Imerys Sa Ord

Good morning. Good morning to all of you. Thank you for joining us today to review Imerys Q4 and full year 2024 annual results. With me this morning, Sébastien Rouge, our CFO. Let me start as usual by giving you some highlights for the year we just closed. In 2024, Imerys delivered a solid performance posting organic growth and increased EBITDA and increased margin driven by volume recovery. Revenues landed at 3.6 billion euro with a 1% organic growth. In Q4, organic growth amounted to 3.5% and this was the third consecutive quarter of improvement. This achievement reflects continued volume recovery driven by additional industrial capacities, new product launches, commercial action and pricing turning positive in the second half of the year. Imerys posted and adjusted EBITDA for the full year at 675 million euros, an 11.4% increase over the prior year, like for like, and in line with our guidance. Noteworthy, the strong Q4 performance at plus 14%, like for like, compared to 2023. The group generated a free operating cash flow in the year of €209 million before strategic APEX 136 reported. Imerys financial structure is sound and its investment grade rating is confirmed. Another important topic, Imerys continues to offer shareholders an attractive remuneration. At the shareholders general meeting on May 13 this year, the board of directors will propose an ordinary cash dividend of 1.45 Euro per share, a 7.4 increase versus last year. On this slide, I would like to focus a bit more on Imerys sales performance. Q4 revenue was strong with a 3.5% organic growth versus last year. This is, as said, the third consecutive quarter of continuous organic growth. The solid performance was fueled in particular by the excellent work of our performance minerals teams, both in the U.S. and in EMEA APAC. Prices in Q4 confirmed the recovery already started in Q3 and are now solidly in positive territory. For the full year, prices are fast flat versus last year. The volume recovery Imerys enjoyed in 24 amid, in general, a weak underlying market situation, was driven by additional industrial capacities, new products, commercial actions, and we will elaborate a bit more on this in the presentation. Let's now comment on Imerys EBITDA, our performance for the full year 24. The graph on the left side highlights the significant improvement of Imerys adjusted EBITDA margin, reaching 18.7, up 110 BPS basis points versus last year. It is driven by, yes, volume recovery, but price discipline, cost savings, and the higher contribution from joint ventures. In absolute terms, the adjusted EBITDA progressed as well by more than 11%, like for like, versus last year. If we focus on the evolution of prices and costs for Q4 and for the full year, the graph on the right side illustrates Emery's ability to adjust its selling prices to cost inflation. During the first nine months of 24, the price-cost balance was positive despite some price concessions to customers, as we could benefit, as you see, from a deflationary environment. In Q4, as the situation on the cost side was less favorable, we were able to pass on price increases. This is clearly one of Emery's core strengths. Finally, I think important to point out on the cost saving programs, these generated 111 million of gross savings, so before inflation, since the beginning of the year, representing approximately 3% of total costs. On this side, an update on the markets we serve, especially after the divestment of the assets serving the paper market. Imerys main exposure remains construction with close to 40%, followed by consumer goods. New energies, small but still gaining relevance year on year. And if we now look briefly to each end market and the recent trends, some comments, construction. Throughout the year, we have seen weakness in Europe in general, U.S. a bit better, though mainly thanks to infrastructure, no residential, whereas residential, which is Emery's main exposure, still subdue. Interest rates are expected to continue dropping, especially in Europe, so we may expect a recovery of the markets on the back of a large deficit in housing, really in all geographies. This should trigger demand for our mineral solutions. Consumer goods, always a good market, holding well in the US, thanks to robust job market. It grows, but slowly in Europe, although inflation is dropping. China was okay, a bit hampered by increased household saving levels and a bit of low confidence. But we have seen a positive trend since Q4, which should carry on in 2025. On this slide, automotive. To start with, definitely the biggest source of concerns today, excluding China, all markets show weakness, and this is expected to continue in the coming months. In Europe especially, the situation has further deteriorated. Expectations were revised downwards during Q4, painting, frankly, a gloomy picture for the industry and a negative outlook also well into 2025. North America, we expect current softness to be prolonged into 2025, and there is for sure an additional risk today of supply potential, supply disruptions linked to the ongoing trade tariffs discussions. Finally, China, good Q4, so positive for the full year. 2025 will be more contrasted, we believe, as positive internal demand might be compensated by an expected slowdown in exports. Energy remains weak in Europe and the U.S., while China continues to grow, and in particular on solar and photovoltaics. Electronics, goods rebound since the end of 23. And on the electrovehicles markets, I would say slow with uncertainties in Europe, less incentives, we know well, and in the U.S. On the contrary, production, sales, domestic sales, and export still booming in China. Moving to the last slides of end markets, industrial activity in Europe continued to decrease. And frankly, we do not expect a rebound before the second part of 2025. Better in the U.S., probably slowing towards the end of the year and maybe into first, second quarter of 2025. But then we do expect a good rebound for the end of the year. Holding well in China. driven, as we know well, mostly by exports, to be