Elvalhalcor Hellenic Copper and Aluminium Industry S.A. ($ELHA)

Ladies and gentlemen, welcome. Thank you for joining the live webcast of Elvalhalcor for the first quarter of 2026 Trading Update. Mr. Angelos Giazitzoglou, Deputy Chief Financial Officer of the group; and I, Dimitrios Theodorakatos, consolidation and IR manager of the group, we are going to provide you with insights of our performance. After the end of the presentation, we will conduct the Q&A session, where you're welcome to ask any questions regarding our group its performance. Now let's move on the presentation and the key highlights for the period. Elvalhalcor marked a solid start aiming a challenging volatile economic environment. The group managed to increase sales volume by 6% to 156,000 tons, driven by the increased demand from aluminum segment and mostly for packaging and transportation-related products. Increased operational profitability, adjusted EBITDA was supported by lower energy costs and higher sales volume, which partially offset by inflationary pressures, reached to EUR 66 million, up by 4% compared to prior year respective period. Earnings before taxes surged to EUR 68 million, mostly affected by the positive accounting metal results, which rose by EUR 31 million year-on-year. Significant increase in [ LM ] prices during the first quarter of 2026, led to increased working capital and debt needs. Despite that, net debt stood at EUR 622 million, down by EUR [ 8 ] million from the first quarter of 2025, thanks to robust operational profitability. However, there are rise in LME prices at the last quarter of 2025, which continued during the first quarter of 2026, resulted to EUR 70 million increase from the year-end. Deleveraging continued for 1 month quarter with net debt to adjusted EBITDA ratio improved to 2.6% from 2.7% in the first quarter of 2025 and remains stable from the first -- from the first December 2025. Now I will turn the floor over to Mr. Giazitzoglou for his comments.

