Befesa S.A.

Good morning and welcome to the preliminary full year 2024 results conference call of VEFESA. I am Rafael Perez, CFO of VEFESA. This morning I am joined by our group CEO, Asier Zarraonandia. Asier will start with an executive summary of the period and then he will cover the business highlights of the steel dust as well as aluminum salt slag recycling business. I will then review the financials by business and will cover the evolution of commodity prices, our hedging program. And finally, cash flow, net debt, and capital allocation. Asier will close this presentation providing an update on the outlook for 2025 and an update of our growth plan. Finally, we will open the lines for the Q&A session. Before getting started, let me remind you that this conference call is being webcasted live. You can find the link to the webcast preliminary full year 2024 results presentation on our website, www.befesa.com. Now, let me turn this call over to our CEO. Asiel, please.

Thank you, Rafa. Moving to page five of the business highlights. The FESA has delivered a strong four-quarter and four-year results despite a challenging macroeconomic environment, which demonstrates the resiliency of our business model. Total adjusted BDA in the four-quarter has been 62 million euros, up 27% compared to the previous quarter and making a record level for quarterly results, reflecting a strong year-on-year performance. For the full year, adjusted VDA reached €213 million, an increase of 17% compared to the previous year. Operating cash flows have increased by 30% year-on-year, even by a strong cash conversion. Leverage at year end reached 2.9 times below our initial target of 3 times. We have delivered solid performance during the year with solid steel dust volume in our two main markets, Europe and the U.S., despite the challenge that the steel sector is suffering. In our aluminum business, we have delivered strong performance in our salt slag recycling business leaving the Hannover plant back to full operations and a strong volume received from our customers. On the other hand, our secondary aluminium business has been impacted by a challenging automotive industry in Europe. I will elaborate later on all these aspects. On outlook, we expect 2025 to be another year of strong earnings, strong energy growth and further deliberation during the year. We are adjusting our business plan and capital allocation to focus on reducing the leverage and investing in ongoing approved expansion projects. As such, the expansion plan in China is stopped due to the current market conditions. Our growth capex will focus on finishing the refurbishment of Palmerton and expansion of Bermuda, both low-risk projects from execution, technology, and commercial point of view. Moving on to page six. Overall, our steel dust recycling business has delivered strong results in 2024 in Europe and the US. In Europe, the steel sector is going through a challenging period, with steel production in Europe at the five-year low levels, impacted by weak demand. In Europe, despite this challenging environment, the level of steel dust deliveries from our EAF steel customers is stable and solid. and we continue to run our plants at a very high capacity utilization with an average of 92%. In the US, in the steel dust recycling business, we are running the plants at good levels of utilization, similar to previous quarters, around 70%. The measures that we have been taking and best practices that we have been applying to improve the recycling operations are on track and delivering good results, achieving higher BDA per ton gradually. The zinc refining plan in the U.S. is in final stage of the ramp-up and turnaround process with a strong focus on cost reductions. In 2024, the unfavorable combination of PCs and premiums for special high-grade zinc produced around 15 million negative contributions. In our ASEAN operation, we have delivered robust Q4 in Turkey and South Korea, reaching a strong level of utilization. Our Chinese plants continue running at the utilization level of 50% impacted by weak electric car furnace steel production. Moving on to page 7, business highlights for the aluminum salt slag recycling business. In the aluminum business, we have delivered a strong volume of salt slag recycling, which has been partially upset by weak secondary aluminum results. On salt slugs, the strong volume has resulted in a very high capacity utilization of the plants, driven by the Hannover plant in Germany back to operations at full capacity. This strong operating results has been partially upset by lower FBM aluminum price. On the other hand, our secondary aluminum segment has been suffering during the whole year from a very weak European automotive industry, which is affecting the demand of secondary aluminum. This is putting a lot of pressure in the aluminum metal margin, which is suffering compression compared to the levels of last year, caused by weak demand of secondary aluminum, coupled with difficult access to aluminum scrap in the market. Now, Rafael will explain the financials in more detail.

Thank you, Asier.

