Good day, ladies and gentlemen, and a warm welcome to today's earnings call of the AlzChem Group AG, following the publication of the financial year 2024 figures. I am delighted to welcome the CEO Andreas Niedermaier, CFO Andreas Lösler, as well as CSO Dr. Georg Weichselbaumer, who will speak in a moment and guide us through the presentation and the results. After the presentation, we will move on to a Q&A session in which you will be allowed to place your questions directly to the management. Let's jump straight into the numbers. Mr. Niedermaier, the stage is yours.
Yes, thank you for the very pleasant opening. Good morning together, and thank you for joining us today, and welcome to our year-end analyst call here. As always, we will go through the presentation, as we have already heard, and then be available for questions for sure. Let's skip the disclaimer and go directly to the page five. Hopefully, the technique will do that. Yeah, here we go. Let me start with our outstanding sales and EBITDA growth, as well as our diverse markets. Based on our unique calcium carbide-for-bone production, we developed a portfolio of new specialty chemicals with leading position in here the niche markets. We supply the Western world with high-demand products from the areas of human nutrition with Creapure, automotive and defense with nitroguanidine, and animal nutrition with Creamino. Most of the other specialties also contributed to the successful growth as well.
The special product segment now accounts for around 63% of sales and accounts for almost 90% of the total earnings contribution here. As you can see, this led to an impressive increase in sales, which stands for an average growth of 7%, including COVID-19 and energy crisis years, and a rise in EBITDA since 2016, which means an average growth of 13% up to EUR 105 million EBITDA here. Thus, we have kept our promise and successfully exceeded the EUR 100 million EBITDA limit this year. What happened else? We see that on the next page. With a very good result, we were able to achieve an EBITDA increase of 29%, mainly due to the growth of specialties. Sales have not grown quite as strongly overall, but still with 3%.
This is mainly due to the structural change in sales towards specialties and the fair treatment of our customers that we have also returned raw material price reductions to customers. A further analysis comes later in much more detail from Georg here. The profit after tax of EUR 54 million also reached a record level in our history. This results in a dividend proposal of EUR 1.80 per share, which also represents a decent increase of 50% here. It is not only in the pure numbers that we have done very well. Last year, for example, we received a platinum rating from EcoVadis. This puts us in the 1% of companies that have managed to do this. In addition, you can read an ESG report in the non-financial statement year-end closing prepared in accordance with the latest requirements and specifications of the CSRD.
We can proudly say we are thus CSRD ready. Last year, we also approved the company's largest investment project with approximately EUR 140 million. This is already being implemented and is scheduled to go into operation in the second half of 2026. Many orders have already been placed, and construction activities on site are starting just now in these days. We started with the site search in the USA and are working through the project in a very structured way so that today we assume that we will also get our growth projects implemented in the USA. Last year, we were able to significantly increase the liquidity of the share with a free float of almost 62%. Last but not least, this has led to a very good price plus and to the inclusion of the SDAX.
The fact that we were able to significantly outperform all relevant indices and finally have been included in the SDAX selection index is a great recognition of our strategy and the success of the past years. What else can we report? Here on this page, I'm allowed to present our extended board team. Here, I would like to warmly welcome Martina Schmitzer. As an excellent marketing and saleswoman, she has already taken over some areas from Dr. Weichselbaumer since January 1st, who can and should take much more care of the USA project. Martina Schmitzer will not only represent marketing and sales, but also the big topic of ESG with full commitments. You can get the first impression by reading the so-called non-financial statement, which, as already discussed, we have arrived out as a so-called CSRD report.
We would also be happy to receive your valued feedback on this. I am very sorry you have to read more than 200 pages. The target was to reach 20 pages, but we were forced to reach and to report 200 plus pages here. I can now pass the word on to Georg Weichselbaumer, who will analyze and explain the segments to us.
Yeah, thank you, Andreas. Let's start with basics and intermediates. In this segment, we ended up with a decrease in sales compared to the previous year by 9%. Nevertheless, the profitability of the segment could be increased, and our EBITDA rose to almost EUR 11 million, representing an increase of 14%. The sales decline was reported throughout the year already and is based on a combination of pricing and quantity. Overall, the decrease in costs for energy and other essential raw materials has mainly led to a reduction in sales prices through embedded price adjustment clauses, thereby passing on cost reductions to customers. Additionally, we still do not compete with Asian price settings for some of our products and thus deliberately lost some quantities. However, we are convinced that this strategy is the right one and see a confirmation of this strategy by the EBITDA development in this segment.
