Imerys Sa Ord

Good morning to all of you, and thank you for joining us today to review Imerys Q4 and full year 2023 results. With me, as usual, our CFO, Sébastien Rouche. Let me start by giving you some highlights of the year we just closed. Once again, I think in 2023, Imerys continued to demonstrate resilience and agility in what we can call a complex market environment. Revenues were close to 3.8 billion euro, with sales volumes impacted by weak demand in certain or maybe in several end markets, notably residential construction, industrial and paper markets, as well as significant destocking throughout the year. Despite last year's high comparables, prices were up this year, again 2.6% on a full year basis, though slowing in Q4 with a negative 4%, clearly to reflect the end of certain surcharges. Sébastien will deep dive on this in a few minutes. Thanks to price discipline and really strong actions on costs, Imerys posted a current EBITDA for the full year at 633 million euro, in line with guidance. Even for Q4 2023, EBITDA at 152 in line or even slightly above Q4 2022. Good news on the cash side. E-merge generated substantial free operating cash flow for the year, 288 million before strategic capex, 192 million after strategic capex, compared to 20 million last year, which means 10 times. This was possible thanks to really a great work of my teams, but also structural actions we put in place on working capital management, leading especially to a significant inventory decrease. Of course, also helped by lower inflationary pressure in 2023. To conclude, the Board of Directors will propose to the shareholders meeting In May, a cash dividend of 1.35 euro per share for the year, in line or above historical payout ratios. If we now look a bit over the last three years' development of the group, Imerys confirms its business model, its resiliency, even in challenging times. We had record inflation in the past, lower volumes this year. Current EBITDA margin remains resilient, around 17%, confirming the group agility and adaptability to the situation. On the right side, that's a good example. We were capable of adjusting our prices to the evolution of variable costs, especially in 2022. but also adjusting to the inflationary pressure on fixed costs and overheads. And we maintained such price even when input costs dropped, like you can clearly see in 2023. This was necessary to maintain our profitability and all the actions we put in place to reduce the cost base as described in the next slide. What I want to underline here is really the tremendous effort done by the team on costs. Net of all the external events like foreign exchange or perimeter and things that are not directly under our control. Savings of 126 million euro in 2023. 3.3% of the overall cost base. More than compensating still persistent inflation. And really, the action encompassed all aspects of Imerys, from purchasing, operational efficiency plans, capacity adjustments, overheads reductions, discretionary spending limitations. These savings, I think, is very important, are structural. Therefore, they will durably and positively impact our cost base in the future. If we now look a bit at our end market, as a reminder, the construction market remains today our largest end market with around 37%, followed by consumer goods in general and healthcare with around 20%, followed by automotive, energy and industrial activities. Under others, we register here still our paper activities. If we deep dive on these markets, let's start with construction. As you can see here, overall, construction is showing a positive impact or a positive trend, mostly thanks to the dynamic infrastructure sector. Unfortunately, Imerys products are not used or very present in infrastructure. Our exposure is largely on the residential market, which is severely impacted by high interest rates and credit tightening both in Europe and in America, which are our main markets. Some figures, U.S. housing starts decreased 3% in Q3 and Q4 and 9% for the year. Similar picture in Europe, drop of 1% in Q4. The roll in 12 months, that is available until September, shows a 9% drop in residential building permits. The good news, there are good news. The good news is that there is a lack of housing, certainly in the U.S. and probably in large parts of Europe. So we are convinced that as soon as the markets will stabilize, there should be a start or a restart or even a jump start of construction supported, I hope, by an inversion in interest rate trends. Private consumption is holding well in the U.S. Robust job market that helps consumption. A bit more flattish in Europe following high or higher inflation. Good rebound in China post-COVID that continues. If we move on to automotive, quite a good 2023 and a robust Q4 in general. Of course, 2022 comparable basis was very low. There was a backlog. We believe it's coming to an end, and that's why we are prudent on the development of the automotive market for 2024. What is to be noted, Europe remains still way below pre-crisis level, minus 15% approximately. China, more solid, leveraging especially exports. Energy... Negative, very much related to industrial production, so especially in Europe and partly North America. Electronics coming back, big spike during COVID, a big drop afterwards. Now I think we are coming back to more normal levels. Electric vehicles and mixed pictures below expectation in Europe and in the U.S., what we hear also right now. Buoyant in China, thanks especially to a rise in exports. The next slide is industry and equipment. Weak, weak in Europe, weak in the U.S. We do expect a bit of recovery this year, 2024, especially if we will enjoy an easing of monetary policy. Not yet the case, but we remain confident for the second part of the year. A bit less affected the U.S., China did come back, but I would say in a disappointing way in terms of especially expectations. On the bottom, two sectors that are still suffering significantly, I would say, still subdue both in the U.S. and in Europe. of course, as a consequence of its main uses, which is construction and partly industrial automotive. Paper still recovering from very historically very high inventories at the end of 22 that affected significantly production in 20, sorry, 22, affected 23. Inventories that are coming to an end. So even for this sector, we see 24 under a better light. Let's look a little bit at our lithium projects. I think a lot has been done, but 24 will be a milestone year. Let's start with France, with the Emily projects. Just as a reminder, target is to produce 34,000 tons per year of lithium hydroxide. Some steps were achieved. I think the attractiveness of the deposit is confirmed. The technology works. We are producing today in a laboratory scale hundreds of kilos of battery-grade lithium, which is a great achievement. We have selected the locations, of course, for the mine, but also for the lorry station and the conversion plant in Montluçon, recently announced. Key in 24, Commission nationale de débat public, so the public debate that will be launched at the beginning of March, should take around three months and be concluded at the beginning of Q3. This should really give credibility to the quality of this fantastic opportunity. In parallel, we will complete the pre-feasibility study, therefore eliminate all the variables in these projects and create a document that will be the basis for our future estimation of CAPEX, OPEX, potential partners, and of course become, I would say, a marketable document. Last, we count on launching the construction of the pilot plants after obtaining the necessary permitting. As far as British lithium, our joint venture in the UK is concerned. Again, target 21,000 tons of lithium carbonate. The drilling campaign is continuing. The target is to assess the size and potential of this deposit, improve our pilot lab plant that we have on site to confirm the technology, and then move on to complete the pre-feasibility study. As you can see, the project is behind. The French one is started later, but we count on the synergies of the two projects to catch up and use the learning in France to increase speed in the UK. A few words on innovation. Again, we launched a number of new products, 50 in 2023, three focus areas, sustainable energy, sustainable construction, and natural solutions for many applications, especially consumer goods. I will not enter in all the details, but I would say two key messages. Constant effort to satisfy market needs, market demands, especially towards new trends. And second, each innovation is screened. It has to be sustainable for the long term. It is audited by an external independent body. And 78% of our innovation solutions are sustainable or what we call sustainability solutions in 2023. Moving on, focus on ESG, our roadmap, our objectives, many of them or some of them represented here. And of course, I will not go in detail. We set a program, a three-year program, 23-25. We are in the middle of the journey. Here is a snapshot where we stand today. What is important is we are well on track. We are well on track to achieve our goals. And I want to focus if one particular importance is CO2 emissions and then move straight to the next page. In 2023, we have committed to reduce our CO2 or greenhouse gases emissions in absolute terms, in absolute value by 42%, scope one and two, and 25% scope 3 by 2030 to align with the 1.5 degrees trajectory. These targets have been submitted and validated by SBTI. We have reduced 24% in two years, so we are well ahead of schedule. We're not there yet. We know we'll get there. We will leverage... few elements and you see some here on the left side. We have launched a specific energy efficiency program called Energized. multi-year program to increase really the efficiency of our processes in terms of energy. We are working to convert our fuel usage away from fossil to other kind of fuel, so typically biomass or electrification of certain processes. And of course, when you electrify, you want to buy low-carbon electricity. We have launched a big project across the entire group, what is called power purchasing agreements, to purchase low-carbon electricity rapidly throughout the world with reliable partners. A set of ambitious targets, confident we will achieve it. And on this, I hand over to Sébastien for more details on our financial accounts.

