Mersen S.A. (MRN) Earnings Call Transcript & Summary

Good morning. Good morning, and thank you for being here once again. I'm going to start the presentation. Can you hear okay? Yes? Very good. I'm just going to kick off the presentation with a few slides. We're just going to come back to 2023. I'll then hand over to Thomas for the financials. And I'll come back after Thomas just to go through some of our businesses, the ones that will be driving the company's performance in the 4 or 5 years to come and beyond. We'll just give you an update also on what we presented last year in March, and we'll tell you about our new plan. The new plan was developed in 2022 -- end of 2022. We then started to introduce it in 2023, the ambitious objective is EUR 1.7 billion sales in 2027 as we have a strong CapEx plan as well. In 2023, we had a lot of contracts, especially at the beginning of the year. Wolfspeed, ACC for electric components, for automotive. We had additional contracts. We didn't really communicate much about even if they were significant, but with -- we had a silicon carbide with deals, we have a partnership with Soitec, which will or may soon turn into something more robust and probably a contract. I have a slide on -- dedicated to Soitec. And we're going to -- we also need enough flexibility in terms of equity because, between now and 2027, we have a long journey ahead of us. We've defined the company's growth plans we've also -- which wasn't easy. We've also redefined our CSR objectives and road map. This road map is very much in line with the company's growth ambitions. And every year, we will be adjusting it as we move forward. Here are some numbers -- interesting numbers, exciting numbers, EUR 1.2 billion this year, and EUR 1.7 billion in 2027. As you can see, sales were very consistent this year. Thomas will come back to the sales specifically. We'll see that, because of the currency, there was a currency impact of approximately EUR 40 million. So EUR 1.250 billion EBIT has increased. Thomas, there again, will develop and explain. So the EBIT has been good. And once again, I would like to insist on the fact that the EBIT is somewhat consumed now for -- because we're preparing the future for Columbia. The EV teams, Soitec went a bit faster than initially planned. Again, we'll come back to Soitec. We are going faster in terms of production. This was in the 2027 plan, but things have been somewhat advanced. And then the ROCE, same thing. The comments are the same. And then for CapEx, just the same as well. We're maintaining our rating with CSR agencies, you have this information right below. We've made significant progress in the green taxonomy as well. 21% of the sales are aligned or taxonomy-aligned. 21% is not that high, but very few companies in the industry are way below, sometimes 10% or even under 10%. 75% of sales are taxonomy-eligible, which doesn't mean we will be fully aligned, but it's a strong foundation as we move forward. So this is in a nutshell. We have a -- again, we're seeing a good momentum. We will talk about the outlook and perspectives to 2027. Thomas, I think it's your turn, right? Here you go.

