Good morning everyone, and thank you for waiting. Welcome to Aeris Energy second quarter of 2022 results conference call. With us here today we have Mr. Bruno Vilela, CEO of Aeris Energy, and Mr. Bruno Lolli, Chief Planning and Investor Relations Officer. This event is being recorded and all participants will be in a listen-only mode during the company's presentation. After Aeris Energy remarks, there will be a Q&A session and at that time, further instructions will be given. Should any participant need assistance during this call, please press zero to reach the operator. This event is also being broadcast live via webcast and may be accessed through Aeris Energy website at www.ri.aerisenergy.com.br/en, where the presentation is available. Participants may view the slides in any order they wish. The replay will be available shortly after the event is concluded.
Those following the presentation via the webcast may post their questions on our website. They will be answered by the IR team after the conference is finished. Before proceeding, let me mention that forward-looking statements are based on the beliefs and assumptions of Aeris Energy management and on information currently available to the company. They involve risks and uncertainties because they relate to future events and therefore depend on circumstances that may or may not occur. Investors and analysts should understand that conditions related to macroeconomic conditions, industry, and other factors could also cause results to differ materially from those expressed in such forward-looking statements. Now I would like to turn the conference over to Mr. Bruno Vilela who will start the presentation. Mr. Vilela, you may continue. Good morning, everyone. Thank you for attending the call. One more Aeris conference call to share the results.
I'll try to be as brief as possible so that we can have more time for the Q&A session at the end. Okay. Let's go to slide number two, where we speak about the macro highlights of this quarter. The first topic, which is something we always address and now we have more information, has to do about the climate packages. In the second quarter, we had significant increases in several countries. There are two main reasons for that. Some countries mix both and others separate them. One has to do with the Paris Agreement for the climate change.
The other one that is at a highlight now, everybody knows what's going on in Europe, and very seriously, is the energy crisis because Russia is really restricting the supply of gas to European countries, and that is not only increasing the price of energy, but really restricting the supply. In Germany, we see some water fountains being turned off. That's unheard of. This is very important for Aeris. I wouldn't say for the future, I'd say for next year that is something that will increase our demand. Let's look at the Biden package. This is something he's been trying to approve since he was elected. He tried to pass a gigantic package of $1 trillion, but the Senate has always vetoed it. There have been some negotiations.
It has passed by the Senate, a package that encompasses medications as well as climate issues. Let's focus on the climate aspects. The Senate of the United States approved $370 billion to provide incentives for generation and use of renewable energy. The PTC will be renewed, most likely. That was one of the major things that favor demand. Now the Congress will probably pass because it's majority of it is composed of Democrats, it will be then signed by Biden. We expect a major demand for our products because there are still large projects to be made in the United States. We already see the reflections of that. If we look at the investors that invest in our competitor, TPI, they agree with our interpretation.
If you look at TPI, it has gone up, fifteen-- a 100% in the last two weeks. It did not make a profit, but with the approval of the package, the share prices went up a hundred percent because people know that, demand's coming, and when that happens, everybody will profit from it. Why does TPI has an advantage in the U.S. market when compared to Aeris? TPI does not make blades in the United States. It has production units in China, India, Turkey, Mexico, but not in the U.S.. The labor cost and labor quality in Mexico cause the blades to arrive in the United States at very competitive prices. We have exported four GW to the United States. In the backlog we have for the future, we did not see much demand coming from the U.S. market.
The major demand came from Brazil. We know that we'll have lots of products being demanded. We'll have a high demand from the U.S. after this package is finally approved. I believe this will be reflected in our share prices. Okay. Let's talk about France and Germany in Europe, that these are the countries that have disclosed their packages and are significant for the European Union. France has disclosed an emergency law targeting energy security, energy safety, because France wants to have a guaranteed supply of energy and also some control over the price of energy. The law or the act allows investors to sell their energy in the free market for 18 months instead of selling to the government. That improves the return on projects highly.
