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

[Technical Difficulty] AMAG and its representatives do not assume any responsibility for the completeness and correctness of information included in the presentation. This presentation is also available in German. In cases of doubt, the German language version shall be authentic. This presentation does not comprise either recommendation or solicitation to either purchase or sell securities of AMAG. It is my pleasure now, and I would like to turn the conference over to Mr. Christoph Gabriel, Head of IR. Please go ahead, sir.

Good morning, ladies and gentlemen, and welcome to our conference call for the full year results of 2022 and together with our CEO, Gerald Mayer; as well as COO, Helmut Kaufmann; and CSO, Victor Breguncci. Our Board Members will guide you through the presentation. As usual, we will enter into the Q&A session directly after the presentation. So the Management Board is happy to answer your questions. Before we start, I'd like to remind you that the press release, the presentation and our annual reports were published on our website at 7:30 a.m. this morning. Now I would like to hand over to our CEO, Gerald Mayer, and ask him to start with the presentation. Thank you.

Thank you, Christoph. Good morning from my side to our earnings call for the financial year 2022. It's a pleasure to present to you a new record level in revenue and in earnings. It was very challenging, but also outstanding year 2022, where we met challenges with high productivity, flexibility and definitely stable productivity and stable production levels. Revenue is significantly up by 37% to EUR 1.7 billion after EUR 1.3 billion roughly in the year 2021. EBITDA growth was really strong, up by 33% to EUR 247 million. Also, net income after tax is up. It's the first time that we can present a triple-digit net income for the year 2022. It's 69% up compared to the prior year and at a level of EUR 109 million. Also, operating cash flow is up significantly by around 90% to EUR 86 million. And based on all of that, we propose a dividend of EUR 1.50 per share. The outlook for 2023 is, of course, difficult and definitely given the circumstances, the uncertainty in the market, a little bit too early for us. But based on weaker markets we saw in the second half, in particular, for 2022 and the lower weaker economic growth, we expect this will also impact our results 2023 from today's perspective. If you change now the slide to Slide #5. We have, as we said, an extraordinary year 2022, which was characterized by a lot of uncertainties and high volatility. The start into the year was very positive. So we had positive market environment in the beginning of the year 2022, which was characterized by very high demand across all our industry and customer industries. Energy prices at this time were already high. The increasing levels of energy prices started in 2021, roughly half of the year or middle of the year, and were very high throughout the year, of course. We saw in the beginning major uncertainties with the start of the invasion by the Russians in Ukraine in February or end of February 2022. And these uncertainties, in particular, related -- were related to energy supplies and the general economic outlook. Significant price volatility is what we saw then for the rest of the year. Energy prices were high, and we saw increasing -- or, let's say, volatile commodity markets, commodity prices. And I will talk about this a little bit later in our presentation. Everything was accompanied by high inflation, cost increases, also interest rates -- and interest picked up throughout the year. And this, again, resulted in deterioration of market environment, which is reflected then also in our figures graph we present here, with the PMI at the bottom of the slide, which perfectly reflects also our order intake situation, a very positive first half and a slightly weaker second half 2022. Given that, we -- as I said, a strong first half, a little bit weaker second half, high volatility and uncertainty. Our answer was our business model, our consistent strategy. And this resulted definitely in stability. So our focus on our 2 main pillars of our strategy means innovation and sustainability, accompanied by an important value for us, means diversity. And the human touch is -- I would say, was the perfect answer to this situation. We optimally utilized the capacity of our plant and our personnel, and this was a flexible response to the fluctuations over the course of the year 2022. Also, our product portfolio was further extended -- Helmut will talk about this a little bit later -- with high shipments to the aircraft industry, automobile industry, packaging industry, which we could significantly increase. Yes, cost inflation, of course, we had an answer there. We had to really push to adjust prices, which successfully happened. So this was also, I would say, a big achievement last year, but also definitely very, very necessary. Our setup, where we also have a Canadian smelter participation, as you know, with Alouette, which is totally independent of the European energy situation, provided support to our results again with very stable production levels and also high shipment volumes. With that, I would like to hand over now to Helmut to guide you now through the next slides.

