Ladies and gentlemen, welcome to the first half-year 2024 results presentation conference call and live webcast. I'm Sagar, the Chorus Call operator. I would like to remind you that all participants will be in the listen-only mode, and the conference is being recorded. The presentation will be followed by a question-and-answer session. You can register for questions at any time by pressing star and one on your telephone. For operator assistance, please press star and zero. 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 July 12, 2024. 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 the light of the 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 the information included in this presentation. This presentation is also available in German. In case of doubt, the German language version takes the precedence. The presentation does not compromise either a recommendation or a solicitation to either purchase or sell securities of AMAG. At this time, it's my pleasure to hand over to Christoph Gabriel, Head of Investor Relations. Please go ahead, sir.
Good morning, ladies and gentlemen, and welcome to our conference call for the first half of 2024 of AMAG Austria Metall. Helmut Kaufmann, CEO, and Claudia Trampitsch, CFO, will present the development and results of the first six months of this year. As usual, after the presentation, you have the opportunity to ask questions during the Q&A session. Helmut, please start the presentation. Thank you.
Good morning to everyone. From my side, I start the presentation with slide number three, highlights of the first half of 2024. I give you only a short summary of the financial results, and Claudia Trampitsch will go into details a little bit later. So we saw solid earnings despite the fact that the market, especially the European market, was still weak. However, we saw higher aluminum prices in the Q2, and we observed that our strategic positioning with the wide product range was again supporting our rolling business. The revenue came up to EUR 707.7 million. It is down compared to the first half of last year, same for the volumes that we sold. But please remember that the first half of last year was a very strong period.
The EBITDA turned out to be EUR 95.3 million, and as I mentioned, was below last year's EBITDA, which was EUR 117.8 million. But, and this is important, there was an improvement compared to the second half of 2023. The net income after taxes summed up to EUR 33.4 million compared to the EUR 51 of the first half year of 2023. Cash flow from the operating activities, however, was strong and grew to EUR 75.7 million compared to EUR 68 million last year. A short first look to the second half and to the possible end-year result: we increased the lower limit of the bandwidth compared to our last presentation from EUR 150 million-EUR 160 million, and we say that the bandwidth now will be EUR 160 million-EUR 180 million based on the current assumptions, especially concerning aluminum price and shipment volumes.
We thought that in this presentation, at the beginning, we give you a short overview of sustainability activities because these are very important already now, but gaining importance for the future. We are proud to say that, again, we got a very good sustainability rating, and AMAG was again number one in the aluminum group in a group of 42 different global companies. And again, we were announced to be a member of the VÖNIX Sustainability Index in Austria, and therefore we belong here to the leading companies in terms of ecological or social conditions. And what is new? You already know our brand name, AMAG AL4 ever, AL4 ever, which we introduced for foundry alloys and rolled products. But now we are proud to say that we already received this status also for the primary metal produced in Canada. Let me continue on slide number five.
Decarbonization is a big subject for the upcoming years, and as you know, it will not be possible to change all the natural gas to direct electricity consumption. Hydrogen will most likely be required in our cast house. Therefore, AMAG is also active in a new Austrian alliance, the so-called HIAA, Hydrogen Import Alliance Austria, where we partner with a couple of other leading companies in Austria to develop a plan, a roadmap to promote the import of green hydrogen to Austria, especially to achieve volumes and competitive conditions for the future. We also announced that we partnered with Energie AG to double our photovoltaics installation on the roofs of our factory halls, which then will lead to 120,000 sq m of photovoltaic cells. This will then be Austria's largest, for sure, producing roughly 13 GWh for own consumption. We only use this in-house.