Now, let's have a closer look at our business areas. As already seen in the third quarter of 2024, we saw positive development within our fertilizer business with our brand Perlka and could increase volumes and sales. Due to the better specialization of the product for high-value crops, customers are willing to pay a certain premium compared to cheaper alternative offers, basically delivered from Russia. In the metallurgy business, sales were significantly below the level of the previous year. The development was mainly driven by two effects: price escalation clauses with most of our customers passed on price reductions on the raw material side, and the economic situation of European steel producers also caused volume declines. Our nitrile business did not recover as fast as anticipated at the beginning of the year, and we are currently working on a transition plan for this product area.
We made first steps to move away from stamped applications with high Asian pricing pressure and concentrate on specialized applications in the nitrile sector to gain a significant competitive advantage. Unfortunately, it can be observed that many customers do not want to pay for regional supply chains, delivery, reliability and quality, and reliable adherence to ESG criteria in pricing. As an outcome of our pricing and volume strategy, the segment EBITDA could be decoupled from the sales decline and increased by 14% to approximately EUR 11 million. Accordingly, we could also increase our EBITDA margin to 6.2%, which is above the previous year's 5%. It shows that quantity is not the only decisive factor if the optimal production structure is not negatively affected.
As mentioned several times, the products of our basic and intermediate segments are not sold to the market, but they are very important raw materials for our following production steps, and all raw materials required for the growth of our specialty chemical segment could be produced reliably. This brings me to the next page, where we will analyze the situation in our specialty chemical segment. My colleague Andreas Niedermaier already mentioned that our specialty chemical segment was again our growth driver in 2024 and contributed a major part to our record sales and record EBITDA. The segment sales reached almost EUR 350 million, and this represents a very strong increase of 9% compared to the previous year. The majority of this remarkable revenue growth was based on volume increases, while a smaller portion was driven by price increases.
We're happy to report that most product areas contributed to this revenue growth, albeit to varying degrees. Let us now discuss the development in our major product lines with our specialty chemical segment. Throughout the year 2024, we have constantly reported that three product areas had a major impact on our sales growth within this segment. Those are nitroguanidine, creatine, and Creamino. Our nitroguanidine business could materially grow within the defense industry. The increase in sales is due to both volume and price effects. Here, the shift in sales from applications in the agrochemical and automotive industry to the defense sector continued seamlessly. The current CapEx program in our nitroguanidine capacity expansion is the best indicator that demand within this product area is not satisfied at the current level and is expected to increase further within the next two to three years.
We are very satisfied with the volume growth we had for creatine products. The success story of Creapure within the fitness industry continued, and we managed to convince more and more customers of our quality promise. Additionally, we placed our new brand Creavitalis successfully in the market with applications in the health and pharma sector. We are constantly working on bringing all the education about creatine, our brands, and its advantages in the market. Our sponsorship with FC Bayern Basketball and the upcoming Creatine Conference are just two examples of what we do. We believe in the market growth and put a new investment on its way, which shall support our growth with existing and new applications for creatine within the next years. The animal nutrition product area also showed a stable growth trend. With our brand Creamino, volume and thus sales growth were achieved despite a price-intensive competitive situation.
The further expansion of sales activities in all major global markets is paying off and will continue to be consistently pursued. Also, the pharmaceutical sector with BioSelect and the automotive sector with Diehard developed positively in 2024. Within the automotive industry, we saw an increased trend from steel to lightweight construction, where our Diehard products are used and deliver high quality. In the pharmaceutical sector, our BioSelect benefits from the general trend that customized, individually tailored DNA analyses are gaining increasing importance. We were clearly not happy with the sales reduction in our custom manufacturing business of our multipurpose blends. This business is clearly linked to the economics of the chemical industry in Germany and Europe and was impacted by a lower demand and cautious customers. We see this business as a chance and do believe to be back on the growth path if the chemical industry in Europe recovers.
The positive sales development was accompanied by a strong increase in EBITDA and EBITDA margin. With an EBITDA of EUR 94 million, we can report an increase of 28% compared to last year. Accordingly, our EBITDA margin increased as well and ended up at a very healthy level of 27% in 2024 after 23% in 2023. In summary, we can state that we are mostly satisfied with the development within this growth segment, but we see further growth opportunities. Let us now move on to our third segment, Other Centrally. This segment reached higher sales than in 2023, which was mainly due to the pass-through of increased grid charges from our network operators. The services utilized were primarily variable in nature, as energy supply, technical services, and network operation, and included the usual price increases.
The segment's EBITDA was above the previous year's figures, which was associated with the increase in sales for grid fees of the CapEx program in our grid network last year. Now, that was all for our detailed view on the segment development. Let's now hand over to Andreas Lösler and take a look at the overall group figures.
