Gränges AB (publ)

Good morning, ladies and gentlemen, and a warm welcome to this third quarter presentation of the results for Grenges. My name is Jørgen Rosengren, I'm Grenges' CEO, and I'm joined here also by Oskar Hellström, our CFO, and we'll take you through the third quarter result for our company. We'll be referring to the presentation that you can see on screen, but it's also available on our homepage under the Investor Relations tab. So, in summary for the third quarter, we saw in fact a very stable sales volume of 120,000 tons relative to 119 last year, and it's a sign of strength we feel that our different regions, our different segments compensate for each other. We saw, of course, continued strong demand in Americas, which has been the case for many quarters on end now, and also we're very happy to be able to say that we saw a very strong recovery after the post-COVID shutdown that we had in the second quarter in China, and that more or less compensated for a slight slowdown in the European theater. So in total, that evened out to an uneven volume development. On this stable volume, we had a very good operating profit development. The adjusted EBIT is up almost 60% to 345 million relative to 119 last year, and that of course represents a very strong margin improvement, and we're proud of that because it comes despite very, very large cost increases that we've had to tackle over the past 12 months, and have tackled with a combination of cost productivity, of course, but also price increases. We're also happy to be able to report a good cash flow in the quarter of 441 million relative to negative cash flow last year, and that cash flow helps us, of course, to also reduce our leverage, which is now down to, I believe, 2.1 or so, close to our target range. And while dealing with all these short-term things, we also are executing on our long-term navigate plan, and have some good progress also to report there. Getting back to volumes then, if we look at the overall picture, our largest segments to the right of this picture are automotive and HVAC. And in both cases, we had stable, in fact, quite good growth, and that also reflects the situation in our two largest segments. So automotive is driven mainly by growing as Eurasia, where we saw strong growth, and that strong growth was in the quarter was very much driven, of course, by the recovery in Asia that I reported on before, but also reflects a relatively stable demand situation in automotive, which is influenced and bolstered, I guess, by the pent-up demand that is there after the delivery problems that that industry has experienced in the past year or so. In Green's Americas, we had a very strong demand in HVAC, which we endeavored to fulfill, so far as we can. In Green's Americas, we are and have been for a long time now constrained by our production capacity. And that is also visible in the Green's Americas numbers, where specialty packaging is down a little bit. That's not really due to demand, but rather due to the fact that we're scrambling a bit to keep up with demand, which is, I guess, a luxury problem to have. In total, the Green's Americas volume, as you can see, landed more or less on the same level as last year. In Green's Eurasia, the strong development in automotive was unfortunately then negatively affected by or compensated for, if you like, by negative growth in some other segments, and that's mainly in Europe, where we have some shorter-term business in areas such as driven by such things as construction and so on, also packaging, as you can see. And there we've seen, of course, an effect now of the rather extraordinary situation in Europe, but on balance it evens out also there. So we have, in fact, the ability to report the growth in Green's Eurasia. All this boils down to -on-year flat volumes for Green's, which we're relatively happy with in these turbulent circumstances. Looking at margin then on page four, the margin, in fact, this year has been very, very stable. It's, of course, helped to a large extent by the strong margins that we have been able to generate in Americas. The margins in Eurasia are a little bit lower and also went down, as you can see, in this particular quarter for the reasons I've already mentioned. So the energy cost, of course, is the biggest factor there. But in total, Grängens delivers a stable margin for the third quarter in a row and also on a high level. And that's also what makes the operating profit to date this year the highest we've ever been able to generate. Turning to page five, we, of course, as you know, most of you, we have a very strong focus on sustainability in Grängens. And this year we are continuing to show good results in that area. We're planning also for even better results long term, but also this year good results. We've committed to climate neutrality by 2014. And we have committed to the science-based targets initiative and are in the process of calibrating our targets to make sure that we fulfill those requirements. Reaching these targets will require a lot of partnerships, both upstream and downstream. And in this particular quarter, we signed a long term partnership for the lever of renewable energy to our Newport site in the US. In the quarter itself, we had, unfortunately, an increased carbon emissions intensity from 8.9 last year to 9.5 this year. That's mainly due to a mixed change between our regions. But on the other hand, if you look at the long term trend, it's favorable. So far, our year to date carbon emissions are the lowest we've ever had and are down very significantly relative to our reference year of 2017. And the same thing is true for recycling, where we have the highest ever recycling share and also recycling volume for Grängens year to date. Interesting growth area for us are battery materials. As you know, there are a lot of investments are taking place, not the least in North America and in Europe, to supply batteries to the electric vehicle industry. And we regard that as a very exciting growth area for Grängens. We see a lot of customer interest in this from customers across the field, both in our cathode foil capabilities, but also in other components for electric vehicle batteries. And we feel that we have structural advantages in this field. We have the good footprint in Asia, of course, which is good because that's where this industry is focused. But also in North America and Europe, where most of the growth is expected to come in this industry. We have the technology and the ability to serve automotive customers well. And we have the sustainability that is both the ambition and the performance, which are going to be very critical in this industry. We've started a systematic investment program to supply these customers and have started deliveries already this year of battery cathode foil in China. We then plan to start deliveries in Europe in 2023 and in North America in 2024. In fact, we believe that we will be the first to market in the US with domestically produced battery cathode foil. And that is an achievement that we firstly are proud of, of course, but also positions us. We feel well with many of the global customers in this industry. But based on the latest signals we've gotten from our customers and from the market, we're also taking steps to accelerate this development and strengthening our team, among other things. So that was like a helicopter view of the third quarter and the developments in it. And now I would like to turn over the word to Oskar to take us through the numbers in more detail. Oskar, please.