Thank you, Alessandro. Good morning, everyone. Let's walk through some of the key aspects of our financial performance, starting with revenue. Sales reached 3.8 billion in 23 with soft volumes. This represents a 9% organic decrease versus 22, which was at record levels in terms of revenues. It includes a negative 31 million perimetre effect following the small divestiture that we did in 2022 and a negative currency effect of 83 million, mainly due to the depreciation of US dollar compared to euro. Price remained steady during the year after the exceptional 2022 inflation. You can note that in Q4, the drop in volume reduced as compared to the same period in 2022. I would say only to 6% while it was running at 13 or 14% if we are looking at Q3 only or year-to-date September. Let's now look into more details at our business segments, which have been slightly modified in their perimeter for this publication, as required by accounting norms following the updated organization of the group. You can find the quarterly historical data at the end of the press release in full detail. Performance minerals generate 62% of the group's turnover, with sales of 2.3 billion in 2023. All geographies saw headwinds, with like-for-like revenues down 7.2% versus 2022. If we look at the market, paper producers massively destocked in 23, and it has driven a decrease of around 80 million of our sales. Construction industry was impacted in Europe and in the US because of higher interest rates. Demand for consumer goods was solid in the US, but softer both in Europe and in Asia. Current EBITDA for performance minerals landed at 374 million euros, which is a 16% EBITDA margin. Price and cost actions partly compensating the sales reduction. Now, our solutions for refractory, abrasive and construction business. This segment recorded sales of 1.2 billion, representing 32% of Imerys' consolidated revenue. Looking at the end markets, volumes were impacted by low iron and steel production and weak industrial end markets in Europe, Asia, and to a lesser extent in the U.S. Some of our European facilities of highly energy-intensive products suffered from Asian competition, which enjoyed better energy and logistic costs. Despite adverse market conditions, specialty binders for construction kept a good momentum thanks to market share gains at key customers. Current EBITDA landed at 141 million, hit by revenue decrease versus last year. Saving actions are in place and footprint adjustment measures have been launched to mitigate the volume impact. Now, how does it look like for the group profitability as a whole? Current EBITDA for 2023 met the guidance announced last July at 633 million, down 12% versus last year. This evolution reflects a decrease in volume contribution for 240 million, a continuing positive price contribution, 106 million, associated with a decrease in costs thanks to saving actions and lower inflationary pressure. You even see that looking at Q4, we had as anticipated an acceleration of the variable cost decrease, 51 million positive versus 28 for Q3 only. You remember it was negative in H1, so a real shift in trend. It has enabled Imerys to push price downwards and maintain a positive price-cost balance in every quarter. 2023 EBITDA development was also driven by a good control of fixed costs and overhead, lower than last year in spite of embarked inflation. Also driven by an increased dividend contribution from our joint ventures and associates, the Quartz Corporation in particular. You remember that our EBITDA definition takes into account the dividends received but not the full net profit that we recognize in the P&L. As a result, current EBITDA margin stabilized at 16.7% in line with the profitability of last year. If we look now at the other elements of our income statement. Current operating income landed at $365 million, which represents 9.6% of sales. Net financial expenses, negative at $38 million, decreased by $12 million versus previous year, and this is in particular driven by the reduction of our net debt. Income tax expense, 81 million, corresponds to an effective current tax rate decreasing at almost 25%. Also, the bigger contribution of net profit from JVs, not taxed at our level, supported this rate decrease. Current net income from continuing operation at the end ended up at 242 million, down 30% versus last year, which is very close to our sales decrease. Another important element, the net operating expenses, are impacted by a large 175 million impairment of the assets serving the paper market, plus some transaction and restructuring expenses. Unchanged since H1 is the contribution of the discontinued operation, and all in all, the net income landed at 51 million last year. If we look now at the cash flow generation, this time a great improvement as compared to last year. We report a large reduction in working capital due to the combined effect of lower sales, lower inflationary pressure and management actions. We will continue to drive further improvement in 2024. I wanted to highlight this characteristic of our business model. When volumes are soft, we are able to adapt our working capital and secure extra cash generation. As far as capital expenditures are concerned, we have not compromised the strategic capexes and invested 97 million that will fuel incremental growth. Overall, with capex paid at 390 million, we deliver a free operating cash flow of 191 million euros. How do these different elements translate into Emery's balance sheet? Thanks to the diverse teacher of HCS business activity, and our substantial cash generation. Even after the exceptional dividend payments of last year, we have deleveraged the company and reinforced the balance sheet. Just a small technical note, as far as HTS is concerned, you see flows directly in the net disposal column and also the plus 119 million that corresponds to the net debt that has disappeared with the assets that have been disposed of, so two positive contributions. At the end of 2023, the ratio of net financial debt to current EBITDA decreased as compared to December 2022, reaching 1.8. In absolute terms, the net financial debt decreased to 1.1 billion, down 33%, or almost 550 million versus last year. It now represents 35% of shareholders' equity. On this good note about Imery's financial structure, I now hand over to Alessandro for the outlook.

