Good morning, everyone, and welcome to our investor webcast. My name is Susan Trast, and I'm the head of Group Communications and Marketing. It's my pleasure to be your host today. Today's topic is our full year results 2023 of ANDRITZ Group. The results will be presented by our CEO, Joachim Schönbeck, and CFO, Norbert Nettesheim. In the end or after the presentations, in the end of the webcast, we will have a Q&A session, and we will open the lines for your questions. Before we start, I would like to remind you about our disclaimer. As we will be making forward-looking statements, please refer to the disclaimer. And now I would like to hand over to Joachim, please.
Thank you, Susan, and good morning from my side, everybody. Ladies and gentlemen, thank you very much for spending your time with us. We appreciate your interest in ANDRITZ. Before we start, and we wanted to give you just a very small heads-up. This is regarding the reporting logic. As many of you have been visiting our Capital Markets Day, four weeks ago, we reported on a new reporting structure from business year 2024 onward. But everything we present to you today is in the old figures, in, as you know it, the four business areas as they have been during the business year 2023. That's only for your information, and with the Q1 results of 2024, we will change to the new format, and then you will have all historical figures also translated into the new structure for comparability.
That's just as a heads-up. If we look now to the first quarter... Sorry, for the fourth quarter last year at a glance, it's a, I would say, very satisfactory last quarter, quarter for 2023, with a year-on-year growth in order intake, revenue, and earnings. So order intake was up 12% to EUR 2 billion compared to 2024. The revenue, slight increase by 5% to EUR 2.4 billion. Order backlog at the end of the year almost EUR 10 billion, stable compared with 2022. The EBITDA in the quarter was EUR 233 million at an EBITDA margin of 9.5%. That's exactly on the level we had it in the last quarter in 2022. The net income was almost EUR 160 million at 6.5%, up 13% compared with the last year.
If we have a look to the full year, we can see a satisfactory order intake and a significant growth in revenue and in earnings. Order intake at EUR 6.8 billion, down by 8%. That's mainly driven by a market drop in pulp and paper. All other business areas, as you will later see, have could increase their order intake compared with the previous year. Revenue up in all business areas in total by 15% to EUR 8.7 billion. So you can see book-to-bill almost till one, which is good. Reported EBITDA at 8.6%, EUR 742 million, record high value for ANDRITZ. Same for the net income, was EUR 504 million at 5.8%.
The net liquidity dropped a bit compared to last year, to EUR 913 million, and the dividends per share, we propose to the general assembly to increase them from EUR 2.1 per share to EUR 2.5 per share. That is an up of 19%. On the ESG goals, we are—I would say we are well on track. On environment, we are full on track in reaching our 2025 targets. In water consumption and waste volume, we already overachieved the targets we have set for 2025. The other goals, we are on a good track. On accident frequency rate reduction and share of women workforce, we are lagging behind our targets, while in the yearly fluctuation, we are well on track.
The same is for our governance in the supply chain, as well as no infringements and no profit warnings for the complete year 2023. We continued our acquisition strategy. We concentrated on our major strategic initiatives, acquired Dan-Web Machinery and SciTech Service in Finland to complement our technology breadth —in digitalization, we acquired a service platform for our software platform, sorry, for our digital twins. In the strong service business, we expect from the acquisition of NAF, that's a leading process control brand in the pulp and paper industry, with a 125-year heritage and the corresponding large installed base. And we could acquire Dedert in the USA to further expand our business for dryers and evaporators, with particular focus to the USA.
Looking to the performance in detail, order intake, as I said, a significant drop in order intake for the full year for pulp and paper, down 27%. All other business areas, nicely up. Metals by 6%, hydro by 17%, and separation by 4%. I would say both pulp and paper and hydro is definitely market-driven. Pulp and paper, very, I would say, diminished investment activities. And in hydro, we saw that the market is really picking up, and we expect that for the next years to come, while metals and separation in a rather stable environment. You could see what I also said about the market, the market drop in pulp and paper.
If you look to the split of capital versus service, that the service nicely grew from 36% - 40% in order intake, and that is a clear sign of these large projects impacts. Here you can see —sorry, I was too quick. Here you can see the impact on the, on these very large projects. They represent, in total, basically 10%-15%, or around 15% on top of what we say the service business and the, and the stable mid-sized business. As a good, as a good, rough estimate, you can assume that our base capacity is designed to do the business below the large projects, that we are able to do the projects when they come, but not to depend on them in our structural setup.
