Befesa S.A.

Ladies and gentlemen, thank you for standing by. Welcome to the preliminary full year 2025 results conference call. I am Jota, the course call operator. I would like to remind you that all participants will be in a listen-only mode and the conference is being recorded. The presentation will be followed by a question and answer session. You can register for questions at any time by pressing start and 1 on your telephone. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Rafael Perez, CFO. Please go ahead.

Good morning and welcome to the preliminary four-year 2025 results conference call of BFESA. I am Rafael Perez, CFO of BFESA, and this morning I'm joined by a group CEO, Azir Zaronandieh. Asir will start with an executive summary of the period. Then he will cover the business highlights for the steel dust as well as aluminum salt slag recycling businesses. I will then review the preliminary full year financials by business and will cover the evolution of commodity prices, our hedging program, and finally cash flow, net debt, and leverage and capital allocation. Asir will close this presentation providing an update on the outlook for 2026 and an update on our growth plan. Finally, we will open the lines for the Q&A session. As always, this conference call is being webcasted live, and you can find the link in our webcast. Now, let me turn this call over to our CEO, Asir, please.

Thank you, Rafa. Good morning, all. Moving to page five of the business highlights. We have delivered strong full results and year results. continuing the solid trends seen in the first nine months of the year. Our performance demonstrates once again the resilience of our business model and the benefits of our diversified operations. Adjusted EBITDA for the full year of 2025 reaches 243 million, up 14% year-on-year. The BDA margin improved significantly to 21% in the full year of 2025, compared with the 17 in 24, reflecting strong operational efficiency and disciplined cost management. Financial leverage was further reduced to 2.27 in December 2025, compared to 2.90 a year ago, well below the 2.5 target, marking the seventh consecutive quarter of the leverage. Net income and earnings per share also increased sharply, EPS rose 58% year-on-year to 2.01, reflecting a strong profitability and improved financial performance. In our steel dust business, we achieved resilient EAF dust volume across all markets, despite adverse market conditions. Performance was further supported by lower seam treatment charges and favorable seam prices. our salt slag operation delivered solid performance, while secondary aluminum has been impacted by persistent, challenging environment, driven mainly by the weak automotive market in Europe, as well as the usual summer period maintenance activities in the auto industry. The Palmerton expansion project was completed as expected, with the second kiln successfully hot-commissioned in July 25. We expect 20C to be another year of earnings growth, primarily driven by higher EAF steel dust volumes in the U.S., as well as sun recovery and secondary aluminum. Our financial leverage is expected to remain at around two times by year-end 2026, supported by solid-car generation and disciplined capital allocation. We continue to focus on the Vermont project. I will comment on the outlook in more detail later. Moving on to page six, business highlights for the steel dust business. In Europe, steel production in the full year of 2025 has mainly decreased, down 3% year-on-year, mainly due to weak manufacturing activity and higher imports from China. Despite this, our steel dust deliveries from electric car furnace steel customers continued in line with the 2024 average at very solid levels, demonstrating the resilience of the business model. Operationally, the European plants performed strongly, achieving a 94% low factor in the fourth quarter, showing strong performance and no maintenance stoppages. In the U.S., steel production increases by 3.1% year-on-year, driven by overall economic growth. Our U.S. plants operated at a 71% low factor in Q4, continuing a gradual improvement year-on-year. The two new kilns in Palmerton have been fully operational since July 2025. A new electric car furnace supply contracts are ramping up progressively through the Q4 following some initial startup delays. At the same time, cost reduction measures in the U.S. green refining plant continue to deliver the expected improvements in asset profitability. In Asia, volumes in target increases by 11% year-on-year, recovering strongly after a weak second quarter affected by maintenance shutdowns. In Korea, the low factor reaches 76% in 2025, up 6.6% year-on-year, driven by higher domestic deliveries and strong operational execution. In China, operations continue at low utilization level, with earnings around break-even reflecting ongoing market weakness. Moving on to the page 7, business highlights for the aluminum salt and slag recycling business. In our aluminum business, performance has remained mixed in 2025. Starting with the salt and slag recycling business, operations have continued to perform strongly, running in line with previous quarters. Utilization levels remained above 90% in 2025, demonstrating the robustness and efficiency of our assets. In our secondary aluminum segment, the market environment continues to be very challenging. As we have been commenting during the year, the European secondary aluminum industry remains under pressure with tight metal margins and limited production activity, largely as a consequence of the ongoing weakness in the automotive sector. However, the performance in the fourth quarter of 2025 reinforced the view that the Q3 was the lowest point of the cycle and that the recovery should be underway. Despite these headwinds, we continue to focus on operational discipline, cost efficiency, and customer diversification to preserve profitability and position of the business for recovery once market condition improves. Now, Rafael will explain the financials in more detail.