Thank you, Sébastien. So let's wrap up this presentation. A few takeaways. We've experienced in 2023, throughout the year, an unprecedented destocking, which further impacted already some weak demand in certain markets. But we believe markets have stabilized and probably the worst is behind us. Construction, notably residential construction, maybe to a lesser extent automotive, will remain low for some time, I believe. Other businesses, especially consumers, life sizes, energy, electronics, should progress well throughout the year. In this, let's say, still uncertain economic and, let's not forget, geopolitical environment, Imerys will maintain a strict cost discipline. We have showed it in 23. We will prioritize growth. And we know we have good commercial actions ongoing. We have new industrial capacities coming on stream. We have innovative products, as you have seen. And we are exposed to some very attractive markets, growing markets like mobile ore and sustainable energy. This will all be done within the back of our mind, ESG, and especially sustainability and greenhouse gases reductions. This will drive all our decisions going forward. Thank you for your attention. And we now open the floor to your questions.

Thank you. This is the conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press start. and one on their touch-tone phone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. Anyone who has a question may press star and one at this time. The first question is from Sven Edelfelt from Oddo. Please go ahead.

Yes, good morning, Alexandro. Good morning, Sébastien and team. Couple of questions for me, if I may. Firstly, would be on the quartz corporation. Can you help us understand what's the main driver for the contribution of the 87 million euro GV contribution in 23? Correct me if I'm wrong, but it seems to me that chips on IE is the main driver. So growth is said to be stellar. I've done a model on the quartz corp and I forecast a net profit of close to 300 million in 2024. Is it a fair assessment? Industry experts are telling me it's too low. I would be interested to have your view. Shall I continue or you answer the first question?

At least we have time to think.

I'll continue. So second question, on the carbon black, I would like to know where my money is. We've seen a lot of capex going through for the last few years. So could you help us understand where is the current revenue on EBITDA? And can you help us understand as well what would be the trajectory? What would it be in, let's say, two years' time? Also, can you remind us what was the capital invested? And lastly, on the asbestos, on the Delaware website, the final document is ready to be signed. Only the signature is pending for this joint disclosure hearing. So is it something we haven't seen since the last vote? So shall we start getting excited on the possible resolution of this litigation?