On slide six, we want to point out that we recently signed a power purchase agreement with the company ImWind in Lower Austria, where we will get 48 GWh from wind power. And this plant is now in installation and will most likely start by the end of this year. And same is true for hydropower, where we signed a power purchase agreement with AlpenEnergie for 36 GWh. And so, as you can see, we strongly believe we actually need energy mix, and we prepare for this for the upcoming future. Let us move on to slide seven. We are very proud to say that one of our real core customers, the company Airbus, gave us three important awards. We were, so to say, the absolute winner at this, what we call the Aerospace Oscar here.
We were, for the third year in a row, the best supplier in the product area, and therefore we received a SQIP award for accredited supplier. And we received two special awards for innovation and sustainability. And as you know, these are the two core pillars of our strategy for the future. Therefore, we are happy that our core customers realize that this is done very well by AMAG. So let us look at market and volumes that we shipped. I continue with slide number nine, looking at the Purchasing Managers' Index. Very briefly, you can see in the upper right corner, the Eurozone is still quite red, Austria and Germany are pretty red, and also the important markets in France and Italy. Only outside Europe, in the USA and, of course, in China, the situation is considered to be better.
When we look at slide number 10, at the CRU forecast of the future aluminum demand, then we can say that for primary metal as well as for rolled products, the outlook is still positive. However, it's interesting that looking at the primary metal expectation for Europe, there it's flat or maybe even a slight decrease. So the main growth actually comes from the Chinese market. Rolled products, it's not a big growth that is forecasted for Europe as well. But anyway, there is growth in all the continents and all the markets that we supply from Ranshofen. Looking at slide number 11, where we indicate the main areas where AMAG delivers rolled products, without going into detail, you can see that basically all areas have a positive growth forecast.
But for us, it is important that the transportation area is doing well and with a forecast of 6.6% annual growth up to 2028. This is positive information. And as you know, automotive and aircraft business are very important for us. Looking at the group shipments on slide number 12, we have to announce a slight decrease compared to last year with 214,000 tons of the three product groups that we sell. This is primary metal, recycling foundry alloys, and rolled products. We reached this volume with an increase in the metal area compared to last year, a very slight decrease in the foundry casting alloy and in the recycling casting alloys, but with a bigger reduction in rolling. And this is, on the one hand, a positive development, especially in the aircraft and also in the industrial applications area compared to last year.
However, temporary reduction in the automotive sector. So we expect an improvement in the second half of this year. But the volume reduction in packaging has a bigger impact. Sports and architectural products are still at a very low level globally. And looking at the shipments by industry on page or slide number 13, there is no major change except for the reduction in packaging. But in detail, in numbers, it gives you what I just mentioned before. So automotive industry is at 21% and aircraft at 15%. But industrial application is important with 27%. And this takes me to my final slide, the current order intake situation. As you can see, we are in the range of 60,000 tons plus at the moment, which is a good value, and it gives us actually a good start into the second half of 2024.
For further details of the outlook, I will come back later and hand over to Claudia Trampitsch for now.
I will start with some information on the market prices that influenced us the last quarter and the first half of 2024. So we saw an increase in the aluminum price compared to last Q2, but also compared to the last half year. But what we see now is a little bit of decrease now the last week. So at the moment, it's more on the declining side, but for the first half of the year, it had a very good impact. When we move on to the aluminum price, you know that's a very relevant cost factor for our smelter in Canada. And there we see an increase in price, not only in the absolute numbers, but also in the percentage of the aluminum price.
So that is now at the moment at roughly 20% of the LME, which will not, it has no impact now on the figures, but will have an impact for the next months to come. When we look at AMAG Group revenue, we can see that it's a very challenging environment to have for the first half. Our broad orientation and our diversification showed that we still had a very solid revenue, which comes out about 11% less than last half year. And this is mainly influenced by, on the one hand, the realized aluminum price, and on the other hand, by, for sure, the lower volume you heard about before, and the price and the premiums that mainly affect the rolling business and affect the revenue of the group.