I need my notes. I'm going to talk about the performance, and I don't want to repeat the same thing over and over again, strong performance, strong sales and so on. As Luc said, 2023 was another year of profitable growth with record sales of EUR 1.211 billion. There's a negative impact of currency of foreign exchange, mainly the Chinese currency and the U.S. -- the U.S. dollar. Organic growth, as you can see, was 13% versus 2023. 5% is coming from price increases. This strong progression is largely due to our growth market. As you can see, the SiC semiconductors, we went from EUR 50 million in sales to at EUR 90 million in sales. That's an 80% growth. And this is why we have invested. We're also delivering sales very fast. We're also seeing strong growth for electric vehicles, 16% growth. As you know, this market is still fairly modest, representing EUR 24 million in sales. But we're expecting much, much higher numbers, especially for the 2025, 2026 period. I'm not going to go into the detail of each of the markets. We've already presented the detailed markets in January. What I can say is that all markets grew. All business units, all geographies have grown. Moving on to profitability. Profitability has also risen sharply. Recurring EBITDA exceeded EUR 200 million, EUR 202.7 million, precisely, up 9% year-on-year. After restating the ForEx, it has increased 14%. The same thing is true for the operating income, up 13% versus the previous year and 19% excluding the foreign exchange, the currency effect. Operating margin up 0.4 points. And I would like to make a couple of comments. One that Luc already alluded to when it comes to amortizations. As you can see, amortization has only slightly increased. Some of this is the ForEx. You can see the numbers are not the same for like-for-like basis. And at the same time, we're investing significantly. The reason for this is that a lot of the new equipments we're investing in have not been introduced yet. So the amortizations will really start to increase starting in 2024 and beyond. The second comment I would like to make is on ROCE. Luc briefly mentioned it, it is reaching a high level of 13%. This is our objective. This was our target for 2027. It's been reached this year in very favorable market conditions. We haven't completely invested. Not all equipment has been -- is operational today, and yet we're already seeing a very good performance. Moving now to the increase of operating margin, what does this show us? First of all, we have a favorable volume/mix effect plus 2.1 -- 210 basis points, I'm sorry, coming from the strong growth -- sales growth, which I mentioned before. The second from lines 2 to 4 with -- in the red lines here. This is -- this shows a very consistent set of numbers. First of all, inflation has been significant, especially raw materials and energy, and we've had labor inflation as well, payroll inflation and those inflations were offset. This was a real challenge, remind you. Last year, we announced and we said we were going to offset this. We've done more than offsetting -- fully offsetting the inflation by becoming more productive and by -- thanks to price increases as well. All in all, as you can see, the margin has actually slightly improved. This is -- thanks to our business model. We have been able to create tailor-made products for our customers, and again, markets are very buoyant. Point three, the operating margin includes temporary costs, one-offs coming from the p-SiC project, for example, this is the Soitec partnership Luc was referring to. So these are one-offs, temporary costs we're preparing for much larger volumes and contracts. And we even have a negative P&L on both. And right now, we're really investing for the future. We're investing also in p-SiC and SiC. In general, we're investing growth. When you go from EUR 1.2 billion in sales to EUR 1.7 billion in sales, you need additional resources. And those resources, you need to anticipate. You need to -- and this is what we're doing here and hence, 140 basis points. So all this combined, all these cost, additional cost factors combined, once again, they're temporary, we see -- we've had a very good performance. Operational performance, margin has increased to 11.3%. So that's a 40 basis points increase. So the increase in operating income has been consistent over the past 4 years in both divisions. Well, 2020 was an unusual year. But even in 2021, you can see we continue to progress. If you take a specific look at the last year's, 2022, 2023, namely, starting with the Advanced Materials division, you can see that operating income grew and margin is in line. There was a volume effect -- significant volume effect, which allowed us to offset the p-SiC which I mentioned earlier. It also allowed us to offset some ramp-up costs with the -- for isostatic production in the Columbia plant. The plant to date is still is not very profitable. We knew this, however. And prices and productivity did not completely offset inflation. Inflation -- again, there is inflation related to payroll to labor costs and energy, especially the Advanced Materials division, which obviously consumes a lot of energy compared to the Electrical Power division. So you have Electrical Power. As you can see, the Electrical Power division grew very strong, both the operating margin and margin. And you can see that prices and productivity significantly offset inflation, and there really is no energy inflation. And all this was made possible while adding additional costs connected to the EV. I think we have a good mix in Electrical Power. All year, we talked about the electrical distribution, which did very well. It was very buoyant, the entire year, with very good margins as well. Okay. Moving on to the net income. Let me, first of all, say a quick word about the noncurrent expenses. This is mainly provisions for litigations and expenses related to current acquisitions. The financial expenses have sharply -- risen sharply versus 2022 because of a sudden increase of interest rates during this period. This obviously had an impact on the variable rate debt. And so I think this is worth being noted. And the EUR 19 million should not be connected directly to our net debt. You can't really compare those numbers because it also includes 5% -- EUR 5 million, which are IFRS-related costs. These are pension costs and rent-related costs. Those have been restated and are included in the financial expenses. So then we have taxes, 23% effective tax rate, which is very similar, very consistent with the last year tax rate. I guess we can define it or describe it as a structural. So the net result has increased and net income has increased 16%. And if we take minorities into account, we have a net share which has increased 20%. Very good performance in net -- in terms of net income, but also very good performance in terms of cash flow. I keep repeating myself, very good performance. Very high performance. The cash flow has -- operating cash flows has increased 70% before CapEx, before investments because our EBITDA increased, of course. And it also increased because we had a positive variation of our working capital requirement. Despite strong sales growth, generally, the working capital generally goes up. This year, for us, it went down simply because we had a lot of customer prepayments on a number of contracts, especially the semiconductors and silicon carbine conductors. And this -- so these prepayments allowed us to build some inventory, buffer inventory, which was necessary. And since I'm mentioning inventory, and in spite of those the buffer inventory with -- the stock delays remained the same. Working capital requirement is 19%. I don't think we've ever, ever had this at Mersen. I'm -- Véronique, correct me if I'm wrong, I think our best, very best performance was 20%. Anyway, very good operational cash flow, which allowed us to pay for a number of investments, EUR 176 million, significantly up as planned once again. If we break down the investments, we have EUR 95 million that are related to growth projects. We talked about the EUR 300 million additional. So we've spent approximately 1/3 of that amount in 2023. Luc will come back to this. And the other investments are what -- are normative investments, about 6.5% of sales in total. This is what we announced. This is what we delivered. Looking at our those normative investments, we have recurring ones, maintenance, productivity expenses, we have additional growth projects. I'll give you one example. We've significantly increased our capacity in India. We made a public statement about a month ago, a press release, on this topic. And we're continuing those investments very much in line with our CSR objectives as well. We're investing in safety. We're investing in the environment, always to keep ahead of new regulations that are in the pipeline. As you know, regulations are increasingly strict and drastic. So our financial performance is excellent. Our debt went down EUR 30 million. The operating cash flow is paying for the investments. And we've had a capital increase, EUR 96 million capital increase. And this also includes interests, the payment -- payout of dividends, rents as well as interest. Total is 211 -- EUR 212 million. That's a leverage of 1.09. As you know, our leverage policy should be between 1.5 and 2.5. So we are right in the middle, and this shows that our financial structure is excellent. Liquidities are also a very good. Once again, we have no significant debt to pay back before 2026. And as a matter of fact, we've reinforced our structure with a new EUR 100 million Schuldschein, which -- that's the financing plan of EUR 100 million. Again, for almost 6 years, this allows the company to keep good maturity at 4.7 years on average. So we always have that long-term perspective. And it also allows us to maintain those other credit lines open and diversify our sources of financing. Well, this transaction is placed with European investors and Asian investors and it was a major success. The market was closed for a while due to our peer. So I think we're the second French company that is issued, and it was a massive success. We had oversubscription, twice the initial amount that we've been thinking about. Now then excellent performance in terms of sales, margin, cash at hand. But I'd be remiss if I didn't talk about our road map, which has improved, the CSR road map. Luc, in a minute, will be talking about the updates on our CSR road map for '27, so that it is aligned on our plan. This is an overarching strategy, and it includes CSR. But to start with, in 2023, we've made considerable progress. We started conducting audits with our suppliers that didn't have a good CSR rating last year or in '22, what we did is that we asked our suppliers to fill out a questionnaire to get this rating. And then in '23, we had 56% of audits with these suppliers. We've exceeded our number of women as engineers and executives by -- we've exceeded the 26% mark. We were at 20% in 2018. We know it's not enough, 26%. We're working on that, but we've made considerable progress. And we'll continue with training efforts. More particularly, we'll be focusing on ethics and cyber security. There's no kidding about that. And if you look at our rates, they're rather good. But the best thing we did our best achievement is impact on the environment. We've reduced by 26% our GHG footprint versus '22, which is good in a year. And the reduction is 54% since 2018. We have other plans for 2027, but Luc will tell you more about this. Now given the good performance, what we suggest for the AGM is a dividend of EUR 1.25 per share, which is what we did last year. And as far as distribution is concerned, in terms of cash, it's more than last year. Because with the capital increase, we've increased the number of shares -- floating shares. So in terms of total amount distributed, the increase is 17%. This rate, well, represents a distribution rate of 33% from our net profit, a lot better than '22, we were at 33%, and now we are at 37%, which means that all of this is very much in line, and it's been a number of years that it's been in line with our payout policy, which is a payout ratio of between 30% and 40% from the net income. There we are. Now that I've shared these good results with you, Luc will be talking us through the future. Thank you.

