Good morning, everybody. On this day where we will present the Sif Annual Numbers 2024, give a bit of an outlook on 2025 and further on. My name is Fred van Beers, CEO of the company, and with me, Ben Meijer, CFO, Fons Investor Relations. Thanks for those coming to this meeting room. It's also always good to see people live during these presentations. Thanks also for adjusting the timing a little bit to an early start this morning at 9:00 A.M. Appreciate it from my side. Let's see how we come through. That's to take the time that we need, the decent time we need for this session. From a safety perspective, for those here in this room, there is no safety drill planned for. The emergency exit is downstairs, and then we will meet at the meeting point should the alarm go.
will follow the instructions of the personnel. For those online, the presentation is uploaded on the website, so you can follow also there the material. First part of this presentation will be taken care of by Ben, our CFO. He will take you through the numbers of 2024, and I will come back later on, market outlook and outlook from Sif for 2025. Ben, floor is yours.
Thank you, Fred. Good morning, everybody. We'd like to start also with the safety performance at Sif and also discuss last year. Last year, the safety performance was not good. Last year, if you look at 2023, so I'm not talking about 2024, 2023, the number of lost-time incidents was at 10, at a level of 10, which was not a good performance. In 2024, 2023, we took additional measures. We had additional safety standards at Sif, two in 2024, and we will continue with that, also with the yearly safety standard, also in 2025 and going forward. As a consequence of that, we see that safety behavior and also the safety culture at Sif has improved. In 2024, we saw a reduction in the lost-time incidents from 10 to a level of 1. Overall, happy with the improved safety performance in 2024.
Of course, this remains a key topic for Sif also going forward. Number of lost-time incidents, significant reduction. Also, if you look at the total recordable injuries, which is a combination of the lost-time incidents, the restricted work incidents, and also the medical treatment incidents, also reduction from 22 in 2023 to a level of 13 in 2024. Sickness leave, still on the high side. Last year, 2024, we came in at 7.8%, a slight increase compared to 2023 with 6.9%. What we see over there is that there is still a lot of pressure on the organization. It's tough work. What we also expect over there with the new factory at the Maasvlakte, where you have improved working methods, is that this will also result in a lower sickness leave going forward.
Last but not least, I would like to mention the code of conduct, also how we interact with each other and also with the outside world at Sif. We have made an update of the code of conduct in 2024 and also made communication of the code of conduct an important topic within the organization. It is at the moment also part of the onboarding. Also important steps have been made from that point of view in 2024. Some of the key highlights. First one, key topic 2024 was, of course, the new factory. The new factory is up and running. From a technological point of view, it is doing what it has to do. The overall project was within budget, it was within time, and also within specs.
Overall, very happy with the new factory being built and being where it is as of today. We will come back later on because looking at the ramp-up of the new factory, it is doing what it has to do. First monopiles are being produced. Right now, we are in the ramp-up phase to further increase the output level. Over there, we see some delay. Fred will come back to that topic later on. Skybox is a solution for more efficient TP-less installation on schedule, including the certification, which is also on schedule. Regarding our presence in Rotterdam, a couple of things to mention. We have leased temporarily additional 20 hectares. My neighbor has been selected Portman of the Year in 2024. You see quite a happy picture over there. Also a happy guy indeed.
ESG-related KPIs, a couple of key KPIs I would like to share with you. First one, the cross-CO2 emissions. We see a reduction of slightly more than 8,000 tons in 2023 to slightly more than 6,000 tons in 2024. Key underlying measures for this reduction, first of all, replacing fossil fuels by biofuels for the inland shipping. Also, an important measure is the gas preheating, which we have replaced by induction. Key underlying measures within the organization to reduce cross-CO2. Our contribution to renewable energy, you see, quite a significant drop compared to 2023. This is basically related. In 2023, we were involved with more various foundations. We had a couple of projects where we only did the TP, not the monopile. Also, if you do the TP, this is also included in the number of renewable energy.
It is basically a mix of the portfolio resulting in the decrease in 2024. Lastly, the LTIF. We already talked about the number of lost-time injuries, the reduction from 10 to 1 in 2024. You also see this clear reduction reflected in the LTIF number. Coming back to some important financial parameters. Order book, well filled with slightly over 500 kilotons. This is all final contracts. At the moment in the order book, we do not have exclusive negotiations. All firm contracts added this year have been East Anglia, Baltyk 2 and 3 TPs, and some smaller pinpile and leg orders. Also, what we see if we look at the timing of the order book, 2025 fully booked. Also 2026, including the shift of volumes from 2025 in 2026. Also almost fully booked, close to completely fully booked.
At the moment, we are working hard on 2027. Fred will also come back on that one. Contribution per ton is going up, which is good. As also mentioned in the press release, we are moving more towards an indicator of contribution margin per week because per ton is the metric we have always been using. We continue to mention that, but contribution per week is more important because sometimes you have difficult projects which are relatively light, complicated to produce, and we also include that in the pricing. We basically look at the pricing per production week and not purely at the pricing per ton.
Workforce, we see a small increase and also a shift over there, more people at the Maasvlakte and fewer people at year-end at Roermond factory because at the end of 2024, there was less work in Roermond and more work at the Maasvlakte. Overall, we see an increasing trend. Even more important, we see more permanent people on the payroll. We try to move away. Still flexible workforce, very important, but also we try to increase the number of permanent people who are on the payroll of Sif. Adjusted EBITDA, we gave a guidance for 2024, EBITDA guidance of EUR 35 million. Overall conclusion, we came in slightly above guidance with a little bit more than EUR 38 million. Volumes slightly lower, which is impacted by the slower ramp-up of the new factory.
