Ladies and gentlemen, thank you for standing by. I'm Stuart, your Chorus Call operator. Welcome, and thank you for joining the AMAG Austria Metall AG Q1 2022 Results Conference Call. Throughout today's recorded presentation, all participants will be in a listen-only mode. Presentation will be followed by a question-and-answer session. If you'd like to ask a question, you may press star followed by one on your touchtone telephone. Please press the star key followed by zero for operator assistance. The forecasts, budgets, and forward-looking assessments and statements contained in this presentation were compiled on the basis of all information available to AMAG as of April 20th, 2022. In the event that the assumptions underlying these forecasts prove to be incorrect, targets be missed or risks materialize, actual results may diverge from those currently anticipated.
We are not obligated to revise these forecasts in light of new information or future events. This presentation was prepared and the data contained in it verified with the greatest possible care. Nevertheless, misprints and rounding and transmission errors cannot be ruled out entirely. In particular, AMAG and its representatives do not assume any responsibility for the completeness and correctness of information included in this presentation. Presentation is also available in German. In cases of doubt, the German language version takes precedence. This presentation does not comprise either a recommendation or a solicitation to either purchase or sell securities of AMAG. I would now like to turn the conference over to Christoph Gabriel, Head of Investor Relations. Please go ahead.
Good morning, ladies and gentlemen, and welcome to our conference call for the first quarter of 2022 of AMAG Austria Metall. Today, Gerald Mayer, CEO of AMAG, will present the development and results of the first three months of this year. As usual, the presentation as well as the press release has been published this morning on our homepage under Investor Relations. After Gerald's presentation, you have the opportunity to ask questions during the Q&A session. Gerald, please start your presentation. Thank you.
Thank you, Christoph, for the introduction. Very warm welcome from my side. It's a pleasure having you here for our Q1 presentation. Let us start with the highlight of the first quarter, and it was a really excellent first quarter for AMAG. It was in our history, the best quarter to be reported up to now. Revenues are up 60% to roughly EUR 400 million. The figure of last first quarter was EUR 250 million. Our result earnings, EBITDA, we had EUR 68 million. This more than doubled compared to the first quarter of 2021. Also, net income is significantly up. It more or less sixfold to EUR 32.5 million from EUR 5 million last year.
It's a result of a very positive operating performance, high productivity, good capacity utilization, in particular, in all our operations and facilities in Ranshofen. Of course, we also still have tailwinds from high aluminum price and also stable production at our Canadian subsidiary, Alouette. The outlook for 2022 is really difficult, but we are very optimistic that an EBITDA of above EUR 200 million is a realistic one, but given, of course, some preconditions that means secure energy supply, and so on. It's all mentioned there, and in particular, of course, is sustaining high aluminum price levels. Let us flip the page to slide five.
You can see here the purchasing manager indices from the last month or the last two years. The signal is still green. This means the environment is still positive. But of course, the green tone's a little bit lighter, so it is. It's a little bit weakening perhaps, or was a little bit weakening in March. And this translates quite well in our order intake situation. All in all, it is still very positive. We expect some weakenings for the second half of this year. This is also confirmed by IMF downgrade for global economic growth forecasts to 3.6% and for the Eurozone to 2.8%, which I added here at the bottom of this slide.
Slide 6, aluminum price trends. Of course, all in all, and let's start with the average numbers to the right. It is a consistent, let's say, increase in aluminum prices quarter by quarter in the last since Q1 2021. In the last month or weeks, aluminum price was highly volatile, but came down again to a level as of today of around $3,000 per ton of aluminum, means still high, but below the levels we are reporting here for the average number of Q1 2022. Of course, it's a lot of uncertainty in this price trend, given the environment we have right now with lockdowns in China and also, of course, with the Ukraine war.
Alumina price trends, also there you see, looking at this chart to the left, high volatility there. We saw we had a very, let's say, interesting or positive start for us, that is, that it is a main cost element for our primary division, metal division. It was more or less flat at a very low level in the first half of last year. In Q3, you know, it increased, so this alumina price increased dramatically. It came down again until, let's say, end of last year, and now it went up with this Ukraine war. It normalized in the last weeks again.
It is right now a very interesting level, price level for us, given this aluminum price we have, which I presented at the last slide. All in all, going to the right side of this slide, you see, after an average quarterly number of around $300 per ton of alumina in the first three quarters of last year, we are now at the level of roughly, or have been at the level of roughly $400 in the first quarter. It is still an attractive price given the aluminum price we have right now. Slide number eight, shipments. In shipments, you see that we are up 6% in the first quarter compared to the prior year.
