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spk06: that full start. Good morning, everyone. Thank you so much for joining today's Q1 2024 Trading Updates. I'll hand over very shortly to Eve and Taufik, but just before that, it's important to take you through the Safe Harbour Statement. Just to remind, this presentation may contain forward-looking statements. Such statements reflect the current views of management regarding future events and involve known and unknown risks, uncertainties, and other factors that may cause actual results to be materially different from any future results, performance, or achievements expressed or implied by such forward-looking statements. Beccard is providing the information in this presentation as of its date and does not undertake any obligation to update any forward- looking statements contained in it in light of new information, future events or otherwise. Beccard disclaims any liability for statements made or published by third parties and does not undertake any obligation to create inaccurate data, information, conclusions or opinions published by third parties in relation to this or any other publication issued by Beccard. With that clear, I'd love to hand over to Eve. Thank you.
spk03: Okay, so we're going on to the training of day 24. So the years started solid for us with performance in line with our three-year expectation and today myself and Taufik will give you some protocol on this performance. So on the first quarter top line sales we shipped 1 billion, 25 million. This is compared to a very strong Q1 23 down top line sales of 14 percent. As you remember Q1 23 was the last quarter of very high let's say input materials, raw materials and energy costs which we passed through to the market into one as well as pre-stocking and customer stocking both in China and in some other regions of the world. If you make the evolution of quarter four 23 versus quarter one this year we have a top line of 25 percent. So in that context environment we continue to focus on delivering on our strategy and preparing for the upcoming year and years. First of all by further ramping up our growth businesses. We keep the pricing discipline in the core businesses and be very selective in the business we are in. We continue to focus on our cost efficiency and optimize our working capital management and we continue to work on further margin improvement and strong cash flow generation. As mentioned Q1 performance for us remains in line with our full year expectations and we are confident as management to deliver on our full year 2024 guidance and meet your endowments in the capital market. So some highlighting Q1 on proof points of our strategic evolution in the different business segments we are active in. First of all in our diary enforcement where we gained momentum and traction together with one of our premium customers Coutier on bringing a product to the market with 90 percent or with 90 percent recycled materials including the Reckart Recycled Steelboard. In the BBRG area we have a morning solution for largest offshore floating solar plant and synthetic mooring expertise for tailwind floating offshore world project. So happy to be part of this demonstrated projects for the future. In the area of energy transition we got qualification of the Solar Impulse Foundation for the current product as a solution which is contributing to sustainability. On the telecommunication in the US we've been qualified and certified as a buy in America which gives us further opportunities for growth in energy utilities near point of months and years in the US and then also progressing on how we handle steel circularity in the value chain with our suppliers and our customers. So we continue working on driving our performance while also improving and increasing as they are our portfolio towards more sustainable products and now here we achieved the 42 percent of our full product portfolio in the sustainable category continue our trying to make it 50 50 in the future by bringing products to the markets which influence the way we live and move. Having said that I pass now to Tafik for more insight in the performance on the top line of our different businesses.