Projects that are being deployed now, investors can increase the size of the complex by the wind park by up to 40%. That improves their return on investment because the infrastructure is the same. It's just about buying more blades or more wind turbines for the same complex. The government is understanding that there will be a change or an increase in the prices of raw materials. The government will take the risk of this rise in raw material prices. This will give a lot of certainty for projects. When we speak of France, we can also consider offshore units. There is a concern with the area already made available for offshore units. The government is working on that to be able to implement offshore wind complexes.
France is not so much about the climate, but it's about energy safety. When we go to Germany, that uses a mix both based on climate change as well as on energy safety. It has approved the Easter package recently, and the main bottleneck that existed in Germany was related to permits. That package makes it more flexible, allowing investors to find more good areas to install the wind complexes. They foresee annual deployment of 12 GW per year up to 2025. Germany has been the major market, but it has never implemented so much per year. After 2025, 10 GW per year, and before that, even higher. This is a very aggressive target, and this will improve prices for manufacturers of turbines.
Vestas, which is a significant customer of ours, says that the prices of turbines to be sold in the future has been increased to return to the previous margins Vestas used to have in the past. Since demand is up, it's much easier to raise prices. Later on, we can answer questions or more in detail about these packages. Okay. Now, the second item is the signing of the contract with Vestas. We have signed an agreement extension with Vestas up to 2024. This increases the backlog by 3.3 giga. It's a significant increase. We see that the Brazilian market installs four gigas-five gigas per year. It's really at a high. We don't see that decreasing. On the contrary, we believe that there are turbines, there are projects to be installed.
We signed an agreement up until 2026, in which Aeris is entitled to work with most of the demand or a large part of the demand that Vestas has in Brazil. I cannot give details about this agreement due to governance issues for both companies. We do have signed this commitment. We do have a commitment with Vestas up until 2026. Now, the third quality topic, which is quality and cycle reduction, the quality indicators has improved considerably. That is very important because with a higher quality, we're able to reduce the product in process. We can finish products quicker, and that reduces our working capital requirement. As you will see in this presentation, this is one of the things that has affected our results negatively in the short term. The cycle reduction, we're talking about non-mature lines.
We're getting close to transforming most of the lines into mature lines, and the production plan follows the energy plan. Okay, so these are the three highlights for today, for this second quarter of 2022. On the next slide, number three, I will focus on losses. Of course, we need to be transparent about that. We did have a loss of BRL 28 million in the second quarter of 2022. In the first half of this year, the consolidated loss is of BRL 27.4 million. We had operating profit, but two main movements that happened affected the bottom line. The first one was we had to redirect some production we intended to export. We had to give it to the local market, and that affected the hedging we had to protect for exchange rate.
Of course, we're negotiating that with the client. We won't absorb that loss of BRL 21 million or BRL 23 million, and we're negotiating with the customer to try to make that into extra demand. Either extending the contract, which is something that provides better return for us, and we're negotiating along those lines. This is probably the solution we'll find with this client. The other topic that happened, the need for working capital due to the items in production. We need to have more quality inspections, and so our need for working capital increased. Our gross debt increased. You know what's going on with the Selic interest rates. Whenever it goes up, it really hurts us because it increases the cost of financial expenses with the debt service that we have. These are non-recurring, or one-off events that happened in the second quarter.
We've decided to work with all the figures right now, not to leave anything for the balance sheet for the future. Now, going on the ROIC of 10.6%, we have invested BRL 27.5 million. We have a net revenue, BRL 651.7 million in the second quarter. Year to date, BRL 1,188.5 million in the first half of 2022. The EBITDA is BRL 67.1 million, and year to date, BRL 121.4 million in the first half of 2022. Overall, these are the figures. I would like to give you an overview of the market as well as the main indicators of Aeris. Now I'll turn the floor over to Bruno Lolli, so he can give more details about the financial topics. I'll talk to you later.
Thank you, Vilela. Good morning, everyone. Let me start on slide number four. We always show the slide. In orange bars, we see the average invested capital, and the gray line shows the NOPAT in the last 12 months. From 2019 - 2020, invested capital grew by more than 30%. More than 50% from 2020 - 2021, and from 2021 until June 30, 2022, it has grown by 15%. We expect it to grow 10%-15% until the end of this year. We clearly end a cycle of more significant capital allocation that started in 2019. The NOPAT was flat pretty much during this period because the concentration of non-mature lines does not add value until they are mature. We'll see more in detail on slide 20.
