Alzchem Group Ag

Welcome, ladies and gentlemen, to the Q1 earnings call 2026 of Altium Group AG. I would like to welcome the company CEO, Andreas Niedermeyer, and CFO, Andreas Loesler, who will guide you through the presentation in a moment, followed by a Q&A session via audio line and chat. And with that, I hand over to you, Mr. Niedermeyer.

Thank you for your warm introduction. Thank you for joining us today, and welcome to our quarter one analyst call here. As always, we will go through the presentation first and then we'll be available for all the valued questions at the end. So let's skip the disclaimer and go directly to page five. I think, yeah, you should see the presentation. Let me briefly summarize our performance in the first quarter of 2026. We have made a very Solid start into the new year, group revenue increased by approximately 3% here on a year-on-year basis to approximately $149 million, building on an already strong comparison base. So at the same time, profitability developed significantly better than revenue. EBITDA rose by 18% to $32 million, and our EBITDA margin expanded to a markedly 21.7%. This clearly reflects the success of our strategic focus on high-margin specialty ingredients. In particular, our ingredients once again proved to be the key growth driver here. Growth was predominantly volume-driven with strong demand across human nutrition, animal nutrition, and defense-related applications here. As a result of this strong operational performance, net income after taxes increased by more than 20%, underlining the scalability of our business model and our discipline cost management. From a capital markets perspective, we further strengthened our equity story by increasing the free flow to around 75%, improving liquidity and visibility of the stock. On the operational side, I am pleased to report that the scheduled overhaul of the carbide corners is fully on track. Re-commissioning is expected in early July as planned. So against this backdrop, and despite the volatile macroeconomic environment, we are confident in confirming our full year outlook for 2026. We expected additional growth momentum, particularly in the second half of the year. So overall, quarter one has laid a strong foundation for another successful year here. Based on this strong first quarter performance, I would now like to turn to the key strategic projects that will further drive our growth in the coming years. Let me start with the nitrogen-benadene expansion in Germany. Progress in the first quarter was fully in line with our ambitious targets. construction and preparation activities continued as planned and we remain on track to commission the additional capacity in the second half of 26. This expansion will allow us to meet the structurally growing demand from the defense sector and further strengthen our position as a reliable European supplier. So second, in parallel, we advanced our plans for our nitrogen production site in the United States. During the first quarter, we continued to intensify the site selection process here. The site selection process is close to final and the basic engineering for the plant has already been awarded to the engineering company and has also already started. This project is a key strategic step to produce around transatlantic footprint. improve proximity to customers, and enhance supply security for our international partners. And certainly, finally, let me briefly touch on our creative investment program. Driven by sustained strong global demand, we continue to execute our 120 million investment program exactly as planned here. The construction of the new highly automated production facility and the expansion of the surrounding infrastructure progressed smoothly in the first quarter. So the project is scheduled for graduate commissioning from the second half of 27 and will secure long-term growth in our premium brands, CreaPure and CreaVitalis and further reinforce our leadership position in high quality specialty ingredients. So let me now briefly walk through The development of our operating segments, starting with the basic and intermediates here. Let's turn the presentation page as well. You should see now all the respective figures. So in the basic and intermediate segment, revenue declines by 14% year-on-year to 36.7 million, fully in line with our expectations in European chemical development. This development was driven by both lower volumes and prices and price pressures, reflecting the continued weak market environment, particularly in agriculture, pharma, and steel-related end markets. Despite a lower revenue base, EBITDA improved a little bit to 0.3 million and the EBITDA margin increased to 0.8% here. This clearly demonstrates our disciplined approach to pricing and cost management, as we deliberately refrain from unprofitable volumes while safeguarding the integrity of our integrated production tree. Operationally, the carbon furnace overhaul is progressing fully according to plan, and the segment's supply capability remains fully secured through inventories and our second furnace. Overall, the segment performed exactly as anticipated and continues to provide a stable backbone within our group structure. Let's now go where we are already much more successful to our specialties segment here. This segment delivered another very strong quarter. Revenue increased by 11% year on year to 105 million approximately with growth predominantly driven by higher volumes. while pricing contributed positively as well. The strong volume momentum was driven by our ingredients portfolio, in particular in human nutrition, animal nutrition, and defense-related applications, reflecting robust end-market demand and our expanded capacity base. This favorable volume mix combined with the continued shift towards high-value ingredients translated into a 21% increase in EBTA to approximately 31.5 million. At the same time, the EVTA margin improved further to closely 30% and underscoring the scalability and high operating leverage of our specialty ingredients business. Overall, specialty chemicals and its ingredients portfolio remain the core growth and earnings engine of our group here. So let me briefly complete the segment review by turning to others and holding. Let's turn the page as well. So in the other and holding segment, revenue came in slightly below the previous year, mainly reflecting lower pass-through revenues, in particular reduced bridge-free recharges to our customers. Accordingly, EBITDA declined modestly to 0.2 million. Largely in line with the revenue development overall, this segment behaves as expected and does not alter the underlying earnings momentum of the group, which continues to be clearly driven by our specialty chemicals and ingredients business. That was all for the detailed view on the segment development. Let's now take a look at the overall group figures and hand over to my highly valued colleague, Andreas Lösler.

