AMAG Austria Metall AG (AM8.F) Q3 FY2025 Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to the information on the Third Quarter 2025 Conference Call. I'm Valentina, the Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast. The forecasts, plans, forward-looking assessments and statements contained in this presentation were made on the basis of all information available to AMAG up to 17 October, 2025. The economic and trade policy environment has changed several times in recent months. Internal calculations and earnings analysis are based on various assumptions. These include, among other things, the continued validity of global U.S. import duties on aluminum products. If the assumptions underlying the forecasts do not materialize, targets are not achieved or risks arise, actual earnings may differ from those currently anticipated. We undertake no obligation to update such forecasts in light of new information or future events. This presentation has been prepared with the utmost care and the data has been checked. However, rounding, transmission or printing errors cannot be ruled out. AMAG and its representatives accept no liability for the completeness and accuracy of the information contained in this presentation. This presentation is also available in German, whereby the German version shall prevail in case of doubt. This presentation does not constitute a recommendation or invitation to buy or sell AMAG securities. At this time, it's my pleasure to hand over to Christoph Gabriel, Head of Investor Relations. Please go ahead.

Good morning, ladies and gentlemen, and welcome again to our conference call for the first 3 quarters of 2025 of AMAG. Today, Helmut Kaufmann, CEO and COO; as well as Claudia Trampitsch, CFO, will present the developments and results of the first 9 months of this year. After the presentation, you have the opportunity to ask questions during the Q&A session. As usual, both the presentation and the press release have been published this morning on our home page under Investor Relations. I would now like to hand over to Helmut. Please start the presentation. Thank you.

Good morning, ladies and gentlemen, from my side. It's a pleasure to present Q3 earnings and the result of the first 9 months for AMAG. I would like to start with Slide #3, the highlights, and point out that we or AMAG showed high resilience in a continuously difficult environment, but rapidly implemented efficiency measures enabled stable earnings development in Q3 and also supported the performance of the first 9 months. The revenues grew by 5.4% to EUR 1,137 million compared to EUR 1,078,000 the year before. And this was mostly due to higher aluminum prices. The EBITDA came to EUR 114.2 million, and this number already exceeds the lower limit of the range that we communicated in the past. And for the full year, where we said the limits would be EUR 110 million to EUR 130 million. So with EUR 114.2 million, the EBITDA is 22.6% lower compared to the same time period last year, where AMAG achieved EUR147.6 million. Net income after taxes reached EUR 33.8 million compared to EUR 54.3 million, which is a minus of 37.7% Cash flow from operating activities recorded a growth of 23.3% to EUR 134.8 million compared to EUR 109.3 million last year same time period. So with the numbers presented, we can mention the following outlook for the financial year -- full year 2025. Since the EBITDA already exceeded the lower limit, we now say that we expect a result at the upper end of the communicated range, close to the EUR 130 million. Although -- and this is important to point out, our experience shows that valuation effects can have a noticeable impact on these numbers. Let me continue with Slide #5 and look at the current market sentiment. The so-called Purchasing Managers' Index shows a slight improvement compared to previous period. And the global threshold of 50 is slightly exceeded at this point in time, but we do not see a significant improvement in the sentiment in the Eurozone. And we do not see a significant improvement in Austria, but a slightly stabilizing trend in Germany. Germany is an important market area for AMAG. Let us continue with Slide #6 and look at the total shipments of the AMAG Group. In Q1 to Q3 of 2025, we sold 320,800 tonnes of various products to our customers, which is 1% down compared to the year before. A look at the 3 divisions indicates that the Metal Division compared to previous year is 4,800 tonnes lower, mostly due to a slightly lower number of active pots in the recent months. In the Casting Division, where we produced the recycled foundry alloys due to market development, especially in the automotive industry, we are down by 2,800 tonnes compared to last year. And in the Rolling Division in terms of volumes delivered to our customers, we saw an increase compared to last year by 5,100 tonnes, connected, however, to a change in mix. So the transportation sector was in a more -- still is in a more difficult period, while we were able to grow the volumes for industrial applications and packaging products. Slide #7 gives you details to what I just mentioned. We still benefit from our diversity in products because this stabilizes our sales volume. And as you can see here, especially automotive, aerospace and other transport products are down compared to last year. And we have a significant increase in industrial applications, which is 12,006 tonnes more than last year. Also packaging products, foil stock is up 1,400 tonnes compared to last year. This brings us to Slide #8, where you can see the development of our order backlog. And there, we have a slight decrease. Still we are above 50,000 tonnes in order backlog. But due to a reduced order intake, especially from the transportation sector that I mentioned before, this is slightly down. And of course, we can see also a negative impact from the U.S. tariffs, and this is reflected in the order backlog. So, this brings us to business performance information, which Claudia Trampitsch will now present to you. Thank you very much.

