Thanks a lot, operator. Also from my side, a very warm welcome to this investor presentation. With me today are Nico Reiner, our CFO, and Christian Skilich, our CPO/CTO. Let's start with an overview of the key developments and strategic highlights of the first quarter, 2023. We see first signs of recovery in the textile fiber market, and we see a solid business development in nonwoven, as well as good demand on the pulp side. We also see a positive development on the raw material and energy front. Our global cost reaction program, with an annualized impact of more than EUR 70 million, is well on track. I'm happy and proud to announce that we started the production of TENCEL Modal fibers in our production site in China.
On the energy side, we just announced the acquisition of a biomass plant for the energy supply of our Lyocell specialty production site in Heiligenkreuz, Austria, in order to speed up the energy transition as well as securing further saving potential. As you could read recently, Robert van de Kerkhof decided not to further extend his contract. Robert had excellently fulfilled his role as a chief commercial officer since 2014, and contributed significantly to the successful development of the Lenzing Group. I and my board colleagues would like to thank him for his dedicated and trustful cooperation and wish him all the best for his future path. I have essentially taken over the commercial agenda in the fiber division, and Robert will continue to drive the sustainability area, including the CO2 roadmap as a chief sustainability officer until end of 2023.
The managing board of Lenzing Group will thus be reduced from four to three members as of January 1st, 2024. Let's move to the key financials. On the revenue side, we saw a first recovery in volume in line with market environment, while prices remained under pressure. There was a positive impact of cost decreases and valuation accruals were benefiting EBITDA. Revenue slightly increased from EUR 623 in the first quarter 2023, versus EUR 615 in the pre-crisis Q1 2022. EBITDA reached EUR 30 million versus EUR 88 in the Q1 2022, the net result after minorities and hybrid bonds was negative at EUR 8, minus EUR 80 million, versus EUR 23 million positive in Q1 2022. Our liquidity cushion remains stable at EUR 640 million.
Looking at our guidance, we can confirm that assuming a continued market recovery in the current financial year, the Lenzing Group expects the EBITDA in 2023 to be in the range of EUR 320 million-EUR 400 million. Let's start with an update on our new Lyocell plant in Thailand and our new DWP mill in Brazil. As you know, both plants were commissioned successfully in the last year. The 100 KT plant in Thailand will help us to serve the growing demand for the sustainably produced Lyocell fibers. In this case, even carbon neutral Lyocell fibers. The 500 KT single line DWP plant in Brazil is expected to help us in three aspects, security of supply, as well as cost advantage and incremental revenue through external sales. As you know, both sites are fully invested and they are now up and running.
We are very happy with the progress and are further increasing production output. The quality of both plants are already on very high level. Both new plants are well on track to contribute positively to the 2023 results. Another positive news. Let's move to China. I'm excited to announce that we completed the conversion of a production line from generic viscose to TENCEL branded Modal fibers for textile successfully at the end of March 2023. We can now offer our Chinese customer the long time expected locally produced TENCEL fibers for the first time. We continue to expect attractive structural growth in demand for modal fibers and are now in the position to meet this demand much faster than in the past.
The nameplate capacity for the line is 35,000 tons per year, and this is in addition to the existing modal capacities in our production site here in the Lenzing. With this conversion, the fiber portfolio out of the Chinese production site now solely consists of eco-friendly specialty fibers under the brand TENCEL, VEOCEL, and LENZING ECOVERO. We celebrated the launch of this new production line together with 200 customers in China. With that, I will hand over to Christian to give us the first update on the energy side.
Thank you, Stephan. Good morning, good afternoon from my side as well. As you know, our Lyocell production site in Heiligenkreuz suffered most from the increases of energy costs due to its exposure to gas, mainly Russian gas. In order to significantly decrease our dependency on fossil energy, we acquired right now a biomass plant for the energy supply of the Heiligenkreuz production site. About 50% of the gas currently used is planned to be replaced by renewable energy. The backward integration into energy is planned to lead to cost savings, for instance, from less use of gas and electricity and CO2 certificates. The use of renewable energy will improve our sustainability footprint and strengthen our eco-responsible specialty fiber portfolio. The closing of the transaction is expected to take place in the current quarter.
