Mersen: First-half 2025 Financial Report

2025 FIRST-HALF

FINANCIAL REPORT

MERSEN

2025 fi rst-half fi nancial report

page

This document is a free translation of the original prepared in French. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation of information, views or opinions expressed therein, the original language version in French takes precedence over this translation.

CONSOLIDATED SALES

CONSOLIDATED SALES

Mersen’s consolidated sales amounted to €610.4 million for the fi rst six months of 2025, down 4% at constant scope and exchange rates compared with the fi rst half of 2024. Reported growth was -2.2%. Prices increased by around 1% over the period. Excluding the solar and SiC semiconductor markets, which fell sharply as expected, organic growth was 3% in the fi rst half of the year.

Performance by segment

Sales for the Advanced Materials segment totaled €323.0 million, down 6.8% over the period on a reported basis and down 10.3% on an organic basis. As announced, the Group renegotiated contracts with its customers in the SiC semiconductor sector, which led to higher sales in the second quarter than in the fi rst. However, for the fi rst half overall, sales in this segment remained below the previous year’s level. Second-quarter sales in the silicon semiconductor market were on par with the fi rst quarter. The solar market remained weak, while other renewable energy markets (wind and hydropower) experienced growth. The transportation markets remained dynamic, especially aeronautics, and the chemicals market also expanded year on year.

Electrical Power sales totaled €287.4 million in the fi rst half, up by 3.9% on an organic basis. The trend was present across most markets, including process industries, which saw growth driven in particular by electrical distribution in the United States. The segment benefi tted from an increasing number of opportunities in power electronics projects, particularly for power grids, and enjoyed growth in transportation markets (aeronautics, rail and electric vehicles).

Performance by region

Europe saw a decline of 2.0% in organic terms, refl ecting a contraction in chemicals and SiC semiconductors, partially offset by good momentum in the wind power market and power electronics projects.

In Asia, Group sales were down 15.7% on an organic basis versus the prior-year period, primarily due to the low level of sales to solar cell manufacturers in China. Chemicals sales were also down. India and Japan, on the other hand, enjoyed strong growth, supported by rail and energy storage markets, respectively.

Lastly, in North America, sales grew by 0.3% on an organic basis. On a reported basis, growth was 6.3%, thanks to the contribution of acquisitions made in 2024, despite the depreciation of the US dollar. The region was driven by buoyant maintenance activities for chemicals and electrical distribution markets. However, the slowdown in the SiC semiconductor market had a negative impact on the region.

 EBITDA before non-recurring items came to €97.8 million, a limited 7% contraction year on year despite the lower business volumes and the unfavorable currency effect. This amounted to 16.0% of sales compared with 16.9% in the fi rst half of 2024, in line with guidance (between 16% and 16.5%).

Depreciation and amortization came in at €40.0 million, an increase on the previous year (€35.5 million) as expected, attributable to higher capital expenditure. This increase should continue in the second half of the year.

Operating income before non-recurring items came to €57.8 million in the fi rst half of 2025, yielding an operating margin before nonrecurring items of 9.5% of sales, in line with guidance for full-year 2025 (between 9% and 9.5% of sales).

 The adaptation plan partially offset the unfavorable volume/mix effect. Price increases and productivity gains helped offset the higher cost of raw materials and labor. In addition, operating income before nonrecurring items includes a signifi cant increase in depreciation and amortization linked to the Group’s capital expenditure plan.

 Advanced Materials segment

EBITDA before non-recurring items for the Advanced Materials segment was €61.4 million and represented 19.0% of sales compared with 22.2% in the fi rst half of 2024. Lower volumes had a signifi cant impact on the segment’s margin in the fi rst half of the year, partially offset by the adaptation plan. Price increases and productivity gains during the period only partially offset higher costs for raw material and wages.

Operating income before non-recurring items for the segment amounted to €33.8 million, resulting in an operating margin before non-recurring items of 10.5% of sales, compared with 15.2% for fi rst-half 2024. T he increase in depreciation and amortization represented a change of more than 2 points in the operating margin before non-recurring items.