Moving to page seven, sorry, moving to page nine, financial results for our steel dust segment. Steel dust delivered 170 million euros of adjusted EBITDA in 2024. It represents a 25% year-on-year improvement compared to 2023. EBITDA margin improved from 17 to 21 in the period. Thirty-six million EBITDA improvement has been driven by the following factors. The year-on-year impact from volume was flat, with a total plant utilization at 70 percent, similar to last year. On price, a strong positive EBITDA year-on-year impact of about 44 million euros, with the three main price components being €7 million EBITDA impact from higher LME prices, 5% in the year. €15 million positive impact from high ZIN hedging prices, €104 per ton higher year-on-year on average. And thirdly, €22 million positive impact from the lower ZIN treatment charges, which was set at $165 per ton for the year 2024. versus 274 per 2023. On cost and others, Bethesda Coke average price continued further normalization throughout 2024 to levels below the 2022 average price, driving 11 million euros of positive EBITDA impact in the year. Operational improvements in the U.S. recycling operations also have delivered positive EBITDA contribution. as well in the period, improving the EBITDA per ton on the steel-dust treated. All these positive impacts have been partially offset by general inflation and other effects, mainly attributable to €15 million negative contribution from the ZIN refining operations in the US, which is going through a turnaround plan. As Asir explained, we are laser focused on executing our strong cost reduction plan. Moving to page 10, financial results for our aluminum segment. Aluminum sold slag delivered 43 million euros of EBITDA in 2024, which represents a 10% year-on-year decrease compared to 48 million euros in 2023. The year-on-year 5 million euros of negative EBITDA development was mainly due to the lower aluminum metal margin, partially offset by lower energy prices. on volumes overall positive EBITDA year-on-year impact. Our recycled volumes of salt slag increased by 18% to 426,000 tons in the period, driven by the resumption of operations at our Hanover plant. Our secondary aluminum alloys production volumes increased by 2% to 171,000 tons. With these volumes, we operated our plants at a strong utilization rate of about 91% in salt slag, and 84% in secondary aluminum, on average. With regards to prices, overall negative EBITDA year-on-year impact of around 11 million euros, mainly driven by pressure aluminum metal margins versus the previous year. This compression in the aluminum metal margin is caused by two main factors. On the one hand, there is a scarcity of aluminum scrap in the European market, driven by lower overall industrial activity as well as higher exports of aluminum scrap away from Europe, and secondly by a weak automotive industry in Europe, which impacts demand of secondary aluminum from automakers. Aluminum F&B price was up 5%, with an average slightly above 2,300 euros per ton. The negative price effect was partially compensated with year-on-year lower operating costs, mainly through the lower energy prices of electricity as well as natural gas. Moving on to page 11, SIN price and treatment charges. Regarding SIN LME prices during 2024, SIN has been trading with some volatility over the marginal cost of the producer C90, trading sideways in the range of $2,300 to $3,100 per ton. The average of 2024 SIN LME price has been $2,780 per ton. which is slightly above the last year's average of $2,650, on average up 5% in the period. In 2024, Zinc prices have been trading well above the marginal cost of the producer, which is around $2,500 level. On treatment charges, on the right-hand side, in 2024, treatment charges for Zinc were settled in April at $165 per ton for the full year 2024. As explained earlier, this reduction had a positive impact of around 22 million euros in 2024. We have to wait until March or April to see the settlement of the treatment charges benchmark for this year, 2025. As a reference, the spot treatment charge in the market is trading on the negative zone, which very rarely happens. This shows the current supply-demand dynamics in the ZIN market, characterized by reduced supply of ZIN concentrates from mines. which is making spot treatment charges to be negative. It seems that this dynamic continues, which may imply annual treatment charges for 2025 should remain at a low level. Turning to page 12 on hedging, we have taken the opportunity of the volatility in the SIN price seen throughout 2024 to extend our hedging book further towards the end of 2026. With this extension, our ZIN hedge book covers close to 24 months of hedge at increasing hedging average prices of 2,650 euros or 2,950 dollars per ton in 2025 and 26. This level of hedging represents an all-time