Thank you, Jørgen. So let's see if I can provide some more details then on the developments in the third quarter. So if we start with the sales volume, we can see that that increased with about a percent to one hundred and nineteen point eight thousand tons there, as you heard from Jørgen earlier. Net sales, on the other hand, increased by thirty four percent to six point two billion SEC. And the main reasons for that, the net sales increased while the sales volume was fairly stable, are the higher average year on year aluminium price that is still impacting in the third quarter and increased fabrication price. And that in addition to this, the net impact of changes in foreign exchange rates was positive seven hundred and ninety five million SEC compared with the third quarter last year. That's also a big driver of the increase in net sales. In addition to this, I should mention that the net sales includes revenues of seventy four million SEC related to insurance compensation for the fire in Corning that occurred in May. This does, however, not have any impact on the operating profit in the quarter as the assets that were damaged in the fire are impaired with the with the same amount. Looking at the earnings, I should maybe start by saying then that the three hundred and forty five million SEC in adjusted operating profit in Q3 is the third highest we've ever seen in an individual quarter. So we continue to perform well, and I would say especially so under the current quite challenging circumstances. The adjusted operating profit per tonne increased to two point nine thousand SEC compared to one point eight in the third quarter last year. And the key driver behind the strong earnings is the continued margin recovery as price adjustments are compensating for significant external cost increases that we that we see. And on that topic, we actually continue to see almost all cost items increase year over year with the largest increases related to energy. And that's really our European operations that are most impacted from this in total for the group. External costs increased by close to four hundred million SEC in Q3 compared with last year. And this does not include the cost for aluminium that is directly passed on to customers. In addition to the improved balance then between price and cost, net changes in foreign exchange rates had a positive impact of forty eight million SEC in the quarter. And this is primarily the translation effects on the significant appreciation of the US dollars against the SEC. And over the coming quarters, we expect to see increasing transaction effects as well as the effects of currency hedges are currently or gradually wearing off. Depreciation, amortization and impairment charges increased with sixty three million in total. And this now that includes the seventy four million SEC related to the impairment of the assets damaged in the firing corner that I mentioned earlier. The reported operating profit of two hundred and sixty nine million SEC in the quarter further includes items affecting comparability of negative seventy six million. This is related to a loss on an open aluminium position in one of the Grenge subsidiaries. And the reason for the loss was a wrongly stated and therefore unhedged exposure in combination with extremely high volatility in the price of aluminium during the second quarter of this year. Now, this is an unusual type of event for Grenge's. And as a consequence, we have reviewed and improved the processes in our subsidiaries to ensure appropriate risk management throughout the group. The profit for the period increased to one hundred and fifty six million SEC and earnings per share increased to one point forty seven SEC in the third quarter. During Q3, the financial net debt decreased slightly to four point three billion SEC driven by the earnings improvement. The leverage did, however, also come down to two point one times EBITDA on a rolling twelve month basis. And as you can see on this slide, the adjusted cash flow before financing was strong in the quarter, totaling four hundred and forty one million SEC. And as you may remember, then we saw a very large build up of working capital in the first quarter this year due to the dramatically increasing aluminium price at that time. With the metal prices now having come down again, we see the reverse effect of this. So sequentially lower aluminium price impacted the working capital positively in the quarter. Now, the effect from the lower aluminium price is partly offset by build up of inventory and then that's primarily related to safety stock in our Polish operation. And this will mitigate the effects of potential natural gas shortages over the coming months. But the result of this is that the working capital remained fairly flat from the second to the third quarter. We also continue to invest in total hundred and twenty nine million SEC in the expansion of the Granges Group and in key areas such as more sustainable and circular products. The majority of the spend in this quarter relates to the two new recycling centers that we are currently building