Okay. Also, good morning from my side, and thank you, Andreas, for the insight in our segment development in Q1-26. As always, I start my analysis with looking at our P&L. Our gross sales amounted to almost 149 million euros within the first three months in 26, an increase of 4 million euros compared to last year. Compared to our guidance, we are exactly on the anticipated level, not only for the group, but also if you look at the segments standalone. The different developments within our segments have been discussed already by my colleague Andreas. On a regional basis, the major sales increase could be achieved in the U.S. once again and can be allocated to the specialty chemical segment. Our EVGA grew even more. After three months in 26, our EBITDA amounted to 32.3 million euros. This represents an increase of almost 5 million euros, or 18% compared to Q1 last year. As already discussed, the major portion of this increase came from our high-value products sold within segment specialty chemicals. This development is also completely in line with our expectations and our guidance. On the cost side, we have to report increased personal expenses based on increased union tariffs and slightly increased number of employees for our growth projects. Our operating costs increased mainly resulting from higher maintenance costs in conjunction with our carbide furnace renovation and higher waste disposal costs resulting from our increased business volume. Our Q1 costs were not yet affected by the possible cost increases resulting from the conflict in Iran. As mentioned already by my colleague, our sales and FHDA development led to a further increase in our FHDA margin In that reporting period, the EBITDA margin reached 21.7%, significantly higher than the 18.9% achieved in the corresponding prior year period. The improvement in the group's overall profitability was primarily driven by the continued shift in the revenue mix towards the specialty chemical segments which comprises highest value specialty chemical ingredients. Our depreciations increased slightly and so did our financial result. The latter was mainly impacted by non-cash interests for non-current provisions. All put together, we could also increase our net result up to 18 million Euro. This represents a significant increase of more than 3 million or 23% compared with the prior year QWAP. The same applies to our earnings per share. That was the big picture of our P&L. Now let's move on to the balance sheet and cash flow figures. Our balance sheet and cash flows are still very healthy and developed as expected. Our balance sheet total increased by 37 million euro since our last reporting date. The assets are mainly influenced by our growth projects and accordingly, non-current assets showed with 22 million euro, the highest portion of this increased balance sheet total. Major expanding is related to our nitro-granitine expansion, but we also started with first payments for our creatine investment. Our inventory level increased slightly. Reduced carbide stock levels were overcompensated by increased stock levels for our multipurpose business in preparation for production campaigns. Our equity increased by 18 million euro, and our equity ratio could be That increase was supported by our very strong net result and increased interest rates for our pension valuation. Additional payments from customers for our NitroBurn investment further increased our contract liabilities, which amounted to €93 million by the end of March 26th. Our current liabilities increased as a result of our increased business volume in Q1 compared to Q4 of last year. As of our reporting date by the end of March 26, we can again report a positive net cash position of almost €30 million. Our operating cash flow was €12 million lower than in Q1 last year. While we improved our net working capital with positive impact on our operating cash flow, The main reason for the decline in our operating cash flow was attributable to reduced customer grants for our CapEx program. Such payments amounted to 6 million Euro in Q1 1026, but almost 40 million Euro in the comparative period of last year. Investing cash flow was highly above prior year and clearly shows the progress in our current CapEx program, especially for the Nitro-Garnitine expansion. Despite this highly increased CapEx activities, we can still report a positive free cash flow. Our financing cash flow shows regular loan repayments. Last year, Q1 was affected by our share buyback program. As you can see, Altcare is in a very healthy cash position and ready for future growth. Future is a good keyword. Let's now discuss our outlook for financial year 26. As already mentioned by my colleague, we can confirm our guidance as set out at the beginning of the year and see further growth for 26. Sales are expected to grow to approximately 600 million and EBITDA is expected to grow to approximately 126 million Euro. This represents a sales increase of approximately 7% by EBITDA is expected to grow by approximately 8%. The planned sales growth shall continue to be achieved organically. The fundamental growth drivers are expected to be volume effects within segment specialty chemicals. As already outlined, we do expect that volume growth in the area of human nutrition and defense, the latter expected in the second half of the year. For the basic and intermediate segment, we expect overall sales to be at the previous year level. We are currently experiencing increases on raw material prices as a result of the conflict in Rioar. Our outlook is based on the assumption that such increases can be passed on to our customers and that this conflict will not last for a very long period. Our ABTA increase for 26 is mainly driven by the development in our segment specialty chemicals. This also applies to our ABTA margin. The recently announced industrial power price in Germany has not been included in our guidance, as we are currently analyzing the new regulations and its accounting treatment. However, we do not expect a huge impact out of this regulation. As you can see, we have interesting times ahead of us. At this point, we would like to thank you for your appreciated attention and are now at your disposal for possible questions.

