Befesa S.A. (BFSA) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to the Befesa Preliminary Year-End Results 2024 Conference Call. I am Yusuf, the Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or for broadcast. At this time, it's my pleasure to hand over to Rafael Perez, CFO. Please go ahead.

Good morning, and welcome to the Preliminary Full Year 2024 Results Conference Call of Befesa. I am Rafael Perez, CFO of Befesa. This morning, I'm joined by our group CEO, Asier Zarraonandia. Asier will start with an executive summary of the period, and then he will cover the business highlights of the steel dust as well as aluminum salt slags recycling business. I will then review the financials by business and will cover the evolution of commodity prices, our hedging program; and finally, cash flow, net debt and capital allocation. Asier, we'll close this presentation providing an update on the outlook for 2025 and an update of our growth plan. Finally, we will open the lines for the Q&A session. Before getting started, let me remind you that this conference call is being webcasted live. You can find the link to the webcast on the preliminary full year 2024 results presentation on our website www.befesa.com. Now let me turn this call over to our CEO, Asier, please?

Thank you, Rafael. Moving to Page 5 of the business highlights. Befesa has delivered a strong fourth quarter and full year results despite a challenging macroeconomic environment, which demonstrates the resiliency of our business model. Total adjusted EBITDA in the fourth quarter has been EUR 62 million, up 27% compared to the previous quarter and making a record level for quarterly results, reflecting on a strong year-on-year performance. For the full year, adjusted EBITDA reached EUR 213 million, an increase of 17% compared to the previous year. Operating cash flows has increased by 30% year-on-year, driven by a strong cash conversion. Leverage at year-end reached 2.9x below our initial target of 3x. We have delivered solid performance during the year with solid steel dust volume in our two main markets, Europe and the U.S., despite the challenge that the sector -- steel sector is suffering. In our aluminum business, we have delivered a strong performance in our salt slags recycling business, driven by the Hannover plant back to full operations and a strong volume received from our customers. On the other hand, our secondary aluminum business has been impacted by a challenging automotive industry in Europe. I will elaborate later all these aspects. On outlook, we expect 2025 to be another year of strong earnings growth and further deleverage during the year. We are adjusting our business plan and capital allocation to focus on reducing the leverage and investing in ongoing approved extraction projects. As such, expansion plan in China is still due to the current market conditions. Our growth CapEx will focus on finishing the refurbishment of Palmerton and the expansion of Bernburg, both low-risk projects from an execution, technology and commercial point of view. Moving on to Page 6. Overall, our steel dust recycling business has delivered strong results in 2024 in Europe and the U.S. In Europe, the steel sector is going through a challenging period with the steel production in Europe at the 5-year low levels impacted by weak demand. In Europe, despite this challenging environment, the level of steel dust deliveries from our EAF steel customers is stable and solid, and we continue to run our plants at a very high capacity utilization with an average of 92%. In the U.S., in the steel dust recycling business, we are running the plants at full levels of utilization similar to previous quarters around 70%. The measures that we have been taking and these practices that we have been applying to improve the recycling operations are on track and delivering good results, achieving higher EBITDA per ton gradually. The zinc refining plant in the U.S. is in final stage of the ramp-up and turnaround process with a strong focus on cost reductions. In 2024, the unfavorable combination of PCs and premiums for special high grades zinc produced around EUR 15 million negative contribution. In our Asian operation, we have delivered robust Q4 in Turkey and South Korea, reaching a strong level of utilization. Our Chinese plants continue running at a utilization level of 50%, impacted by weak electrical furnace steel production. Moving on to Page 7, business highlights for the aluminum salt slags recycling business. In aluminum business, we have delivered a strong volume of salt slags recycling, which has been partially offset by weak secondary aluminum results. On salt slags, the strong volume has resulted in a very high capacity utilization of the plants, driven by the Hannover plant in Germany back to operations at full capacity. These strong operating results has been partially offset by lower FBM aluminum price. On the other hand, our secondary aluminum segment has been suffering during the whole year for a very weak European automotive industry, which is affecting the demand of secondary aluminum. This is putting a lot of pressure in the aluminum metal margin, which is suffering compression compared to the levels of last year, caused by weak demand of secondary aluminum, coupled with difficult access to aluminum scrapping market. Now Rafael will explain the financials in more detail.