Revenue development had a nice growth in all business areas throughout the year and in each quarter. That's a very good sign. Biggest increase in pulp and paper and hydro, the growth was 17% and 16% respectively, but also metals and separation grew on double-digit basis, so we would say very solid and balanced development for the group. The service is continuously rising over, I would say, long term, and if you can see that over the past few years, the growth rate even increased a bit, and it's our target to drive that further. As the business stabilizes, the service stabilizes our business in total. We have the clear target to increase the share of service in each of our business areas.
You can see separation very nicely developed, increased their service share in the previous year from 47% - 50%. That's where we are targeting to. The largest gap we still have in metals, where it's still only 25%, but we have plans underway to increase that. The order backlog has on a year-to-year basis remains on the same level. It's about—it's almost EUR 10 billion, so we have a good backlog looking forward to maybe a bit uncertain and challenging times.
You can see 80%, eighty percent of the backlog can be attributed to the capital business, and almost 70% of our total backlog comes from pulp and paper and hydro, where we have the largest projects with the longest delivery times. We have record earnings on a basically stable profitability. Reported EBITDA increased from EUR 649 million to EUR 742 million. If you, if you look to the comparable EBITDA, if we take one-offs out, like sale of property and extraordinary other items, we could increase the operative EBITDA margin from 8.5% - 8.7%.
So that is a good development, and in total, the comparable EBITDA increased by 17.5% compared to the previous year, to EUR 757 million. We have an increase in EBITDA in all four business areas, which is very important. The growth is a bit different, but you can see we have a stable increase in all areas. While the profitability is a bit mixed, we have a very nice increase in Metals from 3.8%-4.9%. So we would say we are on the right track to bring Metals to the EBITDA margins that we intend. We have also a good increase in Hydro from 5.5%-5.8%.
In Pulp and Paper, it's a small drop that's basically based on the product mix between capital and service, and I would say basically it's a we can report a stable profitability there. And it's it's only a —the same applies for Separation, with 11.9% EBITDA on a very, very good level. I pass, I pass on to Norbert, who will explain you the details of our financial results.
Yeah. Good morning, ladies and gentlemen. Also from my side, as always, it's my task now to dig a little bit more into detail in the group P&L into cash flow and liquidity. As you see already on the screen, starting with EUR 742, which Joachim explained in detail, we come to a net income of EUR 504, which is for the group a record high, as well as in absolute terms as always, as also in relative terms. The bridge between EBITA and net income is similar to what we have presented in the former quarters. We are, let's say, now at a little bit reduced level of IFRS 3 amortizations. Had the chance now to do also a little bit of housekeeping activities there.
EUR 7 million is included for some write-offs of old brands. Gives us a EUR 557 million amortization. A little bit better than last year. Impairments of goodwill, we didn't have this year, fortunately, due to the good development of all the acquisitions we made in the past. Gives an EBIT of 7.9%, which is 0.3 percentage points better than last year, where we had a 7.6%. Financial result looks very nice. First time now positive with EUR 3 million, certainly driven by the or mostly driven by the change in the interest environment. We were able to generate EUR 20 million positive interest income this year by reasonably and carefully investing our gross debt in good financial investments.
So this led in total to the EUR 3 million positive financial results. Then we have the taxes, this year, also a little bit higher than in the last year, driven by some extraordinary tax effects from cash repatriation, China to Europe, and also some accruals for tax audits which might come in the future. The 504 leads to a earning per share of EUR 5.15, which is also a record high in ANDRITZ history. Quickly, verbally, the bridge to the equity OCI is not very spectacular. EUR 9.3 million gives a EUR 513 million total result.
Adding that to the equity we started with at the beginning of the period, and taking off the dividends which we paid and some minor items, leads to an equity of EUR 2.17 billion, which gives an equity portion of 25.4%, which, for a company like ours, is a very satisfying and a very good equity ratio, which gives us room for a lot of things which we can do then in the future. So far on the P&L, the cash flow is a little bit of water into the wine. As you see, starting with the EUR 504 million net income, we made only EUR 375 million operating cash flow.
