Good morning. We welcome you to the Altri Second Quarter 2024 Results Conference Call. During the presentation, all participants will be on a listen-only mode. There will be an opportunity to ask questions after the presentation. If you would like to ask a question during the Q&A session, you may do so by pressing the star key, followed by five on your telephone keypad. If you are experiencing any difficulty in hearing the conference at any time, please make sure you have your headset fully plugged in, or alternatively, please try calling from a different device. I will now hand the conference over to Mr. Rui Cesário, Head of Investor Relations of the Altri Group. Please go ahead, sir.
Hi, good morning, everyone. Thank you for joining us at today's second quarter results of Altri. A conference call, we'll review our latest financial performance, market conditions, operational highlights, future perspectives, and at the end, we'll follow with a Q&A session. To do that, we have with us today the CEO of the group, Mr. José Pina, and Mr. Miguel Silva, the group's CFO. I'll hand over to Mr. José Pina.
Thank you. Good morning, and thank you for attending Altri's conference call. We're obviously to host this call with investors and analysts to share Altri's results and talk about the market environment and challenges ahead. In slide number two, we comment on some of the main highlights during the second quarter of 2024. The global pulp market remained with positive demand dynamics during the second quarter of this year, as we shared with you at our first quarter results conference call. Demand continued sound in Europe and North America, despite some slowdown seen in China and Asia overall in the last weeks of the second quarter. As a result, pulp prices in Europe, especially for hardwood, continued to increase during the second quarter of 2024 to reach a new high of $1,440 in May, with some stability in June.
Giving a more stable demand environment and after nine months of price increases, we may see some correction during the second half of 2024, as anticipated by many industry analysts. Our EBITDA for the second quarter of 2024 reached EUR 74 million, 48% better than the first quarter, and an EBITDA margin of 30.8%, an improvement from 22.5% in the first quarter. If we compare with 2023, growth rates would be significantly better, as the pricing environment was quite different last year. As a result of the high free cash flow conversion level we maintain, we managed to lower our net debt level in the quarter by EUR 15 million, despite distributing full-year dividends of EUR 51 million. Net debt to EBITDA ratio is now at 1.8, which compares with 2.6 at the end of 2023.
Altri continues to develop several diversification and growth projects in segments such as bioproducts and textile fiber, as well as dissolving, where we highlight the recovery and valorization of acetic acid and furfural from renewable sources at our industrial unit, Caima, already in execution. Moving to slide number three. On global pulp demand, it continues to grow at mid-single digits in the first five months of 2024. Hardwood pulp demand rose by 6.3% year-over-year, with double-digit increases in Western and Eastern Europe and North America. China has slowed during the second quarter of 2024, but still positive by almost 4%, as paper demand seems to be less dynamic than earlier in the year.
The softwood pulp demand also grew, but at a slower rate of 1.5%, showing hardwood's capability as a product to continue to gain market share in the pulp space. If you turn to slide, slide number four, we see a stable 5%–5.7% growth in global demand for dissolving pulp in the first four months of the year, in line with the increasing interest we continue to see for this product. In slide number five, inventories at European ports during the quarter continued to at a low level of around 1.2 million tons, in line with the previous six months. And even more recently, that trend continues with the recently published June levels.
With pulp prices in Europe at a premium to China, is it possible we may see as well some more volumes being redirected towards Europe? In slide number six, average PIX prices for hardwood in Europe were 23% higher in the second quarter of 2024 versus the second quarter of 2023. On a quarterly basis, average prices increased by 21%, fueled by the mentioned positive demand environment during the quarter. Pulp prices ended the year at $1,001 per ton and were at $1,440 per ton at the end of June 2024. In slide number seven, we can see dissolving pulp prices with a more stable and less volatile trend, having grown by 4% on an annual and quarterly basis.
These prices are net and sourced from China, so not fully comparable to the European BHKP prices that include commercial discounts. At Slide eight, we show our production and volume sold in the first half of the year at more normalized levels than last year, respectively, with increases of 6% and 9% versus the first half of 2023. As we mentioned in previous calls, we have strategically tried to balance production with sales to optimize our pulp inventories. Going to Slide nine. Volume sold maintain a similar pattern when looking at sales per region, with the end use being led by tissue, followed by printing and writing. I'll now pass the call to Miguel Silva, our Group CFO, who will comment on the main financial highlights of the second quarter of 2024.
Thank you, José. We can see in Slide 10 that as the market environment continued to improve during the quarter, so did our revenues and profitability. Total revenues for the second quarter of 2024 increased by 19% year-on-year, and are also 8% higher than the first quarter. An EBITDA of EUR 74 million is significantly higher than last year's second quarter, and 48% more than the previous quarter. In slide 11, the accumulated numbers for the semester point to an increase of 9% in revenues and 53% growth in EBITDA in the first half of the year. In Slide 12, we can see that Altri's EBITDA margin in the second quarter of 2024 increased to 30.8%, the highest since the beginning of 2023.