When we move on to AMAG Group EBITDA, you can see that it is still, if we look at how challenging our market environment was, we mentioned we were able to also reduce our cost of sales and reduce some structural costs so that at the end, we had a very solid EBITDA of EUR 95.3 million. It looks, it is lower than the first half 2023, but I also want to point out that it is higher than the Q2, second half 2023. Therefore, we really think that we had a good job there on that. What you can see when you look at the reconciliation that's additional to the things I mentioned before, I want to point out two things.
One is that we had a positive effect out of energy prices in Europe and of raw material prices, mainly in Canada, but also in Europe. Some valuation effects that were positively affecting the first half of 2023 have now a negative impact in the reconciliation. When we look at the change of EBITDA by division, you can see that the weak market environment primarily affected the rolling division. So as the metal division was positively affected by lower raw material prices and lower premium, the rolling division, as we already mentioned before, was affected by lower shipment volumes, energy costs, and product mixes.
When we just look at the Q2 of 2024, we see that the difference between these two quarters is smaller than for the total comparison of the half year, which shows what I mentioned before, that our Q2 was quite a good quarter, also compared to our Q1. We can show alone in the Q2 an EBITDA of EUR 53 million. For the net income after taxes, there's nothing particular to mention. So there were no special evaluation effects. The only thing you can see perhaps is that the depreciation arose because of mainly the implementation of the new surface treatment center and some replacement investments in Canada. As every quarter, we also want to show you some of our ESG key figures.
So these are the key figures for our Ranshofen site where we want to show how we do on ESG-related figures that we think are the most important for us or that we measure ourselves on. And just pick out two or three of them so we could increase our scrap utilization rate. Our scrap utilization rate is dependent on our product mix. But even though we are always doing our best, and that's one of our core business things, that we try to use as many scrap as possible. And therefore, we are proud that we could reach that number. Also, we could increase our share of specialties. And our specific energy consumption was also at a very stable number. When you go to slide 25, we can see that we had a further growth in our operating cash flow.
So the operating cash flow is mainly influenced, for sure, by our earnings. And there is a reduction due to the development of the working capital. But nevertheless, we had EUR 75 million operating cash flow, which is higher than last first half. And putting into the account the investing cash flow, we come up with a free cash flow increase of EUR 10 million compared to last half of the year. So we are now at EUR 27 million free cash flow. When we look at our key financials on the balance sheet side, we still show, despite the effects we all mentioned before, a stable position due to net financial debt, equity, cash, and cash equivalents. So when we look at the net financial debt, you can see that compared to year-end, the main influence factor was the dividend we paid out of EUR 53 million last year this year.
Apart from that, there was no significant increase of the net financial debt. Also when we look at the equity, you see that when you take the equity of year-end and compare it with equity to the 3rd of June, you see that it adds up the earnings after taxes and is reduced by the dividend. That is mainly the difference to last year. We are very stable there. We have still, over many years, a stable high equity. And as you also see on that slide, a very comfortable situation on the liquidity side. I now will skip the details on the several divisions. As I mentioned the main points before, I'll now hand over to Helmut for the outlook of 2024.
Yes. Thank you, Claudia.
Based on what we see now, based on forecasts and discussions with our customers, we, honestly speaking, do not expect a significant change in the second half of this year when we talk about the economic environment. So we think that this will remain subdued, as we wrote here on slide number 32. But again, I repeat this, that our wide product range in the rolling division helps us to somehow move the product mix and go to business areas where we can sell and earn also in the second half. We do expect stable production for primary metal in Alouette in Canada. Claudia already mentioned we cannot expect such a strong tailwind from Alouette in the second half because the aluminum price was high in the Q2, but is lower now. And the alumina price is high, and this is not such a positive combination.
The automotive industry remains challenging, and we see uncertainty here. But on the other hand, we can see the ordering behavior in our casting division, which is very strongly linked to the automotive industry, is still good. So we are producing very close to capacity limit, and we foresee that this will remain the same also in the second half of this year. And we expect to participate in a generally positive environment for the aircraft industry. However, as you heard, Airbus reduced the forecast numbers. And so, of course, also AMAG is slightly affected of this new situation. But in general, we expect a strong performance of AMAG also in the second half of the year, which allowed us to increase the lower limit of the bandwidth, as I mentioned before.