Metal is more or less a flat development, with 400 tons up. This has to be, of course, considered here, put into consideration. We again, as last year, had to shift shipments to the second quarter, given congestion at port facilities, given the earnings part or the profitability of these 10,000 tons will be seen in the second quarter. Casting division, roughly same level as last year. We run this plant more or less at full capacity, so all good there. Rolling division, significantly up at 5,800 tons. The volume in shipments grew materially.
This growth has to be allocated to a wide range of industries. All in all, the first quarter was good for all our businesses. Slide nine, distribution of shipments in our rolling division. What I would like to point out here is that we have still attractive volumes in automotive. Compared to the first quarter last year, we are slightly up here. Last year we had 16% in share of automotive. Now we are at 17%. Aircraft, more or less normalized. We have been at 6% first quarter last year. Now we are at 11% again. This is quite a significant increase there.
For the rest, I would say more or less where we have been. We are, you know, the only part that we are down is in tread plates, so which is part of our industrial application business. Order intake trends, next slide 10, in the rolling division. Let's have a look at this at the chart we included here in this presentation. Order intake increased dramatically in the first half of 2021. On purpose, we're a little bit reluctant to take in orders because of cost inflation we saw in the second half of last year. We are more or less stable in terms of order backlog situation, order book situation in our rolling division.
What I can say here is up to now, the order situation is really positive. We have sustained high demand for many of our customer segments that I mentioned here. What I can share with you here is that we see a decrease in demand, which is expected to translate also into perhaps a little bit lower shipments in the second half of this year in the automotive products. Also tread plate, as I mentioned before, part of our industrial application segment, the demand is quite lower right now. In this regard, I would say the stocks are full. This is the main reason for that. Slide number 11, AMAG Group revenue.
Of course, we saw a very high aluminum price level. We saw increase in shipments. This translates automatically into higher revenue, and we are up 60% roughly, and from EUR 250 million to EUR 400 million. The reconciliation at the bottom of this chart shows that the bulk comes from higher prices. So 68 is the aluminum price. 62 refers to the price and premium increases, which comes mainly from our rolling casting division, and so on. It was necessary to compensate for significant cost increases and inflation trends. Volume was also up, and this accounts for a little bit less than EUR 20 million. We end up at the revenue of EUR 400 million for the first quarter. Profitability, EBITDA on slide 12, sorry.
As I mentioned at the highlights, for us it was the best quarter in history with EUR 68 million of EBITDA compared to EUR 30 million in the first quarter 2021. Again, having a look at the reconciliation there, you see aluminum price is of course responsible for that in an amount of EUR 20 million. The general price and premium situation is responsible for that at an amount of EUR 50 million roughly. On the other side, it was necessary to increase these prices to compensate higher raw material and energy prices. Because they increased with the aluminum raw materials, the energy prices increased for up to EUR 44 million in the first quarter 2022 compared to the prior year.
Slide 13, this is the change of EBITDA in divisions. What you can see here that all the divisions have material growth there. Metal division, we are up EUR 10 million, despite the fact that. But this is okay. As I said before, 10,000 tons roughly were not shipped, but it was a similar volume we did not ship in the first quarter of 2021. Casting division, very positive. It is, I always mentioned it here. It is of course, our smallest division, but very positive first quarter, and they are up EUR 1.6 million, so very successful first quarter there. For rolling, significant growth to EUR 26 million. Of course, on the one side, we have shipments. We had a very positive, I would say, production.
We had high productivity there. One bottleneck is still personnel, so the guys we need to run our shifts. Very difficult, one of the challenges we are facing in times like this. On the other side, of course, we managed to adjust prices, which was necessary to cover these cost increases, which were really significant in the first quarter. It was very successful. Net income after taxes, we more than sixfold the result there to EUR 32.5 million. Of course, the main driver is the higher operational or operating result, EBITDA. If you're earning more money means also that we have to pay higher taxes, and this is then the bridge.
There's nothing to add, I would say, on this slide. I would like to skip the key figures. It's, I think, a reading exercise there, which there's no surprise in it. I would like to skip that and go to the flip side of the coin on slide 16. Trend in times like that with significant increase in aluminum price and also in a worse situation that we build up stocks, of course, translate into high working capital needs and financing needs. This is why the cash flow is that negative in the first quarter. The price effect result in financing needs of EUR 80 million, roughly. We have 23,000 tons of higher stock.
