MYTILINEOS – Big profit increase in 2021

62.4% increase in earnings per share on an adjusted basis for extraordinary and non-recurring events, compared to the Nine Months of 2020, or 18% on a non-adjusted basis, with net profit after minority interests amounting to € 115 million, was shown by MYTILINEOS in the 9 months of 2021, according to a relevant announcement.

At the same time, there was an increase of 27% in the turnover that amounted to € 1,698 million, compared to the Nine Months of 2020.

At the same time, there was a 23% increase in earnings before interest, taxes, depreciation and amortization (EBITDA) amounting to € 241 million, if the comparison is made on an adjusted basis for extraordinary and non-recurring events, compared to the Nine Months of 2020. In Non-adjusted basis EBITDA shows an increase of almost 3% compared to the Nine Months of 2020.

In addition, net debt amounted to € 804 million, with the leverage ratio (Net Lending / EBITDA) reaching 2.5, in a year in which very significant investments are either completed or in full swing.

“As we go through the Fourth Quarter of 2021, a year in which despite the recession presented by the pandemic, challenges are recorded as important as 2020, MYTILINEOS records new historical levels of turnover and profitability while accelerating the implementation of its investment “preparing the transition to even higher economic figures in the coming years in line with the ambitious environmental goals it has set,” the company said in a statement.

The global economy, despite experiencing the fastest growth rate in recent years, is now facing critical secondary effects of the pandemic, such as inflationary pressures, rising commodity prices, supply chain disruption, and rapid energy costs. record freight rates worldwide and in general the increasing cost pressures that became particularly intense in the second half of the year, undermining the growth prospects. The coexistence of so many adverse conditions at the same time, puts to a great test the whole entrepreneurship, in Greece, in the European Union but also in the whole world.

Recognizing the above developments in time, MYTILINEOS has taken targeted measures, especially regarding energy costs, which on the one hand ensure the achievement of a new historically high profitability in 2021, but also lay the groundwork for a change in the level of its financial performance from next year. Significant investments are gradually entering the completion phase regarding the increase of Aluminum production capacity, to 250,000 tons (project NEW ERA 250), with the completion of the construction of a new 826MW power plant as well as with the completion of development and construction of new RES units, total power over from 2.5GW in Greece and abroad.

Comparison

Compared to the Nine Months of 2020 on a consolidated basis:

Turnover amounted to € 1,698.1 million compared to € 1,341.0 million in 2020, recording an increase of 27%. Earnings before interest, taxes, depreciation and amortization (EBITDA) amounted to € 241.2 million compared to € 234.5 million in the first nine months of 2020, benefiting from the significantly improved performance of the Sustainable Development Projects Sector, which returned to profitability after new contracts in the previous period, but also the consistently strong performance of the Metallurgy Sector. The increased performance of the Metallurgy, Sustainable Development and Development of Renewable Sources & Energy Storage Projects fully offset the expected reduced performance of the Electricity & Gas Sector due mainly to the planned high maintenance of the power plant. particularly high gas costs. If the planned maintenance of Korinthos Power had not been carried out in 2021, the operating results (EBITDA) of the Electricity & Natural Gas Sector and of MYTILINEOS in total during the nine months of 2021, are estimated to have increased by approximately € 15 million.

In a period of great fluctuations, comparative size analysis acquires special importance. Therefore, it is worth noting that excluding the effects of non-recurring factors, the adjusted increase in EBITDA for the nine months of 2021 compared to the corresponding period of 2020 amounts to about 23%.

Net profit, after taxes and minority interests, amounted to € 115.2 million for the Nine Months of 2021, increased by 13% compared to € 101.8 million for the corresponding period of 2020. Respective

ha, if the comparison was made on an adjusted basis for extraordinary and non-recurring events, the increase compared to the Nine Months of 2020 is 55%.

In the Nine Months of 2021, the Electricity & Natural Gas Sector recorded a turnover of € 687.9 million, which corresponds to 40.5% of the total turnover, remaining almost unchanged (+ 3%) compared to the corresponding period of the previous year .