Thank you, Sven. I'll start, I'll take one by one, and then I will ask Sebastian to give us some specific information on numbers, to put numbers next to words. On the Quartz Corp, TQC, I remind you, is our joint venture with Norsk Mineral, our long-term partner in Norway. As you said, it's a business that has developed well in the last few years. What are the main drivers? I don't think artificial intelligence is the only one. This business serves primarily three markets. It is the solar and photovoltaic market. It is the semiconductor and microchips market. And to a lesser extent, optical fiber. As you can understand, all three markets are fundamentally going well. Some exceptionally, like photovoltaic, because of the drive to renewable energies. Imerys is a very good example. I mentioned before power purchase agreements, low-carbon electricity. We are looking at all options. The eolic is one of them, but solar and photovoltaic will be definitely the main driver. We have a lot of sites. We consume a lot of electricity. We will buy a lot of photovoltaic panels in the future. So that's why I don't think AI alone is the driver. It's unfortunately a more broad business, a broad market with all underlying markets pointing in the right direction. We don't comment specifically on any business on future performance, so we will certainly not do it for this one. And as a group, you know that we tend to wait the beginning of the year to see developments and express our targets rather around mid-year for the group only. In terms of impact of TQC, Sebastian, do you want to say a few words to explain the difference between net income and TQC?

Yeah, two sets of numbers maybe to set the frame. First of all, in the P&L, so the net result contribution, if you look at 21, 22, and 23, which represents 50% of the QuarkCorp net result, it was a little bit less than 7 million in 21, went up to 18 million in 22, and 80% 8-0 in 2023. So obviously a very good development. That's what you see in the PNL. What we record in EBITDA is only the dividends that we received, and in 2023, for the first time, TQC has distributed dividends The Imerys share is 48.5 million euros. And that's what you see in our reports. All the JV combined brought 54 million overall to the EBITDA of Imerys. Obviously, the EBITDA of TQC itself... And our 50% of this EBITDA would be higher. It would be actually more than 100 million if we were to completely take that into account in our financials. But again, since years, the EBITDA definition of Imerys is to take into account the dividend and not the full contribution that we get from this joint venture.

Thank you, Sebastian. And we are considering on how we could in the future maybe better present or expose this business because it is definitely becoming important within the group. If I now move on to your second question, you call it carbon black. I would call it graphite and carbon. This is our activity. Where is the money? The money is in new lines. that are not delivering yet at their full potential, but have no doubt on the mid-long-term trajectory. Main driver is lithium-ion batteries. If you look at the year 23, we had six months perfectly aligned to our trajectory with solid growth, profit volumes, and revenue. We had a very difficult second half of the year when the entire market slowed down. fundamentally is very high inventories. If you remember 2022, there was not enough raw materials. Lithium went through the roof. Nickel went through the roof. Cobalt went through the roof. Our products went through the roof. Over-purchasing, over-production, over-stocking, that it was paid in the second half of 2023. So very low 2023, second half 2023. Overall, the year is slightly negative in terms of growth, so not exactly what we were expecting. Does it change in the trajectory? Not for a second. We said this business will become a 500 and potentially 1 billion business down the road. We remain fully convinced the electric vehicles world will continue to grow. It might slow down. It might accelerate. There are political decisions behind. But if we want to decarbonize the world, we have to remove the 25% that road transportation causes. in emissions, and therefore we will move to electrical vehicles. It's the only mature economic technology today available. It will require lithium, and it will require a lot of synthetic graphite and carbon black. So given a pause, it will continue. maybe not in January, not in February, as we are coming out of this destocking in this specific market, but we already see orders coming in for March and April at increased levels. The trajectory that you've seen at the Capital Market Day is, for me, unchanged. It might be delayed six, nine months. Our CapEx are well invested. The third line has been commissioned. The second line for graphite has been commissioned. The fourth line for carbon black is being built or will be completed in 2024. And I'm sure they will all be full very soon. A word on talk. You call it asbestos. I prefer to call it talk because there is a big difference between the two things. Your comments are correct, Sven. There has been a significant step, for sure, compared to the last 18 months or two years where only mediation was ongoing. There has been an agreement between plaintiffs and different law firms. This has been translated into a document, a so-called reorganization plan that has been signed. All ancillary agreements, including the last one around voting, has been filed this week. had been filed or have been filed this week. So all documents are at the court. The North American talc entities have requested a hearing to confirm the plan. I remind you, once this plan is confirmed by a court, a vote will be launched to approve it or not. There is a preliminary date in March. We are waiting for the judge to confirm it. That's why I don't want to get excited yet because... I will only when the hearing confirms the vote is launched and the vote is positive, then it will be the right time to celebrate. But for sure, a step was done and is an important one. And it is more something that we have not seen in several, several months. Thank you, Sven.

Thank you. Very useful.