Thank you, Osir. Moving on to page nine, the financial results for the steel dust segment. Steel dust delivered 212 million years of adjusted EBITDA in 2025. which represents a 25 year-on-year improvement. EBITDA margin improved from 21 to 27% in the period, mainly driven by better pricing environment on treatment charges and SIN hedging. The 42 million EBITDA improvement has been driven by the following factors. The year-on-year impact from volume has practically no impact, with similar plan utilization at group level around 70%, similar to last year. As explained by Asir, we have been able to run our European assets at a high utilization despite a very challenging market environment. On price, strong positive EBITDA year-on-year impact of around 35 million euros, with the two main price components being higher SIN hedging price, 3% higher year-on-year, and lower SIN treatment charges, which was set at $80 per ton for the full year 2025. versus 165 per ton in 2024. On cost and order, the net positive 6 million impasse is largely driven by the lower operating costs in the single smelter in the U.S., as well as lower average code price. These two positive effects have been partially offset by higher inflation costs in the recycling business, as well as unfavorable effects. Moving on to page 10, financial results for our aluminum segment. Aluminum salt slag delivered 32 million euros of EBITDA in 2025, which represents a 27% year-on-year decrease compared to the 43 million in the same period of last year. The year-on-year 11 million euros negative EBITDA development was mainly due to the lower aluminum metal margin, as well as slightly higher operating costs and energy prices. On volumes, overall marginally negative EBITDA year-on-year, with a decrease of 3 million euros. Our recycling volumes of salt slag remain pretty much in line with the previous year. With these volumes, we operated our plants at a strong capacity utilization rate of about 89% in salt slag and 75% in secondary aluminum. With regards to prices, negative EBITDA year-on-year impact of around 5 million euros, mainly driven by the pressure aluminum metal margin versus the previous year. As commented by ASEER, our view is that the industry has bottomed out already in Q3 last year, and we expect positive development from now on. This was partially offset by higher aluminum FMV price with an increase of 3%, averaging 2,369 euros per ton. On course, another increased pressure from higher operating and energy related expenses. Moving on to page 11, SIM price and treatment charges. Regarding SING LME prices during 2025, each SING has traded in the range of $2,521 to $3,351 per ton, showing a particular positive trend in the last months of 2025. The average of SING LME price in 2025 have been $2,867 per ton, which is 3% above the last year average. However, unfavorable evolution of the foreign exchange of the euro-dollar has resulted in a slightly lower ZIN pricing euros, down 1% at 2,542 euros. On the right-hand side of the slide on treatment charges, in 2025, treatment charges for ZIN were set in April at $80 per ton for the full year 2025, compared to the $165 of the previous year. marking an all-time low record level. Turning to page 12 on hedging, we have taken the opportunity of the recent rally of the same price to be very active on our hedging program. Our hedging book has been extended to the first half of 2028 at all-time high levels of $3,100 per ton. For 2027, the hedge is set at $3,000 per ton. This provides stability and visibility over the coming quarters and years. Average HES prices amounted to $2,923 in 2025 and $2,990 per 2026. Turning to page 13, the FESA energy prices. The page shows the evolution of the three energy sources that we have in the FESA, coal, natural gas, and electricity. With regards to coal price, which today represents around 60% of the total energy bill, the normalization that started in the second quarter of 2023 continues throughout 2025. Average coal price in Q4 was around 152 euros per ton, consolidated its downward trend compared to the previous quarters. Regarding electricity, which today accounts for 30% of the total energy expense, price are at similar levels during Q3 2025, after significant correction in the second quarter of last year. Finally, gas prices continue its normalization throughout 2025, with a slight increase