10,000 of that refers to our metal division, the shift in shipment to the second quarter I mentioned before. This also translates into roughly EUR 90 million, and then we had, in particular, taxes to pay for the prior years, around EUR 20 million. All that is mentioned here on this slide. The positive, I would say, sign there is looking at the second quarter, I expect a significant positive cash flow again, as long as aluminum prices stay stable and the business stays as we expected, positive. All in all, this is no surprise for us. We always say we, being dependent also on the aluminum price, we have to refinance all our inventories, and this translates into a situation like that.
In the first quarter, all in all, our key financials on slide 17, of course, net financial debt was up. I just explained it at the cash flow slide. On the other side, look at the left, we are still very sound in terms of financing, let's say, key KPIs, net debt to EBITDA at the level of 2.2, compared to the last using the last twelve months EBITDA. Slide 18, equity is down a little bit despite this high result. The reason is that we have valuation effects in there from hedging, and this goes directly into equity. On the other side, cash, which we drove down on purpose in the last year.
This year, of course, we had our cash flow effect. We still have a sound position there with EUR 130 million in terms of liquidity, plus, of course, some financing facilities. Metal division, as I said and mentioned before, very solid production there. High aluminum price paired with low alumina price result in a very positive result. We have these delays in shipments, which will be then we will see it coming in the second quarter. With high certainty for the first 5,000 tons of this 10,000 tons we already had in April. It is definitely will be a very good quarter for metal division also in the second quarter of this year. Casting division.
Casting division with an EBITDA of EUR 5 million. It was definitely the best quarter for casting, also in history. There is positive environment, but what we also see there is weakening demand from the automotive side, which definitely will affect our business at the latest from Q3 onwards. This is how we expect it as of today. The energy price development there, of course, we did some hedges in the past, and of course, this helped us also to drive those results. Same valid, by the way, for rolling division on slide 21, where we see an EBITDA of more than EUR 40 million in the first quarter compared to 17. The first quarter 2021.
We are right now at the level I would say that we should be, and yeah, very positive in this regard. Also, the expectation for the second half of this year is definitely a softer development. We'll see high demand, depending of course on the development also of the Ukraine war and of course of lockdowns in China. I'm now at slide 23, outlook. All in all, I mentioned it during my presentation, things are going quite well. Demand is still positive with some shadows there for the second half of this year and some of the customer segments in particular, automotive.
This will be reflected in the numbers second half of rolling and casting. All in all, it is still positive including that, and it will not be a disaster, shouldn't be one. Ukraine conflict is of course something which brings a lot of volatility and uncertainty as well as the COVID lockdowns we have right now in many places in China and in ports in China, which brings a lot of uncertainties about, let's say, the upcoming economic development. We saw significant cost increases which are still there. Energy is just one of them. Logistics is something else, and so on. We have high prices on the cost side.
On the other side, the aluminum price is still highly attractive for us, in particular given our pricing formula for energy in Canada. This is still very attractive. Of course, we did some hedges in the past and as long as these hedges are there, given also our diversified portfolio, I think it should be fine. Labor shortages, of course, I mentioned it before, is for us definitely a bottleneck and a daily thing to manage. In particular also, I'm personally very happy that we managed to do such a good performance, productivity-wise and so on in our rolling mill and therefore we had this first quarter, which was really good.
In the beginning of this presentation, I also gave you an outlook for 2022, of course, subject to high uncertainty. No one of us knows what happens with gas supply. We need, of course, our energy price hedges if counterparties are in danger. This is of course all. There's a lot of risk associated to that. In addition to that, the general economic development is also, I would say linked to a lot of uncertainties giving in addition to that, these lockdowns in China, inflation trends and so on.
Given all that, and with the assumption I made there, with secured energy supply, our energy price hedges, which should be in place for the rest of the year and sustain attractive aluminum price, the full year result is very realistic that it's over EUR 200 million. With that, I'm ready to answer your question. Thanks for the presentation and participation in our call, and looking forward now to answer your question. Thank you.
Ladies and gentlemen, at this time, we will begin the question-and-answer session. Anyone who wishes to ask a question may press star followed by one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star followed by two. If you're using speaker equipment today, please lift the handset before making your selections. Anyone who has a question may press star followed by one at this time. One moment for the first question, please. First question is from the line of Markus Remis from RBI. Please go ahead.
Yeah. Good morning, gents. Congrats on the results and a couple of questions. Firstly, on the metal segment, the roughly 10,000 tons that are delayed into the second quarter, is it fair to assume that the EBITDA effect would be roughly EUR 10 million?
Yes.