Good morning from my side as well. I will start with an outlook on the market price developments we had in the last quarter. And when we look at Page 10, you can see that the aluminum price increased over the quarter -- over the year 2025 compared to last year. So, we see now a very good aluminum price level in Q3 2025 and also year-to-date. So year-to-date, you see around 7% increase of the aluminum price. When we move on to the U.S. Midwest premium, you can see here that as we also mentioned already last quarter that the premium moved up significantly due to the U.S. tariffs. And apart from the higher -- from the impact of the U.S. tariffs, you now see every time the LME price of the aluminum goes up, it also is reflected in the development of the U.S. Midwest premium. And you can see also how much it is on the right side where we have up to 163% increase. Nevertheless, as for our Canadian company, we lost our exemption of the U.S. tariffs. We also lost there our meaningful profits. When we move on to the alumina price, we see that compared to last year, the price development downward, as we had in the first 2 quarters now, really stabilized itself. So, we are still at a very low level. So at the moment, we are around compared to the aluminum price, which is compared higher than last year, we see a really good price level in relation to around 12% at the moment, which is very positive for the Metal Division. And although when we compare the year-to-date comparison to last year, the decrease is not that big because it's a 6%. But when you look at the quarter, you now can see that compared to last year, where the trend went up to really high aluminum prices -- alumina prices, we now see the trend going down, and that will also affect the results of the fourth quarter. When we move on to the revenues of AMAG Group, we already mentioned that the revenues -- the Q1 to Q3 2025 are 5% higher than for the respective period of last year. And when we look at where does it come from, the main impact comes from the higher aluminum price. So, this is mainly also due to the Metal segment, but you can see the high increase here and also in the Rolling segment. But for the Rolling segment, you see the vice versa effect in the material cost as well. So apart from that, everything was just mentioned before, we have an impact on -- because of volumes, prices and so on. But just to remember, the main impact came out of the high aluminum prices. When we now look at the EBITDA of AMAG Group, you see that the EBITDA for the first 3 quarters sums up to EUR 114.2 million, which is 23% lower than last year. When we have a deeper look at it, you see that although I mentioned before, we had higher revenues due to the aluminum price, in the EBITDA, you also had an impact of the higher aluminum price. But here, as I mentioned before, it's mainly out of the Metal Division because in the Rolling Division, it's also -- the high aluminum price also affects the production cost. When we see in the reconciliation, why is the EBITDA lower than last year, there is big impact out of price and premium. And this is what we mentioned before due to the effects in the Rolling Division, as Helmut mentioned before, in the transport sector. But here, we also see lower prices because of the weak economy and also the impact of the U.S. tariff kicks in there. Another effect we can see is that the EBITDA is influenced by raw material costs and energy costs. And at the moment, also in the raw material costs still for the first 3 quarters, there is an effect of higher alumina costs compared to last year and higher energy cost on the metal side because of the high LME prices. When we look at Page 15, you have another one division -- the EBITDA division-wise, where we have in the Metal Division, lower primary aluminum shipments, as mentioned before, and an impact of the higher aluminum price and already kicking in the attractive alumina market price that we can see here. But as mentioned before, we are also -- we are always influenced compared to 2024 to now being fully displaced to U.S. tariffs compared to last year where we had an exemption. For the Casting Division, there's nothing else to mention. As we mentioned before, the market environment, which had an effect on the shipments and prices in the Casting Division, but we were able to be flexible and react accordingly. And the same is true for the Rolling Division, where we saw an increase in shipments and revenues, but due to changed product mix affected by tariffs and price dynamics, we saw a pressure here, but we are able to stabilize the impact also if you compare it to the second quarter. So, we're more or less on the same level in the second quarter. There you can see that even due to the impact of the higher U.S. tariffs, we were able to stabilize our results in the Rolling Division. So in general, we can see that we showed our ability to adapt to the actual situation and set measures to stabilize our results. When you now look at the EBITDA of the third quarter 2025, which is at EUR 33.5 million, which is compared to last third quarter, a minus of 36%. I think it's worth mentioning that, of course, here, you can see that it's lower than last year. But last year, we had -- as we told you before, totally different circumstances we were in. But when we compare it to the second quarter 2025, so last quarter, we see that we are more or less at the same level because there, we had EUR 34.6 million. And this shows us that we set the right measures, showed our flexibility to move to other areas, other product mix and so on to stabilize our results here and to make other measures to the increased price mix we see. For the net income after taxes, the reduction is due to the low operating profit. There are no special effects in there. So, I can move on to the cash flow statement of AMAG Group for the first 3 quarters. And on that side, we can show -- even though the cash flow, as it is impacted by the lower EBITDA compared to last year, we show an increase in operating cash flow because of our measures we do on the working capital side. We also see that there is a significant lower investment cash flow. These are measures we planned because due to our situation we are in and the circumstances, we decided to reduce our investment volumes and this also affected the cash flow in a positive way so that we can show you that we had for the first 9 months, a free cash flow of EUR 94.2 million, which is an increase of 134%. When we move on to Slide 20, we show you our net financial debt in million euro. And there, you can see that we reduced our net financial debt with 10% compared to year-end. And the ratio EBITDA to net debt rise from 2.1 to 2.4, but this is due to the lower EBITDA for the last 12 months and still a stable number and a solid number for AMAG. When we go on to the next balance sheet figures, KPIs, our equity is as well stable. We have 1% less than at the year-end. Yes, there are some effects in it, but perhaps I want to point out that there is also a translation difference out of the U.S. dollar in there, which we had due to the weaker U.S. dollar and our U.S. dollar business in Canada, which had an effect there compared to last year. But apart from that, we are stable at the equity. And we can show you also that on the cash side, we have an increase. This is due to refinancing measures we did the last month. I mentioned everything for the division. So, I will not tell you anything more on that side. You have all details you -- we can present on the following slides. And so finally, I just want to go on, on the ESG key figures as we always also want to tell you how we are performing on that side and show you that our focus still is as well on being positive and have positive development on our ESG figures. And to point out just one when you see how our scrap utilization rate develops, we are still on high level and even could increase it. This also is -- when you see that we had a shift in product mix and therefore, a good sign that we could increase our utilization rate, we also could increase our utilization rate and we could decrease our specific energy consumption and also all our other numbers here that we show, let's say, the TRIFR or the compliance valuation is everything very positive that we can report. With that, I now hand over to Helmut again for some closing words and some information on the outlook.