As a comparing reference, we have reported 22.3% EBITDA margin in the first quarter of 2023, a quarter with very similar average BHKP prices. EBITDA margin in the first half of the year was 26.7%. Slide 13 and Slide 14, we see the improvement in EBIT and net profit levels, with net profit in the quarter almost doubling when comparing with the first quarter of 2024, and reaching EUR 62 million in the first half of 2024, 122% higher than in the first half of 2023. On Slide 15, we have some remarks related with the costs. We reaffirm our belief in cost stabilization for the second half of 2024 versus the first half. On the energy side, we continue to benefit from a regulated regime, both in Celbi and Caima units.
We continue to see stabilization in wood prices during the first half of 2024, as well as in chemical prices. In Slide 16, and looking at net debt, there was a reduction of around EUR 15 million during the quarter, despite EUR 51 million dividend distribution, placing the free cash flow in the quarter at EUR 66 million. This was a consequence of a positive evolution in EBITDA, lower investment requirements, and a strict working capital management. I will now pass the word back to José Pina.
Thank you, Miguel. If you turn to Slide 17, Altri's return on capital employed level increases to 16% in the first half of 2024, based on the operating results of the last 12 months, which still includes the third quarter of last year, an unfavorable comparison. The current level of ROCE is already in line with Altri's historic numbers of 17% over the last, if you take the last seven years, and above the industry's average. In Slide 18, we share an update of some sustainability developments and efforts of the group during the quarter. Sustainalytics made an update to our rating, improving our score to 14.5, maintaining a low-risk status and making us the eighth globally out of 85 companies in the sector for paper and forests.
We are currently updating the full year review and expect an update in the coming weeks. We have also developed several initiatives within our communities, celebrating the Forest Day with several schools at our nursery, Altri Florestal, and association with local authorities to clean several beaches in the surroundings of Celbi. Also, we have been promoting events with our works for physical exercise and mental health regarding our own organization. Finally, in slide number 19 and looking ahead, we expect some stabilization of demand trends for the second half of 2024. Europe and North America are likely to continue to be the most dynamic regions, while China could register some slowdown in the short term due to a softer local paper market after a 2023 record year.
Nonetheless, we maintain our positive outlook for 2025-2028 period, where additional capacity is limited and demand should continue on a positive trend. Based on the demand outlook for the second half of this year, as new capacity enters the market and temporary disruptions tend to diminish, we anticipate some correction for pulp prices in the near term. On the cost side, we maintain our view of cost stabilization for the second half of the year versus the first half of 2024. Nonetheless, we do not exclude some additional inflation pressures, depending on the evolution of pulp prices, especially if there is upside risk. In any scenario, we maintain our commitment, as proven, to maintain our cash flow cost levels at a very tight scrutiny.
Our diversification and growth projects, including the valorization of acetic acid and furfural at Caima, are on track and expected to be completed at the end of 2025. On Gama, Altri is in the process of obtaining the integrated environmental license, which is, as you all know, a special condition for a final investment decision. So in conclusion, Altri has a positive first half of 2024, with positive market conditions and improved financial performance. We expect to have further progress on our growth projects in the coming quarters, and we remain focused on executing our strategic plan, optimizing our operations, and delivering value to all our shareholders. Thank you for your attention, and we look forward to your questions.
Ladies and gentlemen, the Q&A session starts now. I would like to remind you, if you would like to ask a question, please press star followed by five on your telephone keypad. Our first question comes from Enrique Parrondo from JB Capital . Now your line is open.
Yes. Hi, good morning. Thank you for the presentation and for taking my questions. I have three, if I may. First one would be related to expectations for sales volumes for the year. If I recall correctly, in previous quarters, you were guiding for a mid-single digit increase this year. Just wondering if this is still your base case, maybe factoring in a slightly lower third quarter and a recovery in fourth quarter, as some of your peers are guiding, too. Similar one on cash costs. So year-to-date decline is close to low double digits. You're commenting that you expect this to stabilize in the second half of the year.
It would be helpful to have an update on your view for cash cost declines for the full year if this is still in the mid-single-digit range. Final one on CapEx. Reported figure for the second quarter was surprisingly low at EUR 4 million. Just want to confirm if we should expect an increase in the second half to reach the mid-40s levels guided for the full year. Thank you very much.