The projected BRL 150 million year to date and it may exceed BRL 200 million NOPAT at the end of this year. At the closing of this quarter, this is expected. On the third and fourth quarter, we'll have growing results capturing the investments made in the last 2.5 years. Now, moving on to slide number five. The adjustments are in blue so that the effective rate is considering the normalized effective rate. We have taxes levied on past revenues. There's a volatility. To normalize and make it easier to understand, we're making these adjustments. The highlights of slide number five is that we continue to transform invested capital from non-mature to mature lines. More than BRL 200 million in excess invested capital or working capital for these non-mature lines.
We see a growth of adjusted NOPAT for mature lines of more than 20% when compared to the first quarter, and we tend to have an upward trend for mature lines until the end of the year. The annualized ROIC continues at 20%. We always project ROIC above 25% for mature lines. We continue to be negatively affected by high inventory, so we are delivering results between 20% and 25% of ROIC for mature lines with the projects. In some projects, we expect to go back to 25%. On slide number six, net revenue reached BRL 651.7 million, as mentioned before. The important highlight of this quarter is there's the record of deliveries to the domestic market. There was such a high concentration of such deliveries because the demand volume was redirected to the domestic market.
We were making products for export, but we ended up meeting the demand in the local market. That caused the effectiveness of the financial instruments in this quarter to be reduced. That's why we had a loss of BRL 33 million associated to exchange rate variation. Services is growing. Of course, we do have a seasonality in the first quarter that negatively affect that in the United States. Now services revenue from services is going back up again. Slide number seven is a new one, so let me spend some time to explain it. On the top darker line, we show the revenue in BRL per megawatt and the development of the revenues from blades since 2019. The average price of the megawatt has grown considerably, and a part of that is associated to the rise in cost of direct materials.
You can show in the chart the capacity to transfer the cost of direct materials. That includes the exchange rate that increased 30% when compared to the beginning of 2019 current rates. In materials inflation, that's very significant. That includes the prices of materials as well as logistics costs. Aeris is talking to customers to have better tax conditions so we can reduce the cost of materials. Just to summarize then, both the costs of materials charged by suppliers, exchange rate variations, logistics costs and taxes are transferred to customers through prices going up or down. We end up protecting the economic results on one side and giving logistics and cost of materials, but we are more subject to the need for working capital because our inventories increase.
Now, moving on to slide number eight, the EBITDA year to date in 12 months, BRL 251, so a record high. BRL 67.1 in the quarter. There has been a growth in margin. We see progressive growths in margins in 2022. When we look at the guidance center, the margin projection for the second half of this year is 11%. The increase from 10.1% - 10.3%, and the expected growth in margin for the second half of this year reflects a decrease in fixed costs. The company is structured to have more lines maturing that would increase volume, increase revenues, and therefore, more effectiveness in reducing fixed costs to improve margins in the second half of this year and in 2023. Slide number nine.
We've made BRL 27.5 million investments in the second quarter of 2022, and we'd reduced the guidance due to a larger investment in finishing positions. That we have the rolling and the finishing area. We need more positions of finishing to ensure that the bottleneck remains in the area that we have more investment. This increase in more finishing positions allows us to reduce the work in progress. In addition to investments of Aeris to increase these finishing positions, the current customers also invested for that. That will make our production process leaner to create a larger production volume without having an impact on the inventory of products in process. On slide number 10, we had a growth of work in progress in gray.
Although, in this quarter, we're starting to reduce in terms of days of revenue, so the turnaround of inventory is improving. The idea is to reduce the work in process in the second half of this year. When we look at raw material, this was expected when we disclosed the results of the first quarter. We reached a peak of excess of inventory, BRL 235 million, and we expected, until the end of the year, we'll be able to increase the number of days of raw materials to 30 days. We want to have an inventory of raw materials again, so we can reduce the capital invested. Up until the end of the year, we expect to continue to grow the EBITDA at the same time that we reduce invested capital, de-leveraging the company.
