RHI Magnesita N.V.

Okay, good morning. Thank you for joining us today in London for RHI Magnesitas 2025 full year results presentation. As usual, Ian, both our CFO and myself will do this together and lead you through the events of 2025 and of course look at the incredible forecast of 2026 and maybe a little bit beyond even. Before we get started, let me just send our thoughts to our colleagues and our customers and our suppliers and our business partners in the Middle East. who woke up yesterday in a different world than they would like to be in, so our thoughts are with them, our support is with them and we hope that things normalize very quickly there and that people are not hurt as much as possible. 2025 was a challenging year, actually quite a challenging year, but ultimately with a good ending, at least for Archai Magnesita. Before moving into the presentation, let me highlight three key takeaways from 2025. First, highlight we delivered our self-help, mostly cost-based initiatives, as we had planned them already before. starting very early in 2024. And therefore, we could meet our profit guidance. This is important because we're improving the business structurally and sustainably. These are not short-term measures. These are structural improvements by focusing on what we can control and not relying on the outside world. Second, This momentum of self-help will continue into 2026. New measures that will start this year are already well advanced and they will then support that velocity also into 2027. Third message, there is currently no visible market recovery. We know All of you is not shared by all, but we retain substantial operating leverage ourselves that could benefit from this one day when demand improves. But we do not expect any improved demand before 2027. We're not relying on this. If we are wrong with our forecast and you are all right, And we will all have a happy drink at the end of this year. Before I go into the results, let me start, like always, with health and safety. Safety remains the core value at RHI Magnesita. In 2025, triggered by fatalities... in the year before, we made significant progress in our group-wide safety culture transformation program. This is not just a corporate initiative. It is a fundamental shift towards embedding a deeply rooted safety mindset across the organization. In 2024, we recognized that we need a different approach here. Greater depth and greater accuracy in our health and safety reporting. Therefore, last year in 2025, we added more than 200 sites to our safety reporting. Mostly on our customer sites, but also of course sites from acquisitions that we didn't have before. They often have a lower safety maturity because they come into the group, but also because we didn't focus on them enough before. And this maturity, now that we can measure, we can also address. And therefore, you see a different number in 2025 that looks shockingly increased, but it comes from a complete re-reporting. This increase... results in a big increase in transparency. And this improved visibility allows us now to address risks much more systematically and holistically. We are focusing with greater discipline on controlling the company's critical risks to prevent serious injuries and fatalities. Our key initiatives center now on visible felt leadership. How do people perceive their own supervisors on site? We have introduced seven life-saving rules and strengthened standard operating procedures and these practical measures is very practical on the ground. Influence behaviors, improve accountability and raise the standards across every site. We remain fully focused and committed to have a zero harm, no injury environment. That's the only acceptable objective. Let me now turn to the results. We delivered against the continued challenging market backdrop. While the steel business saw a slight downward trend across most regions in 2025, the fall in the industrial project in 2025 was unprecedented. Never seen before. This industrial projects business is a high-margin segment for RHA Manzita that contributes disproportionately to earnings normally. In addition to that fall, foreign exchange headwinds further pressured profitability, mostly the US dollar, but not only the US dollar. Despite these challenges, we achieved our full-year guidance, delivering 373 million euros of EBITDA and a margin of 11.1%. The earnings recovery was accompanied by strong operating cash flow. of 391 million in these days, this is at least as important as profit. This is a cash conversion of more than 100% and driven of course by a quite meaningful reduction in working capital, which shows you the financial discipline that we have in the meantime everywhere in all operations. We finished the year with a leverage of 2.9 times net debt to EBITDA, a little bit better actually than we guided, driven by that really good cash flow performance. Based on this performance, the board is recommending a final dividend of €1.20 per share, bringing the full year dividend to €1.80 in line with 2024. But That's not the whole thing about the story of 2025. It was a story of two completely different halves. The first half of 2025 was one of the weakest semesters on record of the company. Even if we include major economic shocks, It was one of the weakest. In anticipation of