Thank you, Asier. Moving to Page 7 -- sorry, moving to Page 9, financial results for our steel dust segment. Steel dust delivered EUR 170 million of adjusted EBITDA in 2024, which represents a 25% year-on-year improvement compared to 2023. EBITDA margin improved from 17% to 21% in the period. EUR 36 million EBITDA improvement has been driven by the following factors. The year-on-year impact from volume was flat with the total plant utilization at 70% similar to last year. On price, a strong positive EBITDA year-on-year impact of about EUR 44 million with the three main price components being EUR 7 million EBITDA impact from higher LME prices, 5% in the year; EUR 50 million positive impact from high zinc hedging prices, EUR 104 per tonne higher year-on-year on average. And thirdly, EUR 22 million positive impact from the lower zinc treatment charges, which was set at $165 per tonne for the year 2024 versus EUR 274 per tonne 2023. On cost and others, Befesa coke average price continued further normalization throughout 2024 to levels below the 2022 average price, driving EUR 11 million of positive EBITDA impact in the year. Operational improvements in the U.S. recycling operations also have delivered positive EBITDA contribution as well in the period, improving the EBITDA per tonne on the steel dust treated. All these positive impacts have been partially offset by general inflation and other effects, mainly attributable to EUR 15 million negative contribution from the zinc refining operations in the U.S., which is going through a turnaround plan. As Asier explained, we are laser focused on executing our strong cost reduction plan. Moving to Page 10, financial results for our aluminum segment. Aluminum salt slags delivered EUR 43 million of EBITDA in 2024, which represents a 10% year-on-year decrease compared to EUR 48 million in 2023. The year-on-year of EUR 5 million of negative EBITDA development was mainly due to the lower aluminum metal margin, partially offset by lower energy prices. On volumes, overall positive EBITDA year-on-year impact, our recycled volumes of salt slags increased by 18% to 426,000 tons in the period, driven by the resumption of operations at our Hannover plant. Our secondary aluminum alloys production volumes increased by 2% to 171,000 tonnes. With these volumes, we operated our plants at a strong utilization rate of about in 91% in salt slag and 84% in secondary aluminum on average. With regards to prices, overall negative EBITDA year-on-year impact of around EUR 11 million, mainly driven by pressure aluminum metal margins versus the previous year. This compression in the aluminum metal margin is caused by two main factors. On the one hand, there is a scarcity of aluminum scrap in the European market, driven by lower overall industrial activity as well as higher exports of aluminum scrap away from Europe. And secondly, by a weak automotive industry in Europe, which impacts demand of secondary aluminum from automakers. Aluminum FMB price was up 5% with an average slightly above EUR 2,300 per tonne. The negative price effect was partially compensated with year-on-year lower operating costs, mainly through the lower energy prices of electricity as well as natural gas. Moving on to Page 11, zinc price and treatment charges. Regarding zinc LME prices during 2024, zinc has been trading with some volatility over the marginal cost of the producer, C90, trading sideways in the range of $2,300 to $3,100 per tonne. The average of 2024 zinc LME price has been $2,780 per tonne, which is slightly above the last year's average of $2,650, on average, up 5% in the period. In 2024, zinc prices have been trading well above the marginal cost of the producer, which is around $2,500 level. On treatment charges on the right-hand side, in 2024, treatment charges for zinc were settled in April at $165 per ton for the full year 2024. As explained earlier, this reduction had a positive impact of around EUR 22 million in 2024. We have to wait until March or April to see the settlement of the treatment charges benchmark for this year 2025. As a reference, the spot treatment charge in the market is trading on the negative zone, which very rarely happens. This shows the current supply/demand dynamics in the zinc market characterized by reduced supply in zinc concentrates from mines, which is making spot treatment charges to be negative. It seems that this dynamic continues, which may imply annual treatment charges for 2025 should remain at a low level. Turning to Page 12 on hedging. We have taken the opportunity of the volatility in the zinc price seen throughout 2024 to extend our hedging book further towards the end of 2026. With this extension, our zinc hedge book covers close to 24 months of hedge at increasing hedging average prices of EUR 2,650 or $2,950 per ton in 2025 and '26. This level of