The explanation has been given by me several times in several quarterly presentations and also in the CMD. ANDRITZ is a big projects company with huge fluctuations in operating working capital. After, let's say, positive effects we had in the last year, where we decreased the working capital by EUR 150 million, we have this year increased working capital, and this is mostly driven by the big payments, down payments, progress payments in the big projects business, where we had last year a year which more new orders, which more prepayments in the early phase of the projects.
Now we are in the middle of the execution of the large projects, which means cash consumption, in the course of the project execution, and this then led to a increase in working capital of EUR 337 million, which at the end then was the main driver why the cash conversion in 2023 is significantly below one. But, as I also have told you already several times, it would be reasonable and good to look at this at a three-year average view. And, at the left side of this graph, you see the three-years rolling average of EBITA.
At the right side, you see the three-year rolling average of operating cash flow, and you see here that the numbers are much closer together, and that we are able to transfer most of our profits then also into the treasury and to the cash flow. So that's about the cash flow logic, and the cash flow of the current year and the consumption of cash by increase of working capital led in 2023 to a slight decrease of net liquidity. So we reduced from EUR 983 in the last year to EUR 918, but this decrease is, let's say, not very exciting. It's as I would say, absolutely normal, that after this number of years with increasing net liquidity, we also can have a year with a slight decrease.
When you look to the gross liquidity, this is reduced more significantly, but this is mostly driven by the payback of a larger loan. So we paid EUR 165 million back in the current year, which makes our balance sheet also a little bit more efficient, carrying not too much debt, which we currently don't use for operational measures. Just on the, as mentioned here, January liquidity was already back way over the EUR 1 billion. So in January, we were able to harvest more than or to collect more than EUR 200 million cash by payments from our customers. So we start with a very good basis into the year.
There we have a net liquidity of EUR 1.1 billion, which, as we always said, gives us a lot of room for acquisitions and for whatever comes to digest then. All right, that's about the liquidity. Same story as so far. The last slide or the —no, not the last, but the last message in detail here, you have the dividend slide. Joachim mentioned already EUR 2.5 we will propose to the general shareholder assembly in March to pay out. Maintains our average payout ratio above 50%, and is a clear sign that we want to continue our strategy to pay constantly and to pay constantly growing dividends. So that's it on the individual numbers. You have here the overview slide.
Don't wanna go through all the numbers. That's a good fourth quarter in order intake. Again, at EUR 2 billion is something you should, let's say, recognize in the quarterly numbers. And when you look to the full year numbers, it's record sales, record profits, everything you have significantly double-digit increases. The only negative thing, if you wanna look and wanna search for something, then it's the cash flow, but I'm sure that we have now changed the trend. The fourth quarter was already the second quarter with, let's say, a positive development in that area. So I'm very confident that we will also this now bring back to the level we saw in former times. So that's it from my side. Thank you for listening, and I pass back to Joachim.
Now, thank you very much. So let's make a quick review on our last roadmap. For 2021 - 2023, we can happily report that we achieved all of our targets we have set. On business volume, we are not only well above EUR 7 billion, we are well above EUR 8 billion in order intake and in revenue. EBITDA margin with 8.6%, definitely at a solid 8%. Net income definitely above 5% with 5.8%, and we made, in these three years, we made 11 acquisitions for further growth, for new technologies, and for more service business. The ESG targets, as I reported, are well on track, so we can report that we have mission accomplished.
If we spend few minutes on the update on the business areas, we can see in Pulp & Paper, we had a market-driven drop in order intake, quite significant by EUR 1 billion. Backlog also dropped because we were able to execute the huge order backlog that we have, which is a good achievement considering the challenges we have in the supply chain, in the logistics, and in the environment we are facing. The EBITDA is at 10.3%. It's a slight drop on the reported EBITDA margin, but that is basically driven by the business split between capital and service.
You can, you can see that capital increased by 3% touch points, while service dropped by that respectively. We also increased in the emerging markets to 56% of the revenues, and that is driven by the large power projects we are executing in Asia and in South America. In the middle of last year, we started up the largest pulp mill in the in the world, the largest single-line pulp with 2.3 million tons capacity for UPM in Uruguay. It was almost perfect startup by the middle of the year, reaching to target capacity on a very, on a very fast pace. Just another proof that we can deliver on these large projects in a really, in a really good manner.
Looking to Metals, I would say the key message for sure is that, I would say the restructuring is done, and we look forward to a much more positive, business and more healthy margins. So we could drive the EBITDA margin up to, from 3.8% - 4.9%, which is the right direction, and, we are confident that we can grow and increase from there. We have the order intake on a record high for company history, that includes also very new —a lot of new technologies.
