AMAG Austria Metall AG (AMAG) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by. I'm Stuart, your Chorus Call operator. Welcome, and thank you for joining the Q3 2021 results presentation. [Operator Instructions] The forecasts, budgets and forward-looking assessments and statements contained in this presentation were compiled on the basis of all information available to AMAG as for October 15, 2021. In the event that assumptions underlying these forecasts prove to be incorrect, targets be missed or risks materialize, actual results may diverge from those currently anticipated. We are not obligated to revise these forecasts in light of new information or future events. This presentation was prepared and the data contained in it verified with the greatest possible care. Nevertheless, misprints and rounding and transmission errors cannot be ruled out entirely. In particular, AMAG and its representatives do not assume any responsibility for the completeness and correctness of information included in this presentation. Presentation is also available in German. In cases of doubt, the German language version takes precedence. This presentation does not comprise either a recommendation or a solicitation to either purchase or sell securities of AMAG. I'd now like to turn the conference over to Helmut [ Michael ] Kaufmann, Head of Controlling and Reporting. Please go ahead.

So good morning, ladies and gentlemen. My name is Helmut [ Michael ] Kaufmann, and I am Head of Controlling at AMAG. On behalf of Christoph Gabriel, who is currently on a business trip, I would like to welcome you to our conference call for the third quarter of AMAG Austria Metall AG. Gerald Mayer, CEO of AMAG, will present the development and results of the first 9 months of this year. As usual, after the presentation, you have the opportunity to ask questions during the Q&A session. Gerald, please start your presentation.