seen for 2025. Iron and steel, it's a market that remains under pressure. The industry is definitely not doing well in Europe. The long-awaited announced rebound in the second half of 2024 did not materialize. Now the recovery is rather delayed, pushed back into the second part of 2025. U.S. is holding better. It's a more protected market, and we do expect to see growth in 2025. China, we know there is an issue with overcapacity and oversupply. Exports partly helped as they increased, but we also know that China is facing more and more restrictions abroad, so production is expected to slightly decrease in the following years. Let's now look or focus on a few strategic highlights of the year 24. We've closed the year with the acquisition of the European diatomite-amperlite business of Canviron. It's a nice extension and nice complement to our diatomite-amperlite footprint. It broadens our filtration and life sciences product portfolio. to better serve our customers in food, in beverage, filtration and pharmaceutical markets, all posting healthy growth. On the talk side, the US litigation, we achieved an important step on January 5th, 2025. This year, more than 90% of voting claimants have accepted the plan of reorganization. So we can now progress towards a definitive conclusion of this topic. A few steps still remain before the North American talc entities can conclude the Chapter 11 process, and I think this is clearly explained in this slide. On the lithium side, on our projects, they are proceeding according to plan. In France, Emily, we completed the PFS, the Pre-Feasibility Study. We're now starting to work on the next step, the DFS, the Definitive Feasibility Study, basically the engineering of the commercial plant. while we are finalizing the necessary steps for the construction of the industrial pilot plant. In the UK, where as you know we are a bit behind time-wise, we acquired the remaining 20% interest we did not own and we continue to work on the characterization of the deposit and on the pre-feasibility study work. Award on sustainability, I will come back also later on, good performance in term of CO2 emission with the reduction of scope one and scope two greenhouse gases by 28% in absolute term, so in thousand tons of CO2 versus base year 21. Well on track towards our SBTI validated target of minus 42% by 2030. In terms of ESG ratings, I think we just received, we were just awarded the A rating by the CDP. It's a great honor and reaching this top score, I think reflects the group's dedication to mitigating emissions of greenhouse gases. But in general, the group improved all its scores in the year 24 and we are systematically rated above industrial average. On this slide and the one right after, I would like to highlight the results of some of our recent efforts to outperform our end markets. Here is a snapshot of our recent investments in new product lines, all recently commissioned, but already contributing approximately 50 million euro of the group sales in 2024. Jade is our greenfield plant in China, producing mineral solutions for lightweighting of polymers, in particular for the growing automotive sector in China. In Wilbroek, in Belgium, where we produce conductive additives for lithium-ion batteries, Line 3 was commissioned at the end of 2023, started delivering and serving the markets in 2024, whereas Line 4 was commissioned in December of last year. So we now have enough capacity to accompany the expected growth of this industry for a few years. In Vizag, in India, where we produce aluminate binders serving the growing local refractory and construction markets also ramping up very successfully. All these new capacities have room to grow and will guarantee a flow of new sales going forward. Second lever of growth, for sure, innovation. I will not enter into too many details of the different products, but here are just some examples of innovative products. In 24, these products alone on this slide generated more than 40 million revenues, and it will be more in the future. It's important to remind that new ideas and new applications are generated every year. thanks to the incredible properties of our minerals. And at Imerys, we have the widest portfolio in this regard. Let's now focus a bit on group sustainability and our roadmap. We set objectives, you may remember, a three-year program till 2025 around three pillars, people, customers, and planet. On this slide is an intermediate picture, 2024, To make it simple, we are well on track to achieve our targets for most of them. And if we want to focus a bit more specifically on CO2 and climate change in general, we can look at the next slide. We had committed to reduce our greenhouse gases emissions, scope one and two, by 42%, in line with the 1.5 degrees trajectory, and by 25%, scope three, by 2030, using 2021 as a base year, and of course in absolute terms. Over the last three years, we have managed to reduce emissions by 28%, so more than the linear requirement to reach the target. using some levers. First, energy efficiency. We have a dedicated program called Energize, aiming to increase the energy efficiency at our sites. Progressing well, adopts the newest technologies and more to come. Secondly, fuel conversion. So reducing fossil fuel use, switching typically to biomass or electrification. A nice example is the conversion from coal in the U.S., in our plant in Georgia, from coal to a mix of biomass and natural gas to fire six kilons. Third lever, purchase. Purchase of low-carbon electricity, not only from our suppliers, but also internally. We have commissioned three solar plants under our power purchase agreements, and much more is in the pipeline for the future. A 42% reduction in CO2 emission is an ambitious target, but I'm confident we will achieve our goal. As a conclusion on sustainability, here is a snapshot on how the leading rating agencies in terms of ESG rate Imerys. Definitely, our strong and constant commitment to sustainability is highly recognized by all of them. I now hand over to Sébastien for a more detailed analysis of our financial results.