spk02: Thank you very much Yves and good morning everyone. So I will just start this part with an overview of the total consolidated cells for Bekaat. So as you see in Q1 24 the consolidated cells topped 1 billion 25 million euros roughly contracting by 14 percent compared to Q1 of last year. In the overall context we are dealing with market conditions which have remained mixed. This is leading to a consolidated organic volume decrease of 5 percent and I think it's important to put the volume decrease of 5 percent in the context of the overall 14 percent contraction that we are reporting. Specifically about these contractions they are part of a broader industry challenge which is reflecting a subdued demand in certain sector but the important element there is that we have been dealing with the normalization of some of input costs as compared to last year and the reduction that we see this year is actually a reduction of the passed-down inflation which contributed to a 70 million euros decrease in cells. So again the change is largely due to the normalization of cost as we're seeing a stabilization from the previously high energy and raw material prices. These two elements were particularly pronounced last year in rubber reinforcement and steel wire solutions and you might remember that for instance we have benefited in 2023 from so-called energy surcharges which have increased our top line but didn't have any impact in terms of margin. So despite these challenges the sales figures are in line with our expectations so we are not dealing with a surprising situation so to speak and again considering the high base of Q1 2023 which included this significant one-off contribution we kind of anticipated this situation. So we remain actively focused on addressing this dynamic so we have the right strategic initiatives in place to help us improve the operational efficiency and adapt to this specific hopefully punctual market conditions and in 2024 we will remain focused on navigating these challenges and be again as usual very opportunistic in terms of enhancing our overall performance. Now if we look at the dynamics within the specific business units and starting with our R so we're reporting a decrease of the top line of 17 percent compared to the same quarter of last year but I think it's important to mention that if this quarter compared to Q1 of last year we're reporting a drop of volume of 6 percent this evolution corresponds to an increase of 6 percent versus Q4 of last year so the volumes again are picking up compared to the last proof point of Q4. Originally we see sales volume dropping in China by 5 percent 3 percent in EMEA but it's also very important to mention that we are seeing a significant boost of the top line by almost 20 percent in the southeast region. So again a dynamic which is primarily driven by the phase out of some of the energy surcharges from early 2023 and a stabilization of the the the wire road prices. Moving to a steel wire solution a 14 percent contraction in sales versus Q1 of last year. Two main contributors volume for 5 percent and a similar decrease in the past on wire road prices. A contraction as well in the range of 4.5 in terms of price and mix. We did see a very strong start in January however the segment didn't really show a crystallization of this trend for the balance of the quarter and we did see as well a demand which is remaining weak in some of our more commoditized areas. Compared to Q4 there's a 5 increase in volume and a 10 increase in in in revenue so it's picking up again versus the end of 2023. Regionally the region which has suffered the most is the north of Latin America with the 19 reduction mainly compounded by the situation in Ecuador with all the political situation that the country is dealing with. North America and EMEA declining but in smaller percentage and China a significant growth of almost 7 percent. Then moving to specialty business a 5 percent decrease in consolidated sales mainly impacted by the pricing pressure that we had to deal with in some specific segments including construction. But construction did see a volume pickup of almost 7 percent primarily in Europe which has been benefiting from more business at a lower average sales price so it's helping in terms of absorption and allowing us to utilize the strategy that we have established in terms of gaining market share and we see the adoption of the steel fiber reinforced concrete in growth market is progressing with some significant project wins across the world and the share of our high end application the DREMIX 4D and 5D is increasing from 46 percent lastly to 51 percent this year which is really a very strong performance. Fiber technology within specialty business there as well we have a top line increase almost 5 percent in terms of sales. Then moving to BBRG sales were 15 percent lower primarily driven by almost 20 percent in decrease however we did see a strong positive price and BBRG 6 effect which has partially mitigated some of these deviations I have referred to. The issues that we had to deal with are mainly related to punctual phasing of projects in Europe and as well some production challenges in the U.S. in terms of production output. So we continue to benefit from a good momentum in the significant mooring projects which are ongoing and it's clearly something which is enhancing our positioning in the renewable energy solutions for the company. With that I hand it over to Yves for the outlook.
spk03: Thanks Tepke. So for the full year of 2024 we will continue to figure out on our plans and our strategy. So we expect a modest growth as mentioned in previous outlooks, a moderate growth for 2024 and basically a performance in terms of margins in line with previous years slightly above. So having that I hand over to Guy for the Q&A.
spk06: Yeah super many thanks Yves and Tepke. I see another chance already up. William if you want to first please go ahead.
spk07: Yes thank you good morning everybody a couple of questions from my side. Can you maybe comment a bit on the rubber reinforcement business and the profitability gap between China and the rest of the world? It seems that the efforts you've taken in China are helping to reduce the gap but I would like to have some color on that. Also with respect to the rubber reinforcement momentum can you maybe elaborate on the difference in momentum between truck and car segments? That would also be interesting. And then another question would be on dramics. Can you comment a bit more on the older books for that business and also diving into the pricing you seem to indicate that there's some pricing pressure in Europe at least but can you maybe elaborate whether that's now fully in the books where you see additional pressure in Q2 and the coming quarters on that? So those were the questions thank you.