Thank you, Helmut. Good morning from my side. Thanks for participating in our earnings call for the third quarter of 2021. Interesting times right now. So we had a very good, let's say, third quarter. We had very good first 9 months behind us, and we ended this first 9 months with new historical highs for revenue and earnings. And I would like to run you now through our presentation. In the first slide, you see our highlights, the main points to be mentioned for the first 3 quarters. The revenue significantly up to EUR 923 million. The main reason are higher shipments and very attractive aluminum prices and this EUR 923 million are comparing to EUR 673 million for the first 3 quarters in the year 2020. EBITDA is at EUR 146.5 million, and this means clearly above previous year. Our previous year, where we ended the first month at the level of EUR 80 million. Net income also up. So we have 5x -- around 5x net income compared to the prior year. And we are right now at EUR 57 million, after EUR 11 million in the first 9 months of the year 2020. Main reason for this very positive development of our results production and our production in Canada and this significantly contributes to the very positive performance of AMAG Group. The outlook, very difficult, I would say. It is -- we are aware that we are now at the end of the year -- after 9 months of the year 2021. And we have still can offer you a band of EUR 175 million to EUR 195 million as guidance and as outlook. Main reason is that the only stability right now seems to be uncertainty. We have severe cost increases on the one side. On the other side, we also have severe material demand from the customer side. So a lot of things that aren't clear yet. But all in all, EUR 175 million to EUR 195 million translates into a new record year for AMAG for 2022, which is -- 2021, sorry, which is highly profitable. Slide 5, you see our -- we always present the purchasing manager indexes because they are a very good, let's say, indicator for our business, and you see that we are still in the green. If we look to the very right, September, month of September and the split to the regions, our most important regions, Eurozone, U.K., U.S. and also Asia. So we are still in the green despite. It's a little bit -- perhaps a little bit weaker than it was in the months before. But all in all, still a very positive sentiment and positive environment for our production and our, let's say -- and this also, of course, drives our forecast. Slide 6, a very material driver for our, let's say, results or our turnover this year is the aluminum price. You have to the left on Slide 6, you see a chart of the aluminum price development. It started to increase sometime mid of last year. We were -- we peaked at roughly USD 3,200 per tonne. And I mentioned before that the only stability is uncertainty or volatility. You can see it right now, 2 weeks ago or 10 days ago, we saw USD 3,200 per tonne of aluminum. Right now, we had $2,700 per tonne of aluminum. So I would say, really high volatility there in aluminum pricing for many reasons. To the right, you see the average aluminum price. The average aluminum price in the third quarter increased by more than USD 900 per tonne and for the first 3 quarters by USD 730 per tonne. This, of course, translates into higher turnover, sales line item and into higher EBITDA and profitability. Of course, this is the reason. Perhaps, yes, from my side, one reason why we saw in the last days, a decrease of the aluminum price to USD 2,700, this has to do with falling coal -- thermal coal prices. And this, of course, is a very important input factor for the production of primary aluminum in China, in particular. Next slide, Slide 7, alumina price trends. After months -- or the first 9 months where we saw a very low level of alumina, we saw a peak, or let's say, a sharp increase in the third quarter. So the increase brought us to USD 480 per tonne or as of today, roughly 17% and those 17% compared to the aluminum price also translates into the long-term average we saw in the last years of alumina price compared to the aluminum price. All in all, the combination of the aluminum price and the alumina price is still very attractive, but of course, not as attractive anymore as it was in the last weeks or months. AMAG Group shipments on Slide 8, you see the shipment development at the top of this graph. We are up by 11% compared to the prior year. 11% translates roughly into a little bit more than 30,000 tonnes or 34,000 tonnes. And at the bottom, you see the split, where the shipment increase come from. And you see that they come from all in our divisions. So in Metal Divisions, we are up 4,400 tonnes compared to the first quarter -- first 3 quarters, sorry, 2020. This includes also 2,500 tonnes of early deliveries end of September. These were recognized according to the [ input ] terms we applied. Then in Casting Division, we are up 7,500 tonnes responsible, of course, this big demand, in particular from the automotive sector. In Rolling Division, we are up 22,000 tonnes. I would say there's just one exception, and this is the aerospace industry. For the rest of the industries, we see really very positive demands. And all in all, we are up according to our plan or even above our plans in all, let's say, our industry supply except, as I said, aerospace. In Slide 9, I brought the split for our Rolling Division shipments. And you see that we -- yes, we have some mix changes there. One exchange is foil stock compared to the prior year. We are at 14%. Prior year was 21%. So it means minus 7%. This is on purpose in this case. So we reduced to optimize the mix, the supply of foil stock. Aircraft is down from 11% to 7%. I will talk about this on the next slide. Then we have 2 other, let's say, industries to mention. We are up in automotive and in clad brazing. In clad brazing, we're up from 7% to 10% and in automotive from 11% to 16%. And this also reflects the demand of the -- in particular, the automotive industry, also clad product go to the automotive industry to a certain extent. Slide 10. On Slide 10, you see the development of the stake of our, let's say -- in our mix of automotive and aircraft to trends. First of all, automotive is down a little bit compared to the second quarter to 16%. And aerospace or aircraft, again, increased a little bit, and this exactly reflects what we presented in the last quarter's presentation or half year presentation where we said we will -- we saw more or less -- or see the light at the end of the tunnel, and it should let's say, increase, at least again in the next month or coming