Thank you, Alessandro. We will go through the key aspects of our financial performance. Before we start with revenue, a short reminder about the disposal of the assets serving the paper market. This was closed in July. It's important to make sure that this disposal, which is the main contributor of the perimeter effect, minus 182 million, that it does not overshadow the good performance of Imerys' underlying business. So with positive volumes and prices almost flat, Imerys had a full year 24 with organic growth of 0.09% and our full year sales reached 3.6 billion. If we look at Q4 alone, Imerys organic growth is plus 3.5% and we can note positive volumes for the third quarter in a row. Prices continue in an upward trend. You remember they were negative in Q1, they were slightly negative in Q2, flat in Q3 and plus 1.4% in Q4. If we look now into more details at our three business segments, we start with performance minerals. This business generated 2.2 billion of sales in 24, and it represents more than 60% of the sales of the group. Overall, an organic growth of 2.4% as compared to last year. Revenue in Americas were the most dynamic, up 6.2% at constant scope and exchange rate. Sales were supported by volumes, up 4.5%, mainly driven by consumer goods and also solid pricing. In the fourth quarter of 24, revenue reached 219 million, plus 9.4% like for like versus prior year, confirming the good business momentum. Revenues in Europe, Middle East, Africa, and Asia Pacific grew by 0.8% at constant scope and exchange rate. Following a low start of the year, we have seen a progressive volume recovery since Q2, especially in paints and plastic markets. New capacity in China for lightweighting of polymers supported the fourth quarter good performance. Prices were maintaining a positive dynamic, which led to a 2.2% organic growth in Q4. The adjusted EBITDA of this segment increased by 4.6% in 2024 as compared to prior year, and that in spite of perimeter changes. And this was supported by demand recovery and significant cost savings. Now looking at our solutions for refractory, abrasive, and construction business. This segment recorded sales of 1.2 billion in 2024, out of which 286 million in the first quarter, well in line with 2023 levels. It benefited from an overall good level of activity in the US, but still suffering in the European industrial and construction markets. Thanks to price increase and stable volumes, this segment has had a positive growth in Q4. Adjusted EBITDA in absolute value and as a percentage of sales has improved significantly, supported by a positive price-cost balance and cost savings actions throughout the year. Now, let's complete this segment review with the solutions for energy transition. Graphite and carbon first posted a 3.5% revenue decrease in 2024 versus prior year, as the activity suffered at the beginning of the year from a long destocking period in Asia. Let's note that the trend reversed at the end of 2024, with Q4 sales up 16% versus Q4 of 2023. Same trend for adjusted EBITDA, which reached 42 million for the full year, slightly lower than in 23, but picking up in the second part of the year. H2 24 EBITDA is better than H1 and very close to the H2 of 2023. Now to the Quartz Corporation. Our joint venture posted an increase in revenue over the year of 1% compared to 23. A very strong H1 performance, fueled by exceptional sales, contrasted with H2 suffering from very high inventory in the global photovoltaic value chain, which is the main market of TQC. TQC serves also two other end markets, semiconductor and optical fiber. Both of them held well in 2024. The net income for the full year reached 196 million, half of it is reported in our financials, and that's a 22% increase as compared to the prior year. If we look now at the group profitability as a whole, For the full year of 24, adjusted EBITDA reached 675 million in line with our guidance announced in July, and that's an increase of 1.2% versus prior year on a reported basis. The adjusted EBDA margin reached 18.7%, showing a significant improvement of 110 basis points as compared to 2023. Riven by stronger operating leverage, we have volume up and cost way lower than in 2023, and a higher contribution from our joint ventures. If we exclude the perimeter and change effect, the adjusted EBDA increased by 11.4% over the full year compared to 2023. And if we look at the fourth quarter alone, adjusted EBITDA reached €143 million. The decrease versus last year is only due to the perimeter effect. The Q4 adjusted EBITDA on a comparable basis increased by 13.9% thanks to revenue growth and cost saving actions. If we look now at the other elements of our income statement for 24. Current operating income improves by 8%, reaching 394 million, which is 10.9% of sales. That is driven by the adjusted EBITDA improvement and also lower depreciation and operational provision than last year. With tax expenses close to 23 and higher financial expenses reflecting mostly interest rate increase, the current net income from continuing operation landed at 262 million, up 8.2% versus prior year. Net other operating expenses represented 357 million, mostly originating from the translation reserves associated with the assets serving paper that we divested in July. This is a remainder. We discussed about that with the Q3 release where this impact was already booked. This translation reserve has been a recycle to the income statement at closing of the transaction in accordance with applicable IFRS standard. It is important to remember that this accounting entry of 302 million does not have any cash impact and even if it drives down the net income, it does not have any impact on the group shareholders' equity. If we look now at the cash flow generation, the free operating cash flow figure includes 364 million in paid capital expenditures, out of which 73 are labeled strategic capex. These correspond to the graphite and carbon expansion capacities, and they came to an end in 2024. And also inside this 73 million, we have the expenditure for lithium projects. The operating working capital remained stable, well contained in absolute value in spite of the recovery inactivity. The dividends received from joint venture amounted to 75 million, a 20 million increase as compared to prior year. All in all, we reported a current free operating cash flow of $136 million in 2024 or $209 million if we look at that before strategic capex. With this level of strategic investment, the recovery of our business and the LC dividend, net debt of the group increased slightly. On top of the FX impact, 36 million, which is mostly attributable to the increase of our US dollar denominated debt, I want to highlight the proactive management of our pension plans. With a 52 million contribution to our UK and US pension, we have reduced to zero the deficit of all our funded pension plans and could de-risk the assets, which gives a positive impact on our balance sheet today and less risk for the coming years. All in all as well, our investment grade rating was confirmed. The net debt represents 1.9 times the adjusted EBITDA, reflecting the solid financial structure of the group. Now back to Alessandro for the outlook.

