Good morning. My name is Lidia, and I will be your conference operator today. At this time, I would like to welcome everyone to the Befesa First Quarter 2020 Earnings Presentation. After the speaker's presentation, there will be a question and answer session. To enter the queue, you can press zero one on your telephone keypad at any point during the call. Thank you. I would now like to turn the call over to Rafael Perez, Director of Investor Relations and Strategy. Please go ahead.
Good morning, and welcome to the first quarter 2020 results conference call of Befesa. I am Rafael Perez, Head of Strategy and Investor Relations of Befesa. Today, as usual, we have with us Javier Molina, CEO of Befesa, and Wolf Lehmann, CFO of the company. Javier will start with an executive summary, including the current market environment, the first quarter highlights, as well as an overview of the guidance for the full year. Wolf will review the first quarter financials in detail, as well as cash flow, net debt, and capital structure, as well as our progress in our growth initiatives. Javier will close this presentation providing a more detailed outlook for 2020. We will open the lines for the Q&A session. Before getting started, let me remind you that you can find the webcast link to this conference on our website.
Please let me turn this call over to our CEO. Javier, please.
Good morning. Thank you for attending this conference call. During the first quarter of 2020, we have achieved good operating results. We have maintained our plants at a high capacity utilization of more than 90%. The impact of the coronavirus pandemic during the first quarter has been very limited across Befesa's operations. All our steel dust recycling plants have been operating as normal during the first quarter. We have increased our volume of steel dust treated by 10% compared to the previous year, mainly driven by Turkey. In the aluminum segment, we had to stop our salt slag plant in Valladolid for two weeks as a precautionary measure due to a potential coronavirus case amongst the workforce. The plant is now operating as normal. In our secondary aluminum business, we stopped our plant in Bilbao at the end of March due to the lack of demand.
As a consequence of the COVID-19, metal prices have been suffering pressure, which has impacted the level of earnings during the first quarter. In the first quarter, we have achieved total revenues of EUR 180 million, stable and same as previous year. Total EBITDA has been EUR 34 million, which represents a decrease of EUR 9 million or 22% compared with the previous year, all driven by the depressed metal prices, not by volume. In China, as we announced, we restarted the construction of our plant in Jiangsu on the 17th of March, and also continued the preparatory work at the construction site in Henan, where we are developing our second steel dust recycling project in the country. The impact of the COVID-19 on the project has been a delay of around six weeks. Wolf will provide more details on the first quarter results later in the call.
Now, I would like to explain what are we doing to manage the current environment and how we see the rest of the year. In this challenging environment, I would like to highlight the following aspects. Befesa has a great management team, which has been in the company for more than 15 years on average, and has demonstrated in many different circumstances, including the financial crisis of 2009, that we know how to navigate in the current uncertain environment. From the operations point of view, we are monitoring the evolution of each individual plant and taking operation actions on a case-by-case basis. We are taking the appropriate health measures to preserve the health and safety of our employees across all the geographies where we operate, following the recommendations of the local health authority.
On the steel dust recycling plants, we have a stock of raw material at each of our plants that will help us keep the plants running, even in the event of a temporary decrease in steel production. We are bringing forward the annual maintenance shutdowns in some plants that were initially scheduled for summer. For example, we have made that in our plant in Duisburg, and we are ready to do the same in other plants. We are using the tools the governments of the different countries put at the disposal of companies in order to minimize the impact of temporary plant shutdowns. We have applied this in our secondary aluminum plant in Bilbao and in Bernburg, as I explained earlier, and we are prepared for applying across the rest of the plants, just in case we need to do so.
We have reviewed and reduced our maintenance CapEx by 25% to keep only the maintenance investments that are considered as essential, with the criteria of not compromising neither the health and safety of our workers nor the operations of the plants. We are keeping our growth roadmap, mainly consisting on the two new recycling plants in China, which are under development. We consider this investment as a top priority and therefore we will keep them. We believe that this investment will help Befesa exit the current crisis more rapidly and in a better shape. Befesa today enjoys a geographical diversification with presence in Europe, South Korea, and Turkey, which provides greater stability and make us depend on the development of various different markets with different dynamics. We feel very good about our liquidity and capital structure.
With nearly EUR 200 million of liquidity and long-term capital structure with no maturities until July 2026. Yet, we are fully aware that preserving liquidity in the current environment is a top priority, and as such, we are taking actions to protect it even more. As explained, we have reduced our maintenance CapEx by 25%, and also our growth CapEx will be reduced as a consequence of the slight delay on the projects. Additionally, we are in the process of financing 50% of the investment in China with local loans, and we are also revisiting our dividend corresponding to 2019 with a combination of reductions and a postponement until we have more visibility on the development of the market due to the COVID-19. Beyond the potential health implication, the COVID pandemic has mainly two types of economic impact on Befesa.