high level of hedging for BFESA and will provide around 20 to 22 million euros of incremental EBITDA in this year 2025. regardless of what happens with the SIN price. We continue to monitor the market to close volumes for the first quarter of 2027. Our hedging strategy remains unchanged and continues to be a key element of PFE's business model, providing earnings visibility and predictability, lowering the impact from SIN price volatility. This year is a great example of how our hedging strategy enables us to benefit from the volatility of the SIN price, While the average SIEM price in 2024 has been $2,780, we have been able to hedge the second half of 2025, an entire full year of 2026, at an average price of $2,950. This is $170 higher than the average LME SIEM price in the year. Now moving to page 13 on BEFESA energy prices. The page shows the evolution with the three main energy sources that we have in PESA, coke, natural gas, and electricity. With regards to coke price, which today represents around 55% of the total energy bill, the normalization that started in the second quarter of 2023 is continuing throughout 2024 to levels below 2022 average. Average coke price in 2024 has been around 190 euros per tonne. which is 20% lower than in 2023. This had a positive impact on our still-last operations, as explained in the bridge. Despite this positive trend, however, the average COG in price in 2024 is still around 30% above the average levels seen in 2029 and 2021. Regarding electricity, which today accounts for around 25% of the total energy expense, prices decreased around 20% in 2024. gas prices stayed pretty much in line with previous years. Now turning to page 14, cash flow results. The operating cash flow in 2024 has reached 192 million euros, which represents an all-time high level and an increase of 30% compared to the last year. On the EBITDA to cash flow bridge starting with 213 million euros, adjust the bid-dump and walking to the right. Working capital consumption of 26 million euros in the year, down from 37 million in the previous quarter. As in previous years, working capital improvements improved significantly in Q4 compared to the previous quarters. Overall, working capital consumption was pretty much driven by the increase in revenues and receivables. Taxes received in 2024 came in at 4 million euros as a result of a tax final assessment of the previous year. resulting in an operating cash flow of 192 million euros in 2024, up 30% compared to last year. On CAPEX, in 2024, we have invested 56 million euros on regular maintenance CAPEX, 23 million euros in growth CAPEX, mainly related to the refurbishment of Palmerton in Pennsylvania, and 40 million euros in the 50% acquisition stake in Resitec. In summary, total capex of €119 million in the year. Total interest paid increased to €42 million in the year, mainly driven by the year-on-year higher e-reward, as well as a slightly higher margin spread. On dividend, a total dividend of €29 million, equivalent to 73 cents per share, was paid to shareholders in the third quarter of last year. For 2025, the Board of Directors will propose to pay a dividend of €25 million, equivalent to 63 cents per share, or 50% of the net income. In summary, free cash flow before dividend and M&A amounted to €65 million. Cash on hand stood at €103 million, which together with the €100 million undrawn revolving credit line provides Befesa with more than €200 million of liquidity. Gross debt at the end of 2024 stood at €722 million. Net debt at closing of the year stood at 619 million euros, compared to 662 at the end of the previous quarter, resulting in a net leverage of 2.9 at the end of the year, compared to 3.4 at the end of the previous quarter, and better than our initial target of three times. Turning to page 15, debt destruction and leverage. In July 2024, we extended the maturity of our debt until July 2029. The new financing, together with our consistent hedging policy and cash flow generation profile, provides the strong financial backbone to support the future growth of EFESA, with a strong focus on capital allocation discipline and leverage management. The reduction in the leverage ratio from 3.4 to current 2.9 demonstrates our commitment to rigorous capital allocation. We will continue reducing the leverage throughout 2025 to keep it two and two-and-a-half times going forward. To do so, we will prioritize our growth capex on those projects that will deliver immediate cash flow upon completion, like Resitec and the approved projects of Palmerton and Benville. Also, we will keep the annual regular maintenance capex around 40 to 45 million euros in the coming years. On dividend, we are committed to maintain our dividend policy to pay between 40% to 50% of the net income to shareholders as dividend. Now back to Asier on outlook and growth.