The first green hydrogen plant that we are designing and building for Salzgitter Steel in Germany, helping them on their way towards green steel, but also several orders for innovative technologies for e-mobility battery plants, for all solid-state batteries, as well as for lithium ion batteries. Hydro, we see a strong increase in order intake and in revenue that is clearly market-driven. And with the good market position we have, we can take our good share. What really is remarkable last year that not only the project activities, but also order intake for us increased a lot for pump storage.
And we see that now in many, many customers see the necessity of these pump storage capacities, as they are needed to work on the fluctuations we have in the power generation coming from wind parks and from solar parks. So that is a trend, and we are quite confident that the good market trend in hydro will continue. And that will also help us to slightly —not slightly, to continuously and slowly increase the profitability in that business. That takes a bit longer, as the project lead times are much longer than in other business areas, which takes then also some years for us to work out the old backlog.
On the Separation, we are very happy that the very positive business development continued. We have a stable development. We have a good development in service, and then the revenue from year to year is significantly up. We are now at 11.9, almost 12% EBITDA, very stable compared to the previous year. And some of you might look back to the many years of discussions we had where a Separation was struggling. I think we can happily see that a restructuring was successful, and we are confident to keep the business on that track looking forward. Coming to the outlooks, to repeat the group targets, the roadmap for the next years, which we presented in the Capital Markets Day.
We wanna grow the revenues above the EUR 10 billion, wanna increase the EBITDA margin above the 9% and the net income above 6%. M&A strategy should focus on service and digitalization, and we want to overachieve our ESG targets. That's in a nutshell, and we will work hard for that. The near-term market outlook, we would say in general, we see satisfactory market activities. We see good markets for hydro in general and other green products, and in North America. The economic and geopolitical challenges are closely monitored, and you could see from the last years that, if we say closely monitoring, we mean closely monitoring, that we are, I would say, in a good position to cope with the unforeseeable to come.
Financial guidance for this year, we expect a slight increase in revenue and earnings. That was it from our side. Thank you very much, and we are now ready for questions, if there are any.
Yeah. Thank you, Joachim and Norbert, for your insights and, and remarks. I said, the line is open. Please follow the instructions you can see on the screen, and most importantly, remember then to press hashtag five to ask your questions. We are ready now to take your questions —we have the first question coming, and that is one from, Sven Weier. Please, Sven.
We cannot hear anything.
Yeah. Please press hashtag five to ask your question, Sven.
Hello?
Yes, very good. Now we can hear you.
Good morning. Thanks for taking the questions. The first one is with regard, maybe just following, Dr. Schönbeck, up on the latest comment you made on the guidance. I was just wondering, when you say you expect a slight increase in revenue and earnings, on the earnings side, does that also apply to the adjusted EBITDA? And, how should we think about margins? Should we think, stable margins or —yeah, that's the first one. Thank you.
Yeah, you should, it's what your guidance is on reported figures. And, I mean, we have a—if we look back now to 2023, we have a book-to-bill of about 1. We have a good backlog of EUR 10 billion, so we could see a slight increase, and I would say stable margins.
Understood. And then maybe just to follow up on the metals and pulp and paper order intake situation. I was just wondering how you see the pulp and paper pipeline from here. Do you think that in the coming quarters, the order intake is going to remain at this level and only improve later this year? And the same for metals. We saw some softness compared against the previous quarter. Do you think that's just lumpiness, or is that also maybe on a more cautious approach by the auto clients? Thank you.
If we start from the back, I would say in the metals, there is definitely a cautiousness in investment, and that is for automotive industry as well as for the steel industry. On the other side, we see investment necessities, but I would say the global uncertainties and also political uncertainties in many areas of the world, I would say, hold back the investments a bit. So therefore, we saw a slowdown in the last two quarters, and we see this, I would say, this tendency to continue. There is a better look for the second half of the year.
If we look to, if we look to pulp and paper, we could see that the market situation for our customers improved on a general level, and that accounts for for pulp as well as for many paper grades. So utilization rates in paper mills increased a bit to the beginning of the year, so we can see, we would see a slightly positive development there. If we look for the major capacity expansions in pulp, we do not see major projects in this year.