This is being offset by increased service revenues and also fees in relation to licensing contracts. An important one, working capital, you see a very negative number, which is, again, positive, also what we discussed before. Also, this one is impacted by significant upfront payments that came in at the end of 2024 related to contracts which are going to be executed later on. If you look at the cash position, which is at a number of EUR 140 million, of course, this is also impacted by this working capital management. Overall, healthy liquidity position of the company and adjusted EBITDA coming in slightly above guidance. Might I hand over to you, Fred?
All right. Thank you, Ben, Fred. Let's move on to the market first because we are living in interesting times, to say the least. What you basically see is that due to all the geopolitical turmoil and the sea change in the U.S., the U.S. market has come to a grinding halt when it comes to new projects, new developments. We clearly noticed that, I think within one week after the elections, in the numbers of tenders that were frozen on the U.S. market. On the projects that are in execution phase, however, it's continuing like before. There is no sign that we see projects being halted or whatever. That's continuing so far, so good. Obviously, that means that the potential for the U.S. market over the coming years is basically dropping to something close to zero.
We have built in here something like 2 gigawatts that is maybe one project. These numbers are coming from Woodmac. Probably the 2 could be considered a zero as well for the coming five years, meaning that the overcapacity or the undercapacity is becoming a little bit more balanced now with the market, especially short term. With a period up to 2028, I will show that later on as well. The European market, despite all the money being spent now on defense, there is a lot of focus on ramping up the European market from a defense perspective, but also from an independency perspective. The industrial act that has been released end of February shows or has some very strong elements in it that will, in our view, boost the European supply chain for European projects in order to create energy independency.
We do not see in that sense also any deviation on ambitions in Europe from previous meetings. Also in the U.K., the market is strong. I think thanks to the failure of, for example, the Danish auction, we do see an increased tendency to go for double-ended CFD tender processes and a more balanced tender setup that is realistic towards market conditions. We are looking forward to the new tender round in the Netherlands where there is clear pressure on The Hague and RVO to adjust the tender qualifiers. Let's see what comes out of that. What we also, and then the main market, Asia, we see no reason to adjust that compared to previous times as much as well as the EU market.
The factor four and a half compared to this year up to 2030, in our view, is still valid when it comes to market potential. If you go to the, I go to the next one. If you then look at this famous ramp-up that we have seen postponing year after year, we see it's still there. In our view, from 2028 onwards, in our view, if we look at the tenders that are being addressed to us, then from 2028 onwards, the market does see this jump. We, however, also consider this with a certain carefulness because the past has shown that this wave could be pushed further forward.
Having said that, we also notice clearly that the EU and member states are now rolling out actions to, on one side, shorten permitting processes, on the other hand, setting the right economical qualifiers in the tenders, and also the non-economic qualifiers in the tenders that should, in our view, hopefully now boost this ramp-up in a realistic way. The other, I think, news or thing to mention, and we'll come back to that later as well, is that the 9-11 meter diameter monopile foundation looks to be a foundation of choice for at least five or seven more years compared to when we two years ago took an FID. In other terms, the sweet spot of our factory that we initially saw for a four- to five-year period, in our view, will be extended with three to five years more.
We do not foresee a new investment on a short to mid-term period given that development, which is good. You may also have seen the news that a Mingyang, a Chinese turbine that was selected in Germany, has been put on hold from security reasons point of view by the German government. We see more indications of that happening now in the market, which is, I think, a strong signal that we will see some changes in protecting the European supply chain for offshore wind. That, in our view, is good news coming out of all this insecurity globally. Going a little bit into the situation operationally today. I start with the right one because I think that is the most important one at the moment. The new factory, as said by Ben already, is finished. We closed the project completely financially, operationally.
There are always remaining points that have been handed over now to the maintenance Sif operational organization to deal with. In that sense, the project is passed, is passé. We have hired all the people that we need. We did have them in time last year already. On that note, everything according to plan. The factor that caused, in our view, two to three months delay as it looks now in the ramp-up is the speed with which we are ramping up the experience curve in these teams. We have roughly 250 people working in the new setup, and it simply takes more time to let them work in the right flow with the right experience curve and let them gain the right experience curve than we initially thought.
Having said that means that, first of all, if you would compare now today's situation with the planning, we are roughly, as we speak now, two months in delay compared to where we should have been. We are ramping up. We are in a position basically now where we should have been end of December. That also clearly shows that, first of all, the machines and the equipment are doing what it should do. People are learning faster and faster at the moment, but we are simply too early in that ramp-up phase now to give a clear indication of what the effect is of the shift from 2025 to 2026. That is the reason why we also gave a range on the EBITDA outlook.
We expect to give more clarity there simply because we gained more experience in the next meeting in May when we announce the Q1 numbers. We will come back in more detail and foresee a smaller window of EBITDA expectation for the year-end simply because we know more about where we are at that moment. That is, I think, good to remember. It is a shift. It is not a dilution of margin. It is purely a shift. That is also why, as expressed by Ben, 2026 basically looks very strong now from an EBITDA perspective because we do not see any dilution of margin. A shift of margin, 2026 basically should generate this EUR 160 million that we guided for. There is no reason to adjust that.
This maybe also explains why we have been very careful in announcing or closing or committing deals for 2026 because we wanted to be sure that when we commit, that we also can deliver. This is so crucial in this business that we need because otherwise you run into a lot of liquidating damages problems. For example, also in 2025, although we have some delay, there is no installation campaign of any of the projects that we have in the order book that will be delayed because of our initial delay in the project. I think that is also important to mention. We have built in sufficient float leeway in our planning to accommodate for this sort of delays because for us, delivering on time and in the right quality is important. That is the other element I would like to add.
In whatever we do, the priority also as desired or wanted by our customers is, number one, is safety. We are starting up a very complex thing. Some of you have been there, have seen it. We need to be 100% sure that we do this in a safe way. Secondly, that we guarantee the quality. From that perspective, I can say that the repair rates of the production at the moment are slightly above the design level, but not much. That is 100% in manageable, so to say, tolerances. That is good. It shows also the quality of the production, I think. The third one is volume and output. That is the part we are in now. That is important to say. Thirdly, we are very happy that we have now 190 kilotons as preferred that we can announce.
