Ladies and gentlemen, welcome to the Q3 Results 2024 Presentation Conference Call. I'm Sarjan, the Chorus Call operator. I would like to remind you that all participants will be in listen-only mode and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and one on the telephone. For operator assistance, please press star and zero. 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 October 22, 2024. In the event that the assumptions underlying these forecasts prove to be incorrect, targets be missed, or risk 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 the information included in this presentation. This presentation is also available in German. In cases of doubt, the German language version takes precedence. This presentation does not comprise either recommendation or a solicitation to either purchase or sell the goods 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 three quarters of 2024 of AMAG Austria Metall AG. Today, Helmut Kaufmann, CEO and COO, as well as Claudia Trampitsch, CFO, will present the development and results of the first nine months of this year. After the presentation, you have the opportunity to ask questions during the Q&A session. As usual, the presentation, as well as the press release, have been published this morning on our homepage under Investor Relations. I would now like to hand over to Helmut. Please start your presentation. Thank you.
Good morning, everyone. From my side, I would like to start with slide number three, highlights of the first three quarters of 2024, and I'm glad to say that we had a quite good performance in a challenging environment. And as we explained several times before, the broad positioning of the AMAG Group, connected with the high flexibility in operations, enabled solid revenue and earning figures in a very and still very difficult environment. Revenues remained above EUR 1 billion, with exactly EUR 1,078.7 million compared to EUR 1,142.8 million in the same period last year. EBITDA reached EUR 147.6 million. And as I mentioned, in this difficult environment, we see this as a good performance of the operating divisions. Nevertheless, compared to below the 166 million of last year's result, the earnings after income tax reached EUR 54.3 million compared to EUR 69.7 million in 2023.
Cash flow from operating activities was at EUR 109.3 million compared to EUR 157 million last year. Looking ahead to the end of this year, we can confirm the EBITDA range that we published in the previous call with a range of EUR 160 million to EUR 180 million. But we would like to comment that the upper limit is primarily linked to valuation effects, which can occur or may not occur. The forecast is very difficult in this respect. Let me continue with market and shipments. Slide number five shows the PMI. And as you can see, especially the European market is still rather red. But in the very recent months, also PMI of the United States went below 50, and also the Chinese PMI became now slightly below 50.
So as we said in the headline, we can see little optimism from the general markets globally, actually, but of course, Europe being the most difficult area. Looking at slide number six, which indicates the shipments of this quarter, we were close to 300,000 tons of the product that we ship. Metal Division was, compared to last year, 1,000 tons above. So this means primary metal production in Canada worked very well. Our recycled foundry alloys sold by Casting Division was slightly below last year, especially due to the slight reduction of the European automotive industry and the biggest decline we saw in rolling. But this was a heterogeneous situation compared to last year. While industrial applications, aerospace, and transport products were better than last year, we saw a decline in packaging and in the automotive sector. This is shown in a little bit more detail on slide number seven.
There you can see that we are, compared to last year, 3,000 tons below the result in the automotive industry, summing up to 20% of the overall shipments. Aerospace slightly above, other transportation also above. Also industrial applications, 4,000 tons above, some up to 28%. Heat exchange business slightly below last year. Architecture, sports, and electronics remained the same. But the biggest decline, and this was part of a contract negotiation last year, so not unexpected, was the reduction in packaging, where now it sums up to 15% of the overall shipments. Looking ahead on slide number eight, you can see the order backlog, and this is on a stable level also compared to the previous years, with slightly above 60,000 tons. This is quite okay. We see a rising order intake in aerospace and in the industrial applications in this third quarter.
But still, we have a challenging environment in the automotive industry. As you know, there is this uncertainty about the electric vehicles, but this is, of course, also reflected in the AMAG business. And slowly but surely, we see improvements in the sports segment, which was very positive during COVID, then slightly down and now improved again. Architectural products pretty much remain stretched, but slight improvements we expect for the future. With this general information, I hand over now to Claudia, who will give financial details.
Thank you. Good morning from my side. I want to start with the information on the aluminum price. We saw an increase in the price in quarter-on-quarter comparison by $220 per ton. Also, when we compare the quarters, the three quarters, 2023 and 2024, we saw an increase of $100. Nevertheless, there was a, not displayed here, but there was a decrease in the premiums, mainly the Midwest Premium, where we saw a difference from around $55 per ton in the last three quarters compared to last year. When we move over to raw materials, we saw a significant price increase at the alumina price. When you look at the graph that we provided, you can see that it was quite stable over the last, let's say, one and a half years.