The first year of the plan is a year, thanks to which we can say that we got off to a very good start. Now to be quite open, we've never really quantified that very specifically between '22 and '27. We have a good idea though of the amounts that are needed, for instance, based on silicon carbide and EV cars. It's one of our business lines where we can have forecasts. We have forecast this. A company in SiC, that can give you numbers until 2030. Well, I don't know if we should believe in these numbers, but there are people who make projections. And part of our business at Mersen is connected to the general economic activity and to exogenous elements. So our sales -- our '22 sales figure is a good milestone. Mersen is at the heart of the energy transition. I know this is a bit of a sophisticated sentence that says that we'll have to use fossil fuel less in the future. It's easy to understand. It's -- but it's not that simple to do. Because if you look at power generation today, well, in some countries, we obtain energy from coal and gas. Nonetheless, I think we had 520 gigawatts of renewable energy installed this year. 520 gigawatts, that's to be compared, I think, to installed nuclear power plants, 350, 400 giga. And with the Chongqing solar project, we were saying 10 or 15 gigawatts installed each year. So it's a different scale. And within these renewables, there's 75% or perhaps more of these renewables coming from solar power. Well, solar power, again, is an energy, which is generated with photovoltaic cells, but it's DC. So you can't do much. Yes, you can store this in a battery where you have DC but then it has to be injected in the grid. You don't have DC at home even though this is something that people are thinking about in the future in the long, long term. So you need conversion -- power conversion. So the more renewables you have, the more power conversion you need. And in general, if you look at the wind turbines, they are offshore. So we need to have current where we use electricity, which means we need overhead lines, high-voltage lines and there's less current loss. So we need conversion into low energy. And we have more and more electric vehicles, and that means more power conversion. At the same time, with these converters -- and that's something we've been talking about in the past years, these converters are made of silicon, not very efficient. And now we'll use more and more silicon carbide. And thus, as you can see, our silicon carbide plan has really taken off nicely. And if we look at the deadline, 2030, we will see different numbers. Sorry for my throat. And these are the early stages of electric vehicles. If you look at our numbers, usually, we look at forecasts for 2030, but then we stopped that because the quantities are amazing, very high. And the figures will be too high, and you will feel dizzy if you look at the numbers. Now that's the plan that we presented last year. We've added a year, that's all. It's rather good. It's a nice milestone and there you go. There's nothing else coming from our business lines. So we didn't have to change anything for '27. As we say, we review our plans annually. And this plan -- this year, the plan, of course, will cover 2028. And there's nothing really that's brand new, but it's good because this plan is quite ambitious. As Thomas has said before, we'll have a quick look at our capital expenditure plan. '23, we have the EUR 95 million number that is extra capacity -- additional capacity for 2023. And then you have more particulars of the different building blocks. It depends on the CapEx types. We'll start with electricity, the electric capital expenditure. We have a slide on that, our industrial organization and EVs, we have a slide on that. So that's the first building block, the first brick. We spent quite a lot. As you can see, we've used money for automated lines in China and in Mexico, and the ACC project mainly, which is making progress. So that's for semifinished products and their factories for isostatic graphite. I can tell you that the sales for 2023 will be obtained without any special increase in the product. Well, we had a few extra tonnes, 200, 300 tonnes more or less, for '23. We didn't have more capacity for our clients that wanted isolation. So it was difficult, but we delivered. And if you look at the blue bar, that's -- well, we did in 2023, these CapEx, and this will have effects on the second half of 2024. Sometimes -- that's sometimes it takes, 1.5 years, so that we see the full impact on equipment. Then the finishing plants, they will transform these products into parts for our clients, and the story is the same. We have to always be abreast of construction. It's not just one building here, another building there. Two factories will totally redesign their layout has changed. The Bay City factory and another one, so it takes time to have buildings that can be used but now we have more machining capacity at the end of '23. And then insulation felts again, we'll have more capacity at the beginning of H2 '24. It's a tough plan that we have, a very stringent plan for '24 because that's when equipment will have to be up and running so that we're ready in '25 because we'll have a big leap forward in silicon carbide, a lot bigger than '24. And then the important year will be 2026. So in '24, we prepare not, 2025 but '26. So EUR 110 million to EUR 150 million, that's the bracket. We're never certain at the end of the year, what's going to be done or what's going to happen rather and look at the carryover in '25. And also, there's Soitec what we do for Soitec. It's included in the finishing factory. We try and work faster than planned so that we can deliver large quantities in '25. Then let's have a look at power semiconductors. We had a slide on that last year because it's different from what we do for semiconductors. Well, my slide is working, but the screen in Paris is showing a different slide. We have a slight technical glitch with the slide show. There we go. There we are. It's not the nicest perhaps slide this morning that we can show you, but at least I can talk about power semiconductors. Here again, we use silicon 90% of the cases, silicon. Maybe 80% or 90%, but quite a lot of silicon. And we have a role to play. But not that big. It's a good business. That's all. But with silicon carbide, and we'll see this when we look at processes, we will have more Mersen products sold based on graphite. And therefore, the growth curve is a lot nicer, steeper. A lot of people communicate on this. The ones who produce transistors. They talk about silicon carbide, the increase in their sales, STMicro, of course, because they deliver for Tesla. And a lot of these wafers today -- oh, by the way, that's why we have such good numbers. If you look at ourselves, go to industrial players for drives, but also for railways, for solar power manufacturers or generators and surge generators, they use silicon carbide. And today, 5% to 10% goes to EVs. So there's a business case and the future is going to be 1/3, 2/3 or it will be in quarters, but at least some customers use those products as we speak. We are well-positioned in the value chain because the two businesses have an equivalent importance. First, materials expertise, to the left. Without our production capacity today, we won't look good, go and meet full speed and say, okay, I have the best graphite in the world. We have epitaxy receptors, we produce them. Can you deliver twice the quantities next year? You're going to say no, and they're going to knock at your neighbor's door. So production capacity is what comes first, given the existing backdrop or context. And as we said last year, we can deliver 4,000 tonnes of products in '25, '26 for all these players. Otherwise, we would have this plan with the objective of EUR 1.7 billion. We have to be close to them, to the clients, and therefore, our footprint is in all the industrial areas. This helps us. I'm not saying we can't deliver on another continent, but it's not simple. There's a lot of technical difficulties on the way. So you have to be close to your clients. Now back to the products. The products are important as well. We have different grades depending on the process. It's an incredible process. One of the most incredible ones, 2,400 degrees, one of the hottest ones that's high temperature. And there's only graphite that works at these temperatures. On the following slide, as you will see, we have epitaxy for the wafers, and that's very technical. A lot of machining and the parts are very complex to manufacture. This is an important application. Without epitaxy, you don't have transistors. So that's an important milestone or step. And in addition to this, that's the fact that we are able -- and it took us 2 years, we are able to work for Soitec with p-SiC, it's a product that didn't exist before. And now we have it. The quantity is not high. We always say it's a prototype, but we deliver industrial wafers to Soitec so that they qualify them and give them to their clients so that the clients qualify them in turn. So in 2 years, we've done that. We're now ready to produce these products at costs that we will discover when the factory is ready, that is in 1.5 years from now, but we have a good view of what we can do. Now then, let's talk about, as I see, semiconductors. This year, we wanted to start with the wafer -- production of wafers. At present, if you look at the processes, it's called the PVT process, the PVT line, 2,400 degrees in a furnace, you produce an ingot from which you're going to produce wafers. But it's a monocrystalline ingot that is the most perfect of all the products you could produce, but it's difficult to make. And all the players don't have the same grades, the same quality. And now I can't tell you who's producing the best, but given the contracts that have been signed, the official contracts, Wolfspeed delivers quite a lot of players. SiCrystal as well and the other place as well, SiCrystal as well, but they don't communicate as much as the other two -- the first two. So these are the two biggest players that drive the business in terms of grades and quality but also in terms of quantity. And there's a lot of graphite parts for that and insulation parts. And of course, the furnace will be totally insulated. And that's when I'm talking about St. Marys, Colombia capital expenditure, Holytown as well to deliver all these products. These products are not that complex in terms of their geometry. It's a lot more difficult to produce the parts that you can see on the right-hand side that is epitaxy susceptor and the product has to be produced