this, because we saw this coming already in 2024, and to be able to respond to such a development, management implemented targeted self-help measures that had an effect then starting in the second quarter, but especially in the second half. These actions underpinned a strong recovery then in H2, with adjusted EBITDA rising to 232 million euros just in the second half, actually starting in August, not even in July. This was 65% higher than in the first half and also 7% higher than in the comparable period in the year before. Nothing changed on the market. It's just purely 100% driven by self-help. We delivered, therefore, a step change of the EBITDA margin, which was at 8.4% in the first half, to 13.7% in the second half. It was achieved despite continuous market weakness. No demand increase. The steel business, if we now look at these two different sectors, declined slightly, reflecting either weak demand in many regions, and in those regions in which we had good demand, we had weak pricing. This demand weakness was primarily caused by record levels of Chinese steel exports which are displacing local production and therefore we cannot supply to the local steel plants. And that is a problem of course because the local steel demand is not growing. As a result, gross margins came under pressure driven by an unfavorable volume mix fixed cost under absorption, but also nervous competitors who made price concessions and elevated Chinese refractory exports into several markets, mostly attainable to China. India remains the main engine of global steel production growth, delivering approximately 10% steel growth. Our revenues, however, did not increase at the same pace as we had to make price concessions and therewith accept margin reductions in India. This is the market with the most undisciplined competitive behavior. North America delivered a very strong performance, not solely due to the acquisition of Resco, which happened, I think, at the perfect time. Excluding Resco, revenues increased still by 6% against broadly flat steel production in North America. We are benefiting from the green steel transition outside of North America mostly, but there also actually, because the strength of our 4Pro offering, our total solution offering, and our very solid market position wherever these green steel transformations happen. In contrast, revenues in Latin America, in Europe, in China and in East Asia declined in the steel business, as weak domestic steel demand coincided with record Chinese steel export volumes, which continue to displace local production and reduce local refractory purchases as a consequence, of course. The Middle East, Turkey, Africa region, the META region, experienced a revenue decline, primarily mostly because of two issues with two key customers in the first half of the year. So they just bought a lot less. So it's a one-time thing. We're not so worried about it. But also, in this region, with significant margin pressure due to Chinese refractory imports. Steel production growth elsewhere in this region was insufficient to offset this impact of these two very big customers that had a week here. We focused on restoring that performance in the Middle East region now in 2026. At least that's what we thought until yesterday. We have to see how this unfolds now. Looking forward, we do not see in our order book any green shoots of improved steel demand. We do not see an order increase in no region. Let's turn to the industrial business. 2025 was an exceptionally weak year for our industrial project business. The impact was particularly visible in the first half of the year. Our cement business which is not the industrial projects, it's a different business unit, was remarkably resilient, but the number of industrial projects declined by 40%. Our glass business remains at a historic low level. There's no sign of recovery anywhere. The non-ferrous part of the industrial projects is a little bit more resilient. We are not yet seeing a big turnaround here either, but there the forecast is a little bit better. As a result of this industrial project downturn, revenues declined by 9%. This is the first top-line contraction in this business since 2020. More significant, however, was the impact on gross margin here. Industrial project business, particularly in glass and non-ferrous, typically generates above average margins because this is a very technical and supply chain complex business. We are the clear market leader worldwide in these high complexity projects. The sharp reduction in project volumes, therefore, has a disproportionate impact on our margin mix because these projects are done in very expensive, complex plants. And if they're not utilized, the fixed cost there is very high that we are stuck with. To support this business globally, we operate these specialized plants with structurally high fixed cost basis. The exceptionally weak order intake leads then to these material fixed cost underabsorptions, which we can only partially compensate with short-term reduction of cost, which actually we don't want to do either, because then we're not ready for the recovery. looking forward we expect a gradual improvement now in the industrial business project activity could particularly improve in the second half of this year although it will remain way below historic