Let's look now at some of the key developments in the markets for energy and chemicals. On the cost side for Lenzing, both energy and chemicals came down in Q1 2023. The prices remain highly elevated, especially in Europe, for natural gas, where prices remain more than five-fold compared to the pre-pandemic level. Our energy hedging strategy is in place now, and the majority of energy costs for 2023 is locked in now. On the chemical side, as you know, caustic soda is a key input for the viscose process. Prices in Europe have decreased for the first time since the beginning of 2021, but are still more than triple the pre-pandemic level, while Asia and the U.S. are suffering much less.
Those are developments of market prices and do not fully reflect the impact for Lenzing as we are sourcing at better conditions in Europe and we partially source from Asia if the price delta is beneficial and benefit thereby from our storage facility in Italy. I hand over now back to you, Stephan, for the development on the demand side.
Thanks a lot, Christian. We plotted here, the textile industry sentiment graph, right? Everything above the black line means good, everything below the black line means poor. As you can see, the assessment of the current business situation in the textile industry, which is in dark green, reached a new low in March. However, the ITMF regularly asks players in the global textile industry also about their expectation for the textile industry sentiment in the coming six months. In the second half of 2022, this forward-looking sentiment was poor, as you can see in the graph. Whilst current trading is still weak in many textile areas, the outlook has changed to the positive since January and further increased in March, when six-month expectation in the textile industry were now in line again with the January 2022 sentiment.
Some of the possible reasons for the expected improvements are, for instance, the improved energy situation as well as the growth impulse from the China reopening and the early results in China. Staying with China, we are looking also, and you know that was a very important driver for the results in 2022 on the inventory side. Let us now look at the latest development in viscose, in particular, the operating rate and the inventory. As you can see, the operating rate developed very positively in the second half of this quarter after Chinese New Year. We are now above the critical 75% mark. Inventories, as said before, were a big part of our problem in 2022. They are still elevated higher versus the long-term average in some Western markets like U.S.
In China, the viscose chain inventories are all trending downwards, and the VSF inventory is already below the five-year average, therefore, also the higher operating rate. In a nutshell, we see stronger demand. However, prices remain low compared to the incost, input cost. With that, I hand over now to Nico to take us through the financials.
Thank you, Stephan, and a warm welcome from me as well. Let's start with revenues. They increased to EUR 623 million versus EUR 615 million in Q1 2022. This development was mainly driven by a significant increase in the share of DWP revenues. For now, textile fiber prices remain under pressure. We expect prices to improve in the course of the rest of 2023 in line with a further market recovery. Fixed costs remain stable and are expected to benefit from ongoing cost improvement measures going forward. EBITDA reached EUR 30 million compared to EUR 88 million in the pre-crisis Q1 2022. Looking at EBIT, it reached minus EUR 41 million, depreciation and amortization being at EUR 71 million. For group net profit after minorities and hybrid bonds, we reported a net loss of EUR 80 million attributable to Lenzing shareholders in Q1 2023.
Financial results was at minus EUR 33 million. Income taxes were positive at EUR 9 million. Looking now at cash flows. Free cash flow was at minus EUR 132 million. In the free cash flow, we can see first positive impact from our CapEx reduction due to completion of our two projects in Thailand and Brazil in 2022. Going forward in 2023, we will not have such significant projects and are therefore confident that CapEx levels are under further normalization, and investments will mostly include the upgrades at existing sites, such as in China or Indonesia, as well as maintenance CapEx for sure.
Trade working capital increase in Q1 2023 was mostly driven by an increase in receivables, reflecting the positive development on the demand side, partly offset by an inventory reduction of roughly 10 percentage points by the Q4 2022, caused by a reduction in volume. Due to ongoing working capital improvement measures, we are confident in our ability to further optimize our working capital, which will benefit our free cash flows going forward. On the next slide, we show historically net financial debt quarterly evolution. Reported net financial debt increased slightly to approximately EUR 2 billion from EUR 1.9 billion quarter on quarter, whereas economic net financial debt as of Q1 2023 increased to approximately EUR 1.5 billion from EUR 1.4 billion in Q4 2022. Drawing attention to the balance sheet metrics on the right-hand side of the slide.