in masses. If you don't deliver the same product, the ingot manufacturer will realize that and the products will not be that good. Look at the names there, the place we work with at different levels, of course. We work with all of those players. And then there's the Soitec player. Again, let me tell you what these guys do. What they do is that they take one of the best wafer producers, the monocrystalline wafer producers from the left column, and they split those down into as many layers as possible. The more they do this, the better their competitive positioning. And the SiC layer will be coated or used on a polycrystalline wafer. And this will have a mechanical effect. That's all. So that the part can be used on a manufacturing line to produce a transistor because some machines will be handling these parts. And it's a mechanical component to some extent. And the trick with them was to develop a polycrystalline wafer that more or less coats or glues the layer. It's not that simple. The specs are tough. And they wanted us to produce this polycrystalline wafer that would be a good heat conductive elements with less resistance fto avoid losses on the way because electric current will go through the part from the top to the bottom. So the less -- loss -- the fewer losses you have, the more efficient it is and Soitec has a technology which is better with considerable efficiency gains. And I suppose as well economically, it is a solid plan. Anyway, the two products that you can see after being produced are on the right-hand side. So there's epitaxy product, as you can see. There's a number of names there, ASM, took over a company in Italy. They don't work on epitaxy, but only the machines and ST, Infineon, Bosch, and all those people use these machines, the ones who produce the transistors and off to epitaxy, there's quite a number of steps. But there's one that's very demanding, which is iron, the iron process that you use iron in the epitaxial layer to produce a transistor and we're well positioned with Axcelis and Applied Materials. And that's a process that you can use, for instance, for memory cards or transistor for a laptop. And there's no difference for us between the world of silicon and p-SIC. It's the same machine we have Axcelis and Applied Materials that produce same machines. It goes then to ST, Infineon and Bosch and many more. And we can deliver some parts, spare parts, to Infineon and Bosch, but usually, we use the OEMs. So this is the cycle. A quick slide here to remind you of our footprint. Holytown is an acquisition 10, 12 years ago. This is where we have our expertise center in insulation felts, companies that started in this business a long time ago, who make quality wafers. I don't know if there is a reason for that, but they use the Holytown felts. We ship to the U.S. Europe, we have a few customers in China as well. There is a lot of demand. It's a very unique product, and the graphite is made in St. Marys or Colombia. Both plants can make the same grades. And the extension capacity is in Colombia. St. Marys is saturated. So Colombia, by the end of this year, we'll have 2,000 additional tonnes, eventually 4,000 additional tonnes in line with the 2027 plan. Chongqing is not involved with isostatic. It is used mainly for the solar, Chinese markets and other markets. We have specialty sites for -- to make certain parts like Bay City, for example. And $80 million or $90 million in investments. Greenville as well for graphites and insulation. And we have additional purification and coating capacity in China and South Korea. We have -- there is only one player there, which bought Dow Corning in the U.S. and Malonno, Italy, delivers to ST Microelectronics. And in Gennevilliers, we have a facility which also delivers the traditional SiC market. But since the beginning of this year, I wouldn't say we've dedicated, but we made some adjustments to only do p-SiC for Soitec. So we have the p-SiC plant. The only one we have is in Paris to deliver Soitec. And hopefully, there will be new -- there will be more news there in the 4 or 5 years to come. A quick update on the Gennevilliers site. Initially, we picked Gennevilliers to launch a small production. We didn't really have a clear forecast of Soitec. And then when we continued our discussions with Soitec, we came to realize that we had to move fast. We had SiC coding capabilities in Gennevilliers. The p-SiC ovens. We had some prototyping in the pipeline in Gennevilliers and this is when we decided to do everything in Gennevilliers. There was no time to move it somewhere else. So we did this. We made a very conscious decision to invest quickly. This was a massive investment to deliver decent quantities of wafers to Soitec. We're talking about 400,000 wafers. Don't really keep this number in mind because there is going to be -- there are shifts. Initially, there were 150-millimeter wafers and all silicon transistors were 200. No luck. So the transistor silicon carbide is based on those wafers. And everybody is asking for 200. We know how to make 200 ones. So we're delivering more p-SiC wafers to Soitec that are 200-mm versus 150-mm. There is a ratio. I don't know exactly what the ratio is. But anyway, that's not important. Soon, we would like to produce maybe not 400,000, but many by the end of 2025, '26. We had some state subsidies with the France 2030 program. We've also had some subsidies with R&D. It's pretty easy to get in France. And as you can see on this slide, you can see the Soitec wafer, what it looks like. So nothing very tangible from a commercial standpoint. You may know that they work with STMicro. I think Infineon was also interested in their technology. They are very actively prospecting other geographies as well. We're going to continue to deliver Soitec. If one day -- who knows, one day, we could also deliver p-SiC to their customers. So this is the story. And all this is quite new. I must say, compared to last year. Even if our yields can be improved, I do want to insist on the fact that we make a lot of wafers. We have all the equipment necessary for p-SIC, not enough yet to meet all the needs. Let me reconfirm what we already said last year after the spectacular leap of last year. We're now well on the path to 2027 and there will probably be again some Soitec that will be a lot more in 2027. We will give you more information as we move forward, probably next year. A word on EVs. Here again, quite some interesting news. Last year, we didn't have much. We have -- we make busbars for batteries. We could also offer busbars for converters. We have some business in this area, a bit less, but then we have the fuses. We have a range of fuses. And you may say, this looks like things I've seen before. Well, not quite. They're for current voltage. We are using semiconductors, but we redesigned a completely new range and this requires physics, right? So it was interesting to increase voltage up to 800 volts, sometimes occasionally 1,000 volts, Mercedes, for example. But the products that are used are very different. So we're continuing to develop new fuses to serve that 1,000-volt market. In cars, you will find all kinds of averages, depending on what components and what parts of the vehicle. There are all kinds of standard, there's all kinds of calibers. And the busbars, well, it depends on the size of the busbar. The battery pack, you could be at 15, 20, 30, 80 if it's a very large pack. So ACC, we'll come back to ACC in a moment. This slide is really dedicated to fuses and fuse qualifications. We have a top five customers, car manufacturers representing EUR 30 million in sales over several years. We're qualifying additional customers. They will probably increase that number. We have some well-known brands. And with Marquardt, we're also serving Volkswagen, Kia. We're now qualified with Hyundai because about a year. We have a lot of full electric vehicles that will be coming from Korea. So this is obviously a country we -- where we have to be delivered out of Shanghai. And a lot of fuses also in BMW vehicles delivered to Panasonic. They're one of the battery manufacturers working for BMW. So I mentioned ACC. ACC has a major contract with battery manufacturers. There is a video. We looked -- we tried to find it. We couldn't find it yesterday, but it shows the STLAM, that's the platform we're using. It's a great platform. you will see how it's designed. You have the battery, you have 10 different packs. For the L platform, they're going to range one additional line of packs, it will be slightly longer. So you have this video, which shows how the cells are added to the pack and then the busbar that connects them and then the hood. It's very interesting. It's a great video, and the guy who shows the video pretty much says what I said a few months ago. It's the first platform not in Europe, I think, but in France, that only contains European or Europe-made products. So the cells are made in the ACC's gigafactory, busbars from Mersen and other components. So the -- they completely redesigned the platform and all the vehicles that they use -- that we see today are Chinese packs. We have a lot of CATL ones as well. I mean, nothing wrong with that. They're great products. But this is really a more recent development. So this -- the cars will receive our busbars. And so far, we -- I must say we've been more successful than the ones we worked on in the early days with ACC. The numbers speak for themselves. They've increased the number of busbars to make for the time of the contract. And ACC has added a lot of features to the busbar. So the value of the contract has increased somewhere between EUR 250 million and EUR 300 million over a 7-year period. There will be some production peaks in 2026 and 2027 with very impressive volumes of products that will need to be delivered. We have the plant in St-Bonnet, France. We're struggling with some of the logistics simply to get 25 trucks in and out every day, more than actual technical problems so -- because the volumes are simply very, very high. After '26, we're going to be delivering another gigafactory, which is currently being constructed. There will be some assembly there as well. Without any details, but the investment -- we made an investment of EUR 20 million to EUR 25 million in St-Bonnet. We made fuses initially. We now have this building, which is entirely dedicated. It will be one of our flagships. We're working a lot on automation as well to keep up with the pace. We need to make one part, every 10 seconds. So this is it, France is in blue. We have the research and development center in Angers. The ACC busbar was mainly