Yes. Also, good morning from my side, and thank you, Georg, for the insights in our segment development in 2024. As always, I will start with a detailed look at our group P&L figures first. As already explained by our CEO, Andreas Niedermaier, we are looking back on a very successful financial year. In terms of sales, we continued our growth story and ended up with a sales increase of almost 3% and reported group sales of EUR 554 million for the year 2024. It is worthwhile to mention that this sales amount represents the highest sales in AlzChem Group's history. As already seen throughout the year and mentioned from my colleague, the sales shifted again more and more to the segment specialty chemicals, which proved to be our growth segment. The sales portion of our specialty chemicals segment was 63% of total sales.
This relationship amounted to only 59% within the comparative period and shows the current revenue trend into specialty products. Our sales analysis over the 12-month period shows a volume increase of 3% over the whole group. It was already mentioned from my colleagues that this volume increase was linked to the specialty chemical segment, where we reported a volume increase of 8%. Also, the volume reduction, as shown for the first quarter, was only linked to the development within our basic and intermediate segment. Our EBITDA development could also continue the trend as seen within the quarterly reports of the year 2024, and we can report an EBITDA of EUR 105.3 million for 2024, which, as the same as for the sales, represents a record for AlzChem Group.
The reason for this positive development clearly relates to the increased sales portion of and the volume growth within the higher margin business of specialty chemicals. In terms of comparative figures, our EBITDA increased by almost EUR 24 million or 30% compared to last year. Our EBITDA margin also showed a positive development and a strong increase. For the whole year 2024, we could reach an EBITDA margin of 19% after 15.1% last year, an increase of 26%. The positive development in EBITDA has also materially influenced the group net result in 2024, which increased by almost EUR 20 million and ended up at EUR 54 million, an increase of 56% compared to 2023. Our reduced financing costs also supported the growth in net result.
Interest income could be increased due to our strong cash position, and interest expenses could be reduced due to lower interest rates and lower outstanding loan amounts. As a consequence, we increased our earnings per share to EUR 5.31 after EUR 3.40 per share in 2023, and this was the reason for the increased dividend proposal, which Andreas Niedermaier mentioned at the beginning of this presentation. That was the big picture of our P&L. Now let's move on to the balance sheet and cash flow figures. Our balance sheet and cash flow have also shown a very healthy development in 2024, and all major KPIs could be improved. The increase within our total balance sheet of approximately EUR 60 million was driven by higher investments and materially improved cash positions on the asset side.
Compared to last year, we increased our investment activities and showed a growth in fixed assets of EUR 60 million. On the other hand, we could reduce our inventory level since last year, which contributed to a slight reduction of working capital as well. As mentioned already, the main impact on the balance sheet came from our positive cash development. At year-end, cash amounted to EUR 61.5 million, which represents an increase of almost EUR 50 million. As we made all loan repayments during the year on schedule and have not used any short-term financing lines, we can report a net financial asset of EUR 30 million at the end of 2024, after a net financial debt of EUR 46 million at the end of last year. On the other side of the balance sheet, we can see a positive development within our equity and equity ratio.
Equity amounted to EUR 207 million, which represents an increase of approximately EUR 44 million since last reporting date, and accordingly increased our equity ratio to a very healthy level of 43% by the end of the year 2024. As a one-off impact, equity was reduced by the amount already spent for our share buyback program, in fact EUR 1.5 million by the end of 2024, representing a bit more than 25,000 shares. As mentioned already, we are very satisfied with our strong and healthy cash development throughout the year. As a result of our very good net earnings and ongoing very close look at our working capital management, we could materially increase our operating cash flow to EUR 105 million, which represents an increase of 45% compared to last year's period.
The cash flow from investing activities has been reduced by an amount of EUR 12 million, which represents the first installment from the European Union subsidy program ASAP for our current investment program in nitroguanidine expansion. Approximately EUR 10 million were already spent for this major single project in 2024. Our financing cash flow was mainly impacted by dividend payments of EUR 12.2 million and scheduled loan repayments throughout the year. Again, we were neither required to use our short-term financing lines nor our factoring lines. As you can see, AlzChem is in a very stable and healthy cash situation, and thus is prepared for further growth investments in the future. This brings me to the outlook for financial year 2025. From today's perspective, we see a further growth.
Sales are expected to grow to approximately EUR 580 million, and EBITDA is expected to grow to approximately EUR 113 million. This represents a sales increase of approximately 5%, while EBITDA is expected to grow by approximately 7%. The planned sales growth shall continue to be achieved organically. The fundamental growth drivers are expected to be volume effects within segment specialty chemicals, which shall overcompensate a slight sales decline in segment basics and intermediates. Further growth in the specialty chemicals segment shall be achieved through volume increases for our products Creapure, Creamino, as well as nitroguanidine. In addition to that, we also expect an increase in volume and sales in the area of custom manufacturing for our multipurpose blends compared to the previous year, as the overall European chemical industry is expected to slightly recover.