to 45 euros per megawatt hour in the fourth quarter of last year. Turning to page 14, the cash flow results. Operating cash flow in 2025 has reached a record of 212 million euros. which represents an increase of 10% compared to the same period of last year, despite higher taxes with 21 million euros paid taxes in 2025 versus a positive tax impact in 2024. On the EBITDA to cash flow walk, starting with 243 million euros adjusted EBITDA and to the left, working capital consumption amounted to 10 million euros in 2025. with strong end-of-the-year recovery from previous level in the first quarter, reflecting the intra-year seasonality that we explained already in the first quarter. Taxes paid in 2025 came in at 21 million euros as a result of the final tax assessment of the previous year in comparison with a positive tax impact in 2024, resulting in an operating cash flow of 212 million euros in the year. making a record in the history of BFESA. On CAPEX, in 2025, we have invested 50 million euros in regular maintenance CAPEX across the company. 26 million euros in growth CAPEX related to the refurbishment of the Palmetto plant in Pennsylvania, which is now completed, as well as the part of the Benburg expansion project in Germany. In summary, total CAPEX of 76 million euros in the year, which is lower than the range of 80 to 90 million euros that we initially provided, reflecting a strong discipline on capital allocation. Total interest paid amounted to 34 million euros, and total bank borrowings amounted to 34 million euros in the full year. For 2025, the EGM approved in June to pay a dividend of 26 million euros in July, equivalent to 63 cents per share, or 50% of the net income. In summary, final cash flow amounted to 40 million euros in 2025. Cash on hand stood at 143 million euros, which together with our 100 million euros undrawn revolving credit line provides Befesa with more than 240 million euros of liquidity. Gross debt at the end of December stood at 695 million euros. Net debt was greatly reduced by 11% to 552 million euros, compared to 619 in the same period last year, resulting in a net leverage of 2.27 at closing of December 25, a strong improvement compared to the 2.9 at December 2024, and well below our initial target of 2.5. Turning to page 15, debt destruction and leverage. Following the refinancing back in July 2024 and the repricing in March last year, 2025, Bethesda today has a long-term capital structure with optimized financial costs. Net leverage improves significantly as explained earlier to 2.27 at the end of last year. This marks the seventh consecutive quarter of leverage reduction as well as well below our company target. For 2026, net leverage is targeted around two times and below two times onwards, reflecting Befesa's continued commitment to discipline capital management. We will prioritise the growth capex on those projects that will deliver immediate cash flow upon completion, like the approved project of Benburg and other market opportunities that may appear. Also, we will keep the annual regular maintenance capex around 40 to 45 million euros over 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. For 2026, the Board will propose to the EGM to pay a dividend of 40 million euros, equivalent to one euro per share or 50% of the net income. This dividend is 37% higher than the dividend pay last year in 2025. Moving on to page 16. Bethesda is entering a new cycle of low capex and high earnings, resulting in a strong frequent flow generation and shareholder value creation. During the last years, we have gone through a high capex cycle, which has allowed us to expand our operations globally into the U.S. and China. Now that this cycle is completed, we enter a new cycle of limited total capex, below 80% over the coming years, along with high earnings, resulting in a strong frequent flow. Total cash flow after three years of negative cash flow, 2025 has been marked as an inflection point delivering a strong final cash flow. Total cash flow is expected to follow a positive trajectory, reflecting the companies improving a stronger underlying cash generation profile. Finally, as we have already commented, leverage is expected to be kept below two times for the coming years, allowing greater optionality in future capital allocation decisions. Now, back to Sierra on outlook and growth. Thank you, Rafael.