months, and this is actually what is happening there. So we are up from 6% or from, let's say, the lowest level end of last year, 5%, now to 8% in share for the aircraft industry. Automotive is down slightly. This also, of course, has to do with the semiconductor issues, which we are also facing here. The demand is a little bit reduced by the automotive customers. Order trends, Slide 11. Slide 11, we have the order book position here for you, which shows still a very high level. We reduced it a little bit on purpose. So -- in particular, the main reason is cost increases we are facing, which has to do with challenges then also risk management. So we are a little bit, let's say, cautious in taking in too much orders now, which have to be produced, let's say, in 5, 6 months. So there's a lot of time in between. So we are right now opening the order book for our distribution customers for the month of February. And what I can say is that demand is still high for all our industries and the capacity utilization, as we mentioned here on this slide, is secured definitely until the end of this year, but also beyond, as I mentioned, we are opening right now for distribution customers, the month of February. Yes, Slide 12, the revenue bridge. First of all, you see that we are up in all the divisions for our sales line item there. So Metal division, plus 50%, roughly or EUR 70 million. In casting, we are up EUR 34 million. In rolling, We have EUR 150 million. All in all, this means an increase that translates into an increase of EUR 250 million for the first 3 quarters. Responsible, if you have a look at the bridge at the bottom of this slide, the aluminum price, of course, yes, accounts for EUR 95 million in this sharp increase. And also, there's a second part of the aluminum price, which is price and premium is -- account for an additional EUR 60 million. So let's say, the pricing is responsible for an increase of EUR 150 million volume and mix of -- EUR 115 million, volume/mix for EUR 115 million. Let us have a look to the profitability, EBITDA, Slide 13. On Slide 13, you see that once again at the top the comparison to the first 3 quarters of last year. So we are up roughly EUR 70 million compared to last year. So really a sharp increase. And I mentioned the main reasons, which we summarized at the bridge at the bottom of this slide. So aluminum price accounts for EUR 40 million roughly. Prices and premiums were another EUR 30 million. Then, of course, also raw material and energy is way more expensive than it was last year. So this is a burden to this bridge and reduces, again, the profitability by EUR 30 million roughly and volume mix is up, and this accounts for a profitability increase of EUR 50 million. Then there is a big, let's say, part of this bridge refers to other. And in this line item, of course, we have structural cost, higher personnel expenses, for example, after our, let's say, short-time working period 1 year ago. And this is also definitely a part in this bridge. And on the other side, we have positive valuation effects in there of, I would say, roughly EUR 10 million or EUR 12 million in, let's say, last with [indiscernible] which is a positive impact to this trend, minus EUR 20 million. Yes. Then Slide 14, where does this change come from in terms of division, this increase in EBITDA? Metal Division accounts for EUR 40 million. Of course, price increases paired with low-cost period. I mentioned that in the first 9 months, alumina was really cheap compared to the aluminum price and the combination of good operations in Canada. This is definitely the case. So we are working full speed there. On the one side, we have good pricing. On the sales side, we had low cost, and this translates into EUR 40 million-plus for Metal Division to a new record level. Casting Division is up, markets were strong. And so EUR 4 million up in particular from the automotive industry, but we also use Casting Division for internal purposes. Rolling Division, we are up EUR 20 million roughly after a really difficult period 2020. So remember, if we go back 1 year, we had quite a good first quarter then we had difficult quarters 2 and 3. This year, we have, I would say, good recovery in rolling high demand, but also cost increases we are facing. And this, of course, it's pressure, let's say, to the margin and make them a little bit tighter. Let us have a look to the -- on Slide 15 to the third quarter performance. Third quarter, we had an EBITDA of EUR 53 million after EUR 20 million in the, let's say, comparing period. This means a plus, so it translates into the plus of EUR 33 million. The bridge looks quite similar to the bridge I just presented for the first 3 quarters. Again, it is a function of pricing, a function of premiums, of higher volume. And on the one side and on the other side, we are facing higher raw material and energy prices. And in the third quarter stand-alone, there are no valuation effects in there. So this EUR 10 million mainly refer to structural costs. Net income on Slide 16, I would say, very positive. It's also up significantly. So we -- yes, we have had a 5x higher net income compared to the prior year. So we ended up the first 9 months at a level of EUR 57 million after EUR 11 million in the prior year. Of course, the bridge, the main impact comes from the operating result from EBITDA. Income taxes, of course, higher. When you earn more, you have to pay more taxes. But this is, I would say, the positive thing in paying high taxes. You also need a high result there. I would like to skip the summary, the table of the key figures on Slide 17, and I would like to refer to Slide 18 to cash flow. Cash flow from operating activities looks, on the first view, a little bit disappointing at the level of EUR 100 million, roughly of EUR 68 million after EUR 100 million in the comparing period. But you also have to bear in mind that we saw severe price increases. Those price increases of aluminum price on the one side is positive for our result, but we have to build up working capital to adjust to this new pricing level. And this has quite a severe impact there. So it means working capital affected the first 9 months in terms of cash flow by roughly EUR 75 million, so quite a severe impact. And excluding this effect, it will be a super positive cash flow from operations. Cash flow from investing activities is a little bit lower than expected. This has to do that we pushed back some of -- or had some postponements, some delays, delay is perhaps the wrong expression. There are some postponements of some of the planned projects. So we will see an increase