The first one is caused by lower steel and aluminum production, which means lower waste volume produced and delivered from our customers. So far, this impact has not been material for Befesa. Although in Q1 of the year, steel production in Europe has decreased 10% over the previous year, there is a great level of uncertainty about what level of steel production there will be for the remainder of the year. Regarding the decrease in the production of secondary aluminum in Europe, this is very much linked to the production of cars. So far, more than two million cars have not been produced in Europe due to the pandemic. The second impact comes from the present metal price, in our case, zinc and aluminum. During the first quarter of this year, the average price of zinc has decreased 19% compared to the previous year.
Zinc treatment charge has increased from $245 - $300. Combining these two effects, LME price and treatment charge, the impact in price represent 28% decrease compared to the previous year. In the case of zinc, we have near 70% of the production hedged at attractive levels, so the impact is limited to the 30%, 40% of the volume unhedged. Under the current environment and with the uncertainty that the COVID-19 is putting on the economy in general and the markets where we operate in particular, we have modeled different scenarios that provide us the lower and the upper end of our guidance of earning for the full year 2020. Based on that, we are estimating that the full year EBITDA of Befesa for 2020 should be between EUR 100 million on the lower end, and EUR 135 million on the higher end.
I will explain this in more detail at the end of the call. Now, Wolf Lehmann will explain the results of the first quarter.
Please turn to page five, the Q1 2020 highlights. As Javier mentioned and explained, the first quarter of 2020 has been as expected, and a solid quarter for Befesa from various aspects: operationally, liquidity, and progress in China. The unfavorable price environment, which has been further pressured by the COVID-19 crisis, impacted the earnings of the company. I will elaborate on this further over the next pages. Turning to page six, the consolidated key financials. In the first quarter, consolidated revenue remained approximately flat and stable at EUR 179 million. Main gives and takes offset each other. On the positive side, one main factor. Steel dust recycling throughput and electric arc furnace dust increased 10%, mainly driven by Turkey back in operations with the increased capacity. On the other side, this positive effect was offset mainly by three items.
First, the slightly lower salt slag and spent pot lining volumes recycled mainly due to the COVID-19 related precautionary campaign downtime during two weeks of March at the Spanish plant of Valladolid. Second, lower metal prices in wake of COVID-19 on all fronts. Zinc LME average prices were -19% year-on-year. Zinc treatment charges up unfavorably by $55 per ton to a latest reference of $300 per ton. Zinc LME and treatment charge combined represent a 28% year-over-year price decrease in Q1 per ton of zinc. Aluminum alloy, Metal Bulletin, average prices were -6% year-on-year. Third, finally, on the price side, our hedging approach clearly works and is clearly beneficial, and our hedging prices are above water.
Nevertheless, still, zinc hedging prices in Q1 were approximately EUR 83 per ton lower year-over-year. On the revenue side, our operational progress and growth was offset by the metal price pressure. Clearly, the price pressure is the main COVID-19 impact on Befesa in the first quarter. Referring to EBITDA, the lower part of page six. The revenue drivers obviously fall through to EBITDA. In the first quarter, we reached EUR 33.6 million of EBITDA, down EUR 9.5 million year-on-year and all in net-net price driven. We experienced for the quarter, EUR 12 million price headwind that we partially offset with EUR 3 million operational progress. Main price year-over-year headwind drivers were EUR 7.5 million due to lower metal prices, seven zinc and 0.5 aluminum. EUR 2.5 million due to the unfavorable zinc reference treatment charges.
EUR 2 million due to slightly lower zinc hedging prices, which comes to a subtotal of EUR 12 million price pressure overall. Main operational year-over-year progress came from EUR 3 million progress from steel dust volume increase. Aluminum is plus/minus neutral as the minor EUR 500,000 driven by the slightly lower aluminum salt slag volume. Remember, the two-week temporary COVID-19 precautionary quarantine is offset by EUR 500,000 from the aluminum high-efficiency furnaces productivity progress. Again, EBITDA down year-over-year, EUR 9.5 million. It's negative EUR 12 million from prices, which is partially offset by EUR 3 million from operational progress. Going now to page seven, the results of our steel dust recycling services segment. First quarter revenue increased by EUR 6 million or 6% to EUR 101 million. Primarily driven by higher electric arc furnace steel dust throughput of 10% year-on-year due to progress in Turkey.
Partially offset by the price pressure in zinc LME, treatment charges, and the minor hedge price reduction as explained. Q1 EBITDA year-on-year decreased by EUR 8 million to EUR 26 million. The main drivers of the EUR 8 million EBITDA year-on-year decrease are, EUR 11 million combined price decrease from LME treatment charge and minor hedging price reduction, which was partially offset by EUR 3 million operational progress from more steel dust throughput. As the price pressure falls straight through to EBITDA, the EBITDA percent decreased to 26% EBITDA as a percent of revenue in Q1 2020. On the right-hand side of slide seven, we show details on plant utilization and prices. On capacity utilization, we continue to run at high utilization levels of 90% in the first quarter.