Thank you very much. What we can clearly say with numerous discussions with our customers, the economic environment remains challenging. So the global economic outlook and the influence of the American or U.S. tariff policy on our business remains subdued. And this has especially negative influence on the development of the industry in the Eurozone. The earnings performance of AMAG's divisions were discussed in detail. We are, of course, influenced by these global developments, but we can see and foresee for the last quarter that Metal Division and our smelter in Canada performs well. And the rolling and casting activities in Ranshofen answer to these demands very flexibly, and cost efficiency is always in the center of our activities at the moment. And the shift in product mix, I think, will continue. We have to stay flexible because of this. But overall, I can repeat what I mentioned already before. We now expect EBITDA for the full year of 2025 at the upper limit of the communicated range, and this was EUR 130 million. And again, I have to point out that valuation effects now in the last quarter may, of course, have a noticeable impact on this result. With this, we are open for your questions and try to answer these as good as possible. Thank you very much.

[Operator Instructions] The first question comes from Michael Marschallinger from Erste Group.

I have 2. Firstly, on your guidance. You already said you achieved EUR 140 million for the first 9 months. You are guiding now for EUR 130 million, but this would still imply a rather steep drop in the fourth quarter of some [ EUR 16 ] million. This would be more than 50% in comparison to the third quarter. So, could you maybe walk us through the divisions where you would expect such a big drop?

Well, as we said, still we think, unstable market. There might be, again, some shift in mix, but there are some chances and there are some risks remaining to these numbers. Chances, of course, we are actively looking at all cost positions that we have and continue to improve our cost efficiency. But then there can be other risks, especially I missed the English word now for, but for example, for contract risks for long-term contracts for the future that might not have a full cost positive result. Such things are under development, especially in the last quarter when future contracts are being negotiated with our customers. Changes in tariffs are more in the area of risk and the level of products sold to the customers still under negotiation, and there is some uncertainty connected to the volumes that we can sell and to the mix that we can sell. Yes, go ahead?

