Good afternoon, ladies and gentlemen, and welcome to the conference call of Aurubis AG. At this time, all participants have been placed on a listen-only mode. The floor will be open for your questions following the presentation. Let me now turn the floor over to Elke Brinkmann.
Good afternoon also from my side, and a warm welcome to the conference call on the results of the first three months, 2024-2025, of Aurubis AG. We from Investor Relations are here with our CEO, Toralf Haag, and our CFO, Steffen Hoffmann, who will present the figures for the first quarter of 2024-2025 and current developments at Aurubis. After the presentations, the floor will be open for questions. If you would like to ask a question during the Q&A session, please use the nine-star key sequence. Before we begin, a brief reminder about the disclaimer on forward-looking statements. Today's capital market presentation contains forward-looking statements about Aurubis' plans and expectations. These statements involve risks and uncertainties that could cause actual results to differ materially from those anticipated. Let me now turn the floor over to Toralf Haag.
Thank you, Elke, and good afternoon, ladies and gentlemen, and thank you very much for your interest in Aurubis. Like Elke said, we will report on the first three months of the running fiscal year. The robust operating result for the first three months underlines the strengths of Aurubis' solid business model, even in challenging times for the economy as a whole as we have it today. With the overall stable market conditions and satisfactory operative performance, operating EBT came in at EUR 130 million, which represents an increase of 17.5% compared to the previous year. Even if we consider the significantly increased capital employed, this resulted in a slightly increased return on capital employed of 11.7%. Furthermore, net cash flow came in at EUR 178 million, well above the previous year's level of minus EUR 202 million.
This net cash flow is highly supportive in financing the company's growth investments and underlines the attractiveness of the Aurubis's business model. The free cash flow was also positive. Finally, looking ahead, we renew the guidance for the operating EBT at 300-400 million EUR. On the next page, following the exceptional events of 2023, plant security and occupational safety continue to be the Executive Board's top priorities. Let's take a look at plant security. We completed a comprehensive analysis of plant security optimization potential and identified around 400 measures. Roughly a quarter were already implemented in the past fiscal year, and an additional 150 are scheduled for 2025. We invested a middle double-digit million amount in heightening security since September 2023. Key objectives of these measures are to raise plant security and better safeguard precious metals. A comprehensive employee protection program was launched internally.
It includes risk analysis of critical roles, meaning those who could potentially be approached by criminal networks. For work safety, we rolled out a program to transform occupational health and safety with three action areas. Number one, management culture: introduce and establish safe and conduct practices. Number two, risk management and safe site processes, and number three, safety management: effective tools for safety management. Our goal is to create a definite safety culture with effective safety management. Looking next at market developments throughout the first quarter, you can see that market trends continued. Overall, the copper and metal prices showed some positive momentum in a year-over-year comparison. The latest Reuters copper poll now anticipates a median of $9,452 a ton in 2025 and $9,800 a ton in 2026. Let's have a look at the various markets.
The global concentrate market continues to experience high demand from the smelting industry that is outpacing the growth in global supply from the mining side. As a result of the tight to concentrate markets, smelting and refining charges remained muted on the short-term market. Aurubis, however, remains well supplied with materials in both quantity and the quality of concentrates. Aurubis' diversified supplier base with long-term contracts remains unchanged. Aurubis' physical concentrates supply situation is covered well into Q3 of this fiscal year 2024-2025. Looking at the recycling markets, during the reporting period, we have seen a stable supply of scrap and blister copper for secondary smelters. Also, for the other recycling materials, we have seen a stable supply with mostly stable refining charges on a group level. Looking forward, our production sites are already supplied with material until the end of the second quarter of this fiscal year 2024-2025.
Sulfuric acid: the sulfuric acid market showed growing demand from the fertilizer and chemical industry in the reporting period. The maintenance of some sulfur burners and smelters in the industry lowered the availability of sulfuric acid for these off-take markets. Given the current market situation, Aurubis benefits from the sulfuric acid market and saw improved earnings in the reporting period. Copper products: we saw an ongoing robust demand for copper and copper products in and our off-take markets. dollar: Aurubis has a long U.S. dollar position of approximately $560 million in this fiscal year. Within the scope of our hedging strategy, we hedged 70% of the U.S. exposure at 1.085 for this fiscal year 2024-2025 and around 42% at a rate of 1.080 for the next fiscal year 2025-2026. And now I hand over to my colleague, Steffen Hoffmann, for some more details on the numbers. Steffen, please.