Thank you, Dimitrios. Welcome. Before diving into the numbers, let's look at the operating environment in the first quarter of $26 million. prices trended lower in the first quarter compared to Q1 of 25%. The average price was down by 19% to EUR 38 per megawatt hour. Electricity prices moved in the same direction with the average price in 28% lower than the same period of '25 at EUR 95 per megawatt hour. Inflation was slightly lower at 2.1% when interest rates declined significantly by 20%. As a result of all these trends, energy and financial costs are reduced compared to the first quarter of '25, creating a tailwind for margins. Let's look at the metal prices. LME prices had a totally different trajectory in both metals. After the acquisition of tariffs in '25 and disruptions caused by the shortage in raw materials as well as the [ uprating ] prices, another geopolitical tension arose this time and rock the boat. Aluminum prices rose significantly in the first quarter of '26 by 9% compared to '25 and copper prices skirted by 24%. The effects of the elevated prices were inevitable in our working capital and metal results. Let's move now to our cost structure. In Q1 of '26, consolidated costs were broadly flat year-on-year at EUR [ 177 ] million versus EUR 175 million in [ 2 ] increase or roughly 1%. Employee benefits increased to 29% from 28% while third-party fees rose to 17% from 15%, consistent with inflationary pressures and external service costs. [ Pet ] fell to 13% from 17% a reduction of approximately EUR 7 million, driven by lower average TTF and down prices, as we discussed earlier. Transportation was stable at 12%. Depreciation dropped to 10 from 11 and maintenance and other operating remained broadly flat. As a takeaway, in lower energy costs partially offset increases in labor and service costs. Now let's see the volumes quarter-by-quarter. The first quarter started from a stronger base in the aluminium segment than in copper. Aluminum sales rose to 112,000 tons from 104 in to EUR 225 million, a strong increase of 8%. Copper moves to 45% from 44%, up by 1%, indicating a much flatter demand. in both segments. It is clear that the sales slowdown we experienced during the second half of '25 has now rebounded to a more positive trajectory. Now let's move to markets. The first quarter of '26 versus '25 shows a shift in mix across specific markets in both segments. In the Aluminum segment, the targeting remains the dominant market with 6% in total sales, while flexible packaging declined to 13% from 15%. Transportation also climbed to 14% from Building and Construction, on the other hand, declined slightly to 10% from 11%, while all other markets remain broadly stable. So packaging and transportation are fueling the increase in volumes in the aluminum segment. In the copper segment, industrial applications increased to 29% from 26% and energy and Power Networks rose to 22% from 20, indicating stronger demand. Building a construction down to 18% from 23%, reflecting retail activity in '26. Other markets moved in a more stable direction. Now take a picture about the geographical areas. During the first quarter, we saw a clear shift in the geographical revenue mix in both segments. In the Aluminum segment, the revenue mix is broadly stable year-on-year. remains dominant at 66% versus 68%. The Americas increased modestly to 14 from 13 and Greece moves to 5 from [ 4 ]. Overall, aluminum indicates only limited mix reallocation with small offsets across regions rather than a structural shift. In the Copper segment, the change is more pronounced. [ Use ] expense to 71% from 67% while the Americas for are sharply from 4 to 4 from 10 in -- this resulted from the position of tariffs by the U.S. administration in the second half of '25. However, as we saw on the slide with volumes, the segment managed to weather this headwind and replace those quantities in other markets. In addition, the segment delivered an overall increase. The getaway from the copper charges is a clear shift in sales mix from the Americas and towards to EU, while aluminum remained more balanced with a stable original profile. Now let's move to our financials. On this slide, the graph is a [ bit ] the clearly positive start from -- for the first quarter of '26 for both [ metals ]. Aluminum adjusted EBITDA rises from 39% in first quarter of '25 to EUR 40 million in 6, a gain of 3%, while copper increases from 25% to 26%, a 5% growth. Both segments demonstrated a significant rebound from the last 2 quarters of '25 when we experienced a decline disruption due to disruptions from the implication of U.S. tariffs. Now let's go to the profit per tonne. Year-on-year earnings performance varied across the two segments. Aluminum adjusted [ Copper ] tonne moved from EUR 378 million in '25 to EUR 362 million in '26 , a decline of 4%, indicating more normalization after the prior year peak. Of course, we have to say that the environment in which we operate in after the position of tariffs is very different from what it used to be, especially in the raw material market. the scrap shortages along with the increase in prices that began in the second half of '25, squeezed margins. Even though the situation is now closer to normal levels, the pressure is still evident and erodes part of our profits. Copper, on the other hand, rose from EUR 554 million to EUR 574 million, an improvement of 4%. Strategic reduction in lower-margin products, along with segments ongoing focus on [ bioadec ] markets and enhanced profitability. Now moving on. Q1 shows a clear year-on-year improvement versus 35% across the consolidated P&L figures. Volumes increased in both segments, supporting performance adjusted EBITDA is above the previous year's level at EUR 66 million, rebounding significantly from the results of the second half of '25 and remaining higher than the correspond period of the previous year. Our revenue was boosted by the elevated prices to EUR 1 billion. EBITDA cited to EUR 94 million from EUR 71 million, a gain of EUR 23 million fueled by very uptrend in metal prices. That is confirmed by metal results moving to 38% from EUR 31 million uplift while earnings before taxes improved to 68 million from 45%, up by 50%. Now let's see the EBITDA evolution. EBITDA in Q1 '26 increased to EUR 68 million from EUR 45 million in the corresponding period of '25, a year-on-year improvement of EUR 23 million. Volume added EUR 5 million, led by the aluminum segment, mostly. On the other hand, competitive pricing pressure in parts of the portfolio and a less favorable mix weighed on margins by EUR 3 million. SG&A also reduced EBIT by EUR 3 million due to wage inflation. Of course, the main driver of this strong EBITDA result is the metal result, which contributed EUR 31 million. Now from profits EBITDA of EUR 94 million was up 33% year-on-year. It became a stronger end base supported by a better metal result across both segments. Despite the improvement, free cash flow did not fully reflect the gain and remained negative at EUR 40 million. The main driver of of this is the change of working capital by EUR 70 million, driven by sharply higher LME prices. CapEx of EUR 27 million added a further drain while finance activities provided EUR 43 million inflow, helping offset the net cash impact. Now let's see how the [ court ] capital saved during the first quarter of '26. First quarter of '26 shows a clear impact on old capital, as we said, from elevated LME prices in aluminum and copper. Working capital rose 13% to EUR 627 million from EUR 557 million at the end of '25, an increase of EUR 70 million. I want to reiterate that this increase also resulted from higher inventories. That decision was made at the end of the previous year to prevent any disruption to our production due to [ orders ] of raw materials. Working capital as a percentage of sales increased to roughly 17% from 15% in December of '25. Despite that headwind, net debt improved significantly versus Q1 of '25 and slightly increased from the end of '25 at EUR 622 million at the end of the first quarter of the year, we are still on track to meet our objectives to keep our leverage ratio lower than 3x. At 2.6, we remain in line with our targets. Financial costs declined to EUR 9 million from EUR 10 million, down about 9%, consistent with lower average debt and a more favorable rate environment. Main takeaway from this performance is that higher metal driven working capital remains a cash flow headwind but margin resilience and disciplined financing continue to support balance sheet quality and financial credibility. Last but not least, let's see our CapEx. The company takes a very concentrated investment profile, following a period in which we invested heavily, especially in the aluminum segment. We have now entered the phase of capitalizing on those investments. Developments in the global trade environment and the ongoing geopolitical tensions require a more prudent approach. [ Strategy ] we prioritize future growth and competitive position. Now before we take your questions, let me summarize the company's performance. The first quarter of '26 started with positive momentum despite the challenging environment that had saved the previous year. The company delivered a robust performance, achieving higher sales volumes and improved operational profitability. Despite the pressures in [ Boticapital ], we managed to keep net debt lower than the respective period of '25 slightly above the end of the year. The group has demonstrated the resilience and remain vigilant for the [ mCarbon ] developments. Now we are ready to take your questions.