Moving on to page 17 on outlook. You can see on the page the main drivers of our view for 2025. As explained earlier, we expect 2025 to be another year of strong double-digit earnings growth and further deliberation during the year. This is fundamentally based on better-thin hedging levels, as Rafael explained, higher volume of steel dust recycled in the U.S. recycling plants, and as well as lower thin defining costs in the U.S. In steel dust, We expect to continue running the plants at high capacity utilization and achieve a stable volume compared to 2024, despite current challenging steel industry in Europe. In the US, we expect higher EAF steel dust volume driven by volume from new contracts. In China, we expect a slightly better situation than in 2024 with overall positive contribution in the country, driven by a positive development in Jiangsu. On our aluminum business, we expect stable salt slag volume compared to 2024. However, on secondary aluminum, we expect stable to negative evolution as we continue to see metal margin compression caused by aluminum scrap, scarcity in Europe, and a weak demand from auto sector. The seam refining plan in the US, we managed to stabilize operations in 2024. and we are taking strong operation cost-cutting measures in 2025. We are aiming at a fixed-cost reduction between 15 to 20 million euros to be captured in 2025. The current environment characterized by low TCs and low seam premiums make it to be at the bottom of the cycle for the refining business. On energy prices, we expect a slightly lower overall coal prices for the group in 2025, However, we are expecting natural gas and electricity prices in Europe to be higher than 2024. On treatment charges for zinc, the zinc concentrates market remains very tight at the moment, with spot Tc in the negative territory, which will indicate that the trend for Tc will be downwards. As a reference, the last 15-year low was at $143. For 2025, we are expecting 2025 benchmark TCE to remain stable or lower than 165, which was the level for 2024. As explained by Rafael, average SIEM price heading for 2025 at 2,640 euros will brief a strong earnings growth in 2025. On SIEM prices, we expect some degree of volatility driven by global macroeconomical and geopolitical uncertainty. The marginal cost of the producers in Haiti is around 2,500 level, acting as a floor of the same price. On leverage, we are expecting to finish 2025 below 2.5 times, as explained by Rafael. We are adjusting our business plan and capital allocation to focus on reducing the leverage and investing in ongoing approved expansion projects. The expansion plan in China is still due to the current market conditions. Our growth capex will focus on facing the refurbishment of Palmerton and the expansion of Vermont, both low-risk projects from the execution, technology, and commercial point of view. Moving on to page 19 of Palmerton. The refurbishment of Palmerton plant in Pennsylvania is moving well on time and on budget. The first kiln of the project is already completed and in operation. The second kiln will be completed by the second half of the year, next year. We are signing new contracts with the steel makers, customers, and so far we have secured more than 50,000 tons that are coming into operation during the 2025 year. Moving on to page 20 on Bergman, with regards to the expansion of the secondary aluminum production capacity in the system plan of Bergman. In Germany, we are moving forward with the permits, authorizations, and commercial contracts with customers. This project is linked to the demand for the recycled aluminum we are getting from existing Befesa customers in Europe. We expect to start investing in the second half of the year. In summary, our growth plan is flexible and we are adjusting and adapting it to the current balancing leverage and capex, which results in a better growth and financial profile over 2025 and the next years. Thank you very much.