Thank you, Toralf. Also, a warm welcome from my side. Moving from the market to the financial figures for the first three months, revenues came in slightly higher compared to the previous year, driven by a significantly higher metal result, considerably increased sulfuric acid revenues, and robust revenues from copper production. In line with revenue growth, the gross profit increased to EUR 433 million. This resulted in a solid and robust operating EBT of EUR 130 million, which is a 17% increase over the previous year's figures. The main drivers were a higher metal result due to increased metal prices and improved earnings from the sale of sulfuric acid, robust revenues from copper products, and slightly lower costs at the group level. These effects were reduced by decreased concentrate throughput with lower treatment and refining charges, as well as a mild decline in revenue from the processing of recycling material.
Furthermore, depreciation and amortization and personnel costs in connection with growth investments increased. Based on the rolling four quarters of the EBIT, this results in a ROCE of 11.7%, which represents a slight improvement despite much higher capital employed due to the strategic investments. On the gross margin, we generated a gross margin of more than €500 million in total, well balanced across our different income components. This is yet another sign of the resilience of the Aurubis business model with its various earnings drivers. For metal result, we achieved a significant increase year over year as we benefited from higher metal prices, in particular for copper, gold, and silver. Our premium and products business remained stable with an increased contribution from the sale of sulfuric acid.
Last but not least, as a result of lower throughput, treatment charges fell below last year, and refining charges for recycling raw materials were slightly reduced. In the Custom Smelting and Products segment, CSP, operating EBT increased to EUR 125 million and was driven by a significantly higher metal result, a notably increased contribution from sulfuric acid, and robust earnings from copper products. As already mentioned, lower throughput with reduced treatment and refining charges and decreased earnings from processing recycling material had a negative impact. Adding these parts together, the return on capital employed reached a significantly improved 19.4%. The improved earnings situation, therefore, more than compensated for increased capital employed due to the strategic investments in the smelting network, such as Complex Recycling Hamburg and the expansion of the tankhouse in Pirdop.
In the Multi-Metal Recycling segment, MMR, operating EBT came in at EUR 27 million, which is a slight reduction compared to last year's first quarter. The result for the segment was supported by higher metal prices, which led to a significantly improved metal result, coupled with higher throughputs of copper scrap and blister copper. However, as expected, the ramp-up cost for Aurubis Richmond and the well-executed shutdown of the anode furnace in in November-December last year, which had an EBT effect of minus EUR 7 million, offset this positive contribution, and as a result of lower EBIT for the rolling past four quarters and the increased capital employed due to investments in Richmond, the segment's ROCE came in at 5.5%, which is obviously below prior year figures.
If we look at our expenses, total group cost decreased by 3.6% compared to last year, with minor movements between the expense positions. On the positive side, at the group level, external services, consumables, and energy costs declined in absolute terms in a year-over-year comparison. In contrast, there were higher personnel costs because of wage and salary increases linked to collective wage agreements and increased staffing for the new Aurubis Richmond site. Moving on to the transfer of EBITDA to net cash flow. As a consequence of our robust first quarter and the good commodity pricing for our core metals, Aurubis generated an operating EBITDA of EUR 184 million, which is ahead of Q1 last year. On the one hand, we built up inventories linked to operating performance. On the other hand, this effect was slightly counteracted by less capital outflow related to liabilities.
In total, working capital increased by EUR 131 million. Other positions, which are mainly influenced by valuation effects, led to a plus of EUR 148 million. Finally, taxes paid increased by EUR 23 million and reflect the increased profitability, but also the increase in the tax rate in linked to the Pillar Two legislation with a 15% minimum tax rate. In total, net cash flow amounted to a healthy EUR 178 million and remains on track to meet the guided range of EUR 500 million-EUR 600 million for the full fiscal year. You know, we focus on working capital management, and in general, I also want to flag, however, that net cash flow is subject to fluctuations over the course of the fiscal year, which balance out again as the year goes on.