We did not take it in the order book yet because it does not 100% qualify as exclusive. That is simply the reason. It does qualify enough to announce. I think that is because we always have this juggle between what we can and cannot say. What we are not disclosing is how many projects are this. It is 190 kilotons preferred. We do not disclose whether it is MPT, TP-less, and what the split is between Roermond and Maasvlakte. We hope to give more clarity on that also in the next Q1 announcement or a little bit later. In the first half of this year, we expect to be able to give more clarity on 2027 and onwards. We do see a lot of tender activity for the asset already for 2028.
A lot of projects that have been announced, but also quite a few projects of these that still need to get their own, what is it, security that they are actually being built. CFD7 is coming. The Danish projects, the German projects, the Dutch projects are all coming for that period. We are working on all of them at the moment. Sales is quite busy as before. On the supply chain, that is also an interesting area where we are in. Steel at the moment from Europe is under high pressure from Asian steel. Our competitors from China are working for obvious reasons with Chinese steel. Chinese steel is slightly less expensive than European steel. Luckily, in our new factory, we are not 100% tied to German steel anymore.
We are also looking and building in and plotting scenarios to start using more steel from Asia should we be forced to do so. Our preference, though, is to work shoulder to shoulder with our German supplier to protect also from our side the European supply chain because also we believe it is quite essential from an independency point of view economically to make sure that we stay side by side in staying independent also from a steel perspective. As you may have seen on the announcements this week, there is a lot of action being taken now. It was also mentioned in the news, I think, two days ago. We have seen some initial outlines of that that are promising in the sense that they should make European steel competitive again compared to Asian steel.
We can deal with both of them, and we have arrangements with both of them from both areas. I think that is on a, yeah. I re-mention it again, the OEMs postponement of growth. You may have seen the announcements from Siemens. They will do a 21-plus MW test turbine, but then basically mock all that machine until further notice and stick to the 15 MW platform for the time being. Given the example that I just gave from the Chinese turbines, I think there is also quite some political pressure to make sure that these turbines will stay the preferred platform for the coming period in Europe. Guidance for 2025, 2026 again. Order book solid 2024 as confirmed here in the 500-plus kilotons with 190 kilotons to be added on soon given this preferred status we are in. That should fill us nicely up in 2027.
Not fully yet, as we believe. Our EBITDA guidance, as said, we had to or wanted to adjust to a range of EUR 90 million-EUR 120 million, which purely relates to how fast is now the curve of the ramp-up. If it's a fast track curve, yeah, we expect to come closer to the EUR 120 million, of course. If it's basically continuing a little bit lower than it is today, then we come to the lower end of the number. Every week, the ramp-up has been going faster. That's now the real question in all openness, where do we land? That's simply time that will tell us. We'll give you more information on that, as said, in May this year. No signs whatsoever or indications of any cancellations or expected cancellations on any of the projects in the order book. All are fully full speed ahead.
As you know, the majority is also related to European U.K. projects here. Yep. On the contribution, here we start announcing or start making the comparison now on the contribution per week. In our view, a more leading indicator, as mentioned already by Ben, than the contribution per ton given the complexity of the future designs of monopiles whereby design related to tonnage is not so much in favor of tonnage anymore, but more in relation to how many weeks do we need to actually produce wind farm and what contribution do we gain over that project period. That is what we will start reflecting more and more now consistently in this contribution margin per week. I have come to the point where I would like to thank you for listening so carefully and probably having some questions on what we just presented.
Who would like to start? We have plenty of time left for that. Thijs, yes. What is it? Or is it working?
Tijs Hollestelle , ING. Thanks for the presentation. My first question is about to get in my mind a view on what actually is happening on the factory floor. I have been visiting the factory twice now. Indeed, the last time I was there, I think that production line one was already really running. The next two were, let's say, ready but setting up. How many, let's say, critical areas do you have in the factory? Because if I remember correctly, there was one area which was very busy. There was a bit of monopiles clocked up. After that, it was quite empty. I could basically see that there was still some execution risk.
How far are you in total getting a view on having all three production lines running with what you have as a budget in your head, in your mind?
All three production lines are full-fledged running and are full-fledged manned. That is in the new factory hall where the plate assembly is being done. That whole factory is actually now producing more than what we can use for the build of the final sections and the monopiles. What I'm basically saying is we are slowing down that one a little bit because we are in the phase of optimizing and adding capacity in the assembly line, which is where we have the people also now that are starting up these double welding adds, etc., etc., etc., which is creating the next bottleneck. Basically, the whole new factory is out of the critical attention area.
That is then the last phase.
That is the last phase because after that, you have the monopile.
Bring them outside.
Yeah.
Yeah. Okay. Yeah, that is quite helpful. We discussed it also before. Q1 is almost at an end. You have probably a pretty good view on the fixed cost. Can you help us a little bit with what we can expect for the first quarter?
Share price is very sensitive, of course, on reported numbers so that we have any idea of what kind of EBITDA we can expect for the first quarter.
Basically, as said, we expect roughly a shift of a quarter. That means also that the quarter results will shift from Q4 to Q1.
Yeah. That is not sufficient for me because you are producing something and you recognize revenue in the first quarter on the project.
Yeah. We can. Yes, yes, yes, yes.
Also regarding, I will not give a number at this stage. That's a little bit too soon, also taking into account the ramp-up phase we are in. You still see the increasing line basically. What we can say is that, of course, you're producing at the moment full fledged on Empire. That's what you see happening at the moment in the new factory. Also, the big increase and step-up in EBITDA will come a little bit later because you're still in the ramp-up phase. In Q1, you should not expect any miracles, basically.