I repeat this, that we now expect to come up somewhere in between EUR 160 million and EUR 180 million of EBITDA for the full year. I would like to stop at this point here, and the remaining slides are for additional information. We are now open for questions. Thank you very much for listening.
Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touch-tone phone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Questioners on the phone are requested to use only handsets while asking a question. Anyone who has a question may press star and one at this time.
I have already four analysts who want to ask questions. So I suggest to start with Markus Remis, please.
Sure. The first question is from Markus Remis from RBI. Please go ahead.
Yeah. Hi, good morning, everybody. Two questions related to rolling, please. Firstly, you mentioned that you expect an uptick in the demand from the automotive industry. So I would be curious to hear to which extent that is already substantiated by an improving order intake over the summer month, or if that is more, I would say, indications that you received from the industry. And then secondly, you also referred to an improvement in the industrial applications business, which, yeah, was probably the weakest link for a couple of quarters now. Is that kind of a sustainable and underlying improvement, or is it more of maybe a restocking effect? And maybe you can shed some light also on the regional development here.
Yes. So thank you for these questions. Start with the first one concerning the situation in the automotive industry. All I can say here is that our expectation for the second half is based on direct discussions or already placed orders from our customers to AMAG. So this outlook is, so to say, a very realistic one. And the question concerning the industrial applications, I can say, and we mentioned this in the last presentation that we gave, that there is a difference between the European market and the international markets. Unfortunately, the European market is still weak. And looking at the newspaper today, when there were some articles saying that Germany was basically flat, almost no growth, this is not so good news for the industrial application because in the European area, the German market actually defines the dynamics here.
And so we do not expect, as I said before, in this region here, we do not expect a significant change in the second half. However, we were able to move to other markets and mostly to the American market. And we also think that this will continue in the second half.
Okay. Can you maybe elaborate a bit more on this deeper penetration of the U.S. market? I mean, is that something more of a kind of structural development or, let me say so, an opportunistic move? And is kind of the margin profile the same or comparable to Europe?
Yeah. All I can say here is we are able to deliver the same products that we supply to European customers, also to the American market. And in the American market, there is simply demand.
There is no strategic adjustment or anything, or we do not develop special American products. So actually, the industrial market mostly orders to standards, so Normen in German. So this is not customer-specific development. And therefore, we can shift to the markets and just have to handle the logistics. But we are capable of doing this.
Right. Last question is more of a bookkeeping one on the CapEx side. Is it still the case to expect around depreciation levels of EUR 90 million?
So far, we are working according to plan, and this is correct.
Yep. Okay. Thank you.
Thank you. The next question is from Duarte Murta from Kepler Cheuvreux. Please go ahead.
Good morning, everyone, and thank you for the presentation.
Maybe I can say I have a couple of questions, but all around the metal division, I'm looking at the average aluminum price for the quarter, which was obviously quite high. But looking at Q3 for the start, so for the month of July, the average price is already lower at $2,400. Spot prices are even lower at around $2,200. Alumina prices are now at roughly 21% as a percentage of LME. So my question is, to what extent is this very quick shift included in the guidance? Because I personally would see it as a big headwind for the division. Yeah. And yeah, so where is this giving you confidence to raise the guidance for?
Are we really expecting such a strong improvement in the downstream operation to possibly offset this decline in the metal division, or was this so quick that it's simply not reflected in the current range? Thank you.
We did the first forecast some months ago when we were quite at the beginning of the year; the bandwidth is broader because there are still nine months to go, more or less. There was for sure more uncertainty than now. We do a quite thorough forecast, and it shows that we now expect a higher low level, let's say, put it like that way. To your detailed question, yes, we always take the forecast for the alumina price and the aluminum price.