Moving to the cash flow bridge, I mentioned the EUR 178 million on the net cash flow side. The cash outflow for investment activities includes our growth strategy and baseline investments. Here, capital expenditure for Aurubis Richmond represented the largest part, which will lead to higher EBITDA contributions in the medium term. With interest payments at a low level of EUR 6 million free cash flow was positive, amounting to EUR 38 million . So I think it's fair to say that at the end of Q1, Aurubis had a solid cash and cash equivalents position of EUR 451 million . Our key performance indicators on the balance sheet side show a healthy and robust picture with a debt coverage close to zero. Our equity ratio was at 54.7%, remaining well above the target level. CAPEX was, as planned, at a high level of EUR 141 million slightly below last year's Q1.
This represents a further step in executing our strategic project pipeline after close to 60% of the EUR 1.7 billion CAPEX program was realized last quarter. The substantial increase in capital employed to EUR 3.8 billion is a consequence of ongoing strategic investments and increases in our asset base. And on that note, I'd like to hand over to Toralf Haag again.
Thanks, Steffen, and let's move on to the outlook for the markets for fiscal year 2024-2025. Concentrates: As already widely discussed with the capital markets, the concentrate market is expected to be tighter as a result of the recent expansion in the smelter industry. This increased demand from the smelter industry outplaces the growing supply from the mining industry. Despite the tighter concentrate markets, we are already 90% supplied with contracted concentrates for the current 2024-2025 fiscal year. Our primary smelters are already supplied well into Q3 of this fiscal year. Scrap and recycling materials: For the recycling materials markets, we anticipate satisfactory supply at the group level. The recycling market remains a short-term market influenced by short-term developments in factors like collection rates, metal prices, and Chinese imports. Overall, we now anticipate a slightly lower earnings situation from recycling materials for the remainder of fiscal year 2024-2025.
In line with our broad supplier base, the secondary smelters are well supplied with recycling material until the end of Q2 2024-2025. Sulfuric acid: Based on the latest market developments with good demand from the European chemical and fertilizer industry, we expect a continued positive earnings contribution from sales of sulfuric acid. Copper products: Coming to our copper products, the rod shapes, flat, and rolled products. We continuously see good demand for wire rod driven by the infrastructure sector. On our other downstream products, we expect shapes to be below the previous year's levels. Flat rolled products are expected below previous year levels due to the sale of Aurubis Buffalo in the last fiscal year.
Coming to our guidance: In line with our announcement on December 5th, and based on our latest assumptions for both earnings drivers and cost components, Aurubis is providing a forecast for the group result and continues to expect an operating EBT of between EUR 300 million- EUR 400 million and an operating return on capital employed of between 7% - 11%. This range already includes an approximately EUR 50 million EBT effect for startup costs. For the Multi-Metal Recycling segment, we expect an operating EBT of between EUR 50 million - EUR 110 million and an operating return on capital employed of between 4% - 8%. The anticipated return on capital employed is subdued due to, in large part, the growth investments in Aurubis Richmond and therefore the related startup cost.
For the Custom Smelting and Products segment, we expect operating EBT of between EUR 310 million and EUR 370 million and an operating return on capital employed of between 14% - 8%. The maintenance shutdown in Pirdop in May-June 2025, with a negative EBT effect of EUR 34 million, is already included in these figures. Let's take a look at the strategic projects. This overview is not really new for you, just a repeat of the timeline of the strategic projects. Aurubis continues to deliver on what was promised. The first strategic projects have now been commissioned and are being ramped up. The first projects like ASPA, BOB, and Industrial Heat phase II are in operation and will gradually deliver on the expected and guided EBITDA contributions once fully ramped up. Executing the approved strategic projects remains one of the key priorities for the Executive Board and for Aurubis.
The timeline for the start of operations of the strategic project remains laid out for the coming fiscal years and, as such, for when the first revenues will be generated. Let's analyze how project progress corresponds with our CapEx spending. In the first quarter of fiscal year 2024-'25, we made significant progress on the strategic agenda yet again. As just mentioned, the first projects were inaugurated, and additional projects from our strategic agenda are progressing well. In the first quarter, CapEx at group level totaled to about EUR 141 million, of which around EUR 86 million were spent on strategic investments. At the end of this first quarter, Aurubis has spent close to EUR 1 billion for the strategic investments since the launch of the group's strategic agenda. Roughly 60% of the anticipated CapEx for the strategic project is now behind us.
