Wel come to Aperam Q3 podcast. I am Tim Di Maulo, CEO of Aperam. Together with Sud Sivaji, Aperam CFO, I will explain why Q3 was a tough quarter and how we will surpass expectation again in the future. We will answer your question at the webcast conference call today at 2:30 CET. The dial-in details are on our website and on the last slide of this presentation. Please take note of the disclaimer on page 2, and then move to the highlighting on slide 3. Reporting the worst quarter in Aperam history is painful, but we have a plan for the turnaround, and we also know that one-time effects play a major role here. We hit rock bottom due to a very high inventory valuation charge, and the footprint upgrade caused severe production issue in the upstream operation of our Belgian plants.
The problems have been resolved, and operations are running normally. The only way from here is up, even though the market environment in Europe remains challenging, with very soft demand and still low pricing. Brazil contributed to a solid result. Demand and the outlook are good, but pricing remains a headwind due to its link to the global situation. Imports have normalized after more effective dumping, and circumvention protection has been put in place by the European Commission. The Commission is actively working on closing all loopholes. They launched another anti-circumvention investigation against cold-rolled material from Taiwan, Vietnam, and Turkey. This is a significant initiative. The three together had a market share of 11.3% in the EU cold-rolled market this year. Because of all imports from these countries are registered, a retroactive duty seen in other cases is possible.
If this initiative materialize, then we are convinced that the measure put in place since 2018 are effective in maintaining a fair global trade playing field. In Brazil, a circumvention investigation against some cold-rolled produced in China was opened. This is the first of its kind in Brazil, which make it very significant. Self-help measure within the Leadership Journey are the key pillar to strengthen our flexible and resilient business model. Phase IV is still running till the end of the year. We added another EUR 28 million gains during the quarter, and with realized gains of EUR 178 million, we are now clearly beating the target gains. Major areas of improvement were raw material sourcing, efficiency gains scrap, efficiency gains Brazil, and the downstream integration of the alloy business. We'll share the detail of Phase V in February with Q4 results.
However, it's clear that the current situation in Europe requires additional measures in the form of a dedicated cost-cutting program. We will revert to this later. On the ESG front, we launched our Infinity brand this quarter. Let's go to the next page. Infinity. It is our new brand for near-zero-carbon stainless steel. Why this name? Because stainless steel has an extremely long, useful life. It can also be infinitely recycled without any loss of quality. Infinity uses the maximum possible amount of recycled material and is produced with renewable energy. It yields an 85% reduction in CO2 emissions. It therefore benefits our customers in their decarbonization efforts. Infinity also differentiates Aperam's product offering further. This is not a commodity that can be purchased from Asia. Let me remind you that the Carbon Border Adjustment Mechanism just started this October.
This makes carbon-optimized products like Infinity increasingly valuable to users of stainless steel in Europe. The Infinity brand is also a showcase for our, our differentiated value chains come together. We are recycling champion via ELG. Our distribution activities allow us to close recycling loops. In this way, the combination of ELG and S&S enable us to secure suitable clean feedstock in larger quantities. But there are more entities involved. Recyco processes recycled nickel, raw material like dust, ashes, and residues. This entity will play a major role during Phase V of the Leadership Journey. You are aware of the BioEnergia, our FSC-certified forest operation in Brazil. This supplies more than one-third of the Aperam Group's energy on a sustainable and renewable basis. And then there is Botanickel, our plant-based nickel source. Harvesting nickel sounds like a dream, but you saw the picture on the previous page.
BioEnergia is real and makes good progress. Let's go to the next page. In Europe, the market environment has been difficult for some time, and change is not apparent. Prices have slightly recovered, but remain at a level that we previously saw during recessions. Volume remained depressed as the negative economic growth weighs on real demand and the inventory cycle is still negative. The latter is actually quite interesting. Absolute tonnage in distribution chain is clearly below the seasonal normal level and more in line with previous recessionary trough. It is noteworthy that inventory days are close to a normal level despite a very low denominator. This is, this will eventually turn into a restocking rush, but not yet in Q4. The nickel price continued to slide, and distributors will polish their year-end balance sheet. The sector, sectoral demand picture remains steady and very challenging.
