Elkem

Earnings Release • Oct 24, 2024

@ Elkem

Third quarter results 2024

Agenda

Business update

Financial performance

Outlook

@ Elkem

Highlights

Elkem continues to improve profitability despite weak markets

• Elkem's EBITDA was NOK 1,235 million in the third quarter 2024, the highest since first quarter 2023
• The improvement in EBITDA was mainly driven by Silicones, and explained by higher sales volumes and operational improvements
• Silicon Products delivered improved results, despite lower sales volume
• Carbon Solutions was also impacted by low sales volume, but continue to deliver excellent results
• In September, Elkem successfully raised new bond loans of NOK 1,500 million with tenors of 3, 5 and 7 years

Total operating income MNOK 8,056

EBITDA MNOK 1,235

EBITDA margin 15%

Corporate strategy

Creating value through profitable & sustainable growth

Dual-play growth

• → Driving growth & value creation in all three divisions
• → Securing supply chain resilience through geographical diversification

Growth >5% per year

EBITDA >15% per year

Green leadership

• Cutting emissions & resource-use to reach climate-neutral production

• → Enabling the green transition through supply of critical materials

Reduce CO2 -28% 2020-31

Net zero by 2050

Silicones

• → Improve underlying profitability & value creation
• → Accelerate product specialisation & circular economy
• → Pursue selective growth initiatives

Silicon Products

• → Strengthen leading cost positions
• → Pursue organic growth & bolt-on acquisitions
• → Reduce CO2 emissions & energy consumption

Carbon Solutions

• → Further improve profitability through operational excellence
• → Expand green product portfolio
• → Pursue organic growth & bolt-on acquisitions

Environmental, Social & Governance

Strong ESG performance

Green leadership

• Elkem received top rating from EcoVadis for 2024. The Platinum rating is awarded to the top 1% companies
• S&P Global has rated Elkem's ESG performance in 98th percentile for 2024
• The Sicalo project, which aims to remove CO2 emissions from Elkem's smelting processes, has received funding from EU of MNOK 20

Safety

NET ZERO

Ambition: Zero injuries

Total injury rate (per million working hours)

by 2050

Net zero CO2 emissions

Rated among the world's leading companies

EcoVadis: Platinum for 2024, in the top 1%

S&P Global

S&P Global CSA: Top 98th percentile

5

Funding for groundbreaking Sicalo project

• Elkem is researching a groundbreaking concept to eliminate CO2 emissions. Sicalo (silicon production with carbon looping) is one of Elkem's projects to reach zero emissions by 2050
• The project has collaborated with SINTEF, with support from The Research Council of Norway. Enova has granted MNOK 31 for medium-scale pilot testing in Kristiansand, Norway
• EU has awarded MNOK 112 in funding to the Horizon Europe project "Mecalo" for the production of critical metals and materials, which builds on Sicalo. Elkem has been allocated MNOK 20 of this
• · Commissioning of two pilot reactors has been successfully conducted in 2024 and will be used in test campaigns from September 2024 until end of 2027

EBITDA improvement programme delivering good results

• Elkem's EBITDA improvement programme reached realised effects of BNOK 1.0 YTD 30 September 2024. The full year effect of these measures is estimated to BNOK 1.4
• The programme has improved Elkem's EBITDA despite continued market headwind, with lower sales prices and weak demand
• The programme primarily focuses on the Silicones division, which has generated most of the improvements
• The main improvement initiatives relate to sales optimisation, productivity improvements, and organisational efficiencies
• Restructuring expenses amounted to MNOK 54 in 3Q-2024

EBITDA improvement programme (in NoK billion)

Capex reductions ahead of target

• Elkem's target is to reduce capex by > BNOK 2.0 compared to 2023
  • = Reinvestment target approx. BNOK 2.0 (80-90% of D&A)
  • Strategic capex target approx. BNOK 1.2 ■
• Capex YTD 3Q-2024 was BNOK 1.9, ahead of target
• The Silicones expansion project in China was finalised in May 2024. The ongoing project in France will be completed in 4Q-2024
• With the completion of these two projects, Elkem is well invested in the upstream business and has flexibility to keep investments low going forward

Reinvestments and strategic capex Target 2024 - reduction by > BNOK 2.0 vs. 2023

e Elkem

Silicones projects driving improved performance

• Elkem's silicones projects in China and France will deliver improved financial and operational performance
• The Silicones project in China was successfully completed in May. Based on current market conditions, the new production line is expected to generate revenues of BNOK 1.5 in 2024
• The silicones project in France will be completed in 4Q-2024
• These projects will improve Elkem's cost position and deliver improved environmental and operational performance
• The Silicones project in China generated a positive EBITDA contribution of MNOK 75 in 30-2024