As already announced, the fiscal year will be another year of high spending before the group's CapEx level normalizes again. We will continue to invest in our baseline to improve efficiencies and strive for higher production asset reliability. To summarize, Aurubis remains well on track. We continue to progress on the reported investments with a clear focus on the execution of the projects and good management of the operating business. With this, I'm happy to hand over to Ken Nagayama, who's taken over the duties of Angela Seidler in his new role as Vice President of Investor Relations at Aurubis. Over to you, Ken.
Thank you, Toralf, much appreciated. And before we move over to the Q&A session, I would like to briefly draw your attention to our financial calendar and upcoming events. On the 3rd of April, we will be welcoming our shareholders to our Annual General Meeting here in Hamburg. The next time we will speak to each other in this format again will be on May 8th for our Q2 earnings call. And with this, I would now like to open the floor for the Q&A session. Thank you very much.
Thank you. Ladies and gentlemen, if you would like to ask a question, please press nine and the star key on your telephone keypad. In case you wish to withdraw your question, please press nine and star again. Please press nine and star to register for a question. And first up is Daniel Major from UBS. Over to you.
Hi. Yeah, thanks very much for the presentation and the questions. A couple of questions. You mentioned the positive contribution from sulfuric acid in the first quarter. Can you quantify that either quarterly delta or total contribution to EBITDA?
Yeah, I can hear this. This is Steffen speaking. Yeah, I would want to give you a range. The quarterly impact of the sulfuric acid is a double-digit million euro figure, more in the lower vicinity, and we expect that this trend continues in the quarters to come as well.
Okay, so sorry, double-digit impact. And you said the trend continues, i.e., a similar level of earnings contribution or incrementally higher earnings in the subsequent quarter?
So what I meant is there was a positive deviation on the EBT line quarter- over- quarter for sulfuric acid in a double-digit million euro figure, more a lower double-digit one, and we would also for the quarters to come see positive deviations, at least for the, let's say, next two quarters to come. Obviously, I don't know what the sulfuric acid price now is in three quarters, but for the full year, we think that this is a very strong supportive lever, probably the strongest supportive lever overall, so similar pattern of positive deviation as we saw in Q1, also in quarters to come.
Very clear. Thanks. And then maybe on the other side of the earnings bridge, you mentioned the expectation of lower earnings from recycling materials. Despite your book being covered from a perspective of volumes, I guess that implies lower secondary refining charges. Yeah, you mentioned strength of or potential pickup in demand from post Chinese New Year, etc. I mean, it seems from my side the logic from the smelting industry, if you're operating with a $20 benchmark treatment charge, is to use more scrap everywhere. Yeah, is that a risk from a perspective of sharply lower refining charges and shortages of scrap?
Talking about those topics, I think you heard us talking today a bit more to provide an outlook based on earnings, as it paints a more comprehensive picture than combining now or than detailing, let's say, the pieces below the earnings being kind of TC/RC figures times volumes. So I rather want to talk on earnings than on more detailed KPIs. Generally, on the recycling market, I mean, the business with copper scrap and other recycling materials is of short-term nature, obviously. We know that. Depending on a variety of influences that are difficult to predict, such as metal prices and the recycling industry's collecting activities, it's also a question about China's activities. Generally, we do share the view that the refining charges are somewhat under pressure, but you do know that we always want to highlight that we have a very robust business model that stands on several pillars.
We also usually want to highlight that we have long-term contracts that help us. We also want to highlight that those figures that other participants mention on spot and benchmark and whatever that is, that they do not translate one-to-one in our balance sheet. So yes, this is a year where generally those types of KPIs are a bit more under pressure. However, we also need to see, as we discussed in the first question, that sulfuric acid revenue streams give a certain upside that can counteract.
Very good. Thank you. I'll let someone else have a go. Thanks.
The next question comes from Ioannis Masvoulas from Morgan Stanley.
Hello, good afternoon. Thank you for the presentation. Just going back to the point that Dan made around the scrap markets, you used to provide in the past visibility on how well-supplied the refining facilities are. You've done that for the smelters, the custom smelters today. You talk about the smelter network being well-supplied with concentrates through to Q3 of this current fiscal year. Can you give us some indication on how well-supplied the recycling network is at this point?
Yeah. Toralf, do you want to take the question on how well the recycling network is provided during the course of this year?
