Good morning. My name is Lydia and I will be your conference operator today. At this time, I would like to welcome everyone to the Befesa First Quarter twenty twenty Earnings Presentation. After the speakers' presentation, there will be a question and answer session. 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 twenty twenty results conference call of I am Rafael Peders, Head of Strategy and Investor Relations of BFESSA. And today as usual, we have with us Javier Molina, CEO of DFSSA and Gaurav 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. Then 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.
Finally, we will open the lines for the Q and A session. Before getting started, 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, and thank you for attending this conference call. During the 2020, we have achieved good operating results. We have maintained our plans at a high capacity utilization of more than 90% and the impact of the coronavirus pandemic during the first quarter has been very limited across the phase of operations. All our steel gas recycling plants have been operating as normal during the first quarter and we have increased our volume of steel as treated by 10% compared to the previous year, mainly driven by Chalky. In the Aluminum segment, we have to stop our solid stack plant in Bairololit for two weeks as a precautionary measure due to a potential coronavirus crisis case amongst the workforce.
The plant is now operating as normal. In our secondary aluminum business, we stopped our plant in Bilbao at the March due to the lack of demand. However, as a consequence of the COVID-nineteen, metal price has been suffering pressure which has impact the level of earnings during the first quarter. As such, in the first quarter, we have achieved total revenues of €180,000,000 stable and same as previous year. Total EBITDA has been €34,000,000 which represents a decrease of €9,000,000 or 22% compared with the previous year, all driving by the depressed metal prices, not by volume.
In China, as we announced, we restarted the construction of our plant in Changzhou on the March 17 and also continued the preparatory work at the construction site in Hainan, where we are developing our second steel gas recycling project in the country. So far, the impact of the COVID on the project has been annualized of around six weeks. Worf 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.
Bessesa has a great management team, which has been in the company for more than fifteen years on average and has demonstrated in many different circumstances including the financial crisis of two thousand and nine 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 plan 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 gas recycling plant, we have a stock raw material at each of our plants that will help us keep the plants running even in the event of a temporary decrease in the 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 Grisberg and we're 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 immune plant in Bilbao and in Berbouf. And 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 map 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 BFESSA exit the current crisis more rapidly and in a better shape. BFESSA today enjoyed 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 €200,000,000 of liquidity and a 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 early reductions and a postponement until we have more visibility on the development of the market due to the COVID-nineteen. Beyond the potential health implication, the COVID pandemic has mainly two types of economic impact on the face of.
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 during the 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 Romanian euro, this is very much linked to the production of cars. So far, more than 2,000,000 cars have not been produced in Europe due to the pandemic.
The second impact comes through 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. Also, treatment charge has increased for $245 to $300 Combining these two effects, LMA 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% to 40% of the volume and hedge.
As such, under the current environment and with the uncertainty that the COVID-nineteen 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 earnings for the full year 2020. Based on that, we are estimating that the full year EBITDA of BESESA for 2020 should be between 100,000,000 on the lower end and €135,000,000 on the higher end. I will explain this in more detail at the end of the call. Now Warl Lehmann will explain the results of the first quarter.
Please turn to Page five, the Q1 twenty twenty highlights. As Javier mentioned and explained, the 2020 has been as expected and a solid quarter for Buffetso from various aspects: operationally, liquidity and progress in China. But the unfavorable price environment, which has been further pressured by the COVID-nineteen 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 first quarter, consolidated revenue remained approximately flat and stable at €179,000,000 Main give and takes offset each other. On the positive side, one main factor. Steel dust recycling throughput in electric arc furnace dust increased 10%, mainly driven by Turkey packing operations with the increased capacity. On the other side, this positive effect was offset mainly by three items. First, the slightly lower saw flak and spent pot lining volumes recycled mainly due to the COVID-nineteen related precautionary canteen downtime during two weeks of March at the Spanish plant of Valadolid.
Second, lower metal prices in the wake of COVID-nineteen on all fronts. Zinc LME average prices were minus 19% year on year. Zinc treatment charges up unfavorably by 55 per tonne to a latest reference of $300 per tonne. Zinc LME and treatment charge combined represent a 28% year over year price decrease in Q1 per tonne of zinc. Also aluminum alloy, free metal bulletin average prices were minus 6% year on year.
Third, finally on the price side, our hedging approach clearly works and it's clearly beneficial and our hedging prices are above water. Nevertheless, still zinc hedging prices in Q1 were approximately €83 per tonne lower year over year. Thus, on the revenue side, our operational progress and growth was offset by the metal price pressure. Clearly, the price pressure is the main COVID-nineteen impact on VEFA in the first quarter. Referring to EBITDA, the lower part of Page six.