We are very pleased with the progress in Turkey and continue to see similar very high utilization levels in Europe and Korea as last year. The zinc price decreases we already discussed earlier. Overall, for our Steel Dust Recycling Services segment, again, solid, good operational progress with Turkey delivering and continued high loading in Europe and Korea. Nevertheless, the price headwind in the wake of COVID-19 pandemic more than offset the operational progress. Turning to page eight, the results of our Aluminium Salt Slags Recycling Services segment. Q1 revenues were down around EUR 5 million or 6% year-on-year to EUR 79 million. Mainly driven by two items. One, the 6% lower prices for aluminum alloy. Second, the 3% or about 4,000 tons year-on-year reduction in salt slags and spent pot lining volumes. Again, this came from the temporary precautionary COVID-19 quarantine for two weeks at Valladolid.
No infections found and operations are back up and running. Q1 EBITDA was close to flat, down EUR 0.3 million year-on-year to EUR 8.6 million EBITDA. Secondary Alu in gray bars was up EUR 0.2 million and salt slags in orange bars down EUR 0.5 million. In the secondary aluminum subsegment, the gray bars, slightly up to EUR 2.7 million. Net-net, the high-efficiency furnaces installed are delivering results in 2020. In the salt slag subsegment, the orange bars, down EUR 0.5 million to EUR 5.9 million, mainly explained by three items, each around EUR 0.5 million each. EUR 0.5 negative from the lower aluminum alloys average prices. EUR 0.5 negative from the temporary two weeks COVID-19 quarantine and positive EUR 0.5 million from improved efficiencies. Overall, resulting consolidated EBITDA of the Aluminium Salt Slags Recycling Services segment was close to flat, slightly decreased to EUR 8.6 million.
On the right-hand side of page eight, we show plant utilizations and prices. Salt slags and spent potlining volume and utilization levels continued at a high 94% in the first quarter 2020. This is even so we managed two weeks precautionary COVID-19 quarantine. In secondary aluminum, we ran operations at plant utilization levels at 94%. Market prices, on the other hand, decreased. Alu alloy, free Metal Bulletin prices in first quarter averaged EUR 1,433 per ton. Down 6% year-on-year. Overall, a solid Q1 for the Aluminium Salt Slags Recycling Services segment, with close to flat EBITDA results. Turning to page nine. On the left-hand side, net debt cash capital structure. I can only echo the points Javier mentioned. We closed first quarter with EUR 200 million liquidity readily available, EUR 120 million of cash on hand, and EUR 75 million set in entirely undrawn revolving credit facility.
Our capital structure is strong, the strongest one Befesa ever had. It is a simple term loan B, fixed until July 2026, more than six years to go. No maturities and no covenants. We repriced two months ago in February and reduced the interest rate by 0.5% or 50 basis points down to an attractive 2% interest. On the right-hand side of page nine, the total cash flow after funding, working capital, taxes, interest, and CapEx investment was slightly negative by EUR 5.5 million in Q1. This is after working capital was temporarily impacted by EUR 10 million higher receivables, stemming from quarter-over-quarter higher sales and different monthly seasonal loading patterns, all in resulting in solid cash in the bank of EUR 120 million. The operating cash flow during the last 12 months period as of end of March remained solid at EUR 93 million.
Operating cash flow is shown after taxes, interest, and change in working capital, et cetera. The only two items to be funded from operating cash flow are CapEx and dividends. For 2020 and in the middle of this COVID-19 pandemic, we have scrapped our CapEx one more time and can get done in 2020 with EUR 70 million. EUR 20 million for maintenance. This is about EUR 5 million less as usual, saving or postponing non-vital items, and EUR 50 million on growth, which is for our expansion in China. I am now advancing slightly in the presentation where Javier talks later about the lower EUR 100 million EBITDA and the upper EUR 135 million EBITDA guidance.
After spending EUR 70 million on CapEx, we expect for the pre-dividend cash flow, a balanced ±EUR 5 million pre-dividend cash flow for the lower end of the guidance, and a +EUR 25 million to +EUR 35 million positive pre-dividend cash flow for the upper end of the guidance. We're moving ahead and paying a dividend, but managing the dividend level and timing of the dividend payments accordingly, targeting to keep about EUR 100 million of cash in the bank or more either way, whether the lower or upper end comes through in this COVID-19 year. Summarizing, the high liquidity, strong and long-term capital structure, as well as our hedging book, forms the backbone of Befesa and serves us very well to weather the COVID-19 pandemic impact. Turning to page 10, hedging. Our hedging approach and book are the same as during our last update.