Thank you, Sébastien. Let me now wrap up this presentation with a few key takeaways. Even in an overall economic environment, which is still uncertain, because that's what we're living in, the Group expects to continue on its growth path in 2025. We need to remain focused on costs and on cash, but combining these efforts with our commercial initiatives, our innovative product offerings, and our recent investments in additional production capacities, we are confident to continue delivering a strong financial performance. Thank you very much. I now open the floor to your questions.

This is the conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. 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 Edfeldt, O2BHF. Please go ahead.

Yes, thank you. Good morning, gentlemen. I would have a few questions. Firstly, on guidance, if I understood correctly, you expect higher volume, strong cost control. So in fact, it seems for me that you're guiding for an increase in EBITDA like for like, which seems unusual for you at this time of the year. Can you maybe quantify a little bit more? It seems to me that it's reasonable to expect between 5% and 10% increase like for like, given what you achieved in Q3 and Q4. Second question would be on quartz. I understood you have no visibility and expect no recovery in 2025. So it would mean that the Chinese have one year and a half of stocks, which seems quite unrealistic. Correct me if I'm wrong, but on the carbon black, the Chinese had one year of stocks. So it means that we should expect on the quartz an uptick in H2. That's the second one. And the third one would be on asbestos. Beyond some insurer objection, I believe there is no real objection to the chapter 11 plan. Can you elaborate on that, please? Thank you.