Is it break even?
Yes.
Okay. Yeah, yeah, yeah, yeah, yeah, yeah. Okay. A final one of, okay.
That's important. No, no, no.
It's more that we don't want to give an absolute number now, but definitely, we are percentage of completion. I can tell you that March alone probably will outblow January and February because this ramp-up is taking place as we speak.
Okay. That's quite helpful. Yeah. You already explained it a little bit, but when you gave, let's say, initial guidance for 2025, you probably also built in some conservatism. Yeah, the dropdown and then also the range, yeah, to me, it feels a bit spooky because it's still a big gap in the MBA. Is it only timing, or are there potentially other factors that can reduce MBA quite significantly this year?
That's the usual stuff, I would say. If you have a massive machine breakdown, for example, that could cause a submitting block.
The reason why the spread is there is that, as I said already, the main reason for this delay is the speed with which people gain experience. In the experience curve, gaining experience curve, people make mistakes. If they make a mistake that is significant, you could have a stop for a while. That is a bit the insecurity factor that we are now facing at this stage. We had hopes to be past that point where we are now today, but we simply are not, that we do not have enough data and, how to say, robustness in the teams yet to give a clear view on that. I think it is without saying that also the organization, given the order book that we have, is, of course, focusing more on the right side of the bandwidth than on the downside of it. Yeah.
To simplify it, if one line, let's say, has a breakdown, that is basically then the difference in the current EBITDA guidance range.
Yeah.
To make it maybe how we came to the range, basically, right now, we have more like forecasted a base scenario. Based on the progress we see at the moment, and we are slightly above the base case at the moment, there is a certain EBITDA expectation. Subsequently, also, we took into account some sensitivities. What indeed if the ramp-up is going a little bit slower or if it is going continue to go a little bit faster, what we currently see, basically, also in the new hall. You come to this range. Of course, this range, it is quite a wide range of EUR 30 million.
It is also in the phase we are currently in that you are still in the ramp-up phase. That is how we came to this EBITDA range of EUR 90 million-EUR 120 million.
The request is to bear with us and give us two months more to gain that experience and give you more clarity in May. Okay. Yeah. Okay. We also can show you what you just asked for, what Q1 has done.
Thank you.
Is everybody awake?
Yeah. Sorry. Thijs, too. It is working.
Okay. Thijs, American, other ABN AMRO, ODDO BHF . Coming back on ING's first question, the DA scenario for 120, is it strange to assume 10, 30, 40, 40 in terms of sequential EBITDA per quarter?
It sounds better than the other way around. I mean, indeed, you will see, of course.
Should we, in your assumption towards 120, that you're at, let's say, full production speed on, let's say, 26 speed in the second half of this year?
Yeah. Right now, without giving the numbers, as you just stated, indeed, Q1, what I mentioned, do not expect the miracles taking the ramp-up phase. Q2 will be already at a higher level curve expectation. Q3, Q4 at even a higher level. Also taking into account the mix of projects and the margin per project, basically.
It is a scenario that could work.
Yeah. Yeah. A follow-up.
I'm not saying that we will do it like that, but that is a scenario that could work.
Yeah. We have to do it.
Sure. I have to do better.
Previously, you gave kiloton forecast for, let's say, the running year.
High-end guidance is how much kilotons, roughly, and low-end guidance, how much?
On this one, on purpose, what we did is also looking at the past year that we're moving away from the kiloton guidance. Right now, it's purely focused indeed on EBITDA, looking at that one and moving away from the kiloton is also taking into account the complexity of the projects, which is having quite a big impact on the volumes.
Yeah. What is not in the guidance is that if you're on the track towards EUR 90 million EBITDA, then probably you are still a bit in delay. The 2026 guidance more or less need to be raised further up, I would say, because you then miss EUR 30 million of business.
You miss volume.
Yeah. Yeah.
You would miss volume. How much that is.
2026 will be EUR 190 million?
On this one, what we can mention is what we did with the various scenarios. You're fully right there. Indeed, if you have 2025, if the ramp-up is taking a bit longer, more volumes will shift into 2026. That also will mean that one of the last projects in 2026, you can do a little bit less. What we did is based on the various scenarios we identified, if you were working from a worst-case scenario for 2025, more volumes into 2026, that also means that one of the projects we want to do in 2026, we cannot fully do it. Therefore, we say also regarding the EBITDA range of EUR 160 million, independent of which scenario you are choosing for 2025, that the EUR 160 million is pretty solid. For 2026, the difference is we still have a little bit of space in Roermond.
If we can book an additional order also for the Roermond factory, that will be further upside for 2026.
I think we explicitly already have said at least EUR 160 million.
Yeah. Clear. EF availability in Roermond. Every standard question first Q&A in a meeting. What can you do for the defense sector?
Build submarines. Now, we have no indication whatsoever that we should do anything for the defense sector. What we can do, what we're very good at, is rolling thick wall plates and weld them with high quality. Now, a tank is too thin.
So a wall between Poland and Russia.
It's not rolled , is it? I think. I think. In all honesty, seriousness, I mean, there is no indication or I think that we're not looking at that at all.
Okay. Just checking. Yeah. Yeah.
What can we expect now from the marshalling business? It will come back. When will it come back? Again, similar revenue levels?
I think it's fair to say that we have part of what we have in the order book includes marshalling logistics primarily around, how to say, insurance policy on longer-term storage of monopiles. Should an installation campaign be delayed or whatsoever, not from our perspective, but from a customer's perspective, should that happen? We are in discussion with some of the customers where we have the monopiles already in the order book to see if we can offer additional service on turbines as well. We are in discussion indeed with the Port of Rotterdam to see how we long-term can guarantee the 20 hectares that we have now on a temporary basis.
Yeah.
What is not clear to me is Korea payments, which came in in 2024, March, roughly. Is that to continue as well in the coming years?