The next question is from Laurent Runacher.

of lresg advisory please go ahead yes uh good morning gentlemen and uh congratulations for all the the productivity gains i'm again going to to ask question on on the class cooperation is it fair to to assume that if i look at the equity accounted results um Let's say the very impressive improvement from 18 to 18 million is due among the businesses you've been quoting to the semiconductor part. I know that Solar PV has improved quite a lot, but judging by the figures of NVIDIA, which were almost, I would say, four times, and the results which have been... I'd say 20 times, if I do recall well. So the one thing is, is it fair to assume that the major factor of improvement was the semiconductor part of the quartz core?

Is the only question long?

This is the first question, and then... Depending on your question, your answer could have some additional... We take them all.

Please, put them all on the table.

So I understand you refrain to give some color on the improvement you expect for 2024, but Is it looking at your volumes for this subsidiary is a good judge to look partly at what has been giving Nvidia as far as their revenue improvement expected?

Okay, this is more of the same. Listen, the semiconductor market is an important market for this business, for the high purity quartz, but it's not the only one. The answer is partly yes. Semiconductor is important. AI will play a role. And you yourself mentioned NVIDIA as somebody benefiting strongly from this. But once again, high purity quartz is a unique product because of its purity. It has evolved over time. Several years ago, the biggest market were lighting products. Now with lead, the world moved on. Semiconductors came. Photovoltaic was irrelevant 10 years ago. It has become a significant part today. Optical fiber, we are cabling the entire world. So there are different pillars on which we build this business. All of them are just as important. Semiconductor is definitely an important one, but I would not necessarily tie NVIDIA good, we are good. No, there are other things that are very different from the semiconductor that are just as important for us. But what is important, all of them at the moment are pointing in the right direction for this business.

Okay, so as a sum up, is it fair to say that almost half of your results are tied up with polar PV, semiconductor, and the strength from AI and optical fiber? So more or less half of your results. And it's weird that equity accounted since it is such a large part of your results.

I say that and we don't disclose what the single markets represents for this business as well as for the others. I let you take your assumptions.

Okay, thank you very much and congratulations.

The next question is from Aaron Ciccarelli of Berenberg. Please go ahead.

Hello, good morning, Alessandro. My first one is again on the quartz business. I would assume that most of the growth comes from higher prices. I mean, I understand that's also volume growth, but I would like to understand what kind of visibility do you have for prices in the high-purity ports for 2024? In other words, is there more supply coming on stream, or do you expect the supply of these products to remain quite tight? And if you can elaborate on the reasons behind that, if this is a reason based on the fact that the product is superior to the one from competitors. The second question is about price mix, good price mix in 2023. I would like to understand a little bit how you think about pricing going in 2024 in an environment where raw material costs are going down. The third one is on CAPEX. So you invested 97 million euros in growth CAPEX in 2023. I would like to understand a little bit the moving parts for 2024, how much you think about growth CAPEX and maintenance. And I have a final one, which is just a clarification on carbon black and synthetic graphite. So is it fair to assume that in your EBDA for 2024, there's no contribution from these businesses yet? Thank you.

Aaron, thank you for many questions. Let's start with our high-purity quartz. I think the most important thing you said is a superior product and it's high quality. It is effectively a unique product that starts in a unique mine, a unique deposit in the U.S., and we have a unique process technology, really state-of-the-art, to make it one of the best products in the market. That's what really drives the growth. The work that the team there has done to create something of extreme purity is what really drives the growth. And it's for sure not only pricing. It's solid organic growth. It's volume growth because we are becoming the preferred solution, the preferred supplier for our large customers. There is competition, and one of our largest competitors in Europe has recently published a big study on this market. I'm sure you will find it. They are increasing capacity, so I don't think it's a matter of tightness. I think it's really a matter of the value that this product brings to the technology and to the application, which is a little bit in history. The next question you pose is on carbon black. Carbon black in a lithium-ion battery is probably 1% of the cost. But if it's not good, you can throw away your battery. So that's a little bit our strength. We supply something which is a small part in the overall finished product, but it has an incredible impact on the performance. That's what I would like to say on quartz. And coming to carbon black, and then Sebastien, I'll let you comment on the price mix later. component or side. No, no, there will be a significant impact in 24 in Carbon Black, for sure. The business is there. We are talking about 230, 250 million business that is delivering his contribution to the group. Capacities are largely installed. Some will be finished in 24. They will be filled. So not only what we already have will deliver, but I think the new capacity will start to deliver sales, volumes, and EBITDA in 24, pending these markets to rebound or restart along the line that we expect. So there will be a contribution. We count on it. It's important. Even if a few months of delay, I'm very confident. And the last word on my side on CAPEX, ES97 in the year 23. It was a peak in terms of graphite and carbon business. Second line of graphite, third and fourth in carbon black. This world or this side of the business in terms of CapEx is coming to an end. We should have around 25 million to go in 2024. And then I believe we have a solid, well-built, expanded capacities to feed the market at least for the next two, three years. So in the government carbon, I do not expect any significant capex going forward two, three years. And as we have announced in our capital market day, the next step will be a new facility somewhere else in the world to serve the next level of productions. The second big chunk of strategic capex was around lithium projects. On the contrary, we did not spend much in 2023. Sebastien, how much was? 36 plus a little bit in the UK. So let's say around 40 million. We're invested in all our studies, tests, labs, drillings. 24 will be a big year. So we are counting on investing significant money in the lithium project. Overall, to make it simple, we expect 24 to be lower in terms of strategic capex and lower in terms of running capex, so maintenance, overburden, sustenance, small developments, as this year. This year we invested $30 million less than the year before because we believe our assets are well invested, well maintained. We have reached what we wanted to reach. You need to invest to keep your assets at the good level, but... Good work was done. Volumes are, let's say, flattish or have been slightly down. Therefore, I think we are looking for a year of lower capex than in the past, in all senses.