in the next weeks there. Free cash flow is positive after the first 9 months. And in particular, taking into account this USD 900 increase compared to the prior year of aluminum price, I would say this is a very positive free cash flow number we see there. Slide 19, next slide, I would say AMAG is a very stable company in terms of debt, in terms of cash, also in terms of equity, which we see in the next slide. We reduced on purpose after the year of the crisis, the cash on our balance sheet to EUR 190-roughly million. And we will perhaps reduce it a little bit further, but we are more or less there where we would like to be. Equity gearing on the next slide, you also see stability in terms of equity and gearing. So I think we maneuvered quite well through the year of the crisis and we managed quite well the period now with higher working capital needs based on this higher aluminum prices and many other raw materials, which are priced by skyrocketing right now. A quick look to the divisions, Slide 21. As I mentioned, Canada, base here in history, high prices, low input costs, very stable operations. So this is what we always have to highlight because it does not go without saying. And we pushed a lot also during the year of the crisis that we finished off a cycle of pot relinings, that we are ready to have the full capacity available for this year. And yes, now this -- we harvest the fruits there, so that all the work that was done at the smelter in Canada. So all in all, I would say, a very positive development. But of course, I showed you and presented on one of the first slides, the increase in alumina prices we are facing. It means the margins will be affected definitely in the next month. But still, the level is still very positive. This is definitely what we have to mention there. Casting Division. Casting Division, also a very positive year, one of the best years of forecasting this year 2021. Demand from automotive in general is there. What we see there is although we are affected by the shortage of semiconductors, also AMAG is affected by cost increases in particular, energy, alloying metals and materials. So those are affecting us. And those -- this is the tricky part also for, I would say, giving a good guidance right now reliable and looking a little bit further into the next year. This is -- those are the challenges we are facing right now. Rolling Division on Slide 23. The shipment trend was very positive in the third quarter. The order book in general is full. As I said, the demand is still there. And also means the capacity utilization will stay high in the next month. This is what we can say at this point of time as of today. The third bullet on this slide is something. As I mentioned before, when I talked about Casting Division, which is the challenge for the next month and perhaps for the next year or years, on one side, we have some supply chain issues where we are affected directly and indirectly. Semiconductors, in particular, refers to some of the customers. We have also chemicals but chemicals also sometimes, yes, it could be an issue for us. But we see on customer side issues that they reduced with us a little bit because of semiconductors, because of chemicals and those have to do with supply chain issues, logistical challenges all over the world right now on a global scale. The other point we have to mention here are cost increases. You definitely are following cost increases with regard to energy, with regard to logistics, to alloying metals. Magnesium is an important metal for aluminum, but also for other industries. And we are depending there on -- we means the industry depending there or the globe on Chinese production and there are some uncertainties related on this side. But all in all, I would say the summary is that demand is positive. And I would say we have a -- with some uncertainties, we have a positive outlook to give in general for the development in the next months. So outlook on Slide 25. So as I just mentioned, in general, the demand is encouraging. And this is the opinion of CRU and, I would say, also some are confirmed by our short-term, let's say, order intake situation. So in general, we are positive and CRU even is positive in the longer run with interesting, let's say, growth rates, the forecast. The aluminum, all in all, is also influenced by supply chain issues. I just mentioned them before. Our portfolio in AMAG, you know that we have a widely diversified portfolio. There is, of course, helping and supporting us because, to a certain extent, we can shift from, let's say, one product to other products, and this is stabilizing a little bit, at least a little bit, let's say, our situation there. The cost increases is something we are facing right now, all the industries. So in many industries, all industries are facing, in particular, from the energy side but also logistics. We saw a high cost for wood. It's still at a very high level. But here, we expect at least some, let's say, decreasing cost again. Another issue or not issue, challenge, is personnel availability. So mining is something that we are really are working hard to get the people we need to fill the capacity and can take advantage of our capacity in terms of facilities after the COVID crisis. We are in an area here, where we have full employment, which is good on the one side, but also brings some challenges on the other side. Metal Division currently is benefiting, as we mentioned here, from these high prices. And definitely also, we were -- have been benefiting from lower, let's say, low cost. But we saw rapidly rising alumina prices. Also, other raw materials are increasing in terms of price. So I would say we saw the peak in margins, but we expect still high margins for the next month. The outlook for this year, EUR 175 million from -- to EUR 195 million. We increased the spend again. So this is, on the one side, positive. I would say, okay, it's a EUR 20 million band, as I mentioned before, but this has to do with the volatility in which we are in. And volatility in aluminum price immediately brings valuation effects for, let's say, a balance sheet or let's say, for the P&L. And so this is, therefore, necessary and we decided to go for EUR 20 million band. It is still too early given the uncertainties we have to talk about next year. Sorry for that. We have our earnings call, the first earnings call, end of February and the presentation of the full year, and hopefully, we can give you a little bit more insight at this time. So this was my presentation now, and I'm looking forward to answer your questions, if there are any. Thank you.