They evidently reflect the impact of overall weaker full-year 2022. We remain in a stable position at Q1 2023, with approximately EUR 640 million of liquidity cushion available, as well as a substantial adjusted equity position. We continue focusing on implementing measures to protect liquidity and improve cash flow generation, are also working on optimizing Lenzing's capital structure for the long term, with the aim of being well-positioned to execute our future growth strategy. Let me hand back now to Stephan.
Thank you, Niko. Let's talk about the various measures we have taken and we continue to take. Overall, we are well on track, both on the cost-saving measures as well as on the liquidity measures. When we look in detail, the reorganization and cost reduction program initiated in 2022 with an annualized and reoccurring impact of more than EUR 70 million is on track, with the impact targeted to be growing throughout the year, month by month. With regards to the working capital, improvement measures are on track as well, and inventory levels have been reduced in quarter one, in particular in fibers. Looking at CapEx, as Niko stated, in 2023, we will focus our CapEx mainly on maintenance as well as on the carryovers of the two upgrade and conversion projects in the sites in China and in Indonesia.
The reduction of CapEx is well underway with the CapEx in Q1 2023, down by about 50% compared to Q4 2022. On the risk management side, as Christian mentioned, we have put our energy hedging strategy in place and the majority of the energy costs for 2023 in Europe and in the U.S. is already locked in. We are convinced that our proactiveness and swiftness in identifying and addressing the opportunities we have in savings and liquidity measures help us to be in a very good position for the rebound of the business. Let's come to the outlook. 2022 was an unprecedented year that we don't foresee being repeated anytime soon. In our presentation, which you may have listened, for the full-year results, we called the second half of 2022 the perfect storm. Costs in chemicals and energy were at unprecedented levels.
Demand for fibers in the textile industry did decline deeply, which led to a decline of fiber sales and sales prices for Lenzing. Free cash flow were significantly affected by the planned but high CapEx for our two new plants and inventory buildup as well, especially in the pulp area, resulting overall in a negative operating cash flow. In the first quarter of 2023, costs started to decline, as Christian said, they were still elevated versus previous levels. Nonwoven sales remained strong, textile sales started to increase compared to Q4 2022. Fiber prices remain under pressure, DWP prices were stable. Due to the completion of our new sites in Brazil and Thailand in 2022, CapEx in quarter one of 2023 decreased by roughly 50% compared to the quarter four of last year.
In the remaining three quarters of 23, we expect a continued improvement of the market conditions in textile. Costs are expected to further decrease on several fronts, raw materials, energy, and other costs as a result of our global savings program. The hedging strategy is expected to provide a good safety net, in particular for Q4. The uptick in demand is expected to have a positive effect on utilization rate and consequently on the sales prices. Operating cash flow is expected to increase. CapEx will be focused on maintenance and carryovers, and trade working capital is expected to decrease. We are not alone with our view on the textile market. Let's see how other players in the textile industry see the outlook for the rest of the year, and let me here quote two examples.
H&M stated recently, and I'm quoting here, "We definitely see a good tendency when it comes to how the spring collections are received. February and March are quite volatile depending on the weather. This quarter gives even more reassurance that we will see a recovery during this year towards of the end of the year." Lemars as well expect the second half of 2023 to be considerably stronger than the first half. Those messages are in line with our assumptions, which we have in terms of further market recovery for the next quarters. What does this all mean for the outlook of Lenzing? As mentioned before, we saw first signs of demand recovery accompanied by the raw material and energy cost decreases in quarter one, 2023.
While visibility remains restricted, we expect significant upside in Q2 to Q4 of this year compared to the Q1. What are the main drivers of this uptick? First, the recently completed expansion projects are expected to significantly contribute. Second, the global cost reduction program with more than EUR 70 million annualized savings will have an increasing positive impact month by month. Third, we expect further decreases of energy and chemical costs. Fourth, we envisage an increase in fiber revenues due to expected positive volume, mix, and price development. Last but not least, the operating rates for both fibers and pulp are expected to further increase based on the positive development of operational efficiency.