Also, regarding licensure fees, income will continue. In 2024, we cannot give the exact number because that is sensitive. It was a nice number, let me put it that way. Also, the range is no. I cannot give a range on that one. It was a nice number, and it is reflected, but it is not the full part. If you look at the backside of the annual report, you see in the section breakdown also the volumes and the margin regarding business without production volumes. It is included in that number. It is part of it. It is not the full number.
We have agreed with them to not disclose it, so we do not do it.
Yeah. For now, final question. Is it logical to assume that Dogger Bank D is in the preferred contract part?
I would not assume that. That is too far away still.
Okay.
Philip Ngotho , Kepler Cheuvreux. I am new to the story, so if I ask any very basic questions, apologies for that. I just want to understand a little bit. You explained that you do not want to provide a 2025 production guidance, but I mean, it is a very important building block in any way for your EBITDA guidance. I would think it is maybe even less uncertain than your EBITDA guidance that you provide. What is the thinking about not providing at least a range of what you think you can produce in terms of volumes in 2025, I have to say, actually.
That's a question that I have. The other thing that I'm wondering about is, are you assuming or what utilization rate are you assuming for 2026 with the EUR 160 million EBITDA guidance? How much availability or utilization do you have in Roermond? What is the potential additional earnings that you can get from that? Do you have any penalties if you can't exclude certain projects in 2026 that have to be delayed in 2027 at all?
To start with the last one, no. No penalties foreseen because we have built-in sufficient float in our planning. On the utilization for 2025, we basically booked the order book that we booked utilizes 70% of our 85% capacity on production weeks.
The reason why we're not disclosing these kilotons is exactly as Ben said, that the kiloton as a qualifier or as an indicator for production load is so far off from the reality, which is how many production weeks do you need. That's why we want to make the shift now to that. As I said already, we will continue afterwards announcing these kiloton contribution margins. I think the 70% of the 85% that I just mentioned is a bit more worth to look at than the kilotons. That's why we're a little bit stubborn in not disclosing the kilotons anymore.
Also, what you see the last two years, for example, is that in terms of output, we have been slightly lower than the numbers we presented.
In terms of EBITDA guidance, which is for us the key metric, adjusted EBITDA, that we have always been in line or slightly above the guidance we presented. On Roermond, there are basically three product lines. One, to give some basic data. The first one is the offshore steel structures, as we call them. Pin piles and structural legs for jacket constructions. The jackets are predominantly used at the moment for substations. As also presented for a MIDEF jacket, for example, we have booked the order also for producing the pin piles. That is roughly half of the production capacity in Roermond, and that looks quite stable. These are relatively small orders. They come in at a regular pace. We see that continuing at a bit of the level of kilotons. I'll give you one kiloton number, something like 20-ish a year.
The second and the main product line is transition pieces and/or top sections for TP-less foundations. Depending on the design, whether it is a monopile transition piece configuration, the transition pieces are produced in Roermond. If it is a TP-less design, the top part of the monopile, where basically the transition piece is connected already in the welding process to the monopile, that part is also produced in Roermond. The design, again, of the foundation determines whether production of transition pieces or top sections is being made. We see a very healthy or sort of regular, steady split between TPs and top sections that nicely accommodates the base load of both sides. That goes really hand in hand.
The third part is when we have a monopile only, then the top can of that monopile where the flange is being welded, we decided to concentrate that knowledge in Roermond, and that is also then being done in Roermond. Roermond basically always is a subsupplier, a supplier to the Maasvlakte factory.
Yes. Sorry, in terms of utilization, how much?
You should work with the same percentages.
Also 70%.
Yeah.
Okay. And for 2000?
For hand in hand. And for 2026?
Sorry, 2026.
You are using as a utilization assumption with EUR 160 million that you,
yeah.
It is not far away from the numbers you mentioned.
It is not far away. It is not far away. It is maybe the 75%, something like that.
Depending, because that's also a little bit depending now on what we will know a lot better in two months' time how much of '25 will flow into '26. But roughly, '26 has always been considered a bit of also a ramp-up, so you are somewhere between 70-80%, I would say.
Yeah. Okay. Last question. When it's fully ramped up and everything is going according to plan, what would be a normal utilization?
85%.
85%
of theoretical capacity. We plan full is 25 weeks minus holidays at five shifts a week, basically production. The weekends we always use for catch-up or not catch-up for the hot dog, but catching up eventual delays and bottleneck in the design.
There is always a certain bottleneck somewhere, and there you need a weekend to sort of prepare for the next week so that you can keep the balance in the production flow. That is why we never plan against 24/7. Is that helpful or creating more confusion? Yeah. Yeah. All right. No more questions from your side, Martha? All right. I am sure I am avoiding keeping you off my connection.
Yeah. Maarten Verbeek . Yeah, I did a couple of questions from Mike. Firstly, you mentioned the delay of two to three months, but I thought initially that as of the start of the year, you would be at full-fledged production levels. So should not the delay be a bit more than just two to three months?
Oh, because we have full-fledged capacity available. That is not the issue. Everything is working. Everything is up and running.
The output is creating a delay, has been creating a delay because of the experience curve we gained. Please remember here, because it's not just a window dressing comment, safety first, quality second, and after that, volume. Does it make sense to produce a lot of steel when there are quality issues? That's what we are very disciplined doing.
Initially, you had to book a W for 285 kilotons for this year. Assuming that for nine months it goes well and the two to three months' delay, you produce 50%, that should imply that more or less 35 kilotons is estimated to flow into next year. Is that a fair estimate?
I refer to the questions we just answered on the percentage of utilization. Could you explain to me what the difference is between a preferred supply contract and an exclusive negotiation contract?
It's a qualification on that. When you have exclusive, you basically are literally exclusive. With preferred, we are the ones to say, the last to say no. When you're exclusive, there's no other negotiations. You finalize the contract. When you're preferred, basically the customer says, "You're always in a position to say no or yes."