Good morning from my side. I'm now on Slide #7. And I can tell you that we were able to continue our new product fireworks that we announced a couple of years ago by introducing more than 40 new products last year, and by doing so, increasing our high share of specialty products up to more than 50% again. We spent 15% more on research, exactly EUR 19.2 million. So for the near future, we will focus our R&D on automation and digital strategy. And one of the examples is shown here. You see the pilot plant, so to say, our smart factory for manufacturing and testing of samples, especially for automotive and the aircraft industry. I can also tell you that the so-called AMAG CrossAlloys development is on track. We introduced this to you last year and told you that we are now on the way from fundamental research towards industrial application. This is doing well. And we will continue with this, and this will be certainly a specialty of the future. With the new product developments and consistent following of automotive applications, we can now call ourselves a one-stop automotive shop now, on Page 9. With a mixture of cast products and rolled products, we cover up, for example, engine components, structural components as well as outer component sheet, decoration material. I think we are also quite well prepared for a transition to [indiscernible], for example, with our heating products or heat exchangers product offering. And let me then move on to Page #10. As in the past, we still focus on sustainability and sustainability innovation nowadays really to close to [Technical Difficulty]. We were able to introduce what we call recycling friendly alloys and produce specialty products with a high recycled content. One example shown here is -- we're showing here aluminum wheels for the automotive industry, usually were made based on primary material, and now we're able together with the company Audi, we will produce recycled parts of alloy with more than 70% of scrap in the product. A very simple approach we were able to produce for skis with the company Fischer, where AMAG introduced the specialty product Titanal with a scrap rate higher than 80%. And very importantly, we introduced a new brand, the so-called AMAG AL4ever or AL4ever Star looking at the CO2 emissions connected to the production of these products. And importantly, we guarantee certain limits to our customers that we are allowed. The guarantee is now because of the certificate that we received from TUV Austria that the method of calculating and measuring the CO2 emissions is certified and correct. Page #11. We just repeat shortly that we keep the focus on recycling. It's despite growing volumes, our target to stay in the range of 75% to 80% of scrap utilization. And so far, we were able to reach this target. We are focusing on closed loop products -- projects with our customers. And one example is our internal closed loop with the new AMAG components group for aircraft components, where machine and chips go back to Ranshofen and are recycled in our craft house. And we continue also selling ASI standard materials. It's another specific branding similar to the AL4ever, the international standard that's a Chain of Custody Standard. And Gerald mentioned that the broad product portfolio and diversity in general were a success factor last year. Page #12 indicates some of the numbers. And it's quite impressive that for 4 product areas that are shown here in the center from primary material to component, we delivered to more than 1,000 customers more than 5,000 different products and more than 200 alloys. And this is done by roughly 2,000 employees coming from 30 different nations. So this means that all our products because of the high specialty level can be shipped from Europe, from Ranshofen to anywhere in the world where specialties are required. And finally, Page #13. These actions are also visible to the public, and we are very proud that we received several very positive ratings or prizes last year that are all listed on Page 13. I do not want to go into detail here, but it's certainly worth mentioning that we reached the Platinum Medal level of EcoVadis rating. So we are among the top 1% of the industry. And also the sustainability ratings of VONIX are very positive. So with this, I hand over to my colleague, Victor, and he will talk about market and shipments.