Silicones project in France Capacity increase: +25% / +20 ktpa Total capacity: 100ktpa Start-up: 40-2024 Investment ≈0.4 BNOK

Silicones project in China Capacity increase: +50% / +120 ktpa Total capacity: 360 ktpa Start-up: May 2024 Investment ~4.0 BNOK

9

General markets

New stimulus package in China to boost growth

• The package offered funding and interest rate cuts to revitalise the real-estate sector and increase consumer spending
• China's property market has been in a severe downturn since 2021, and the property crisis has weighed heavily on the economy and reduced consumer confidence
• Statistics indicate that new housing projects have declined 23% YTD-2024 vs YTD-2023, and 42% vs YTD-2022
• The automobile production shows a modest growth, with 18.7 million units YTD-August 2024, up 2% compared to YTD-2023

China Construction - New housing projects YTD-August (million m²)

China Automobile production volume YTD-August (1,000 units)

General markets

Elkem's business model mitigating global trade tensions

• Elkem is well positioned to handle trade restrictions based on regional value chains. The importance is underlined by recent international trade developments
• US have increased tariffs on Chinese-made EVs from 25% to 100%
• EU member states vote in favour of imposing tariffs on Chinese-made EVs, with proposed duties of up to 45%
• US investigate anti-dumping and anti-subsidy practices for ferrosilicon from Brazil, Malaysia, Kazakhstan, and Russia
  • Anti-subsidy rate of 283% and anti-dumping rate of 449% imposed on Russian material
  • Substantial anti-subsidy and anti-dumping rates could be imposed also for Malaysia, Kazakhstan and Brazil

Silicones market

Chinese commodity prices improving, price increases on speciality grades implemented

• = Several producers, including Elkem, have announced global price increases for specialities. This has also impacted commodity prices
• DMC prices in China showed a modest increase despite low demand
• Price development going forward is however, uncertain. The stimulus package will likely have positive effects, but could be countered by ramp up of new capacity
• Average operating rate for upstream silicones producers in China was around 80% in 30-2024

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.

Silicon and ferrosilicon markets

Prices in EU remain stable still weak demand

• Weak demand for silicon and ferrosilicon, but prices in EU have remained stable in the third quarter
• Prices for silicon and ferrosilicon in the US have declined slightly but from significantly higher levels than in EU
• Silicon prices in China remain low due to weak markets. Several producers now suspending production
• Increased Chinese exports to EU may exert pressure on prices

CRU silicon 99 price EU (EUR/mt)

CRU ferrosilicon 75 price EU (EUR/mt)

Carbon market

Market conditions remain unchanged

• · Demand for carbon products varies across regions driven by steel, ferroalloys, and aluminium
• Global steel production in 3Q-2024 down 4% compared to last year
  • Global decline y-o-y driven by lower production in China
  • Low but stable production in Europe and North America
• Carbon Solutions' specialty product portfolio contributing to stable performance across markets and regions

Crude steel production (million mt)

Highest EBITDA since first quarter 2023

Overview financial elements

• = EBITDA MNOK 1,235
  • Segment Other included realised currency hedging losses of MNOK -38
• Other items MNOK -68
  • Consisting of losses on power and currency derivatives MNOK -35, restructuring expenses MNOK -54, partly countered by currency gains of MNOK 12, and net other items of MNOK 9
• Net finance income (expenses) MNOK -197
  • Consisting of net interest expenses MNOK -178, currency losses of MNOK -23, and net other financial items of MNOK 4
• Tax MNOK -155
  • Tax expenses of MNOK -155 giving a tax rate of 57% in the quarter, explained by low taxable income for Silicones
• In March 2024, Elkem exited its financial investment in Vianode
  • Elkem holds a claim for deferred payments, with a book value of MNOK 765, conditional upon milestones for Vianode
  • Based on recent market developments, Elkem considers that the value of the deferred payments could become uncertain

Consolidated key figures

(NOK million, except where specified)	30 2024		3Q 2023 YTD 2024 YTD 2023		FY 2023
Total operating income	8,056	7,831	24,506	26,629	34,760
EBITDA	1,235	535	2,985	3,139	3,771
(1) EBIT	554	-18	934	1,476	1,365
Other items	-68	-158	-302	432	516
Net finance income (expenses)	-197	-115	-453	-406	-668
Profit (loss) before income tax	273	-338	-50	1,302	ે છે. જિંદી
Tax	-155	-05	634	-691	-781
(2) Profit (loss) for the period	92	-456	507	533	72
Key ratios
EPS (NOK per share)	0.15	-0.72	0.80	0.84	0.11
Equity ratio (%)	49%	48%	49%	48%	48%
Net interest bearing debt (NIBD) (3)	9,939	6,921	9,939	6,921	8,373
Leverage ratio	2.7	1.4	2.7	1.4	2.2
Reinvestments % of D&A	56%	107%	59%	99%	102%
ROCE (annualised) (%)	7%	0%	4%	6%	4%