On the price mix, I think what we can also summarize is the very brutal shift between 22, 23, and in short, we hope 24 is normalizing. 22, we had massive increase in cost, massive increase in price. 23, you have seen that the trend are reversing. We started the year with a continuation of year-on-year cost and price increase. It has crossed the line in Q3, and you see that in Q4, year-on-year, we are the only on the other side. A good, positive contribution of cost, in particular freight and energy that are stabilizing at... Lower level, importantly, and adjustment in price so that we keep this very good dynamic of adapting the price by country, by market, by customer, which is one of the strengths of Imerys. What we see in 2024 is... more stabilization of the different elements, price and cost. We've been able to edge a large amount of what can be edged, currency and commodities, edging of electricity, edging of oil and gas has been made for the most of 2024. So now we can Deliver to our customer a more stable price valid for the full year and also enjoy more stability on the cost side. So our commitment is still to monitor the balance to make sure it's slightly positive or positive. But we do not expect at this day swings as brutal as we have seen in the last two years.

The next question is from Jamie Fletcher of The Analyst. Please go ahead.

Good morning. Thanks for taking my question. Unfortunately, it's more on the quotes call. The first one was, I think you kind of alluded to this, but the income from the JVs now is 25% of operating income. So I just wanted to ask if we can expect more detail and discussion on this in the next results. The second question was, so my understanding is that given the bottleneck of high purity quartz in solar, TQC has been able to secure longer term contracts at much higher pricing, but also that CapEx is mostly covered by large prepayments from solar customers securing supply. So meaning the cash, even with growing capacity, the cash flow is very strong. So what can we expect in terms of dividend policy at the quarter call?

Hey, Jamie. The only question that I wish to answer is that will we communicate more on this business? The answer is yes. That's what we are considering because, as you rightly point out, it has become a significant component in our overall activity and, of course, in our financial accounts. Therefore, with Sébastien, we are considering on how we could feed you with more up-to-date information. On the rest, what you're asking are confidential information. If we have what kind of contracts, what kind of capex, what kind of prices we do, it's really confidential to the business itself. I know that one of our competitors has published something in this direction for other reasons. It was interesting to read, but it's also a competitive disadvantage when you publish too much. So on your other questions, I'm not in a position to answer. Sorry. Be patient. Be patient. But we are working on how we can give you a better picture on this very nice business. That's for 2024. And I hope as soon as possible.

Okay, thank you. And sorry, just to follow up. Are you able to confirm at all if there is a dividend policy in place at the moment? Just trying to understand how things might flow into EBITDA.

Also, I prefer not to comment, it's part of our joint venture agreement, so I do believe it's a confidential information. What I think is clear for me is two things. One thing we, and if you look at the business as a whole, is the same. One thing we want to guarantee that each business has the required money to continue to progress, to continue in his capacity to deliver, to invest, to maintain his assets. So that, for me, is the first priority when I look at this business as well as the others. The second is once the money is available and you've secured your long-term business, of course you distribute. Emirates is distributing last year an exceptional one, this year again a high dividend. So for sure, we will make sure that dividends are distributed as long as the mid-long-term development of the business, especially a good one like this one, is secured.

Great. Okay. Thank you very much.

Clearly, before is the first time this business has distributed dividends. This business was built, so we had debts. We repaid all the debts in the past. Now it's the moment to enjoy the returns. So I see no reason why it should not continue to distribute these dividends, especially if the business remains solid. But we will decide as we move along with our partner. Thank you.

The next question is from Matthias Kubli of Tiger Asset Management. Please go ahead.

Good morning. Thank you for taking my questions. Obviously, there were already quite a few questions on the quartz cooperation, the quartz joint venture, but I just want to follow up on one point. I mean, when we look at public available prices, your material for the inner layer seems to have gone up significantly in price. What we have seen is from 28,000 yuan per ton to more than 400,000 yuan per ton. This level of prices, are you now able to roll up with these prices on new contracts? And do you think this is sustainable? And the follow-up would be, There is only one competitor in this market, as you mentioned, one European competitor, Sibelco. Do you see anyone else being able to enter the market short term to end these prices or this cycle? Thank you.