When we do our forecast, we also put into the account, as you say, the roughly 20%-21% of alumina for the upcoming months with a little bit of delay as we also have inventory and so on. So we put the forecast into account. And as Helmut mentioned before, we do a very realistic forecast, and we are confident with that forecast.
Perfect. Thank you. And maybe just a quick question on shipments again for the metal division. They were surprisingly high, I would say. Is this something we can expect for the year? They have been trending higher over the last few years. Last year, 126 million tons. So should we expect this to be increased again this year?
No, the higher shipping volume you see in the first half of 2024 is due to early shipment. So that will reverse in the second half of 2024. So it was shipped before, let's put it that way, and therefore, it will reverse in the next half of the year. So in total, it will stay stable. So we are more or less at the same level.
Okay. No, perfect. That's it from my side. Thank you, and congratulations on another quarter. Yeah. Have a nice day. Thank you.
Thank you. As a reminder, if you wish to register for a question, please press star and one on your telephone. We'll take our next question from the line of Christian Obst from Baader Bank. Please go ahead.
Yes. Good morning. I have a question concerning packaging. So it's minus 6,000 tons approximately on a year-to-year basis. Can you give us a reason for that, and how should that develop going forward?
Normally, I'm right that this is a lower yielding part of your entire mix. So normally, this should have a positive effect on the margin if you ship less in packaging and a little bit more in aerospace, right? So that's why I wonder that the impact was more on the margin side. Maybe you can give some kind of an explanation for that. And then concerning your shipments to the U.S., do you see any kind of risks of tariffs, or how do you handle that, especially having in mind the upcoming election in the U.S.? Thank you.
Thank you for these questions. The reduction of packaging volume is basically the result of our negotiations with our main customer in this area. This will remain lower than last year.
We had a record shipment of more than 40,000 tons last year, and we will be quite a bit below according to our negotiations. It is, however, still an interesting and a positive business for AMAG, I have to say. Yes, we utilize our capacity that becomes available because of a reduction in this area in the sheet metal production. And it allows us also future and also in the second half of this year growth in the automotive industry. And this is not so much connected to the aircraft industry because the main driver in the aircraft industry is plate. And so open capacity in sheet goes mostly now to the automotive industry where we see the current demand.
Okay. Just some additional question to that. So this was kind of a price margin decision, right?
Yes. This was the result of such a discussion.
Okay. Okay. Thank you. And concerning the U.S. and the tariffs?
Well, let us wait what elections will bring and what the results of this election will bring. At the moment, we think, or yeah, we think that it stays the way it is.
Okay. And maybe a last one is you're talking about the CRU projections concerning demand, especially in Europe. So if there is almost no demand growth until 2028, especially in your important German market, so how do you prepare for that in the end?
I'm not so sure if I completely understood the question because there is not a very good line at the moment. But I understood that you asked for the development in Europe and how we cope with this.
Yeah. Especially for the 2028, no growth until 2028.
Yeah. Yeah. Yeah.
As we said, I mean, first of all, we continue with our strategic positioning, wide product range, wide customer range, and no restriction to areas. So we are globally active. We intend to grow in the American and Asian market. And with these special products, this shall be possible.
Okay. Thank you very much.
But I must say, even I mentioned that we expect to grow in the automotive business. And even the same was true in the aircraft business, actually. Even though the market did not significantly grow, AMAG was able to increase the market share because of our performance. And this is what we build on also for the future.
Okay. Thank you.
Thank you. Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Christoph Gabriel for any closing remarks.
Thank you all very much for having attended our conference call. As usual, you are invited to give me a call in case of any further questions. I wish you a pleasant summer, hopefully with some relaxing days. I'm looking forward to our next call in October. Thank you and goodbye.
Thank you very much. Bye-bye.
Thank you. Goodbye.
Thank you. Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.