Yeah. It's provided. We said the concentrate market, we are well-supplied until the Q3 of this year, and recycling market, we are well-supplied into the second quarter of this year because it's, of course, more short-term than the concentrate market. Even though there is some tightening of the TC/RCs, we are cautiously optimistic that we will have a good supply also for the remaining quarters, Q3 and Q4. So we have contracted supply until the end of Q2, but we're also looking that we are having good supply in Q3 and Q4.
Yeah. Thank you for that. And just a second question, going back to the discussion on CAPEX, could you remind us what the maintenance CAPEX we should be baking into our models once all the strategic projects are in production? I'm thinking fiscal year 2028, 2029 onwards, just to get a sense on cash flow generation. Thank you.
Yeah. Ioannis, I think on page 17 in our deck, you see this midterm plan on CAPEX divided between baseline and strategic CAPEX. So you do see the baseline line, which kind of oscillates between a €300 million figure in 2026-2027 and a €390 million in 2024-2025. Obviously, the baseline CAPEX includes, as we flagged here on the chart, the maintenance operations along with investments in efficiencies. So it's not only repairing, it's obviously improving the future and environmental protection and so on and so forth. You also do know that our strategy is to shift the maintenance schedule for the primary smelters from a two-year timeframe to a three-year timeframe. All of that is baked in. Can I think I can also give you an additional data point on Q1?
The vast majority, let's say more than two-thirds of the Q1 CAPEX that we were flagging here or talking about, which was €141 million, let's say more than two-thirds was related to strategic CAPEX, whereas less than one-third in this quarter was related to baseline CAPEX.
Yeah, understood. So maybe something in the order of EUR 350 million is a good assumption beyond the next three to four years of maintenance CAPEX.
I think the baseline was the connection was not so good. Did you say that on average EUR 350 million?
EUR 350 million, yeah, would be a good estimate.
I mean, you see four figures. You see four figures on page 17: 390, 370, 300, and 350. So if you want to build the average on that one, I don't have my calculator now here, but.
Sounds about right.
But you will do the math.
Thanks very much. Thank you.
Next up is Bastian Synagowitz from Deutsche Bank.
Yes, good afternoon all. Thanks for taking my questions. My first one is actually just a quick follow-up on the recycling business. Just coming back on the supply which you currently have here, which I guess basically for the next two months, I think in the context of history, that's clearly a little bit less than usual. Are you getting a bit more concerned about your ability to fill the pipeline maybe throughout the next couple of quarters? I think you seem to be signaling that you're cautiously confident, but maybe you could just explain that a little bit better. And then secondly, also, is there already any guidance on when you expect Richmond to basically get from the current startup loss situation to above breakeven, i.e., can we expect that already next business year, Q1, Q2? Is there any firmer timeframe on that? These are my first questions.
I would shortly talk on MMR, and then perhaps Toralf, you can take the second question on Richmond. So Bastian, we did not intend to flag that we are more cautious on MMR. So the way we look at the market is, and I made the point earlier, that obviously, and you know it very well on the recycling material, let's say the visibility is always shorter than on CSP. And we have, I think, at the last, at the full year disclosure call, we said we have a visibility till end of Q1 for recycling. Now at the Q1 call, we say end of Q2. So basically what we are trying to say is it's the similar unusual type of turnover and of visibility, and we did not want to flag that we are more cautious.
With that, Toralf, I would hand over to you on Richmond and the ramp-up.
Yeah. Bastian, on Richmond, we expect, like we said, on this fiscal year, startup losses of around €50 million. Next year, we still anticipate some startup losses, but significantly reduced, and then a positive contribution in the following year in 2026-2027.
Understood. Perfect. Thank you. Then my next question is actually maybe a bit more technical on the benefits of your free metals. I guess you mentioned earlier that you basically locked in a larger part of your price exposure in free metals than usual. Could you maybe share with us how much of your exposure you basically have hedged for this year and maybe also next year? And given how strong many of the metals you're exposed to have been, particularly, I guess, on the precious side, could you maybe also provide us some sensitivity on how much more additional uplift to EBT you would see if you basically would run your free metals at current spot prices? That would be very helpful.
Obviously, I know I'm going a little bit into the weeds here, but I guess it's a very important number, so it would be great to have a bit more color on that front.
