Ferroglobe PLC Q2 FY2025 earnings call

Management Statement and Operational Highlights

• Trade Environment: Rapidly evolving market with elevated uncertainty around global trade policy, tariffs, and safeguards. Withdrew 2025 guidance due to limited visibility on market dynamics and trade measures.
• EU Safeguard Investigation: European Commission launched a safeguard investigation in December 2024 on silicon metal, etc. Preliminary decision delayed; Ferroglobe expects benefit in 2026. Actively engaged with stakeholders for positive outcome.
• U.S. Trade Tensions: Pending trade deals with Canada and uncertainty around silicon metal trade case (preliminary countervailing duties decision in late Sep, antidumping in late Nov).
• Market Developments: Decline in European silicon metal prices due to Chinese imports; production curtailments in China, Europe, Brazil; NATO defense spending increase and Germany's infrastructure investment.
• Operational Actions: Switched 2 silicon metal furnaces to ferrosilicon in U.S. and Europe to optimize production; joined Russell 2000 and 3000 indexes for improved visibility and liquidity.
• Financial Performance: Q2 showed 27% volume increase, 26% revenue increase, adjusted EBITDA rebounded to $22 million from a loss in Q1, remaining net cash positive.

Segment Performance

• Silicon Metal: Revenue increased to $130 million in Q2, up 24% over Q1. Shipments rose 23%, adjusted EBITDA went from a $15 million loss in Q1 to a $7 million gain in Q2, with margins improving to 5%. Revenue contribution: Not explicitly stated as a percentage but was $130 million.
• Silicon-based Alloys: Revenue rose 23% to $112 million, supported by a 24% increase in shipments. Adjusted EBITDA increased from $2 million in Q1 to $7 million in Q2, with margins expanding from 3% to 6%.
• Manganese Base Alloys: Revenue post the strongest improvement, up 43% to $106 million, driven by a 31% increase in volumes and a 9% increase in average selling prices. Adjusted EBITDA improved from a $6 million loss to a $17 million profit, with margins reaching 16%.

Guidance

• Withdrew 2025 annual guidance due to market uncertainty around trade policies and tariffs.
• Expect EU safeguard decision to reduce price pressure from imports, paving the way for robust market conditions in 2026.
• Anticipate further improvement in U.S. ferrosilicon market due to trade policies and antidumping actions; expect trend of increased ferrosilicon sales in U.S. to continue in coming quarters.

Risks

• Uncertain Global Trade: Elevated uncertainty around global trade policy, tariffs, and safeguards impacting visibility and business operations.
• Delayed EU Safeguard Outcome: Pending EU safeguard investigation decision; timing and measures unclear, affecting market expectations.
• Impact of Chinese Imports: Massive low-priced silicon metal imports from China exerting pressure on European market, destabilizing pricing and market share.
• U.S. Trade Uncertainty: Lack of clarity on U.S. trade negotiations with Canada and other countries, affecting business and global trade dynamics.

Question and Answer

• Q: Inquiry about forward-looking metrics for the second half of 2025.

A: At this stage, in an extremely uncertain environment with trade tariffs and low-priced Chinese imports, projecting volume, price, and costs is difficult due to ongoing market uncertainties.

• Q: Exposure to rare earths and impact on supply chain.

A: Discussed bismuth, germanium, tellurium as rare earth exposures; secured supply, with magnesium not being a rare earth and supply currently secured.

• Q: EU safeguards, price floor, volumes, timing.

A: No final EU decision yet; engaged with EU stakeholders, optimistic about outcome, but can't speculate on price floor, volume response, or timing as final decision pending (preliminary Aug 18-19, final Nov 20).

• Q: U.S. furnace switch, volume impact, EBITDA.

A: Switched 2 silicon metal furnaces to ferrosilicon in U.S. and Europe; positive EBITDA in U.S. due to market opportunities and advantaged cost position, with volume increase contributing to improved EBITDA.

• Q: Coreshell investment and trade case impact.

A: Coreshell pilot plant operating smoothly, first cells produced with outstanding cycle efficiency; working with major OEMs in U.S. and Europe, with silicon-rich anode technology benefiting from reduced graphite reliance on China.