spk03: Okay thanks for the question. I will start with the construction question and then Tepke will give your perspective on RR. So first of all on the dramics so as you know as we discussed strategically this is a conversion game from steel bar and mesh correct and so it is also one of our growth platforms which we take a multi-year approach and for 2024 we have a clear approach by market, by country, by region on gaining share not sharing fibers but sharing conversion from steel and rebar reinforcement to fibers. So what we see here and mentioned by Tophik is what we planned right being a little bit more aggressive on some of the projects but again it demonstrated on one hand the growth that we are capturing with services and more increase in volume side and of course the and I will continue to do for you with that approach.
spk02: Okay so taking the question on China and some of the evolutions that we see so first of all in terms of macro related to the automotive sector so EV market in China continues to remain strong so it's clearly supported by promotions, subsidies, incentives and so on. The truck market is rather stable in the replacement transportation the passenger market is positive while the truck is impacted by lower construction in industry. So this is for the environment as far as Beka is concerned and I think that we mentioned it in one of the previous exchanges our plants are running at full capacity in China so it's clearly a positive but it's happening in a context where we needed to do some tactical concessions in terms of pricing but we are benefiting from the fixed cost absorption we have an over absorption as we speak because of this situation so it's clearly a very good momentum that we see in China at the same time we see that the share of our premium constructions is increasing so it's above almost topping 50% as we speak so very good momentum as far as China is concerned. The other regions and starting with EMEA is a bit subdued demand is clearly not crystallizing and on top of that we see an inflow of imported goods primarily from China so this is creating some tensions in terms of pricing in a context where as I mentioned demand is not there. Then if we move to the US very good momentum well hopefully a very good momentum which will be confirmed in the next quarters but why I'm positive about the US it's primarily because we do see a pickup environment and the demand has been rather yeah flattish in the past you know that in the US we have trading business and local production our trading business which is mainly imports from overseas is performing at very good margins the margins with our local production is on the profitability standpoint a bit more under pressure so I mean labor is expensive in the US local supply of steel is also expensive but when you balance out our trading business with our local production we are ending up with a very decent performance. So then the the follow-up question was trucks and car segments I think I mentioned very quickly some of the evolutions that we see so again car is especially there's a clear catalyst which is the EV plus all the different incentives which are in place when you look at the truck which is roughly 50 percent of our business there's a more direct correlation with the GDP evolution and since industry construction and so on are not there best we do see some pressure on the truck business.
spk07: Very clear thank you.
spk06: So looks like Frank is Frank I think you're still on mute. Second. Very good there we are. Can you hear
spk01: me? Yes here we are. Okay sorry for that. Good morning all three questions please first of all on the wire rot prices what is your let's say main assumption for the rest of the year on the wire rot price redevelopment and what do you see in the different regions that's my first question then secondly on the hydrogen you indicate in the release some refacing of demand what do you exactly mean with that and can you elaborate where you whether you still see let's say the doubling potential of revenues for the hydrogen part and then finally working capital what kind of swings have you seen in q1 is it in line with their expectation and what do you expect for working capital for this year thank you.
spk03: You
spk02: don't have a question.