 Electrical Power segment

 EBITDA before non-recurring items for the Electrical Power segment was €45.3 million, representing 15.8% of sales, signifi cantly up on the fi rst half of 2024 (14.1%). The adaptation plan more than offset the negative mix effect, while price increases and productivity measures comfortably counterbalanced the rise in costs of raw materials and wages.

Segment operating income before non-recurring items amounted to €34.8 million, compared with €29.6 million in the fi rst half of 2024. This represents an operating margin before non-recurring items of 12.1% of sales, a signifi cant improvement on the fi rst half of 2024 (10.7%).

Non-recurring expenses of €4.9 million correspond to expenses and provisions set aside for optimization measures and litigation costs. These expenses were down slightly compared with the fi rst half of 2024 (€5.4 million).

The net fi nancial expense was €13.5 million, an increase from the fi rst half of 2024 (net fi nancial expense of €10.3 million), due primarily to the rise in average debt.

 The income tax expense was €9.9 million, corresponding to an effective tax rate of 25%, slightly higher than in the fi rst half of 2024 (24%).

Income from non-controlling interests fell sharply (€0.1 million versus €2.4 million in the fi rst half of 2024) due to the steep decline in the solar business in China, which impacted the entities concerned.

 The Group generated a strong €78.7 million in net cash from operating activities, an increase of more than 40% on the €54.5 million reported in the fi rst half of 2024. The WCR ratio stood at 19.2% of sales, lower than its rate as of June 30, 2024 (21.8%) and as of December 31, 2024 (19.7%) thanks in particular to the action plan on inventories, which has led to a €32 million reduction in inventories on a like-for-like basis since its launch.

Income tax paid represented an outlay of €6.9 million, a similar level to the fi rst half of 2024 (€6.3 million) which benefi ted from the repayment of tax receivables in the United States.

Capital expenditure

 In the first half of 2025, capital expenditure amounted to €64.1 million. More than two thirds of this amount will be used for capacity increases as part of the Group’s medium-term plan, mainly to serve the SiC semiconductor market. The remaining capital expenditure relates to safety and environmental initiatives at Group sites, maintenance, upkeep and modernization of plants and equipment and other growth projects.

Investments in intangible assets related to the plan to digitize and modernize information systems, as well as to capitalized costs in electric vehicles and on the p-SiC project, for a total of €7.1 million.

FINANCIAL STRUCTURE

FINANCIAL STRUCTURE

Net debt

Net debt as of June 30, 2025 stood at €380.1 million, slightly up the amount as of December 31, 2024 (€370.3 million), thanks to signifi cant cash fl ow generation and close control over capital expenditure. Pension obligations amount to €31.4 million (€32.4 million as of December 31, 2024). Lease liabilities amount to €58.4 million (€64.4 million as of December 31, 2024).

The Group maintained a sound fi nancial structure over the period, with a leverage of 2.2x (versus 1.8x as of December 31, 2024) and a gearing ratio of 48% (versus 42% as of December 31, 2024). The average maturity of the Group’s fi nancing is 4.9 years. The next signifi cant repayment milestone is expected in 2026. This will be refi nanced with cash from the US private placement arranged in the fi rst half of 2025.

ROCE

The Group’s return on capital employed (ROCE) stood at 9.4% in the fi rst half of 2025, compared with 10.8% for full-year 2024. This decrease, as expected, is due to the rollout of the Group’s investment plan, with the new production capacity not yet in use.

2025 GUIDANCE

2025 GUIDANCE

While remaining vigilant to changes in the macro-economic environment, the Group confi rms its objectives for the year 2025, namely:

■ reported sales to remain stable or increase compared with 2024, based on EUR/USD exchange rates of 1.05 and EUR/RMB exchange rates of 7.65, representing organic growth of between -5% and 0%;

■ EBITDA margin before non-recurring items of between 16% and 16.5% of sales;

■ operating margin before non-recurring items of between 9% and 9.5% of sales, refl ecting a signifi cant increase in depreciation and amortization;

■ capital expenditure of between €160 million and €170 million, including €15 million pushed back from the end of 2024.