Thank you, Sven. A lot of questions, so we will address them one after the other. First of all, on guidance and on potentially EBITDA improvement next year. As you know, we do not give guidance so early in the year, even more so knowing the uncertain future ahead, including geopolitical question marks that we all have. What I can say is, if you look Q2, Q3, Q4, we have been growing. I do expect our growth to continue. Don't ask me to put a number. As I said, guidance at a later stage in the year. We have good markets, we have good products, we have new products and we have new capacities. So we will continue this trend. And I would like to add that if you look at the pricing structure of 2024, we started negative. We reached, let's say, zero. And we closed the year in Q4 with a 1.4% increase. So if you average it out, I would say almost mechanically, we should see a price increase in 2025 as well. So I think the basis for growth of underlying business is given. TQC, I think your comment that we have little visibility is the correct one. There are fundamentally two markets. There is a photovoltaic solar, largely Chinese, and there is a smaller part, which is semiconductor, optical fiber, technical glass. This part will continue to grow. We have visibility is very little cyclical. And by the way, we have seen semiconductors picking up around the end of the year, and the trend should continue. But the bigger part of our business, photovoltaic, remains uncertain. Chinese, do they have 18 months? I have no idea. We really have little visibility. I hope we see some activity restarting, but at a very limited stage. Q4 was particularly good, but it's partly driven by year-end contractual conditions that make a picture a bit better than it should be. Therefore, I think this uncertainty will remain going forward. But as you said, underlying markets, photovoltaic installation remains very healthy. I would say at least 10% growth. One day these inventories will be used. Our product is unique, is needed. For the time being, there is no substitution in sight. Therefore, it's a matter of when rather than if. And you have given a good comparison. Early in 23, we saw our graphite and carbon, both carbon black and synthetic graphite, drop significantly because of the drop in production of lithium-ion batteries as well as sales of electric vehicles. It took a few quarters. We started 23 still at a relatively low level, and then it has been a continuous growth. The best year of the month, December. So it's a good message because for me means very often in this market with strong growth and strong growth for many years ahead of us sometimes euphoria takes over people over invest over produce and depending on inventories and adoption rates we might see some setbacks so i would say it's not a cyclical market simply euphoria sometimes pushes investors in this case our customers to overestimate the rapidity and the behavior of other competitors so Underlying positive, carbon black synthetic graphite coming back strongly. Sebastian mentioned 14% growth in Q4. I can tell you January is a great month in this business, so the trend continues. China is expected to be the biggest market... China is expected to sell more electric cars in 2025 than combustion cars for the first time in history. It has been the case in the last few months. So a market that will continue to grow. I believe the European community will come back to some reasonable schemes to reassure customers and consumers. Maybe a bit less positive in the U.S., but we do expect this market to continue its trend. As in photovoltaic, So we have to be patient until inventories are consumed and long term it is sure a growth market. I agree with you 18 months seems a lot, but it's pure speculation because the visibility is limited. Third topic is chapter 11. um we have achieved an important step with the positive votes not only positive but strongly favorable more than 90 percent more than 93 percent to be precise the deadline for objections against the vote is passed and there were no objections next step will be the confirmation hearing on on april 20 starting on april 22nd we know there has been one filing as an objection by an insurer you are correct the deadline for objections is the end of march so we can comment if there are other objections or not around the end of the following month but they said we are very confident now that the important step, which was the vote, and the vote with this success is behind us. Now, yes, we do need to continue to progress, to find agreements with the remaining objections, find solutions, address them, and go through these next two hearings, one bankruptcy court and one the federal court. But I would say I remain optimistic that we'll get there rather soon. Thank you, Sven.

The next question is from Ebrahim Homani, CIC. Please go ahead.

Hello, Alessandro. Hello, Sébastien. Thank you for taking my question. I have three, if I may. The first one is also about your guidance. All in all, do you consider positive organic growth, and is it mainly driven by a recovery in the European market? What's your point on the price in 2025? My second question is about the paper divestment. There was some news saying that FLAGS is disappointed with the assets they acquire. Is there any risk for MREs behind that? My last question is about the Lithium project. We are closer and closer from the production phase in 2028. It remains maybe three years. Is there any news flow regarding your financial partner? As you have noticed, JBL has communicated this morning on the potential delisting. They didn't confirm, but they didn't deny the option. What's your point on that?