[Operator Instructions] First question is from the line of Rochus Brauneiser from Kepler Cheuvreux.

Yes, a couple from my side. The one is -- first is on the automotive demand in the third quarter. I think you have been flagging concerns about auto call-off rates, semiconductor issues quite often today. Can you give us a sense how much the volume side has been already hit in the third quarter in terms of these issues? And do you expect this to get worse in Q4 and how we shall read the order book you've been flagging? If there are postponements to that, then obviously, there will be holes in the pocket eventually? How shall we read that at the moment?

So up to now the first 9 months, we are not really materially affected. Of course, we saw some impact. But as I mentioned also before, we were able to shift to other, let's say, to other industries or to other products. So it was possible, and we were perhaps affected. This was some talk. So it's not really material. What we are seeing right now is that this, let's say, trend is not reduced. It's even a little bit sharper right now. So it is a very short-term reaction by our customers that tell you today that they need less tomorrow. So this is insured. And I expect perhaps a more severe -- or not more severe, but compared to the first 9 months, a higher impact perhaps, but also for our forecast for this year is in terms of volume for the rolling mill to pick up quite specific, they are roughly 230,000 tonnes. So it will not be that big. But it is definitely an effect here. It's not just the automotive. We also saw from other industries, other customers who relied on or needed, for example, chemicals for their production, they also reduced the order situation and the demand. So we are affected not just from semiconductors, and this is definitely true for many, many industries. This is simply the current situation. It makes, of course, life a little bit more difficult for us. Normally, and this is the second part of your question, this is not a hole at the end of the day. Of course, we missed perhaps some production this year, but we will see it then in the future because this is the good side, is that a very high demand, which was anyhow difficult to fulfill for the customers can be split over, let's say, a bigger period.

Okay, that makes sense. And based on what you said, can you give us your current thoughts about the magnesium or potential magnesium shortage Europe depends to a very high degree on China? I guess it's not directly affecting your production process, but what kind of stock level do you have in terms of magnesium? And what impact could there also be on the aerospace? I think you're still sounding pretty optimistic on aerospace. I think this is also an area where you have a lot of aluminum alloys going into.

Yes. So magnesium is definitely an issue, not just for Europe, I would say also for the globe, not except China, yes. The world production, China produces 87% of the world production of magnesium. Europe imports more than 95%, I think 96%, 97%, from China of its needs. Also in the States, you can read right now that magnesium from China, and it is definitely big issue there. For AMAG itself, for our business, you need magnesium for each and every alloy. Let's put it that way. I think there is hardly an area where there is no magnesium in it. And this depends on what alloy it is. It could be 0-point-something percent, but it goes up to 5% or so, yes. You mentioned aircraft alloys. Normally, I'm not the technician, but roughly 2.5% go into aircraft or aerospace alloys of magnesium. So we need it for every product. What we were doing last year during the COVID crisis, we increased a little bit the stock level of magnesium to be a little bit less dependent if we -- at this time, we said the logistical situation, supply chain issues might occur because of COVID. So we increased this level. And so we are definitely -- we have no issues this year, for sure not. So we have everything on stock we need this year, for sure. We are also securing our supply chain with regard to magnesium with, let's say, daily discussions with our suppliers. So we are quite optimistic also for the first quarter next year. But there is no guarantee because if you contracted something, there's no guarantee that it is delivered. But up to now, what we see is it takes more effort to get magnesium. This is what we see and face right now. It is way more expensive than it was. You're definitely following the pricing. So we come from a level of USD 2,500 per tonne. It went up to a past USD 10,000. It's going down again. So this, for me, is also a signal that it might get a little bit better right now. But to summarize everything, for AMAG, I would say, for the industry, it is for sure an issue. It is an issue if it stays like it is right now that the Chinese do not, let's say, bring into operation the magnesium facilities again because they curtailed a big part of the production they have there. This is the core of the issue. So for the industry, it will one for us. In the short run, there is no need for worries for this year for sure not. So the fourth quarter is secured. Also the first quarter is, I would say, rightly okay. But they'll be still depending on some deliveries from China. And right now, the stock level, given our increase in level or including this increased attrition level, we are at the normal stock level. And this is, I would say, absolutely okay for us. AMAG, again, there's one differentiating thing to other producers. We, as you know, we are recycling company. And by, let's say, buying scrap, you're also buying magnesium, which is already in the alloy you're buying. So this makes it a bit easier also for us. I hope this is not a very long answer. I hope it was also clear and -- yes, if there's additional questions, I'm there.