GLOSSARY

 GLOSSARY

Capital expenditure: Investments in property, plant and equipment.

EBITDA before non-recurring items: Operating income before non-recurring items, depreciation and amortization.

Gearing: Covenant net debt divided by equity.

Leverage: Covenant net debt divided by covenant EBITDA.

Net debt: Sum of long- and medium-term borrowings, current fi nancial liabilities and current bank loans, less current fi nancial assets, cash and cash equivalents.

Operating cash fl ow: Net cash generated by operating activities

Operating margin before non-recurring items: Operating income before non-recurring items divided by sales

Organic growth: Determined by comparing sales for the year with sales for the previous year, restated at the current year’s exchange rate, excluding acquisitions and/or disposals.

Recurring EBITDA margin: EBITDA before non-recurring items divided by sales.

ROCE: Return on capital employed: operating income before non-recurring items for the last 12 months divided by average capital employed for the last three half-year periods.

Scope effect: Contribution from companies acquired in the year in relation to sales for the year.

WCR: Working capital requirement: sum of trade receivables, inventories, contract assets and other operating receivables, less trade payables, contract liabilities and other operating payables.

WCR ratio: Working capital requirement divided by sales for the last quarter, multiplied by four.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

ASSETS

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

EQUITY AND LIABILITIES

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Attributable to Mersen shareholders

Additional paid-in capital,

                                                                                                                   retained           Net

           AT DECEMBER 31, 2024                                                 48.8         732.6          59.0               9.8       850.2                  32.2         882.4

CONSOLIDATED STATEMENT OF CASH FLOWS

CONSOLIDATED STATEMENT OF CASH FLOWS

Note 1 Compliance statement

In accordance with Regulation (EC) No. 1606/2002 of July 19, 2002, the consolidated fi nancial statements of Mersen and its subsidiaries (the “Group”) have been prepared in accordance with IFRS (International Financial Reporting Standards).

The standards and interpretations effective for annual reporting periods beginning on or after January 1, 2025 are described in Note 2.

The accounting options selected by the Group are described in Note 3 to the consolidated fi nancial statements in chapter 6 of the 2024 Universal Registration Document.

The interim consolidated fi nancial statements for the six months ended June 30, 2025 have been prepared in accordance with IAS 34 – Interim Financial Reporting. They do not include all the information required for a complete set of annual fi nancial statements, and should be read in conjunction with the Group’s consolidated fi nancial statements for the year ended December 31, 2024, available at www.mersen.com. They do include a selection of explanatory notes describing the major events and transactions for a better understanding of the changes that have occurred in the fi nancial position and performance of the Group since the latest annual fi nancial statements for the year ended December 31, 2024.

These condensed interim consolidated fi nancial statements were approved for issue by the Board of Directors on July 30, 2025.

The accounting methods used to prepare these interim fi nancial statements are the same as those used for the Group’s consolidated fi nancial statements for the year ended December 31, 2024.

New standards and interpretations effective in 2025

The amendment to IAS 21 – Lack of Exchangeability came into effect on January 1, 2025. This amendment had no material impact on the Group’s fi nancial statements at June 30, 2025.

The OECD’s Pillar Two model rules – aimed at ensuring that multinationals pay a minimum level of tax on their profi ts – came into force in the European Union on January 1, 2024. The Group has applied the temporary relief from accounting for deferred tax assets and liabilities arising from the implementation of the Pillar Two model rules, as provided for in the amendment to IAS 12 – International Tax Reform – Pillar Two Model Rules.

Use of judgments and estimates

In preparing these interim fi nancial statements, Management was required to exercise judgments, use estimates and make assumptions that affected the application of the Group’s accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual amounts may differ from the estimated values.