As a result, assuming a continued market recovery in the current financial year, the Lenzing Group confirms the expectation of EBITDA in 2023 to be in the range of EUR 320 million-EUR 420 million. If we look beyond 2023. Looking at our long-term business case, the overall drivers for Lenzing and our products remain unchanged and continue to show positive development. The structural driver of about 1% per annual population growth remains largely unaffected by short-term development. In combination with a higher per capita fiber consumption, this will lead to a forecasted increase of the fiber market of 2%-3% per year. Wood-based cellulosic fibers are forecasted to grow by 4%-6% due to the cellulosic gap.
The shift to sustainable fibers such as Lyocell is driven by growing consumer demand. Criticism by some leading NGOs and anticipated regulations such as, for example, the EU Textile Strategy. As a result, the expected growth rate for Lyocell is more than 20% per year. Based on our strong position, we are ready to tackle the mega-trends of sustainability and to accelerate the transformation of the textile business from a linear to a circular model. Ladies and gentlemen, crises are part of history. As you can see in this chart, we plotted the fiber demand from the sixties up until today. Fiber demand rebounded quickly and exceeded the pre-crisis level, either in the following year or the year after the crisis.
What remains very clear, while there are setbacks from time to time, there is a clear underlying trend of growing fiber demand driven by the combination of population growth and higher per capita consumption. Let me summarize. The positive prospects for Lenzing remain unchanged, and 2023 is targeted as a comeback year for Lenzing. We see first signs of a demand recovery and expect this to continue in the course of 2023, especially for the textile fiber market as our nonwoven business was already quite solid in the first quarter of this year. On the cost side, energy and chemical costs show signs of normalization in 2023, and the positive impact of our global cost reaction program is planned to further increase in the course of the year. Of course, there still remains low levels of visibility on demand and cost.
Some of the factors neither we nor anyone else in the industry can influence. However, in a nutshell, we expect the continuation of the market recovery and EBITDA, as explained before, in the range of EUR 320 million-EUR 420 million for 2023. With regards to 2024 and beyond, we expect to have a better picture later this year. As you know, historically, the textile market and also Lenzing has tended to come back after crisis year, and we expect this general pattern to continue. The key reasons behind this expectation are: We are in a strong position to tackle the mega-trends of sustainability and circularity. Even though we have not much spoken about circularity today, rest assured that this is one of the key topics and key priorities for us in the years to come.
Specialty fibers are forecasted to grow above the average, and those are exactly the products we have in our portfolio. We have a strong innovation platform with unique technology that support the long-term prospects. As we have seen in the recent past, for example, with the innovation such as LENZING ECOVERO, turning into a strong margin contributor. Additionally, we can build on our strong ingredient brands such as TENCEL and VEOCEL, to further support both our margins as well as our revenue growth. Last but not least, our new and our upgraded assets are expected to have a boosting impact, assuming full recovery of the market. We remain committed to changing the world from a linear to a circular economy, and we choose to embrace the circular economy at every opportunity. Through our greater transparency and improved infrastructure and greener energy sources, we will drive this agenda.
In summary, we as a board remain positive looking at the prospect of Lenzing. With that, I would like to close the presentation. Thank you very much for your attention. We will now open the floor for the Q&A.
Ladies and gentlemen, at this time, we will begin the question and answer session. Please note that questions are only possible via telephone. Anyone who wishes to ask a question may press star followed by one on their touch-tone telephone. If you wish to withdraw your question, you may press star followed by two. If you're using speaker phone 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. The first question is coming from Markus Mayer from Baader Helvea. Please go ahead.
Good afternoon, gentlemen. I have several questions, if I may. I start with this joint venture at the. Can you help us to understand how the cash flow generation from this joint venture is affecting you? From the 51-49 joint venture. That would mean that you get yearly dividend, and if so, when, or do you get quarterly cash flow payments? That would be my first question. Second question, also on this joint venture. It looks like at least out of... If I compare the numbers with the last year, in particular, the second half of last year, that this joint venture currently has a capacity utilization around 60%. Can you help us to understand why this was the case?
Was this pure demand driven or also maintenance or ramp-up related driven? What has been the ramp-up or start-up costs you had to book in this first quarter? My third question is on the cash flow. You said you want to work on net working capital and also CapEx is coming down from a very high level. Can you help us to understand how much net working capital you expect to help the cash flow this year? How the CapEx saving over the year might be, and also this remark you made on optimizing the capital structure, what this exactly mean? That would be of high help.