developed there, and then teams hand over the project to the [ Leon ] teams that are working production. I'm not sure this picture is very clear, but everything is robotized, it's a bit like in a gigafactory. As a matter of fact, the busbars has some areas that are specifically designed so robots can pick them up and move them around, move them to the pack. Everything is robotized. Eventually, there should be 3 or 4 production lines. We're developing the first one as we're speaking. And we should be ready to deliver next year. We're talking about tens of thousands of products that will be delivered and installed on cars and 2026, volumes are really going to pick up. So we have this real challenge of having fully automated lines when necessary. As far as fuses are concerned, we have a new line in Mexico and we had customers -- Chinese customers who came -- who went faster than Marquardt and Volkswagen. So we have three lines in Shanghai to deliver BMW, Panasonic, Kia, Nio and other manufacturers. We're also working with CATL for power storage. And so things -- a lot is happening in this segment. I think we've made tremendous progress when it comes to industrial equipment. The bottom line -- bottom left line we had last year, but all the others didn't exist. So we have a lot of people -- 100 people who are working on this, 60 for ACC, really dedicated to the project simply because it is a lot of work. Just once again, to reconfirm what we announced last year, between EUR 100 million and EUR 120 million in sales, the busbars and fuses by 2027 with a nice increase this year and a real leap forward in both 2025 and 2026. In the meantime, we have additional markets that are also doing quite well, starting with solar. Solar, excluding China, outside of China, our ambition is not to further grow in China. But we have a number of projects. Some projects were launched about a year ago. We have a few in Europe. I'm really interested in two projects in India and in the U.S., I have nothing tangible to share at this point, but things are really moving fast, especially in India. So this is -- we think this is going to generate additional tonnes in sales and they've not been included in the plan. Wind power as well there, again, things are growing or moving, not at an extraordinary pace, but it is a profitable business and again growing. And we have energy storage. No slide this year dedicated to it, but we have some interesting developments there, including with large power storage units with some technical challenges as well facing us. We're not in automotive here. We're not -- we're talking about 250 volts. We're looking at potentially 3,000 volts in -- which is important with potential sales opportunities. We had -- we were in the vicinity of EUR 5 million, EUR 6 million or EUR 8 million, but we're looking at more than that. So guidance for 2024. Let me very briefly take you through the numbers. Organic sales, around 5%. Operating margin, around 11%. And CapEx, between EUR 200 million and EUR 240 million with -- based on all the growth projects I've just mentioned. So organic sales growth of approximately 5%. SiC is going to drive growth. We're also expect fairly stable renewable energy markets. EV is going to generate some additional millions, especially with ACC, which could offset some of the process industries if they were to slow down. They're only very slightly slowing down this year or in 2023 versus 2022, but there is some uncertainty. It's 33%. It represents 33% of company sales. And especially for North America, we're waiting to see what the growth perspectives are. So far, they've been good. They were so high over the past years, but we want to be cautious. Operating margin again, very much in line with what Thomas mentioned earlier. We still have wage inflation. Energy inflation seems to be more or less under control or at least doing better. We have additional resources. P-SiC is increasing but we're going to have -- we're going to need 100 people for p-SiC. We have 25. We won't have 100 people by the end of the year, but we have some efforts, some resources to mobilize and there will be some slight increase in depreciation and amortization. So once again, operating margin guidance around 11%. This slide is to reconfirm the 2027 targets. Once again, the key number is EUR 1.7 billion. You then have the operating margin objectives, current EBITDA and ROCE, which remain unchanged. The climate plan, we've called it the climate plan. But Thomas has already shared with you some CSR KPIs, and they've improved. I'll stick to what has an impact on the climate that is CO2 emissions, mainly, the ones you can see is in Scope -- are in Scope 1 and 2. And look at what we've done since 2018. We've done nicely in terms of CO2 reduction. Before, that is between 2018 and '21, if you look at tonnes in absolute values, but since we have a growth plan, which is quite ambitious and since this is something we're allowed to do, we think it's a better indicator if we compare this to our sales. So look at what we've done. Nice improvements. We wanted to go fast, not to have plans for the year 2030, which is what we saw somewhere else in other companies. Look at what we did in '23. The numbers have decreased considerably. And the objective for '27 is 79 in 2027. Not that easy. But at the same time, we've moved towards renewables whenever we can. So we're at 73%. We think we can go up 80%. And in terms of CO2 well, why should we use renewables in France because we have nuclear power and zero CO2? So that's the objective for renewables in the group, 80%. And then to preserve the water resource. Here again, the indicator we use will be tracked to that is we measure our intensity, but also if you look at absolute values, we've really decreased, except if you need to have water cooling systems, then it's difficult to decrease the number but we're working on other technologies with closed loops, et cetera. But in absolute values, we can't use less water in 2027 compared to 2022. And then waste recycling. Well, this started a long, long time ago. I remember at the time, the number was 38% or 40%, but we're on the right track to reach 80%. I think -- well, we didn't show you the year 2022, but 2 years at 70%. It's difficult to do more than 70%, but we'll manage. We recycle as much as we can, that's waste recycling. And we'll reduce the amount of weight to produce, which is not easy. 56% of the group sales is already on renewable -- markets for renewables. So that's quite positive. If you think about Mersen's image and something I'd like you to pay attention to, which is the project we have with the PolarPOD. And it's a nice and interesting topic. How much CO2 can be absorbed by the oceans? That's the objective of this mission, the PolarPOD. And this year, we decided to offset the CO2 emissions due to the new CapEx that is EUR 300 million, that's our CapEx in a factory, have a footprint, 250,000 tonnes of CO2 so we pay for that. We have contracts to install renewable factories in India where we are. The Indian teams really were happy because we're helping them and we're investing in these projects. And we're going to be able to save or offset the equipment that we will need in less than EUR 300 million, 250,000 tonnes of CO2 that will not be emitted. That was perfect, I think. Now before we put an end to this meeting, even though we're going to have a Q&A, apart from what you can see on the screen right now, there are other things happening in the group that are not in the plan. The solar projects, for instance. A few words about this. This is a nice opening, I think. We don't need to have a capping of a static production in Colombia or St. Marys. If we need to have 1,000 tonnes more. If there are projects, we'll do this. But there are two important projects in India making considerable progress. There are some in Europe. I wouldn't really bet on those ones in Europe -- I shouldn't say that. Let's be positive. And in the U.S., we have one or two large projects. Thousands of gigawatts, and they will come to fruition. And then there's another line that we'd like to keep for later, but let me talk about it right now. You've seen that there are many projects mushrooming in the nuclear business in France and elsewhere. We track 25 of those projects all over the world, mainly in Europe and in the U.S. And I'll skip the EPRs that are smaller, the 200-megawatt that EDF is in charge of, it's a copy of an EPR, but it's smaller. There's no graphite in there. Why should we be there? And all new SMRs, 20 megawatts Jimmy Energy area all that. Well, many of these are similars can use graphite in the core or in the reactor or silicon carbide that we produce in the [ tonne of tablets ] in the case of Naarea with molten salt reactors. It would be SiC for this company. Now of course, if you look at the quantities, there's no need to mention the quantities because we have to go through a series of tests but these are the things that have emerged in the past year. And there was acceleration this year, and we've produced many prototypes for American companies with our graphite grade. And of course, it's a lengthy process. But some people would like to market their first prototypes as early as '28. That's like tomorrow. I think they're very optimistic but never mind. Here we are. Maybe there's going to be more to tell you in a year, we're working hard on that. And then reactor with graphite or silicon carbide, the quantities could be high, several thousands of tonnes and then electrification, DC direct current will require quite a lot of fuses. I'm not saying that circuit breakers can't be used for DC current. So a fuse is better than the circuit breaker. And we hope that with this, we'll be able to grow even faster. We've seen this with energy storage and PVs. Look at the fuses, we sell, otherwise, the markets would have been going down because fuses are little by little replaced by the circuit breakers. That is good for us with this lineup of products. Power conversion, as we said, more and more, we need power conversion. We've added AI. If you don't speak about AI, I'll look like old fashion. And all this means that these are very fast, very powerful microprocessors that's silicon semiconductors that's good for us. That's good for us. So far, so good. And then green transportation. Our story ends at 2027, but we'll ask ourselves the question one of these days? What's going to happen after 2027, that is between '27 and '32. Green transportation is going to be the story, an important story for the group, I think. And I think I have finished. Here we are. Thank you very much for your attention.