levels why are we so sure because the delivery time for these projects is somewhere between 9 and 18 months so whatever we don't see in the order book now will not happen in 2026. Let me update you a little bit on our strategy. We sharpened our strategy at the end of 2025 together with our board to adapt to these new geopolitical and also technological challenges and opportunities. We are reviewing our portfolio. We are innovating with new products, but also with new business models. Both of them should create greater value, of course, for existing and future customers. We are boosting productivity through scaled and optimized footprint, through smarter operations and through a digital transformation. We lead in sustainability by pioneering technologies that set the path for green transformation of our industry. Our main objective continues to focus on the consolidation of the global refractory industry in order to get scale for all of these things. In 2025 the acquisition of Resco of course transformed our North America footprint for the better. Leveraging our scale remains the only structural avenue to be able to continue to pay for innovation and for improved customer services which they expect. We will go into more detail in a couple of minutes together with you. We continue to evaluate these opportunities, these acquisition opportunities in many markets. We don't expect a meaningful cash out in 2026 because these negotiations take time. When we look at the broader steel and refractory industries, it becomes evident that global demand no longer moves in a synchronized demand-driven cycle as it once did. Instead, we see more and more diverging regional trajectories also influenced by the growing scale and impact of Chinese exports and protectionist reactions that are very different from one region to another. In the past, regional demand for metals and industrial goods drove local capacity development and then trade flows. Together, however, global and particularly Chinese industrial capacity is sufficient to supply demand growth almost everywhere in the world because of the overcapacities there. This structural overcapacity in China places sustained pressure on local industries in many markets. As a result, global trade is gradually shifting from a free trade model towards a more protectionist environment, with countries and regional trade blocs increasingly managing supplies differently, depending on their capabilities. Given their strategic importance, refractory consuming industries are at the center of this transition and of that protectionist. The only large exception to this is the cement industry, because it operates anyway under a fundamentally different dynamic. Unlike steel, Cement is not broadly exported around the world. Never has been, due to technical and commercial reasons. As a result, the cement sector is less exposed to global overcapacity and to rerouted trade flows. This more regional market, which always was a regional market, allows our cement business to perform resiliently. Mature markets such as Europe and North America, but also South America in a way, are leading the implementation of trade protection measures. Markets like India and Meta are less protected, and therefore they absorb much more of the rerouted Chinese exports that don't make it into the protected markets anymore. This adds margin pressure there. And as you have heard, we saw this already last year. It therefore also limits at least profit growth opportunities for us in these markets, because volume growth gets compensated by margin pressure. RHI Manzita began this regionalization focus in 2021, and we're so happy that we did this, because we continue to steer the company now strategically by regions. We believe this regionalization is a key response to this ongoing reorganization of global trade. The creation of the meta-region, Middle East, Turkey and Africa is the last step, the latest step in this approach, probably not the last. Many of these markets still import the majority of their refractory demand, and are therefore also particularly exposed to this global trade dynamics and of course imports from places like China. Under the right conditions, trade barriers can create a more supportive local environment under the right conditions. But only locally, not globally. In the United States, for example, tariffs on certain Chinese refractories used in steelmaking support more sustainable pricing levels for us to keep local production running. That has been a political decision actually since many, many years. In Europe, measures to limit steel imports could eventually help to put a floor under domestic production. which in turn then can support local refractory demand also. We expect this to potentially have an effect in 2027. Potentially. In Brazil, investigations into tariffs on Chinese refractories could restore pricing a little bit there to more sustainable levels, but also there not for a while. There's still an investigation. While we have not observed any tangible impact on our order books globally, there remains a possibility that pricing and demand dynamics could gradually improve across certain regions over time, but it could also then go at the detriment of other regions. At present, however, ladies and gentlemen, there is no direct benefit from this