(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

Silicones

Operational improvements, stable market conditions

• Total operating income of MNOK 3,843, up 20% from the third quarter last year
  • · Mainly explained by higher sales volume
• EBITDA of MNOK 202, up from MNOK -268 in the third quarter last year
  • Explained by higher sales volume, operational improvements and positive effects from the new production line in China
• · Sales volume up in all regions compared to third quarter last year

Total operating income

NOK million

Silicon Products

Stable results despite low sales volume

• Total operating income of MNOK 3,643, down 8% from the third quarter last year
  • Lower operating income explained by lower sales prices and lower sales volume
• = EBITDA of MNOK 821, up 56% from the third quarter last year
  • 3Q-2023 was negatively impacted by one-offs of MNOK 220
  • Insurance compensation for Elkem Salten included to reflect estimated operating losses compared to normal operations
• Still weak demand from silicones, aluminium, and steel markets

Total operating income

NOK million

121

4Q

Carbon Solutions

Challenging markets compensated by strong business model

• · Total operating income MNOK 886, down 13% from the third quarter last year
  • Lower operating income mainly explained by lower sales prices
• EBITDA of MNOK 269, down 14% from the third quarter last year
  • Lower EBITDA mainly explained by lower sales prices, partly offset by favourable currency movements and lower raw material costs
• The sales volume was in line with third quarter last year. Low demand in certain reqions was partly offset by multireqional presence

Total operating income

NOK million

Robust equity position

• Earnings per share (EPS) amounted to NOK 0.15 in the third quarter

  • EPS YTD-2024 was NOK 0.80

• Total equity amounted to BNOK 25.7 as at 30 September 2024, up BNOK 1.2 from year-end 2023

  • Equity to total assets (equity ratio) at 49%

Earnings per share (EPS) NOK per share

In percent of total assets

ට Elkem

Well managed financing position

• = Net interest-bearing debt (NIBD) of BNOK 9.9 as at 30 September 2024

  • Leverage ratio of 2.7x* based on LTM EBITDA of BNOK 3.6

• · Good financing position

  • · The interest cover covenant (ICR) in loan agreements has been reduced to 3.0x from 4.0x for 2024. By end of the third quarter, the ICR was 4.6x
  • = Elkem raised new bond loans of NOK 1,500 million in the third quarter to refinance loans maturing in 2024 and early 2025

Net interest-bearing debt (NIBD)*

NOK billion

Maturity profile* NOK billion Group level

China loans

* Bank bills payable in China have been reclassified from NIBD. The change has positively impacted the leverage ratio by 0.3x for 3Q-2024.

Investments significantly reduced according to plan

• Cash flow from operations(1) was MNOK 32 in the third quarter 2024

  • Weak cash flow generation in the quarter was explained by negative working capital changes due to higher inventory levels

• Investments ex. M&A of MNOK 537 in the third quarter 2024

  • Reinvestments were MNOK 381, amounting to 56% of D&A
  • Strategic investments were MNOK 156, mainly related to the silicones project in France and the carbon expansion project in Brazil

NOK million

22

Outlook for the fourth quarter 2024

• While market sentiment continues to be relatively weak, Elkem benefits from strong cost and market positions, and well-defined improvement programmes
• = Silicones markets are still challenging, however the division expects to continue benefitting from the EBITDA improvement programme and higher sales volume
• Silicon Products expects relatively stable market conditions, but somewhat lower realised sales prices
• Carbon Solutions expects stable performance, taking advantage of strong market positions and geographical diversification

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

We are Elkem

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

Sillicones

Silicon Products

Carbon Solutions

@ Elkem

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

Sustainable business model delivering good results

Delivering good results over the business cycle

Figures in NOK billion unless otherwise stated

Operating income

EBITDA margin

EBITDA

■ 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

Cash flow from operations

Leverage ratio

� Elkem

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

Silicones		Silicon Products		Carbon Solutions
Fully integrated silicones manufacturer with focus on specialities		Global producer and provider of silicon, ferrosilicon and specialties		Leading producer of electrode paste and specialty products
40% of operating income End markets	49% of operating income End markets 13 main plants 12 main plants		11% of operating income End markets
· Construction Automotive · Chemical formulators · Personal care Healthcare ■ Paper & film release Silicone rubber 트 Textile		Automotive ■ Construction/industrial equipment Electronics ■ Specialty steel 트 Solar & wind turbines Refractories 트 Oil & gas 트		▪ Ferroalloys · Silicon Aluminium Iron foundries	6 main plants