I mean, this kind of pipeline, I guess, also means that, because I think, lastly, you spoke about the load in the pulp business, it gets a bit more critical in the second half of this year if you don't see an improvement in order intake. I would assume that this is then also reflected in the guidance, because I guess when you—if you were seeing a more positive order outlook for pulp, you would probably even have a higher guidance than this. Is that fair to assume, that the guidance bakes somewhat lower loading in pulp in?
Yeah, that's a fair statement, but even if we would have major pulp investments this year, that would not add significant to the revenue. Yeah. So but it's a, that's for sure a fair statement. On, let's say, on our operational side, we are prepared for that, so we are not caught by surprise, and we are adjusting our capacities accordingly because that is, I would say, quite a natural rhythm for us, that we have a good adaptability to the changes on in these markets.
Okay, understood. Thank you, Dr. Schönbeck.
Thank you.
Thank you, Sven. Then we have questions from Akash Gupta from J.P. Morgan. Please, Akash.
Yes. Hi, good morning. It's Akash from JP Morgan, and I have a few quick questions as well. The first one is on pulp and paper as well. I mean, as we have seen a correlation between share price and pulp prices, and quite some time we basically debate whether that is right or that is not right. I mean, the question I have is that, can you help us understand a bit, has there been any financial impact in 2023 financials from the pulp prices decline that we saw in the first half of the year? And then maybe if you can also give us some figure that when we look at 2023's revenues, roughly how much of revenues are coming from large pulp projects in financial year 2023. That's the first one to start with.
So on the, I would say in our financials, there is no impact on the pulp price. I would say we can fully exclude that because that is not on our balance sheet, and the amount of pulp that we are purchasing is so small, only for our test facilities, that it has no impact. On the one slide, we are showing you the large projects, the relevance of the large projects on the order intake in hundreds. And you could see that roughly on a yearly average, we have about EUR 1.2 billion order intake over the last five years on large projects.
So that represents a revenue share of around 15%, and that's basically what we can say there. So 15%, I would say, goes to large projects. Yeah. I cannot distinguish now between the pulp, paper, and the rest.
Thank you. And the second one is on also pulp and paper. I mean, we have this deadline in the EU for textile recycling. Can you talk about how are you seeing the business activity for recycling of textile? And could that basically help offset some of the weaknesses in large pulp order awards, so to speak?
So on textile recycling, I would say technically we are quite bullish. It's an exciting new market. I think we have a strong position there. You know, there is about 12 million tons of textile waste every year in the EU. We have inaugurated in November last year an automated textile sorting plant. That's the first of its kind, where you put garment and other textiles in, and they sort to a high degree, above 85% cleanliness on color and on material. I think that is a huge step.
It draws a lot of interest in that industry, and we believe we are in the beginning of a development where textile recycling supply chain is going to be developed and quite the same, what we have seen in the seventies developing around paper. So, we see a strong parallel there, and we are prepared for that. How much it can replace pulp markets, I cannot say, and I also would not say that that is needed because we see on the midterm there is a strong demand, and there will be a strong growth in pulp demand worldwide, as we still see that pulp is one of the major building blocks to replace plastics in many applications, like packaging, and in other ways.
So we see it as an additional business, but the volumes, it's growing, and it's slowly growing because it has a lot of regulations to be looked for.
Thank you. And my final one is for Mr. Nettesheim, which is on balance sheet efficiency. I see you repaid EUR 165 million of gross debt in 2023, and you have reduced your long-term debt, but your short-term debt has gone up versus last year. So do you have any further plans to reduce gross debt in 2024? And if yes, then what could be the approximate amount? Thank you.
Yeah, it's a clear plan that we reduce further. We will repay EUR 300 million Schuldschein loan in 2024, and we are currently not having the plan to refinancing it with effect on the balance sheet. Maybe we do something in the lines, but on the balance sheet, we will not take further debt from external financing sources.
Thank you.
Okay, then we have our next caller from Austria. But unfortunately, we don't know the name of the caller, so, you who recognizes yourself from this description, so please, the line is yours.
Hi, good morning. This is Daniel Lion from Erste Group. I would also like to follow up somehow on the trends, just to get it right. When moving towards the end of 2024 and into 2025, how would you see the business somehow evolving, given the current weakness in pulp and paper? Would you expect, when going into 2025, that we will have some order intake that will support the business, overall business in 2025, or would you rather expect that the strong Hydro and other business parts would compensate to some extent for some time in 2025, in order to keep up the current business volume and moving towards the 2026 guidance?
