Elkem

Earnings Release • Apr 18, 2024

@ Elkem

First quarter results 2024

Agenda

Business update

By CEO Helge Aasen

Financial performance By CFO Morten Viga

Outlook

By CEO Helge Aasen

Highlights

EBITDA improvement from modest levels

• Elkem's EBITDA was NOK 721 million in the first quarter 2024
• The Silicones division has experienced weak market conditions, particularly before Chinese New Year. Weak demand for specialities
• Silicon Products delivered better results compared to the previous quarters, gradually benefitting from higher commodity market prices
• Carbon Solutions delivered another strong quarter, despite slow demand
• Strong focus on improving core business, decision to exit Vianode investment

Total operating income MNOK 7,961

EBITDA MNOK 721

EBITDA margin 9%

Environmental, Social & Governance

Strong ESG performance

Green leadership

• Total CO2 emissions reduced by 8.3% in 2023, with reductions in scope 1, 2 & 3
• Grant received from Enova of MNOK 17 for carbon capture pre-study in Rana. The project is set to capture 95% of the CO2
• Well positioned to benefit from the green transition, with silicon defined as a critical material in EU and the US
• Elkem's ESG report for 2023 released on 22 March

Safety

Ambition: Zero injuries

Rated among the world's leading companies

FORESTS

Forests Climate

Water Change Security

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

S&P Global

S&P Global CSA: Top 94th percentile

(೧) ESG100

Rated A+ for ESG reporting in 2023

Strong focus on profitability improvements

• Elkem has introduced a comprehensive programme to counter the current challenging market conditions, particularly in Silicones
• The target is to improve EBITDA by > BNOK 1.5 in 2024. The initiatives are organised along several dimensions:
  • Sales and product value improvements
  • Reduce raw material costs by sourcing of cheaper materials
  • Operational improvements and streamlining production structure
• = In 1Q-2024, Elkem has realised improvements of BNOK 0.2, with an estimated full year effect for 2024 of BNOK 0.8

EBITDA improvement programme (in NoK billion)

Concentrating on core business - reducing investment levels

• 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 down to BNOK 0.6 in 1Q-2024, well on path to reach target
• = Major investment projects in China and France completed in 2024, providing flexibility to keep strategic investments low going forward. In line with this plan, Elkem decided to exit its investment in Vianode
• The financial covenant waiver process announced in February has been successfully concluded. Lenders granted a waiver of the Interest Cover Ratio for 2024, reducing the covenant level to 3.0x from 4.0x

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

Silicones expansion project in China coming on stream in May

• The Silicones expansion project in China will be finalised in 20-2024, with commercial production expected to start in May
• The production volume is expected to reach 65 kt in 2024, generating an estimated revenue of NOK 1.5 billion
• In France, project completion is expected in 3Q-2024
• The projects will improve Elkem's cost positions, mainly through lower energy and raw material consumption

Silicones project in France Capacity increase: +25% / +20 ktpa Total capacity: 100ktpa Start-up: 30-2024 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

A key silicones supplier to EVS

• Electric vehicles (EV) represent an attractive growth potential for Elkem as silicones are used for battery systems, cables, connector seals, and safety & lighting systems
• Sales of EVs, including hybrids, solidly increasing in all main markets
• · China is the largest EV manufacturer, reaching a production of 9.4 million units in 2023. Domestic sales in China was 8.4 million, accounting for 60% of global sales
• Elkem entered the market at the early phase and has developed a range of strong applications

BEV & PHEV sales and growth (in 1,000 units)

Energy cost positions

New long-term power contract 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

General markets

2 Elkem

Modest macro economic outlook

• Elkem's sales generally linked to GDP growth, particularly in Silicones
• The recent macro-economic sentiment has been weak, characterised by high inflation, interest rate hikes, and geopolitical uncertainties
• Growth projections from OECD do not indicate significant changes
  • · In the Euro area the growth is expected to remain weak
  • China continue to face headwinds with lower real estate investments and lower inward foreign investments
  • In the US, a loosening of the fiscal policies and lower savings have boosted demand
• According to OECD, the challenges for near-term growth include; slowing global trade, trade disruptions in the Red Sea, geopolitical tensions and risk of further energy price spikes