hedging represents all-time high level of hedging for Befesa, and will provide around EUR 20 million to EUR 22 million of incremental EBITDA in this year 2025, regardless of what happens with the zinc price. We continue to monitor the market to close volumes for the first quarter of 2027. Our hedging strategy remains unchanged and continues to be a key element of Befesa business model, providing earnings visibility and predictability, lowering the impact from zinc price volatility. This year is a great example of how our hedging strategy enabled us to benefit from the volatility of the zinc price. While the average zinc price in 2024 has been $2,780, we have been able to hedge the second half of 2025 an entire full year 2026 at an average price of $2,950. This is $170 higher than the average LME zinc price in the year. Now moving to Page 13 on Befesa energy prices. The page shows the evolution with the three main energy sources that we have in Befesa: coke, natural gas and electricity. With regards to coke price, which today represents around 55% of the total energy bill, the normalization that started in the second quarter of 2023 is continuing throughout 2024 to levels below 2022 average. Average coke price in '24 has been around EUR 190 per ton, which is 20% lower than in 2023. This had a positive impact on our steel dust operations as explained in the bridge. Despite this positive trend, however, the average coke price in 2024 is still around 30% above the average levels seen in 2019 and 2021. Regarding electricity, which today accounts for around 25% of the total energy expense, prices decreased around 20% in '24. Gas prices stayed pretty much in line with previous years. Now turning to Page 14, cash flow results. The operating cash flow in 2024 has reached EUR 192 million, which represents an all-time high level and an increase of 30% compared to the last year. On the EBITDA to cash flow bridge starting with EUR 213 million, adjusted EBITDA and working capital consumption of EUR 26 million in the year, down from EUR 37 million in the previous quarter. As in previous years, working capital improvement -- improved significantly in Q4 compared to the previous quarters. Overall, working capital consumption was pretty much driven by the increase in revenues and receivables. Taxes received in 2024 came in at EUR 4 million as a result of a tax final assessment of the previous year, resulting in an operating cash flow of EUR 192 million in 2024, up 30% compared to last year. On CapEx, in 2024, we have invested EUR 56 million on regular maintenance CapEx, EUR 23 million in growth CapEx, mainly related to the refurbishment of Palmerton in Pennsylvania and EUR 40 million in the 50% acquisition stake in Recytech. In summary, total CapEx of EUR 119 million in the year. Total interest paid increased to EUR 42 million in the year, mainly driven by the year-on-year higher Euribor as well as a slightly higher margin spread. On dividend, a total dividend of EUR 29 million, equivalent to EUR 0.73 per share was paid to shareholders in the third quarter of last year. For 2025, the Board of Directors will propose to pay a dividend of EUR 25 million, equivalent to EUR 0.63 per share or 50% of the net income. In summary, free cash flow before dividend and M&A amounted to EUR 65 million. Cash on hand stood at EUR 103 million, which together with a EUR 100 million undrawn revolving credit line provides Befesa with more than EUR 200 million of liquidity. Gross debt at the end of 2024 stood at EUR 722 million. Net debt at closing of the year stood at EUR 619 million compared to EUR 662 million at the end of the previous quarter, resulting in a net leverage of 2.9x at the end of the year compared to 3.4x at the end of the previous quarter and better than our initial target of 3x. Turning to Page 15, debt structuring and leverage. In July 2024, we extended the maturity of our debt until July 2029. The new financing, together with our consistent hedging policy and cash flow generation profile provides the strong financial backbone to support the future growth of Befesa with a strong focus on capital allocation discipline and leverage management. The reduction in the leverage ratio from 3.4x to current 2.9x demonstrate our commitment to capital allocation. We will continue reducing the leverage throughout 2025 to keep it between 2 and 2.5x going forward. To do so, we will prioritize our growth CapEx on those projects that will deliver immediate cash flow upon completion, like Recytech and the approved projects of Palmerton and Bernburg. Also, we will keep the annual regular maintenance CapEx around EUR 40 million to EUR 45 million in the coming years. On dividend, we are committed to maintain our dividend policy to pay between 40% to 50% of the net income to shareholders as dividend. Now back to Asier on outlook and growth.