spk03: Yeah we'll start this we'll start Frank with hydrogen so let me give some context so if you look at the projects that were planned for installing of electrolysis installation and equipment so we've seen recently last couple of months some delays in some of these projects due to funding regulations approvals but also of the increased due to the inflation increased capex for these projects now what is the impact if you look at the long term the upcoming until 2030 the upcoming years we see there a delay of around of some of the projects that amount 18 months to two years now what it means for us in our business first of all we see an opposite trend is that our customers are ordering our ptls earlier in the total project time phase yeah that means that we expect versus our plans a delay of one year now that's from a demand side for the ptls or the other side is the progress we are making being spectin and qualified where we are making really good progress and other element in the equation is that the balance between say awe technology and the pen technology and if you remember we found technology we see more wins and also successes for some of the technologies projects so all in all and nothing that out there's a slight delay but not impacting our business plan so we are still targeting doubling the sales every year slightly with the likely below doubling but still nice gators in scaling up and in parallel we continue to work explains on our mayor strategy to expand our offering and bringing a mayor product to the market the upcoming year so we follow the market very closely on what's happening with market information but also to our customers we adopt our scaling of our capacity but strategically we continue to on our investment journey because the outlook remains on the mid and the long term the same for us
spk02: we'll take the next two questions so as far as the the wire rod is is concerned so first of all in terms of demand it continues to be rather low so suppliers are reducing capacity in in different regions obviously the situation might change depending on china and the stimulus policies which could be implemented then the dynamic could obviously change as far as becaught is concerned in terms of pricing the prices do remain low so which is again a positive for us in terms of cash conversion there could be a minor punctual increases in some regions like us and and china but translated in other words we are not expecting major inventory revaluation impacts coming out of wire rod in 2024 but again i mean putting this aside i think it's again important to insist on the fact that the impact on margins are anyway rather low because wire rod is going through a pass-through effects and this is also the reason why we have netted the inventory valuation amount from the price and mix impact in a context where i mean we do think that it should be embedded into this this category then the next question is related to working capital so when you look at the patterns that becaught usually had i mean q1 is typically used to be typically a quarter where we do working capital build up especially inventories i mean we mainly driven by the fact that in some of our segments like construction for instance we prepare for for the high season we are being very cautious with that i mean i think that a couple of times the question has been asked to me whether we have low hanging fruits in terms of working capital i said yes i'm giving the same answer working capital is under control for the moment it's trending rather positively and we don't see any reason for any specific deviation for the balance of the year
spk01: okay that's helpful thank you
spk06: so hi can i go ahead okay see can you hear us and can you pretty scared yep
spk05: okay great um there good morning all i have a couple questions maybe firstly just looking at capital allocation so obviously in the last quarter you announced the pause of the of the share buyback scheme and you you said the reason the reasoning behind that was to basically provide optionality for either inorganic or organic growth opportunities and i'm just curious on how you're looking at that now is there still a pipeline for acquisitions or have you identified other organic growth opportunities just any sort of color on your capital allocation for the remainder of fund 24 please
spk02: yep so the positioning of our narrative on capital allocation i mean we we mentioned it and we refer to the to it for the year 2024 we are just at the first quarter and what i can say is that the narrative is not changing so we still want to give ourselves optionality as you rightly pointed out and we are actively working on that more to follow in the next coming months and and quarters
spk05: okay great thank you and then my second question you've obviously spoken quite a lot about your repositioning and sws towards more energy and utilities markets given the yeah sort of the positive mix effects you can see there and the growth potential there i believe at full year 23 you recorded that about 23 percent of sws was exposed to energy and utilities can you give us an indication as to how that's changed or what sort of exposure that's at now
spk02: yeah on a full year basis we're expecting the percentage and the exposure to sustainability energy transition and so on to slightly increase we will have a quarter to quarter difference because of the ordering patterns and so on from some of our key customers in the us but the ambition the plan and the prospect to grow that segment within sws is as valid as ever i mean you know that we are enjoying very nice margins from that business it's meant to continue for the foreseeable future okay
spk05: but only a small small -on-year increase this year in terms of yes exactly exactly okay perfect and then there's one final question from my side looking at the specialty businesses segment obviously you've spoken that the the market environment for the combustion tech and the hosting and variable business is still quite weak and you know it's largely offsetting the the positive developments in for example dramix or hydrogen is there you know do you see a light at the end of the tunnel for these end markets see any sort of positive indicators there for the remainder of 2024 or do you expect that to really remain negative or subdued for for the coming year