for our forecast in 2026. Not on cash and not on profit. At the same time, while this is all happening, China recognizes that globally deployed excess capacity is straining their trade relationships and maybe more than trade relationships. Therefore capacity reforms and potential export limitations in China could benefit other regions in the years to come and support the development of a more sustainable value creating refractory industry within China also because capacity reduction there has to happen. It is recognized but again This will take years until this will take effect. At present, we see no benefit from these announced measures. Not in our order book, nor in our forecasts, nor in our performance for 2026. I want to spend a couple of minutes on North America and particularly the US. This is our most attractive refractory market globally at this moment in the cycle. It doesn't have to stay like this. The US market is characterized by balanced supply and demand structures, maybe that's the most valuable part here, which enables disciplined pricing and mature capital allocation among suppliers and between customers and suppliers. At the same time, US steel producers operate at very healthy margin levels, supporting continuous investment in low-carbon steelmaking. Despite the noise you hear, the US is the leader in low-carbon steelmaking. And this is important for us because it creates strong demand for our market-leading 4PRO and electric arc furnace offerings. While the US currently offers attractive margins, it also presents challenges, particularly around tariff volatility, where should we supply from next month, and the US dollar devaluation, because we account in other currencies. The recent acquisition of Resco significantly strengthened this local for local strategy and thus reduced the tariff risks and gives us some more natural hedges. We have launched a network optimization Americas program to increase our local for local share in the U.S. to approximately 80% from which we will attain in 2028 from about 50% that we had until 2024. This will allow us to deliver best-in-class services with lower working capital intensity and reduced tariff exposure, while also delivering further margin upsides through synergy realization and self-help measures also in the US. Let's talk about sustainability. In 2019, we set ambitious sustainability targets that many believed were unachievable. There are and they continue to be a cornerstone for developing our business model for the next decade because the emission problem doesn't go away. In 2025, we delivered the first key milestone on this sustainability agenda. including a meaningful reduction in CO2 intensity. This is really significant for a heavy industry here, more than 15%. On the back of this progress, we remain committed, fully committed, to our decarbonization roadmap. And now the next set of targets that we have set. First, our recycling rate now stands just under 16%. up from 3.5% in 2018. Despite the delusion from acquired businesses who had a much, much lower percentage. They now all operate at much, they did operate at much lower recycling levels and we are bringing them up step by step. So you see there's still potential here, quite a bit of potential here. With continued investments and now technological advancements in recycling and sorting, we will further increase this recycling content and scale also the commercialization of secondary raw material businesses globally. Second, our carbon capture and utilization technology developed together with MCI Carbon in Australia is currently undergoing industrial scale testing. This green mineral technology could become a key lever in addressing geogenic emissions, which are unavoidably, technically, especially in our raw material operations. We are targeting the first international large-scale industrial development in 2030. Third, we continue to test hydrogen. where it is economically and technically viable. A specialized furnace in Germany is central to advancing these trials where we have technically everything in place across different refractory products because hydrogen burns differently. The technical feasibility of using hydrogen as a fuel is very much possible. We know this now and we know how to do it. But commercially, hydrogen is not a viable fuel alternative for the time being. So we will not continue any more activities here, at least in the short term. Recycling already contributes meaningfully to earnings. via our joint ventures in Europe and in the US, on top of the raw material cost savings that it brings. Our recycling capabilities in particularly are a clear differentiator now also in our 4Pro offering for our customers, because we can present to them a true 100% circular economy solution for refractories. We are seeing strong interest from the new green steel mills overall around the world, actually in every region, that are looking to integrate these circular solutions into their operations. They don't want any landfills anymore. In 2025, we signed four green steel contracts, some including recycling components, and we expect further progress in the years ahead. Let's go to the financial review that you've all been waiting for so long, and I would like to ask Ian to lead you through the numbers, and then I'll come back at the end.