We are hedged up to and including October 2021. The zinc spot prices decreased in the course of the COVID-19 pandemic to current levels below $1,900, well below the C1 marginal cost to produce a ton of zinc, which is approximately $2,200. Two conclusions. A, many mines are struggling financially, and two, our hedge book is in the money. In the blue box, we quantified approximately how much our hedges or better the remaining 127,000 tons we sold forward up to October 2021 at fixed prices are in the money against the March average spot price of $1,720 per ton or equivalent to about $1,900. This represents a more than $60 million value or buffer in profit and cash over the next quarters to come. Our hedging book continues to provide a reduced variability of earnings and cash flow.
This allows us to plan our cash flows better to ensure we can fund our growth initiatives organically. Our growth roadmap we show on the next page. Turning to page 11, our midterm growth roadmap. Upfront, it is important to understand that also during this COVID-19 pandemic, we stay the course on our strategy and growth roadmap. As we continue to execute our initiatives, we target to get out of this COVID-19 crisis with a stronger portfolio versus when we entered. In the graph, we show three levels. Level 1, hedging, I already explained on the prior page. Level 2, organic growth, and Level 3, China, I will elaborate on over the next pages. Turning to page 12, organic growth. The left-hand side showing the main organic growth projects we executed on budget, on time last year in 2019. Turkey.
We expanded the capacity successfully to 110,000 tons and ramped up in the fourth quarter of last year. The plant is running very well. South Korea. We built our washing plant such that we can offer the higher grade washed zinc oxide or Waelz oxide, WOX, to our customers in Asia. The plant works well, we are loading the operations over this and next year as the customer contracts get renewed. Barcelona got the upgraded high-efficiency aluminum furnace, just like Bilbao. We are done with that initiative, too. All three present great operational progress worth, pre the COVID-19 depressed metal price and market, around EUR 14 million-EUR 15 million year-over-year incremental EBITDA growth, on a like-for-like year-over-year basis. On the right-hand side of page 12, we show how we expand the capacity and diversify the portfolio of our largest segment, Steel Dust Recycling Services, over time.
In 2009, this was 100% classic Europe-focused business, with about 500,000 tons capacity. In 2019, with the expansion of 110,000 tons in Turkey and 220,000 tons in Korea, it is rather a 60/40 classic Europe, rest of the world portfolio. In 2021, we expect to balance the portfolio to 50/50, with the addition of our first two plants in China, together 220,000 tons recycling capacity. The overall growth rate beats GDP growth by about double. Environmental regulations get stricter and more global, and Befesa is the market leader in this attractive industrial environmental services space. Turning to slide 13. We provide the update on our progress in China, which is lever number three in our growth roadmap. The picture is the aerial view of our construction site at the city of Changzhou, in the province of Jiangsu.
This province has a higher density of electric arc furnace steel production, and thus, steel dust hazardous waste volume to be serviced by Befesa. We are first mover. We started construction back up on March 10, after the COVID lockdown was lifted, and are very pleased with progress. It is starting to look like a plant. We expect to finish construction beginning of next year, thus in about nine months. Our second plant, we're building at the city of Xuchang and province of Henan, and are estimating completion by mid-next year, about six months after our first plant is done. Nothing has changed towards our commitment to the Chinese market and bringing our state-of-the-art environmental services to the largest overall steel, as well as largest electric arc furnace steel market of the world. We're on track in China, and our overall growth roadmap is on track. Turning to page 14.
Sorry, this is a bit of a rough transition. This is not on growth, but on the left-hand side, this is instead on how resilient we handled the last crisis in 2009. 2009 was a severe crisis for the steel industry, shown in the blue line. Crude steel volume in EU 28 decreased year-over-year from 2008 - 2009 by 30%. Befesa, on the other hand, performed much better and went down 14%, or by half, measured by the throughput in electric arc furnace dust. Capacity utilization went from 96% down to 82% and right back up to 96%. Similar, EBITDA decreased 38% and went right back up the following year. On the right-hand side of page 14, we show how the latest market volume trends in this year, in 2020, in the first quarter, turn out.
The EU 28 crude steel volume, in blue, is down 10% year-over-year. Two important things. Number one, Befesa steel dust throughput in the first quarter is up 10% year-over-year. Even normalizing for Turkey and looking at EU only, we see flat to slightly up steel dust volume, thus more resilient, again, just like in 2009, versus the general steel market. Secondly, if 2020 shall be as severe down year-over-year by 30% as in 2009, then after first quarter down 10%, the quarters Q2, Q3, and Q4 each need to be down a full 37% year-over-year. Otherwise, 2020 would not be as severe as 2009. We use this as a low case or the low case assumption for the coming 2020 guidance ranges. Summarizing. We have demonstrated a resilient performance in the last 2009 severe crisis.
Based on the latest steel market volumes in the first quarter of this year and our performance in first quarter of this year, we picked a similar as severe scenario like in 2009 at the lower end of the 2020 guidance range. Let me turn the call back over to Javier with further explanations on our guidance framework and low and upper end earnings ranges.