spk03: if i understand what was not perfectly was question more on the the sub segments especially to be this conversion technology as well as at the whole thing yeah correct so on the combustion technology and we explained the the reset last year correct the the good news is that this year our top line is in line with our expectations correct so we see a stable environment there and we also adjusted our full capacity footprint to that adjusted to the mountain and sales so there's a pretty stable environment for this year if you go to monitoring in the energy transition what will happen towards next year a stable day on host wiring conveyor belt i think we also have a stable situation correct so the mount has stabilized so basically in line with what we what we expected for this year so no no further decline but stable situation these two segments but not not showing growth of course in these two segments of specialty business okay it's very clear thank
spk05: you gentlemen
spk06: thank you jess and so in your next please go ahead yes
spk04: good morning thanks thanks for taking questions can you hear me because i have a bit of a technical difficulty with very clear
spk00: okay
spk04: perfect so my first question is on actually on the sales guidance what level of confidence do you have in in reaching this ambition of modest sales growth because if i make my math is correct you need five percent sales growth for the remaining of the year to be flat year over year but the wire rot isn't exactly helping i learned from the previous question and the q2 comp doesn't strike me as necessarily that much easier either so can you help me understand the building blocks of that sales uplift that you expect over the next nine months that's my first question
spk02: yeah so in order to to keep flat sales or slightly increasing as per the guidance that we gave that means that we need to do roughly 1.1 billion euros of sales per quarter we closed q1 which is typically one of or the second lowest quarter of the year at 1 billion 25 so you can do the average we need to do 1.1 for the the balance of of the year knowing that q2 is typically the strongest quarter so which we should hopefully where we should hopefully deliver a level of sales higher than what we have done in in in q1 so i mean in terms of calendarization i think that the the narrative is clear and it's compounded by by the previous trends as far as the wire rod impact and the ceiling the steel prices are concerned we mentioned that we are not expecting major deviations in terms of wire rod it's meant to be flat so we will not see a negative impact in terms of wire all pass-throughs and so on impacting our top line as far as this year is is is concerned so so these are i think the two key elements to to to answer your question
spk04: okay can you can you maybe to to go further on that you expect a better q2 versus q1 wire out which was a drag in the q1 bridge will not no longer be a drag in the in the bridges going forward is that a good interpretation that's
spk02: the right interpretation okay
spk04: and then you mentioned the q over q volume increase in the q1 versus q4 but these are partly due to a typical season uplift you see there as you mentioned q4 is typically the the small square and then q1 so the six percent how much is seasonal and how much actually a peak of an underlying demand i
spk02: think that most of it from q4 to q1 is seasonal you have some demand pick up primarily coming in some regions like china with the situation where we're facing with a very strong demand and plant occupation that that we have we have also significant volume increases that we are reporting in applications like construction where we're reporting a volume increase by seven percent so again you will need to look at it segment by segment then when you compound all these pluses and minuses i mean you will be definitely topping a top line which is in the range of 1.2 billion 1.1 in between 1.1 and 1.2 in q2 we will have the phasing impact with some of the delayed projects which have negatively impacted us in q1 especially in bbrg coming back online in the balance of the year hopefully between q2 and q3 so this should also drive the sales up and this is also the other elements which are explaining why we remain confident on our ability to deliver at least 4.3 billion euros of sales for the full year
spk04: okay so you wouldn't see a typical seasonally weaker q4 then is the outcome of this exercise yeah
spk02: i mean we always have a typical low q4 for two main reasons the first one is that while it's the winter and it's the low construction season so typically we we see a contraction in the construction applications and by nature it's also a short quarter with all the vacations so we have lower production output having said that and last year probably was another example of that you do see sometimes some punctual events happening which distorts these historical patterns and we did see last year in q4 some significant restocking happening in in china and we are not immune of any of these specific events if they again happen in q4 but if we i rely only on what we know and the usual patterns q4 is typically a low month a low quarter so we might expect a level of sales which will be a bit below the 1.1 billion that i have referred but we have ahead of us two strong quarters which are q2 and q3 long quarters where we usually have the highest level of demand in some of our key markets like construction i referred to and chase has asked the question on the situation with the energy and utilities business in the US we did see some delays in q1 which might come back in terms of order intake in q2 and q3 and this would further consolidate the expectation that we have in terms of sales for the two next quarters okay