Slide 11 shows the cash position of BRL 860 million, which is more than 1.5x the liabilities up until the end of 2024. We had funding in the second quarter at the cost of CDI + 1.5 per year to preserve our cash position so that we don't have to go to market this year. That's the situation. We don't expect to borrow any more money until the end of 2022. On Slide 12, we have a contract with Vestas signed, so we attain a record of backlog with 13.6 gigawatts of power to be delivered in coming years. That is equivalent to BRL 10.8 billion reais at the exchange rate as of the end of the quarter.
The average power of the wind turbines in the backlog is 4.9 megawatts per set. It's only natural that a major part of this backlog is dedicated to the domestic market, and the average size, or the average power of the turbines is around that. Slide 13, the extension of Vestas' agreement is already reflected here. The commercial challenge we face right now is that we have six lines to be closed between the end of 2022 and 2023. We have closed the first line that we see here. We have the next quarter six lines. The commercial challenge is to be able to extend the lines that are closed so that in 2023 and 2024, we'll be fully occupied with mature lines.
Looking at the historical results of Aeris, mature lines that last longer generate very good results for the company, allowing us to continue with our deleveraging process along the next 10 quarters. On slide 14, we review the projections for 2022. The first cause to which this reduction is attributed is a customer that we requires a large number of inspections due to changes in the project or in the design given by the customer. We signed an amendment to the agreement that activates the take-or-pay clause, protecting the economic result of Aeris, but it does affect the working capital requirement. When we project the solution of this issue until the end of the year, we will deliver volumes that are much lower than expected initially. This would bring the volume very close to the bottom of the guidance, original guidance.
With the change we had in this quarter, dedicating more volume to the domestic market instead of exporting, we also project a significant reduction of exports until the end of the year, and that would cause us to be below the guidance. The third cause for this reduction or review in the guidance is the increase in manufacturing cycle, especially in finishing positions. CapEx need is due to that, but we also project that this cause will continue to affect the company until the end of this year. When we change the year to 2023, the stock in process will be considerably high. We're just postponing deliveries for 2023. Since it was expected for 2022, it's reflected here. The new guidance is 3.2-3.6 gigawatts until the end of this year. Net revenue between BRL 2.6 and BRL 3.1.
The reduction in this quarter's revenue is lower than the decline in the delivery volume. That results from an exchange rate that is higher and the unit price that's higher. The reduction of EBITDA is less significant than the reduction in revenue because take-or-pay clauses come into play that protects the company's capacity to generate operating profit despite the lower volumes. Since we're still negotiating with one of the customers, in this period, we do not give guidance for next year. We expect to conclude the negotiations until November, and then we'll be able to disclose the projections for 2023. With that, I end my presentation and turn the floor over to the operator.
Thank you. We'll now start the Q&A session. In order to ask a question, please press star one.
If you want to remove your question from the queue, star two. First question from Lucas from XP Investimentos.
Good morning. Part of my questions I think you've mentioned regarding the guidance of 2022, but just to understand a bit better. The three main factors, one seems to be more structural. Inspections by the customer, the more one-off event of the transition of mature to non-mature lines. Thinking about 2023 and even 2024, when lines become mature during 2023, there will be a backlog to be invoiced in this year. Is there any factor that could damage that production level, especially considering 2023, 2024? Although you know don't give guidance, is there any risk, something that could hinder these sales in the next two years, maybe some structural factor or a transition from a mature to a non-mature line?
I believe that the amendment with Vestas Agreement only foresees that from 2023 onward. I would like to understand the dynamics for 2023, 2022. Thank you. I have another question later.
Good morning, Lucas. Well, it's like you said, Lucas, for 2025, 2026, there is a possibility of a transition in the blade model. But for 2023, 2024, no. Whatever is mature now in the second half of 2022 is what the demand is for during 2023 and 2024. When you ask if there is a risk of reduction, I'd say that we don't see any risk in the macroeconomic scenario right now. Most of this demand is domestic for Brazil. Even if something happens in the U.S., this should not affect this local demand. Towers that have been sold, blades for the regular as well as for the free market.