Now the time has come for the Q&A. We'll start with the in-person meeting in Paris, and then we'll take questions from those following the webcast.

I'm Thomas Renaud from Gilbert Dupont. I have a series of questions to ask. Number one, your organic growth guidance in 2024. Usually, your uncertainty in the group leads to a bracket that you give us, a guidance bracket whereas this time, you're more specific about the numbers for '24. Does that mean that there are fewer uncertainties hovering on the year, the fiscal year and you have more visibility? That's my first question. And what about the 5%? How should we look at those? What's the mix between price increases and volume increase? I have a second question about the WCR rate for '23. You've given us at 19%, which is an exceptional number for you. Could we expect the same in '24? There are good headwinds in terms of advanced payments, and these will not stop this year, I think. And then a third question about your CapEx on p-SiC. Now I think you mentioned a capacity of 400,000 wafers for 2027. I was thinking 200,000 and EUR 30 million to EUR 40 million in sales in '25. That's what I thought was the number. Can you perhaps shed light on this? Because we're talking about capital expenditure, but we're not talking about your growth prospects connected to these investments. And my final question, question four is your external growth objective. Your debt position at the end of the year is really good. Given your leverage policy, could you perhaps afford to be more aggressive and buy more companies to grow? That's all as far as I'm concerned.

Okay. We'll answer these. I'll answer your question on p-SiC with Soitec. Yes, you're right. That's your question number three. We had a plan, which originally -- well, I don't know if it was less ambitious, but we had a plan. And that's true. We thought we would change the Gennevilliers factory to produce these 200 ground wafers. Yes with a lower level of CapEx. But given the forecast what's going to happen with Soitec, not over time. Well, I mean, not for years '26 and '27, but if you look at their plans for 2024, it's going to be tough. But if you look at 2025, we decided to saturate the factory. We have the go-ahead from the French prefecture. It's in the middle of nowhere in a village, Gennevilliers, that's the name. And we thought will do as much as we can. We have the rights given by the French prefecture, and we can reach 400,000 wafers, which is a lot better for Soitec compared to the former quantities. So to give you a point of comparison, but there's nothing I can say about the sales number because we are still discussing the price. It's going to be more than what was originally planned. Thomas will answer the other questions.