Construction is in the doldrums, together with white goods, where restocking has made some progress but is not yet completed. Automotive remains the bright spot, while food and beverage, restaurants and catering remain below average. Industrial demand is unchanged, with good business in energy, non-oil and gas. Everywhere else is quite poor. In Brazil, we see solid volumes continuing to Q4. Distribution is stable, and real demand is supported by a very gratifying capital goods and transport demand. White goods are recovering, and construction is also seeing some green shoots. Pricing is the only headwind in Brazil as a spillover from international markets. Just one add-on to imports. We said for some time that imports will remain unimpressive in the future. This quarter proves us right again. Furthermore, I have to repeat the potential positive impact of the new anti-circumvention investigation.
It addressed 45% of all imports year to date. The additional action and vigilance of the European Commission should therefore keep imports at bay. While the Carbon Border Adjustment Mechanism is technically not a dumping or subsidy feature , it will further level the playing field with Asia on decarbonization cost. The program has now moved into implementation phase, and as previously reported, stainless steel imports are recorded on Scope 1 and 3 . This would hold value for the European stainless steel industry in the future. We go to the next page. The market environment is challenging and will most likely not provide tailwind for the foreseeable future. Self-help is the name of the game to restore profitable operation and cash flow that covers maintenance, improvement, CapEx, and shareholders' returns.
Yes, one-time effect will fade at some point in time, but inflation has had a noticeable impact on our cost structure in Europe since the COVID recovery. We must and will reverse this to regain our leading competitive position in Europe. Energy and labor are the two major areas where we target via classical structural cost reduction plan. Additionally, in stainless and electrical, we refocus CapEx from mix improvement and growth to productivity and efficiency, and energy efficiency to combat these tailwinds. The scope has been defined, and implementation for specific measure has commenced. The associated EUR 50 million gains will be realized during 2024 and 2025. I want to stress three things. First, the EUR 300 million normalized EBITDA improvement target to 2025 remains valid. We are in a good way to reach this goal.
This initiative takes in account a changed economic environment and contributes to securing it. The growth programs for Renewables and Recycling , along with Specialties and Services & Solutions , are well on track and continue. Second, the cost-cutting program will be reported within the Leadership Journey Phase V that starts in January. But what we present today is a supplementary program, a program to restore competitiveness in Europe. This comes in addition to the normal EUR 50 million gains per annum that you know from our Leadership Journey. We will share more detail regarding Phase V with you in February, when we will report the Q4 results, but you know the targets gain for 2024 and 2025 will be EUR 75 million in both years. Third, the source of these measures.
As you know, we have been investing CapEx for our improvement in mix and flexibility in different European locations to prepare for Leadership Journey Phase V . These investments bring in newer, more productive equipment and allow us to run our production lines at a lower operating point and efficiently utilize the capacity across the cycle. Aperam is known for a flexible and resilient business model. You can trust us that we have a plan that makes this company profitable and cash generative, irrespective of the shape of the recovery, be it V, U, or L-shaped. Sud will now comment on the financials.
Thank you, Tim, and a warm welcome to all of you. Shipments declined by 6% during Q3. It is normal that Q3 forms the seasonal trough, but this time it compares to an already extremely low Q2 base. To put this into perspective, Q3 steel shipments are comparable to the COVID crisis trough. The weak industrial chain in Europe and further destocking are two reasons. As expressed by Tim, production issues in our Belgium upstream operations came on top. Without these, Q3 shipments would have been comparable to Q2. Low demand was further reflected in lower realized prices. We also recorded a near triple-digit inventory valuation charge because nickel declined by 9% during the quarter and ferrochrome by another 12%. Additionally, we had to impair the buffer stocks that we built to safeguard the footprint upgrade in Europe and Brazil.