Thank you, Asir. We will now open the lines for your questions.

Ladies and gentlemen, we'll now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their telephone. You'll hear a tone to confirm that you have entered the question queue. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to only use handsets while asking a question. Anyone who has a question may press star and 1 at this time. The first question comes from the line of Brian Butler from Stiefel. Please go ahead.

Hey, good morning, or I guess afternoon. Thank you for taking my questions. Maybe we can start just, where do you see kind of the current environment relative on the steel production cycle? It looks like it's very depressed, and in a normalized kind of recovery or getting back to a normal level in steel production, what kind of incremental upside would that be to Bevesa color-wise?

Thank you for the question, Brian. Well, I think it's a very theoretical question about full recovery of steel production over the last five years. Well, obviously, it's different by regions. It's a different picture. In Europe, basically, we are in the full capacity. So no matter what they do, probably we are going to be, again, growing inventories, but not many differences in throughput. Of course, in the U.S., we were waiting for, if there is an increase, we are going to fill the mining capacity that we have staying in place. Reminds that we have a 70% utilization. And this is the same in the case of Asia. I mean, probably it's in the range of 70% and we have room to increase up to, well, of course, 100%. China, well, no doubt that we have very low capacity utilization rate. It's a combination, difficult to say, but at the end of the day, it depends where you want to move and multiply by, you know, some X, eight euros, average eight euros per ton, and you can multiply whatever is that. But difficult to say an amount, depending on the recovery, of course.

Okay, and then I guess just one on modeling. Working capital was a use. with the use of cash this year. How should we think about working capital needs in the 25?

Thank you, Brian. Well, basically, it's the usual working capital outflow is driven by the increase in activity. Revenues increase 5% and accordingly receivables. I think going into 2025, as you know, we will provide the full year guidance once the treatment charges have been settled around March, April. But I think from the working capital point of view, you can pencil in like 10 to 15 million, something like that.

Okay, great. Thank you for taking my questions.

Thank you, Brian. Thank you, Brian.

The next question comes from the line of Sashi Shekar from Citi. Please go ahead.

Hi, good morning everyone and thank you very much for this opportunity. I have three questions. The first one is on the utilization rate at the steel dust recycling business. In the fourth quarter, it has increased to 74%. Just wanted to know how did you achieve it and is this rate sustainable going forward? My second question is on Henan plant in China. How much is the current capacity utilization at this plant and is there any plan to reduce cost there? My last question is on your cost. What is your view on cost inflation?

Hi Sasi, thank you for the questions. Starting for the first one. The 4Q is a 74% utilization rate higher than the others. Basically, as you know, the utilization rate normally out of the deliveries by region is affected by the maintenance stoppage of the plants. And as well, in the particular case of the TAC, it's a 3Q stoppage by a strike. So all in all, the 4 quarter is a good and strong 74% utilization rate. Moving forward, I do recommend more in the yearly level because depending on the maintenance stoppage that we have to do to our plants, the quarters could be different. As an example, first Q in 25 could come a little bit lower in utilization because we are stopping a big plant and so on. But the full year, I think that in general we are going to increase the capacity, you know, utilization slightly. I mean, you know, between 70 to 75 is a good reference. In the case of China, as you know, we have two plants. One of those, Jiangsu, we are running the level of 60 percent of South Lerat capacity, and what we expect in 25 is even a little bit higher in the level of 60, 70. we are not being very optimistic unless we see a clear change in the market. So I think that repeating or a slightly better situation in Jiangsu plant is something that we can consider. Henan plant is just running in the level of 20% and we don't see more than that in 2025. So overall we are talking about 50% capacity more or less in China and could be a good reference 50 to 60% in 2025. Regarding cost to be in those low levels, well, we can say that we have Henan with a minimum people at the plant and even we are using, when we stopped the other plant, when we had to run campaigns in Henan. So we are having the cost very controlled way and that's why even Henan being stopped is not delivering cash negative and later in the case of the two plants together. Regarding the cost of inflation for next year, I think in overall, well, you know that taking out the energy that Rafa has explained about the coal, but the electricity and what you have, the typical fixed cost like personnel and maintenance and something like that. It is the inflation rate by countries, but in global, I think that something like 5 million, 5 to 6 million globally could be considered inflation. if you want to have a round number.

The next question comes from the line of Yanis Moutsouraris from Morgan Stanley. Please go ahead.

Thanks very much for the presentation and well done on the results today. First question on Palmerton. Given the investment there, can you give us an idea on what sort of EBITDA uplift you anticipate for 2025 versus 2024, and then at full run rate, 2026 versus 2025, just to get a sense on the EBITDA trajectory there. Thank you.