Moving on to Page 17 on outlook. You can see on the page the main drivers of our view for 2025. As explained earlier, we expect 2025 to be another year of strong double-digit earnings growth and further deleverage during the year. This is fundamentally based on better zinc hedging levels as Rafael explained it, higher volume of steel dust recycled in the U.S. recycling plants and as well as lower zinc refining costs in the U.S. In a steel dust, we expect to continue running the plants of high capacity utilization and achieve a stable volume compared to 2024 despite current challenging steel industry in Europe. In the U.S. we expect higher EAF steel dust volume driven by volume from new contracts. In China, we expect a slightly better situation than in 2024 with overall positive contribution in the country driven by a positive development in Jiangsu. On our aluminum business, we expect stable salt slags volume compared to 2024. However, on secondary aluminum, we expect a stable to negative evolution as we continue to see metal margin compression caused by aluminum scrap scarcity in Europe and a weak demand from auto sector. The zinc refining plant in the U.S., we managed to establish stabilized operations during 2024, and we are taking a strong operational cost-cutting measures in 2025. We are aiming at a fixed cost reduction between EUR 15 million to EUR 20 million to be captured in 2025. The current environment that characterized by low TCs and low zinc premiums make it to be at the bottom of the cycle for the refining business. On energy prices, we expect a slightly lower overall coke prices for the group in 2025. However, we are expecting natural gas and electricity prices in Europe to be higher than 2024. On premium charges for zinc, the zinc concentrate market remains very tight at the moment with a spot seen in the negative territory, which will indicate that the trend for the zinc will be downwards. As a reference, the last 15-year low was at $143. For 2025, we are expecting 2025 benchmark TC to remain stable or lower than $165, which was the level for 2024. As explained by Rafael, average zinc price hedging for 2025 at EUR 2,604 will drive a strong earnings growth in 2025. On zinc prices, we expect some degree of volatility driven by global macroeconomic and geopolitical uncertainty. The marginal cost of the producer C90 is around 2,500 level, acting as a floor of the zinc price. On leverage, we are expecting to finish 2025 below 2.5x, as explained by Rafael. We are adjusting our business plan and capital allocation to focus on reducing the leverage and invest in ongoing approved expansion projects. As such, the expansion plan in China is stopped due to the current market conditions. Our growth CapEx will focus on finishing the refurbishment of Palmerton and expansion of Bernburg, both low-risk projects from the execution, technology and commercial point of view. Moving on to Page 19 of Palmerton. The refurbishment of Palmerton plant in Pennsylvania is moving well and on time and on budget. The first kiln of the project is already completed and in operation. The second kiln will be completed by the second half of the next year. We are signing new contracts with the steelmakers, customers. And so far, we have secured more than 50,000 tons that are coming into operation during the 2025 year. Moving on to Page 20 on Bernburg. With regards to the expansion of the secondary aluminum production capacity in the existing plant of Bernburg in Germany, we are moving forward with the permits, authorizations and commercial contracts with customers. This project is linked to the demand for the recycling aluminum we are getting from existing Befesa customers in Europe. We expect to start investing in the second half of the year. In summary, our growth plan is flexible, and we are adjusting and adapting it to the current circumstances, balancing leverage and CapEx which results in a better growth and financial profile over 2025 and the next years. Thank you very much.