Yeah, Bastian. So what can I say? Let's start with the current financial year, 2024-2025. The general approach for the current financial year generally is that you would hedge roughly two-thirds and that you would leave open one-third. For this year, on gold and silver, as we had rise and rise and rise over the last quarters, we have done a bit more than the two-thirds on hedging, and obviously we're enjoying good levels, and we are now in a situation where we are at the cap of what we want to hedge in the current fiscal year, not doing more, but obviously enjoying then more spot levels that are quite favorable at the moment. For the next fiscal year, we generally have very low hedging rates in relative terms, so do not hedge a lot, do hedge very seldomly.
Given the very interesting prices on gold and silver, we've done more than usual. We've also done a bit very recently, even this week, to just enjoy very good levels. And we feel quite comfortable about the levels and the prices that we are achieving already for the next fiscal year. But once again, a caveat, we do hedge for the next fiscal year on a really low level, but more than usual given the very favorable environment.
Okay. No, that's very helpful already. Is there any color which you could give us in terms of what the gap is, given that, again, it's always the important number? I mean, in principle, you could have locked this in early last year at some point. So I guess if we would mark things to market, I suppose it would definitely give you a relatively decent tailwind incrementally.
Well, Bastian, I think for the time being, I would leave it with that level of granularity and transparency. Hope you can somehow understand.
Yeah. Okay. No problem. Then my last question is just on your cash flow statement. I guess you highlighted this 148 million item from others in your cash flow, and you said that that was valuation-driven. So if it's valuation-driven, I'm not quite sure why it would be impacting your cash flow. Is this basically just cash-settled hedges, or is there anything else which is behind that? Maybe you can just explain that briefly and whether that reverses later?
Yeah, Bastian, you know that on the profitability side between EBT IFRS and EBT operative, there's a few differences, so basically, but this difference is not true for cash flow, so what I'm trying to say is there have been pieces that do not impact the EBT operative that would impact, however, the EBT IFRS, but that do impact the cash flow, and that's kind of in those 148. Let's put it that way. We talk here about, as I said, valuation effects. It's linked also to derivatives and basically to topics that explain the bridge between IFRS, EBT, and EBT operative.
Okay. But technically then, I guess it would be fair to assume that that reverses later on, maybe via the operating number, or?
No. No, that is not reversed.
So the statistics. Yeah.
As of today, our assumption would be that this is not reversing.
Understood. Okay. Great. Thanks so much.
Thank you.
The next question comes from Christian Obst from Baader Bank. Over to you.
Thank you and good afternoon. First of all, the still rising personnel costs should become or expect to come to an end for these rising or overproportional rising personnel costs, and as we have fully staffed Richmond already, can we expect some kind of an underproportional increase going forward? This is the first question, and I'll take one at a time.
Bastian, perhaps I'll start with the personnel cost, and then again, Toralf will talk on Richmond. Personnel costs, I mean, obviously between one year and the next one, usually there's a wage increase, there's an inflation. That's also the point here. Just to give you a data point on the wage increases, we did have out of the negotiations with the labor unions, we had in September 2024 a wage increase of 2.0%, and we will have in April 2025 as part of the bargaining agreement a wage increase in 4.85%. So inflation, salary inflation is the one piece. The other piece is obviously the ramp-up in Richmond, which at the end of the day is related to people or other of the strategic CAPEX projects like ASPA, for example. So there is a double-digit headcount number increase due to those items.
On the other side, I want to clearly state we look intensively at cost. We have an ambition to counteract on a cost increase. We see potential on consultancy cost to reduce. And we look at all cost levers, be it personnel costs, be it consumables, be it logistic costs, be it maintenance costs. And in those more volatile times in a European industry, it's obviously clear that the management is doing everything to counteract cost increases and to work yourself down from that. Actually, we already have achieved the first things and continue to work on that. With that, I would hand over to Toralf on Richmond.
Yeah. Richmond, like you rightfully said, Christian, we are almost fully staffed for phase I . So we don't expect there some more. But when we start phase II or begin to build up phase II next year, then there is planned to be an increase of another mid-double-digit personnel number. So it's limited. And like Steffen said, we are looking not to increase significantly at our other operations. We had a strong build-up in not a strong, but we had a build-up in the last fiscal year for some investments and also for some safety personnel and also for some reporting personnel for the new guidelines. But this should have come to an end. So some build-up for Richmond phase II, but apart from that, no further build-up.