The revenue drivers obviously fall through to EBITDA. In first quarter, we reached €33,600,000 of EBITDA, down 9,500,000.0 year on year and all in net net price driven. We experienced for the quarter €12,000,000 price headwind that was partially offset with €3,000,000 operational progress. Main price year over year headwind drivers were €7,500,000 due to lower metal prices, Devon zinc and 500,000.0 aluminum €2,500,000 due to the unfavorable zinc reference treatment charges 2,000,000 due to slightly lower zinc hedging prices, which comes to a subtotal of $12,000,000 price pressure overall. Main operational year over year progress came from €3,000,000 progress from Stelas volume increase.
Aluminum is plusminus neutral as the minor €05,000,000 driven by the slightly lower aluminum SaltFlex volume, remember, the two week temporary COVID-nineteen precautionary campaign is offset by €500,000 from the aluminum high efficiency furnaces productivity progress. Thus again, EBITDA down year over year €9,500,000 It's negative €12,000,000 from prices, which is partially offset by €3,000,000 from operational progress. Going now to Page seven, the results of our Steeldust Recycling Services segment. First quarter revenue increased by €6,000,000 or 6% to €101,000,000 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 €8,000,000 to 26,000,000 The main drivers of the €8,000,000 EBITDA year on year decrease are: €11,000,000 combined price decrease from LME treatment charge and minor hedging price reduction, which was partially offset by €3,000,000 operational progress from more steeler throughput.
As the price pressure falls straight through to EBITDA, the EBITDA percent decreased to 26% EBITDA as a percent of revenue in Q1 twenty twenty. 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 service 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-nineteen pandemic more than offset the operational progress. Turning to Page eight, the results of our Aluminum Salt Flag Recycling Services segment. Q1 revenues were down around $5,000,000 or 6% year on year to $79,000,000 mainly driven by two items: one, the 6% lower prices for aluminum alloy second, the 3% or about 4,000 tonnes year on year reduction in saws flex and spent for lining volumes. Again, this came from the temporary precautionary COVID-nineteen quarantine for two weeks at Valladolid, no infections found and operations are back up and running.
Q1 EBITDA was close to flat, down 300,000 year on year to 8,600,000.0 EBITDA. Secondary allo in gray bars was up €200,000 and salts, flax, in orange bars, down €500,000 In the secondary aluminum sub segment, the gray bars, slightly up to €2,700,000 Net net, the higher efficiency furnaces installed are delivering results in 2020. In the sulfide sub segment, the orange bars, down €500,000 to €5,900,000 mainly explained by three items, each around €500,000 each: 500,000.0 negative from the lower aluminum alloys average prices, 500,000 negative from the temporary two weeks COVID-nineteen quarantine and positive €500,000 from improved efficiencies. Overall resulting consolidated EBITDA of the aluminum salt flex recycling service segment was close to flat, slightly decreased to €8,600,000 On the right hand side of Page eight, we show Plat utilizations and prices. Salt Flax and Stamford Lining volume and utilization levels continued at a high 94% in the first quarter twenty twenty.
This is even so we managed two weeks precautionary COVID-nineteen quarantine. Also in secondary aluminum, we ran operations at plant utilization levels at 94%. Market prices on the other hand decreased. Alloy free metal bullion prices in first quarter averaged $14.33 dollars per tonne, down 6% year on year. Overall, a solid Q1 for the Aluminum Salt Flags 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 €200,000,000 liquidity readily available, euros 120,000,000 of cash on hand and €75,000,000 set in entirely undrawn revolving credit facility. Our capital structure is strong, the strongest one the Pfizer 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 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 €5,500,000 in Q1. This is after working capital was temporarily impacted by €10,000,000 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 €120,000,000 The operating cash flow during the last twelve months period as of March remained solid at 93,000,000 Operating cash flow is shown after taxes, interest and change in working capital, etcetera.
The only two items to be funded from operating cash flow are CapEx and dividends. For 2020 and in the middle of this COVID-nineteen pandemic, we have scrubbed our CapEx one more time and can get done in 2020 with €70,000,000 €20,000,000 for maintenance. This is about €5,000,000 less as usual, saving or postponing non vital items and €50,000,000 on growth, which is for our expansion in China. I am now advancing slightly in the presentation where Javier talks later about the lower €100,000,000 EBITDA and the upper €135,000,000 EBITDA guidance. But after spending €70,000,000 on CapEx, we expect for the pre dividend cash flow a balanced plusminus €5,000,000 pre dividend cash flow for the lower end of the guidance and a plus 25,000,000 to plus €35,000,000 positive pre dividend cash flow for the upper end of the guidance.