Thank you very much, Helmut. I'm going now to Page 15. We'll try then to give you a little bit of background of what happened from the whole demand from aluminum based on the Commodity Research Unit. The fundamentals were there, remains strong for primary aluminum. And we had a stable level of production globally with all the pressure we had in energy now for a couple of years, but the production remains stable. We have an outlook that says we plan for the next 5 years to have a growth of 2%, which is a very important message to all of users of aluminum in the flat rolled product. When we go to Page 16, we see that this demand is very well [indiscernible] into semi-finished products. We had 31 million tonnes production level in 2022, especially both by transport and packaging. And this [ confirms ] that there's robust usage of aluminum in flat rolled growth, an additional 6 million tonnes into 2027. And it is consistently expected that this growth will be pushed by the intensity of aluminum in transportation, including specialized alloy for automotive and airplanes. When we go to Page 17, we have a little bit of a breakdown of the growth, also described by CRU. And we see that the expectation for the next 5 years is very strong in transportation applications as well in packaging and mechanical engineering. So the context is very positive. We had a very good year of 2022 in general in all these areas. So when we go to Page 18 for the shipments of AMAG, we see the -- what happened in each business unit, in each business that we have. In our Alouette smelter in Canada, we are -- stability is the name of the game. We shipped 1,000 tonnes more in 2022 versus '21, 125,000 tonnes in general. In our foundry alloy -- in foundry alloys and the casting business, we had a robust year relating to about 92,000 tons, which proved the value of our portfolio of products in foundry alloys, especially given the uncertainties and volatility in the automobile industry. When it comes to rolling, as Gerald and Helmut have already mentioned, the very strong relevance of having optimized and a very diverse mix of products and segments, with a shift in comparison to 2021, 4,400 tonnes less, but we shipped with a higher level of specialties. When you look into Slide 19, you see the variations are very much strong into the high strength alloy aircraft business, automotive, clad brazing, which really offset the drop in the second half of the year. We had a very strong part of '22 that was in the Industrial Application segment. As you can see on the graph, sheets & plates and tread plates were about 20,000 tonnes below, but it was compensated by the OEM business on the right, which proves that the specialty business and the diverse portfolio protected our business model. All the impact of this shipment strategy in the metal, in the cast foundries and also in the rolling will be now presented in the following numbers. And I shift now to Gerald Mayer, who will continue to speak through price shifts.