In the basics and intermediate segment, sales are expected to be slightly below the previous year's level, with possible positive developments in the nitrile product area after a strategy change in the current product mix. We expect the prices for key raw materials and logistics to remain stable at the 2024 level, while energy prices are expected to stay at the elevated level of the fourth quarter of 2024. The sales growth in the specialty chemical segment leads to a further increase in the sales share of this segment in our total sales. Consequently, the EBITDA of this segment and the EBITDA margin of AlzChem will also grow. That is it from our side with the information for last year and the outlook. At this point, we would like to thank you for your appreciated attention and are now at your disposal for possible questions.
Thank you very much for your presentation and congratulations to your growth. We will now move on to the Q&A session. For a dynamic conversation, we kindly ask you to ask questions in person via audio line, and we already have two hands up. To do so, click on the "Raise Your Hand" button. If you have dialed in by phone, please use the key combination Star nine followed by Star six to enter the queue. If you're not able to speak freely today, you can also place your questions in our chat box, and I will read them out for you. Duarte Murta, can you talk and accept? Yes.
Good morning and congratulations on a great quarter. A couple of questions from my side. Firstly, Q4 margin in specialties was surprising at 30% on what was relatively stable pricing. I take it the big push came from lower electricity, and as I know, you purchase electricity up to three months in advance and obviously produce more as well during summer. Regarding the inventory availability produced at that great price level, what margin can we expect in Q1, keeping in mind last year's Q1 group EBITDA margin of 16.6%? Thank you.
Okay. Yeah, you are right. We had a very good quarter four in last year, but there were some special impacts in the fourth quarter. As you know, we are a very energy-intensive company, and thus we get some subsidies from the power market, and those usually materialize in the fourth quarter of the year, so we can allocate this into our accounting rules in the fourth quarter only. Your question regarding the EBITDA margin for the next quarter, you can expect a slight increase compared to the first quarter of last year. The second question was regarding inventory level. Was it correct?
Yeah, yeah.
Inventory level for the end of the year, it will increase as we will have a major shutdown of one of our furnaces by the beginning of 2026. We will start in the second half of the year increasing our carbide inventory level in order to be able to deliver the market.
Okay, thank you. Follow-up question on the dividend payout. It was a bit higher than guided at 35%, the payout ratio. Is this sustainable given the upcoming CapEx spending? If yes, can we take this level as well for 2025?
Yeah, that's Andreas speaking. That's always the discussion. To be honest, I have two hearts in my body. On the one hand, we have to invest our CapEx, and we have to fuel our growth. On the other hand, we all want to make happy our shareholders. From that point of view, I always said that we want to see a 30%-50% dividend payment, but actually, we will be more on the lower end, and you should calculate more on the lower end between 30% and 35%. Hopefully, the cash flow will come quite well. Then we can afford a good dividend for the next year as well.
Okay, thank you. A final question from my side, a quick one. Could you just comment on the exposure to Ukraine pre-war and how AlzChem could benefit from conflict resolution there?
From our point of view, there is no short-term effect expected from the Ukraine war. I think there is a more or less long-term effect expected because we have to think about our, let's say, topic: how many munitions do we have on stock? How can we fight against an aggressor in the future? From that point of view, I think many, many people will invest a lot more in defense than in the past. From that point of view, I do not really expect short-term issues, more long-term growth, and long-term issues here.
Okay, thank you very much. Once again, congratulations.
Thank you, Mr. Lösler. Oliver Schwalz, it's your turn.
Yeah, thank you very much. I also like to congratulate you on the fantastic results. Well done, gentlemen. Let's say onto your new frontiers now. Can you quickly talk me through the slight volume and price decline in specialty chemicals in Q4 2024? Is that all due to the weakness in custom manufacturing and perhaps some passing through of floor or material costs, or is there something additional that explains that slight decline? That would be my first question.
Yeah, that decline can be attributed to two products, both for Creatine and for Creamino. For Creamino, we are in a highly competitive environment, and we need to make certain that we find a balance between volume and prices. In order to maintain a certain volume ratio, we had to lower prices. The second part is for Creatine and Creapure, where we saw a slight decline in the fourth quarter. Fortunately, that was only for the fourth quarter. Sales have picked up in the meantime, and Creatine and Creapure are going strong again.