Thank you, Irene, for the questions. Recovery, first of all. Well, my comment is we are very low in the cycle. Look at the construction market, look at the automotive markets, especially in Europe, even construction in the U.S. So I believe economies in general are at a relatively low point. So, yes, we believe there will be recovery, there will be a rebound. I would tend to say for sure in the U.S., But even Europe, interest rates dropping and we do expect all further drops. There is a huge need for residential in the US, in Germany, in France, in Italy, in the UK, in the US. So it will come back. It is, in my opinion, just ahead of us. I'm a bit less confident on automotive. It might take a bit longer. Also because there is uncertainty. Do I buy a hybrid EV? Do I buy... So I hope that once Germany has a new government, whatever the color will be, but that has a clear economic policy going forward, we all know it's the most important economy, that will trigger industrial activity. automotive certainties, and therefore growth. So is it Q1? Probably not. But Q2, Q3, Q4? Yes, we plan a year of growth, of recovery, and therefore needs for our minerals. On pricing, as I said before, we close the year with 1.4% year-on-year. The year is flat, so mechanically, if we keep the same price throughout 2025, we'll have automatically a 1.4% increase. So yes, there will be positive pricing in 2025. I think you should compare it to costs, as always. One of our main raw materials, alumina, caused some headaches in 2024 because of shortages. Prices went from $400 to $800 per ton. So we had some catch up. Finally, the world is stabilizing. 500, still a relatively high price historically, but nothing comparable to 24. That will allow us eventually as this new pricing percolates through the system to give some back to customers. But salaries, less, but will go up a bit. Energy at the moment, especially in Europe, is up a bit. So we need to do our job, as always. If there are costs, we need to pass them on in a fair way to our customers. And that's what I see going forward. I think the big deflationary time is over. The world, I think, is going back to normality. So slight cost increases, slight price increases. On paper... There's been an article in the newspaper, but I think it's rather noise than concrete. As always in commercial activities, there could be discussions, including disputes, we don't comment on those for obvious reason what i can tell you i think the paper assets are doing well their business is doing well we still have commercial relationship everything is is going okay so whatever the discussion is sure all the level will be we will we will manage we will handle and um nothing specific to report on that on lithium yes 28 Production start or start of commissioning is coming closer. We said at the end of last year that we will give at the beginning of this year an update in general on the lithium projects, especially Emily, which is more advanced. I was hoping to do it today, but we are not ready. We are still missing some bits and pieces, although the main work, the pre-feasibility study is finished. But we are finalizing a bit of the financing. The permitting is not there yet. There are some discussions around infrastructure in France. So it's really a matter of a bit of time. But very soon we will give you more information and a lot more details. Once again, the big decision to invest the big amounts is rather second half of 26. Therefore, we have time. And I confirm that, as I always said, given the size and the risk of this project, attractive, very interesting, but sizable. We will probably look for a partner. Discussions are always ongoing. Of course, if something should become final, we will be happy to announce, but the urgency is not there yet, and therefore we do things in the proper way. Last on GBL... Fundamentally, in this case, we are the object rather than the subject. And on top, we don't comment on rumors, but a press release was issued this morning, which I believe explains the situation. And I have really nothing else to add on this. Thank you, Ibrahim.

The next question is from Jason Faircloth, Bank of America. Please go ahead.

So, good morning, guys. Thanks, Alessandro, for the presentation. Two questions for me. One just on the lithium assets, and second, just on sort of capital returns versus growth. So, on lithium, you know, you're working through the DFS. Some people seem to think these things start producing in 28. To me, that feels quite optimistic, given where the projects are. And I guess the more fundamental question is, do you think that the assets are high enough quality to work without subsidies? What I do see is a lot of very low cost brine production coming online down in Latin America. And I just struggle a bit to see how hard rock mining is going to compete with that. So that's the first question. The second question is on dividends. And again, it's something I struggle with sometimes with Emirates. You pay a nice dividend, a nice shareholder return, but at the same time, you're trying to be a growth company. And that feels like a bit of a tension. So I'm just wondering what your latest thinking is there.

Your assessment on the timing needed for a couple of days is not totally wrong. We said we would be commissioning in 28, which means production, probably commercial production in 29. Of course, we need to move fast because the time is moving. So if I had a different opinion, I would tell you. And again, allow me to come back shortly, very soon with a full update. But we know that time runs. Of course, we are ambitious. Of course, we take no contingencies. And therefore, sometimes some risks. But I... I remain confident that we can deliver on these projects. And especially what is important is the attractiveness of these projects. And then we come to the subsidies or not, to the cost position or not. It is true. Today, South American deposits are, in terms of the cost curve, and there are plenty of available public information on cost curve, they tend to be on the lowest side of the cost curve. You might remember what we have announced at the end of 22, a 7 to 9 euro per kilo cash cost. That cost will put us... in the best 50%. So if we confirm this number, and again, it will be part of our disclosure coming ahead of us, I think you can still count on the future and you can still count on being there in the long run and profitably. Today's assessment is that the South American brines cannot supply what the world will need. So there will need to be, and even today, around 50% is done based on rocks. So the world will need more lithium going forward, more projects. For sure, at today's price, $10, $11, $12, a lot of projects will stop because if you are higher on the cost curve, no way to invest, no way to produce. But the deficit between offer and demand going forward, the easy ones have been implemented, and you're perfectly right, brownfields capacity expansion in South America. But going forward, they cannot be expanded unlimited. And second, the world will need more. So there will be room for good projects. And again, I'll be back when we'll disclose all the data. We continue to invest because what we see in our deposit is high volumes, high quality, good technology, and a cost position that should allow us to make a profitable project. Then, of course, we are in Europe, where costs tend to be higher. We have taken choices, especially from an environmental point of view, going underground and so on. That will probably require more CAPEX. And that's where I believe discussions with the different governmental bodies and authorities will come, because we commit to something for the planet, for Europe. And I hope it will be recognized one way or the other. But that's ahead of us. On the second part around dividends and capital and growth, Sébastien, do you want to?