Okay. Thank you very much. Then coming to electricity, so what is the main lever do you see to increase or decrease going forward? And then most obviously, we will have a new coalition led by CDU/CSU going forward. And in their program, they are guiding for lower electricity tax and grid fees and stated that there might be a relief of at least EUR 0.5 per kilowatt-hour. And we expect any support from this development.
Toralf, do you want to comment?
Yeah. Electricity, we have in most of our plans, we have long-term contracts, so we are not affected by these short-term changes. We expect from the new government in Germany to continue to have some reliefs, which we are already enjoying today. So we are looking for stable developments of our electricity costs, but we need these reliefs in order to be stable in the long term. So there's no additional upside.
Okay. Thank you. Then very briefly, you are guiding for a net cash position going forward, EUR 500 million-EUR 600 million. CAPEX might be EUR 820 million, so free cash flow should be negative this year between EUR 200 million-EUR 300 million. This is a right calculation, right?
I think you're doing well your math.
Okay. Thank you, and then coming a little bit back to Richmond, so you're guiding for the EUR 50 million approximately negative development this year. So what is the main lever you can work on to reduce these negative developments? Is it a certain throughput? Is it to have a control on cost or whatever? So what is the main lever there which brings you to the minus EUR 50 million?
The minus EUR 50 million in this fiscal year, that is pretty much set because we have all the people on hand, and we don't have much sales yet after the startup in the summer of this year. In next year, we are expecting some production and some sales, and that will reduce the startup losses. This year, we don't see any significant improvement potential to further reduce the EUR 50 million.
Okay. Thank you very much, and all the best.
Thank you.
Next up is Maxime Kogge from Oddo BHF.
Yeah, good afternoon, so the first question is on TC/RCs. There was a first significant transaction settled at $21 in December for 2025, and since then, there have been reports that Japanese and European smelters were trying to extract a higher benchmark level from the miners. Can you give us an update on where the negotiation stands and whether you're still hopeful that you can get more than $21 as a benchmark in 2025?
Maxime, the answer I give you is probably not the answer you want to hear. I feel it anyway. So as I said earlier, we reviewed some internal aspects and have decided to provide an outlook based rather on earnings than detailing more, let's say, TC/RCs and volumes specifically. And over the recent years, externally published concentrate terms, call it benchmark, have already lost in relevance for various reasons, at least for us. With our long-term-oriented supply portfolio, we are paying less attention to individual agreements anyway. So those figures that are intensively debated, they do not arrive on that level and with that importance in our balance sheet or profit and loss statement.
Okay. Fair enough. And the second question is on, yeah, potential tariffs on copper imports in the U.S. How would that impact your activity in Richmond? And would that lead you to accelerate perhaps your thoughts about adding some downstream units to Richmond, i.e., refining and finished products?
I mean, Maxime, obviously, tariffs and global trade wars could have a negative macro impact on growth and on fundamentals. And we all know now in our industry and with our metals, they are traded in a global exchange, and therefore the price is not directly linked to tariffs. So it's quite early to quantify the impact on our Aurubis. I also think, let's say, the directions coming out of the U.S. on potential tariffs vary on the day or on the week. So it would really be difficult to now chip in a figure. But I think one thing is safe and clear. The strategic move of our Aurubis going into the U.S. with a secondary smelter and being the first one, then there in operation is absolutely the right one.
It has been the right one before those tariff discussions, and it's even more right after those tariff discussions.
Okay. So I'll stop there. Thank you.
Thank you.
The follow-up question comes from Ioannis Masvoulas from Morgan Stanley.
Thank you for taking the follow-up. Just going back to Richmond, if we look at phase one, when do you expect to hit the full run rate of production?
Like we said, we expect the startup of the facility in this summer, and the full ramp-up should be, if operations go according to our plan, 18 months later.
As we think about phase II, is that ramp-up going to be faster given that you have a lot of the infrastructure already in place?
Right now, we plan the same ramp-up schedule. It could be faster, but right now, we plan for the same ramp-up schedule.
Understood. Thank you very much.
You're welcome.
Next in the line is Lutz Kihm from GCIS . Over to you.
Thank you. A question regarding non-operating assets. Aurubis holds roughly 1.3 million treasury shares. Are there any plans to monetize these shares? And what are the other major non-operating assets of the company? And what plans are in place to monetize these assets?