We are moving ahead and paying a dividend, but managing the dividend level and timing of the dividend payments accordingly, targeting to keep about €100,000,000 of cash in the bank or more either way, whether the lower or upper end comes true in this COVID-nineteen year. Summarizing, the high liquidity, strong and long term capital structure as well as our hedging book forms the backbone of Pfeza and serves us very well to weather the COVID-nineteen 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-nineteen pandemic to current levels below $1,900 and thus well below the C90 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 tonnes we sold forward up to October 2021 at fixed prices are in the money against the March average spot price of $17.20 dollars per tonne or equivalent to about $1,900 This represents a more than $60,000,000 value or buffer in profit and cash over next quarters to come. Overall, 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 mid term growth roadmap. Upfront, it is important to understand that also during this COVID-nineteen 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-nineteen crisis with a stronger portfolio versus when we entered. In the graph, we show three levers: Level one, hedging, I already explained on the prior page Level two, organic growth and Level three, 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 tonnes 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 Welsh oxide, WOX, to our customers in Asia.
The plant works well, and 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 the Bauh. We're done with that initiative, too. All three present great operational progress worth pre the COVID-nineteen depressed metal price and market around EUR 14,000,000 to 15,000,000 year over year incremental EBITDA and 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 02/2009, this was a 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 sixty-forty classic Europe rest of the world portfolio. In 2021, we expect to balance the portfolio to fifty-fifty 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 Bifissa 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 road map. The picture is the aerial view of our construction site at the city of Changshu in the province of Changzhou. This province has a higher density of electric arc furnace steel production and thus steel dust hazardous waste volume to be serviced by the FSR. 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, just in about nine months. Our second plant we're building at the city of Chuxiang and province of Hainan, 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 02/2009. 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 to 2009 by 30%. The VESA on the event 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, the face of steel dust throughput in the first quarter is up 10% year over year. And 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. And secondly, if 2020 shall be as severe down year over year by 30% as in 02/2009, 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 02/2009. 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. Also 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, Wolfgang Gorg. I would like to finish the call providing more details on the guidance for the year. I would like to highlight that VECESA 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. It showed that under whatever scenario we think for the current crisis, Befesa will be able to keep its business operating, meet its financial and fiscal obligation 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 guidance of earnings for the full year 2020. In both scenarios, we have assumed that we manage our costs rigorously with a strength 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 clients.
For the lowering 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 zinc prices for the rest of the year are on the level of the minimum price achieved during the first quarter of $1,800 and we have considered a treatment charge of $300 for all the markets where we operate. This three main charge represents around 70% of the LME price, which is a historical high level and comparable 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 lowest scenario. As such, under this scenario, achieved a full year EBITDA around $100,000,000 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 European steel market decreased materially in the second quarter and the lockdown is reduced by the end of the 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, the capacity in this scenario the capacity utilization will be near 90% across most of our recycling plants.
We have assumed average zinc 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 $135,000,000 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 BREFSA.
Although we currently enjoy a comfortable and healthy liquidity, we must ensure that in this 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 twenty percent 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. And third, keeping a moderate and manageable leverage level. As such, we have decided to reduce our dividend proposal to $15,000,000 versus initially $45,000,000 The $15,000,000 or $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, store liquidity, long term capital structure and manageable leverage. So in summary, the FESSA Grab, great assets to navigate the current proven environment, human capital that 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.
The first question comes from Ingo Sechel 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 and your, let's say, bare case scenario, if we think about the 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? Or is there anything you can do in terms of short term work or prolonged closures 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 to we try to do the maintenance shutdown in the moment we have laser raw material. It is what we are doing, for example, in the what we have done in April in our plant in Lewisburg. Meanwhile, we still are receiving still gas from our customers.
So when the maintenance and outfitting, we will be in a position start to operate the plant again, which will be the case in this world again. So this is the first thing we do. We are not only in the very low scenario, we are considering to shut down additional times our plants. That's what was happening in 02/2009. What's happening in that case is we use the tools that the different government offered to the companies in Germany, UK, Spain to reduce the lower cost at that moment.
So with this lower cost of reduction plus the variable cost, we are able to keep a very good profitability in our business.
Okay. That's very clear. And on the liquidity question, also to understand what you're planning in November regarding the dividend. I think you referenced 100,000,000 cash on hand that you would still want to have after the eventual November dividend payment. So the interpretation would 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 €20,000,000 lower cash balance than you had at the beginning of the year? And also, is there any reason for the 100,000,000 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 we you can think about I think you're thinking about it the right way. So let's start with the low scenario. We're showing there a plusminus balanced total cash flow, yes, so plusminus €5,000,000 Remember, we started the year at €125,000,000 of cash in the pocket. And even in the low case scenario, in the middle of the year in July, we're distributing €15,000,000 of dividend, $0.04 4 per share.