I think it was only a month or, let's say, a year-end close effect. You can't really calculate which turnover comes in December or which one in January. From that point of view, we saw a strong and a good January, and the decline in sales was not so much recognized from our side.
Fair enough. Thank you for that. Second question: electricity prices somewhat went through the roof in January and also most part of February in Q1 2025. Can you please elaborate better on the impact? I know that you hedge electricity prices to some extent and also do some, let's say, physical hedging regarding your carbide production or carbide usage. Is there any related to a slight increase in the overall margin in Q1? Does that effect come later, or is there no effect of those swings in the electricity prices foreseen as of now?
Yeah, so electricity prices are quite high, and I honestly asked the politicians to think about that in Europe very deep because that is really a topic we have to maintain and we have to think about. We have seen higher costs in electricity already in January, for sure, and we have seen that in February as well. How we reacted, we have saved electricity and pre-purchased that in Sweden. From that point of view, there was no problem. In Germany, we had some shutdowns of our ovens and our carbide kilns to react against that and to have not a big negative effect in our P&L figures. Some effects you will see, but we will do quite well, I think.
Okay, thank you for that. The last one, at least for this round, I might queue up also for some other questions after that. When talking about the custom manufacturing, you correctly pointed to a weakness in European chemicals, which makes it harder for you to fill your capacities. That's also true when talking to your competitors, regardless of who they are. This situation has been going on for, I'd say, talking to the others as well, almost two years now. Is that probably more of a structural problem if we assume that European chemicals won't come back to their full strength due to the structural higher production costs given higher energy costs and also some labor costs? Is there more, let's say, competition from Asian, especially Chinese competitors in these markets?
How likely is it that volumes will come back given, let's say, lower structural demand in the European chemical industry for the short and midterm and maybe also some more price-aggressive Asian competitors?
I mean, it's hard to predict what the recovery in the chemical sector would look like. When we look at our business and compare 2024 to 2025, we had in 2024 two effects for lower sales. One was a destocking at the customers, and the second one was reduced growth expectations. The destocking effect for 2024 is gone, and we see the positive effects of that already in 2025. When we look at the portfolio of our multi-purpose plants, it is not high-volume products at low costs, which are usually attacked by aggressive Asian competitors. It is new specialty products where our customers have a competitive advantage. This is then not so much due in our portfolio to the overall development of the market, but the specific development of the areas.
There is one or two in which we see growth in which we had invested in our R&D for quite some years, and we see some of that coming to fruition already this year. Yeah, order intake, let's summarize. Order intake is quite healthy within multi-purpose plants. Only one to add. Our nitrites product portfolio is really struggling, and we do some restructuring there. We are not through, but we think that we can make it by the end of that year, but it will take some time to restructure that to higher-valued chemicals and specialties, and that's ongoing. Yeah.
Thank you very much. I'll come back to you.
Yep.
Thank you, Mr. Schwalz. Konstantin Wiechert, here's your space to speak.
Yeah, thank you so much. Also, congratulations from my side, gentlemen. Just maybe starting with maybe a follow-up on the Creamino question. Is that really just impacting the price levels, but is then covered also through lower raw material prices, or did you also take a hit on the margin there, and what are your expectations for the current year? With that regards also, I've seen that your sales basically in every region grew, but declined in the U.S. by about 4%. Is that mainly the result of the lower prices in Creamino? How has played the Creatine in this as well? Just some color on that would be great. If I'm allowed on Creavitalis, as you mentioned, health and pharma sector. I remember that you were also having projects with a dairy customer. How's that progressing?
I think we can respond to the last question fairly easily. Yes, it is progressing. It is progressing fairly well. We will see most likely first sales there already this year. With regard to Creamino, of course, we have had fairly low raw material prices, mainly of glycine, which we passed on into the market, and that was also one of the reasons for the lower sales figures. Also in the U.S., and that could be one part of the answer, we are still working very hard to expand our sales reach for Creamino. We have actually a little bit tweaked our strategy and approached more medium-sized customers where we are in good discussions and also product trials. Yes, it is correct that we did not have the biggest growth in the U.S. last year, but we have high hopes that this will change this year.
Okay, perfect. A couple of more, when I may. Another one would be on your agriculture business. If you could share some color on that in general, how that has developed through the regions and products, maybe also commenting on potential restocking that you might have seen in the fourth quarter or not, and how your year started in that business.
I mean, when we look at the major products which we have in the agriculture sector, we start with the fertilizer with Pelcar. In Pelcar, we saw an interesting development, which actually was shared with the entire industry. We increased prices in the fourth quarter and continued to do this also in the first half of this year. Usually, you should expect that you lose volumes by doing so. The opposite happened. We had higher volumes, which continued also in the first quarter of this year. Pelcar is doing very well. On the Eminex side, we still have not a tailwind from the regulatory side. We keep growing Eminex also, but we would be delighted if it was a little bit higher.