On the treasury shares, the way this program was defined and approved by the AGM, the use of the treasury shares would be for purposes like possible acquisitions or future financing needs. Those shares would not be canceled. At the moment, there is no concrete plan with regards to any action.
What are the other major non-operating assets of the company?
Just look at the colleagues here for a second. Give us 10 seconds, please.
Can you perhaps be a bit more precise in your question? Because we do not exactly.
Yeah. I wonder. I find Return on Capital Employed very impressive. It's good. But my impression is the company still has too much non-operating assets, and there may be ways to monetize these assets to finance your growth.
It might be that the piece you are looking for is, let's say, the corporate center. When we have on the chart where we detail the return on capital employed for the two businesses, MMR and CSP, and then if we go for a ROCE for the group, let's say adding those two businesses, CSP and MMR, you also need to add cost for the group, for the corporate center. This is functions like accounting, controlling, investor relations, communications, corporate procurement. And so let's say it's not non-operating assets. It's very active headcount, doing a good job, but obviously bearing a certain cost piece to it. Perhaps that's the piece you're missing or looking for.
Okay, so back to the treasury shares. I mean, you talk about roughly EUR 100 million, which you're holding on the balance sheet, which you could finance CAPEX, which could be distributed to shareholders in view of dividends, so you'd have less debt weight on the balance sheet.
As I said, the way this program that was passed at the AGM, I think some time ago, was formulated.
2018.
Yeah, 2018 was formulated. Possible usage could be for acquisitions. Today, we have no acquisition on our table. A possible use could be for future financing need. Today, we don't see the future financing need. And that's why it's sitting on the balance sheet at the moment. You are right. It's defined that those repurchased shares will not be canceled. And at the moment, no decision has been made what to do with it. And at the right point in time, we will take a decision what we will do with it.
Okay. Thank you.
Thank you.
At the moment, there are no further questions. So if you have any additional questions, please press nine and the star key. nine and star for any additional questions, please. And we have a question coming from Boris Bourdet from Kepler Cheuvreux. Over to you.
Hello. Thank you for taking my question. The first question, you provide on slide number 17 the trajectory of CAPEX. Could you please share if you have a trajectory of depreciation and amortization for the coming years? This is something you used to do, but I suppose it's not up to date. And the second point is just some clarification on Richmond. You're referring to a minus EUR 50 million startup cost. Is it only for Richmond, or is it for the overall startup strategic projects? Thank you.
Boris, on the depreciation and amortization, we have not provided, let's say, the full timeline over the same, let's say, over all the fiscal years in analogy to page 17. But the data point that I can give you on this fiscal year, 2024/2025, is that we anticipate depreciation and amortization around EUR 230 million for this fiscal year. On the other question, I must admit that I did not completely hear it. Would you mind repeating it?
I can answer it. The EUR 50 million is only for Richmond. It's only for that plant. It doesn't include any other startup costs.
Okay. If we take the slight positive contribution of the ASPA and BOB projects, then we should have a small positive contribution overall, sorry, a lower negative contribution overall.
Yes, that's true.
Okay. Okay. And just if I can add a third question, it's on TC/RCs. I get your message that this is less and less relevant for you because of your contract relationship with suppliers. But can you share with us any view you have on the trends in the TC/RCs for the coming years? Thank you.
Toralf you want to take that one?
Yes. I mean, of course, we don't have the exact forecast. We see, like we said today, tightening because of more demand than supply at the current moment. There's some events which could loosen this situation, like if some mines continue with the expansion. We know there's a lot of or some CAPEX projects in the pipeline for the mines, either for expanding existing mines or to explore new mines. It really depends on how fast can they go on. So we have to take it, I think, step by step. But for this year, for this fiscal year, we still see a tight. And then maybe or hopefully, we'll see some additional capacity coming on next fiscal year of the mines. And then the TC/RCs should also improve.
Thank you.
For any additional questions, please press nine and star now. There are no further questions. And with this, I hand the floor back to Elke Brinkmann.
Thank you. We would like to thank you for your attention. And if there are further questions after this call, please give us a call to the IR team. And yeah, then we say goodbye. Have a nice afternoon and a nice rest of the week. Thank you. Bye-bye.