Thank you, Victor. So I'm now on Slide 21 with the aluminum price trends. And what we can see is somehow some sort of a roller coaster. So we saw end of 2020 level of roughly USD 2,000 per tonne. And step by step, it was going up to a new record high of the LME, a new peak of roughly USD 4,000 per tonne. And then step by step going down again to the year-end level of last year and similar right now, we have USD 2,500, roughly, per tonne. And if we compare the average prices for aluminum last year compared to the prior year 2021, we were USD 225 up. And in the fourth quarter, we were lower by roughly USD 400 compared to the fourth quarter 2021. This all, of course, influences on the, one side, our EBITDA, our results in Metal division, but also our needs of working capital. So this has a high impact this up and down of aluminum price. If we turn the page to Slide 22. Alumina price -- alumina, as you know, is a very important -- or the most important raw material for the production of primary metal for our business in Alouette, in our smelting operation, primary division. Also here, we saw, let's say, significant up and down, rollercoaster type of developments in the last 2 years. But in the -- let's say, at the second half or the last 3 quarters of last year of the year 2022, it was more or less stable and the levels were always, I would say, affordable levels or attractive levels for us in alumina. Let's go to Slide 23. This is now the bridge and the development of revenue. So we saw roughly 40% growth compared to 2021. And interestingly, the bridge at the bottom of this slide shows that, of course, aluminum price has an impact of roughly EUR 120 million. But prices, cost inflation and so on in general, premiums, had an impact of EUR 270 million. So this is the biggest impact here which we see in the bridge. In others, the EUR 60 million -- roughly EUR 60 million refers to, let's say, a stronger U.S. dollar compared to the euro. So this also had a significant impact. And this means then EUR 1.7 billion turnover, a new record level after a record level of EUR 1.2 billion in the year 2022. Let's go to profitability to Slide 24. Some words to EBITDA. For us, it was the first time that we are above the level of EUR 200 million. EUR 186 million in the year 2021 was a record level, up to 2021. So again, we beat the prior year level. Again, the bridge, if we discuss a little bit this development there, also aluminum price, of course, is an impact. We see impacts in general in prices and premiums, which were necessary to cover the cost increases which you see in raw materials, energy and also others, where structural cost is, for example, and valuation effects are included. So big development compared to the prior year, in particular driven by the cost inflation and so on, which also led to higher necessity -- higher prices for us to sell our products. Having a look at 25. So a change of EBITDA by division. You see minor changes in Metal division, but that's very important that we have a look at the starting point, 2021. For Metal, it was as far as this year -- [indiscernible] in 2021, and again, we improved and managed to improve this very high level again to the level we saw in '21, means plus EUR 5 million compared to the prior year. Casting also a new record level, high shipment volumes, a very stable production led to a new record there, plus EUR 2.6 million. The baseline was already a good one, and now it's really a good one in 2022. In Rolling, it was a little bit more difficult in 2021. There the baseline was the second COVID year. It was difficult in '21. We were still suffering from increases -- increasing energy costs -- already suffering from increasing energy cost, but locked in prices -- sales prices from our side. So -- but all in all, this USD 56 million growth was also the result of a very stable production, good operational development, a strict policy or strategy for pricing and so on. So very satisfying there, and we are definitely where we should be. Yes. So this is the change by division. A quick look to Q4 development, 2022, because what we see here is a lower level compared to the year 2021. And as I also showed before that in 2021, one, we saw a very high level, for example, of aluminum price. So if you look at the bridge, we saw an impact there of EUR 6 million minus. Of course, prices and premiums, these levels were up also in Q4 '22. So it has a positive impact of EUR 21 million. Raw materials, of course, they're more expensive. Here you see the translation. Volume mix is down, and this is the main driver why we are below the level of the year 2021. We saw this weakening impact of the market, in particular, in the second half, and this resulted in lower volumes, in particular, in the Rolling division. And therefore, we are down compared to the prior year. Net income, Slide 27. We are up, first time triple-digit results at roughly EUR 110 million. Of course, it is a result of a very high operating result. Of course, then depreciation was a little bit higher. We saw rising interest rates and, of course, an influence there, an impact there of minus EUR 2 million. And if you earn more, you have to pay more taxes, I would say. A straightforward bridge for net income. In terms of cash flow, of course, the baseline is a record result. On the other side, I also explained that a very special year, on the one side. And increasing cost levels means also higher working capital needs, on the one side. On the other side, we also had safety stocks there because of this high uncertainty, and so we had a negative impact from working capital. All in all, the operating cash flow is up roughly at 90%. Cash flow from investing activity is more or less stable, a little bit below our depreciation, which was at EUR 84 million or so. Slide 29, key financials. Equity and gearing very solid, EUR 710 million of equity, 55% of gearing. I would say high stability there. And with that, going to Slide 30. I think I can skip this. This is just to have the full picture, including EBIT and the margin numbers. So I would like to continue with Slide 31. That is the first time to present ESG key figures there. You see, interestingly, I think, this is what we always say that we stand out is the scrap utilization