spk04: understood final question and apologies because maybe i i mean misunderstood because the line dropped a bit but on hydrogen you you mentioned you still expect in long term the business to double every year but in 24 it will probably be somewhat less is that what i heard correctly or so
spk03: it's close to doubling correct so it's not 100% doubling what we expect but almost close so i think there is no change versus what we are
spk04: yeah and can you remind me the 23 base
spk03: 30 million revenue
spk04: okay all right thanks thanks for clarifying these were my questions it's time
spk06: alexander you're next please go ahead
spk08: hey thank you um two two questions on on my side so one was on the rubber reinforcement segment you oh sorry i forgot to put on my camera um so you mentioned that yeah you mentioned that rubber reinforce continues to drive margins in and i was just wondering what the difference is between in margin between low tensile and high tensile because i think if you um take the implied currency which was 400 million euros in it i think probably you're expecting an ebit margin of 11% in the rubber reinforcement segment whilst your midterm target is 9% and i was just wondering if that um 11% that you're seeing is sustainable um considering actually that the ev trends are positive etc and my second question would be on the the cost optimization or at big cards um which you mentioned and which has already been mentioned in quite some press releases in the past so yeah i know cost optimization is a is a constant at big card but i'm just wondering how much is available there still so thank you for that
spk02: um okay i will i will start with the the the second the second part so cash conversion and the cost reduction i mean when we speak about cash conversion optimization i mean it's not that we're doing restructurings or anything like that it's just that we're doing what any company should do is being cost conscious flexing the cost wherever we can making sure that what we spend on our operation is meant for production going after the waste and doing continuous improvement so i mean again i'm not saying that this is an exercise which has a start and an end it will continue we have some significant programs on which we're working in terms of cash conversion cost it ranges anywhere from optimizing the energy intensity of our machines to making sure that we simplify the the scope of our steel ordering to benefit from higher discount from our suppliers through a focus on engineering simplification and things like that so this is something which is constant which will continue which will continue to have an impact on our cash conversion cost and we will accelerate the activities on that it has nothing to do with restructuring or anything like that and it's something that we like that we're proud of and on which we are stretching our people the first question alex was on yeah our our rubber reinforcement so indeed i mean we do see a good momentum in terms of the the stut construction so i mean we have a nice progression of the volumes associated with these constructions so i think that i mentioned that it's roughly about 50 percent of our business in our currently the key catalyst is clearly the ee we didn't disclose and we will not disclose the the margin spread between the standard construction and these premium constructions however i mean if you try to to to reconcile with the level of margin that we have guided for and this statement that i have just made i think it's important to take into consideration as well the impact of the regional mix so i think that in a normalized environment where europe is doing well north america is doing well these are the two regions where we have the highest margin contribution yes we can expect the margin to be at 10 between 10 and 11 percent this is not the case we do see the situation in in in europe continuing to be to be subdued the regions where the business is picking up significantly is china and southeast asia including india and these are typically regions where the margins are a bit lower or lower than what we usually deliver in europe and north america and explaining some of the reasons why we're guiding for a more prudent margin delivery for our for the time being
spk08: okay um all right that's that's clear then maybe just as a last question it wasn't the energy surcharges and you you mentioned that the energy surcharges are now not applicable i was just wondering does that mean that they're not embedded in the contracts anymore with the clients and if you could just remind us how much you profited from the surcharges last year thank you
spk02: yeah i mean the energy surcharges closed are embedded in the contracts and basically they kick off when energy prices are above a certain threshold so now these price energy prices are normalizing electricity prices are normalizing we're still benefiting still marginally from from them depending on the region where some of the supplies are scarce but they are embedded in the contracts they are there to stay the only thing is that they are triggered when we see deviation versus a pre-agreed level of of energy i don't recall if we isolated from 2023 results the specific impact from it checking with the team it's not the case so unfortunately i will not be able to state a precise figure on that
spk08: but
spk02: but you did profits yeah obviously and i think that we we explained it when we refer to all this push through of inflation cost which has generated cells which didn't deliver margin and out of memory it was i mean the impact on top line was around 800 million euros in 2022 if you remember and we said that these cells didn't generate any margin because it was primarily push throughs of cost inflation and
spk08: then maybe just as a simple question but you're still confident with the implied guidance of 400 million and if it's 2024 we
spk02: are definitely comfortable and we are confirming these guidance thank
spk08: you very much
spk03: okay yeah thanks for attending thank you very much bye
spk08: thank you thank you
spk03: thank you bye
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