in the US. Finally, I think it's also worth to comment on the large currency translation effect that impacts the net debt in the quarter. And this is primarily related to our dollar denominated debt and the strengthening of the US dollar against the SEC in the quarter. Even though the currency maybe is working against us a little bit on the debt side, I think it's very positive that we continue to see the strong cash generation and we continue to reduce the leverage in the quarter. Let's now take a closer look at our business areas and start with Granges Americas. In Americas, we heard from Jörgen that we continued to experience a strong market demand from all our segments with the exception of automotive there, which is continuously negatively impacted by component shortages and high inventory at customer level. In addition to this, we gradually ramp up of the Salisbury facility there after the stop in June restricted the production capacity with about three thousand tons in the quarter. And this had a negative impact on the sales, primarily to the specialty packaging market. We expect the Salisbury operation there to be back at full capacity as of first quarter next year. The adjusted operating profit increased to two hundred and fifty four million SEC, which corresponds to an adjusted operating profit per ton of four thousand SEC. Also here we see the main part of the positive effect of the effects on net changes in foreign exchanges was positive. Thirty nine million SEC in the quarter. Continuing with Granges Eurasia and here we experience this mixed market development as Jörgen talked about the two percent year over year sales volume growth in total. And it's a combination of strong demand in automotive in Asia as China recovered and Asia increased within total thirty two percent in the quarter. And then that was offset by by twelve percent lower sales in Europe. And that's really driven by two things. Well, firstly, general negative market sentiment in Europe, I would say. And then second, high inventory levels as an effect of of new anti-dumping duties in July. The European Union imposed anti-dumping duties on the import of rolled aluminium products from China. And this has been known for a while. And in anticipation of this decision, European distributors basically built up significant stocks of Chinese products in, for instance, the general engineering and building and construction markets. So inventory levels are currently high in Europe. And maybe we should say that over time the anti-dumping duties are expected to have a positive impact on Granges European business. But but short term, then they provide a challenge due to this inventory buildup. The adjusted operating profit for the quarter increased to eighty seven million SEC corresponding to an adjusted operating profit per ton or one point four thousand SEC. Also here we see a little bit of positive impact from FX. It's nine million SEC in the quarter. And going back to the group level again, as some of you may recall, we updated our financial targets earlier this year. And although we're currently not meeting the targets, we delivered sequential improvements on both profitability, profit growth and capital structure in the third quarter. And as you can see on this slide, we're now very close to meeting the targets of at least 10 percent average operating profit growth. And we're almost back at our target range of net debt to EBTA below two times. Of course, this is something we're very pleased with, and especially so in the very turbulent environment that we're currently in. And speaking of the turbulent environment, that's something we expect to continue to have to tackle in the fourth quarter, especially in Europe, where we see challenges both in terms of increasing costs and falling demand. But maybe start on the positive side. We expect a stable year over year development of demand in North America and increasing demand in Asia in the fourth quarter. In Europe, we expect the demand from the automotive customers to continue to be stable, but basically most other markets to be very weak. Further, our sales will also be negatively impacted by continuing the high inventory levels at customers in Europe, as I just mentioned. In total, we expect the slowdown in Europe to bring Grenge's group sales volume for the fourth quarter down to a similar level as for the fourth quarter last year. On the margin side, we intend to continue to offset cost increases with productivity and price increases as we've done throughout the year. With the extremely high energy prices we see in Europe and the market dynamics currently in play there, we do, however, expect a time lag before the new price increases come into effect. And this is currently expected to impact sequential margin development negatively in the fourth quarter. That said, we should not forget that the macro environment is currently highly uncertain, and basically that there could be both downside and upside potential to our current view. With that, I'll hand over back to Jörgen to summarize the third quarter before we open up for questions.