Altogether, this resulted in the lowest EBITDA in our history. We had no exceptions, no major financial items, and a normal tax rate. Summing all the factors up resulted in a negative EPS and a negative operating cash flow. Investing cash flow was also a bit higher because it contains our contribution to the joint venture and M&A for the forest expansion in Brazil. Inventory increased during the quarter due to the buffer stocks for the upgrade in Genk, but has started going down towards the end of the quarter. What we see in Q3 is purely a technical effect, where the reduction of net working capital starts with payables reduction. This materializes as a reduction in net working capital in Q4 as the effect translates into inventories when we focus on releasing all volume-related inventory buildup by end of Q4.
Net financial debt is therefore temporarily elevated this quarter, but by the end of 2023, it should be at a comparable level to 2022. Our commitment is to maintaining net financial debt below EBITDA over the cycle and is now a clear part of our financial policy. Moving to the next slide, to the segment perspective. Recycling and Renewables , together with Brazil, performed solidly, while one-time items and the European economic headwind are clearly visible in the other entities. EBITDA in Recycling and Renewables declined from a very high level in Q2. However, annualizing the EUR 17 million shows that Q3 was fully in line with the guidance we gave for a normalized earnings for this segment. Scrap volumes declined due to the low stainless steel production in Europe as customers destock, but pricing was solid and BioEnergia had delivered a stable result.
Looking into Q4, we expect an EBITDA increase due to higher scrap volumes and some year-end effects. Stainless and Electrical Adjusted EBITDA turned negative due to the high inventory valuation charge and the production disruptions in Europe. Brazil volumes were solid, with a steady outlook, but prices softened. Like-for-like, we expect 2023 to surpass all years before 2021 for Brazil. Please bear in mind that BioEnergia is now reported in R&R. On a fully underlying basis, without one-time effects, S&E's Q3 EBITDA would have been in line with other recessionary phases. We expect a higher EBITDA for Q4 due to higher volumes and less negative one-time effects, but the price-cost spread will remain unfavorable this quarter. S&S is back in black, mainly due to reduced price-cost squeeze as we reduce inventory and having slightly better volumes.
This is despite Q3 still being highly burdened by inventory valuation charges. We expect a higher and historically more normal Q4 EBITDA as one-time effects fade. Alloys and Specialties results look unfortunately so much worse than they really are. As we have disclosed in our Capital Markets Day in 2021, alloys have 4-6 times the nickel content of regular stainless steel, and the rest also consists of other precious metals, such as molybdenum and cobalt. What you actually see is the price decline on all these metals that already had a high impact on reported EBITDA in Q1. On an underlying basis, A&S will have its best year ever by a wide margin. However, this is merely the reversal of the inventory valuation gains we've had in the segment over 2021 and 2022, albeit faster in a 5-month frame.
The volume contraction was seasonal and will reverse in Q4. Together with the fading inventory valuation charge, we project an EBITDA increase in Q4. Others and Eliminations was once again positive at EUR 5 million EBITDA due to intercompany elimination when sales price moved down faster than raw material costs. Because of corporate costs and intersegment profit elimination, a negative number is normal here, and we expect that to show in Q4. Moving to the next slide, let's take a closer look at working capital and what caused the increase. Most of you take the end of 2020 as a starting point and ask yourself when the accumulated EUR 784 million net working capital addition in the cash flow statement will flow out again. There are three factors at play: raw material prices, value chain differentiation, and footprint upgrade. Let's start with raw material prices.
Nickel averaged close to $16,000 during Q4 2020 and was 28% higher during Q3 2023. That is an obvious and big driver. However, all our products contain 18% ferrochrome, and that is also up by a third over that period. Furthermore, you're aware of how electricity and natural gas prices have evolved since the Russian war on Ukraine started. This is also an important driver for net working capital. The working capital investment that happened in 2021 is a good proxy for the price effect-driven working capital addition. These input prices cannot be influenced by us, but account for more than 60% of Aperam's net working capital increase. This will flow back only once raw material prices reverse again. The second component is the footprint upgrade. These investments are a key building block for the EUR 300 million like-for-like EBITDA improvement to 2025.