Yeah, as I said, we expect the pulp market to grow midterm and to grow steadily. As the large pulp projects, they add spot on capacity of above 2 billion per new plant. They come at a spot, so there is no continuous movement. Our expectation is that looking to the project pipeline, we rather expect expansion decisions made in 2025 than in 2024. So from that point of view, we are prepared, and we are working on that already. Yeah.
No, I understand. Of course, this, the market will recover at some point, but of course, given, given the lead times you have, of course, with the large scale projects, is there —do you see any risks to have then some kind of a dip of the business in early 2025 before it starts to increase again? Or do you think this will flatten out given the demand trends in the other business areas?
Oh, there is for sure this period of lower activity. And as I said, adapting our organization to these trends and changes is basically one of the key feature of our business model, and we are not afraid of taking that. And I mean, you know, on the, if we're moving to renewable and sustainable resources, investment in pulp requires supply of natural fibers. They have to grow. So we are in a cycle that is given, and this is why we can see there will be investments to be decided in 2025.
Yeah. Okay, got it. Do you have any updates for us regarding your hydrogen contract? That's supposed to be fully signed during the first quarter this year. How is this evolving?
Yeah, as we reported last year, we have received the FEED contract, front-end engineering and design, for this Kuopio Energia project in Finland. So that is evolving quite well. Engineering is on track. Financing has worked on in the background. We still expect supply decision by second half of this year, so that would be something very tangible, and we believe we have a good, it's a good opportunity for us. There are other projects in the market which are currently under negotiation. So I would say we have definitely a very good market activity. Yes.
Mm-hmm. Okay. And last one, regarding the positive trends we are seeing now in Hydro as backlog is building up, we are now strongly about EUR 3 billion again. By when would you expect this to translate into revenues and also profitability? Is this already expected maybe in the second half of this year, or will this take longer?
It slowly, it will slowly move into, into this year, into, into revenue, but the, the lead time in the, in the hydro projects are, typically longer. So we are more talking about, 2 years-4 years than 1 year-2 years. And the, and the backlog, the significant backlog we still have from, so-called, older orders also need to be worked out. Therefore, the recovery on the financial side, will, will take some time, but, we are confident to steadily grow it in that direction.
Okay, perfect. Thank you very much.
We would still have some time for questions, so if there's anything you would like to ask Joachim and Norbert, so please use this opportunity. Please remember to press hashtag five to enter your questions. Yes, please, Akash, you would like to continue with additional questions, please.
Hello, can you hear me?
We can hear you.
Yes. So I have a follow-up question on the earlier remarks during the presentation made by Dr. Schönbeck, when you, when you said that the decline in backlog in pulp and paper is not a bad news, given the pressure on the supply, supply chain. Maybe if you can elaborate on where do we stand on the supply chain in the, in the pulp and paper side, and where- what are the areas where you still need to see some improvement or the situation is still, somewhat tight, which is why you think that the decline in backlog may not be a bad news for ANDRITZ? Thank you.
Well, the decline in backlog we see as a good news because it showed that our organization was able to deliver the large projects on time. And that's what our customers expect. That's what we are being contracted for. So but giving the uncertainties, I would say, the increase in material prices, the struggles on the supply chain, shipping rates, Houthi attacks on the sea with all these disturbances, that is what made us quite proud, what the organization and the project teams achieved, yeah. That we still could deliver all projects on time that was the background of my comment.
I think, sorry, I misunderstood that one. And then my final one is on book-to-bill expectations for 2024. I mean, you have not commented directly, but you have given a lot of indirect comments and by segment. So if we add everything together, do you think we could see a stable, 1x book-to-bill for 2024?
Yeah, that could be a fair statement.
Thank you.
The next question comes from Christoph Dolleschal, from HSBC.
Yeah, good morning. Thanks for taking the questions. As usual, the pulp and paper questions keep on coming, so I am going to add to that. You said the business may see a bit of a dip in 2024. I said may, we don't know. But what measures would you have available to top up your capacities if that was needed? So that's the first one. The second is, I read that Paracel had just started planting trees, so the project is still on, and it's currently assumed to come online in 2026-2027. Would you agree to that?