Now, looking inside the company, the scenario for reduction would be if we were not able to make a line mature. We see internal risks when the lines are not mature, when we don't control all the process. Since in 2023 and 2024 lines will be mature, I won't say that the risk is zero, but it's a very reduced risk of in-house problems because we'll have control over the process by then. In terms of the macroeconomic scenario, we see an upside potential due to these packages that are being approved worldwide. Actually, the risk we see is an increase in demand. If demand increases, will it be for the same products? It tends to be the same we're producing now because customers have not launched new turbines. If they receive new projects, they are using the current turbines.
The risk is not so much of a downside one, but rather of an upside one. Being very practical here, the risk of the guidance for volume 2023 and 2024 be changed is very low. Okay, that's exactly what I wanted to understand. Bruno Lolli made a comment about the different production guidance. We see that the average point from 2.8 - 3.4 giga. This first factor is the inspection level by the customer, and this would cause it to go to the previous guidance at a low rate. We understand that about one-third of the reduction in production was given to this first factor that I believe will be valid for the rest of this agreement with this customer. Then we have to understand the review of mature to non-mature lines.
Lengthier inspection cycle, how much would it reduce the EBITDA in 2023? I imagine that there will be a much lower reduction since you have some clauses to protect you from that. After that, there will be a zero impact on the lines that would mature in the beginning of 2023. I believe that's right? Thank you for the answer. Good morning, Lucas. This is Bruno Lolli speaking. This first point we highlighted, it's a bit more than the total effects. Like I said, we signed a take-or-pay clause. Today there are two scenarios. We continue to charge higher prices during 2023, or the problem is completely solved, which is plan A, and we're very close to reaching that so that we can have higher volumes go back to the original contract conditions, both in price and volume.
The other two factors, which is the redirection of volume that caused the exchange rate loss, is being negotiated with the customer. This is a one-off event in 2022. It won't affect 2023 and the future at all. The last factor, which is the increase in the average cycle, is also a one-off event. It requires more CapEx, which is reflected in the guidance review. We expect to go back to original contract volumes too for all customers considering this additional investment. We do expect these three factors to be restricted to 2022 and not affect what we have projected for 2023 and 2024 at all. Okay, thank you.
The next question comes from webcast, Ramon Vieira from Acelo Capital.
About the possible entry of Goldwind in Brazil, do you believe it could sign some orders, place some orders with Aeris? Good morning, Ramon. While answering the first part of your question, the possible entry of them. Well, am I talking about this? Because Goldwind is trying to enter Brazil for some time now. 2016, 2017, myself and more people in Aeris visited Goldwind's in China to understand their business model, to understand how Goldwind works, because it was planning to come to Brazil at that time. Actually, it was planning to sell turbines in the Western market, and we paid them a visit. Now, I believe they are coming.
This is why I wanted to answer this part of your question. Goldwind is already hiring people in Brazil, and we have a good relationship with their team, both in Brazil and in China.
What I can say is, well, there's not much to say. Their plan is something they say to everyone is to have turbines after 2024. We have an NDA signed with them. This is all I can say, and it answers part of your question, but unfortunately, I cannot say yes or no. I can just give you this type of answer. I hope that I have answered your question. Thank you. The next question is also from the webcast, Rafael Indetti. The increase in raw materials and inventories are explained by the reduction in production as presented. However, in six months there has been an increase of 60% in inventory, with also an increase in products in production, plus finished products just shown in days and twice the time when compared to 2Q22 and to 2Q21.
Would it be interesting to break down these amounts or values? In the company's quarterly financial statements, we have the explanations for the inventory breakdown. For presentation purposes, we consolidate the inventory of work in progress with finished products because the finished goods are not yet available to be invoiced. It's a technical detail. We say that it's finished when the blade is finished, but the actually invoiced product is a set of three blades. There are some days until the set is completed of three blades that are balanced to equip the same wind turbine. In practical terms, we consider it as inventory in process, and that's why it's shown together for presentation purposes. To ask questions, please press star one. The next question comes from the webcast, Lucas Barbosa from Santander. Good morning, Vilela and Lolli. Thank you for the question.