Mr. Mayer, I think this was very up. Just to understand, there's magnesium in all your alloys. So I would consider that what the Rolling Division sells is primarily aluminum alloys rather than anything else, right?

Everything. In primary aluminum, of course, this is primary. This is high-purity aluminum. If you look to Casting Division and to Rolling Division, and this is for all rollers, for all casters, for extruders, there is always aluminum with primary aluminum itself. You cannot even wrap something, yes? So you need 2 alloy to produce an alloy because with the alloy you get the property you need for the customer, the stiffness and so on and so forth. And then magnesium, there are also others like lithium and [indiscernible] and other alloying -- copper, other alloying metal, which are important. But magnesium is the product where we see right now, let's say, a little bit a tighter market situation.

Right. I think this is a good explanation of everything. Then the last and other, the less pleasing topic is the energy costs, as you mentioned. Can you give us kind of a big -- a noble number of your energy envelope on an annual basis? And can you explain us a little bit how on the gas and on the electricity side, how much you are sourcing on a contracted basis? How much is based on a hedging structure. And how much is spot? And how long is your hedging going out -- reaching out?

Okay. So all in all, we have to differentiate again. The primary Metal Division in Canada, we need electricity there, huge amounts of volumes of electricity, and this is secured. So we fully rely on hydrogen, hydropower there. We have a long-term contract until end of 2029. And it is a formula which depends on the aluminum price, risk sharing, yes? Now it's a little bit more expensive than it was 1 year ago, of course, because alumina prices have -- but it's still attractive. For our Austrian operation, we consumed roughly 750 gigawatt hours a year of energy. 2/3 of this energy refers to gas, 1/3 refers to electricity. We look in terms of hedging and securing and fixing prices. You look at this as envelope as, let's say, an overall energy type of position. So out of this 750 gigawatt hours, we have roughly 80% are price fixed for next year. So -- and if you look to the year 2023, 2024, way lower levels, but there are still significant price fixed, let's say, volumes in there. I hope this is helpful.

Yes. Excellent. And maybe one word on working capital. I think you mentioned the build because of price rises. How should we think about Q4?

It depends. The last days, aluminum price came down. If it stays like that, and then we will, for sure, have a positive impact there. This is just the pricing effect. If it goes back and up, then -- or not positive because at the end of September, we were, I think, at USD [ 2,700 ], USD [ 2,800 ]. And so then we saw a peak at USD 3,200, and it should stay stable roughly at USD 2,700 per tonne. The working capital impact should roughly stay stable compared to end of Q3. What we are thinking now is given the situation we have, you mentioned magnesium. We mentioned other things. We are possible perhaps to reduce risk perhaps here and there some kilos more on the balance sheet. Perhaps it would be wise. And then -- but this is -- this will not have a significant impact until end of this year. This is at least my take there.

Next question is from the line of Markus Remis from RBI.

Congrats on the figures. First question, coming back to energy, please. Just to understand the way of your forward buying. Is that on a rolling basis? Or is there a certain kind of point in time where you then hedge, say, for quarter 4 of next year? So is this like on a monthly basis rolling forward? Or how should we think about the...

Yes. Markus, so we -- our philosophy there is to look at energy prices, let's say, all the time. So -- and therefore, out of this 80% hedges, a big part was done before the sharp increase, of course. So in particular for cash. So I guess this is your question. And we look -- if we say maximum, normally, we have -- we do -- we have a similar philosophy like we have for discretionary hedging activities for our metal management on the sale side of primary. We say, for the next year, of course, you want to fix more or less a budget. You need certainty because you have contracts in place and so on. And therefore, we are at the level of roughly 80% right now. For the year 2023, please, I don't have the precise number now in my mind. But I think for gas and electricity, I would say we are roughly at perhaps 30%, 40% now of price fixed contracts. And we do not do it via hedging. We do it physically normally. So this is how we do. So we secure normally supply in general and the price is normally a physical, let's say, not a hedging instrument, but a physical thing.