The critical judgments exercised by Management in applying the Group’s accounting policies in the interim consolidated fi nancial statements as well as the main sources of uncertainty are the same as those described in the annual consolidated fi nancial statements for the year ended December 31, 2024.

In accordance with IAS 36, as there were no indications of following the impairment tests carried out on goodwill at impairment in the six months ended June 30, 2025, no impairment December 31, 2024. The date of the next impairment tests will tests were carried out. No impairment losses were recognized be December 31, 2025.

Note 5 Equity

At June 30, 2025, the Company’s share capital amounted to €48,836,624 divided into 24,418,312 shares each with a par value of €2.

27,108,514. Since April 3, 2016, a double voting right has been attached to all shares that meet both of the following conditions: (i) they have been held in registered form for at least two years; and (ii) they are fully paid up.

Mersen’s ownership structure at June 30, 2025 was as follows:

Stock options and free shares

For several years now, the Group has implemented a policy of granting free shares. Vesting of these shares is contingent on the benefi ciaries still forming part of the Group at the end of the vesting period. The shares granted under both executive and nonexecutive programs are also subject to performance conditions.

However, Management decided not to set performance conditions in the program for high-potential employees (managers and experts) as these employees have little impact on the Group’s major fi nancial and CSR indicators.

At June 30, 2025, the number of free shares that could potentially vest corresponded to 706,671 new shares (versus 667,128 new shares at December 31, 2024, including 253,430 new ordinary shares allocated as part of the 2025 free share plans), representing 2.9% of the Company’s capital at that date. This total included 665,756 free shares granted subject to performance conditions, of which 47,561 to the Chief Executive Offi cer, Luc Themelin.

A net expense of €1.8 million in respect of share-based payments was recognized in the first half of 2025 (a net expense of

€2.5 million fi rst-half 2024).

Significant developments in ongoing litigation and proceedings

The Group regularly undergoes tax and customs audits carried out by the tax/customs authorities in the countries in which it operates. To this end, in the fi rst half of 2025, the Group booked additional provisions totaling €1.3 million under “provision for litigation and other expenses”, corresponding to the best estimate of risks arising in its various geographical regions over the period.

There were no significant developments in litigation and proceedings that were ongoing at December 31, 2024 in the fi rst half of 2025.

Other operating payables, miscellaneous liabilities and contingent liabilities

Other operating payables (€116.3 million at June 30, 2025) mainly comprised personnel and social security payables, VAT and other tax payables (excluding income tax), and prepaid income.

Miscellaneous liabilities (€39.8 million at June 30, 2025) mainly included dividends of €22.0 million to be paid following the Annual General Meeting of May 16, 2025, and amounts payable on property, plant and equipment.

No material contingent liabilities were identifi ed by the Group at

Note 8 Net debt

Mersen has committed credit lines and borrowing facilities totaling €860.5 million, of which 62% had been drawn down at June 30, 2025. Based on the amounts drawn down, the average maturity of these committed facilities is 4.9 years.

To meet the Group’s general cash fl ow requirements, Mersen has entered into the following main committed fi nancing agreements:

■ A €320 million multi-currency syndicated bank loan (which had not been drawn down at June 30, 2025), set up in October 2022 and repayable in full in October 2029, following the exercise in 2023 and 2024 of two one-year options to extend its maturity. The credit margin on the loan is indexed to ESG indicators. The interest payable is at a variable rate plus a credit margin that varies mainly according to the leverage covenant and, to a lesser extent, ESG indicators;

■ two fi ve-year bilateral loans granted by Bpifrance for a total amount of €30 million, set up in October 2022 and January 2024 respectively, and repayable in equal installments. The interest payable is at a variable rate at Euribor plus a credit margin;

■ a bilateral bank loan arranged at the end of 2019 amounting to RMB 50 million, which matures in 2026 following the exercise of an extension option in 2023. This loan is intended to fi nance the Mersen group’s operations in China;