The last question would be, if you could give us indication on the financial costs you expect, for the full-year and maybe also saving, over the quarters. Thank you.
Thank you, thank you, Markus Mayer. Now, let's start the first question with regards to the joint venture, in Brazil. How cash flows are affecting us. I will hand over this to Nico Reiner.
Yeah. Thank you. Markus, just to respond on this question. I mean, we are in a position that we own 51 percentage points of this joint venture, and as you are aware, this joint venture just recently started and got into operation of the pulp production. Basically, we are still in a ramp-up phase, and as in joint ventures regularly is the case, for sure, we need to align with our joint venture partner, who has got 49 percentage points of the whole joint venture. If there is any cash coming up, then we need to also decide on, as you said already and stated in your comment, on a dividend policy, which is then guiding into our Lenzing AG structure.
This is basically the case and the description to your question. I would go further down the road and go to the next which is then.
Might I steal a add-on question? When you say you decide on dividend policy, we should expect then potentially a yearly dividend payment, I guess. Correct?
If this is the case, this could be the case, yeah. We will see how things are developing, but we are very positive on the overall development, and we are very confident about our investment. We will see, in the future how this will go on. Therefore, the structure I explained to you, this is the case, yeah.
Okay. Mm-hmm. Thank you.
The next question is coming from Isha Sharma.
No, no. Sorry, operator, we still have a couple of questions from Markus left.
Oh, okay. Sorry.
The next one will be around the capacity of the mill in Brazil. This one I would hand over to Christian Skilich.
Yeah, Markus. The ramp up is following completely the plan. We have almost achieved full nominal capacity within the month of December 2022. In quarter one of this year, we have to report the annual shutdown, which is to be performed for safety reasons and maintenance reasons for every single pulp mill. That was performed within the month of January of that year.
Good. Thank you. The next question was with regards to cash flows, so net working capital as well as CapEx, some outlook for the rest of this year. Nico Reiner?
Yeah. Let me focus on the CapEx question you had. As mentioned already in the presentation, the key focus on CapEx is on maintenance spend as well as on carryovers from the upgrade and conversion of the sites in China and Indonesia. This is the key focus on that one.
we have the last question with regards to the financial costs for this year. Nico Reiner as well.
Thank you. If you look into the financial costs for this year, Q1 2023 has been a little bit uplifted. If you take that one as a guidance, then you could.
See the financial results and make your own calculations on that issue. This is basically the comment on this question. Yeah.
Okay. The one comment you made on optimizing the capital structure, can you clarify what you have meant with this?
I mean, as you are aware, we are permanently looking into our capital structure and managing our balance sheet. This is basically the key topic, what we are doing here also.
Okay. Thank you.
The next question is coming from Isha Sharma from Stifel Europe. Please go ahead.
Hi, good afternoon. I have 3 questions, please. First, could you quantify the positive impact from valuation accruals that you have mentioned on EBITDA in Q1? The second one would be on lower energy costs that you have mentioned. You have said that you are fully hedged now or almost fully hedged for 2023. How are you expecting to benefit from lower energy costs? Just a follow-up on the question that Markus has asked on optimizing capital structure. At what point would you take a decision on this, and what are your different options? If we, let's say, assume that second half does not see the kind of recovery that you're expecting, then you're kind of in a cash burn position.
What exactly are your options from there, and what would you do, to optimize your capital structure? Thank you.
First questions, with regards to valuation of the accruals, I would hand over to Nico Reiner.
Thank you for that question. Honestly, we do not share any details on this topic. It's a standard process every company is used to. I would not share any details on this topic.
The next question with regards to energy costs and hedging, I would hand over to Christian Skilich.
Yeah, I take it with pleasure. Yeah, we're performing an energy hedging that is based on both financially hedges with banks, but as well physical hedges directly with energy suppliers, both for natural gas and electricity. The aim is to ensure a coverage of approximately two-thirds for the next 12 months. By that, we are aiming to benefit both from minimizing the risks, but as well, while still being active on spot purchases to benefit out of potentially lower prices in the future.
Good. Then we have another question with regards to capital. I would hand over to Nico Reiner, please.