Thanks, Wolf. I would like to finish the call providing more details on the guidance for the year. I would like to highlight that Befesa has a very resilient business model that is able to deliver positive results across all the parts of the economic cycle, as we have demonstrated in the past. Our hedging policy has proven many times in the past to be the right tool to manage metal price volatility, and especially in challenging environments like the one we are living now. It demonstrates that it is really a great asset. We enjoy a leading position in the markets we operate, with high barrier to entry and clear competitive advantage. This shows that under whatever scenario we see for the current crisis, Befesa will be able to keep its business operating, meet its financial and fiscal obligations, and also finance the growth investments.
As I explained earlier, we have modeled two different scenarios that provide us the lower and the upper end of our guidelines of earnings for the full year 2020. In both scenarios, we have assumed that we manage our costs rigorously with a strong discipline in order to minimize our fixed costs by reducing maintenance expenses as well as personnel costs, using all the tools that the governments are putting at our disposal in the countries where we operate. We have also considered that we manage the potential volume decrease in a very efficient manner in order to minimize the impact by bringing forward maintenance shutdowns and by temporarily shutting down certain plants. For the low end of the guidance, we have stressed the business under conditions that are similar to the last financial crisis we suffered in 2009, as Wolf has explained before.
In that crisis, steel production decreased in Europe 30% in 2009, and we achieved a capacity utilization of 82% in that year. In this scenario, we have considered capacity utilization around 80% across most of our recycling plants. We have assumed average steel prices for the rest of the year around the level of the minimum price achieved during the first quarter of $1,800. We have considered a treatment charge of $300 for all the markets where we operate. This treatment charge represents around 70% of the LME price, which is a historical high level and unfavorable compared to the historical average of around 10%. Combining these two price effects together, LME and treatment charge, the price decrease compared to the previous year is close to 40% in this lower scenario. As such, under this scenario, we would achieve a full year EBITDA around EUR 100 million.
Today, we see this scenario as a very pessimistic case. For the upper end of the guidance, we have considered a more stable scenario. In this scenario, we have considered that the European steel market decreased materially in the second quarter and the lockdown is reduced by the end of this second quarter with a recovery in Q3 and Q4, which means that there is not a second wave of the pandemic causing further lockdowns in the second semester. Based on this, in this scenario, the capacity utilization will be near 90% across most of our recycling plants. We have assumed average steel prices for the rest of the year similar to the average price of the first quarter, around $2,000, and we have considered a treatment charge of $300 for all the markets.
Combining these two price effects, again, LME and treatment charge, in this scenario, the price decrease compared to the previous year is close to 30%. Under this scenario, we would achieve a full year EBITDA around EUR 135 million. Today, I see the middle to upper part of the range as a more realistic scenario. Regarding the dividend, we have been doing a lot of analysis and thinking as to how to proceed with the payment of the dividend corresponding to 2019. In the current environment, characterized by high levels of uncertainty and volatility, liquidity preservation is a high priority for Befesa. Although we currently enjoy a comfortable and healthy liquidity, we must ensure that any decision we make, liquidity is taken into consideration. To preserve our liquidity, our priorities are, first, keeping the continuity of the business by keeping the maintenance investment, which we have reduced any case by 20%.
Second, keeping our growth plans in China, which will deliver attractive return to our shareholders. We expect to close the financing of the 50% of the total investment in China during this quarter, which also will contribute to preserve liquidity. Third, keeping a moderate and manageable leverage level. As such, we have decided to reduce our dividend proposal to EUR 50 million versus initially EUR 45 million. The EUR 50 million or EUR 0.44 per share we plan to distribute in July and consider an additional dividend later in the year in November, depending on the situation and the status of the business by the end of the third quarter.
Finally, I would like to highlight that even in the lower scenario, the worst situation that we have considered, the business continuity of Befesa is assured, including the funding of our expansion plans in China based on our resilient business model, hedging policy, strong liquidity, long-term capital structure and manageable leverage. In summary, Befesa Group. Great assets to navigate the current turbulent environment. Human capital which demonstrate experience, great operating assets which can defend well the current environment, and a strong balance sheet. Thank you very much.
Thank you, Javier. We will open the line for your questions.
Ladies and gentlemen, the Q&A session starts now. If you wish to ask a question, please press zero one on your telephone keypad. Thank you. The first question comes from Ingo Schachel from Commerzbank. Please go ahead.
Yes, thanks very much. I have two questions. The first one would be on your personnel costs and steel dust recycling in your, let's say, bear case scenario. If we think about a capacity utilization of around 80%, can you just explain to us what that means in terms of personnel on the ground? I guess you would still have all your dust recycling plants up and running and would probably still require a similar number of people working similar hours. Is there anything you can do in terms of short-term work or prolonged closures of specific plants to also save personnel costs?
