Alzchem Group Ag New

Good morning, ladies and gentlemen, and a warm welcome to today's earnings call of the ArtsChem Group AG following the publication of the Q3 figures of 2024. I'm delighted to welcome the CEO Andreas Niedermeyer, CSO Dr. Georg Weichselbaumer, as well as CFO Andreas Loesler. So the gentlemen will speak in a moment and guide us through the presentation and the results. So after the presentation, we will move over to our Q&A session. in which you will be allowed to place your questions directly to the management. So having said this, Mr. Nehemiah, this stage is yours.

Yeah, thank you for your warm introduction and good morning together. Thank you for joining us today and welcome to our third quarter call. Actually, as always, we will go through the presentation first and then be available for questions at the end of the presentation. So let's skip the first pages and go directly to the page five, to the highlights. There is a whole range of positive news to report this quarter for sure. So we are able to continue to set ourselves apart from the general downward trend in the chemical industry. So we have developed particularly strongly in the area of specialties. As a result, we were even able to grow revenue in the group as a whole, increased EBITDA by 36% to €76.8 million, and at the same time increased the EBITDA margin to a very respectable 18.5% here. So in terms of the outlook, we assume that although we will achieve sales at the lower end, we will perform in the earnings above €1 million. So 100 million. So we will hear another more detailed financial analysis of the successful figures later from my colleague Andreas Loesler. So this is only a short first summary here. So what I personally was particularly pleased about was the inclusion in the SDACs. In recent years, we have worked very consistently to increase the liquidity of the share with the good performance of the figures And the inclusion in the SDAGs, not only the share price has developed very positively, but also investor interest. For example, we are very well booked at road shows and sometimes even so well that we cannot consider all interested parties, even though we have significantly increased our support capacity. So we would like to ask investors for their understanding, and we are doing our best here. So the consistent work has also paid off in the area of ESG. Here, our company and not least our ESG team were awarded the Platinum Medal for Sustainable Corporate Management. This puts us in the top 1% of companies assessed by EcoVadis worldwide. We have always taken ESG seriously and worked on it consistently. Now it will be up to us to maintain this high level, and probably we will accept this challenge. On the strategic development part, we have also achieved something great. Here we have approved the largest investment package in the company's history for the further expansion of capacity of guanidine salts and nitroguanidine, and are already in the process of implementing it. And I can explain these to you in more details on the next pages. For sure, you are already familiar with our verbund model, with the production family tree. Here, I would like to describe to you exactly where and when, what take place and what the logic behind is. The first step is the already communicated expansion of guanidine soil capacities, which we have supplemented here with the expansion of nitroguanidine capacities. In total, it is about a project sum in a capex of approximately 140 million, since the demand for nitroguanidine as an application in 155-millimeter ammunition can fluctuate greatly, we have agreed on a special capacity and financing model with our customers or are still in the process of doing so. The target is to have financed the entire CapEx sum together with the EU and our customers with the completion and commissioning of the CapEx to such an extent that we do not need any additional debt financing here. all upfront payments, whether from customers or the non-repayable grants. This was particularly important for us, as it allowed us to reduce the risk of the largest company, CapEx, very much in advance. From mid-2026, we expect commissioning in the quarter three, and the sales forecast assumes additional growth in sales in the upper double-digit million range, with correspondingly significant positive earnings contributions in the specialties segment. This is for sure the first step that we are implementing in Germany. However, there is also a second step planned for the USA. To this end, an undefinitized contract action has been concluded with the U.S. Department of Defense, which will extend over the next two years in the first joint project step. If a suitable production site is found during this period, the U.S. Department of Defense has already pledged an investment grant of $150 million for the construction of a new nitrogen production plant in the U.S. by the end of 2029, which will be operated by Altschem in addition to the facilities in Germany. Pictured under step two, you can see this is as the beginning of a new production plant in the USA. An internally formed project team will consistently drive forward the site search for locations and has already started with the project planning and pre-selection of locations. So the two projects and the grants secured for them substantiate the importance of that our defense products have become for industry and government agencies. So here on this page, you can see a summary of the two projects for Germany and the USA. Both projects are pre-financed so that no additional debt should result on Alskam's balance sheet from the CapEx after construction. However, we assume that we will need some interim financing as the payment dates for incoming and outgoing payments will not be harmonized. So these projects will make a significant contribution to the future growth of our specialty sectors and will transform the group more and more in a complete specialty group. So what else happened and how the other products of Altschem have developed is analyzed here by my colleague, Dr. Georg Weichselbaumer, to whom I may also hand over the floor now. So the floor is yours. Please start.