How developments are affecting Europe

The total electricity consumption in the country in the Nine months of the year increased by 3.9%, as after the decrease in the first quarter of the year (-5.4%) due to the pandemic, the demand recovered dynamically in the 2nd and 3rd quarters. of the year (+ 7.6% and + 9.9% respectively), also helped by the extreme climatic conditions that prevailed during the summer months.

During the second half of 2021 and while the pandemic has not yet passed, the world community is called upon to face a major energy crisis, which, combined with the existing inflationary pressures, threatens to slow down economic growth.

In Europe in particular, gas prices are at an all-time high, with CO2 prices hovering around very high and governments urged to take action to reduce energy costs in the run-up to winter.

The above developments directly affect the wholesale market, with prices on the Energy Exchange in the third quarter of the year amounting to 119 € / MWh, marking an increase of 167%, which poses significant challenges for both suppliers and consumers of electricity. . MYTILINEOS, recognizing in time the challenges posed by the current situation, based on many years of experience and friction in the commodity markets, has timely adjusted its commercial policy to protect both its shareholders and consumers – customers in the vortex that has created in the global energy markets.

Specifically, the total production from both the thermal and the renewable units of the Company amounted to 4.0 TWh, which corresponds to 10.1% of the total demand. In terms of electricity supply, Protergia maintains a 8.1% stake at the end of September.

The production of MYTILINEOS thermal units was reduced to 3.6 TWh from 4.1 TWh in the corresponding period last year, since, as mentioned, the Company proceeded to the planned quarterly “Great Maintenance” of the Korinthos Power station during the period March-May 2021. The unit has been operating normally since the beginning of June, contributing to the coverage of the country’s energy needs.

Power increases

MYTILINEOS, with the expected commissioning of the new 826MW gas-fired power plant (CCGT) at the end of the year, will have a total installed capacity of ~ 2.3 GW from thermal power plants and RES units and therefore is expected to double its share of the market it currently holds in terms of production. This development will also enable it to gradually claim a proportional and higher market share in the supply of electricity, taking into account the current market conditions, but also the strong growth prospects of the Greek economy in the coming years.

During the Nine Months of 2021, the Alumina and Aluminum plants of the Metallurgy Sector remained in full operation, without problems, increasing the production levels especially with regard to recycled Aluminum, in order for the Company to meet both the growing demand and the ambitious plans that it has set.

Metallurgy Sector

The Metallurgy Sector in the Nine Months of 2021 recorded a turnover of € 482.3 million, which corresponds to 28.4% of the total turnover, compared to € 393.0 million in the corresponding period of 2020. Earnings before Taxes, Interest and Depreciation (EBITDA) amounted to € 119.4 million compared to € 115.8 million in the corresponding period of the previous year.

Aluminum prices have risen sharply since the beginning of the year, reaching new all-time highs in the current period, as a number of factors, such as pandemic stimulus measures, loose monetary policy, inflationary pressures, escalating energy crisis and the global trend towards the “green” economy, contribute to the significant increase in global demand and at the same time place restrictions on the supply and availability of metal.

Specifically, in the Nine Months of the year the average price of Aluminum (LME 3M) reached the level of $ 2,400 / ton, 44% increased compared to the corresponding period of 2020, while in the period we are going through the prices in LME rose to the levels of $ 3,180 / ton. Premium prices also show a strong increase, having doubled in the Nine months of the year, compared to the corresponding period last year.

The Alumina API index, which initially did not follow the strong rise in aluminum prices, with the average price in the Nine months of the year reaching $ 300 / ton, an increase of 11.9% compared to the Nine months of 2020, the last period has begun to align with rising metal prices.

Rise in raw material prices

In terms of costs, the recovery of global demand and the sharp rise in energy prices have increased the prices of raw materials, transportation costs and pollutant prices, contributing to the increase in production costs of Alumina and Primary Aluminum in the Nine Months of the year . The above cost pressures have begun to affect vulnerable producers, especially in Europe, with the result that high LME prices are not reflected in profitability, on the contrary, several units in Europe have already cut production.

In this area as well, MYTILINEOS has taken the appropriate measures in time to address the various cost parameters, while taking advantage of the high LME stock market prices secures increased profitability for the next 2-3 years.