Yeah, thank you. Basically, if you, if you think about capital, there's always, as in each balance sheet, there's equity, there's debt inside. As I mentioned already before, we are permanently actively managing our balance sheet. If you think about capital structure, you always have to think holistically. If you think holistically, then you have to think on the equity on the debt side. We are full flexible and looking forward to optimize our capital structure. That would be my comment on that one.
Thank you.
The next question is coming from Christian Faitz from Kepler Cheuvreux. Please go ahead.
Yes. Thank you. Good afternoon, everybody. 2 questions, if I may. First one would be, Thanks for sharing the operating rates of the industry. Is it safe to assume that the operating rates of your plants are close to those in industry rates, at this point in time? 2nd, the Lenzing site is currently being restructured. Can you please tell us a bit more where we are on this and when the process will be concluded? Thank you very much.
The first questions with regards to the operating rates in the industry and how that reflects to our operating rate, I would hand over to Stephan Sielaff.
Yeah. Thank you for the question. The operating rate, I would say we have seen an increase month by month throughout the quarter, and we are now on an operating rate on the fiber side, which is above the levels you have seen on the viscose customer side. I'm not sure, but I got your second question about the Lenzing site is gonna be restructured. No, we have a project here where we are also looking at the personnel cost side, but that is not only impacting Lenzing, the Lenzing side, but all sides globally. This is a global initiative, not something only dedicated at the Lenzing side.
Sure. I'm aware of that. I always thought that Lenzing, the Lenzing side would be a prominent portion of that. I was gonna ask where we are on that. Thank you.
Yeah. We are, as we said, we are well on track with that.
Okay.
Both in Lenzing, but, also in the other side.
All right. Understood. Thank you very much.
The next question is coming from Sebastian Bray from Berenberg. Please go ahead.
Hello, good afternoon. Thank you for taking my questions, please. I'll ask them one by one. Depreciation and amortization, EUR 78 million in quarter one. Is this a decent run rate for the full-year as in on an underlying basis, you just multiply the number by 4?
Yeah, I would hand over this one to Nico Reiner now.
Yeah, thank you for that question. I mean, basically, your assumption and your calculation is going into the right direction. Probably you need also to think on the topic that we are ramping up our facilities in China and also our facilities in Indonesia. That might have also a little impact. Your calculation is going into the right direction.
That's helpful. Thank you. The next one is on lyocell. The slides have made reference to the demand outlook of over 20% per annum. Could I talk about the one or two-year supply outlook? Sateri, I think, publicly confirmed it had bought online 100 kilotons last year. Is that, to your knowledge, running well, the capacity that's been brought online? Have the teething difficulties been resolved? What is the magnitude of lyocell capacity additions that Lenzing is expecting over the next year or two?
Okay. Yes, you're right. That is also my level of information. Yes, we have a competitor who started up their factory. Whether how that works in detail, I don't know. Actually, we are not negatively surprised or in any form or shape by this because the market, as we see it, is growing by 20% per year. Actually, it helps to establish Lyocell as a standard fiber if more players are offering it. We have different market segments we are tackling. We are selling, as you know, under the TENCEL brand, under the VEOCEL brand, and we are targeting a different segment than the competition. Overall, I'm not surprised, and we are actually welcome others to produce Lyocell as it helps suit the conversion towards Lyocell.
That's helpful. Thank you. Those are my two questions.
There are no further questions at this time. Oh, we got another question at this moment. We have another question from Bartek Pastawa from Schroders. Please go ahead.
Hi, good afternoon. Can I go back on previous questions? I think you gave very vague answers, to be fair. Firstly, on the CapEx view and cash flow, can you give us a CapEx guidance, your maintenance CapEx you plan to spend this year and the carryover for Indonesia and China that you plan to spend? These are known numbers. You will know exactly how much you need to spend.
Yeah. One for Nico Reiner now.
Thank you. Just to reflect on, there has been already a question to that, and there has been a calculation from an analyst already on that question, which I commented already in the direction of what he said. Basically, that would be my comment on that question. On the split of what you have been referring to on maintenance CapEx and the different areas of. This is something we do not comment at this point of time.
Referring to the previous answers, so EUR 70 million this quarter times four, EUR 280 million. Is that what I'm looking at this year?
That is your calculation, and I commented previously already.
All right. Okay. With your guidance, EBITDA guidance for the year, would you expect to be cash flow positive, negative for the year?