Yes, thank you very much. Ladies and gentlemen, we're now opening the Q&A session. If you would like to ask your questions in person via audio line, please click on the raise hand button. If you're dialing in by phone, please press Starkey 9 to raise your hand and Starkey 6 to unmute yourself. Additionally, you're also welcome to place your questions in our chat. And we already received two risen hands, one by Mr. Christian Feist. You may unmute yourself now.

Yes, Vance, and good morning. Congrats on the results. A couple of questions, please. First of all, Andreas, you mentioned the possible cost increases on the back of the Middle East situation. Can you elucidate this a bit and perhaps also put some numbers on it? I get your remarks mostly considering raw materials as well as energy. And yes, I'm aware you try to pass this on via pricing. But just on the cost side, some comments would be helpful. And second of all, how is the retrofitting of the calcium-carbide organ going? Everything according to plan and schedule should be count on a ramp per July? That's it from my side for now. Thanks.

So let me start. That's Andreas speaking. Let me start on the carbide oven. Yes, the startup of the carbide oven is planned on July. So all things are in the right order. And we think that there should be no problem to open the carbide kiln there. So for the cost increases of the Middle East, Andreas, I don't know if you can elaborate a little bit on it. From my point of view, so we will see higher transportation costs and some raw material increases, but we try to hand that over to the customers. But if you have some more details, please.

That's completely right. As we mentioned, we did not see an impact in Q1 because it was too late for Q1, let's say. On some raw materials, we see slight increases, but We are managing on passing that through to our customers. And your question was also related to the energy prices. And this was – the energy prices in Germany were not so much affected. And this is not as surprising as someone might assume because we have a very good renewable energy mix at the moment. We have wind. We have sun. which means that the portion of the energy or renewable energy production in the energy pricing is very high at the moment. So the energy prices did not increase that much as someone might expect.

As a quick follow-up, in terms of your, let's say, non-renewable positions in energy, how is your hedging there?

Yeah, good question. We have a very, very smart energy team who informed us on a daily basis about all the actions going on in the Iran conflict. And we managed to secure a certain portion of energy in advance. And during the conflict, whenever good prices for the next quarters were available, so at the moment, I would assume, Looking at Andreas, I think it's 25 to 30%, something like this. It's hedged at very low price.

For direct electricity, yes. But to be honest, we hedged a lot of carbide coming out from last year in stock because we over-presumed for the standstill last year very much carbide with lower energy prices. And that helps a lot to bridge that year.

Okay, great. Thanks very much, and good luck handling all these supply-devant challenges in this current geopolitical environment. Yeah, thank you. Thank you.

Thank you very much, Mr. Price, for your question. We have another written hand by Mr. Hesse. You may unmute yourself now.

Good morning. Thank you so much for taking my questions. I'd just like to start with one. Could we potentially see any positive surprises in the basic and intermediate segments of particularly due to supply chain disruptions in Asia on fertilizers. So could we potentially see more demand for your fertilizer solutions due to potentially the lack of imports? Is there anything that could potentially surprise us there? That's my first question.

Well, Konstantin, that's a really good question, I tell you. So we cross our fingers to receive that hopeful surprise or hopefully surprise, but To be honest, within short notice in the fertilizer business, I don't see that really within short notice. Within a longer time period, there could be a positive development there. But farmers decided not to fertilize as much as last year. So from that point of view, I don't really see higher growth possibilities for that year.

Fair enough. Then the last two questions are a bit more short to medium term. One of them, could you potentially comment on, I mean, this U.S. facility, I think we're all kind of obviously in anticipation of it, so hopefully we'll see the announcement soon. But can I ask, beyond nitroguanidine, is there anything else that you see an opportunity for in the U.S. to expand capacity potentially?