Moving on to page 18, 2025 guidance. The FESA closes 2025 with solid delivery within the guidance provided achieving 243 million in EBITDA and a strong operating cash flows of 212 million and maintaining a strict CAPEX discipline spending 76 million. The company continued to deliver it, reducing net leverage to 227 supported but improved EBITDA and consistent cash generation. Earnings per share rose to 2.01, reflecting a strong underlying performance and enhanced financial efficiency. Overall, the results demonstrate disciplined execution and continuous focus on long-term value creation from service holders. Moving to page 19 on 26 outlook. Looking ahead to 26, as in the past, we will provide guidance in the first quarter once the 2026 treatment chart has been announced. However, I can provide some comments about the year. We expect 2026 to be another year of earnings growth, strong cash flow generations, and continued delivery. Still, that volume is expected to remain solid and stable in Europe. while the U.S. anticipates higher volumes driven by new contracts with steelmakers. In China and the rest of Asia, stability is also expected to prevail. Salt slag operations are projected to maintain stable volumes compared with 2025, supported by higher collection fees. The metal margin for second aluminum is also expected to improve gradually through the year. particularly after having bottomed it out in the third quarter of 2025. The smelter has benefited from a strong fixed cost reduction achieved in 2025, and further efficiency are expected to be realized through 2026. On the other hand, energy costs are expected to evolve more moderately. The group anticipates a slightly lower to stable overall coal prices, while European natural gas and electricity prices are projected to rise in 2026. General inflation continues to impact maintenance, auxiliary materials, and personnel costs across all regions, creating a negative pressure point in the cost structure. In the treatment charge environment, the benchmark DC settled at $80 in 2025, its lowest level in 15 years. Although the concentrate market remains tight, characterized by low spot treatment charges, are expected to rise in 26 toward a range of $100 to $130. Hedging activity for zinc remains stable with the average 26 hedge price set at approximately 2,990 per metric ton, consistent with 2025 levels suggesting a neutral hedging position. Total capex for the years will be below 70 million euros, with around 45 million euros for regular maintenance and the remaining for growth in the expansion of Bermuda. Net leverage will be around two times by the end of the year. Moving on to page 20 on Palmerton. In the United States, our Palmerton plan has been successfully refurbished, marking a key milestone in our strategy growth roadmap. Both guilds are now fully operational, positioning Befesa to capture the significant growth expected in the U.S. electrical furnace steel dust market over the coming years. U.S. electrical furnace steel capacity is projected to increase by more than 20 percent by 2028, equivalent to around 18 million tons of new steelmaking capacity. This expansion translates into over 300,000 tons of additional steel dust, creating a substantial opportunity for Refesa's recycling operations. With a total installed capacity of 650,000 tons across our US stands, we are now well-positioned to leverage this growth. Our goal is to progressively ramp up utilization from below 70% today to around 90% by 2028, as new electrical and furnace capacity comes online. The combination of our modernized fundamental facility, long-term customer relationships, and a strategic geographic footprint near key steel producers ensures that Befesa is ready to capture this next phase of growth in the U.S. market. Moving on to page 21, our expansion project in Vermont, Germany. This is another important milestone in Befesa's growth journey as we continue to strengthen our aluminum business and expand our recycling capacity in Europe. From a timing perspective, our permits have now been obtained and our construction officially started in August 25. We spent a 12-month construction period, followed by a six-month ramp-up phase in the second half of 26. On the commercial side, we have already secured strong customer support. Overall, the Melbourne expansion is progressing fully in line with plan. Moving on to page 22 about the European steel industry. Europe is accelerating its transition toward electrical furnace steelmaking, largely driven by decarbonization targets and supportive policy frameworks. Between 2026 and 2030, 12 new electrical furnace projects have been announced to come online. This represents more than approximately 20 million tons of new EAF capacity, which means 23% increase compared to the 1690 millions of electrical earth furnace capacity in Europe. As a result, EAF penetration is expected to rise from the current 45% over the next 5 to 10 years, supported both by this new project and the progressive replacement of glass furnaces. Given our strong market position, established customer relationships, and ongoing business development, BFESA is strategically well-positioned to capture the significant volume growth expected from this structure. We are already engaged in advanced negotiation with key customers to support this expansion phase in the coming years. Thank you very much.