Yes, Jason, maybe just a reminder on the capital allocation that we share with the market at the capital market there, I think we are still navigating within the balance that we have tried to found. You remember that when we announced the large reshuffle of the portfolio and the disposal, In the end, we add up the cash generation. We said we would split that into three, one-third as a return to shareholders, one-third as strategic capexes, which are going to an end right now, and one-third that we keep a little bit more flexible, either M&A or deleveraging. I think if we look at what we have done from 2022 and including what we'll do in 2025 is well within this balance. What will be a little bit out of the ordinary business will be lithium, and that's why it will deserve a specific partnership and financing. But all in all, we are maintaining this kind of free pillar of capital allocation, and that's how we have proposed actually the last dividend distribution, as you mentioned.

And Jason, if I may add, which are the fastest growing markets? Lithium ion batteries, our graphene and carbon business, conductive additives, we have invested in the last four years. As I said before, we're done. We have capacity probably to accompany the market for the next two, three years. So there will be no more strategic apps in that direction. Everything which is around polymers, lightweighting, we have invested in China, brand new plan to serve the Asian market. I do not expect any further capacity increase needs short term. TQC, our quartz corporation, our high purity quartz on the back of solar. Pending it comes back and it keeps running as we expect. We have invested, as we said, in the U.S. We are investing, completing in Norway both expansions. So we'll be there for the next. We are ready to follow market growth for the next few years. All around consumer goods, with the acquisition of these assets, we have created the basis for a larger capacity, synergies, two new mines, a new plant. Fundamentally, we have created, then we have the normal growth, the 2%, 3%, 4% growth of underlying markets, construction industry recovery that we can easily absorb. I remind you, in 21, we were running at higher volumes before the drop of 23. So what I see is an emery that is ready to accompany growth. without significant new capacity expansions. And that's why if you read the press release, there is a sentence which was addressing exactly that point. We believe that in 2025, our capex to run the business, I leave lithium outside, as rightly so Sebastian mentioned, our capex should show a significant drop. because we are ready for growth. So that should combine what, in combination to this, to answer your question to Sébastien. Thank you, Jason.

Yep, thank you. Just a quick follow-up, if I could. So maybe another angle. If I think about the business, you've made these investments and the market's been weak. Have you got a feel for how much the business is underproducing today relative to its potential, relative to the invested capital?

No, I have not done this calculation because with so many plants and so many different products, I can tell you on the recent investments, when you look at to give you some feeling, when you look at the capex at the new plants slide, give you an example our lightweighting project in china four million this plant will deliver at full scale between 20 and 25 million willbrook will be in excess of 100 million when full visac will more than double so this is just to tell you but it's three example because we have numbered there so this this is less than half of what the potential is because i knew so we would i would say we have the capital costs in our books already because all of these are finished and commissioned and closed in 24 the the return is ahead of us fortunately growing fast so rapid then there are the normal assets which is a bit more complex to tell you No.

In terms of figures, we do not have global figures. But it's true that we have only a few of our industrial assets that are completely used and saturated at this level. So we have a reserve of growth. And if we rebound to what you said on construction, The absolute level are relatively low in the US, relatively low in Europe, relatively low in China at the same time. Our assets are here, our products are here, our customers are there. So we are really ready without any need of CapEx to serve and to increase the volumes. So that's an operational leverage that we have seen in the post-COVID recovery and which is really, I would say, a free reserve of growth for us.

Thanks very much for the call, guys. Yeah, appreciate it. And grazie mille. Merci beaucoup.

As a reminder, if you wish to register for a question, please press star and one on your telephone. The next question is from Aaron Ciaccarelli, Barenburg. Please go ahead.