Thanks, Ingo. What we do in the case we need to shut down a plant is we try to do in a clever way. First thing we do is we try to do the maintenance shutdown in the moment we have less raw material. This is what we have done in April in our plant in Duisburg. Meanwhile, we still are receiving steel dust from our customers, when the maintenance shutdown finishes, we will be in a position to start to operate the plant again, which will be the case in Duisburg again. This is the first thing we do. Only in the very lowest scenario, we are considering to shut down additional times our plants. That what was happening in 2009.
What happened in that case is we use the tools that the different governments offer to the companies in Germany, U.K., Spain, to reduce the labor cost at that moment. With this labor cost reduction, plus the variable cost, we are able to keep a very good profitability in our business.
Okay, that's very clear. On the liquidity question, also to understand what you're planning in November regarding the dividend. I think you referenced the EUR 100 million cash on hand that you would still want to have after the eventual November dividend payment. Would the interpretation be correct that you are suggesting that you would also be willing to pay a dividend in November if it exceeds the pre-dividend cash flow, i.e., to end up at a EUR 20 million lower cash balance than you had at the beginning of the year? Is there any reason for the 100 number besides the fact that it's a nice round number?
Is that the level of operating cash you need, i.e., the level at which you would start drawing on your revolving credit facility or how should we think about your minimum cash required before you start drawing on the RCF?
Thank you, Ingo. Now, I think you're thinking about it the right way. Let's start with the low scenario. We're showing there a plus/minus balanced total cash flow. EUR ± 5 million. Remember, we started the year at EUR 125 million of cash in the pocket, and even in the low-case scenario, in the middle of the year in July, we're distributing EUR 15 million of dividend, EUR 0.44 per share. In that case, you're right. EUR 125 million of starting cash would go down after the EUR 15 million dividend to roughly EUR 110 million or so. It's a nice, comfortable EUR 10 million buffer against the EUR 100 million of cash balance we like to have. Now, towards the upper end. In the upper end, starting the year with EUR 125 million of cash in the pocket, but as we lay out the pre-dividend cash flow ranges somewhere around EUR 25 million-EUR 35 million, call it EUR 30 million.
You have to add the EUR 30 to the EUR 125 million starting cash balance, right? You're talking somewhere around EUR 155 million of cash ending balance. In this case, obviously, we would go to with a higher dividend, similarly what we paid out last year, as Javier explained, you would again end up with somewhere around EUR 110 million of cash in the pocket. Somewhere around that, still leaving EUR 10 million buffer against EUR 100 million. That is how we're thinking about pre-dividend cash flow and the dividend scenarios. We're committed to pay the dividend. We start with paying EUR 15 million in July, as Javier mentioned, we're working hard to coming out rather in the middle of the scenario or something or better, we will pay an additional dividend, obviously. The EUR 100 million is no magic mark.
It's a very conservative mark of cash in the pocket. Obviously, we don't need EUR 100 million to run our business, but as you know, capital structure, liquidity, hedging, cash balance, we run conservatively. Okay?
Okay. That's very clear. Maybe just to clarify on the EUR 100 million on what kind of buffer you like to have. Would also understand you that even if you were in an even more unrealistically pessimistic scenario to drop below hundred, I guess it sounds like you would rather drop below hundred or rather draw significant on your RCF before you consider raising new equity, right?
Yes. We don't see a scenario here that we have to raise any equity. Again, even in the lowest case scenario, a crisis like 2009, we're talking here about every one of the next quarters down 37% in steel volume year-over-year, et cetera. No recovery, complete lockdown for the rest of the year. Again, we would pay a EUR 15 million dividend, and we'll be at EUR 100 million of cash in the pocket. We don't currently see the need for raising capital. Correct.
Yes. Sorry. Ingo, I agree totally what Wolf is telling about to raise capital. Even in the case of EUR 100 million of EBITDA, we won't need additional capital. We will have enough cash to keep the company running and to grow the business in China as expected.
Okay, great. That's a clear statement. Thank you.
Okay.
Thank you. The next question comes from Oscar Valmes from JP Morgan. Please go ahead.
Good morning, everyone. Hope everyone's doing well. I have two questions. The first one is on the guidance, and for the 20% of the business that isn't steel, what are your assumptions for salt slags and aluminum, given the end markets are tougher? We know that you're thinking of building new salt slags expansions. How bad could salt slags get? The second question, you've been through the month of April. You talk about the worst case scenario, volume being down 37% for the next three quarters. Could you comment on what you see volume in April in terms of deliveries from the steel makers?
Okay. Thank you. The first quarter, regarding the salt slag volume. Well, as you know, our salt slag business is linked to the automotive industry and has been practically totally stopped during second part of March and April. In any case, we have enough volume of raw material. With a clever combination of shutdown, we'll be able to run our plants at the normal capacity during the second quarter. What we are doing, except the two weeks that we shut down the plant in Valladolid for sanitary reasons, we have been running in April at normal capacity all our plants. What we are going to do in May, we will do the shutdown of our plant in Lünen, in Germany.