This would be like more risks that could materialize, you mean, but like if the business continues performing well similar to the third quarter, do you see maybe also some upside potential that's above this EUR 130 million?

Generally, you have to understand that the fourth quarter always more or less has 2 months because the December, in our case, is always a low result. This is planned like this because of longer stop of the factory for maintenance purposes. And like -- yes, if you look at last year's or previous years, you will always see that the December is not that strong. And therefore, Q4 is always weaker than the months before.

And perhaps I can add because you compare it with the first quarter that our first quarter this year was not already -- was not...

Sorry, it was the third quarter, sorry. I compared with the first quarter. And in the first quarter, you have already the full effect.

Third, sorry. I did got it wrong. Yes. But we always do and you can see it in our history, we always do a very thorough analysis of how our forecast will look like. And I think we proved that we are very thorough and look good in detail in that. And that's what we forecast therefore. And therefore, we can say, we see ourselves on the upper end of our forecast bandwidth, but taking everything in account in this volatile environment, this is what we see at the moment where our year-end will -- how our year-end result will probably look like.

Okay. And then just lastly, quickly on the Metal Division, the shipments volumes were temporarily impacted. So, would you expect some reversal of this effect in the fourth quarter?

When we say temporarily, that means that we have the pots that are producing the primary aluminum. And there, some pots of them -- when we have the full -- all of them working full setup, then we can produce more aluminum and then some of them are in the relining process or undergoing maintenance. Then there can be a period where there are less pots in production and then we produce less metal, and that was what was the case. But when we look at our forecast, we see on the maintenance in relining process as it is called, we are on track to be up to full capacity by year-end, I would say.

[Operator Instructions] The next question comes from Volker Bosse from Baader Bank.

Volker Bosse, Baader Bank. I would have 3 questions, please. First is on your outlook. You gave a subdued market outlook. However, you also successfully implemented several cost efficiency measures. My question would be what is to come in '26 if the situation remains unchanged? What kind of measures do you have still in the bag or planned already for '26 to also to be more efficient than next year if the top line remains as it is? So to say, perhaps also any one-offs, which you can also indicate for next year potentially? Or maybe just your thoughts on how you will react on the unfavorable situation? Would be the first out of 3 questions.

Well, we do not expect a significantly improved market environment next year. We expect more or less that it will continue the way it is this year, doesn't make sense to be too positive. Therefore, as we mentioned, we look at efficiency measures, which we, of course, also did in the past, but now, so to say, reinforced. And this is what we can say at the moment.

Can you be a little more specific what you have in mind if you speak about general efficiency measures to come in? Which areas, which directions you think what can be done, so to say?

To be very honest, we look at every single cost position.

Okay. Good to go with that. And second question would be on your CapEx plans. Could you remind me perhaps what is the CapEx for the full year? And yes, given the unfavorable situation, what are the CapEx plans for next year, please?

We try. And this was the same this year, to stay below the depreciation level. And this depreciation level is in the range of EUR 82 million.

As you know that, we did a big investment program 10 years ago, so 2024 to 2027 -- 2014 to 2017 since we increased capacity here. We had some big investments in Canada. There are also some modernizations going on there because of not increasing of capacity, but necessary investments. But taking this all into account, we have, as Helmut said, depreciation level, which we will not exceed the next years because of -- we already had the big investments and now we are staying at the state-of-the-art level we have.

Yes. I want to point out that we still have the most modern plant in the Western world. We invested from recycling equipment, casting equipment, all the way to rolling and finishing lines equipment. And the last important or major investment that we did was surface treatment line 1.5 years ago. And so we are now well set, well equipped, and this allows us to do this.

And third question would be perhaps a brief one on current trading. If you can give indications about the volumes, about shipments in the fourth quarter, how does it look year-on-year?

Maybe you can repeat the question, Volker.

Yes. It's a question on current trading. Question is about the volumes, the shipments in Q4, where do you stand? What do you expect in a year-on-year comparison?

You're talking about the Rolling Division, right?

Yes. Volume and shipments.

We think that it will be in a similar range to last year in my understanding.

Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Christoph Gabriel for any closing remarks.

Thank you very much to all of you for joining this call. As always, I'm pleased to answer any further questions that may come. And in that case, just give me a call or write an e-mail, I'm always there for you. Thank you very much, and have a great Thursday. Goodbye.

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