On the Dormec side, we continue to suffer from Asian competition since they imported at very, very low prices, but we continue to have a good foothold more on the specialty side. In addition, that was not covered in that detail, we see quite some growth on the Cetofex brand.
Okay, thank you. Especially regarding the Pelcar, do you expect any impact from maybe in the future from the higher tariffs that the EU has implemented against Russian nitrogen fertilizer? I mean, in general, I know your Pelcar is playing in a different price range anyways, but over the next years, I think these tariffs are really ramping up quite significantly. Would you expect that your products could also become more competitive for crops that would also be sufficient with standard nitrogen fertilizers?
We are very happy to see that tariffs on that because, to be honest, that was only an import of gas through fertilizer. Hopefully, they will slow down that or stop that at the end of the day. As you know, the fertilizer season is more or less through by the middle of that year, and they have predicted to set that tariffs in place by, I think, beginning of July. From that point of view, it does not really help for that season. For the next season, hopefully, yes.
Okay, perfect spreadsheet here. If I'm allowed, one last question, just some progress on your U.S. site project. Anything you could share in terms of progress you made on selecting a site and when we might see a definite announcement here?
I mean, we can describe progress insofar as we have identified a handful of sites which we are now carefully scrutinizing towards the parameters which we have set. Yeah, we are progressing, but for us, it's important also. We have no time pressure here. We take the time which is required to make a good selection. We have in parallel started another more broad approach where we actually hired a company in the U.S . who does site search for a living. That will be a structured approach within the next six months, which would potentially help us to identify additional sites. Yes, continuing, but no time pressure.
Okay. In your perception, has anything changed because it looks like it takes a bit longer than maybe we thought at the beginning? Is it more the pricing side that you do not find the right target at the right price, or that you really do not find the right target at all?
Nothing of that. I mean, we have set ourselves a target to have the site search completed by mid of next year. When you look at the timeline of such a process, it is not required to have absolute urgency in doing it. We do it more with scrutiny. We look at what is available, and we will select the site which has the best fit with us. We have identified some sites which could fit that, but the timeline of our U.S. expansion is not set by the site selection itself, but more by the timeline of the construction of a nitrogen plant. That is clearly defined not to start before 2027. We have time until mid of next year to finish the site selection process.
Okay, I'll leave it here and leave some room for the others. Thank you.
Thank you, Mr. Wiechselbaumer. We have four more hands up. The person with the phone number ending 553, you are allowed to speak now. Can you enter the queue? Pressing star clicks?
Yeah, hello, ich hab's gemacht. Peter Hasle here from FinCapital. Danke, thanks for having me ask some questions. First, regarding the guidance, you mentioned already the plant investments and working capital. Given the nitroguanidine and the guanidine chart investments, would it be fair for us to expect total CapEx of approximately EUR 125 million in this year?
Yeah, it's all. Oh, do you have a second question? Go on.
Yes, okay. The second question would be also about the guidance. You expect in custom manufacturing a volume and price increase in this year, which is a recovery to what we have seen in the last two years or so. How do you think, how does this guidance compare to the general economic environment, which does not seem to be very optimistic if we believe to what the leading economic research institutes will tell us? A third question would be on the U.S. or on the NAFTA region. You made approximately 16% of your revenues in the NAFTA region last year.
Can you tell us approximately what proportion of this would be affected by Trump tariffs if there will be any, without considering the situation of the Chinese competitors, which may be affected more than you, but just to have an idea here, which part of the NAFTA region could be affected by the tariffs?
Okay, thank you, Peter, for the questions. This is Andreas speaking. To keep it very easy, CapEx, you should calculate around EUR 100 million next year. That would be a fair figure. When I am talking about next year, I am talking about for sure 2025 and not 2026 because we are reporting 2024. Custom manufacturing, I think we see AlzChem-typical development because what we have seen is that the storages are empty from our customers, and we have a good order intake here, and we can do quite well in comparison to the overall chemical market. I think that is very, very connected to the AlzChem development. NAFTA tariffs, we do not see really clear actually, but to be honest, we have no real competitor in the U.S. We have competitor in the U.S. out of China.
Our calculation is that Chinese will receive more tariffs than we, and then we will see the results. From that point of view, we do not see any big negative effects about the tariffs today.
Okay, only fair. Thank you. Maybe if I may, another question. You converted the first production plant to hydrogen in the fourth quarter to replace that natural gas. Could you quantify the impact on the earnings that may come out of that conversion in this year?