Thank you, Asier. We will now open the lines for your questions.

[Operator Instructions] The first question comes from the line of Brian Butler from Stifel.

Maybe we can start just, where do you see like kind of the current environment relative on the steel production cycle? And it looks like it's very depressed, and in a normalized kind of recovery or getting back to a normal level in steel production, what kind of incremental upside would that be to Befesa color-wise?

Thank you for the question, Brian. Well, I think it's a very theoretical question about full recovery of steel production over the last 5 years. But obviously, the different by regions. It's a different picture. In Europe, basically, we are in the full capacity. So no matter what they do, probably we are going to be, again, growing inventories, but no many differences in throughput. Of course, in the U.S., we were waiting for -- if there is an increase, and we are going to feel the mining capacity that we have is staying in place in mines that we have 70% utilization. And this is the same in the case of Asia, I mean, probably it's in the range of 70%, and we have room to increase up to, of course, 100%. China, well, no doubt that we have very low capacity utilization rate. So the effect as a combination, difficult to say. But at the end of the day, it depends where you want to move and multiply by EUR 8 -- average EUR 8 per tonne and you can multiply whatever is that. But difficult to say an amount depending on the recovery, of course.

Okay. And then I guess just one on modeling. Working capital was the use of cash this year. How should we think about working capital needs in the '25?

Thank you, Brian. Well, basically, it's the usual working capital outflow is driven by the increase in activity, revenues increased 5% and accordingly, receivables. Think -- going into 2025, as you know, we will provide the full year guidance once the treatment charges have been settled around March, April. And -- but I think from the working capital point of view, you can pencil in like EUR 10 million to EUR 15 million, something like that.

The next question comes from the line of Shashi Shekhar from Citi.

I have three questions. The first one is on the utilization rate at the steel dust recycling business. In the fourth quarter, it has increased to 74%. Just wanted to know how did you achieve it? And is this rate sustainable going forward? My second question is on Henan plant in China. How much is the current capacity utilization at this plant? And is there any plan to reduce cost there? My last question is on your cost. What is your view on cost inflation for next year?

Shashi, thank you for the questions. Starting for the first one. The 4Q is a 74% utilization rate higher than the others. Basically, as you know, that is -- the utilization rate normally out of the deliveries by region is affected by the maintenance stoppage of the plants, and as well in the particular case of the Turkish third Q stoppage by a strike. So all in all, the fourth quarter is good and a strong 74% utilization rate. Moving forward, I do recommend more in the yearly level because depending on the maintenance stoppage that we have to do to plants, the quarters could be different. As an example, first Q in '25 could come a little bit lower in utilization because we are stopping a big plant and so on. But the full year, I think that in general, we are going to increase the capacity utilization slightly. I mean between 70% to 75% is a good reference. In the case of China, as you know, we have two plants. One of those Jiangsu, we are running the level of 60% or something like that in capacity, and what we expect in '25 is even a little bit higher in the level of 60%, 70%, could be the same. We are not being very optimistic unless we see a clear change in the market. So I think that repeating a slightly better situation in Jiangsu plant is something that we can consider. And our plant is just running in the level of 20%, and we don't see more than that in '25. So overall, we are talking about 50% capacity more or less in China, and could be a good reference, 50% to 60% in 2025. Regarding cost to be in those low level, well, we can say that we have Henan with a minimum people at the plant, and even we are using -- when we stopped the other plant when we had to run campaigns in Henan. So we are having the cost a very controlled way. And that's why even Henan being stopped is not delivering cash negative and later in the case of the two plants together. Regarding the cost of inflation for next year, I think, overall, well, you know that taking out the energy that Rafael has explained about the coal, about the electricity and when you have the typical fixed costs like personnel and maintenance and something like that, it is the inflation rate by countries, but in global, I think that something like EUR 5 million -- EUR 5 million to EUR 6 million globally could be considered if you plan to have a round number.

The next question comes from the line of Ioannis Masvoulas from Morgan Stanley.

Well done on the results today. First question on Palmerton, given the investment there, can you give us an idea on what sort of EBITDA uplift you anticipate for 2025 versus '24? And then at full run rate, '26 versus '25, just to get a sense on the EBITDA trajectory there?