Thank you for the question, Yanis. Well, the Parminton issue, I will suggest to focus globally in U.S., because obviously the the we have extra capacity currently and when the palmerton came back on on track at the end of this year with the two kills well utilization rate in general and in general in u.s will be you know affecting by the by the availability of dust on our contracts and the production of our steel makers contracts but the key here is that the increase of volumes in general in all the plants We are more or less thinking that with the new contracts which are coming for the new projects, in 25 could be in the range of 5 to 6 million additional. But I think it's as we have explained during the presentation, globally we expect more achievement in the U.S. altogether with the refining plant savings. Twenty-six, we think that we still see growing volumes. and early to say the effect because there are many things that they can consider but another easily 50,000, 60,000 tons more could arise for 26 on war. The idea is to be in two years with the project coming into the market or running at the end in the next two or three years coming to utilization rates of 80, 85% for 27 or something like that. This is the idea and we will keep informing about the delivery and how the things are going.

Basically, just to recap on the US, if we look at the increased volumes plus the fixed cost reduction at the zinc refining, you're looking at something in the order of 20 to 25 million euro improvement?

Yes, at least 20, I will be more comfortable to be a little bit more self-reserved. But yes, I think it's a good combination.

Very clear. And the second question on the CAPEX guidance, because I'm a bit puzzled here, you talk about 100 million euros for the coming years per annum, right? And within that, you talk about 40 to 45 million euros of sustaining CAPEX. and a remaining spending in Palmerton of Birnberg in the order of 55 to 60. That gets us to around 100 or maybe slightly around 100 million euros for 2025, but I would have expected a meaningful step down from 2026 and something closer to sustaining capex levels in 2027, which is not what you're indicating today. So could you perhaps elaborate what drives that and whether there are any additional projects that you are considering as part of this 100 million euro run rate? Thank you.

Yeah, well, it's true that you define very well about the 2025. Those are the idea, Palmerton and Bermwood in the part of the growth. For the next years, I think it will depend. The level of 100 is a good reference, obviously. We don't want to move a lot from that, slightly up or down, because what we want to do is the next projects in line, which are, you know, salt and slag plant in Europe or a second kill in the French plant for electrical furnace dust treatment. I mean, we'll come when we will see or when we see that the market is there, right? So, in theory, the pipeline, you could have those 100 million considering that all the plants are coming one after the other, no? But, again, we will, you know... inform how when we start the next plans like the the salt slack and the and the and the french kill right so we'll depend on that but the 100 million is a good reference because the idea is to do under this kind of cap or reference again those projects you know going and splitting one after the other during the years okay got it and and just to clarify on palmerton there is no remaining

in 26, and on Berenberg there is a bit more to go, right?

Yeah, yeah, yeah.

Excellent. Thank you very much. Thank you.

The next question comes from the line of Vlasic Rubin from Berenberg. Please go ahead.

Hi, good morning. Just to follow up on the Zinco finding asset, just to confirm, so you're expecting that to be broadly break-even this year? Is that the right way to think about it? And then the second question is just on China. Are you seeing any early signs that that's improving? I mean, that seems to be a bit of a tailwind for the resi construction sector. So I'm wondering if there's any early signs that maybe also into 2026 that that could be a bit better than it is now. Thanks.

Thank you for the question. Well, in the case of refining, yes. In general terms, it's true that we can have in mind about 15 to 20 million, you know, improvement, and that could be directly on the profit and loss account of the group, which is going to be the results of the refining plant itself will depend on the TC evolution as well. But on the other hand, this TC we would collect in the refining plant of the U.S. as well. So $15 million is a kind of net contribution from one year to the other, no matter what is the final result about TCs and so in the refining. So this is a little bit idea is to reduce costs in 2015 and capture this positive effect in 2025. Regarding China, yes, we see that it is a slightly better situation based on new contracts and will depend all the time about the capacity utilization that the steel makers are. We are a little bit more positive than in 2024 with a contribution of, I don't know, four or five million or something like that among the two plants. which is better than the break-even point at this point. But it's not a very important contribution, but it's a good signal that the plan in Jansu, specifically when it's running, is delivering positive evidence as it was planned, how to say, at the same price levels, treatment charges and situation. But yes, we expect this contribution. It's not something very significant for the whole group operations, but it's a positive signal that things could become better there.

Okay, thank you.

The next question comes from the line of Christopher Bleifert from PNB Paribas. Please go ahead.