Thank you, Andreas. Let's start with basics and intermediates. This segment concluded the first nine months of the year with sales amounting to approximately 132 million euros. Compared to the previous year's level, this represents a decline by 15 million euros or approximately 10%. In general, it can be said that the situation within this segment has not changed materially since our last reporting date. As shown within the detailed sales analysis, the decline in sales is due to both volume and price effects and was somewhat expected. Overall, The decrease in cost for energy and other essential raw materials has mainly led to a reduction in sales prices through embedded price adjustment clauses, thereby passing on cost reductions to customers. Price reductions amounted to approximately 5% of the sales decline. The decline in sales was further impacted by targeted volume reductions in certain product areas, where the volume development must be viewed differently by product area. The guideline for the country's career also applies, stating that volume reductions are consciously accepted if the market does not allow for profitable pricing. This still applies to areas where we compete with Asian price dumping. Let's have a closer look at our business areas and start with a positive development. In terms of volume and sales, we saw positive development within our fertilizer business with our brand Perco. Due to a significant recovery in demand, revenue was substantially increased despite only slightly reduced price levels. Our neutral business is still undergoing a period of transition. The competition within this business is currently almost only price-driven, and the expected customer prices is sometimes far away from our cost structure. We made first steps to move away from standard applications and concentrate on specialized applications in the neutral sector to gain a significant competitive advantage over the low-cost competition from Asia. Sales within our metallurgical business were also below previous year's level, as we do act with price escalation clauses with most of our customers within this business. Apart from that, the general economic situation of European steel producers also caused volume declines. Despite the mentioned decline in sales, EBITDA increased by half a million euro compared to the previous year and ended up at 6.7 million euro. The deliberate avoidance of low margin business and price competition with Asian or Russian competitors has positively impacted the EBITDA margin, which rose from 4.2% in the previous year to 5.1% in the current reporting period. This reflects the effectiveness of the consisting pricing strategy and the stabilized cost level compared to the previous year. As mentioned several times, the products of our basics and intermediate segments are not only sold to the market, but are very important raw materials for our folium production steps, and all raw materials required for the growth of specialty chemicals could be produced reliably. We will now have a look at the development within this segment. As already explained by Andreas, our specialty chemical segment remains the growth driver of Altschem and was again able to significantly increase all major performance criteria compared to the previous year's period. The revenue of the segment grew by 31 million euro, which represents an increase of 13% and ended up at approximately 260 million euros. While the main driver of this sales development was volume growth, prices could be slightly increased as well. Compared to the previous year, the volume increase contributed almost 11% to the sales increase in the first nine months of 2024, and price increases added another 2%. Across the segment, most product areas were able to contribute to the growth, albeit to varying degrees. The success story of the first half of the year continued, and we could grow materially within the area of dietary supplements with our products CreaPure and CreaMetallis, with animal production, nutrition with our product CreaMino, and within the defense sector with our product NitroGuanidine. As already mentioned at our previous quarterly calls, we can still benefit from the investment in our creatine capacities commissioned at the end of 2022. After the initial smooth rent-up phase in 2023, we could produce and sell our products throughout the first nine months of 2024 at high quantities, which contributed to the growth. The next investment is on its way and will support our growth with existing and new applications for creatine within the next years. My colleague Andreas Niedermeyer has already explained our current and future growth investment into our nitrogen business. Meanwhile, our supplies of nitrogen into the defense sector are on a constantly high level. CREAMINA also developed positively. Despite the highly competitive privatizing environment, significant volume and thus revenue growth was achieved. Also, the pharmaceutical sector with BioSelect and the automotive sector with Diehard confirmed their positive sales trend. Within the automotive industry, we saw an increased trend from steel to lightweight construction, where our Diehard products are used and deliver high quality. The custom manufacturing business of our multipurpose plants is still confronted with a challenging economic surrounding. This business is clearly linked to the economics of the chemical industry in Germany and Europe and was impacted by a sales decline, solely resulting from volume effects. We see this business as a chance and do believe to be back on the growth path if the chemical industry in Europe recovers. The positive sales development was accompanied by a strong increase in EBITDA and EBITDA margins. EBITDA after nine months in 2024 reached 67 million euros, which represents an increase of 18 million euros or 36% compared to last year. Together with the EBITDA with our segment specialty chemicals, the EBITDA margin also developed very positively. This also led to a significant increase in our EBITDA margin to 26% compared to 21.7% in the previous year. Thus, the growth trend in the specialty chemics segment continues the third quarter of 2024, which is also reflected in the EBITDA margin. In summary, we can say that we are mostly satisfied with the development within this growth segment. Let us now move on to our third segment, others and holding. The revenue in this segment was slightly above the previous year, and reached 24 million euro. This development essentially corresponds to passing on of cost increases to the Chemiteriel Park customers. The services utilized by the Chemiteriel Park customers of Altschem were predominantly of a variable nature and represented energy supply, technical service, and network operations. The segment's result was slightly above the previous year's figure, which was associated with the increase in revenue for grid fees of the CapEx in our grid network last year. That was all for our detailed view on the segment development. Let's now hand over to Andreas Lösler and take a look at the overall group figures.