Thank you for the question, Ioannis. Well, the Palmerton issue, I will suggest to focus globally in U.S. because obviously, we have extra capacity currently. And when the Palmerton being back on track at the end of this year with the two kilns, well, utilization rate in general in U.S. will be affected by the availability of dust on our contracts and the production of our steelmakers contracts. But the key here is that the increase of volumes in general in all the plants, we are more or less thinking that with the new contracts which are coming for the new projects in '25 could be in the range of 5 million to 6 million additional. But I think as we have explained during the presentation, well, globally, we expect more achievement in the U.S. altogether with the refining plant savings. '26, we are still -- we think that we still see growth in volumes and early to say the effect because there are many things that can consider, but another easily 50,000, 60,000 tonnes more could arise for '26 onward. The idea is to be in 2 years with the projects coming into -- I mean, into the market or running at the end in the next 2 to 3 years, coming to utilization rates of 80%, 85% for '27 or something like that. This is the idea. And we will keep informing about the delivering and how the things are going.

Got it. So basically, just to recap on the U.S., if we look at the increased volumes plus the fixed cost reduction of the zinc refining, you're looking at something in the order of EUR 20 million to EUR 25 million improvement?

Yes, at least EUR 20 million, I will be more comfortable to be a little bit more [indiscernible]. But yes, I think it's a good combination.

Okay. Very clear. And the second question on the CapEx guidance because I'm a bit puzzled here. You talked about EUR 100 million for the coming years per annum, right, and we've seen that you talk about EUR 40 million to EUR 45 million of sustaining CapEx and the remaining spending in Palmerton of Bernburg in the order of EUR 55 million to EUR 60 million. So that gets us to around EUR 100 million or maybe slightly around EUR 100 million for '25, but I would have expected a meaningful step down from '26 and something closer to sustaining CapEx levels in 2027, which is not what you're indicating today. So could you perhaps elaborate what drives that and whether there are any additional projects that you are considering as part of this EUR 100 million run rate?

Yes. Well, it's true that you defined very well about the 2025. Those are the idea, Palmerton and Bernburg in part of the growth. For the next years, I think it will depend -- the level of EUR 100 million is a good reference. Obviously, we don't want to move a lot from that, slightly up or down because what we want to do is the next project in line which are salt slags plant in Europe or a second kiln in the French plant for the electrical furnace dust treatment. I mean, will come when we will see or what we see that the market is there, right? So in theory, in the pipeline, you could have those EUR 100 million considering that all the plants are coming one after the other. But again, we will inform when we start the next plant, like the salt slags and the French kiln, right? So it will depend on that. But the EUR 100 million is a good reference because the idea is to do under this kind of cap or reference again, those projects going and splitting one after the other during the years.

Okay. Got it. And just to clarify on Palmerton there is no remaining in '26. And on that Bernburg, there is a bit more to go, right?

Yes, yes. Yes.

The next question comes from the line of Lasse Stueben from Berenberg.

Just a follow-up on the zinc refining asset. Just to confirm, so you're expecting that to be broadly breakeven this year. Is that the right way to think about it? And then the second question is just on China. Are you seeing any early signs that improving? I mean there seems to be a bit of a tailwind for the resi construction sector. So I'm wondering if there's any early signs that maybe also into '26 that, that could be a bit better than it is now?

Thank you for the question, Lasse. Well, in the case of refining, yes, in general terms, it's true that we can have in mind about EUR 15 million to EUR 20 million improvement, and that could be directly on the profit and loss account of the group, which is going to be the results of the refining plant itself will depend on the TCE evolution as well and -- but on the other hand, this TCE, we would collect in the refining plant of the U.S. as well. So EUR 15 million is a kind of net contribution from 1 year to the other, no matter what is the final result about TCEs and so in the refining. So this is a little bit the idea is to reduce cost in EUR 15 million and capture this positive effect in '25. Regarding China, yes, we see that it is a slightly better situation based on new contracts and will depend all the time about the capacity utilization that the steelmakers have. We are a little bit more positive than in '24 with a contribution of, I don't know, 4 million, 5 million, or something like that among the two plants, which is better than the breakeven point at this point. But it's not a very important contribution, but it's a good signal that the plant in Jiangsu specifically when it's running is delivering positive EBITDA as this was planned, so to say, at those same price levels, treatment charges and situation. But yes, we expect this contribution. It's not something very significant for the whole group operations, but it's a positive signal that the things could become better there.

