H+H International A/S : Q1 2024 Interim Financial Report roadshow hosted by ABG Sundal Collier - 16 May 2024

H+H International A/S

Q1 2024 Financial Results

Roadshow at ABG Sundal Collier

16 May 2024

Forward-looking statements

This presentation contains forward-looking statements. Such statements are subject to risks and uncertainties, as various factors, many of which are beyond the control of H+H International A/S, may cause actual developments and results to differ materially from the expectations expressed in this presentation.

In no event shall H+H International A/S be liable for any direct, indirect or consequential damages or any other damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other action, arising out of or in connection with the use of information in this presentation.

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First quarter in line with expectations

			Q1 2024 key takeaways
Selected financial figures	(1)	Early signs of market improvement in UK and PL
Figures in DKKm unless otherwise stated. Q1 2023 figures in brackets
	resulting in 13% higher sales volumes.
		.
		(2)	Business Improvement program is delivering with
Sales volume	Gross margin(1)	EBIT margin(1)	approximately 30% lower fixed costs in Q1.
13%	17%	-3%

(-42%)

(24%)

(3%)

EBITDA margin(1)	Free cash flow	Financial gearing(1)
4%	-91	5.1x
(11%)	(-309)	(1.4x)

1. Gross margin came in as expected, however is impacted by planned decrease of stock and still effects from higher gas costs.
2. Financial gearing at a level of 5.1 in line with our expectations.

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(1) Before special items

Early signs of market improvement in UK and PL

The United Kingdom:

• Overall consumer confidence is increasing in the UK.
• Application for new mortgages rising. Number of mortgage approvals were over 60,000 in February for the first time since September 2022.
• Month-on-monthincrease in registrations since January however, registrations down by 20% in Q1 2024 vs. last year.
• Volume improvement is driven by major housebuilders and new won customers.
• After maintaining prices throughout 2023, prices were adjusted in the beginning of 2024 to current market conditions.

Poland:

• 2% loan programme "boosted" the application for new mortgages and new build activities in Poland.
• Building permits are also up 33% March YTD vs. last year.
• Successor program of the 2% program is being developed and is intended to launch in 2nd half of 2024 after current programme's budget is already consumed.
• After gradual price corrections in 2023 backed by lower input cost, prices in 2024 are stable compared to Q4 2023 levels.

Germany:

• Opposite to UK and PL, overall, less new build activity than last year.
• Building permits declined by 25% February YTD vs. last year
• High interest rates, high construction costs resulting from regulation, and the lack of efficient government support programs have worsened the investment climate into newbuild
• After gradual price corrections in 2023, positive price development in 2024 vs. Q4 2023.

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Revenue by region in DKKm. Revenue growth / organic growth

Q1 2023 Q1 2024

-29% /-30%

345

+43% / 31%

245

+26% / 22%

215

184

146	150

Central Western Europe

United Kingdom

Poland

Business improvement program delivering

From Q1 2023…	…to Q1 2024
32 operating plants	23 operating plants
(plus 4 mothballed)
Stock with 3.7 months reach	Stock with 2.2 months reach
170m DKK fixed costs in operations	120m DKK fixed costs in operations
Around 1700 employees	Around 1300 employees
Individual plants	Network of plants
	- Following one operating model
	• Borough Green with 20% higher
	capacity.
	• Concentrate production volumes in
	higher efficiecent plants.
	• Expand customer offerings.

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Project ONE - Business transformation in CWE

From 3	15 to 12 plants		Strategic objectives	Results
Original three plants before 2018
			One face to the Customer	A true partner in wall building
					offering great customer experience

Simplified product portfolio	Better plant utilisation and
	higher uptime resulting in higher
	efficiency

Integrated business processes	SG&A costs in line with other
	regions

Aircrete factories

Calcium silicate factories

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Organic growth significantly impacted by country mix

Volumes by quarter (Thousand m3)

Revenue by quarter DKKm. Revenue growth / organic growth

1,182

1,000

1,087

1,018

899			+13%
		723	740	719
634		648

874

920

810		731	0% / -4%
		699
641		644
	601

Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024

• Positive volume development in the UK and in PL.
• Situation in CWE weaker than last year resulting in lower volumes.

Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024

• Country mix impact was 7%.
• Prices were 9% lower than Q1 2023 as expected.
• Prices compared to Q4 2023 stable/improving in PL/CWE. UK prices below last year.

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Gross margin in Q1 was impacted by gas and significant stock adjustments

Gross Profit and Gross Margin

350			Gross Profit (DKKm)			Gross Margin (%)							30
300																				25
				24%			24%
250																				20
											20%
200
					178										17%
											16%		15
154							138
150
														94		109		10
100
50																				5
0																					0
		Q1 2023	Q2 2023	Q3 2023	Q4 2023	Q1 2024

• Gross profit was DKK 109 million compared to DKK 154 million corresponding to gross margins of 17% and 24%, respectively.
• Gross profit increase with DKK 15 million vs. Q4 2023 and gross margin increase 1 pp.

Gross margin development

• Gross profit in Q1 2024 was influenced by de-stocking. In contrast, there was a planned stock build-up in Q1 2023.
• In the first quarter of 2024, there was a negative impact of DKK 20 million from unfavourable gas contracts.
• Adjusted for unfavourable gas contracts the gross margin would have been 20%.
• We anticipate an improvement in the gross margin during the latter part of the year as gas unwinds from inventory and we approach our desired inventory levels of 4-6 weeks of stock on hand.

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Restructuring and special items

Gas settlement:

• As outlined in the 2023 Annual Report, H+H has decided to settle unfavourable gas contracts that were established in the summer of 2022. Consequently, a one- off loss of DKK 93 million was recorded in the first quarter and classified as special items.
• Additionally, the sale of unused hedged gas to the market led to a further loss of DKK 17 million, also recognised as special items. Thus, the total cost related to gas, classified as special items in Q1 2024, amounted to DKK 110 million.

Restructuring cost:

• In Q1 2024, DKK 19 million in restructuring costs were recognised which mainly relates to CWE.

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Increasing NIBD following normal seasonality

Net interest-bearing debt

DKKm.
		58	19
	42
				1,006
887
NIBD	CF Operating	CAPEX incl.	FX, Interest	NIBD
31/12 2023	Activities (1)	IFRS 16	and other	31/3 2024

• Development in operating cash flow is led by a positive development in inventory due to de-stocking offset by other negative working capital items.
• Q1 impacted by normal seasonality incl. customer bonus payouts.

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Financial gearing

NIBD to EBITDA before special items

Long-term financial target of 1-2x EBITDA

5.5					5.1x
5.0
4.5
4.0				3.6x
3.5
3.0			2.6x
2.5		2.0x
2.0
1.4x
1.5
1.0
0.5
0.0
Q1 2023	Q2 2023	Q3 2023	Q4 2023	Q1 2024

• Current financial gearing is increasing. However, we have adequate headroom within the terms of our banking agreements.
• We anticipate a decrease in the gearing ratio in the latter half of the year.
• Under stable conditions, we will get back to the long-term financial targets by organic measures.

(1) Before financial items