Yeah, so we think about that and we have chosen within the site selection process a site where is a possibility to develop more. But to be honest, we have three big projects running. We have an investment program running for more than 400 million euros. And from that point of view, we will do that step by step. We will do first The German NQ plant second and parallel then the NQ plant in the US and certainly the creatine plant. And that will really fuel our growth a lot and we will concentrate more, let's say, on that three big projects actually.

That's great. Thank you. And the last question. Just out of curiosity, I'm just keen to just quickly get a clearer picture again on Crea Vitalis, the opportunities there. So I know that you currently are in contract with Erman, but, you know, and we discussed this also earlier. in other instances where you are talking to all the large consumer good companies. But maybe you can just give us a bit more detail or a bit more color on timing. How should we think about that? So when does the contract with Ehrman end? When could there be potential further opportunity to see larger players wanting to work with you with Crea Vitalis? Thanks.

So hopefully the contract with Yemen does not end at any day, and I think that should be the position. Actually, we have several discussions with many customers, with many additional customers out of that branch. But to be honest, we have to develop the use case with them. It's not so easy to stabilize creatine within, let's say, dairy products. And on the one hand, and on the other hand, we have to develop capacities for creatine that we can fuel the growth. So from that point of view, we should be ready next year, really, for the next growth step. And we try to develop all the customers when we have additional capacity available. And we think that that additional capacity is really needed and could be fueled and filled up very quick then.

Okay, so just to understand, the contract with Ehrman is not something that hinders you from doing business with other players? Because I had initially understood that the Ehrman contract was an exclusive contract.

So, it hinders, let's say, or let's say it that way around, it does not hinder us to sell additional creatine capacities to additional customers. For some countries, they have exclusivity, but that exclusivity is very short, and I think when the additional capacities of creatine are available, then it should be no problem to sell the product in dairy use cases as well. Understood. Thank you so much.

Thank you so much, Mr. Hesse, for your questions. We have another risen hand by Mr. Speck. You may unmute yourself right now.

Yes, good morning, gentlemen, and from my side also congrats on the very solid results in the first quarter. My first question is, again, on your fertilizer business, because I was wondering, too, why this did not have or not get an impact on your sales in the pearl car. Could you... Tell us maybe, do you offer 100% substitute with PearlCare compared to Urea, or are there any structural factors maybe that might make it harder for farmers to just switch to your product?

Yeah, so it's a very technical question, but let me answer that in the following way. We have a real good fertilizer, nitrogen fertilizer with polka, with some additional side effects. And that additional side effects, you know, are just under discussion with you at the ECHA process because we have these positive side effects of the nitrogen fertilizer here. So, which does not, which it does not receive from the competitive fertilizers. So the competitive fertilizers do have only nitrogen or some additional, yeah, phosphor or potassium on it, but not the side effects that we have. So what you have to take into calculation is additionally that very much of nitrogen fertilizer comes out of Russia. and the eastern countries on very low prices. And from that point of view, many, many farmers decided. And the third point is that the farmers' products are on the lowest prices ever, I tell you. So corn, wheat, and potatoes are so cheap, actually, that farmers does not use more fertilizer within a short notice. So I think that could be a chance for the future, for the next season, because in that season, fertilizer has been already distributed to farmers. And I think farmers decide really to stop fertilizing the last portion, they can spread out. That's the reason why there is not that big growth story behind for us, actually.

Very interesting. Thanks. My second question is, you're planning for price increases, you said. Could you quantify that a bit and maybe also quantify the cost burden we saw in the first quarter due to your oven maintenance?

Yes, in principle, we managed it. You see that we have had some price increases in the specialty chemicals surrounding and that overcompensated already the cost increases. we think that we will receive low double-digit million cost increases, and we are prepared to hand over that to our customers. So price increases are already started, and we are in good negotiation phases so that we stick to our outlook here.

the second question to your um to the cost of the calcium carbide overhaul in our last call in our communication we we announced that we estimate the cost to be approximately um somewhat like 10 million over the year so if you want to calculate half of it will be will be recognized in the first half of the year and the other half will be spread over the whole year because it has something to do with energy price or energy costs regulations. But here we are clearly, as Andreas mentioned in the first question, I guess, completely in line with our expectations.