GDP growth projections in % (source OECD)

	2023	2024 - - -	2025
World	3.1	2.9 /	3.0
G20	3.3	2.9	3.0
China	5.2	4.7	4.2
Euro area	0.5	0.6	1.1
United States	2.5	2.1	1.7

Revisions relative to the latest estimates from OECD's November 2023 Economic Outlook

Upward revision by 0.3pp or more

No change or smaller than 0.3pp

Downward revision by 0.3pp or more

General markets

China market update - signs of improvement

• In China, silicon production YTD-February 2024 was 597kt, up 22% compared to the same period in 2023, while the silicones production was 357kt, up 11%
• Silicon spot prices in China dropped in March. The DMC price was increasing early March, but then turned into a downward trend
• China automobile production in January and February 2024 was 3.9 million units, up 8% compared to the same period in 2023
• China's official manufacturing purchasing managers index registered the highest result in a year, adding to recent signs that momentum could be starting to build

Manufacturing Purchasing Managers Index

Source: National Bureau of Statistics of China

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

Silicones market

Signs of demand recovery, but significant uncertainty

• Silicones markets generally weak, negatively impacted by construction, and weak automotive markets in EU and US
• Demand for most specialty grades remain low in EU and US, but signs of recovery. The order situation has improved for the second quarter
• DMC prices increased after Chinese New Year, but turned into a downward trend late March due to light spot trading, combined with high operating rates and new capacity coming on stream

DMC reference price China (KCNY/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 Europe have recovered from the trough

• Prices for silicon and ferrosilicon have recovered in Europe despite weak market conditions
  • · Silicon prices in EU up more than 30% from the bottom level in September 2023
  • Ferrosilicon prices in EU up more than 15% from the bottom level in October 2023
• Silicon prices have declined in China during the first quarter, based on weak sentiment and high inventory levels
• Silicon exports from Asia impacted by rising sea freight prices caused by disruptions in the Red Sea

CRU silicon 99 price EU (EUR/mt)

CRU ferrosilicon 75 price EU (EUR/mt)

Carbon market

Stable markets with some signs of demand improvement

• Demand for carbon products varies across regions driven by steel, ferroalloys, and aluminium
• Global steel production in first quarter 2024 was in line with the first quarter last year, but ferroalloys production was weaker
  • Production up 2% in Europe while stable in North America
• Stable conditions expected for Carbon Solutions, with some signs of demand improvement in specific markets

Crude steel production (million mt)

@ Elkem

Challenging markets, but improved EBITDA compared to last two quarters

15

Overview financial ratios

• · EBITDA MNOK 721
  • = Segment Other included realised currency hedging losses of MNOK -39
• Other items MNOK -198
  • Consisting of losses on power and currency derivatives MNOK -217 and restructuring expenses MNOK -13, partly offset by currency gains on working capital items MNOK 32
• Net finance income (expenses) MNOK -38
  • Consisting of net interest expenses MNOK -186 and other financial expenses MNOK -5, partly offset by currency gains MNOK 153
• Tax MNOK -103
  • Tax expenses of MNOK -103 despite negative profit before tax, due to losses not being capitalised as deferred tax assets