Hello, Matthias. Needless to say that commenting on prices is not the right place, not adequate. I think each product determines its own price, like our carbon black, like our kaolin or our carbonates. It's the value in use. So I'm sure that if a customer pays a certain price, whatever the price is, it's because there is value attached to it. I disagree that there is only one competitor. There are other competitors. The one you mentioned is for sure the largest. But there is a very solid Chinese company producing this product. There are others around the world, smaller. But there is competition, which is healthy for the market. Still, I think it is... To produce a high-purity product like this one is not something you can do tomorrow. It takes... And we didn't do it in three years. This business belongs to Imerys at 50% when it was created with our friends in Norway since 2011. And it took us a year. Years. to reach the quality, the purity that somebody called superior in the past. So it's efforts, it's R&D, it's knowledge of applications that gives you then eventually a competitive advantage that you may use in the proper way in the market. But there is competition. We will always be careful and monitor this competition because... Because that's what you need to do if you want to be long-term profitable in the market. That's what I can say, Mattias. Thank you.

Thank you.

The next question are three written questions received from Ibrahim Omani from CIC. The first question is, can you elaborate on 2024 in terms of prices and volumes? The second one is regarding the impairment of the paper assets, on what ground will occur the future disposal? And the third one is lithium. How do you grasp the decline of lithium prices? Thank you.

Hello, Ibrahim. I guess the voice call didn't work. So thank you for posing the questions. How do I see 2024? Partly we mentioned it in the outlook. I think construction will remain subdued, at least at the beginning of the year. We don't see a recovery now nor in the coming months. What I hear from banks is that interest rates will drop, will start to drop this year. I think alone the message that there is an inversion could have a very positive impact and allow a restart of this sector. It will take time. We will not see immediately. As you know, it takes time to build, especially a house, residential, which is our strength. So construction will remain so-so. Automotive, I would say, flattish. On one side, there is There is demand, but inflation costs a car today is expensive. Interest rates at this level will not facilitate the decision by consumers. So I hope to have a medium to good, a flattish to good year in automotive. Consumers will remain solid, especially with inflation dropping, especially if interest drops. So I see positive there. Industrial. I think it depends on the rest. If there is demand for automotive, for construction, machinery will move. Therefore, slow starts. But I'm confident that after really 18 months of low business or slow business, I hope around the second half to see a pickup. EVs will continue. Energy and electronics should continue. So all in all, on volumes, I do expect, and I want to be optimistic, a volume growth for 2024. Maybe not exceptional, but a growth compared to 2023. Prices, as Sebastian said, I think we are entering a phase of stability. costs, typically prices. So I would tend to say a flattish environment. If inflation drops, variable costs are on the drop. Year on year, we are still something to gain, because last year it progressively went down, energy, freight, and so on. So I would rather say stability on pricing, if I may guess. Paper, you speak about a future disposal. We are analyzing our options and alternatives. We didn't say that we are disposing of this business, but we remain convinced that from a strategic point of view, IMRIS today is focusing on growing markets. The paper market has a structural decline. Might enjoy a good 24 after a very low 23, but still on the mid-long term, we will consider potentially a divestiture. The market has changed. As I said, 23 was really a terrible year that, by the way, impacted the overall volumes of the group up to a 2%, 3% level, although it is a small business, really driven by inventories. entering 23 inventories were sky high, and therefore a lot of mills stopped, reduced, or even stopped production that are partially restarting now. We thought it is prudent to adjust the value of our assets to this new reality, a lower market, a smaller market, and therefore we have taken this step before any other decision is taken. It's just, I believe, a prudent approach since it is an accounting entry. And we will keep you updated if there are any strategic decisions, of course, in this direction. Last on lithium, if you listen, if you manage to find some of my statements about a year ago, you will see that I said I do expect a correction in price. $80 was crazy per kilo because some brownfield capacity will come on stream rapidly, easily. Is there... is the easy one to expand capacity if you can. That's what happened. Plus, just as for our carbon black business for lithium-ion batteries, exactly the same, overstocking, end of the year with pipeline full of raw materials, batteries, and cars with a battery. So I would say two factors that... put offer or production above demand. And that's why we saw these prices collapse very rapidly. One of the largest producers of lithium just announced recently that at this level, A lot of producers are losing money. Therefore, they will not continue. And based on these prices, nobody will start the project. It's another way to say prices will rise. Prices will need to be higher if we want to sustain the growth, the investments in this field, and the growth of this business. No question on future demand. So after... I cannot tell you, there are different opinions if it's going to be a year or two, but everybody today is, or every study today confirms that the mid-long term price of lithium will go way beyond current prices because demand will continue to grow and capacity will not be enough to match demand. I'm personally fully aligned with this idea. Then your lithium has to be competitive, and I believe both Emily and British Lithium will be competitive in a production scale. Our potential future production is down the road a few years in a market that I hope by then will have restabilized. So summary is our expectations, our dreams on lithium have not changed at all. Of course, we will be more prudent before we start the big investments. And as I said in the past, we will try to secure some of our volumes before launching this big project. But I have not changed at all my opinion on the long-term attractiveness of this business. Thank you, Ibrahim.

The next question is a follow-up from Aaron Ceccarelli of Bernberg. Please go ahead.