The next question comes from the line of Christoph Blieffert from BNP Paribas.

I have two follow-up questions on the U.S., please. Could you help me to better understand the timing perspective when to expect additional steel dust volumes to positively impact your operations? So particularly in which quarter should we expect those positive contributions? And secondly, is my understanding correct that out of the EUR 15 million to EUR 20 million of cost savings, EUR 15 million will make it through the P&L in 2025 and then there's a spillover effect for 2026?

Christoph, well, starting for the second part of the second question, yes, it is there to be for all the years because it's affecting to the fixed cost and operation cost of the plant. And I think that once we get this level, it is nothing to do with being back on the levels that we are having, right? In the case of the U.S., well, the idea here, always we have explained or tried to explain that our plants in U.S. was based on the current circumstances of that availability for the players that we are in that country or in the area because it's North America affecting. But the reality is that there are projects for new electrical furnace plants that probably you have already monitored that are coming into the picture, examples, Arcelor in '25; Algoma and '25; Nucor, West Virginia is coming as well in '26. So all in all, it's depending on when those projects start to be on picture and tracking, but our expectation is more or less clear than in '25 reference of 50,000 tonnes is the reference when we are in contact with those guys, the new guys that are coming into picture when they are going to finally start up operation with a good ramp-up. But in that range, it's secure in the near future. For '26, we hope that is another 60,000 or 70,000 max could come with those projects and '27, another, something like that as well. So in the three years, probably the total idea is to have 150,000 tonnes more. Timing and effect will depend as well of the evolution of the other parameters that affected our results. But to have an idea, so as I said before, you can get those kind of tonnages more or less have your numbers multiplied by the EBITDA level that you want about -- and you are going to have a kind of idea of contribution. In our case, we will -- we like to be closer to the years where we are talking about to define more or less. That's why '25, we see in the range of 6 million, something like that, a contribution, depending on the evolution, but now it's a good reference. And we'll see a little bit higher in '26 and so.

The next question comes from the line of [indiscernible] from Kepler Cheuvreux.

Well, I have two questions about the U.S. as well. So the first one would be how is the integration of AZR in the U.S. developing? And the second one would be, what are your synergy targets for the region in 2025?

[indiscernible], thank you very much for the question. Well, integration in U.S. is -- we can say that it's done. I mean, the couple of years we were discussing about the evolution of the synergies, something like that. But we can say that now where we are is more or less where we want to be, providing that we are always in a ongoing or improving systems for all our plants. So I think there is room to do better things and so on. Integration in general in the group is done for sure, and the cost efficiency in the furnace is already done. For not repeating a lot in the refinery is where we are now focused for the reduction of the cost, and this is how we see now.

The next question comes from Jorge González from Hauck Aufhäuser Investment Banking.

So two questions from my side. The first question on the very strong end of the year, especially for the works sold volumes in Q4. I was wondering with this very strong level of 108,000 tonnes in Q4, I was wondering if there is any narrative specific delta in Q4 for steel dust that we still have into account, as you have not offered this time, the changes in the Q4, the isolated picture for Q4? I was wondering if there were additional cost for the refinery that were booked in Q4 or any other thing that compensated a little bit the super strong sales of works in Q4? That will be my first question. And the second one, I'm sorry, if you have already answered this because I had problems with my connection, is that if you can be more specific with the lingo you are using for the initial '25 target? If this double-digit strong growth, we should think something like a high teens percentage maybe in EBITDA? Or what do you have in mind when you -- with this target?