Consolidated key figures

(NOK million, except where specified)	10 2024		1Q 2023 YTD 2024 YTD 2023		FY 2023
Total operating income	7,961	9,755	7,961	9,755	34,760
EBITDA	721	1,565	721	1,565	3,771
(1) EBIT	114	1,025	114	1,025	1,365
Other items	-198	553	-198	553	516
Net finance income (expenses)	-38	-109	-38	-109	-668
Profit (loss) before income tax	-311	1,385	-311	1,385	051
Tax	-103	-403	-103	-403	-781
(2) Profit (loss) for the period	-439	952	-439	952	72
Key ratios
EPS (NOK per share)	-0.69	1.50	-0.69	1.50	0.11
Equity ratio (%)	49%	53%	49%	53%	48%
Net interest bearing debt (NIBD) (3)	10,206	3,670	10,206	3,670	9,450
Leverage ratio	3.5	0.3	3.5	0.3	2.5
Reinvestments % of D&A	49%	61%	49%	61%	102%
ROCE (annualised) (%)	1%	13%	1%	13%	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

First quarter hampered by Chinese seasonality

• Total operating income of MNOK 3,349, down 19% from the first quarter last year
  • Mainly explained by lower sales prices and lower sales volume
• EBITDA was MNOK -103, down MNOK 73 from first quarter last year
  • E Explained by lower sales prices in China and lower sales volume, partly countered by lower operating costs
  • Reduced production in France and China negatively impacting average product cost
• Sales volume down from first quarter last year, due to weak markets and reduced production

Total operating income

NOK million

EBITDA and margin

NOK million and %

= 2023

17

79

4Q

3Q

Silicon Products

Higher sales prices improved results

• Total operating income of MNOK 4,015, down 20% from the first quarter last year
  • = Lower operating income mainly explained by lower sales prices
• = EBITDA of MNOK 677, down 46% from the first quarter last year
  • · Reduction in EBITDA was mainly explained by lower sales prices, partly countered by lower costs. Continued strong performance from specialty segments
  • Positive impact from insurance compensation for Elkem Salten, albeit recognised at conservative assumptions
• Still weak demand from silicones, aluminium, and steel markets

Total operating income

NOK million

In 1,000 mt

= 2023

= 2024

Carbon Solutions

Strong performance despite lower sales

• Total operating income MNOK 834, down 25% from the first quarter last year
  • Mainly explained by lower sales volume and lower sales prices
• EBITDA of MNOK 249, down 33% from the first quarter last year
  • Mainly explained by lower sales volume and lower sales prices. This has partly been offset by lower raw material costs
• Sales volume down compared to first quarter last year, mainly due to weak ferroalloys market

Total operating income

NOK million

Weak EPS, robust equity position

• Earnings per share (EPS) amounted to NOK -0.69 in the first quarter

  • EPS in the first quarter impacted by negative mark-to-market effects

• Total equity amounted to BNOK 24.7 as at 31 March 2024, up BNOK 0.3 from year-end 2023, mainly explained by currency translation effects

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

Earnings per share (EPS) NOK per share

Equity ratio

In percent of total assets

@ Elkem

Consolidating the financing position

• Net interest-bearing debt (NIBD) of BNOK 10.2 as at 31 March 2024

  • = Increased NIBD partly explained by currency translation effects
  • Leverage ratio of 3.5x based on LTM EBITDA of BNOK 2.9

• · Good financing position

  • Well managed and distributed debt maturity profile
  • Debt maturities in China in 2024 consist of local working capital financing, which is regularly rolled over
  • The interest cover ratio by end of first quarter 2024 was 4.2x

Net interest-bearing debt (NIBD)

NOK billion

Maturity profile

@ Elkem

Stable cash flow generation, significantly lower investments

• Cash flow from operations(1) was MNOK 759 in the first quarter 2024

  • The cash flow was improved from the corresponding quarter last year, mainly explained by positive working capital changes

• Investments ex. M&A of MNOK 615 in the first quarter 2024

  • Reinvestments were MNOK 298, amounting to 49% of D&A
  • Strategic investments were MNOK 318, mainly related to Silicones projects in France and China. The silicones expansion project in China will be finalised in 2Q-2024

Cash flow from operations

NOK million

2 Elkem

(1) Cash flow from operations is according to Elkem management definition and includes reinvestments