Exclusive, basically from a legal point of view, is much more binding compared to preferred.
Okay. You mentioned you signed up a new lease contract with the Rotterdam Harbor. Why only such a short contract?
That has to do with the availability of the plot. That's why we initially said, "Let's agree now on this four-year," because that was related to a certain project where we needed that time.
In the next step now, and that's what I just said, what we're in the midst of, is discussing with them, could we actually extend that a little bit longer or come to a permanent agreement? It's a bit of a salami approach.
It will be the same plot, mostly?
That's the idea.
Okay. Lastly, from my side, because I do see that you had EUR 18.2 million contribution from projects with no production volume, how much cost do you have against that to the income?
It is relatively limited because the key, it's multiple topics, but the key ones, it's indeed related to the licensing contract. It's also related to cancellation fees to which no volumes or costs are being related.
In the outlook statement you provide for this and for next year, to what extent do you incorporate income from this production with no volume?
This is rather limited. Also, for example, regarding cancellation fees, everything has been booked already in 2024 and partly also in the 2023 numbers. We do not anticipate, of course, any cancellations. As the license fees I was just mentioning, we are not going to give a number, but also in the overall picture, it will be relatively limited.
Okay. Thanks.
That's it, Maarten? Sorry, I thought you were saying—it is good. Thanks.
Thijs again. Some follow-up questions on that, please. Yeah. The first one is on, I think that Empire Wind was initially planned to end that production, finalized production in May, so that then shifts a couple of months. A Dutch offshore wind project takes—
be careful.
Be careful. Be careful. In the ramp-up phase of the first project, we build in a lot of float. The fact that we are now two or three months in delay does not mean that we also will be two to three months in delay at the end of that project. We have built-in time. If we ramp up, which we are doing now, we could sort of reduce that period quite a bit.
Okay. Okay. That is good. Yeah. That is safe. In the past, sometimes also you mentioned, let's say, if you switch to another project, you get different plates. Also, I think the whole lines have to be used to work with that. How big is that risk? In addition, is there a big price difference in all the projects in the order book?
Have you managed to, let's say, have all the kind of parameters you need for contribution margin, EBITDA?
We tend to go for a continuous improvement approach on that. How that differs, I can't say, but I can tell you that it's healthy. No reason to believe that we would dilute on what we are doing in the first quarter on that. Your next question was? On the next project? No, given the setup that we have now, we are less vulnerable for transition periods between projects. Plate assembly doesn't matter so much. You can throw on the next plates quite easily and continue there. What you do have to do is have some adjustments in the assembly hall. For example, on the next project, we already have started the production quite a bit, actually, on the top sections in Roermond. This one? Yeah.
Roermond is already—that's the nice thing about these two sites. The top sections for the next projects are already in the manufacturing phase together also with Schmolders, who do the outfitting of steps, etc. They will come—the first ones are coming to the Maasvlakte, I think, next week or the week after. Already.
That's exactly my question. They're not going to be surprised, "Oh, this project is going to be complicated," and then—
There is a real nice sort of step over mechanism that is now in place. That will also be the case for the years to come. That's the way now it's been structured. Yeah. The way we—yeah, that's the way it is. Yeah. Of course, we always build in some time for that, but that doesn't necessarily mean that we actually need it.
Also there, we have been on the cautious side. The biggest nightmare of this business is that you are blocking or putting too much volume and blocking your planning so much that once you have a delay, you never get out of the delay anymore. That is why we have under 70% and 85% for 2026 and build in still sufficient time in between projects in order to have a buffer for something that is actually happening now.
Okay. Yeah. Okay. That's helpful. Also a question on the balance sheet, and maybe it's in the press release, but looking at the outlook this morning took me a lot of time. I had tears in my eyes.
You're the only one. The perpetual bond. I think you already repaid some of the perpetual bond, the advanced factory payments. Yeah.
Because it's into that, did you also do that in the last two quarters?
No. No. No. Indeed, part of it indeed was part of the cancellation agreement with Empire too, and no further repayments during the end of 2024.
What's your planning for this year on that?
What we try to do is more like it's discretionary on our end, but what we try to do is try to repay it at the end of 2025. That is our intention at the end. The reason for that is that also beginning of 2026, you have to pay an interest number of Euribor plus 5% on this instrument.
Yeah. It increases quite quickly, therefore, is what I'm asking. Basically, the same question for the preference shares. Yeah. What is your planning in the repayment schedule?
That will be the next step.
First, indeed, it's more like the perpetual bond because this is the most expensive instrument. After that, the next step will be the compress.
Somewhere in 2026.
Yeah. Also, a bit more fear for because the negative trade working capital also surprised me. It was quite high, so that gives you more leeway on the balance sheet in general. In theory, if your, let's say, preferred contract becomes a final one, you might also receive prepayments at the end of this year for that one. Is that something that's possible?
It's possible, but we saw at the end of 2024. We had the advanced factory payments. If you remember, part of the financing solution, total EUR 100 million. At the moment, still EUR 75 million roughly is included. EUR 70 million, apologies for that.
Seventy million euros of the advanced factory payment is still included in your working capital position, and this will be offset during 2025. It is related to the Empire One project and to the Eco Vendor project. This will be offset in 2025. An additional prepayment in relation to a project that will be executed in 2026 came in at the end of 2024. Also a significant number, which is also reflected, of course, you have negative working capital position. This is a policy, of course, that we are going to continue. In the end, what we always said, cash is key. It is in every business, but also in our business. Also, when you do a new project, you always want to be cash flow positive.
Yeah. You managed that well.
With your question, if the production is ramping up successfully and you have the prepayments early, you could also redeem those kind of debt instruments early.
That could be part of the solution. Yeah. Absolutely.