So 5%. We said around 5%. So there's a bracket. Don't take the 5% for what it is. It's not between 4.9% and 5.1%, if you see what I mean. It's a broader bracket. We have an order book, which is quite good. So it's quite safe for the beginning of the year. We have the SiC contract, the SiC contract. We have some uncertainties with the process industries. And as you know, power distribution as well, which was really good last year and still is. Then you're saying prices. The prices will be at 1% or 2% price increase. This would offset inflation because it's mainly wage inflation. Last year, we had 6% wage increases. And this year, it's 4.5%, 5% wage inflation, and that represents 1/3 of our prices. And then there's also what we factored in already in our pricing. So if we reach 2%, that's good. For us, it's going to be between 1% and 2%. That's the price increase. Then your question on WCR. It's not going to be easy to stick to the 19% objective. We're working on other SiC contracts where we could have advanced payments, and we're also working on our inventory levels to optimize our inventories. 19% for working capital requirement, it's going to be a stretch goal. I grant you that. And then you've talked about the debt. Yes, the debt, your fourth question. And that's why we had the capital increase. We were thinking about acquiring companies. You saying big-sized companies. Well, the first thing that matters is to find the right company, to have a target. And we were thinking about bolt-ons -- the bolt-on acquisitions. And in the bridge, I showed the acquisition costs, and we've made headway on two targets, two acquisitions, we think, in 2024. It takes more time than planned, but we still hope we can make it. Have we answered all of your questions, sir?

Hello. I work with Stifel, Julien Onillon. Let's come back to your pricing policy. You're saying 1%, 2%. Last time you said your cost inflation was to be offset. That's why you're going to increase your prices. So my question is how are you going to do this? Now you have different types of products. I know the market conditions are different for these different products. But let's come back to your graphite business. You've reached full capacity for isostatic products, as you said. So my question is, what about these markets for all the based on isostatic technology? What about the price increases? Will this be -- where you're going to have price increases? Because if you have full capacity all the other peers will be in the same position. So that's when you have a pricing power that's good enough to increase your prices. And maybe with users, it's different, with fuses you will be more conservative. So that's my first question. I have a second question. Your margin guidance. You mentioned costs on the page for 2023, you've said the investment costs would increase exceptionally. And that's what you said for your hiring or recruitment policy for the busbars and all the projects that you have. And I think you're saying -- let me see. I have to find the right page first. 1.4% margin you've said. So my question is, will you go down to zero this year? Or could you have a positive effect? Because you said these are one-off costs. And in theory, the cost could zeroize and therefore, the impact would be positive. That's a very specific element in your margin, which is connected to your objective, which is 1.4%. But also, as we know, there's going to be an increase in amortization. And my third and last question is more business-oriented. It has to do with ACC and the busbars. What you were looking for, well, potentially, is to gain new large customers just like ACC, which is not the case today. You've said that potentially with ACC, you would have a new factory in Italy, have taken due note of this, which means you would have a second large customer. But to meet your initial objectives, you were saying you would need -- in addition to ACC, two other clients. With Italy, that's one more, okay, if the volumes are the same. But then you would miss one big customer to gain. So do you trust that you can have a new big customer? What about the battery producers?

Well, you're right. At the time when we talked about ACC, we said another second big customer would be something interesting for us. But with ACC, we've increased our quantities. They have increased their quantities during the year. So for the Saint-Bonnet factory, that's okay. We're not running after a second client as big as they are because it's almost full capacity that we've reached. Now, we'll have to meet these quantity objectives, but that's their business. If they stick to the contract, it's okay. We don't really need a second big client as we were saying last year. You know what we're working on at present is that we like to be qualified by OEMs that will provide us with more sales in addition to ACC. Not at the end of the plan, but let's say, in 2026 or '27. Let's mention the names Renault. Renault started later than planned. They still use Chinese batteries. And by the way, if you look at their small cars, they will still use the unexpensive pack units. It's difficult for them to sell them at the right price -- at the right selling price. There's a difference between Chinese packs and the European ones. So you know what we're doing. We're looking for other contracts. But on the fuse market, it's easier to do. If you look at these discussions we've had over the past 2 years with ACC, it was a lot faster and less complicated with fuse contracts. And we have manufacturing lines that we -- where we could increase our capacities. So fuses mainly. And I also mentioned converters. We have 2 or 3 clients interested in power conversion. It would be good to produce more converters, I think. And -- well, to meet the objectives with ACC but we're careful, it is a complicated business. There's the supply chain, there's quality that matters. As we said before, we don't want to have four busbar clients, a one-off client -- a one-off deal with four clients. We need to gain experience with ACC. It will take us 1 or 2 years to show that we can be aggressive with this type of plan and business. You've talked about our hiring policy. Well, we're not saying there's going to be a peak in recruitment because we have a contract and after this, we'll kick people away or out. No. We'll have 120 people working on EV segment. This is going to be offset with the product margins, and it's the same for p-SiC as well. We will have more or less a manning of 120 -- 100 to 120 at the beginning of 2025 even though if you look at our sales at that moment, it will be really low. So that's a liability, but it will disappear as we sell more.

Well, in other words, there's going to be no margin gain.

Okay, I get your point, but you've hired people. So will you have a second recruitment wave? Because there's two things you see. Either you stay at the same level and therefore, this burden on the year was one-off and -- or the fact that you're going to recruit again. And that's my question.

You're right with EV, what you said about EV. We are manning correctly. But for p-SiC, we've only got a team of 25 for the time being. We need more or less 100. So there's going to be mainly the p-SiC effect, if you look at our manning and the teams, the R&D and development teams.

And this will be offset because there's Colombia. The ramp-up costs in Colombia and they will vanish little by little, which means that, by and large, all these extra costs will have no major impact, no significant impact neither upwards or downwards.

I have another question then. The prices.

Yes, the price question. There's two things I could say -- well, three things, I could say about the prices. First, we increased our prices with fuses as much as we did with graphite products. And that's due to the market structure probably. So we had this price increase with fuses. Now for graphite, there's two things. Well, we had a big price increase 2 years ago. And there comes a time, I think Luc mentioned this before. He said we are close to our clients. He said that. It's a relation based on trust. And the clients accept this. Well, you have to foot the bill, that they accept us passing on the inflation cost. If you open that door and start saying, I'll use my pricing power, you will have price increases. If that's what you tell your clients, what they might do is that they might look for other suppliers. It takes time to be qualified, but that's an open door. And my second answer to your question is to say that we've signed long-term contracts and the prices are pegged on inflation, but it doesn't mean we have more pricing power. What we want with these long-term contracts is not to use our pricing power but to make sure that we have the right level of CapEx that is to have a safe ROCE. And that's why we're going to have -- for these long-term contracts, we have a slight inflation factored in, but a price inflation that is going to be reduced. And if you look at the cost of energy, recently, they went down in '24 versus 2023. Yet there's still wage inflation. It's still high for 2024.

Just to close on this, the fact there is a lot of volume -- growth volume with SiC. Does that mean that for more traditional products, graphite used in other applications, does that mean that there is less capacity available for those other applications? And how does that affect the pricing?

Well, it's definitely easier to increase prices on a market like this.

Yes, that was indirectly my question.

Well, here is what I can say, in 2022, 2023, we had general price increases. In 2024, we are going to be more selective from.