Yeah. So then I will take the chance to take one question which was handed in written here. On the German nitrogen expansion, you indicate commissioning in half year 2-26 with first deliveries from the new plant in half year 2. Commissioning in half year 2-26 and first deliveries from the new plant in half year 2-27. So that's misunderstood. So sorry for that. We will start up the plant in the half year 26 and we will start delivery in 26 as well. So the question was then can you walk us through the bridge in between specifically how do you think about utilization rate in half 1.27, how much NQ inventory you can practically hold and at what point you expect a new line to reach full utilization. So we will ramp up the production plant that year. We will produce first quantities and we try not to build up a huge stock level. So we try to sell all the material coming out of the plant directly to the customers. And we think that the full utilization rate could be by the end of next year, beginning of the year to come in 2028. And that's the reason why we really need the next capacity increase with the U.S. production plants. Next question was on NQ pricing. Are the long-term off-take contracts indexed to raw material and energy inputs, or are they fixed price for the contract duration? So we can disclose that in principle, we always try to increase index prices. And so we received that in the NQ contract as well. Third question, a question on creatine. Quarter one segment performance was driven by a combination of volume and price effects with specialty chemicals pricing up 8.4% overall. Can you break out what you are seeing specifically on clear pure pricing, both the premium versus Chinese prices today and how that spread has evolved over the last 12 months? So Niklas, in principle, we don't disclose information on the product level, but I can tell you that we see many Chinese raw materials, not only limited to CreaPure, where the Chinese material undercuts us. But at the end of the day, our customer like the high quality, like our services, and like the reliability of our product. So if you take two products on the table, one from Germany and one from China, And the customers know where the product comes from. Most of the Western customers, and I tell you, the Eastern customers as well, will take the Western quality and reliability. And from that point of view, we see good price development and stable prices within creatine for sure. Creatine is available on lower prices than for us. Please think about that, that the one year's doses for creatine and for everybody is below 100 euro a year. So from that point of view, it doesn't matter if you pay 20 or 30 euro more or less for the one year's doses receiving the high quality out of our production. Yeah, then that's understood. The outlook slide 16 states that first NQ deliveries will be in half year 27, so then I'm very sorry if that is first quantities. Yeah, then that's a mistake. We have to correct it, and we will do that immediately after the call. Thank you for that hint.

Thank you so much, Mr. Lutz, for your question. We have one last written hand by Mr. Hasler. You may unmute yourself now.

Yes, thank you very much for giving me the opportunity to ask my two questions. I'm impressed by your coolness with regard to the electricity prices which everybody is complaining about. You explained that by the high renewable energy ratio in Germany. Could a lower renewable energy ratio in other countries negatively impact the pricing power of your competitors there? This would be my first question. The second one is maybe a little bit nerdy one. You mentioned that you are evaluating the accounting treatment for the Industriestrompreis. So which possibilities are there for you and how could this have an impact on iSCAM?

Let's take your first question, Thilo, on the competitor side. As you know, most of our competitors are sitting in China, and China has a completely different energy pricing than we have, completely lower energy prices than we have at the moment. Maybe China may be affected by higher oil prices, but we don't know the exactly energy prices in China. think that there will be a big cost burden for our Chinese competitors out of this. And I don't know the part of the renewable energy mix in China for their energy supply. And the second question?

The second was part of the Industriestrom. That's a very interesting task, but I tell you, it's a nice topic. We are talking about a few millions, a very low single digit million position for us. We calculated that between two and three million. for us and you can ask for that subsidy up to the mid of 27 and you could receive that by the end of 27 or autumn 27 so that's not what we think it's an immediately effect it's more of a mid-term effect and positive thing right and the accounting treatment

Today needs to be analyzed whether it should be recognized in 26 or in 27 or even later if you fulfill all the complicated requirement and that's what we mean that we are working on the accounting treatment.

Okay, I understand. Thank you very much.

Thank you very much, Mr. Hasla. We have not received any further questions so far. So, ladies and gentlemen, if there are any more questions, please raise your hand or put them into our chat box. But I guess if there are no further questions, we will come to the end of today's earnings call. Thank you very much for your interest in asking Group AG. A big thank you also to you, Mr. Niedermeier and Mr. Lüster, for your presentation and the time you took to answer all the questions. If you should have any further questions at a later time, please feel free to contact Investor Relations. I wish you all a successful day, and I'm handing over once more to you, Mr. Idamaya, for your closing remarks.

Yeah, thank you all for your questions. We can now offer you the opportunity to visit us again, as you can see here, virtually at the annual general meeting next week, May 5th. or virtually in person at the conferences as shown above. Otherwise, we will be back with our half-year and second quarter statement, 26th on July 30th. Stay safe and sound, stay in our good graces, and goodbye. Thank you.