Yes, good morning and thank you for taking my question. I have two follow-up questions on the US, please. Could you help me to better understand the timing perspective when to expect additional steel dust volumes to positively impact your operations? So particularly in which quarter should we expect those positive contributions? And secondly, is my understanding correct that out of the 15 to 20 million of cost savings, 15 million will make it through the P&L in 2025 and then there's a spillover effect for 2026? Thank you.

Hi, Christopher. Well, starting for the second part or the second question, yes, it is there to be for all the years because it's affecting to the fixed cost and all the operation cost of the plan. And I think that once we get this level, it is nothing to do with being back on the level that we are having, right? In the case of the U.S., well, the idea here always we have to explain or try to explain that that our plans in U.S. was based on the current circumstances of dust availability for the players that we are in that country or in the area because it's North America affecting. But the reality is that there are projects for new electric car furnace plans that probably you have already monitored that are coming into the picture. Samples is Arcelor in 25, Algoma in 25. New coal, West Virginia is coming as well in 26. So all in all, it's depending on when those projects start to be on picture and tracking. But our expectation is more or less clear than in 25. Reference of 50,000 tons is the reference when we are, you know, in contact with those guys, the new guys that are coming into picture, when they're going to finally start up, you know, operation with a good ramp up. But in that range, it's secure in the near future. For 2026, we hope that another 60,000 or 70,000 max could come with those projects, and 2070, another something like that as well. So in the three years, probably the total idea is to have 150,000 tons more. Timing and effort will depend as well on the evolution of the other parameters that are affecting our results. to have an idea, as I said before, you can get those kind of tonnages, more or less, have your numbers and multiply by the media level that you want about the, and you are going to have a kind of idea contribution. In our case, we will, we like to be closer to the years where we are talking about to define, more or less. That's why 25 we see, you know, in the range of 6 million or something like that, a contribution, depending on any evolution, but now it's a good reference. I will see a little bit higher in 26 and so on.

Okay, thank you. The next question comes from the line of Kirikaya from Kepler Shiver. Please go ahead.

Yes, well, I have two questions about the U.S. as well. So the first one would be, how is the integration of AZR in the U.S. developing? And the second one would be, what are your synergy targets for the region in 2025? Thank you.

Hi, Trey. Thank you very much for the question. Well, integration in the U.S., we can say that it's done. I mean, it was a couple of years we were discussing about the evolution of the, you know, sceneries and things like that, but we can say that now where we are is more or less where we want to be, providing that we are always in a ongoing or improving systems for all our plants, so I think there is room to do better things and so on. Integration in general in the group is done for sure, and the cost efficiency in the furnace is already done. We're not repeating a lot. The refinery is where we are now focused for the reduction of the cost, and this is how we see it.

Thank you.

The next question comes from Jorge Gonzalez from Hauk Aufheuser Investment Banking. Please go ahead.

Thank you for taking my questions. So two questions from my side. The first question on the very strong end of the year, especially for the works sold volumes in Q4. I was wondering with this very strong level of 108,000 tons in Q4, I was wondering if there is any negative specific delta in Q4 for the steel dust that we should have into account as you have not offered this time the changes in the Q4. the isolated picture for Q4. I was wondering if there were additional costs for the refinery that were booked in Q4 or any other thing that compensated a little bit the super strong sales of works in Q4. That will be my first question. And the second one, I'm sorry if you have already answered this because I had problems with my connection, is that if you can be more specific with the language you are using for the initial 25th target, if this double-digit strong growth, we should think something like high teens percentage maybe in Evita or what you have in mind with this target. Thank you.