Starting in the middle of, let's say, more or less May 2024, there was a huge increase in the alumina price, and that will significantly affect not only the quarters that just arrived, but also the quarters beyond. The aluminum that we buy now at high prices will affect the P&L in the next months. We had, reflecting what Helmut told before about shipments and the market, solid revenue in these first three quarters of 2024. What we see is that there is a decrease compared to last year, which mainly results in the rolling business. There, I think it's two things we want to point out. One is price and premiums that declined compared to last year. On the other hand, for sure, it's, as we heard before, lower volumes shipped and therefore lower revenues.
When we move on to AMAG Group, it is that for the first three quarters of 2024, we had a decline of around 11% compared to last year, and this is mainly negatively affected by prices and premiums and valuation effects. On the other hand, we saw a positive effect out of raw material and energy, not only in Canada but also in Austria. When we talk about changes in EBITDA per division, at the Metal Division , we saw a very good performance at the smelter, as mentioned before, but an impact on the earnings due to the higher alumina prices. On the Casting Division , there were solid shipments, and the EBITDA was affected by lower price levels, but also higher structural costs that made a negative deviation here.
On the Rolling Division , as mentioned before, we had a decline in sales in packaging, a product mix shift, and valuation effects compared to last year. This sums up to EUR 29 million negative deviation compared to last year. Overall, especially when we just look at the third quarter, which you can find on the next page, we saw we had a very solid result this quarter, also affected by aluminum prices and affected by the volume and the mix compared to last year's third quarter. We saw particular increases in the area of the Metal Division s and the Rolling Division s in this quarter. On the net income after taxes, there is nothing particular to mention, as it's affected by a lower EBITDA and out of net lower income taxes, and that's why we have a decrease there and no specific other inputs.
You now find on this page 17 a summary of all the key figures we mentioned before. And I want to move on to page 18, where we show you, as every quarter, an overview of our ESG key figures. And you see the key figures of 2024 compared to 2023 are stable, are constantly on a high level. And also compared to the first two quarters, we're still on the same good path as we have been there. Perhaps I want to point out our scrap utilization rate, which was at the end of June at 76.9%. You know this is always influenced by our product mix, but nevertheless, it's more or less stable compared to the year before and the quarter now. So we are here on our very good rate to have a high scrap utilization in our products.
When we look at our group cash flow for the first three quarters of 2024, we see a high cash flow from earnings, which has for sure a positive effect and a negative effect out of working capital developments with around minus 23 million EUR. So in total, we ended up at the end of this quarter with an operating cash flow of around 109 million EUR. Adding the investment cash flow, which is below previous year's level, this was budgeted and planned to be below that level. So we end up with a free cash flow for the first three quarters of 40 million EUR compared to last year, 82 million EUR. Now I want to move on to the key figures regarding the balance sheet.
When you have a look at the net financial debt and the EBITDA in millions compared to the net debt, you see that we are on a stable path there as well compared to last quarter or the last year. When we move on to our liquidity and equity, one thing that I want to point out is that we have, you see, it's quite obvious at the cash and cash equivalents, we have a large increase there. This is mainly we did a refinancing of our future debt payments we have to make, mainly in 2025. This sums up was a refinancing of EUR 160 million, which is now reflected in our balance sheet as the cash is on the cash side. You also see the liability on the liability side.
And therefore, the equity ratio went down a little bit despite the equity at the end of this quarter was higher than the end of last quarter. We added in our slides the details per division, but I informed you about all of these details beforehand. So I will skip these slides now for the moment and will hand over to Helmut to give another information about our outlook of 2024.
Yes. I will continue with slide number 26. As already mentioned, the general market condition and the PMI globally are also positive, but it's still different between especially North America and Europe, so GDP growth of about 2.5% is forecasted for the US, while the growth in the Eurozone is below 1%, and stagnation, even recession in Germany and Austria is possible. Fortunately, AMAG's wide product range and diversified markets globally again help us. This is one real important pillar of our strategy, and this has a stabilizing effect headed in the future, and we are convinced that this will help us also now. In the Metal Division , the alumina price, and Claudia mentioned this steep increase in alumina prices over the past couple of months, will have an increasing impact now and even in the next year, 2025, in the beginning.