rate or input rate, and we are at 77% roughly after 78% in the prior year. The impact there is always product mix, availability of strips and so on. Therefore, we have always slight changes there. But we are continuously between 75% and 80% there. Also the specific energy consumption, CO2 emissions, this stuff you can read there. And I really would like to refer here to our ESG report, which is part of our financials and it's published now. Metal division, Slide 32. I would like to start with a quick view to the 3 divisions. We saw a high level of shipments, 125,900 tonnes, so very high. So we stand out there compared to the prior years. Of course, we saw a combination of high -- of very positive and operational development, good production levels. We could utilize the capabilities of the plant, on the one side. On the other side, of course, we had tailwinds from the market, a very positive environment there. This is the combination of the high average aluminum price and combined, as I explained before, with relatively low alumina prices. And this is what we successfully leveraged there in Metal division and so -- a second year in a row, a new record level. And of course, what is also very important to mention here with Metal division is the last bullet point here, that we have a risk-sharing electricity contract in Canada, and we are fully free in that no link to Russian developments here and European developments of energy prices. So this is definitely very positive. Casting division, as I mentioned before, it is a highly positive result for Casting, a record level of EUR 13.5 million of EBITDA. On the one side, again, stable production, high productivity. This was the enabler for high shipment volumes there. We outperformed -- the significant outperformance also in line with -- or even outperformance compared to passenger car sales in Europe. And the cost inflation, of course, had to be covered by higher sales prices and adjustments here, which, yes, was a successful year for Casting all in all. Rolling division. You see where we come from the 2 COVID years: EUR 52 million, on the right side -- the EUR 53 million roughly in 2022, EUR 80 million roughly in 2021. Up to now, the past years, we are roughly EUR 110 million in the past. So now we're at EUR 136 million. You see here that on the one side, we had to catch up from the second COVID year. On the other side, it was very successful, and we took advantage, on the one side, of the market. On the other side, we definitely had a very strong and stable production, high productivity there. And so this all in all resulted in a positive development for Rolling division. And as I mentioned before, we are there where we should be. 2 slides on 35 and some -- on 35 and 36 regarding our energy consumption. We're very often asked, and therefore, we summarized it once again. All in all, 2.5 terawatt hours per year. This is our energy requirement, including Alouette in Canada and the Austrian operation. In Austria, out of this 2.5 terawatt hours, we consume 0.8. And here, 0.5, this is from natural gas. So this is our situation we have. And if you flip to Slide 36, what you can see there is that we are -- for 2023, we have nice hedges in place, roughly 80% of our natural gas consumption are hedged, also roughly a little bit less than 60% of our electricity needs are hedged in terms of pricing. What you also see there is that it is the impact, on the one side, of hedging. On the other side, this is the bottom right chart, but also that energy caused a significant up for our Ranshofen Austrian operation because this simply -- or fully refers to Austria here. So 2 times after 2020 -- the cost doubled in 2021 and a little bit less than doubled than 2022 again. So this is -- and we saw a good impact from our hedges which we have in place. And the good news is that we also have significant hedges in place for 2023. Yes, with that -- stating that, Slide 38, our proposed dividend of EUR 1.50. I mentioned it in the very beginning at the highlights. We will propose that to the General Meeting in April 13, and the payout date will be April 20. Outlook for 2023. As I mentioned also in the beginning of this presentation, still we have a high volatility, high uncertainty, so it's for us a little bit too early to give you a precise guidance, I would say. But we summarized the -- I would say, our, let's say, gut feeling and all the data we have right now is on the one side. The global forecast give us 2.9%, for Eurozone, 0.7%, I think. Also, we are away now from a recession in terms of forecasting. We, in general, see a positive demand trend. And Victor showed that and discussed it a little bit from CRU regarding the general demand for primary aluminum and rolling -- and rolled products, both aluminum. So this all should impact, let's say, for the next months and years our results positive and the demand and the operations for all our divisions. The stability of new order intake from aircraft, from automotive, from packaging industries is given. So it was strong in Q4. It's continued strong in the beginning of this year. On the other side, we have other operations, in particular, let's say, the industrial application business, which is definitely weaker compared to last year, and this was very strong last year. We have high cost inflation. I think this is also -- and this is impacting definitely our earnings. Energy price levels are going up and down, but we are hedged to a significant extent. So this is where we have a good visibility, at least for our situation and for the year 2023. What is very important is energy supply. And it's key for us that in particular natural gas and electricity is flowing. So what we did last year is we secured 2-month storage roughly for our Austrian operation. Yes. And all in all, what we definitely see is that the growth of the economy in general is a little bit weaker now and was weaker in the second half, and for sure this will impact development of AMAG, on the one side. On the other side, I think, yes, I'm cautiously optimistic for what's happening this year. So with that said, we are now happy to answer your questions, if there are any. Thanks for your participation in our earnings call, and now the line is open for questions.