Okay. That's helpful. Some basic questions on what do you expect for lease payments this year and the same for CapEx, roughly.
For lease payments in total, because then you need to include indeed the Maasvlakte. You have indeed some equipment that we are leasing. Fairly roughly, I would say at the moment, a number of EUR 15 million-EUR 20 million. That's the range I would give at the moment.
CapEx?
For CapEx, maintenance CapEx. So without any of the last pieces of P11 that needs to happen, that needs to be paid.
Maintenance CapEx, we always mention a number of around EUR 15 million.
[crosstalk] Fifteen. Fifteen.
Fifteen. Plus the last of the expenses.
Exactly. Yeah.
How much is that? Around?
A few millions.
Yeah. A few millions. In Q1.
Yeah. Okay. Thank you.
Yeah. Thijs Berkelder again, ABN AMRO & ODDO BHF . I missed the slide on the competitive landscape. Can you maybe surely explain what's happening at—
Good point.
EEW, SeAH of Bladt, Steelwind, Titan, and in Spain, and maybe on what's happening at Dongfang.
Well, Dijon and Chanute are full-fledged on the European market. That's very clear. And they are successful with some developers, and there are others that simply don't want to take the risk. They take a fair bit of the market, I would say, roughly 10-15% at least at the moment. Yeah. This is fine. But that's not mentioning the individual ones. No.
Dijon, the big question is, will the level playing field actions that are being taken by the EU now materialize soon? The expectation is that it should happen this year. How do they then affect that? What we always should remember is that whatever is being done, there are two elements that will be there forever. To what extent is steel subsidized in China, which has a big impact on the pricing of the monopiles? The other one, positive for us, even if they do the transport themselves, they have to pay for the transport to bring the monopiles here. That is quite an expensive one, transporting these things. That is on the Chinese. We take them serious. We are also not panicking because we know we can compete with them on not only price, but on many other angles, especially risk-related.
EEW now in Rostock has acquired a joint venture with Sumitomo. They probably are investigating possibilities, and we know them and appreciate them as a very experienced and reliable competitor. They also look at the same market numbers as we do. Let's see what they do with that. I think what's helpful to them is that the diameter growth has stopped to some extent. They probably are a longer period than initially expected in the sweet spot of their factory. There is still a healthy development on the Baltic Sea. We think that they will continue to be a, how to say, professional competitor. Steelwind is doing great in their, but they have limited volumes as before, but they are very stable. They are very experienced in the meantime, and they write black numbers to our knowledge. They deliver a good product.
They have been affected a little bit by the U.S. market, we think, but they're good where they are. CS WIND, former Bladt, I think is still in a question mark, what will happen there. They have had their problems, and we haven't got any indication that that has been solved so far, but in our view, they have some challenges. SeAH, we've seen probably all the nice pictures with the king. What struck us is that the factory, yeah, it is there, but we couldn't see too much proof of to what extent they have been able to ramp up. The number of cans and cones was limited, at least on the pictures. We could imagine, also based on our own experience, that they are facing some delays in the ramp-up, which I think is logic. They, in our view, will make it happen.
SeAH will make it happen. The owner and Hyundai is a strong company with a lot of knowledge on steel welding, steel handling, and they may take a bit more time, but they will get there. The U.K. market is strong. It is a very big ambition they have over there. CFD7 looks very interesting with 27 gigawatts expected to be put in. That is quite a bit. Let's see how that works out. That is not that SeAH alone cannot do that. If we go to the Spanish ones, I think HSY is doing its thing quite nicely. Whether they are at full speed, I do not know yet, but I think they are good. Windar and Navantia may struggle a little bit more at the moment, although we have not got indications that they are in trouble.
They have had their plans to develop more in Spain, but I do not know to what extent that will be delayed or not given the market situation we are in. Overall, I think my pledge is here also that I really truly believe that it is very important that all these European players are successful in order to make sure that the European supply chain can deal with the ambitions we have in Europe and does not allow outer EU fabricators in too much.
Titan also made a quite large-scale announcement.
Interesting. A very aggressive ramp-up program. I think by the end of 2026, they want to be up and running. Let us see. Seawind is doing a lot in developing the area and the plots, so they probably can benefit from that for sure.
You are indicating you are looking at Asian Steel as well. What kind of savings should that bring, or should we read it more that Dillinger no longer has the capacity to supply all this?
Dillinger has sufficient capacity. That is not the issue. We prefer Dillinger because they are our partner. We know exactly the material that is coming, etc. In a market short term, that is a bit more tight. We need to be careful that we are not blown away by competitors that are using Asian Steel, not Chinese. I will not tell you where we get it from, but not Chinese. We are looking at ways to sort of keep or just, what is it, respect our partnership while also bringing in some Asian Steel to make sure that we win the deals that we are working on.
It is not a preference because you have to deal with transport. You are looking at a lot bigger batches. From a cash point of view, you also have to be treated a little bit different. The difference can be up to 10%-20%. Yeah. Thanks.
Philip, one further follow-up question related also to the question of Thijs. You discussed the competitive landscape, but at the same time, also we have seen, of course, all your clients as well, also under pressure, projects, economics not working aside from whatever is happening in the U.S., but also wind farms in Europe that are struggling. Do you see in any case kind of pricing pressure maybe as well from your client side in these new projects that you are tendering for?
There is always pricing pressure because nobody wants to pay more than needed.
On the other hand, we see more and more developers looking at a balance between pricing and risk. In that, that's on one side. We also see the stabilization in these costs, in my view, at the moment. What's more important, in my view, is also that we see that the levelized cost of energy discussion has come to a bit of a halt. There is not this endless push downwards on energy anymore. These EUR 50-EUR 70 brackets for a megawatt hour are sort of becoming our standard.