Yes, in summary for the third quarter then, we feel that the third quarter was a very stable one, where we proved again that we can meet the external market conditions with things like price increases, mixed changes and so on, to provide a good result. And as a result, in the year to date we have the highest ever operating profit and lowest ever carbon intensity. We feel there's a strong interest in the battery products and that the outlook, though uncertain, is something that we will have to deal with in the same flexible way that we've done before. And that's why we also say that our plan and ambition are changed.

Next question, please dial star 5 again on your telephone keypad. The next question comes from unknown. Please go ahead.

Hello, can you hear me?

Yes, we are fine.

Oh, perfect. Hi, it's Carl Bokhus at ABG. So, good morning. My first question is on the contribution from your ramp up volumes. You say that you are impacted by supply constraints in America, but still it would be interesting to hear how far along you've come in all regions basically within your projects.

About the investment projects that we have, we are making good progress on those in every instance, I guess, except one. So, for instance, the large investments that we're making in remelting and recycling in the US are very much on track and intended to come online exactly as forecast in the respective press releases that we made. In Europe, as you're well aware, no doubt, we've had a setback in the form of the fire that Oskar referred to earlier, and we're still evaluating exactly what will be the... when we will restore that capacity that was lost in that fire. But apart from that, the expansion plans that we have communicated earlier are all on track.

Understood. Yeah, sorry about that. I also had that technical difficulty here. But then also on... you mentioned, you know, one automotive and two battery demand. So, on the first one, is it, you know, related to an automotive recovery in general or within this? Do you in particular see a shift already now towards electric vehicles? And the second one is just, you know, where you are in the process within your battery ventures in terms of commercial stage or testing products and so on.

Yeah, and I think the answers to those three questions are yes, yes, and good. Yes, there is a kind of relaxation, we believe, of the supply chain constraints that have previously affected the automotive industry on the one hand. On the other hand, of course, it would be naive almost to assume that these inflationary trends and the interest rates and so on would not affect automotive demand in the medium term. But right now, we're still in a situation where we feel there's pent-up demand in the automotive industry, and that's why we're forecasting also stable volumes for the balance of this year. Further out, you have to ask somebody who knows more about the further out forecasting that we do. When it comes to battery, then, we are entering this industry. It's a new industry for us and also, in fact, for many of the entrants and for the people who have been in the industry a long time, they're expanding into new territories. So it's an industry in flux, you could say, with a lot of new partnerships and a lot of new opportunities. And we're intent on capturing those opportunities for Gränges. And so far, at least from my perspective, we've had almost a surprising level of demand from very large global battery makers in what we can do for them in Europe and in North America in particular, but also to some extent in Asia. So we feel positive about that development. And like we said also in the report, we're working on what we can do to accelerate our expansion in this space and feel pretty confident. But it's not something that will affect growth in the fourth quarter or first quarter next year or something like that. It's a longer term strategic initiative that we hope also will pay hands-on dividends in the longer term.

Understood. My final question is just on the – and correct me if I misinterpreted you here – but when you said you intend to continue to build up safety stock or inventory to take into account potential gas rationing in Europe, or did you say that you had already heard from governments or power supplies that there could be a shortage already in the coming months? No,

it's a good question, Karl. Maybe I was not entirely clear. We have built already additional safety stock in our Polish operation in order to – if we end up in a scenario where there will be restrictions on natural gas supply, the primary part that runs on natural gas in our Polish operations is the recycling center and cast house. So we have basically run the recycling center and cast house and built up a safety stock after that production step, which means we can still run the rest of the production even in a scenario where there will be restrictions on natural gas supply. That said, we have a high inventory at this point. I currently do not foresee that we will continue to build that, but we have it in case we end up in a situation where it's needed over the winter.

Understood. Thank you.

The next question comes from Kenneth Toll-Johansen from Carnegie. Please go ahead.

Yeah, thank you. You hear me right?

We can hear you, Karl.

Great. Yeah, so I was thinking on the battery side, you said that you will probably be the first producer of battery materials in North America. But what about Europe? Do you have competitors that are supplying battery plants in Europe right now?

We have competitors in America and in Europe, but like you said yourself, we're planning to be the first producer of battery cathode foil in America for our customers there. We think that in both Europe and in North America, there are going to be obviously competitors, but we believe actually that in both geographies we'll be extremely well positioned and that we're extremely early out of the gates, so to speak. But it's a growth industry and it's very much in the news and so on. So of course there will be others who also entered this industry and tried to compete in it.

