Befesa S.A.

Good morning. My name is Lydia, and I will be your conference operator today. At this time, I would like to welcome everyone to the Bethesda Preliminary Full Year 2020 results. After the speaker's presentation, there will be a question and answer session. To enter the queue, you can press 01 on your telephone keypad at any point during the call. Now, I would like to turn the call over to Rafael Perez, Director of Investor Relations and Strategy. Please, sir, go ahead.

Good morning and welcome to the preliminary full year 2020 results conference call of Befesa. I am Rafael Perez, head of strategy and investor relations of Befesa. And today, as usual, we have with us Javier Molina, CEO of Befesa, and Wolf Lehman, CFO of Befesa. Javier will start with an executive summary of the full year, covering the main highlights of the period. Then Wolf will review the full year financials in total and by business unit, as well as cash flow. Javier will close this presentation providing an update on our growth projects as well as preliminary view on the outlook for 2021. Finally, we will open the lines for the Q&A session. Before getting started, let me remind you that this conference call is being webcasted live. You can find the link to the webcast and the preliminary full year results presentation on our website, www.defesa.com. Now, let me turn this call over to our CEO. Javier, please.

Thank you, Rafael. Good morning, and thank you for attending this conference call. 2020 has been certainly a challenging year for BFESA. Nevertheless, we have been able to manage the crisis well, making strong strategic progress and delivering within the upper part of the guidance. The fourth quarter has been the strongest quarter in 2020. confirming the continuation of the gradual recovery that we started already in the third quarter. In the fourth quarter of 2020, we have achieved an EBITDA of 42 million euros, which is similar to the last quarter of the previous year. Looking at the quarter-on-quarter development in 2020, over the last two quarters, we have increased our EBITDA by 35% in the third one and by 45% in the fourth one. The main drivers for this increase has been a recovery in the plant utilization, reaching nearly 90% in the case of steel dust and 84% in the case of aluminum solid glass, as well as a recovery in seed price during the last quarter with an average of 2,203 euros. compared with 1,997 euros in the previous quarter. This strong performance on the last quarter of the year has enabled us to achieve a total EBITDA of 127 million euros in the full year 2020, which is in the upper third of the initial guidance provided and better than the consensus of our analysts of 120 million euros. Compared to the previous year, 2020 EBITDA has been mainly impacted by a decrease in average fee price of 13%, as well as higher treatment charge of $300 compared with 245 in 2019. Additionally, the volume in the aluminum solid slag division has been 10% lower than the previous year, driven by a weak automotive industry in Europe, which has been partially offset by a slight increase in steel volume mainly driven by Turkey. In 2020, we have run our plants at an average capacity utilization of around 85%. The main industries that represent our markets have seen during the fourth quarter a recovery in their level of activity. As such, the production of steel in Europe in the last quarter has increased 5% compared to 2019. However, for the full year, the production of steel in Europe has decreased 12%. As in the past, The part of the steel industry that we serve, the electric earth furnace steel produce, has performed better than the overall steel industry, as demonstrated by Germany, where the blast furnace steel production has decreased 13%, compared to the electric earth furnace steel production, which has decreased only 3% in 2020. The automotive industry in Europe has seen a better second half of the year than the first one, ending the year with a decrease of 24% in car sales compared to the previous year. This has affected the volume of aluminum solid slag that we have been able to process in 2020. Metal prices have suffered great volatility during 2020 and have recovered during the last quarter from the low levels achieved during the second quarter because of COVID-19. As such, average SIN LME has been 1,979 euros per tonne, compared to 2,276 euros in 2019. This has been partially offset by our hedges, as Wal will explain later in more detail. quarter of 2020 and early 2021, we have extended our hedging book until October 2023 at attractive prices, and today we enjoy more than 2.5 years of hedging going forward, which provides high visibility and predictability. The generation of cash during last year has been very strong. and this has enabled us to finish the year with more than 150 million on cash on hand and a leverage ratio slightly above three times. Despite the challenging environment of 2020 created by COVID-19, due to our strong liquidity and capital structure, we have continued our growth plans with our investments in China. we continue the construction work of our two steel dust recycling plants in Jansu and Henan on time and on budget. We expect to have the first plant ready over the coming weeks and to carry out the cold and hot commissioning in March and April. The plant in Henan is expected to be finished after the summer of this year. Finally, on ESG, 2020 has been a year where we have made significant progress. It is very clear that society and investors put more and more for sustainable solutions, which is very much aligned with the FESA. What we do is a vital part of the circular economy. We recycle 1.5 million tons of hazardous residues for our customers in the steel and aluminum industries. to extract value natural resources like zinc, aluminum, and salt. Furthermore, and especially over the last five years, we focus on all the aspects of ESG, compliance, environmental, health and safety, employees, and governance. The efforts that the entire organization is making across these areas are being reflected in our ESG ratings improvements. We are very proud of the progress we are making on ESG, which is a recognition from the market on the contribution Bethesda makes to a more sustainable world. Now, Warren Lehman will explain the financials in more detail.