With the deliveries we are receiving from the aluminum producer plus the stock we have right now, we, again, will be able to run our plants at normal capacity. The only plant where we can suffer more is in our small plant in U.K., the total EBITDA that this plant producing a year is less than EUR 2 million. The effect in our P&L will be very small. Regarding the volume in April. What we are going to do in April is, we have had the maintenance shutdown in Duisburg in April. That was not expected. We will have the maintenance shutdown of one kiln in our plant in Freiberg and the maintenance shutdown of our plant in Recytech. What we are doing is to concentrate in this quarter most of the maintenance shutdowns of the plant.
With that, plus the stock of raw material we have in our plant, we will be able to run the rest of the plant at the rest of the time at a normal load factor. Again, if we don't have a second wave of the pandemic causing additional lockdowns in the second part of the year, that's why we expect to be in the medium to the upper plan of the guidelines. Okay?
Yes, that's very helpful. Thank you very much.
Thank you. Ladies and gentlemen, just a reminder. In order to ask a question, please press zero one on your telephone keypad. The next question comes from Benjamin Sansara from Berenberg. Please go ahead.
Hi. Good morning. A few questions from me, please. The first one would be on the difference in the growth rates between WOX sold and volumes processed in Q1. Does that reflect something with the tapping into the reserves that you have?
Benjamin, do you mind to repeat the question? I didn't understand very well.
Sure. The difference in the growth rates between WOX sold and the EAF dust processed in Q1. You're processing a lot more WOX sold, and I'm wondering if that's something to do with the reserves of dust that you have on hand compared to Q1 last year.
Well, please.
No, I think I can answer that, Javi. No, Ingo, this is like we had that in the past. Remember a couple of quarters ago, we had the opposite. We had less WOX sold, et cetera. It is pretty much just one or two or three containers in the harbor. Sometimes they make the Incoterm cutoff, sometimes not, and that drives the swing either in terms of WOX sold and EAF dust throughput. It is purely that matter.
Okay. In terms of the reserves that you have, is that still around the one-month level?
The reserves, at the end of the day, impact electric arc furnace dust throughput. As we mentioned in the first quarter, we had great utilization levels, and we didn't have to use much of the inventory, as Javier explained. We're going to manage or use some of the inventory that we have in the second quarter as we run or accelerate the maintenance work, mainly from the second half of the year now into the second quarter, such that we're ready when volume comes back and we have lockdown easing. We don't have to shut the plants down. We want to be ready when volume comes back.
Benjamin, yes, we have slightly less than one month raw material stock normally in our plants. The combination between this stock plus the maintenance shutdown will permit us to finish the second quarter again in this situation.
Okay. The length of the shutdowns that you plan, is that dependent on how the market goes, basically, or have you got a fixed time for the shutdowns that you plan in Q2?
No. Out of the shutdowns we are doing in Q2, the only one we are advancing is the Duisburg one that was forecasted for in Q3, and partially the Rethwisch one. Part of the shutdowns we are doing were scheduled in the quarter part, and we are advancing the shutdowns of the rest of the year. That is why I said that, and as Wolf commented before, with the 10% of decrease in the first quarter, to have the same 30% decrease of 2009, we need to see more than 30% decrease in each quarter for the rest of the year. That's why we consider this scenario as a very pessimistic scenario. Only in the case of the second wave of the pandemic in the second half of the year, we will be in this position.
Okay, thanks. My last question is just on the cost-saving measures. Did you implement any of these in Q1 already?
Yes. If you remember, we have an Operational Excellence Initiative that we run all year round. We meet twice a year with an Operational Excellence Cost Savings Summit, where we put our best people together and control the current year projects as well as plan for the next year. Obviously, as the pandemic accelerated, yes, we enforced more of those actions. Those are in place, probably not yet as much in the first quarter, but they come into place quickly throughout the year.
Okay. Thank you.
Thank you, Benjamin.
Thank you. The next question comes from Michael Hoffman from Stifel. Please go ahead.
Hi, Javi, Wolf, Rafael, thank you for taking the questions. I have a couple of them. Could you share with us what you're currently seeing in 2Q for zinc aluminum alloy and secondary aluminum pricing?
Now, covering the stock situation today in zinc is that we have between EUR 1,900 and EUR 1,950 per ton. What we have used internally to forecast the quarter has been repeat the worst price of the Q1, that was EUR 1,800. In the aluminum, this week we have seen an additional decrease, and now we are below EUR 1,700. I think this is the last information we have now.
Okay. When we think of the maintenance you're talking about, both the originally planned plus some of the pulled forward, what will that result in the steel dust utilization for 2Q?