Thank you, Enrique. So specifically on the questions you've raised, in terms of expectation for sales volume in almost the coming quarters, we continue with with our targets, essentially mid-single digits. As you've seen, we've optimized our production capabilities so far in the first half. When we look at the second half, on the production level, we're gonna have a program maintenance stop for Celbi late third quarter. So that's going to have a little bit of an impact in terms of production volumes. In terms of sales volumes, we remain basically on track with our target to be in the mid-single digits for the full year.
Regarding cash costs, from what you've seen, we expect, so far in the second half to be very much, what I'll say, in line with the first half of the year. I would say at this point, we're looking to, we would expect, an overall evolution year-on-year on the low single digits, mainly driven by a slight increase in energy, which obviously gets a little bit of that reduction. But overall, we remain pretty much on target in terms of very stable cash cost outlook. And on our CapEx investment, effectively, as you mentioned, the first half, in particular, third quarter, was somewhat lower than what was anticipated.
But we remain committed to our full year mid-40s in terms of our CapEx. So you should expect pretty much us to be somewhat in line by the end of the year.
Great. Thank you.
Thank you.
The next question comes from António Seladas from AS Independent Research. Now your line is open.
Hi, good morning. Thank you for taking my questions, and thank you for the presentations. I have two, actually, three. The first one is related with gross margin that improved on the first quarter, now improved again, and is about 60%. So, apparently, wood prices are coming down, so if you can comment on this. Second question is related with pulp's volume sold over the second quarter. You mentioned that you are going for mid-single digit increase over the year. Nevertheless, I'm surprised because prices are doing so well, why you didn't sold more pulp? And the last question is related with the prices of dissolving versus the price of cotton.
So cotton is, the prices are coming down according to my sources, well, what I'm seeing in terms of benchmark prices, and dissolving is doing well. So, I don't know if you can explain this relationship. Thank you very much.
Thank you, António. In terms of the growth margin, in essence, our overall operating margin growth was driven by, somewhat of a cost optimization, as well as, obviously, taking advantage of, prices. And that's what we have done. And that led to margins which are, somewhat on the high end, if you look at, our historic levels. But, we've very much been, focusing on managing to optimize, our operating margins. Within that, obviously, wood prices have a significant, impact. What we have seen since, the second half of last year, it's much more stability in terms of wood pricing. I think this year you would expect some, a level of inflation, on those prices.
But overall, I think we managed to compensate that in other places. But I would say at this point, wood prices are very stable, and we would expect them to remain so for the remainder of the year. In terms of volume growth, I mean, we've sold total volumes of we had growth of 9% in the first half of the year. We've tried to maximize our volume opportunities, managing our inventory levels. I think I've mentioned this in the first quarter. We have been operating with low inventory levels. That's been by design. Obviously, we had a more, let's say, prudent outlook for the remaining of the year, especially on the back of how 2023 evolved.
So we continue to manage a very, healthy level of, of inventory, in our plants, and in particular looking at the third quarter, where we're gonna have our largest unit, Celbi, undergoing regularly scheduled maintenance. So obviously we need to build up some inventory as well to go through that, through that stoppage. So that's actually the reason. There's one additional point to that, which is, I think we've mentioned this in the past.
We've been expanding somewhat our ability to produce dissolving and that obviously takes when we go through some campaigns, particularly with our existing capacity, sometimes transition that has a little bit of an impact, despite the fact that in the first half, we were still 6% ahead of last year in terms of production. Regarding your third question, in terms of the prices on dissolving versus cotton, yes, we've seen some softening on the cotton market, but overall, we've seen a fairly healthy cellulose-based man-made fiber, particularly viscose and lyocell. So that those markets remain relatively healthy. It's a seasonal market, so you do have some slowdown in the summer months.
But despite that fact, I think operating levels on viscose plants around the world tend to be relatively healthy, especially compared to last year. So those have provided some support for the current level of prices and actually even with some additional increase, which has been on the back of the volume growth that has been registered as well. So hopefully that clarifies the questions you had, António. Thank you.
Thank you very much. That's okay.
Ladies and gentlemen-
No, no.
Ladies and gentlemen, I would like to remind you that in order to be able to ask a question, you must press the star key, followed by five on your telephone keypad. There are no further questions from the conference call, so I would like to hand over the session to Mr. José Soares de Pina, Altri's CEO.
Well, thank you very much. As we've gone through, it's been, it's a good part of the cycle. We've had, I think, very solid results. We've continued to deliver quarter on quarter in our commitments, and we have a relatively positive outlook for the remaining of the year and for the industry, not only in the short term, but also a bit longer, if you look into the incoming couple of years, based essentially on fundamentals. So we'll continue to remain very focused on managing our operations, and looking forward to report back in the next regarding the next quarter results. So thank you for joining, and wish you a good rest of the day.