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

We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchstone telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use only handsets when asking a question. In the interest of time, please limit yourself to a few questions, thank you. The first question comes from the line of Shashi Sekhar with Citi. Please go ahead.

uh hi uh good morning everyone and uh thank you very much for this opportunity so i have a couple of questions so my first question is on capital allocation i just wanted to understand uh what's the priority here is it deleveraging or dividend payment or further expansion into european steel dust business given uh improved outlook for european steel uh segment My second question is on China. I believe one of the plants is still burning cash. So I just wanted to understand at what point you will consider either closing it or moving it to some other province. Thank you.

Thank you, Sashi. On capital allocation, I think we have tried to explain many times. We want to deliver a combination Keeping the leverage below two times. I think this year we have made, last year, 2025, we made a great progress in our delivering efforts, achieving a target which is below what we initially envisaged at 227. We are targeting around two times for this year, 2026. And beyond 2026, we expect to keep the leverage below two times, okay? Secondly, on dividend, yes, we want to keep the promise that we made at the IPO to pay 40% to 50% of the net income as a dividend to shareholders. And then on growth, obviously, as we have explained, we are coming from a high capex period where we have invested heavily in China and in the U.S., and that has enabled us to expand our operations. I think the focus at the moment is for this year in Benburg, as Asir has explained. And then we also see a clear opportunity to deploy capital in Europe, as Asir explained at the end of his speech, to capture the growth of the EAF steel market in Europe. We envisage to do that through a brownfield. We will provide all the relevant information about the project at the right time. But it's a combination of capturing the growth opportunities that we see in our main market euro, while keeping the leverage below two times and keeping the commitment to pay dividend.

Yeah, Sasi. And regarding the second question about China, well, yes, we have one plan running probably levels in 50, 60%, and the other one is just 10, 20, depending on the DARS availability. But it's not burning cash because basically what we have is that plan stopped under control. And even when we run, we run in periods where we have stopped the plan, moving the people to run the business. And basically the cash is, we are not negative cash in general in China for the whole business. So we are doing a bit of positive and converting into cash positive for the year. So we have some confidence to be in that way until the market come back. Possibilities for the future, well, you talk about. I mean, we are open to see we can move in another province, and in that case, we consider even to transfer or translate the assets. We will see. The whole thing now is that China is in a situation that we don't see the need to invest in that piece of farm more and wait for the recovery and as well, Because we are not, again, making cash negative, we have time to do that.

Okay, thank you. That was very helpful.

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

Hi, good morning. Thanks very much for taking my questions. I also have two. So first of all, just on secondary aluminum, there was quite a strong margin improvement quarter over quarter given the market backdrop. Is this a level we should expect to persist throughout 2026 or were there any kind of specific positive effects in Q4 here? And second, just on the Q1 outlook, could you run through the kind of key moving parts to consider here like volumes and margins and are there any maintenance activities we should be aware of?

Thank you for the questions. Well, secondary revenue, I think that, well, yes, I think it's a reference, the last quarter margins, and probably we will see this. We are starting to see this level in the first part of the year. But still, it's a little bit early to say this is going to be there. Perhaps the level, if it is increased, we will see. I mean, it's a good reference because we see that the last part or the worst part has gone. In terms of the outlook and maintenance, I think that the reference could be the last year situation for maintenance stoppages, and probably the dust and the activity volumes are going to be in line with the 2025, but we think that we can improve the figures. But in terms of activity, it could be a good reference, the first quarter of 2025. That's helpful.

Thank you very much.

The next question comes from the line of Fabian Piasta with Jefferies. Please go ahead.

Hey, good morning. Thanks for taking my question. I have three and one follow-up. So could you give us an indication what the EBITDA contribution from your U.S. business is? Are we break even already this year? And what are you expecting for 2026? The second one is on the treatment charge outlook. Do you think that this is more driven by capacities or the recently increasing LMEs in price basically making Snota compete for the sink? And the third question would be you were referring to demand from data center verticals. Is there an end market split that you can share? How do you see that? What do you expect this growth to influence volumes in the U.S.? ? And the last one was on maintenance. Did you say that the phasing is going to be similar like last year, so more maintenance shutdowns in the first half, or did I get that right? Thank you.

Thank you, Fabian. So many good questions. Well, regarding the US, the plan is where we thought to be, and it's closing to the break-even point and the cost under control. Now the operation depends on the volumes as well of material we can treat there, and And it's basically a control of the cost already done. Even you can gain a little bit more efficiency cost for next year. The treatment chart is a good question about what is affecting. The most is capacity, demand, offer about concentrates market. And it's a little bit strange. But obviously it's affected by the rest of the factors which affects to the same price. The period is still in favor of the miners. The question is where it's going to be. Spot DC, that is not, has not to be a real correlation, but it's a little bit down again. So, well, all the music sounds that it's going to be another year in favor of miners. The level could be in the range as we see, we see more than $100 now. but this has to be confirmed basically those days with a meeting for the International Async Association in U.S. those days. We will see. In terms of the steel demand and so on, I think that everywhere is an expectation about the general evolution. Looks positive because we can see the steel share prices of everyone. I think that the expectation is that a recovery and because the tax and custom action they are taking in Europe or U.S. could have an effect in the production. If this happens, we see positive outlook for the steel in general. And regarding the last point, as I said before, yeah, when we, maintenance stoppage is sometimes not easy to move from six months or longer period because yearly basis is when we do the maintenance, so more or less, what we see now for 26 is the same level than 25 with the Q1 and Q2, and then Q3 and Q4 having more volumes. This is a little bit the view that we have now, no major changes. We try to move and do longer periods before the maintenance, but now big changes are going to come in the short term. So again, the 25 maintenance stoppage reference is a good point of reference. do your expectations.