Okay. Very clear. I think then most of the questions have been answered. Maybe 2 shorter ones, if it's still open. Firstly, on the demand/supply chain levels of your customers or distributors. I mean, what's your sense of how depleted kind of the inventory levels that your customers are? Is this still kind of every tonne that is bought from you directly employed? Or is there some stock building kind of in anticipation of potentially higher prices?

So we don't see stock building at least. So the demand from our, in particular, distribution customers is really high. And this is unchanged to what we saw. And for me, as the impression, it is not that they put it on stock there, also they need it. So situation changed dramatically. All the mills are really full. And if we would like, I think it would be very easy to sell further forward to, let's say, into the year 2022 right now. But for risk management issues, as I mentioned it before, we decided not to go beyond a certain, let's say, lead time there.

Okay. Lastly, on the CapEx, I think you recently said something like EUR 75 million, EUR 80 million for the current year. Is that still a realistic figure?

From today's perspective, it is realistic. So there is -- of course, we always have things in there like, for example, we decided and got approved an investment in a pickling line. This is -- yes, let's say, maintenance type of -- a replacement type of investment we have to do. And this -- it depends a little bit when we do the advanced payment, of course. So there's uncertainty in it. But you're not -- I think it's not wrong if we assume roughly EUR 75 million.

[Operator Instructions] Next question is from the line of Christian Obst from Baader Bank.

First, sort of 2 additional questions, one again on magnesium. How much do you -- can get out of your recycling business? Is it 10% of the total requirements or up to 50%? Can you give us some kind of rough numbers there? And the next one is maybe a little bit more complicated. And so we see, especially for the Rolling business, there's an ongoing increase also the underlying structural costs and you're looking for additional more than 100 employees going forward. So does that mean that we have to expect also going forward? I know that's very difficult nevertheless, that the margin cannot exceed what we have seen in the past, given the current -- given the entire cost structure of your business. Or do you think when everything might normalize a little bit, we can exceed former record levels? What do you think about that? Because in the short term, if you get the personnel and you have this current environment, everything will increase going forward.

Christian, thanks. So first of all, magnesium demand, so it is difficult for me to extract what we have in terms of recycling, but we roughly source each and every year between 2,000 and 3,000 tonnes of magnesium. This is what we get from the external market. This is what I can share with you. So this is roughly the number. Regarding -- if I got your question right. So when you say the margins we can expect from the Rolling Division, first of all, yes, we are looking right now for perhaps 90 people for a different, let's say, in particular, for the production on -- our side in [indiscernible] for casting and rolling. So this is what we are roughly looking for. We need them to build up shifts to fulfill the demand then for next year, which is definitely quite strong. We see, and this is true, we see sharp cost increases. What I can tell you there, we have -- of course, in all the short-term type of contracts where we are not price fixed, we can definitely -- and this is our target and we have to do that minimum, to give these price increases, also push it to the customer there, and it worked quite well in the last months. This is what I can tell you there and what I can share with you. Of course, there is always a portion of price fixed contracts in there, like for aerospace, like for automotive. And in this case, it is, of course, not possible there. We see definitely an impact on the margins. So on the one side, we have high demand. I would say, we're even in the sellers' market right now, where we can increase prices, we can increase this to an extent, which is we are above cost increases we are facing. And on the other side, we have priced fixed contract where it's difficult, where the price increases go to our build. And this is simply the situation we are facing. And yes, and I hope that everything is normalizing again because those are the biggest challenges right now. And then this is also a main reason why I mentioned that we reduced the lead time which we accept, for example, distribution customers, it's more with risk management because things are changing dramatically in a short period of time, yes.

Then one last additional question is concerning the working capital. So you paid approximately -- for the receivables approximately EUR 40 million, but the payables increased only by EUR 29 million. So we are able [indiscernible] of approximately EUR 15 million. Is there any change in the behavior how people are -- or how your customers are paying or...

No, but what we did is -- there is no change in behavior. What we did is we reduced the payment terms actively. This is what we did.

Okay. And this was possible?

It is very difficult normally throughout the periods, but now is the time to optimize.

There are no further questions at this time, and I would like to hand back to Helmut [ Michael ] Kaufmann for closing comments. Please go ahead.

Many thanks for your participation. In case of further questions, please feel free to contact us afterwards. I wish you a pleasant day and stay healthy.

Ladies and gentlemen, the conference has now concluded, and you may disconnect your telephone. Thank you for joining, and have a pleasant day. Goodbye.