That is a side product we take as an energy resource actually, and we try to screw that up as well because we want to increase the production more because that is a byproduct which is produced through producing creatine. The yearly positive effect is, let's say, below EUR 1 million, but it is quite a positive effect which will help to increase the profitability overall.
Thank you very much.
Thank you so much for your question. We will go on with Patrick Schweck. You should be able to speak now.
Yes. Hello, good morning, gentlemen. Can you hear me?
Yeah.
Nice. Also from my side, congrats on your very strong results. I have one or two questions left. The first one is on your operating cash flow. It was even stronger than I expected last year. Were there any effects included from prepayments of your nitroguanidine customers yet? And if so, could you share the number?
Clear no. There were no impacts in last year. We expect the payments for this year.
Can you share your expectations for prepayments for this year, roughly a number?
We are very sorry about that. We are under secrecy agreement with our customers. From that point of view, we are not allowed to share that in very detail. You will see that at the end of the day then in the cash flow and in the cash situation for sure. Actually, we are not allowed to do that.
Fair enough. Then my second question is on the EUR 100 million CapEx volume you mentioned for the current year. Is this number before EU subsidies, right?
It's before EU subsidies because the major part of the EU subsidy will be paid by the end of the CapEx program in 2026.
Understood. All right. Thank you.
Thank you so much. We will go on with Bob Jörn Karp. The stage is yours. Can you unmute yourself, please? It is in the left corner.
Okay. Does it work now?
Yes.
Okay. Thank you very much. Congratulations also from my side for the figures. I have two questions, perhaps one by one. First is on your U.S. investments in the nitroguanidine business. Does the change in the U.S. administration change anything in your risk perception?
No, no.
I understand the answer is no. Okay. Okay. They still need this product to be bought from you. Yes?
Yeah.
Okay. Second is on.
I understand it continues to be a high priority.
Okay. Okay. Well understood. Thank you very much. Second is, you know this question already, is on future potential use cases, additional use cases of creatine Creapure, especially diabetes. Has there anything changed on this matter?
To be honest, what are you thinking about diabetes and Creapure? I'm not really sure.
I'm thinking about the potential use of creatine in the diabetes process at the hospital. I don't know the English words.
You're talking about the dialysis?
Yeah, yes, yes. Yes, sir. Sorry, sorry about that.
No changes. It is continuing. Our customers expect potential first sales already this year.
Okay. We might see, I understood, we might see something this year already on this issue.
Maybe it depends. There is still an approval process at the end for customer ongoing, but the most optimistic view they have is that there could be some first sales already this year.
Okay. Oh, thank you very much. Congratulations on that also. Yes. Have a good year 2025 too.
Yeah. Thank you. We will do it.
Thank you so much. One short question from the chat box. Could you briefly announce the sales share of nitroguanidine in the specialty pharmacy segment and the share of EBITDA and what do you anticipate happening in this field? Thank you.
We are very sorry. We receive such kind of questions many times, but we decided not to disclose single sales and EBITDA topics on the product level because that could be a competitive disadvantage. Because we are the single European supplier, and if we disclose all that details, that could destroy many topics, and that could not be the target of our shareholders. From that point of view, we want to save the business, and we want to save the shareholders. For that issue, we are very sorry. We do only the details on the segment level.
Okay. Thank you so much. One last hand up from Mr. Oliver Schwarz. You should be able to speak now.
I am. I am. Thank you. Yeah, quick, some follow-up questions, gentlemen. Firstly, on the shutdown of the kiln and carbide kiln that's earmarked for the first quarter or for the beginning of 2026, you said you will be building inventory in the second half of 2025 to have the required raw material volumes that you'll need in 2026 at hand when you reduce carbide production. Normally, what you do, when I'm not mistaken, you decide whether to use all three kilns. It is very much depending on electricity prices. Now it seems, let's say, at least in the second half of 2025, you might be forced to build inventory and hence to employ all three kilns regardless of the level of electricity prices. Is that correct? If so, might there be a negative impact on the respective earnings once the raw material is used in 2026?
That would be my first question.
Oliver, to summarize that up, we will do that very carefully. We have already started increasing carbide quantities in stock, and we have the chance to shut down always one kiln when the electricity price went up. We do that big maintenance issue during the winter because during the winter, you normally receive much higher electricity prices. From that point of view, we try to storage more or less summer electricity prices and receive that back in the winter, and we do not expect negative effects on that. There could be cost. The second question, I would imagine, what is the effect of maintenance costs? That is a big pile of maintenance for sure. That is more than EUR 5 million, but that is included in our normal maintenance budget. We will do other maintenance lower, and we will concentrate on that.