At the same time, MYTILINEOS remains firmly committed to strict cost control, aiming to further strengthen its competitive position. The program to increase productivity and cost optimization, called “Hephaestus”, is in full swing and is expected to be completed by the end of 2021.

Finally, investments continue unhindered to increase the production capacity of Alumina by 25 thousand tons, as well as the total annual production of Aluminum to 250 thousand tons (project NEW ERA 250) of which 26% will come from recycled Aluminum.

The results for the Nine Months show the positive course of the Renewable Sources & Energy Storage Development Sector, with a significant improvement in its performance compared to the corresponding period of 2020. More specifically, the Sector recorded a turnover of € 244.3 million, an increase of 16% compared to the first nine months of 2020. Earnings before interest, taxes, depreciation and amortization (EBITDA) amounted to € 15.0 million, increased by 31%. against € 11.5 million for the corresponding period in 2020.

Significant catalysts for this performance were the contracting and commencement of work on a number of projects in South America, Europe and Uzbekistan for third-party projects, while the Build, Operate & Transfer (BOT) projects an agreement was signed for the sale of a portfolio of photovoltaic parks, with a total capacity of 91MW in Romania, with a contract price of € 67.7 million.

Works for third parties

In particular, in the projects for third parties, the works continue in countries such as Chile, Spain, England, Uzbekistan, while within the period MYTILINEOS became the contractor of a 200MW project for DEHAN, in Western Greece in which the works have already started. In total, the contracted balance of projects for third parties amounts to € 287 million. Regarding BOT projects, the Sector made significant acquisitions of projects in Latin American and European countries.

The total capacity of mature BOT projects amounts to ~ 2 GW of which:

· 121.5 MW have been completed and activated

· 524 MW under construction

· 136 MW with complete licensing and ready for start of construction (RTB)

· 308 MW ready for construction (RTB) at the end of 2021

· 848 MW ready for construction (RTB) within the first half of 2022

In addition, in the BOT portfolio the Sector has in development phase ~ 4GW, which are in earlier development stages.

At the beginning of the Fourth Quarter, the Sector strengthened its presence in the Italian market, securing through an auction a project, which it had fully developed, with a capacity of 52.8 MW, securing a 20-year financial contract with an energy sale price of € 65.17 / MW.

Sustainable Development Projects Sector

Following the results of the semester, the Sustainable Development Project Sector remained profitable, certifying its substantial restart, after a year that was significantly affected by the effects of the pandemic, but also with the new strategic focus on projects that promote Energy Transition and Sustainability. In particular, turnover amounted to € 283.6 million which corresponds to 16.7% of total turnover compared to € 209.7 in the first nine months of 2020. Respectively, Earnings before Tax, Interest and Depreciation (EBITDA) increased to € 29.6 million against losses – € 12.0 million in the Nine Months of 2020.

During the year, a contract was signed for the construction of two new high-voltage substations and the expansion of an existing substation in Georgia. This project comes as a continuation of two contracts that have been signed for similar projects in Greece and Albania, marking the dynamic penetration of the Sector in the field of Transmission & Distribution (T&D). At the same time, the Sector continues to utilize its comparative advantages and strong know-how in the construction of thermal units, claiming projects in Europe and Sub-Saharan Africa, while proceeding with the execution of existing contracts.

In addition, in the field of environmental solutions, MYTILINEOS identifies significant growth prospects, already having the market recognition as Turn-Key Contractor for large-scale projects. In this context, the implementation of the project “Protos Energy Facility” in Cheshire, UK, with a capacity of 400,000 tons per year, is being implemented, while it is actively participating in discussions for further possibilities for similar projects.

The outstanding balance of the contracted projects amounts to € 848 million at the end of the Nine Months, while including the projects that are in an advanced stage of contracting, the total reaches € 1.7 billion.

Finally, MYTILINEOS, aims to take advantage of the opportunities presented by the Recovery Fund and especially for projects that promote sustainable development, such as solid and liquid waste management projects, hybrid and off-grid energy projects, energy upgrade projects and the implementation of innovative first -of-kind energy projects.