Great. Thank you very much.

The next question is from Olivier Calvet with UBS. Please go ahead.

Hi. Good morning. Thanks for taking my questions. I have three. Firstly on volumes. In the US, what's your expectation for additional volumes in 2026? If you could give us a sense of the range you're thinking about, depending on when your clients' volumes come through. The second question would be on the capex level. So I fully understand the message on sort of below 80 million capex going forward, but I know to slightly higher maintenance capex in 2025 than I think you have indicated. Are you expecting a similar level of maintenance capex in 26? And just the growth capex part related to Bernboog, I had in mind at 10 to 15 million. Is that fair? And the third one just on the zinc hedges. So great to see you've been active on hedging. So what you've added in 27 and 28 is in USD, right? In 26, I think you had hedged in euros, right? And just if you could remind us what level of exchange rate you hedged 26.

Thank you, Olivier. I can get the first question about the U.S. volume, which is what we do expect is particularly the same that we were expecting to define with the new contract. of the evolution of the steel production in Chile for the rest of the customers, but we see more or less in the range of 60,000 to 70,000 tons of more volume in U.S. More or less is a good reference for you to have.

Regarding capex, Olivier, I think we have said it clearly. Obviously, it's not a fixed number, but maintenance capex will stay between 45 to 50 million over the coming years. And then growth will be based in this year, for 2026, on Benburg. We are envisaging maximum capex for this year of 70 million euros. And for the coming years, we don't see any year of capex higher than 80. So what I try to explain is that we are entering into a new cycle of limited capital, limited capex, and high earnings, resulting in a strong frequent flow. Regarding the hedging, yes, for 2026 we are hedging in euros for European volumes, in dollars for our American volumes, and for 2027 and 2028 the hedging are at the moment in US dollars.

Just on the capex, so the growth part of the guidance for 2026 is basically only Bernburg or is there some headroom to do...

The next question is from the line of Jaime Scribano Maiz with Banco Santander. Please go ahead.

Hello. Good morning. So a couple of questions from my side. The first one on . So the VBA in 24 was close to 32 million, around 29.5 million in 25. What could you expect in 2026? Also, if you can comment on the margin of salted lags in Q4, which was a little bit lower, 21% more or less. What could you expect? If you can give us some color on the dynamics in salted lags, basically. And second question on Secondary Aluminium. It would be very much of a similar question. So 2 million in 2025, which seems to be a trough. What should we expect for 2026? A number that you feel comfortable. And maybe a final question on the guidance 2026, which I know you don't provide, but If we look to the consensus at 260 million BDA, 262 million BDA more or less, how comfortable you feel with this number? I'm building on this in the treatment charts, and that's being around 100, 110, I think, price. Average is above 3,000. How do you see these 260 BDC upside risk or ? Thank you.

Thank you, Jaime. Starting for the question, yes, we have, I think it's a business which the current normal capacity of the secondary aluminum production in general and in Europe is quite stable. This reference of 32 million that we have in 25 could be a reference even to increase something in 26 because we have increased fees for aluminum producers. So we see that is a good reference even slightly higher. The 25 number has been affected by basically the volume that you have seen that is not better. more weight of the cost of production because you are not increasing or compensating with the with the volumes but the dynamics of the business is clear it's very very similar to the steel dust the the volumes is the key because we have the plan almost full capacity but the current aluminium producing second aluminium producing situation is putting some stress to the plant and and we are not the vein so efficient like in the past because the full production is the best situation to assort the cost. We see the 26, as I say, you know, unstable business, but probably a little bit higher, 10% or something like that could be a good reference, no? With regards to secondary aluminum, what we can wait, we can expect for 26? Well, the 2 million of the Q4 is a good reference. I mean, just repeating the 2 million in every quarter, we will talk about 8 million or something like that. So, well, it's not coming back to the years that we have even 20 millions in this business, but, well, a reference of 8 to 10 million is something that would be very strange for us, right? We will see if it's going to be even better because we see very difficult to be back on the worst period like it was the Q3. So, yes, the Q4 could be a good reference. Perhaps conservative, but repeating this, as I say, could be a reference. With regards with the guidance, I know you guys that you like the numbers, and basically one number, and an average in the range, whatever. 260-something, that is the current consensus. Well, we are comfortable with this figure, but we need a little bit more time to see the evolution of PC and put our... but I think that is, in any case, will be in the range, this amount, and we are not, we are comfortable, yes, really.