■ two US private placements (USPP) with a pool of North American investors: one for USD 60 million, maturing in 2031, and the other for €30 million, maturing in 2028, redeemable at maturity. The private placement was arranged in May 2021 and the funds became available in October 2021. The holders of the notes issued under the USPP receive interest at a fi xed rate. The second USPP with a pool of North American investors, comprising a USD 100 million tranche maturing in 2035, and a €90 million tranche maturing in 2032, is redeemable at maturity. The private placement was arranged in February 2025 and the funds became available in April 2025. The holders of the notes issued under the USPP receive interest at a fi xed rate;

■ two German private placements (“Schuldschein”): the fi rst for €130 million initially arranged in April 2019, reduced to €115 million in 2022 following an early partial redemption, with a pool of European and Asian investors, with an initial maturity of seven years and repayable at maturity. Investors receive fi xed-rate interest on a nominal amount of €68 million and variable-rate interest at Euribor plus a credit margin on a nominal amount of €47 million. The second German private placement (“Schuldschein”) for an amount of €100 million was arranged in March 2024 with a pool of European and Asian investors, repayable in full in January 2030. Investors receive fi xed-rate interest on a nominal amount of €23 million and variable-rate interest at Euribor plus a credit margin on a nominal amount of €77 million.

In addition, as part of its policy to diversify its sources of fi nancing, in March 2016 and May 2020, respectively, Mersen launched an NEU CP program and an NEU MTN program, whose maximum amounts were each increased to €300 million in 2023. None of the NEU CP program had been used at June 30, 2025. Any commercial paper issued under this program has a maturity of less than one year and at its maturity date may be replaced by drawdowns on the Group syndicated loan. At the same date, the Group had used €45 million of the NEU MTN program, with maturities in 2025, 2027 and 2028.

Maturity schedule of committed credit lines and borrowings

(1) Maturity calculated on the basis of authorized amounts.

(2) Maturity calculated on the basis of drawdown amounts.

Analysis of net debt

* Including €7.4 million in good quality Chinese bank drafts. Poor quality bank drafts are classified under Other operating receivables.

Net debt at June 30, 2025 amounted to €380.1 million compared with €370.3 million at December 31, 2024.

The €311.1 million increase in borrowings and debt recorded in the statement of cash fl ows for fi rst-half 2025 mainly corresponds to €177.9 million from the issue of a second USPP and €125.0 million from the issue of NEU CP. The decrease in borrowings and debt during the period, recognized in the statement of cash fl ows for €183.0 million, corresponds to NEU CP repayments for €180.0 million and repayments to Bpifrance for €3.0 million.

Of the €550.8 million in gross debt, €534.5 million stemmed from the use of committed loans and borrowings and the remainder chiefl y from the use of uncommitted loans (bank overdrafts and other credit lines).

Current financial liabilities in the amount of €143.9 million corresponded mainly to the German private placement for a total of €115.0 million maturing in April 2026, and a €20.0 million NEU MTN maturing in November 2025. These current fi nancial liabilities were more than counterbalanced by €161.6 million in available cash, notably from the issue of the new USPP in April 2025, and by the €320 million in available fi nancing lines from the Group’s syndicated loan.

Financial covenants at June 30, 2025

In connection with its various committed borrowings at Group level and in China, Mersen is required to comply with a number of obligations, which are customary for this type of lending arrangement, as presented below. Should it fail to comply with some of these obligations, the banks or investors (for the US private placements) may require Mersen to repay the relevant borrowings ahead of schedule. Under the cross-default clauses, early repayment of one signifi cant loan may trigger an obligation for the Group to repay other loans and borrowings.

Mersen must comply with the following fi nancial covenants at June 30 and December 31 each year:

of IFRS 16 for the last six-month period, multiplied by two.