[Operator Instructions] We have the first question from Brauneiser Rochus from Kepler.

A few questions from my side. Can you maybe talk a little bit about order development in the business? I think you, Mr. Mayer, touched base on that. Can you talk about the absolute level of your order intake in rolling in Q4? I think in previous quarters, you were showing the charts how that has developed? And could you also comment a little bit where you see the destocking process in the aluminum markets, particularly in Europe? How far we did completion of that drawdown? That would be my first question.

So regarding destocking, what we can share here with you is that we have now -- in the first, let's say, 6 weeks of this year, we saw again somehow higher demand, definitely higher demand from industrial applications. And this is the path we were looking and -- for destocking at the end of last year. So we saw new -- let's say, at least new signs and new order intakes there, new demand, which is starting again at lower price levels, on the one side, short term on the one side. But the signals they're definitely positive compared what we saw end of last year. And so this is positive. Regarding the order intake for Q4...

What I can share with you is, normally, we have the pattern of having stronger order intake for the OEM business, which happened in Q4, and is consistent now coming in the beginning of this year. What happened is we had a very good first half of '22. And what Gerald just mentioned, the second half of '22 for the industrial applications was strongly impacted. So we're starting with the bottom line and increasing the orders that we expect in this year. But for the time being, it's very volatile. We're coming from a lower base end of Q4, beginning of Q1 of '23. So both segments' industries have different dynamics in terms of ordering.

So the ballpark -- has this been under 50,000 in Q4, to put it into a number? Or the order book, sorry, has that been under 50,000 now?

Well, the order book is above 50,000.

Above 50,000.

Yes.

Then on the energy. I think you talked in length about your hedging structure. What I'd like to understand what you're expecting now in terms of cost step-up in '23 versus '22 after the doubling over the previous years? And obviously, due to your hedging levels, you should have reached now a pretty good visibility on how much higher energy prices will be?

So of course, there are still a certain percentage open, yes. But what we expect right now is slightly higher perhaps energy prices for our site in Austria.

Okay. To get that right, you're largely hedged now. To what extent? How are you benefiting...

We are hedged right now at roughly 80% for natural gas and roughly a little bit less than 60% for electricity, means 40% electricity is open and 20%, of course, natural gas is open. The hedging levels and prices for -- compared to last year, a little bit higher because we did it throughout -- yes, through a longer period of time. It's a little bit higher. But in particular for gas, we are definitely still in the money. And for electricity, we are also not far from the market.

Okay. But that means that the hedging level you're having -- or the hedged levels you have right now are above what the stock market is indicating in terms of electricity and gas?

We are roughly there. Right now, we are roughly -- in terms of electricity, it depends on the year you're looking at. But we are roughly there what the market is saying as of today. And we are below the levels when we're talking about natural gas.

Okay. Got it. On the dividend, I think maybe you can share the thoughts on what you're having on the dividend. I think a flat dividend is not a huge surprise. But what you could argue is the payout ratio is relatively small compared to previous years, and it's not that much reflecting the strength of the year in terms of pricing and margins. What should we take from there? Is this a reflection of the weaker results you're expecting going forward? Is this kind of a one year thing? So it's just a '23 story? Or are you seeing any particular structural topics arising for you in particular in Europe coming from data availability, structurally high energy prices and so on?

Rochus, I think this is easy to answer. You know, in the past, we always said our dividend policy is roughly 50% of our net income. But we would like to go to minimum 120% if affordable. If you look at that, roughly 50% of net income perfectly translates into EUR 1.50. This is number one. Number 2 is we also have reflected that free cash flow is just EUR 11 million because we had to invest in safety stocks. We invested in natural gas and so on. And also there cash is king in our opinion. So we tried to balance out what we paid up for now in terms of dividend policy and, of course, what cash flow presented us or gave us. And this is -- was the reason. No -- absolutely no impact on what we think what could be this year, because we also think this year will be perhaps more normalized, but definitely not a bad year.

Okay. And on the structural view, I think what -- I'm thinking about labor shortage and this pricing structure and you compared to the rest of the world. How do you think structurally for your recycling business to develop? I mean, I look at one company in the copper space, which is aggressively investing into recycling capacity outside of Europe. Strategically, what is your thinking about broadening in downstream business beyond Europe business? Is this any -- is this a topic for you?