Outlook for the second quarter 2024

• Signs of recovery in the first quarter, but still significant uncertainty
• Demand for silicones in Europe and US show signs of picking up. Improved demand also in China but price development hampered by overcapacity. Elkem's expansion in China will come on stream, but limited financial impact in the second quarter
• Silicon Products expected to benefit from the commodity price increases for silicon and ferrosilicon in the first quarter
• Stable conditions expected for Carbon Solutions, with some signs of demand improvement in specific markets

@ Elkem

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 & more sustainable future

Silicones

Silicon Products

Carbon Solutions

P

ਸਿੰ

@ 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

Strategy remains firm - dual-play growth & green leadership

Profitable growth: Top 3 in silicones worldwide Number 1 in silicon products and carbon solutions in the West

• → Balanced between geographic regions (East & West)
• → Balanced across the value chain (Upstream & Downstream)

Green leadership

• → Strengthening position as best in the industry on low CO2
• → Growing supplies to green transition & creating green ventures

We are Elkem

Advanced siliconbased materials shaping a better & more sustainable future

Silicones

• → Balanced geographical growth
• → Improve cost position
• → Higher degree of specialisation

Silicon Products

• → Selective growth
• → Secure leading cost positions

• Lower carbon emissions

Carbon Solutions

• → Selective growth in West
• → Sustainable low-cost position
• -> Preferred supplier with high quality

Growth	EBITDA
>5% per year	>15% per year
Reduce CO2	Net zero
-28% 2020-31	Bv 2050

Sustainable business model delivering good results

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

Silicones	Silicon Products	Carbon Solutions
Fully integrated silicones manufacturer	Global producer and provider of silicon, ferrosilicon and	Leading producer of electrode
with focus on specialities	specialties	paste and specialty products
40%	49%	11%
of operating	of operating	of operating
income	income	income
End markets 14 main plants · Construction Automotive · Chemical formulators · Personal care Healthcare ■ Paper & film release Silicone rubber 트 ■ Textile	End markets 10 main plants Automotive 트 ■ Construction/industrial equipment Electronics ■ Specialty steel 트 Solar & wind turbines ■ Refractories ■ ■ Oil & gas	End markets 7 main plants · Construction = Automotive · Chemical formulators Personal care Healthcare ▪ Paper & film release Silicone rubber 트 Textile

e Elkem

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

→

→

1

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

• ▪

• ▪

▪

target

(Illustrative)

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 : > 240,000 mt in China → Top 3 producer in China in terms of long-term reliability, thermal (exp. to 360,000 mt in 2024) management, electrical & fire production capacity INTERNET → Downstream specialty plants : safety, lightweighting, biocompatibility, adhesion 7 in EMEA/AMs and 4 in APAC 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 (вча) ಳು 2514 Sept Dentsply Sirong ('1-) LG 体 SIEMENS ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Beiersdorf AVERY SAINT-GOBAIN Ontinental MICHELIN Allergan C V (H) BOSCH ABB SOUDAL NORDICPAPER ID STELLÄNTIS P3G (Henkel ALSTOM First Solai Nexans 28 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

36

Silicon Products - Business lines

Silicon - attractive cost position and downstream integration

Consumer goods Construction Automotive

30%

of division's sales

Renewable energy

Raw materials

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

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
• 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 31 March 2024, the NOK closed 4% weaker against the EUR, 6% weaker against USD, and 4% weaker aqainst CNY compared to 31 December 2023
• In 1Q-2024, the NOK was on average 4% weaker against EUR, 3% weaker against USD, and 2% stronger against CNY compared to 1Q-2023

2 Elkem

JRUSD

Fl

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 85 per year(*)
  • 10% price change on ferrosilicon is expected to affect result by approx. MNOK 375 per year(*)
• (*) Sensitivities are on group level and based on annual sales volumes. Sales prices are based on LTM CRU prices.

Delivering your potential