The changes in the alumina price and valuation effects, which I mentioned at the beginning, may also have a noticeable impact on the further development of our earnings. In the Casting Division , which delivers around 95% of the volume into the automotive industry or automotive tiers, there is a very challenging environment, and therefore price levels are under pressure. The aim is still to match the good level of the previous year. In the Rolling Division , it is a little bit different from last year because of a change in product mix. I mentioned that the non-heat treatable packaging material has to be replaced by heat-treated materials. We are really trying to go towards more specialty products and grow in this area. This will then hopefully help us to cover the pessimistic outlook of the global market.
In general, I repeat myself now that we confirmed the EBITDA range of EUR 160-180 million. And again, with the upper limit possible only with valuation effects, and we will see how this will turn out. There we have no influence. So thank you very much for listening to our presentation, and I think that we are now prepared for questions.
Ladies and gentlemen, 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 telephone. 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. Participants are requested to use only handsets while asking questions. Anyone who has a question may press star and one at this time. And we have the first question coming from the line of Michael Marschall from Erste Group. Please go ahead.
Yes, good morning, everybody. Thanks for taking my question. I have three and would do them one by one. First one on the end market and especially automotive. We are all hearing quite negative news across the sector, especially Germany, and you also said you're seeing that increasingly in your order intake. Could you give us some more color here, what you're seeing currently the last few weeks and what are your expectations for the rest of the quarter?
Well, I mean, first of all, I would like to say that our positioning is generally quite positive because we do not only supply the European or especially the German market or the German OEMs, but we also deliver from Austria globally. This means to the United States customers and also to Asian customers. So this helps us because not all brands are in a difficult situation at the same time generally. We think that we had a quite positive automotive year so far, and this was because of our wide range of different customers. But generally speaking, and this we hear every day now in the news, because of the negative development of the electric vehicles market, of course, also AMAG is somehow influenced because we are delivering to both combustion engine cars as well as to electric vehicle cars.
While the combustion engine sector is still doing quite well, we see a downturn or even a strong downturn and quite some uncertainties also at our customers. So it's difficult for them to forecast what will really happen.
So this means you don't see the order book yet, but you expect it to get a weak end for quarter?
We think that something in this direction will happen maybe in the fourth quarter or at the beginning of next year.
Okay, understood. Secondly, your really strong volume mix in EBITDA effect. I wanted to ask you what you expect now for last quarter. Do you believe that this rebound in industrial applications will continue also going forward?
I'm not exactly sure if I understood correctly, but when you mentioned the industrial sector and the growth in the industrial sector compared to last year, unfortunately, we have to say that especially the negative development in the German market, and I think Austria, Austrian suppliers, or Europe depends on the development of the German market. And there, as we mentioned, we see stagnation, and this is strongly reflected in the industrial applications area Handel, as we call it in German. So there, we, to be honestly speaking, not see a positive development in the upcoming quarter.
Okay. And lastly, on the outlook, after nine months, you have 104 EBITDA and the lower range would imply only 12 million in fourth quarter. This is, I think, a bit unrealistic. What negative impacts would you see there? After your comments, they were quite positive. Of course, you will see some pressure from the alumina side. Is there anything else that you would see? And give us more color on this valuation effect. How big of an impact would you expect here?
First of all, before Claudia will answer in more detail, I have to repeat that when we talk about the alumina price, we need two tons of alumina to produce one ton of aluminum. So a steep increase in alumina price has a double effect, basically, because we need two tons of this for one ton of aluminum. So this increase in alumina price has a significant impact. Claudia, maybe you can.
Yeah. So first of all, you asked about the valuation effects in the last quarter. And I will start with that. Perhaps that will then explain how we see the outlook for the following quarter. So we were impacted this quarter by positive effects out of valuation, which means we have two parts. One is in the Metal Division , where we have valuations out of derivatives, out of hedging, out of inventory valuation, which are all related to not just the development of the aluminum price, but also the value it has on the date, let's say, on the 30th of September. So there we have valuation, which we cannot forecast, but nobody can forecast what will be the exact valuation on the 31st of December.