Strategic -- strategy is always in general a topic, and we focus what we said in the past. I think it's very consistent. We have a very consistent strategy in general. Recycling -- just to recycle you also need some -- what you do when there's this recycling material. And what we have in Austria is, we have our recycling facilities and we have a rolling mill. And we use perfectly our materials, we produce and recycling for our rolling mill. And the benefit is this combination. I would say this is very important to understand. Now of course, we always look also to the other side of the ocean. And so up to now, we did not find a proper -- let's say, a proper for us occasion to do something there and the perfect fit. But in general, you were also asking about personnel availability. I think it's very similar, going to the States or staying here in Europe. If you talk about Europe and these people and, let's say, customers, is it in Europe, is it here? It's everywhere difficult right now to find people with the weakening economy. I think it could be a little bit better than it was last year. And we have a lot of initiatives to improve the situation there. But yes, this is -- I would say, I hope this answers your question.

The next question comes from Markus Remis from RBI.

A couple of pointers you touched already, but I would like to come back to the energy topic, just to clarify. So you're saying your energy costs in 2023, if we think absolute terms, will be just slightly higher than in 2022?

It highly depends on what we see then at the market levels, yes. And let's assume that it's roughly where it is -- because the hedges are more expensive than they were in 2022. So based on that, this part will be higher and the rest has been driven by the market. If it's further going down, this also could be a little bit cheaper, but this is based on our plans and this is specifically to ball there.

Sure, sure. Okay. I mean, what's your take on the price cost spread development? In the past you gave -- I mean, have you -- do you think there can be a positive price cost spread in 2023?

I'm convinced that it will be negative compared to the year 2022 because this is exactly what we see right now from -- industrial application was very strong with the order intakes we had and the production and the sales shipments we had there. What I assume is that, it could be still strong in the first month of this year, but it will go down for sure and normalize. This is fully clear now, yes. And this is also the main reason why we say it will not be a copy of the year 2022, 2023. So this is what we cannot assume. Markets are weakening. In general, the economic outlook is weakening, which immediately translates in particular in short term, we'll call it, distribution business and distribution in industrial applications business. For us, it's translated into that there. And so we assume internally that this will weaken.

So this means that higher energy costs will not be passed on to the customer?

The higher energy cost, of course, we do the utmost to pass it on, but perhaps not to the extent we managed to do it last year.

Yes, yes. Can I then come to the automotive sector? I mean what's your perception of the demand? I mean, we've all been aware that this has been like, yes, rather volatile. Do you see a more, say, consistent color, pattern? And what's your take on the volume development on the automotive?

Victor, please answer.

The point is we try to establish a very balanced portfolio of customers and applications in automotive, right? So if you look from the combustion side engine to the electric cars, we have good positioning in applications where intensity of aluminum inside. So call-ups as of today have demonstrated that will persist in going to the direction. But any change in rhythm, in consumption, driving and the sale of cars at the end of the chain impacts us immediately. So we've been very cautious at the moment, managing our capacity, our capabilities and managing the order intake as they come. So when you look at the breaking side of the equation, the same pattern applies. So the one-stop shop that Helmut mentioned and explained to you gives the outlook, the capability of trying to buffer. Whenever we have an element of resistance in one application, the other one pushes and kicks in. But for us, the cautious method is any kind of volatility in the call-offs impacts one side of the equation and we try to come -- we react to the other. So I hope I could -- I was able to explain to you how things are looking today. And that's where the specialty business that we have and how we -- rebalancing on the portfolio has an important element in our business model.

Point taken. But just as we speak, when you say, also call-offs are more consistent, the volatility, decline compared to what we've seen across the second half of the year.

Markus, the semiconductor issue is going away. So this is what we see a little bit. And therefore, there were backlogs in the -- at our customer side, it's definitely still high and positive trend. And we see now consistent orders from this side. Let's wait how it develops then for the second half. But for us, we have good visibility until I would say, end of May.

Final question, please, on your investment bit on CapEx. I think the -- at least compared to my expectations, 2023 CapEx has actually a bit lower than initially assumed. I guess there was a spillover into 2023. And if you could provide us with a kind of indication for CapEx in the current year.