Hello. Good morning, Alessandro. Good morning, Sebastian. I have a few questions, please. The first one is on TQC. I would like to maybe ask if you can unpack a little bit the performance of Q4, clearly very strong sequentially, 16 million. So I would like to understand maybe what was the split between solar versus semi, and if the 16 million includes any kind of volumes which have been pulled forward from Q1. I understand that you are not expecting any recovery in the market, so just trying to figure out what kind of run rate we should think about going into Q1. My second question is on synthetic graphite and carbon black, clearly very strong performance, nice to see. If I understood correctly, you just mentioned that the capacity utilization of this business at the moment is around 50%, and I think the profitability is higher than what we see at your competitors, so I would like to understand what kind of margin you have in mind when we reach a level of around 70%. at least 70%. My third question is on your cash flow. When I look at yours on page 15 of your press release, I see the 52 million change in provision negative, with 30 were in the second half. Can you help me understand how much of this helped your EBITDA generation for the full year? And the fourth one would be on lithium. Clearly, you talk a lot about that already, but I would like to understand what drives the urgency at $10,000 per ton to go ahead with the pilot plant in a moment where we continue to see more capacity coming on stream this year from Argentina, from other countries at this stage? Thank you.

Thank you, Aaron. Let me start with the easy one, graphite and carbon. You said 50 percent production capacity is not totally true because there are lines that are already running and they are full. So it's a balance between what we had and is full and what we are building and have built, which is filling up. But, frankly, there is significant growth ahead of us, which, of course, will bring as you said, an increase not only in absolute terms, but also in margin, because better utilisation, better labour utilisations, overheads utilisation. So definitely expect a margin growth in percentage as well. We don't give, for specific businesses, any guidance for sure, but the answer is clearly a yes. And I will comment on lithium. I don't think there is urgency, nor the contrary. Unfortunately, as very often is the case, when prices drop, people panic and everybody stops investing. That will create, and if it stays like this, it will create a major deficit in supply, not in one, two years, but market is expected to be unbalanced around 2029, maybe 2030, if projects don't start now. So that's why we continue to invest at our pace, which is the right one, because we do believe, as I said at the beginning, we do believe we have something great, maybe big, and therefore maybe with a partner, but something very interesting, which will be competitive in a much larger market of lithium tomorrow. Today, definitely overcapacity drives prices down and there are competitors probably with a lower price but so if today we had to take a decision on the one billion plus big capex i agree with you there would be a big question mark but fortunately we are not there yet And as we get closer, we will have a better visibility. But that's exactly the mistake that, unfortunately, markets do. Euphoria, everybody invests. Overcapacity, prices drop, everybody stops. And then a mine or a project this size, you don't build it in one or two years. So if you don't plan ahead, if you do not move early enough, you'll be late and the market will be short. So for the time being, we continue at our pace. And as I said, it will be a full disclosure very soon.

Sébastien, on TQC... On TQC, there is no pull from Q1-25 to Q4. on the other hand what we have in q4 of 24 is a little bit of retroactive impact of commercial agreement overall the full of 24. so not all of the 20 q424 are related only to q4 some is a catch-up of q1 q2 q3 commercial commitments that were then settled in Q4. I think that's the effect of non-normalization when you look at Q4 alone. But nothing was pulled from 25.

And on the costs, on the provision?

On the provision, so it's a very easy answer. Our EBITDA does not include any movement of provision, so zero. So movement of provision do not help or deteriorate our EBITDA. And what you see in the, actually what I commented in terms of operational provisions, they are actually lower in 2024 than in 2023. And what you see in the IFRS cash flow is mostly the movement of non-recurring provision that are outside of the current operating income and EBITDA. So again, more impact on depreciation of assets for the disposals, but no impact whatsoever on current EBITDA.

Thank you, Eran.

Follow-up, sorry, very quickly on the lithium side. May you remind me what's the total cost per tonne at the moment for expected total cost per tonne at Emily, please?

I stick to what we have published, and for the time being, everything is on green light to hit our target. We published 7 to 9 euro per kilo cash cost.

Gentlemen, there are no more questions registered at this time. I turn the conference back to you for any closing remarks.

Thank you very much for dedicating a good hour to Imerys. We close a year on a growth path. And I hope 2025, and I'm confident that 2025, Imerys will continue on this path. And I thank all our investors that keep their trust in our company. Thank you very much. Bye-bye.

Thank you.