Great. And then regarding the corn.

I think we lost you there, Kenneth. Are you still with us?

Are there long delay times for such equipment? What are your thoughts there? Is the process just standing still now?

I think we lost you there a bit, Kenneth. You had your technical glitch of your own there, but I think your question relates to corn and the lead time on the equipment. Is that correct?

Yeah, exactly. Are you in a hurry to reorder something to get it going again? What are your considerations?

I can start there and comment on some technicalities. We have basically finalized the work of dismantling the existing mill that was damaged in the fire. We've done that in the quarter and as a consequence of that, then we are making an additional write down affecting the third quarter, as I mentioned earlier. Now in terms of how to best rebuild this mill, we still haven't made a final decision. This provides also an opportunity to tweak the specifications of the mill slightly, should we want to do that. That decision still has to be made. With the current lead times for components for the rebuild, we expect it will take about 18 months to get this rebuilt. I would say it's fair to assume that the new mill will be operational around mid 2024 or so. I think that's probably the answer you're looking for there.

I think it's also fair to say that the extreme appetite for extra production volume in Europe is not quite where it was a year ago or so. I think that's kind of the answer to your question. Therefore, we're making sure instead that we will have the best possible solution for the demand picture that we see going forward, also taking into account the segments that we want to focus the most on in the Navigate plan and so on.

And then also in the report you talk about higher energy costs that could be up to half a billion SECs going forward. How do you see your position compared to competitors? Are competitors facing the same energy increase? And do you think it would be sort of an industry thing to hike prices significantly due to higher energy costs? Or do some competitors have longer contracts so they are more protected? Or do they have other energy mixes? Can you elaborate a little bit around that please? Sure.

We don't of course know exactly what our competitors are doing in detail. But I think it's fair to say that the energy crisis is a pan-European crisis and affects everybody in Europe. But it affects of course those players more who are more exposed to, in particular to natural gas and who are the closest to the largest supply problems that we have there in Germany and to some extent also France and other regions. And so on balance I guess it's fair to say that we're very hard hit by this but that our competitors are at least as hard hit as we are. Probably maybe a bit more even. And that I guess goes to the heart of the question because we really don't feel we have a choice. And we were faced last year by 1.3 billion or so of increased cost and we combated that by improving our productivity and raising prices. And now we have another hit here of about half a billion sec or so which could of course be more or less depending on how the prices develop. And we're going to try to do the same thing exactly again to counter it with productivity increases and price increases. And because this is a trend, a tide that lifts or sinks all boats so to speak, we believe that we'll be in good company to sit at least.

Okay. Yeah, great. That's all for me. Thank you.

Thank you, Kehne.

The next question comes from Victor Hansen from Nordea. Please go ahead.

Yes. Hi, I hope you can hear me, Victor. Maybe start off by following up on the previous question regarding the energy costs primarily in Europe. But I was hoping you could provide maybe a bit more color in this perhaps in terms of how many months in general it usually takes to offset this. And then if there are negative effects also in America and Asia or is it only in Europe that you see this?

No, I think we, to answer the last part first, we have of course a negative effect also in America and also to some extent in Asia, although it's smaller there. So it's a global phenomenon, but it's the least pronounced in Asia, a little worse in America and worse still in Europe. Regarding time lag, it of course depends on how we succeed with the price increase negotiations that are currently ongoing with the customers. I'm sorry, I'm a little early to say. But our ambition, of course, is to do at least as well as we did in the past 12 months. And there we did have, to be honest, a lag between the time the cost increases hit us and the time we were able to forward them to customers of something like three to five months or something like that. And if we do worse than that, we will be disappointed. And if we do better than that, we will be happy.

Okay, understood. And then how much of your energy may be hedged here for the Q4 2023?

The question we can ask there, I think it's from a European perspective, because I think that's probably what matters the most here. As Jörgen said, the impact of this in the US and China is smaller. But for Europe, we have hedged approximately 50% of our electricity need for 2023. And approximately the same or a little bit more, of course, for the balance of this year.

But energy for us is not only electricity but also natural gas. Very true.

Yeah, understood. And then perhaps on the safety stock that you mentioned in Koning, how many tons did you say that you built here?

I wouldn't be able to comment on exactly the tonnage there, but it's the main driver of the increased inventory value in the quarter there.