[Operator Instructions] We have one question from Mr. [ Cares ].

I don't see anything of my screen.

Can you hear me now?

Yes, yes.

Yes. Congrats on a good set of results. A good one on the CapEx on aluminum. Can you give us some color exactly where does it go? Which areas are you investing currently?

As I said in the past, we heavily invested in certain specific markets that had to do with packaging. Packaging is a market that shows a steady growth in Europe and in U.S. As I said, right now, we are capitalizing on these investments. And under these conditions safe from the ongoing geopolitical [ pesos ], selective capital allocation is a priority for the company. We always make plans -- we are constantly working on different scenarios, but nothing is final or approved yet. As I said, we have now entered a phase of capitalizing on previous investments, and we examine all potential opportunities to push the button for the next step of our met plan.

Well, we have one more question from Mr. [indiscernible].

Just if you can give us an indication of your capacity utilization at what rate are we are moving in the first 5 months of the year. And if you have witnessed any shift in demand from geographies that are under tension, maybe this demand has [ site ] to other locations and this counterbalanced may be a deficit from the Middle East or whenever this reduction came.

Okay. I will start from the second part of your question about markets. Definitely, the reposition of tariffs created a lot of disruptions in the U.S. But as you saw in our presentation, we managed to keep and increase our share in these markets. We have long-term relationships with our clients. We are very trusted supplier for them, and we managed to keep these quantities in this market, this very profitable market. No one can dispute that, of course, we have a reallocation from this market to EU from countries and producers from Asia and India. This creates an additional pressure for us. But again, as you saw, says that we lost in U.S., especially in the Copper segment were gained in from the corporate segment of our company. So we managed to have all these difficult situations without losing any quantities, but achieving to increase them also. Demand is here. We see that there is demand. Still, we don't see at the same direction, some increases in prices, but demand is there, and we are ready to capitalize an opportunity. The capacity of -- excuse me?

No, no, no, please, go on.

So the free capacity for the aluminum segment is around, let's say, no more than 10%. In the Copper segment, it's a little bit higher. So we have the potential to increase even more our share in the Copper segment. And less ability to increase quantities in the aluminum segment if we don't decide to invest in this direction.

[indiscernible] could you give us some insight for the energy cost impact on the company? It is electricity petrol products or natural gas prices that impact more, is the hedging or fixed contracts in place?

Okay. I will say another time for another time that energy is not a game changer for [indiscernible]. Of course, it's a very critical cost driving. Fortunately, for first quarter of '26, the trend for both TTF electricity and natural gas, we saw prices to go down, going down -- of course, the persistence in geopolitical tension in the Gulf is expected to increase prices in the upcoming months. So yes, we expect to see some pressure from the energy price during the rest of the year. Now if we have some -- if we -- some set instruments to mitigate the risks from the volatility of prices, yes, we do have some instruments for the natural gas. We try to cover all the contracts -- long-term contracts that we have with our customers. in order to avoid any increased cost from multiple activity of price. In the electricity part of our energy costs. We don't have any hedging instruments to use. Of course, we have some contracts for renewable sources of energy. And this is the way that we are trying to mitigate any risk again, from the volatility of prices in electricity. And definitely, we expect to see some actions from the Greek government or from the in order to have a more regulated playing field. So industries like us who are operating in -- which are operating in an environment with elevated prices like the prices in Greece are not losing any of our competitiveness against other companies that are operating in areas with lower electricity or natural electricity, mostly electricity prices.

We have one question from Thomas Renaud.

Just a quick one on scrap provability. You mentioned some disruptions in H2 and during full year results. There is no mention of scrap availability on this Q1 press release. Is it still an issue for you or -- and the situation is stabilizing or deteriorating or improving a bit. Can you give us some color on that?

Scrap remains a complicated issue, but not at the levels that we experienced last year. The position of tariffs created significant challenges for the European scrap market in both metals, leading to market distortions as you said, and scrap sorts for the European companies. There is no doubt that this difficult environment did not come without a cost to our profitability. They increased prices squeezed part of our margins. Fortunately, the situation right now is more stable. It's not what we used to have, let's say, during '24, but prices are more lower than significantly lower than it was in '25, at least the second semester of '25. But we are covered at least for our supplies in scrap. We don't experienced any issues from sources in our EU market. Of course, again, this is an area that we expect some actions from the EU to protect from the scrap to going out from Europe. And we have to say that this is not an issue of raw material supply. It is an issue for the energy also, the scrap goes out from Europe means that energy is going out from Europe. And this is a very critical issue for industries like us. And that's why we are taking so many initiatives to let's say, post the European union to take some measures in order to protect this scrap leads. But for the first quarter of '26 and I must say that even for the first semester of '26, we are covered from -- for the needs of our raw materials in order not to have any disruptions in our production.

It seems that we don't have any more questions.

Okay. So thank you all for joining and thank you also for your questions. And I hope to see you again on our reference to the fourth of August for the first semester financial results. Thank you very much. Bye-bye.

Bye-bye.