Okay. Thank you. On the topic of energy surcharges in the downstream business, I was actually surprised by the strength, especially in rolling. I mean, what's the scope for further increases there as you flag an increasing impact of higher energy prices? Is there a scope that this is just a temporary issue, say, for a quarter or two, and then there's more surcharges to be implemented to compensate for that?
In general, what we did, we started to increase prices one year ago, and we did it step by step. We always a little bit lagging behind the steadily increasing or sharply increasing energy prices last year. As energy prices plateaued in the beginning of this year, you know, then we saw our price increases for rolling exceeding the energy price increases, and this is the reason for these margins we have right now. What we see now in our order index right now, that in terms of price, there are more or less flat compared to what we saw in the month before. Energy prices are highly depending on what we see at the markets.
They were higher, so we are not at the peak right now, but they are of course very high. What I personally do not expect is that we manage to get additional, let's say, additionally higher prices, significantly additional higher prices from our customers. This will be very difficult, I would say. It is also a market which you need there and this was the combination we had. We spent a lot of efforts there explaining to the customers the reason and on the other side, the demand was there on the markets, and it's always easier to of course be successful here in raising prices. I would say this is not easier.
I do not expect that this will be easier in the next month span for the second quarter. I'm optimistic for the first quarter. I mentioned that we see some, let's say at least some clouds at the sky, but it's still overall the sentiment for us is still positive if I exclude Ukraine and exclude the shipment, the issues from China.
Right. On the topic of automotive production, there was a couple of shutdowns, especially also then in the truck market related to this supply disruptions for cable harnesses. Can you elaborate what you're currently seeing in terms of the call off pattern from your OEM customers?
Perhaps the call-off pattern is perhaps a little bit lighter than we planned, yeah, or weaker than we planned in this first months or weeks of this year. It's been a little bit weaker. What we expect is in particular for the second half of this year, so beginning second half of this year, that it weakens a little bit stronger and I do not expect too much change for the second quarter. At least up to now, we have no big signals there.
All right. Okay. Final question on your contingency plans. In case of gas disruptions, I know how it works in Austria, what the scheme is. I mean, is there in any sense or in any way a kind of possibility to change the energy mix shorter term, or does it actually mean in case the gas supply is disrupted, you will have to shut down?
Well, I think, for many European industries, and this has nothing to do just with AMAG and just with Austria, and I think it's independent.
Yeah.
If you are depending 80% or 60% or 50% or 40% on Russian gas, it would have a significant impact and you cannot substitute in the short run with other, let's say, energy sources. This is not possible and changing an energy mix, for example, for us to oil or to hydrogen. Hydrogen is not there. Oil is not possible. The facility is prepared to run on natural gas, and this is simply the point there. In the short run, there's no change possible. I would even say in the midterm, it is really difficult or not possible technologically, but also where should the gas come from? Where should hydrogen come from and so on.
This is, but not just valid for aluminum, and not just for AMAG and aluminum. It is, I would say, for the bulk of our competition in Europe, but also for other industries like glass and so on. We all need natural gas where the burner goes directly, for example, in our facilities to the scrap to melt it, and we cannot use something else there.
Yeah. Okay. Very clear. On maybe you could also share your CapEx budget with us. That would be my last question then.
I guess for this year, I would expect we have some projects in place right now, and I would say all in all including our metal division, roughly EUR 100 million for this year.
100. Okay. Thank you.
As a reminder, if you'd like to ask a question, please press star followed by one on your touch tone telephone. Next question is from the line of Christian Obst from Baader Bank. Please go ahead.
Yeah, good morning.
Good morning.
I have one question. It's about the rolling situation. Very good result of course. February mix, you signed a new aircraft contract. Can you give us some kind of an idea how you expect the mix to change in the next 3-4 quarters? Will you be able really to cluster more towards the more profitable areas, or will it stay as it is? The next one, of course, related to that, you reach an EBITDA per tonne of more than EUR 700 per ton, which we have not seen since the start of 2011.
Is that, could that be some kind of a run rate for the time, or will the headwind coming especially also from the energy side or from ETS go towards the average we have seen over the last five years?
Okay. First question, the contract, we are very happy. You know, this refers to our acquisition in AMAG Components, which we finalized last year by acquiring the remaining 30% stake. It is a very important contract given the disruptions in the aerospace sector. We're happy adding this in that we got this for us very important contract. We are super convinced and fully convinced that the whole concept there could end in a good success. This is the first important step.