Okay. Yes. As I have explained before, what we expect for this quarter, and now we are at the end of April, so we have a very good visibility of the quarter, is that with the maintenance shutdown that we have done in April in Duisburg, plus the maintenance shutdown that we will have in one plant in France and 50% of one plant in Germany, the capacity utilization of the rest of the plants and for the rest of the period will be above 90%.
Yeah. Overall, when I look at it, your total production, my model is based on your total capacity. What's the total plant capacity utilization when I affect the timing of all the maintenance for 2Q? That's what I was trying to get at. I get that the rest of the capacity will be running in high maintenance, but when I affect the downtime, what's the actual calculated utilization for the quarter?
I don't have. Wolf, do you have these figures on your mind? I don't have these figures.
Michael, I think it is a good question. We will come back to you on that one. I do not have it at the top of my head.
Okay
on the EAF, it's just Duisburg. A little bit of Recytech, as we mentioned, and the rest will run as normal. I owe you an answer there, Michael. Sorry.
Yeah. In any case.
No problem.
Any case, Michael.
Sorry.
[José], I can conclude that considering the capacity utilization we have had in the first quarter, plus the maintenance shutdown we are seeing right now, in the middle case, in the middle of the scenarios we are considering to get in all the year, a capacity utilization is likely below 90%. Okay?
Okay. Yep, okay. When we think about fixed versus variable costs and in the way the income statement's sort of presented to us, there's sort of three lines of cost of sales, staff costs, and other operating. How would we think about what the mix of fixed versus variable and therefore your opportunities to flex costs across those three line items?
Okay. Thinking in our cost structure, we have personnel cost, that is a fixed cost. If something happens and we need to shut down plants we have, in that case, we can reduce partially these personnel cost because there are, in all the European countries, we have tools offered by different governments to cover partially the cost of the personnel in that case. Not 100%, but in a good percentage depending on the different countries, from 40%-60%, more or less. You have maintenance costs, and clearly, if you shut down a plant, you have the possibility to reduce, if not totally, partially the maintenance cost. The rest of the costs are more or less variable costs that are basically are linked to the level of production that you have. Try to summarize the answer.
We are not able to reduce all the costs in the same proportion that the production, but we will be able to reduce variable costs in the same proportion, basically, and fixed cost in a good proportion. Okay? I don't know if this answered your question.
Well, that helped. Last one from me. We're starting to hear about the auto production in the U.S. restarting, maybe as early as middle of May. Is there any chatter within the European countries about the restarting of auto production?
This is what we are seeing right now in the different industry we are working with, is automotive industry is restarting the activity in most of the European countries. In the case of the steel industry, we have seen, again, a reopening of the different plants. The answer would be yes. We have seen a reopening of the European industry, both in steel and aluminum industry.
Okay. Thank you very much for taking the questions.
Thank you. The next question comes from Clarissa Quak from M&G Investments. Please go ahead.
Hi, all. Thank you for the presentation. It's very helpful. I'm conscious of time, so I'll keep it to two of them. The first, in the lower end case, the prices are expected to remain at Q1 low prices. Do you think there's a chance we could see prices go even lower than what we saw in Q1? I'm just thinking of the whole auto sector and how volumes are likely to be coming into the market all at the same time, and what that could do to prices. The second question is on ratings. I know S&P affirmed the ratings recently. Have you been in conversation with Moody's yet?
Okay, thanks for your question. I will answer the first one. Jorge will answer the second one. Frankly speaking, we think that the current level of the zinc price at the level of, or the low prices we saw in the first quarter, the level of EUR 1,800. In combination with the high treatment charge that we are suffering right now, which is more than 50% of the same price, in the case of the EUR 1,800 is EUR 17 price, is a very, very low price. In my opinion, this same price or the combined same price plus treatment charge is below the C 92. For me, it's hard to see the same price going down below those levels. Let's see what happen. In my opinion, if that happen, we will see movement in the supply side sooner than later.
Thank you.
The second part of the question, Clarissa, on Standard & Poor's and Moody's. We're in constant contact, yeah. Both Standard & Poor's and Moody's always receive the same information. You're right, Standard & Poor's looked at us already, I think in 19th of March, and kind of echoed strong liquidity, hedging, et cetera, et cetera, fantastic capital structure. Even in their COVID-19 pandemic crisis scenarios, we were doing okay, and so they kept our stable rating. Moody's, I don't know when they're going to look at us again and issue their latest rating. Yeah. We shall see.
Okay.
I would expect a similar result. Yeah.
Thank you. Thanks both.
Mm-hmm. Thank you.
Thank you. Ladies and gentlemen, there are no further questions in the conference call. I will now give back the floor to our speakers. Thank you.
Thank you all for your questions. You can also contact the investor relations team of Befesa for any further clarification. We will now conclude the conference call and the Q&A session. Let me remind you that you can find the webcast and the dial-in details to access the recording of this conference in our website, www.befesa.com. Thank you very much, and have a good day.