to bring online over 320 GW of solar photovoltaic by 2025 and almost 600 GW by 2030
• · Target is to ensure investment opportunities, diversify supply chains, and retain more value in Europe to deliver GDP of BEUR 60 per year and creation of more than 400,000 new jobs
• = The European Critical Raw Materials Act aims to significantly increase and diversify critical raw materials supply
• Silicon defined as a critical raw material on EU's list

EU Green Deal: Clean technology incentives

EU Solar energy strategy 600 GW by 2030

EU Critical raw materials act Silicon metal included

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ONGOING SPECIALISATION PROJECTS

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DMC reference price China (CNY/mt)

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)

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Elkem group

Strong performance by Silicon Products and Carbon Solutions, Silicones impacted by weak markets

Silicones and Silicon Products impacted

Explained by lower sales prices for silicones, silicon and ferrosilicon

1Q 2022 Silicones Si. Prod. Carbon Elm/Oth. 1Q 2023

a Elkem

Elkem Group

Overview financial ratios

• EBITDA MNOK 1,565
  • Segment Other included realised currency hedging losses of MNOK -86
• · Other items MNOK 553
  • Consisting of gain on power and currency derivatives MNOK 175 and currency gains on working capital items MNOK 377
• Net finance income (expenses) MNOK -109
  • Consist of net interest expenses MNOK -97, currency loss of MNOK -7 and other financial expenses of MNOK -5
• Tax MNOK -403
  • Resulting in a tax rate of 29% for the first quarter 2023
  • Losses that were not capitalised as deferred tax assets resulting in higher effective tax rate

Consolidated key figures

(NOK million, except where specified)	10 2023	1Q 2022		YTD 2023 YTD 2022	FY 2022
Total operating income	9,934	11,876	9,934	11,876	45,898
EBITDA	1,565	3,875	1,565	3,875	12,925
(1) EBIT	1,025	3,399	1,025	3,399	10,898
Other items	553	87	553	81	2,151
Net finance income (expenses)	-109	32	-109	32	-161
Profit (loss) before income tax	1,385	3,401	1,385	3,401	12,236
ax	-403	-732	-403	-732	-2,594
(2) Profit (loss) for the period	952	2,658	952	2,658	9,561
Key ratios
EPS (NOK per share)	1.50	4.20	1.50	4.20	15.09
Equity ratio (%)	53 %	51 %	53 %	51 %	55 %
Net interest bearing debt (NIBD) (3)	3,670	3,756	3,670	3,756	2,615
Leverage ratio	0.3	0.4	0.3	0.4	0.2
Reinvestments % of D&A	61 %	54 %	61 %	54 %	84 %
ROCE (annualised) (%)	13 %	53 %	13 %	53 %	41 %

(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

EBITDA and margin

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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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Net interest-bearing debt (NIBD)

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Outlook for the second quarter 2023

• Market sentiment still weak going into the second quarter, but Elkem benefits from strong market positions and robust financials
• Elkem accelerating planned maintenance positioning for expected demand recovery and improved market conditions
• Silicones markets remain challenging due to weak sentiment in EU and US, and overcapacity in China. Maintenance stop in China in May and June will impact sales in APAC
• Stable but weak markets for Silicon Products. Maintenance stops at Thamshavn and Rana expected to have modest impact on results. Raw material costs coming down, particularly for reduction agents
• Carbon Solutions could be impacted by lower demand, but performance expected to remain at a good level

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.

Appendix

㊣ Elkem

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 175
  • · 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 March 2023, the NOK closed 8% weaker against the EUR, 6% weaker against USD, and 7% weaker against CNY compared to 31 December 2022
• · In 1Q-2023, the NOK was on average 11% weaker against EUR, 16% weaker against USD, and 7% weaker against CNY compared to 1Q-2022

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 150 per year(*)
  • 10% price change on ferrosilicon is expected to affect result by approx. MNOK 500 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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