Regarding the split, what we expect, of course, we expect by increasing build rates of the main aircraft producers, but also the percentage of aircraft in our portfolio of the rolling division goes up, at least slightly because we are growing more or less everywhere. To the question what we expect or how we can improve towards more or higher profitability products, I would say this was managed really well in the last six months. This is where we are exactly now, and the surprise is that it is not the OEM part right now, which is really strong in terms of margins, it's the industrial application part, which is really strong in margins. For OEM, you have long-term contracts.
For industrial application customers, we have short-term contracts where it was also possible to increase prices together with high cost increases and the demand in the market. This was a good job done by our, let's say, sales team there. You mentioned the 700 roughly tonne EBITDA EUR per tonne for the first quarter. I would say this, in general, this stands out. It will be very difficult in the long run to sustain this level. I'm very positive that also the second quarter will be a successful one. I didn't do the math there. Is it 700 or where exactly it would be? As we have an order book of three months, I also expect a very high number there.
At the end, as you mentioned, and as you know us quite well, it will highly depend on the mix we can realize then, and yeah, we'll see. All in all, I think it is at a very high level right now, and we do the best to sustain it as long as possible. Yeah.
Of course. Yeah. In fact, I have another follow-up question. Norsk Hydro just announced to buy a recycling company in Poland. It seems that there is some kind of a tougher competition when it comes to recycling material. Do you see that already, or are you worried a little bit about that kind of development?
No, I'm not more worried. You know, aluminum is a metal which stands out when it comes to recycling, recyclability and, with regard to CO2 emissions. Because, look at all the other alternatives, in terms of materials. You have so many others where which you cannot, let's say, indefinitely recycle, by keeping the quality, and this is simply what we have. With the European Green Deal, where circular economy is a very important part of, it is of course clear that, recycling and circular economy and also our competitors will do everything to increase the stake there. On the other side, we are really strong there. We stand out in one aspect, and we have all different alloy families, where we have end products on one site.
We have experience of roughly 40 years now in recycling, and I would say we are really strong there. We are ahead there, and this is why we always and continuously also improve our recycling center in Ranshofen in Austria. We have latest sorting technology, and so on and so forth, that we can also use, let's say, lower quality scraps. I know that in Europe, we are also working to reduce the export of aluminum scrap. There is still, I think, 1 million tons or up to even more going to Asia. This is, let's say, raw material, which we have to use, in my opinion, in Europe, and we should work on that, and this is done. A lot of things are done there.
Of course, all our competitors also try to do recycling where possible. It's also, of course, true for us. We go ahead with that and we are not worried.
Okay. Thank you very much.
Next question is from the line of Michael Marschallinger from Erste Group. Please go ahead.
Good morning, everybody. I have a question on the guidance preconditions you mentioned, and especially on the aluminum prices. I would like to know why you are optimistic that the prices will remain elevated when you already mentioned the price is correcting now to $3,000 below the first quarter numbers? Now given the slowdown in automotive in the second half, shouldn't bring the prices further down in your view?
We are not speculating on aluminum price, and I do not say that I think that it is at this level. I say this is an assumption which we made to get to this 200+, that it's realistic. What we also assume there that aluminum price in our internal calculation goes down, but still, with an average price of roughly $3,000 for the years ahead, we will be roughly there what we said. Of course, this is crystal ball. We don't know. There's a lot of uncertainty, and this is what I mentioned. Those are our internal models. We are not able to give you a band, for example, for the guidance, but we are really fairly optimistic to come there.
Of course, if prices collapse for X, Y reason, then things have to be re-evaluated. This is why we mentioned this assumption. There's no, this is not that we assume that we know that it is going there, for sure not.
Yeah. Could you maybe comment on which price levels, yeah, your optimism would start to fade or?
Once again.
Could you maybe comment on which aluminum price levels your optimism for the guidance would fade?
No, we said what we said is that we need sustained or we expect or that we expect that the assumption for 200 that more than 200 is realistic is a sustained high aluminum price. I just said, if it's around $3,000, yeah, on average for this year, so it can come down to below $3,000, this is what this means, yeah. Then we are still optimistic to be above EUR 200 million.
Okay. Understood. Thank you very much.
As a reminder, if you have any further questions, please press star followed by one on your touch tone telephone. There are no further questions at this time, and I would like to hand back to Christoph Gabriel for closing comments. Please go ahead.
Thank you very much for joining this call. As always, I'm glad and I invite you to give me a call if you have any questions. I wish you all the best, and stay healthy. Thank you.
Ladies and gentlemen, the conference is now concluded, and you may disconnect your telephones. Thank you for joining, and have a pleasant day. Goodbye.