That is one of the risks we have in our forecast, where we say we had a very strong valuation impact on the third quarter, and this could be reversed in the last quarter. That's very much driven by aluminum price at the 31st of December. The second thing that always influences our valuation effects is mainly in the rolling department, where we have to build reserves when we have negative full cost context. And this is something that happens in the third or in the fourth quarter, and we have to take these reserves, have to build these positions. And this is something that can also affect the fourth quarter again. So therefore, yes, I understand your question when you say we have already 147, and when you divide everything, why should we just do 13 million in three years?
But I think that's the main reason why we want to point it out, that we don't see that it's just going on forward like it was and that you can make a linear calculation to the end of the year because we see a lot of risks into these figures reflected, and this is what we wanted to point out.
Okay, understood. Thank you.
As a reminder, if you wish to register for a question, please press star and one on the telephone. The next question comes from the line of Markus Remis from RBI. Please go ahead.
Yeah, good morning. Congrats to the figures. I would have two questions. Firstly, relating to the upstream business, I mean, when I look at the aluminum price in relation to the alumina price, to me, it seems there is some catch-up potential. How would you interpret the price-cost spread situation at the moment? Do you think that markets are telling us that the supply issues on the alumina side are just temporary and nothing structural? So there's just a temporary margin squeeze. Or is there any other interpretation that you consider as viable? And then secondly, on rolling, I mean, stripping out these risk provisions or provisions for impending losses, whatever it is, then earnings generation was extremely strong. Also, when I look at EBITDA per ton, is that purely the effect of aerospace and industrial applications or anything else?
So I'll start with the alumina price. When we compare, not with last year, but perhaps the development in this year, that it was that, let's say, in April, May this year, there were some disruptions in Australia regarding to gas supply for refineries or pending problems regarding bauxite mining in Australia. But.
Sorry?
Sorry, apologies.
But what's happened now, which led the price skyrocketing in the recent months, is mainly a problem at the bauxite supply. So what we have seen, and that is something quite, so I talked to many players, and it's a quite unusual situation, even when you look historically, that we have disruptions in the bauxite supply, mainly the bauxite going out of China, sorry, of Guinea into the Middle East, are held back at the ports there for various reasons that are not that disclosed, I think. But their interpretation is that they've put some pressure for getting some investment done and so on. So I think what the market sees at the moment is that it's not a structural problem as you see, but I would say it's something that could be solved in the next months.
But when we look at what is the effect on AMAG figures, I must say the high prices now will affect the fourth quarter 2024 and even the first quarter 2025, as we have, let's say, inventory stock of two to three months, some ships on the water. So that will continuously affect our P&L. And I think I forgot the second question.
Second question, I think, was about the influence of the mix on the average EBITDA per ton, if I understood this correctly.
Is it just the industrial rebound, industrial applications rebound?
Yeah. You see that there is an exchange of, let me say, non-heat-treated packaging material versus heat-treated other materials, especially an increase in aerospace and transportation, as a general transportation, not automotive, but also in sports applications and heat-treated architecture, not architecture, industrial applications, and this had a positive effect, and of course, we looked at cost.
Okay. And are margin levels sustainable? I mean, automotive is weakening, which I think is detrimental to the mix. Is it going to, I don't know, come down again in not only for seasonal reasons, but on a line basis?
As you indicated, especially the high-strength materials in the aerospace industry and sports industry, they have an impact. For the future, especially also for 2025, this strongly depends on the ramp-up of the, especially of Airbus. If they continue their ramp-up and aircraft materials are required at a higher volume, then this will be fine. We unfortunately experience that even the aerospace industry now is volatile, not because of their order backlog, but because of their weak supply chain. They keep complaining that they could build more planes if they had all the parts for the planes. Aluminum supply or sheet and plate supply to this industry is not the limiting factor. It depends on some other areas whether they can grow in building aircraft and we can supply more sheet and plate material to them.
Okay, thank you.
Once again, to ask a question, please press star and one on your telephone. There are no more questions at this time. I would now like to turn the conference back over to Christoph Gabriel for any closing remarks.
Thank you very much for joining this call. As always, I'm pleased and happy to answer any further questions, via mail or just give me a call. Thanks again for your participation and have a nice day. Goodbye.
Thank you very much. Bye-bye.
Thank you. Goodbye.
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