Thank you, Jorge. Well, in terms of volumes, I think I anticipated something in some previous questions as well, but Q4 has come very, very strong. We cannot say about some periods in our activities because depending on the deliveries and depending on the maintenance stoppage of the plants. Normally, the Q4 used to be a strong if you get the [indiscernible] years. But this is mainly because there are less maintenance stoppage because we want to be out of the peak season of Christmas, December is so difficult month, and we tried to do the maintenance previous periods, which is true is that I would like to multiply the Q4 by 4, but it's not the case. That's why the good reference is to have the four quarters and to see in the Q -- in the 2025, something similar, depending on the quarter. As I say, we are having a strong maintenance in Spain in January in 2025. So it will depend on when we stop the plants. But the strong operation in the Q4 was -- have been not on any specific reason or a special reason. It's just because we did not have the stoppage of maintenance and the other geographies like Asia and even China, they were running a very good level because we have availability on that. Regarding the '25 evolution, you say, well, I think that we have said, I mean -- what we have in mind, obviously, is that strong double digit, starting for an EBITDA level of an increase of 10% to 20%. If you get the average 15% probably is a good reference. It's still early for us to say where, but will be more comfortable in that range, and we will say is strong. But it's difficult for us to say that because one of the topics that used to affect us a lot to us with this treatment charge is nowadays being settled or being at least anticipated now in meetings that are happening in the U.S. for the miners and smelting. So yes, I don't know. In this level, we feel comfortable today. It's true that we don't see even risk that to be below that. More on the contrary, probably as you get the medium point reference is a good reference to start to work before we provide the guidance range in the Q1 results conference.

Let me catch up with the first question because maybe I did not make the right question. So I was referring more -- if there were also some additional cost in Q4. So there was this extraordinary volume in Q4. But were there also some extraordinary costs in Q4? Just to understand the margin -- the total margin figure for Q4?

No, sorry. I mean, nothing extraordinary. Depending on the margin is the combination of the geographies that you know are different, better margins, what is coming from the operations, right? So it will depend on that. And I have the numbers on my mind, but nothing extraordinary, really.

Okay. And do you have already a road map for maintenance works in '25 as usual in Q3? Or when you are thinking to make a different maintenance schedule this time?

Well, it depends on a yearly basis because depend the campaigns. And obviously, we take advantage when we stock kilns for not having a lot of that in some plants. But well, I will say that probably the weakest quarter in '25 is the Q1 because we are going to have a couple of big stoppages in Europe, particularly. And you know the European operations is the better margins contributors. So obviously, the Q1 probably is the weaker and the remaining 3 quarters, we'll see. But I think that once again, probably the four one could be very high. But well, I think the idea is this Q1 a little bit weaker, but the rest in a good path.

The next and last question for today's call is from [ Beltran Palazuelo ] from DLTV Europe.

Congratulations for the strong results. I have a little question regarding capital allocation. If you could give us more color on the dividend, especially seeing that the balance sheet is strong and getting even stronger and seeing that in -- I think it was not 2021, you issued shares to do operation in the United States. Is it in the plans at some point if the market does not reflect the strong ongoing EBITDA levels versus to implement a little buyback to show that you can also issue shares at 50-something, but also combined at 20-something, but I suppose it's quite accretive to shareholders. Is that in the cards seeing that the balance sheet is getting stronger and stronger.

Thank you, Beltran. Well, it's something that we want to stick to our dividend policy, which is 40% to 50% of the -- to pay a dividend of 40% to 50% of the net income. We have been consistent with that since the IPO in November 2017. We have explored in the past alternatives and opportunities to do share buybacks. We have always came to the conclusion that the best thing for the company and for our shareholders was to stick to the 40% to 50% dividend. So in terms of capital allocation, it's about reducing the maintenance CapEx, focusing the growth CapEx in the projects that Asier has been explaining and then deleveraging the balance sheet and keep our dividend policy. That's what I can tell you so far, Beltran.

Ladies and gentlemen, that was the last question. I would like to now, therefore, turn the conference back over to Rafael Perez, CFO for any closing remarks. Please go ahead.

Thank you all for your questions. You can also contact the Investor Relations team of Befesa for any further clarification. We will now conclude the conference call and the Q&A session. Let me remind you that this -- you can find the webcast and the dial-in details to access the recording of this conference call in our website, www.befesa.com. Thank you very much to all of you, and have a good day.

Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.