Hi. Thanks for taking my follow-up. I have two. One is on construction, which is representing a big chunk of your business. I would just like to ask you for a little bit more color. It looks like the market remains bouncing around the bottom. Customers are really managing cash at this stage. Can you give us a little bit more color around the conversation you've been having over the last two months since the year started on construction and inventory levels for customers? And the second one is, again, on the high-purity quote. Can you confirm that the visibility you have from a volume standpoint in this business is similar to the rest of Imerys? Thank you.

If we have visibility for this business.

So basically it's on visibility. Construction, I think you... Your comments are straight to the point. Today, customers manage inventories down. So I don't think there is a lot of inventories in the pipeline. On the contrary, we start hearing customers saying, end users saying, I cannot even construct because there is no inventories. We see some urgent requests for supply. But as you say, it will remain a bit slow for the nearby future. But there is no inventory. And therefore, the moment that the confidence is back, I think we will see really a significant increase. Demand for housing is there. There is a lack of housing. So it's only a matter of confidence. Of course, interest rates, they need to give this confidence. And then we will see it coming back. But... No signs yet. For sure not going down. That's important. As I said, it's stabilized and ready for the next one. On the second question, visibility around our high-purity quartz business. Limited in time, because our products typically don't have a very, very long lead time, so you basically look at four to eight weeks. But the visibility is around rather the end markets. Some of your colleagues mentioned semiconductor will go up, optical fiber will go up, photovoltaic and solar will go up. So for me, the visibility is given by the end market. There will be ups and downs. There is Chinese New Year, so production drops. But the main underlying markets... are on good trend for the nearby future. And I really don't see at the moment anything that should impact these three markets, frankly, because we're cabling everything. We are micro-semiconductors in an electric car, in artificial intelligence will be needed, and we all want renewable energies. So fundamentally, I believe the visibility is given rather by the end markets. Thank you. Thank you.

The next question is a follow-up from Sven Edelfelt of Odoo. Please go ahead.

Yes, a couple of follow-ups for me as well.

On the high purity quartz, you have roughly 90% of the market together with Sibelco. So correct me if I'm wrong, but if those two mines are closed by the US administration for whatever reason, it will damage close to 90% of the photovoltaic and semiconductor market. And therefore, you have here a very strong position on pricing power. That's the first one. Secondly, on the volume, you had minus 6.1 in Q4. What was the monthly trend? I mean, it was obviously December would have been the best month. And possibly, can you give us an indication of what was January, possibly already positive or flat? And lastly, on your margin, your price are going down. This is consistent with a decline in cost. And if I look, it seems to me that you have a positive price over cost on margin gain in Q4, despite negative volume. So can it be extrapolated? for full year 2024.

I'll leave you the last one. Complicated question, Sven. Thank you. I don't comment on market shares. I think you're a bit optimistic, but I don't comment on market shares in the high-purity quartz world. I'm not as pessimistic as you are in terms of geopolitical risk. Yes, we have a mine in the U.S., but it's not our only source of raw material. We also have some other sources, including, among others, Norway. with a quite good deposit. So I think we are balanced in our supply. I feel more comfortable having different sources. Then we have this treatment plant, which is really an exceptional tool that allows us also to consider different sources. And therefore, I am sure we will be a partner to these industries, semiconductor, photovoltaic, and so on, in the future, independently from the geopolitical tensions. I hope and I believe... And no comments on pricing. Volumes for the group, I would say Q3 was mixed. We had a good October. We had a low December, which was a bit surprising. It is true that everybody manages inventories this year probably more than in the past. So difficult to give you a trend. Maybe the positive messages that January that we just closed is not bad. It's not bad in terms of volume. So that reconfirms that probably the worst is behind. Let's see if the next months will confirm that the curve is pointing up. On prices overall, Stian, do you?

On prices, I think our commitment is always to look at the balance. I think you got the answer in the questions then. We will be in Q1 with high comparable, both in cost and price. So we can surely expect that both of them are relaxed. We stick to our commitment of adjusting the price to the best commercial conditions, geographic and customer. So I think it will be up to you to extrapolate, but we confirm our commitment to maintain a positive balance throughout the year. I think the last years... have proven that overall we were able to manage that ahead of the curve. So sometime we need a few months to catch up in one direction or the other. But I would say historically also, when costs were going down, it was not bad for Imerys as a whole.

Thank you.

Gentlemen, that was the last question. Back to you for any closing remarks.

Thank you. So if there are no more questions, first of all, thank you for dedicating the time this morning. And for the many questions we have received, we have noted that there is increased interest in our high-purity quartz business. It's well noted. And we will see if we can follow up with a bit more on this topic. Other than that... At the end, in a difficult context, I think we delivered. We delivered on the guidance. We delivered with fantastic cash in 2023. Probably low point behind. So let's see what 2024 brings. Thanks to cost savings, cash management, I think we are equipped. We are equipped to enter the new year. ready if volumes don't pick up. But I believe even when volumes pick up with the cost basis we have today, I think we will be very happy of the performance of this company and of this group. Thank you very much and have a good day. Bye. Thank you.