Vilela has mentioned in the beginning of the call about a strong demand for turbines in the Brazilian market. Would it be a demand for new contracts or for advanced deliveries? As for the demand for new projects, do you see new projects being announced despite the price increase of wind turbines? Thank you. Good morning, Lucas. How are you? I believe that the answer is a bit of both. Customers are trying to advance their deployment of complexes to improve returns, and new complexes are being negotiated as well. We're talking to customers, and this is one of the reason we consider extending contracts. New contracts are being signed with all customers. To be very honest, we see our customers signing new contracts despite the increase in the wind turbine prices. Thank you.
If you have a question, please press star one. Next question, also from the webcast, comes from Fabiana from Banco Safra.
How the interruption of wind turbine production by GE affect the company. Good morning, Fabiana. To be honest, the impact is zero. We do not have GE as a customer. GE has purchased a competitor, which was a blade manufacturer, and it's not selling many turbines in Brazil. I think the development of the current turbine was not very successful. It's undergoing a global restructuring in their business. It has three major business. One is power. The major market of GE that they're focusing on now, especially because they have U.S., the demand information from the U.S. market, is this, to address this huge demand in the United States. If that comes, let's see if they can produce everything in-house.
If you ask me today, I would say no, because the manufacturer of blades for GE is closing plants. Answering the impact today is zero. In terms of relationship with GE to sell turbines, we render services for them, and they'll continue to do the OEM for the installed turbines. There can be an upside after the Biden package is approved because the U.S. market will grow and GE has a significant market share in the U.S. It's GE investors fighting to see which one has the largest market share in the U.S. every year. Thank you. The next question from webcast, Jorge Milberg from Morgan Stanley. Thank you for the call. In the first quarter, you recognize the gain of BRL 22 million in other operating revenues line related to the reimbursement of production losses caused by changes in design by customers.
That amount is zero, close to zero in the second quarter. Has there been any change in the way you are treating the offsetting of payments? Good morning, George. Yes, we had an important change in the classification. In the first quarter, it was treated as other revenues. In the second quarter, this effect was 100% in the first line through price adjustments, and this is how we'll continue to address it until the end of the year. When you look at the first quarter, the gross margin had a negative impact due to this effect because it is recognized after the gross results. For the future, operating costs and revenue come before the gross income. George, the increase in CapEx projection is 100% a consequence of the increase in the finishing positions for two of our customers.
In order to have a balanced manufacturing cycles and to prevent bottlenecks in the process, we decided to increase the number of finishing positions in the production line, and that requires investments from Aeris and from customers. Some additional investments from Aeris has happened in the second quarter. It won't happen in the third and fourth. We'll be able to offset that by reducing the average production cycle, which is one of our goals. When you will look at 2023, since this effect will be restricted to 2022 for these two customers, we do not expect to change anything. If this is not a projection or guidance, what we can say about 2023 is that we expect to be very close to what we call maintenance CapEx. Which is very close to depreciation.
The expected CapEx volume for 2023 will be around BRL 50 million-BRL 60 million. It's not yet a guidance, but under the current sales scenario, this is most likely the projected value for next year. Thank you. If you have a question, please press star one. You can also send your question in text via the website, the webcast. This concludes today's question and answer session. I would like to turn the floor over to Mr. Vilela for his closing remarks. Good morning again. I think we have talked a lot about the company and the market, so I don't have many closing remarks. It's just a questioning and provocation that people ask me, and I do not know how to answer. When we look at Aeris and TPI, which is our only competitor, and it's a listed company.
I don't know if you saw, but if you look at the data of both companies, Aeris has a better result than TPI. In 2022, we increased our backlog by more than 3 GW, where TPI reduced their backlog by $500 million. Our backlog is increasing and theirs is reducing or decreasing. Our results are better than theirs. The global news about an approved package can affect their share prices so much so that it goes up 100% in two weeks and our prices go up 10%. I mean, I don't know how to answer that question. Some people have asked me that as a provocation. Actually, if you could shed some light on that, please let me know and contact us later.
Our customers are global, and we export since we've been exporting since 2017, and we know that most of our growth will come from exports and from those packages that are being disclosed and made internationally. Thank you very much for your interest, attention, and time. Have a good Friday, and enjoy your weekend. Aeris Energy conference call has now ended. Thank you very much for attending, and have a nice day.