lkem

Energy cost positions

Well-positioned with long-term power contracts in Norway

• In the first quarter 2024, Elkem signed a new power contract in Norway. The new contract is for 9 years and expire end of 2035
• The total volume is 220 GWh per year, in price area N04
• Elkem is well-positioned with long-term power contracts in Norway with around 80% of the electricity supply secured at competitive rates until end of 2027. After 2027, the hedging ratio is gradually declining
• Elkem is continuously evaluating the market conditions for new long-term contracts according to its hedging strategy

Elkem will contribute to limit global warming through three key levers

Achieve fully climate-neutral production throughout our value chain

By 2031:

• Reducing scope 1 & 2 emissions by 28%
• Reducing carbon footprint by 39% (scope 1 - 3)

By 2050:

■ Carbon neutral production (zero fossil emissions)

Supply key input factors required to enable the green transition

▪ Increase development and supply of advanced materials to green industry, incl. EVs, renewable energy and lowenergy buildings

Drive circular economies in our operations, products and markets

• Increase recycling in our own operations
• Develop circular loop with our customers and suppliers
• Adopt eco-design approach to new products

2
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- ▪

▪▪▪▪

-

• ▪

Increase share of bio based raw materials in our processes (scope 1)

Reduce CO ² emissions through decarbonisation of China's power mix (scope 2)

Pursue sourcing of renewable -based silicon metal and emission -free logistics. Develop circular loop and eco -design of products (scope 3)

Scale R&D projects such as Capture & Storage (CCS) and Sicalo to remove CO 2 from the production

Silicones

Solutions to global megatrends

Total production capacity Product properties Market positions > 80,000 mt in France → Silicones bring unparalleled > One of five global players (exp. to 100,000 mt in 2024) properties and performances : → 360,000 mt in China → Top 3 producer in China in terms of long-term reliability, thermal Downstream specialty plants : management, electrical & fire production capacity INTERNET 6 in EMEA/AMS and 4 in APAC safety, lightweighting, biocompatibility, adhesion Mobility Rising middle class Digitalisation Ageing population Decarbonisation Prosthetics precision moulding Release coating Themo-conductive potting Battery thermal management Solar panels assembly Personal Care Semiconductors assembly Implantable materials Lightweight materials assembly Nuclear grades silicones Medical adhesives Moisture & shock protection Lubricant & transmission fluids Energy efficient sealant Processing aids Airbag textile coating Industry players - examples Industry players - examples Industry players - examples Industry players - examples Industry players - examples (BYD) ಳು 2511 Sept Dentsply Sirong ('1-) LG 的 SIEMENS ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Beiersdorf AVERY SAINT-GOBAIN Ontinental MICHELIN (a) BOSCH Allergan C V ABB SOUDAL NORDICPAPER ID P3G STELLANTIS (Henkel ALSTOM First Sola Nexans 2 WATSON AIRBUS Johnson Johnson SILADENT L'OREAL ZHIJIANG 杭州之江 Silicone MARLOW

ariane Group

Silicones - Sales distribution

Serving attractive end markets with advanced technologies

Silicon Products - Business lines

Raw materials

Coal and biocarbon

Electricity

Quartz

Silicon - attractive cost position and downstream integration

→ End markets Consumer goods Construction Automotive # RAFFMETAL Renewable energy OC Electronics (1- LG Chem

30%

of division's sales

Ferrosilicon - high quality products to specialty steel

Silicon Products - Business lines

Foundry Alloys - global leader into cast iron metal treatment

* Companies named are examples and not necessarily customers

** Split of foundry alloys revenues by end market

Microsilica – tailor made products to wide range of specialty applications

15%

of division's sales

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 트
• · 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 750 over the coming 12 months. CNY is not hedged

Currency development

• As of 30 September 2024, the NOK closed 3% weaker against the EUR, 1% stronger against USD, and 2% weaker against CNY compared to 30 June 2024
• In 3Q-2024, the NOK was on average 3% weaker against EUR, 2% weaker against USD, and 3% weaker against CNY compared to 3Q-2023

2 Elkem

EU

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 2027. After 2027, 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 50 per year(*)
  • 10% price change on ferrosilicon is expected to affect result by approx. MNOK 350 per year(*)
• (*) Sensitivities are on group level and based on annual sales volume. Sales prices are based on LTM CRU prices.

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