Thanks, Stefan. Good morning, ladies and gentlemen. I'll walk you through our 2025 financial performance and our expectations for 2026. 2025 was a challenging year externally. However, internally, we responded with discipline and with speed. And the second half performance clearly demonstrates the impact of our managerial actions. Adjusted EBIT A declined from $407 million in 2024 to $373 million in 2025. The primary drivers were market related. In industrial, EBIT A declined by 74 million. This as the number of high margin projects in glass and non-ferrous metals fell by 40% as customers postponed rebuilds and delayed maintenance. This also led to under absorption of fixed costs in our specialised plants. In steel, EBITDA declined by 41 million. This as demand remained weak in Europe, in Latin America and in the first half in Meta. High levels of Chinese steel and refractory exports intensified pricing pressure across multiple markets. Currency reduced our earnings by 13 million, mainly driven by the weakness in the US dollar and the Indian rupee. These were significant external headwinds. Offsetting this, management-led self-help measures delivered 70 million in 2025. This included pricing discipline, operational cost improvements, and SG&A reduction. In addition, Resco contributed to 25 million including synergy benefits. The important point is that the earnings recovery in the second half was execution driven, not market driven. 25 was clearly a year of two halves. The first half was one of the weakest since the merger with EBIT A of 141 million This reflected the full force of the industrial downturn, weak steel demand, pricing pressure, and fixed cost under absorption. In the second half, the benefits of our self-help measures came through strongly, increasing EBITDA to $232 million, 65% higher than the first half, and 7% above the second half of 2014. This improvement was delivered despite continued market weakness and a 19 million currency headwind in the second half. Against our guidance, steel outperformed. The industrial recovery was delayed with projects moving into 2026. Pricing delivered at the top end of our expectations. SG&A savings were more than double what we guided and the plant measures were delivered as planned. All of our cost actions are structural and will continue into 2026 and beyond. They do not rely on temporary reductions or borrowing from the future. Even in this challenging environment, we defended our margins. Since the 2017 merger, our adjusted EBITDA margin has remained above 11% every year. That consistency reflects our diversification across regions and end markets, but more fundamentally, it reflects disciplined execution and active management. The refractory margin remained robust at 10%, supported by synergies, pricing discipline, and operational excellence. The backward integration margin, however, remained at cyclical lows at 1.1%, contributing EBIT A of 37 million. This was primarily due to continued weak Chinese Magnesite pricing, reflecting industry overcapacity, and high levels of above-ground inventory of ore, as well as lower fixed cost absorption at our own raw material plants. Importantly, our backward integration margin remains positive, demonstrating the competitiveness of our cost base. To improve returns from our raw material assets, we've implemented targeted self-help measures to reduce costs, and expand sales into non-refractory markets, and we expect these actions to support a gradual recovery in profitability from 26 onwards. Moving to working capital, working capital intensity improved strongly to 21.7%, marking the third consecutive year of improvement. This reflects disciplined credit management with our accounts receivable as well as inventory reduction driven by continued progress on our local for local strategy and the rollout of new supply chain technological solutions to strengthen our inventory control. The acquisitions of Resco and BPI added 51 million of working capital At the same time, we reduced our working capital by 143 million, with roughly half of that driven by management actions and half by currency movements. In total, this translated into an 84 million release of cash flow from working capital reduction. Cash generation remains a core strength of our business. In 2025, adjusted operating cash flow was 391 million, resulting in a cash conversion of 105%, and free cash flow of 214 million. Net debt increased to 1.5 billion, primarily reflecting the acquisition of Resco. Leverage closed at 2.9 times net debt to adjusted EBITDA, This was slightly stronger than our guidance. Our liquidity remains strong and approximately 70% of our debt is fixed with an attractive weighted average cost of borrowing of 3.3%. We are comfortable operating temporarily at elevated levels of leverage to fund compelling value accretive M&A particularly in high margin segments such as in 25 in North America. Our strong cash generation provides a clear path to deleveraging and we expect leverage to reduce to around 2.6 times, about 1.4 billion, by the end of this year. This level of cash generation gives us flexibility to invest in growth, to reduce net debt and to maintain disciplined shareholder returns. We are therefore recommending a