Powering Ahead with a Greener Twist

International industrial conglomerate MYTILINEOS’ successful strategy for growth has been reinvestment in core operations, continued cost efficiencies, and leveraging synergies to yield strong cash flows, says Investor Relations Director, Cleo Lymberis.

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GIG: MYTILINEOS is expected to report revenues in excess of €2 billion for 2019, representing a sharp rise over 2018. What are the growth areas for MYTILINEOS and what does your strategy for further expansion look like?

Cleo Lymberis Mytilineos' Investor Relations Director

Lymberis: We are regional in assets but an integrated and global company in revenue. We operate under three business segments: metallurgy; power and gas; and engineering procurement construction (EPC) and infrastructure. Our main strategy for growth has been reinvestment into our business, emphasising continued cost efficiencies, and leveraging our synergies to yield strong cash flows.

In our metallurgy business this strategy has established us as one of the lowest cost producers of alumina and aluminium globally. Our vertically integrated model is unique in the industry. The current strategy is to expand into green aluminium with low carbon electricity and scrap recycling.

In power and gas, our strategic decision to invest in natural gas-fired production and wind power throughout the crisis in Greece is now bearing fruit. We are the leading independent power utility in Greece, supplying over 10% of the market, and the leading importer of natural gas with a 30% market share. We are solidifying our position through the construction of a new 826 MW natural gas-fired plant, powered by General Electric (GE) and built by our EPC arm. The plant will go online in 2022.

Lastly, in EPC and infrastructure, we are increasingly building a global portfolio of solar-powered construction projects, from Spain to Kazakhstan, having become a preferred supplier to top solar players. This know-how, coupled with our strong balance sheet, naturally leads us into a solar development (‘build-operate-transfer’) model that will allow us to further leverage our position.

GIG: What do you see as key challenges that lie ahead for MYTILINEOS?

Cleo Lymberis Mytilineos' Investor Relations Director

Lymberis: Changing market dynamics are nothing new. This is something we are accustomed to as a global company. Our key challenge is to successfully transition to a more corporate model, maintaining efficiencies and entrepreneurial spirit, while also adopting the structures that allow for best-in-class corporate governance. Our dynamic and global profile is what enabled us to debut as the first Greek corporate issuer in the debt capital markets over the past five years.

GIG: While Greece’s volatile environment has wiped out businesses, MYTILINEOS is currently one of the biggest companies in Southeast Europe. What has MYTILINEOS done not just to keep afloat but turn into a leading player? What would you like to see more of in Greece at a corporate governance level?

Cleo Lymberis Mytilineos' Investor Relations Director

Lymberis: If you analyse which companies survived and which did not, you will see that in every case the winning strategy was one: to adjust quickly to changing times. We are a highly motivated, agile, and entrepreneurial company at our core. It is deeply embedded in our DNA. With respect to corporate governance, corporate discipline is not a threat to business. More companies should adopt this thinking.

GIG: With the country deregulating its power market, MYTILINEOS has played a leading role in the new conditions affecting both commercial and household consumers. These changes represent a big shift for Greece, which was previously powered exclusively by the state monopoly Public Power Corporation (PPC). How important is the role of private sector involvement and that of Protergia, MYTILINEOS’ energy division?

Cleo Lymberis Mytilineos' Investor Relations Director

Lymberis: The benefit of the last 10 years has been that it led to a paradigm shift in our thinking as a country. It was a wake-up call to the fact that the Greek state cannot be a cure for all and cannot survive without private sector involvement and partnerships. The state of the energy market in Greece requires support from the private sector to help transition to greener energy. Protergia, our branded retail business, has strong brand loyalty, and our operating model of low-cost production supports us remaining a leading player throughout this transition.

GIG: What is your strategy within the scope of RES?

Cleo Lymberis Mytilineos' Investor Relations Director

Lymberis: Environmental social governance (ESG) is very important to us. We are committed to cleaner energy and environmental preservation. We have already demonstrated this in our metallurgy business, where we have been globally recognised for implementing industry-leading methods in bauxite residue management. The largest global alumina players come and ask how we do it.

We are also very interested in renewable energy. We have a portfolio of over 200 MW in operation in Greece with ongoing capacity expansion. Within our EPC arm, we are taking on projects in the solar power market globally, including off-grid solutions. The next industrial revolution is green energy.

GIG: Energy is playing an increasing role in the Greek economy. What kind of impact can this have on the country’s position in Southeast Europe given the changes taking place in the region’s energy map such as gas reserves in Cyprus?

Cleo Lymberis Mytilineos' Investor Relations Director

Lymberis: Greece is becoming an increasingly important energy hub both due to its geographical location, providing a gateway into Europe, but also due to the region’s gas reserves. This is quite exciting for us given our strategic position and expertise in the gas market. Europe needs diversified energy sources. Greece is internationally recognised as a pillar of stability in the region through its alliances with Egypt, Israel, and Cyprus, and hence has a big role to play as the region’s energy map evolves.

GIG: The economy is starting to recover but the stock market is still struggling to draw foreign investors. What do you believe is needed to help boost the profile of Greek stocks and state bonds, as well as to draw players that will take a long-term position on Greece?

Cleo Lymberis Mytilineos' Investor Relations Director

Lymberis: The current yields on Greek bonds reflect a renewed optimism toward Greece. Our experience in our debut €500 million offering in the international debt markets, where we secured five-year financing at 2.5%, supports the view that debt investors no longer penalise Greek companies that are global if they can demonstrate a clear strategy. The country needs an efficient regulatory framework, judicial system, and tax environment that supports growth. The construction of our 826 MW combined cycle gas turbine (CCGT) that we started in the fall of 2019 sends a signal to foreign investors that we are moving closer to such an environment.

GIG: When you chat with foreign investors, what do you tell them about Greece right now?

Cleo Lymberis Mytilineos' Investor Relations Director

Lymberis: I moved to Greece from the United States 18 years ago, hence I have viewed the last 10 years of crisis through the lens of a foreigner and that of a Greek. Greek companies that survived endured existential risks that no other company in Europe has ever needed to address. Not only did we come out unscathed but we, as well as other companies, grew over this period. The experience made us, and others, more resilient, more risk aware, and more extroverted. Such companies, having completed Greek crisis training, in the post bailout era, deserve to have a Greek premium rather than a Greek discount. This is what we tell foreign investors.

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