From that point of view, I don't expect much higher maintenance costs. Some higher, but not much higher. Yeah.
Fair enough. Thank you very much. Very clear. Second one is looking at your outlook 2025 regarding specialty chemicals segment. You state that you expect increased volumes, Creapure, Creamino, and nitroguanidine. I guess Creapure and Creamino, especially if you are planning to increase the capacity of Creapure, that's probably a no-brainer, but increasing nitroguanidine volumes seems to be tricky. Firstly, you are basically working on the site to replace and expand production, which might or might not lead to temporary shutdowns. I was not under the impression that you have, let's say, spare capacity in nitroguanidine, and the big capacity expansions obviously will come only by the second half in 2026. How is it that you can increase nitroguanidine volumes?
Very simple. Work hard on the production.
What you're stating at the end, you guys have been lazy up to now.
No, not necessarily. When we look at the nitroguanidine plant, it was not so much a growth business. It was more a business to optimize the run of the equipment. Now we are in a different scenario. Part of the investment money which we receive from the ASEP funding goes also into small expansion projects for nitroguanidine at the existing unit. I mean, it has always been in our genes that we are able to increase capacity as required. We have ideas on that. It was not that we were lazy, but rather that this was not the focus of nitroguanidine. Now things have changed. Yeah, we will take bottlenecks away. For sure, we are always so relaxed when there is no producer in the room. That is the truth.
We try to de-bottleneck the plant, and we think that we would be very successful here.
Okay. All right. The last one, that might be a tricky one to ask or to answer. When looking at your free cash flow in 2025, you stated that CapEx might be around EUR 100 million due to the expansion mainly in nitroguanidine and obviously also in maintenance and also expansion in other parts of your business. Let's say when looking at your EBITDA guidance and the CapEx as such, I'd say free cash flow might be negative in 2025. On the other hand, you have, let's say, funds coming in from your customers that are willing to pay for the expansion in nitroguanidine. At the end of the day, would you expect free cash flow to be negative or positive in 2025?
To be honest, Georg did a very good job last year in connection with customers. From that point of view, we think that we are quite positive next year.
Yeah. How would that play out in the balance sheet? Would that be recognized, let's say, as, let's say, prepayments or?
That's a very, very good question. I think Andreas should elaborate a little bit on that because that will change the balance sheet, and all of you should be aware of that.
Yeah. Accounting treatment for the customer grants will be a bit more tricky than accounting treatment for the European Union subsidies because the European Union subsidies will be just deducted from the investment cost and will show up in the investing cash flow. The grants from the customer, which Georg collected, they will be shown in the balance sheet as advance payments on the liability side. Until we start with the production, we start with the delivery of the new goods from the new company. When we start with delivering the goods from the new company, we will release the liability and recognizing revenue for these items, for these prepayments, down payments. This will be a bit tricky, and we will definitely be working on a good communication story this year to inform the capital market about this special accounting treatment.
This is also the reason why we stated that we will have a slightly reduced equity ratio by the end of the year. This is just because we are expecting a strong increase in our balance sheet total resulting from the down payments.
Fantastic. Thank you. That's it for my questions for today.
Thank you so much, Mr. Schwarz. One last fast question in our chat box. Do you have plans on M&A in 2025?
Yeah, for sure. We work quite hard on that topic. On the one hand, there is a possibility only to purchase land in the USA. On the other hand, it could be the possibility and the case that we can purchase a company. That would be the best thing to find a company with an organization and to use that organization for creating new business there. From that point of view, that could be the case for sure.
Thank you so much. We now come to the end of today's earnings call, and you will find the presentation on the website of AlzChem Group AG and also at the Airtime website by clicking into today's event. Dear participants, thank you for joining and your shown interest in the AlzChem Group. Should further questions arise at a later time, please feel free to contact investor relations. A big thank you also to Mr. Niedermaier, Dr. Weichselbaumer, and Mr. Lösler for your presentation and the time you took to answer the questions. My name is Judith. It was a joy to be your moderator today, and I wish you all a lovely end of the week. With this, I hand over to Mr. Niedermaier for some final remarks.
Yeah, Judith, thank you for your warm welcome here, and thank you very much for all of your questions and being in that presentation. I think it was the first time that we did that more than one hour. The interest level is quite high. We can now offer you the opportunity to visit us again. You can see that on that page virtually or in person at the conferences as shown here. Otherwise, we will be back with our quarterly statement in the first quarter of 2025 on April 30th. Up to that, thank you for your support. Stay safe and sound and stay in our good graces. Goodbye and hello and a laugh to that weekend. Have a nice weekend and party the weekend then. Yeah.
Thank you. Bye-bye.