They enable us to produce a better product mix and less commodity grades. The new AOD in Genk and the hot rolling mill upgrade in Timóteo, in Brazil, are examples of this. These big investments are like open heart surgery and require buffer stocks to safeguard operations. We said in the past that these buffer stocks will reverse in Q4 and this year, which allows us to reduce net working capital by about EUR 200 million. The remaining block is due to the differentiation of our value chain. We consolidated ELG at year-end 2021, and we target to grow our alloys business significantly. Both are key building blocks for reaching our 2025 improvement target. Both also have a structural impact on net working capital.
ELG, due to its different business model, affects ratios like net working capital to sales or rotation days, as it is a trading entity. In real terms, business working capital is a fast-rotating, pure trading stock, of which 78% is already sold in the next 8 weeks. But our returns benchmark on this invested capital remains high. ELG contributes through the cycle EBITDA of EUR 55 million and adds EUR 24 million synergies. That's operating at a 16% ROCE, so it is a sound investment. For alloys, we target historical EBITDA to double by 2025 as we follow an organic path. In alloys, you don't see it at the moment, but the underlying EBITDA is up by more than 40% this year, and our multi-year order book makes us confident to double A&S EBITDA by 2025.
The growth is based on our unique in-market grades, but we are also ramping up substantial project business with very attractive margins. Back to Tim for the outlook.
Thank you, Sud. The guidance is easy this time. After hitting rock bottom, the only way is up. Our order book indicates slightly higher shipments. Q4 is a seasonally softer quarter in Brazil and in Europe, the economic environment remains challenging. Normally, distributors destock toward the year end to polish the balance sheet, and we see no reason why this year should be different. Regarding EBITDA, we will have a less negative inventory valuation charge, but realized price will still decrease, which is a drag on earnings. Based on today's spot raw material price, I will say EUR 50-60 million Adjusted EBITDA. However, because there is still a lot of quarter left where raw material price can move and impact the inventory valuation, we cannot give a guidance, but only after few raw material price are known.
Sud already explained that the working capital release will drive Q4 cash flow. Yes, CapEx will be higher in Q4. To match our 2023 CapEx guidance, EUR 93 million remain to be invested. Nevertheless, we project net debt at the end of the year to be a similar level year-on-year. A solid and efficient balance sheet is then a good base to start 2024. Let me make one remark on the dividend. We do have a progressive dividend policy, full stop. We have therefore slightly adjusted the financial policy to make this as clear as possible. We deleted somewhat confusing link between the dividend and net debt to EBITDA, to leave no doubt that we are committed to following a progressive dividend. Historically low quarter naturally raises questions about the implication for our roadmap and what are...
What levers we have to steer up and back on the road of success. Our roadshow schedule provides you many opportunities for dialogue in Europe and in the US. If you can't make these events, then please feel free to contact Aperam Investor Relations. We are happy to accommodate a request for corporate access, and your feedback is valuable to us. Please also note that we will hold the next Capital Markets Day in Paris on the 27th of February, with an emphasis on Brazil, BioEnergia, and decarbonization. In conclusion, times are very tough, but we are convinced to have the right strategy and the right tactics to set the company back on the road of success. We share with you the Leadership Journey Booster . Next quarter, we share, we will share with you the whole Phase V program.
There are a lot of high-value, non-volatile business opportunity in our differentiated value chain that will surprise you. Carbon offset, bio-oil, or recycled are just three of them. You will learn more at our Capital Markets Day in February in Paris. Let me clearly say that we are actively steering this company towards the 2025 improvement target, executing all projects linked to the Leadership Journey. When accounted for the one-off time effect, there is a clear progress. We can and we will master this crisis by leveraging our strength, by ingenuity, and right-sizing the business. We ask for your trust and invite you to be part of the journey. Thank you for listening to Aperam Q3 Management Podcast. We host a conference call today at 2:30 P.M. Central European Time to answer your question. Wish you a pleasant day, and hope to see you again at the Q&A.