In that case, you're right, euros 125,000,000 of starting cash would go down after the €50,000,000 dividend to roughly €110,000,000 or so. It's a nice comfortable €10,000,000 buffer against the €100,000,000 of cash balance we like to have, yes? Now towards the upper end. In the upper end, with 100 starting the year with €125,000,000 of cash in the pocket, but as we lay out, the pre dividend cash flow ranges somewhere around 25,000,000 to €35,000,000 call it 30,000,000 yes? So then you have to add the 30,000,000 to the €125,000,000 starting cash balance, right?
And then you're talking somewhere around €155,000,000 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. And then you would again end up with somewhere around €110,000,000 of cash in the pocket, somewhere around that, still leaving €10,000,000 buffer against the 100,000,000 yes? So that is how we think we're thinking about pre dividend cash flow, cash flow and the dividend scenarios, So we're committed to pay the dividend. We start with paying €50,000,000 in July.
And then as Javier mentioned, we're working hard to coming out rather in the middle of the scenario or something or better, and then we will pay an additional dividend, obviously. The €100,000,000 is no magic mark. It's a very conservative mark of cash in the pocket. Obviously, don't need €100,000,000 to run our business. But as you know, structure, hedging, cash balance, we run conservatively.
Okay?
Okay. That's very clear. But maybe just to clarify on the €100,000,000 or on what kind of buffer you like to have. So also understand you that even if you were in an even more unrealistically pessimistic scenario, so drop below €100,000,000 I guess it sounds like you would rather drop below 100,000,000 or rather draw significantly on your RCF before you consider raising new equity, right?
Yes. So we don't see a scenario here that we have to raise any equity. Again, even in the lowest case scenario, a crisis like 02/2009, we're talking here about every one of the next quarters down 37% in steel volume year over year, etcetera. So no recovery, complete lockdown for the rest of the year. Yes, we again, we would pay EUR 50,000,000 dividend and we will be at EUR 100,000,000 of cash in the pocket.
I don't see currently we don't currently see the need for raising capital.
Correct. Yes, yes. Sorry. Ingo, I would like to I read totally what Wally is telling about the to raise capital. Even in the case of €100,000,000 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.
Thank you. The next question comes from Oscar Valmus from JPMorgan. Please go ahead.
Good morning, everyone. Hope everyone is 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?
And then kind of we know that you have you're thinking of building new salt slags expansions. So kind of how bad could salt slags get? And then the second question, we'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 steelmakers?
Okay. Thank you. Thank you. The first quarter regarding the solid slag volume, as you know, our solid gas business is linked to the automotive industry and has been practically totally stopped during March and April. But any case we have enough volume of raw material and with a clever combination of shutdown, we will be able to run our plants at the normal capacity during the second quarter.
What we are doing is that the two weeks that we shut down the planning by other lead for sanitary reasons, we will be we have been running in April at normal capacity all our plants. And what we are going to do in May, will do the shutdown of our plant in Lanning, in Gruening, in Germany. And 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, but the total EBITDA that this plant produced in a year is around is less than €2,000,000 So the effect in our P and L will be very small.
Okay. And then regarding the volume in April, Well, what we are going to do in April is we will have we have had the maintenance shutdown in Duisburg in April that was not expected. And then we will have the maintenance shutdown of one kiln in our plant in Fravor and the maintenance shutdown of our plant in RefiTech. So 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 and the rest of the time at a normal load factor.
So 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 upper the upper plan of the guidance. Okay?
Yes. That's very helpful. Thank you very much.
Thank you. The next question comes from Benjamin Canzara 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 rate between WOCs sold and volumes processed in Q1. Does that reflect something with tapping into the reserves that you have?
Benjamin, don't you mind to repeat the question? I didn't understand very well.
Yes. Sure. The difference in the growth rates between WOCs sold and the EAF dust processed in Q1. So you're processing a lot more what's 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
can answer that, Kali. No, Ingo, this is like we had had in the past. Remember, couple of quarters ago, we had the opposite. We had less work sold than etcetera. It's 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 work sold and EF Test throughput. It's purely that matter.
Okay. And in terms of the reserves that you have, is that still around the one month level?
I mean the reserves at the end of the day impact electrodark furnace dust throughput, yes? And so as we mentioned in the first quarter, we had great utilization levels and we didn't have to use much of the inventory as how we explained. We're going to manage or use some of the inventory that we have in the second quarter as we run maintenance 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, then we don't have to shut the plants down, yes? We want to be ready when volume comes back.