Yeah, I'm not the right person to ask on the coming into force of Paracel. I think you're, you know as much... You probably know more than me, because it's basically in the hands of the bank. Our contracts are signed. We are ready to start. What we are waiting for is the financing, so I cannot, I cannot, I can really not speculate on that. But the owners, the owners probably know more. We are ready, we are preparing, and what we know is that the owners are preparing the site, and they are continue to plant trees to supply the pulp mill.
Then, on the capacity adjustments, we, as I said, we consider ourselves quite experienced in adapting our capacities according to the project needs, as we know that these projects are fluctuating and unfortunately increasing globalization made all the cycles the same. So everybody wants a new mill at the same time and does not want to have a mill at the same time. So cycles are more steep. We can handle that, and we do not see significant or reportable financial impact on the balance sheet of ANDRITZ.
Okay. So, so but when we talk about adjusting capacities, what, what does that mean? Does that mean reducing part-time workers? Or, or, like, what, what are the measures that one can take there in, in a high-fixed-cost business?
You can take part-time. We have extended workbenches for engineering work that are cut off. We have temporary workers that can be easily cut off. We have growth areas like the green hydrogen, like battery, where we can move engineers and project managers back and forth. So same applies for hydro. So these are all the measures, and we are quite confident that we can take these measures.
Okay, thanks so much.
Welcome.
The next question comes from Peter Rothenaicher from Baader Bank AG.
Yes, good morning, gentlemen. One question on metals here. You mentioned a more challenging environment. Do you see this lasting somewhat longer, and might this have then some impact on pricing for the projects? And do you see here the risk perhaps of underutilization, let's say, in 2025 or so?
Now, if the market is slow, there is a risk of underutilization, and then I would refer to what I just told on the capacity adjustment in pulp and paper, so we are running the same procedures in all business areas, and we also exchange between the business areas to the extent possible and necessary. And for sure, we have to be cautious and careful looking forward because we are depending on the investments of our customers. And you can read the papers that in the automotive industry that the challenges for our customers are multiple.
The forecasting on how much e-mobility will be in this year and next year, how much internal combustion, yeah? How is the distribution between Asia, Europe, North America? These are uncertainties. They come down to us, and I think we are in a close dialogue with the customers to cope with that.
But, you feel comfortable that you will not see such a pricing situation as in the past, as we have seen that many projects were not making profits? How is your policy there?
No, we are. As I said, our clear target is to improve the profitability of the metals area. And there are many ways to do that, and one way definitely is not to entertain ourselves in non-profitable projects.
Then more on the financial side, Mr. Nettesheim, you mentioned that you're still planning to pay back gross debt. What would be a fair assumption for possible financial results in 2024?
Yeah. I can only tell you what you can read in the newspapers. We will expect a slight decrease in interest rates, which will also then have a very, very small effect on our interest income. The financial investments volume will go a little bit down by paying it back, so I would not add a too steep increase in it into these numbers if I were on your side.
Okay. Thank you very much.
The next question goes to Lars Cleff from Deutsche Bank.
Thank you very much. Good morning. Thanks for taking my questions. Two quick ones, if I may. I mean, we already spoke about the volatility of, of order intake when it comes to the large orders. Based on what you know and what you see for 2024 already, is it fair to assume that the order intake service as well as the order intake for, for smaller projects should at least be stable year-on-year, if not slightly rising?
I mean, you know that we do not make forward-looking statements on order intake. Therefore, it's, I would not like to comment on that.
Well, it's always worth trying. And then the Paracel, it sounds that you are in close contact, yeah, that you explicitly know what's going on. Do you have a binding letter of understanding with Paracel, or is there a risk that all of a sudden a competitor appears on the scene that then gets the order?
So there is always a risk that a competitor appears, and they appear on a daily basis. You can be sure about that. It's like in your business, but we have a signed contract, and so that's a binding agreement with a clear termination period, expiration period. It already passed two of these expiring dates, and we found good terms with the customer to extend that. And that is needed if you want to go into a project financing because the financing side of the banks, they need a strong commitment from a contractor to make the project happen. So that's the status. Yeah, and we are in continuous and good communication with the customer.
Excellent. Many thanks.
So it looks like that the time is up, and it's time to say, thank you for joining us today. Enjoy the rest of your day, and we look forward to meeting you again on April 25 when we have our Quarter One result release. Bye for now from Vienna.