Thank you very much, Asier.

Thank you, Jaime.

The next question is from Beltran Palazuelo with DLTV. Please go ahead.

Hello. Good morning. Asier Rafa. Congratulations, all of you on the team for the strong results. Two questions. First of all, regarding capital allocation, I know you answered, but I will ask again. Clearly, seeing, you know, the dynamics here you're seeing and you're stating, and they clearly also stating, you know, the visibility you start having with the sink prices, you know, due to the hedges, and seeing that the spot price is higher than your hedges, well, it looks like that in the future, well, your balance sheet should get stronger and stronger. So my question is, apart from paying the dividend, what is making you not start buying a little bit of shares to show the market all your, let's say, improvements? From us, we would like to see the share count decrease. In 2021, you increased it at a good price. Now we want to see it decrease because the balance sheet, it looks like it gets stronger and stronger. And then my second question is, apart from the, what growth opportunities now, apart from the stated, do you see now a medium to long-term to allocate a capital accredited? Thank you very much and all the support.

Thank you, Bertram. I think we have discussed many times, you know. I think, obviously, share buybacks is something that we have looked in the past, the financial profile of the company was not adequate. It is true that we expect to generate a very healthy cash flow going forward. We want to keep the leverage slightly below two times. And yes, we don't see any growth opportunity. We will definitely consider share buybacks, considering also the share price and the valuation of the company. anytime that we see that devaluation of the company or the share price doesn't reflect really what we believe should be the fair value of the company, we will analyze share buybacks. I don't think that's something that you can expect this year. We have another project in the pipeline which is going to explain you, which is in Europe, as you know very well. So it's about balancing everything, but yes, I think

share buybacks are something that we are looking at not in the short term but um but more in the midterms yeah indeed i think this is a good question and and i think that we are starting to enter in a cycle that we are going to generate a strong cast and the massive growth opportunities that we have in the past are not coming so high so probably those considerations are on the table and we have to see what is better is to to keep growing with the projects, as you are asking, or, yes, do some program of save-by-backs or whatever, what is better for the service holders at the end of the day. In this regard, the project that we have in the pipeline for the next years clearly is to finish the bare-boom plan, as we are indicating, basically in 26, and the next one could be, or is going to be, the question is when, but probably starting in 27 is a good reference, and to run it in 29, is the European second killing, our French plan, going on hand-to-hand with the projects of the steelmakers. We have in the pipeline as well the Salt Slab Plan in the East Europe. If I'm following the developing of the decarbonization and the evolution of the automotive sector, then nowadays I think that is not the time to do because everything is delayed and has to be confirmed. Out of those two projects, we have, of course, the idea to medium term for new geographies, like India or, let's say, in four or five years, China is back. At the end of the day, to see opportunities, small M&As or whatever. But it's true that this is the reason, as Rafa says, that we have to evaluate the new projects against new ways of retribution to the status quo, clearly. But anyway, we are really interested because I think that is a very good opportunity for the first evolution on the growth of the European market. and then we will see what is going on with the rest of the geographies.

Okay. Thank you very much. But also, as I said in the past, and I say it now publicly, I think you have demonstrated to the market that you're extremely good, let's say, operators. Now what you have to demonstrate the market is that you're extremely well capital allocators. I think you demonstrated in 2021. Now you have to demonstrate it going forward, no? start a share buyback of 10 or 20 million in the future when the stock is at 60, that would make no sense. So you do not have to make a big thing, but I think the balance sheet is getting stronger and the stock market is not reflecting it. And all the support. Have a good day.

Fully agree. Beltran, thank you so much for your comments.

Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Mr. Perez for any closing remarks.

Thank you all for your questions. Please don't hesitate to contact the Investor Relations Team of EFESA for any further clarification. We will now conclude the conference call. Thank you for joining and have a good day. Bye.

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