Yeah, understood. And the final one for me here. So you usually have the maintenance stops in America in Q4. How much do you expect to impact the expansion in Q4?

As you know, we don't give guidance for individual segments, volumes, because that becomes quite detailed. So I guess you're going to have to make do with the guidance we do give, which we think is pretty clear on the total volumes of grains.

Okay, understood. Thank you.

Thank you, Viktor.

The next question comes from Unknown. Please go ahead.

Can you hear me? Yes, we can. Yeah, apparently I am Unknown. Gustav is in the handlesmaken. Firstly, on the inventory situation in Europe, can you give some more color on how elevated it actually is? I mean, how long do you expect the stocking to go on given the demand environment we are in right now? That's the first one.

Gustav, good morning. You're not Unknown to us at least. Well, in Europe, we don't see in total a strong inventory situation downstream. I think you're referring, firstly, let me clarify that you're referring to the downstream inventory that is in our customer downstream, right? Yes. So it's not so that we see a large inventory situation in general downstream. This is an inventory situation that is in certain segments that are more short-term oriented, more spot market oriented. And in those segments, however, the effect is quite large. And since they are spot market oriented, the inventory situation also influences their buying behavior rather dramatically when the end customer demand changes, as it has in this case. So how long that inventory will last depends on the end customer demand. And we don't know what the end customer demand will be in all those segments. We don't also know to the last decimal how large this inventory is. But but for sure, it will have an effect at least during the fourth quarter and possibly also during the beginning of next year, maybe a bit into next year. We don't

know. All right. Then secondly, on the automotive growth in Q3 for Eurasia, I know it's a bit tiresome to talk about the IHS figures, but it's clearly lower. Anything here? Is this mainly an inventory effect or is there anything else? And then relates that to follow up on Carl's question. Do you have a positive mix effect from more Eurasian hybrids in this quarter already? Because if that's the case, the underperformance versus total production is higher. Maybe

I can start on commenting on the other one. Are you comparing our growth in automotive sales with the external indicators like IHS? Yeah,

exactly. And I think it looks fairly in line in Asia, but lower in Europe. I'm just wondering if you have any thoughts on that?

I think it's a moving target. But I think if we look sequentially from Q2 to Q3, light vehicle production increased by 9% and our sales to automotive increased by about 8%. So take that perspective, it's a better match. But again, I don't think that these numbers will ever be exactly the same, right?

When it comes to the EV versus combustion engine sales, it is definitely so that we see and believe to see even more of a shift, especially in China, a more rapid progression from combustion engine vehicle sales to electric power lines and also, of course, battery cars. So that's clearly accelerating. We expect it to accelerate further. But in an individual quarter like this, that effect is overshadowed entirely by the effect of the COVID shutdown in the second quarter and the subsequent ramp up again in the third quarter. So we can't really factor that out as an important driver in the quarterly situation. But for the long term, however, it's strategically, of course, quite important for us to be strong in those platforms and with those customers who will grow the fastest in that segment. And that's also something we've been working on rather systematically in the past couple of years.

Yeah, right. And then lastly, I'm sorry for coming back to energy, but what kind of levels are we hedged on? I mean, can you in any way quantify the sequential risk and energy costs for Q4 if the forward curve plays out? Well,

you know, it's such a moving target and so such a complex question and also one where we're completely in very deep discussions with our providers of energy and our customers and so on. So it becomes quite difficult to get to get too far into the weeds there. You pick out the number of those weeds. That number comes back to haunt you. But it's for sure so that we have a balance of unhedged cost, which is quite substantial and which we are going to have to offset by various productivity measures. So, for instance, decreasing the amount of energy we use to remelt metal or decreasing the amount of energy we use to slit the metal and so on, on the one hand, and on the other hand, by unfortunately rather substantial price increases to a majority of our customers. And the only little sunshine in all that is that we believe that this is something that everybody else will have to do too.

But just to be very clear, the 500 million you're talking about, that's taking 2022 and 2023 hedges into account.

That's the effect on our cost that could happen if nothing else happens.

Alright, thank you for that.

As a reminder, if you wish to ask a question, please dial star five on your telephone keypad. There are no more questions at this time. So I hand the conference back to the speakers for any closing comments.

Thank you very much. And thanks all of you for joining this result conference for Gränges and welcome back to next time. Have a great day.