Thank you, Jorge. Well, in terms of volumes, I think I said, I anticipated something in some previous questions as well, but Q4 has come very, very strong. We cannot say about the, you know, some periods in our activities, because depending on the deliveries and depending on the maintenance and stoppage of the plants. Normally, the Q4 used to be, you know, a strong four if you get the city for years. But this is mainly because there are less maintenance stoppage because we want to be, you know, out of the peak season of Christmas, you know, December, so difficult months, and we try to do the maintenance previous periods. Which is true is that I would like to multiply the Q4 by four, but it's not the case. That's why the good reference is to have the four quarters and to see in the Q in the 2025 something similar depending on the quarters. As I say, we are having a strong maintenance in Spain in January in 2025. So it will depend on when we stop the plants. But the strong operation in the Q4 was or has been not for any specific reason or special reason. It's just because we were not stopping some maintenance and the other geographies like Asia and even China, they were running a very good level. because we have availability of that. Regarding the 25 evolution, you say, well, I think that we can say, I mean, what we have in mind, obviously, is that strong double digits starting for an EBITDA level of an increase of 10% to 20%. If you get the average 15%, probably it's a good reference. It's still early for us to say where, but we'll be comfortable in that range. We say strong, but it's difficult for us to say that because one of the topics that used to affect a lot to us with this treatment charge is nowadays being settled or being at least dissipated now in meetings that are happening in US for the miners and smelting. I don't know. In this level, we feel comfortable today. It's true that we don't see even, you know, risk to be below that. On the contrary, probably, if you get the medium point reference, it's a good reference to start to work before we provide the guidance range in the Q1 results conference.

Let me catch up with the first question because maybe I did not make the right question. So I was referring more if there were also some additional cost in Q4, so there was this extraordinary volume in Q4, but were there also some extraordinary cost in Q4? Just to understand the margin, the total margin figure for Q4.

No, sorry. I mean, nothing extraordinary. Depending on the margin is the combination of the geographies that you know are different margins where it's coming from the operations, right? So we'll depend on that. And I have the numbers on my mind, but nothing extraordinary, really.

Okay. And do you have already a roadmap for maintenance work in 25? Is that as usual in Q3? Or you are thinking to make a different maintenance schedule this time?

Well, it depends on the yearly basis because it depends on the campaigns. And obviously, we take advantage when we are stocking for not having a lot of... of dust in some plants. But well, I will say that probably the weakest quarter in 2025 is the Q1 because we are going to have a couple of big stoppages in Europe particularly. And you know that European operations is the better margins contributor. So obviously the Q1 probably is the weaker and the remaining three quarters we'll see. But I think that once again probably the fourth one Could be very high, but well, I think the idea is this. Q1 a little bit weaker, but the rest in a good path.

Okay. Thank you for the call. I go back to the line. Bye.

Thank you, Jorge.

The next and last question for this day's call is from Beltran Pazuello from DLTV Europe. Please go ahead.

Hello. Good morning. Always a pleasure to be able to participate on the call. and congratulations for the strong results. I have a little question regarding capital allocation. If you could give us more color on the dividend, especially seeing that the balance sheet is strong and getting even stronger, and seeing that in, I think it was 2021, you said, Serge, to do the operation in the United States. Is it in the plans at some point if the market does not reflect the strong and growing EBITDA levels of EFESA? to implement a little buyback to show that you can also issue shares at 50-something, but also can buy them at 20-something, that I suppose it's quite accretive to shareholders. Is that in the cards, seeing that the balance sheet is getting stronger and stronger? Thank you very much.

Thank you, Eldran. Well, it's something that we want to stick to our dividend policy, which is 40% to 50% of the to pay a dividend of 40% to 50% of the net income. We have been consistent with that since the IPO in November 2017. We have explored in the past alternatives and opportunities to do share buybacks. We have always came to the conclusion that the best thing for the company and for our shareholders was to stick to the 40% to 50% dividend. So in terms of capital allocation, it's about reducing the maintenance capex, focusing the growth capex in the projects that Asir has been explaining, and then be leveraging the balance sheet and keep our dividend policy. That's what I can tell you so far.

Okay. Thank you. Thank you very much for the clarity. All the support. Thank you.

Thank you.

Ladies and gentlemen, that was the last question. I would like now, therefore, to turn the conference back over to Rafael Perez, CFO, for any closing remarks. Please go ahead.

Thank you all for your questions. You can also contact the investor relations team of Befesa for any further clarification. We will now conclude the conference call and the Q&A session. Let me remind you that you can find the webcast and the dial-in details to access the recording of this conference call in our website, www.befesa.com. Thank you very much to all of you and have a good day.