Benjamin, but yes, we have slightly less than one month raw material stock normally in our plants. And the combination between this stock plus the maintenance shutdown will permit us to finish the second quarter again in this situation.
Okay. And 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 shutdown that you plan in Q2?
No. The the in in of the the the shutdowns we are doing in the q in q two, the only one we are advancing is that we should want that was forecasted for the in q three, partially the RefiTech one. So 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 Wolfgang commented before, with the 10 of decrease in the first quarter, we need to see to have the same 30% decrease of 02/2009, 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. And my last question is just on the cost saving measures. Did you implement any of these in Q1 already?
I mean, if you remember, we have an operational excellence initiative that we run all year round. We, twice a year, was an operational excellence cost savings summit where we put our best people together and think and control the current year projects as well as plan for the next year. And obviously, as the pandemic accelerated, yes, we enforced more of those actions and 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.
Javier, Wolfe and 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 the current the spot situation today in seeing is that we are we have between $19 $19.50 dollars per ton. We are in what we have used internally to forecast the quarter has been repeat the worst price of the Q1 that was 1,800 In the aluminum, the last week we or this week we have seen an additional decrease and now we are below 1,300. I think this is the last information we have.
Okay. And then when we think of the maintenance you're talking about both 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 April, so we have a very good visibility of the quarter is that with the maintenance shutdown that we have done in April in Greece plus the maintenance shutdown that we will have in the planning one plan in France and 50% of one plan in Germany, the capacity utilization of the rest of the plants and for the rest of the period will be above 90%.
Yeah. But overall, I mean, when I look at it, your total production, I got it. I mean, my goal is based on your total capacity. So 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 at high maintenance. But when I affect the the downtime, what's the actual calculated utilization for the quarter?
Don't have Wolf, do you have this figure on your mind? I don't have this figure.
Michael, I think it's a good question. We'll come back to you on that one. Don't have it at the top of my head because it is just on the EAF, it's just Dusseberg. And then a little bit of Resitec, as we mentioned, and the rest will run as normal. I will leave an answer there, Michael.
Sorry. Yes.
And in any case No problem. Yes. Any case Michael, I can complete 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 of in the middle of the scenarios we are considering to get all the year a capacity utilization likely below 90%. Okay? Okay.
Yes. Okay. And then when we think about fixed versus variable costs and the way the income statement 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 a personal cost that is a fixed cost. If something happens and we need to shut down plans, have in that case, can reduce partially this personal cost because there are in all the European countries, we have tools offered by different governments to to to cover partial because of the personnel in that case. Not 100%, but in a good percentage depending on the different countries from 40% to 60 more or less. Then you have maintenance costs.
And clearly, if you have if you shut down a plant, you have the possibility to reduce, if not totally partially the maintenance costs. And then the rates of the costs are more or less variable costs that are basically are linked to the level of production that you have. So try to summarize the answer. We are not able to reduce the cost 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 costs in a good proportion. Okay?
I don't know if this answered your question.
That helps. And then last one for me. So we're starting to hear about the auto production in The U. S. Restarting maybe as early as May.
Is there any chatter within the European countries about the restarting of auto production?
Well, is what we are seeing right now in the different industries we are working with is automotive industries 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. So 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 Quack from M and G. Go ahead.
Hi, all. Thank you for the presentation. It's very helpful. I'm conscious of time, 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 and P affirmed the ratings recently. Have you been in conversation with Moody's yet?
Okay. Thanks, Sam, for your question. I will answer the first one and Walt will answer the second one. Frankly speaking, we've seen that the current level of the zinc price at the level of or the low prices we saw in the first quarter is the level of 1,800. In combination with the high treatment chart that we are suffering right now, which is more than 50% of the same price in the case of the $1,800 which is $20.17 price is a very, very low price.
In my opinion, this is zinc price or the combined zinc price plus cement charge is below the C90Q. So for me, hard to see zinc price going down below those levels. Let's see what happens. But in my opinion, if that happens, we will see movements in the supply side sooner than later.
Thank you.
The second part of the question, Clarissa, on Stamper's and Moody's, we are in constant contact. Yes? Both Stanampurs and Moody's always received the same information. You're right. Stanampurs looked at us already, I think, in March 19 and kind of echoed strong liquidity, hedging, etcetera, etcetera, fantastic capital structure.
Even in their COVID-nineteen 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 the latest rating. Yes, we shall see. But I would expect a similar result.
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 VESA for any further clarification. We will now conclude the conference call and the Q and 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