The interest rate on the German private placement notes (Schuldschein) is indexed to the leverage ratio (<3.5). Exceeding this cap does not correspond to an event of default but the applicable margin would be increased. The Group complies with all of its fi nancial covenants. At June 30, 2025, there were no material credit lines or borrowings secured by assets or guaranteed by third parties.

Note 9 Financial instruments

The following tables show the fair value of the Group’s fi nancial assets and liabilities and their carrying amount in the statement of fi nancial position, as well as their ranking in the fair value hierarchy for instruments measured at fair value. They do not provide information about the fair value of fi nancial assets and liabilities, measured at their carrying amount, insofar as their carrying amount corresponds to a reasonable approximation of the fair value.

Financial risk management

Credit risk

The Group has set up a Coface commercial credit insurance program that covers its main Chinese, Korean, US and Western European companies against the risk of non-payment for fi nancial or political reasons. Coverage under this program corresponds to 95% of the amount of eligible and covered receivables invoiced.

Currency, interest rate and commodity risks

There were no material changes in currency risk management between December 31, 2024 and June 30, 2025.

In terms of interest rate risk, the new US private placement set up in April 2025 includes a €90 million fi xed-interest tranche with a six-monthly coupon of 4.21% and a USD 100 million fi xedinterest tranche with a six-monthly coupon of 6.33%. At June 30, 2025, gross debt broke down as 71% at fi xed rates and 29% at variable rates.

Regarding commodity risk, at end-2024, a portion of the copper and silver tonnage provided for in the 2025 budget had been hedged. Higher commodity prices were offset overall by selling price increases.

Right-of-use assets totaled €53.8 million at June 30, 2025, down €5.9 million compared with the December 31, 2024 fi gure. This fall was mainly due to a depreciation expense of €6.4 million and an unfavorable €3.4 million currency effect, partly offset by an increase in right-of-use assets linked to the signing of new contracts for €3.9 million.

Lease liabilities totaled €58.4 million, down €6.0 million compared with December 31, 2024, including €8.0 million in lease payments.

In first-half 2025, other non-recurring income and expenses represented a net expense of €4.9 million, primarily breaking down as:

■ €3.3 million in expenses for optimization measures; ■ €1.3 million in provisions for litigation (see Note 6).

In fi rst-half 2024, non-recurring income and expenses represented a net expense of €5.4 million, primarily breaking down as: ■ €3.5 million in expenses for optimization measures;

■ €1.4 million in due diligence costs incurred on acquisition projects, in particular the Graphite Machining, Inc. group, in which Mersen acquired a controlling interest in early July 2024);

■ a €0.4 million loss on the disposal of Mersen Hatan Electrical Carbon (Harbin) Co. Ltd in early April 2024.

* EBITDA before non-recurring items is equal to operating income before non-recurring items, depreciation and amortization.

The Group’s activities are not subject to any signifi cant seasonal variation.

Group payroll costs (including social security contributions, At constant scope and exchange rates, payroll costs (including provisions for pension obligations and retirement benefits) those related to temporary staff) decreased by 1.9%.

came to €211.1 million in the fi rst half of 2025 compared with €209.2 million in the same period of 2024.

Headcount of consolidated companies at end of period by geographical area

The Mersen group has consolidated tax groups in France, States. The effective tax rate in fi rst-half 2025 was 25.2% (versus Germany, Italy, the United Kingdom (group relief) and the United 24.0% in fi rst-half 2024).

Basic and diluted earnings per share are presented below:

* Excluding treasury shares.

The Annual General Meeting of May 16, 2025 approved a dividend The dividend was paid in cash in July 2025 and represented a payment of €0.90 per share in respect of 2024. total payout of €22.0 million.

Off-balance sheet commitments decreased by €8.3 million the withdrawal of guarantees given under equipment purchase between December 31, 2024 and June 30, 2025, mainly due to contracts and the investment plan.

Between June 30, 2025 and the date the interim fi nancial statements were approved for issue, no events occurred which would require any changes in the value of assets and liabilities or any additional disclosures.

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