I mean, as you know, and you are aware on that topic, we only guide on EBITDA level. Therefore, we do not guide anything which is beyond that area.
Okay. On the Brazil site, your 51% stake there, what is the at current pulp prices, what is the current annual EBITDA level of that business?
First of all, let me comment, at this point of time. Usually, we do not comment on single sites and single results. Therefore, I'm not in the position to give any comments on EBITDA level reflecting the joint venture. On the pulp price side, I would hand over to my colleague, to Christian. He probably is able to give you an answer there.
Yeah. We'll take it. We saw beginning of the year improved pricing for the key grade, which is a hardwood dissolving wood pulp, and with a flattening out over the last couple of weeks now, and that is the expectation for the month to come as well.
Well, why I'm asking about the Brazil project specifically is because you consolidate your numbers. What I'm really after is the EBITDA guidance. How much of that is coming from Brazil? To make a fair calculation, I have to know, I have to sort of take 49%, call it 50% roughly of your earnings from that project because these are not yours. You give us the debt on an economic basis. Good. I'd like to know your earnings on an economic basis as well, because your range obviously is inflated by the share that you don't own.
Yeah. I can understand your question, but please understand also me, it's not possible. We are not guiding on a single entity, and we are not commenting on EBITDA levels for joint venture. Therefore, please accept my apologies and we are not able to give you any detailed answers on this question.
Okay. The final one maybe, regarding the capital structure. You've got the perps, due in December 25. Where... You know, how do you see your long-term capital structure? Do you see permanent sort of hybrid, hybrids as part of the capital structure? You know, not, you know... How are you thinking about that?
I mean, it's a very fair question. Capital structure is an important topic. How do we see? First of all, we fully manage our balance sheet. Basically, as you look on the balance sheet, there is always possibilities on the equity side and also on the debt side for sure. We are holistically managing this and we do see here no special things which we have to align or have to address at this point of time. We are doing a holistic, professional, and efficient management of our capital structure going forward to support our profitable growth strategy.
Okay, thanks.
There is another question from Teresa Schinwald from Raiffeisen Bank International. Please go ahead.
Thanks. Good afternoon, everyone. Coming back to the positive revaluation effect, gross cash flows included about EUR 62 million of non-cash income. Is it fair to assume that this is about the size of this positive revaluation effect? Second question, I was a bit late in joining the conference call, my apologies. The financial result was deep in the red, can you please elaborate on the details, in particular the interest rate effects and potential currency effects? The last one is on the energy hedging. You mentioned that you hedge two-thirds of your energy needs. Does this also apply to sales from the Paskov site?
As far as I'm aware, Paskov was selling spots, does Paskov now also sell on forward contract terms or longer-term forward contracts? That would be about it for my side.
First question, I would hand over to Nico Reiner. Basically if you are asking about the EBITDA and the key impacts here, as mentioned already by Stephan, the key developments in Q1 have been for sure the recovery in volume, also the decrease in prices of energy and chemicals. These have been key major impacts and also the positive development in the utilization of our plants. On special numbers like the reevaluation or accruals topic, we do not comment on these topics here. Please accept my excuse here. Also the same happens to be with the FX effects you have been referring to. This is the same case over here.
In regards to the last portion of your question, I would love to hand over to my colleague, to Christian in regards to your question with the energy hedging. The hedging question, energy hedging, as presented, focuses on the purchasing activities only. In regards of your sub-question, we do not have any hedges in place for sales of electricity or heat.
Thank you very much.
You're welcome.
There are no further questions at this time. I would like to hand back to Stephan Sielaff for closing remarks.
Thanks a lot everyone for listening and for the good Q&A session. As we stated before, we went cautiously optimistic in the year, and we have stayed realistic and confident about the year. We have a plan, and we execute it very well and with a high degree of discipline. All our implementations are on track. Looking back for the next quarters, what gives us the confidence, we see the contribution of the new and renew side coming into month by month. The same on the cost savings, the same on the energy and raw materials. We see the market recovery in textiles driven by vol ume, mix, and price. Last but not least, our higher operating rates. Therefore, we stay consciously optimistic and confident for the year 2023 to make it the comeback year of Lenzing.
Thank you very much, and have a good rest of the week.