There, it's more about double-ended CFD sort of mechanisms that make a business case easier to fly and not being too overly ambitious in looking at system integration or ecological aspects that do complicate tenders quite a bit, which we, for example, have seen now on the [inaudible] Amaire Verte, especially Beta, is quite a tricky one for the developer to deal with a one-gigawatt electrolyzer that is actually not having the offset as it initially was planned for at this moment. As you know, there's a lot of delay in hydrogen, meaning also delay in the offset for that thing. The clients all.
Yeah. You start complicating the development of wind a lot. I think we have to look at all these aspects. Supply chain pricing coming a little bit more to a halt. I think the big part here is OEMs.
What can they do? Because they also have to ramp up. What nobody in this industry, I think, should strive for anymore is going back to four or five years ago where the whole supply chain was at the edge of being a loss-making or even more. That is not sustainable. Here, it's also the matter of, okay, to what extent indeed are subsidies coming in through the double-ended CFDs? I've said it before, but a double-ended CFD basically is an insurance policy. If you look at the double-ended CFDs in the U.K., the majority of them actually never had an actual pay of subsidies because the market sort of fluctuated between the bandwidth. For a developer to take an FID, it's a very strong mechanism to limit this risk.
That is why this is a cool tool to roll out in a broader way through Europe, which I think is happening now. It is a lot of factors that are coming in here into play. Last but not least, I think a very important one is the ramp-up of grid. The grid connection and electrification that has to take place, that will happen, but that cannot take place because grid has not been expanded, which is now, yes, in certain countries like the Netherlands happening, which should, in my view, be done a lot more aggressively in order to deal with that. Those are more important factors. Come on. Yeah.
Still possible.
Yes, sir.
Your guidance outlook probably assumes electricity and gas prices staying roughly the same.
For 2025, we have locked-in energy prices, so there is no risk over there.
Yeah.
Let's say the new stimulus package being introduced in Europe, von der Leyen announcing that gas and electricity prices need to come down drastically to compete with the U.S. and especially the steel industry.
Yeah. Yeah. We all should bet. I think the steel industry gets some special benefits, but it's not a significant one.
For us, the impact is indeed rather limited to the price. Yeah?
Yeah.
Yeah. Also noting that, believe it or not, we do expect our turbine to really start delivering power this year. We are looking at the possibility of a second one to make sure that we have 100% own electricity directly connected to our distribution station, which should help us also a bit in dealing with the electricity fluctuations because the gas consumption has reduced quite a bit. Everything is on electricity. Any more questions? Martin? No? Nobody?
Online? Jimmy? Forms? Yeah. Who's in Teams?
Can you hear me online?
Yeah. I can hear you.
Hi, Sean. Yeah. A couple of questions, if I may. Just wondering about the tender pipeline. I mean, we had a record year of auctions last year. I mean, how would you define over the next 12 months your tender pipeline versus 12 months ago? The second question, more just around kind of the international landscape, clearly with the U.S. market now being on hold, I mean, I suppose, is that the end of kind of any international ambitions for you guys? Is it just Europe going forward, or are you still interested in further international expansion?
To start with the last one, good point. Yes. I mean, we will not announce a big production facility in the U.S. in the short term, for sure.
We will definitely—we have mobbed any initiative or idea for that part of the world for at least four years, I think. At least, if at all. We constantly monitor the rest of the world. I mean, there is quite a lot of activity in Brazil. Australia is picking up. India has been picking up. All of them are not in a stage that would justify any spending of time and money on building business cases for these areas, but we definitely keep an open eye on the global development in offshore wind. Having said that, our primary focus now is and will remain for the coming years the European market because that still is the strongest and most reliable market so far in this dynamic world. That is on that one.
We keep an open eye on that, and we continue to also support our Korean friends from GSM Tech in that respect that also are faced with delays in the Asian market development, but still are ramping up a new facility here. Definitely, they get our support on that. On the tender process, the tenders that we do see are, surprise, surprise, 100% European tenders, U.K. and European tenders, both North Sea and Baltic Sea, Irish Sea, that are very strong for 2028 onwards, beginning of 2028 onwards. Up till 2028, the tender activity is rather low. If you would compare that to one year ago, basically, it is still equally high, but all for tenders one year later. Does that answer your question, Sean?
It does. I suppose just thinking ahead to 2027, it is good to know that you have got the 190 under negotiation.
I mean, would that be—do you think there'll be challenges to filling 27? Are you looking more towards 28 being the year where you're more relaxed about?
If I may be a bit more precise, we have 190 under preferred conditions, but there is more in negotiation. For us, 190 is not sort of a stop for 2017.
Huh? 2027.
Did I say 17? 2027. Bloody hell. We're making the same mistake. You did the same here. For 2027. Your last question was? I forgot.
That was—Okay. Sorry for my question. Thank you.
Okay. Thank you very much for asking. Any more questions?
From my side here, Fred. Ronald Hutchinson from Clarkson Securities here.
I was just wondering about, obviously, the difference between EBITDA and adjusted EBITDA expanded quite a lot this year compared to 2023, which, of course, is explained by the line item I think you called something along the lines of research and preparations for required adjustments and expansion of production facilities, which makes sense given the new expansion of the new facility. My question is, how do you expect that one to look going forward? Will we see a normalization already this year, or do you expect that to be a meaningful item also in 2025?
Preparations will be at a significant lower level in 2025 because, indeed, the ramp-up and also the preparation has come to an end already, but also the ramp-up will come to an end. You will see a significantly lower number for 2025.
You will still see some impact there, especially during the first quarter because you're still in the ramp-up phase. After that, it will go back to a normal level. That's the expectation.
Thanks. That's it from my side today.
Good. Thank you. Any more? Nothing? If not, thank you again for an interesting and quite dynamic session. We're looking forward to see you all back again in two months from now, where we will do our best to give more clarity on how successful we are. With those words, I close the meeting. Thank you all.