final dividend of €1.20 per share bringing the full year dividend to €1.80 in line with our dividend policy. Finally, looking ahead, we expect the market environment to remain challenging as ongoing global uncertainty continues to dampen customer demand and investment. Steel end markets remain at cyclical lows globally, with no near-term recovery in demand apparent in our order books. At the same time, Magnesite-based raw material pricing is likely to remain subdued, keeping our backward integration margin around current levels. In addition, currency is becoming a much more material headwind this year, both from the US dollar and from the Indian rupee, with an expected negative impact of around 35 million at current exchange rates. Against this backdrop, our performance improvement will once again be driven by what we control – We are therefore guiding to 435 million adjusted EBIT A on a constant currency basis, representing a 17% increase versus 2025. After reflecting anticipated currency headwinds, this translates to approximately 400 million of reported adjusted EBIT A, implying a margin of around 11.5%. The earnings improvement is underpinned by four structural measures, each contributing approximately $15 million on a like-for-like basis. First, we expect a gradual improvement in the industrial business. Project activity should improve particularly towards the second half, although it will remain well below historic levels. We do not expect a demand improvement in our steel business overall. Second, we continue to drive pricing discipline and expand our 4Pro offering, increasing the share of higher-value solution-based revenues. Third, our network optimization programs in Europe and the Americas will deliver further benefits, with the Americas now contributing around $5 million of the $15 million total impact this year. And finally, we achieve further structured SG&A reductions through administrative efficiencies supported by the investments that we've been making in digital transformation, in process standardization, and leveraging our shared services model. These measures have already proven effective in driving the second half turnaround, and we will continue to build on them to deliver further improvements in 2027. We are not relying on market recovery to achieve this guidance. So to conclude, 2025 demonstrated the resilience of our model. We acted early, we defended margins, we generated strong cash flow and completed a transformative acquisition in North America. 2026 is now about continuing our disciplined execution and delivering in a still challenging demand environment. Thank you. Now back to Stefan.

Thanks Ian. Let me summarize for you. First in 2025 we delivered significant self-help cost initiative as we had planned to meet our profit guidance. We're improving our business structurally and sustainably by focusing on what we can control. Second, the momentum of self-help continues into 2026, and new measures get added to improve 2026, but that already will prepare the next improvement for 2027. And third, there is no visible market recovery that will benefit our business in 2026. We retain great operational leverage which will enhance our performance if and when such a demand recovery will come. We don't expect this before 2027, even if we want to be optimistic. On that basis, Ian has outlined the guidance, so I don't need to do it again. Our gearing will go down more. Our cash generation will become, we'll stay disciplined, and our expenditure control will provide the actual improvements. And it will... build strategic opportunities for the future. Let me summarize our investment case. Before we move, in 2025 we made very good progress towards this investment case. We have significant opportunities to grow the business and improve our margins. We do have these opportunities. We demonstrated in 2025 how disciplined self-help measures can deliver stable performance, even in a weak market environment, and that's what we continue to focus on. Second, we continue to consolidate the refractory industry, unlocking on average around 35% synergies per acquisition, 35% of the acquired companies EBITDA, in a structurally stagnant global market. The acquisition of Resco marks an important milestone in the US because we had this gap there. It's just one of the examples. At the same time, we're building a highly efficient, digitalized corporate platform. We're in the middle of this transformation. that will enable us to integrate future acquisitions dramatically much faster within weeks and drive cost leadership. It will also make us AI ready. And we're not five years away, we're 12 to 18 months away from this. Our strong cash flow supports an attractive dividend while also giving us strategic flexibility that many competitors do not have. Already today we generate FTSE 100 level cash flows and EBITDA with the market capitalization of the FTSE 250 company. Taken together, this underpins a value accretive strategy and a long-term compelling investment case. Thank you, Ian, for being at my side here, like all the time, and like we've done in so many years. And let's take your questions now. Please. Yeah, please wait for the microphone so that in the phone call we can also hear about it.