Yes, you're definitely right. Yes. So the expectation is around 100, absolutely a little bit more for this year.

[Operator Instructions] And our next question is from Christian Obst from Baader-Helvea.

I'll start with the first question with the rising structural cost. You mentioned that in your presentation. Can you give us some kind of a run rate? What do you expect going forward? And then I follow with the next question.

I think you know structural costs are driven by inflation there and what we have in Austria is 7.6%, an average increase for our figure. And I think this is a main driver for personnel expenses. I think it will be a little bit lower as inflation is also lower for the Canadian operation. So perhaps somehow below 7% should be a run rate for the main driver there, which is inflation. Of course, we also have some other things like maintenance and [ planned outages ], which could be a little bit higher and inflation will be lower. It's in Austria 11% right now.

Okay. Then when it comes to [indiscernible]. So you are adding additional recruits now and then you have to present run rate on the personnel. Is that the right assumption? So what is the increase of the number of the employees you were trying to add in '23, so this '23?

First of all, this 7 point something percent -- or 7%, roughly, is a good assumption there. We are trying to find people according -- now it might to wait a little bit, how demand is developing. This year really is developing this year. So based on that, we try to find new people. And if necessary, we take this year 100, but it's still early. And this is also one of the reasons why we -- it's just difficult to give you a precise outlook right now in the guidance. Whereas, give us some months there, but it's fair to assume that we will add at least some people, it will not be 200. So this is not to worry.

Well, in the -- you stated that you're investing and do some kind of 3 months of gas security, can you give us a number what have you invested to for that kind of security from there?

What we invested for cybersecurity?

No, no, for gas. The 2 months of gas.

Gas. You mean for the storage?

Yes.

For the storage of natural gas it was roughly a little bit less than EUR 10 million.

Okay. And then the last question is concerning to April. You said that you are, of course, constantly optimizing the mix. But when I look at the impact of the mix to between the sales and o say was EUR 40 million approximately on EBITDA, only EUR 6 million. The main income or the main positive development comes from price and premiums, of course. So why haven't we seen a bigger impact from a mix change from -- in '22? And is there -- can you expect something more from that side going into '23?

I think if you say optimization of mix, it also has to do what market allows you to do. With our facilities, we have high flexibility. And I think this is the name of the game there. If demand from aerospace, for example, is going down like it did in 2021 and in 2022 for us, we had the chance to sell products into industrial applications and this was super successful in the first half of last year with strong price increases there. And I would say also name it, this is positive mix or price. In the second half and what we see right now is stronger demand from aerospace, from automotive. And on it again be optimized for us the mix because we have the facilities, we have the qualification, we are allowed to supply to different customers. And this is, I would say, that the highly positive thing there to understand. And perhaps this is also what the U.S. struggling a little bit. All in all, you are right. It was -- last year, was a year that we really managed to bring prices up, which was necessary to cover a higher cost. And we have, in particular, from industrial application side, also tailing from the market, which we utilized, I think is.

So going forward, in '23 in the end, there is these uncertainties from the automotive side, of course, and we will talk about that. But on the other hand, if we see, in some cases, tremendous increase of order intake for the aircraft industry. And I think this should also lead for you that you can deliver more into that kind of the mutual '23 by a significant amount, I would say. So which might change the mix towards a more profitable structure. Is that right?

Yes. You're right. I mean when you go into the more specialty side of our business, as you said, aerospace, automotive, brazing, sport products, the high strength alloy that we have there is going to be small -- are smaller, but the profitability side is good. We compensate that we had the first half of last year in industry applications going strongly with price increases and higher volumes. We had a lower level of volumes in the second half, and we're starting the year with a big fight in terms of how these volumes can replace in the market versus the pressure in prices. So in the end, you're right, moving to the specialty side of the business, gives us the more room to increase in profitability.

There are no other questions at this time. And I hand back to Christoph Gabriel for closing remarks.

Thank you very much for joining this conference call and as always I'm happy to be there for you if there are any questions. Just give me a call right and even. Thank you very much, and have a good day. Goodbye.

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