Jean-Francois Granjon from BHF. I like to come back to M&A. You mentioned provisions for future acquisitions. How confident are you about your ability to close those deals in the year? You said some of the potential acquisitions are family businesses. As we all know, family businesses can be more difficult to acquire. What is your level of confidence? You said EUR 100 million for M&As this year. Is that still the earmark? Or are you -- are we looking at different numbers? I'd like to come back to the question -- with a question on the guidance on operating margin. Do you expect stability of EBITDA margin? Or do you think there could be some changes compared to the 16.7% we had last year? Question three, CapEx is accelerating. The bulk of the investments will be in 2024, less in 2025, which means we could expect a negative cash flow. Does that mean that in 2025, the cash flow should be largely positive again?

Well, to that question, I suppose we will answer in March next year. What I can say is that the cash flow should be better. We said 2023 and '24 will be negative. And 2025, since the beginning, we said it would depend. It will be positive -- very positive in 2026. That was the question three. Luc will answer the question on M&A, but I can answer the guidance question. Our amortizations are going to represent approximately 40 basis points, right? Operating margins going from 11.3% to 11%, that gives you a rough idea of the EBITDA margin, which, in other words, should be more or less stable.

Thank you, Thomas. That gave me some time to prepare for the question on M&As. We're struggling sometimes with administrative complexities. Some countries really like to monitor, control who buys what, even family businesses, even if they're not huge, and it's been a bit of a surprise to see what some countries -- how some countries behave. They really look into -- they scrutinize the potential buyers very closely. I think we're fine. But it's interesting to see we're getting questions we did not have a few years ago. If only 2% of your sales are going to the army, for example, in a given country, or if you are working in a very critical technology, well, then you're scrutinized a bit more and things take a bit longer. But I think we'll be fine, honestly. I don't expect any major difficulties. I think we're pretty much in agreement on everything. I don't believe we said -- we ever said we were going to do the EUR 100 million CapEx in 2024. I think we said half of that amount. That is more likely.

Thomas Renaud with Societe Dupont. I have a question on Soitec and Soitec volumes. Obviously, having significant Soitec volumes is a prerequisite to -- for your 2027 plan. They've been destocking and -- but they've somewhat postponed their destocking several months, several quarters and not giving much flexibility. How much risk is there for you on the volumes they've ordered? And do you think there is any threat to the execution plan?

No impact. No impact. The shift in sales, lower business is in standard digital, not in high power. They have their SOI business. We are interested in their power electronics, the EUR 300 million, they invested. That's where -- that's why what they need the wafers for. And I'm not saying we have no questions because we're obviously forced to follow their qualifications, qualifications coming from people, from companies who make transistors. Again, so far, so good. It could take -- qualifications could take up to 2 years, which means, again, there would be large volumes to deliver in 2025 and 2026, as we said before. So I don't really see a connection with the non-digital.

[indiscernible] with HMG. The drop in energy prices could help you. To what extent? We talk -- some people are talking about the IRA and the potential election of Donald Trump, again, which could put an end to IRA. What is -- what are your perspectives?

I could pick up the Trump question. He could have an impact on other businesses, not necessarily. I mean, I don't think Trump will put an end to IRA. He likes products that are homemade. And it's actually quite surprising to see that Biden did this. We've launched several plants. I think that with the industrial fuses, things have really been buoyant for us. And we have local teams. They're delivering the local market. So it's all fine. And I think if they decide to keep plants -- industrial plants at home, it's probably better for us than if they decided to offshore to Asia, for example. So that's one question. The other question you had was on what, again? Energy costs, right? Well, the energy costs, that's a European question. It's not something that applies to China or North America. Our consumption in Europe is very limited. I think that if the prices go down, it will give us some tailwinds, but not significant -- nothing significant. And never forget that energy, no matter what will be higher -- the costs will be higher than what they used to be. It's better than where we were a while ago, but it's still higher than before the main price increases.

A quick question on sales in 2024. You announced a production increase starting H2. Does that mean H1 growth will be driven mainly by prices? That's 1% or 2%. H2, more significant, 7% to 8% growth. Is that a good interpretation?

Not exactly. I think there will be more production towards the end of the year. That's true. In the process industry, we expect to be a bit less buoyant. So right now, we're working on -- we're delivering the backlog. So one could offset the other. It's difficult to say for sure. We do not see any growth changes that are going to be radically different, a bit like in 2023 because we had -- in 2023, we did EUR 300 million in sales per quarter. We -- the total was 1.2 -- EUR 1.211 billion. Now there's no reference -- no reference market. We still have that EUR 300 million. And we're seeing some -- we have some tailwinds and front wins -- headwinds. We have the process industries. I'm saying that the growth will be exactly the same, but I don't think there will be a huge gap compared to 2023.

Okay. So you think H1, H2 will be fairly balanced?

Yes. Things don't radically change on July 31.

So we have questions from the ones following our webcast. So questions from Thomas, analyst at Berenberg. What level of amortization could we expect for '24? I think we've answered this one, but also what's the level in 2025? Then what graphite volumes earmarked for SiC in 2023? Then the Advanced Materials segment margins not increased in '23 despite the good SiC volumes. Fourth question, what about the cost of the debt for the new Schuldschein? And what about your CapEx plans in France for p-SiC and in the U.S. for graphite? Are your plans in line with the original objective. Thomas will answer the first questions.

Amortization. We can't give you the levels for '25. We have given new guidances for '24 and 2027. So we're not going to answer this question. And we've answered for 2024 when we discussed the weight of amortization. It's the same between the graphite SiC and the felt. We're not going to answer this. Otherwise, the competitors would have information that's precious. We've given you the overall number. Then the question about the margins for Advanced Materials. Why didn't they increase more? Well, there was the volume effect. But as I said earlier on, there's always the ramp-up costs in Colombia. There's also the p-SiC costs and the prices couldn't really offset inflation, I was saying the cost of energy. It's not that high, but the only impact, Advanced Materials. That's where we've had these headwinds negative on the volumes. Then the next question, the cost of the debt, I'm going to hand over to Luc.

You've covered everything.

No, no. There's something about the cost of the debt, 160 bps above the variable that is it was 80% variable for us because we think that the rates go down -- the floating rates, that is not variable rates, but the floating rates. So 160 bps for full shine, 6 years. Here again, the market was closed for 1 or 1.5 years for the French [indiscernible]. Luc will answer on the investments.

Are we late or not? No, no. More or less, this is very much in keeping with our plans. We've made progress with Soitec. The initial plan was not that stringent or ambitious. So there we are. No, no, no. That's my answer, which is quite simple I gather.

We've received a question from [ Gil Chofu ] about nuclear power and SMRs. Can you tell us, please, if it's a one-off sales that you have for the SMRs or sales that could be repeat sales? My question is it -- is therefore is it consumables?

Well, my answer is it varies. If it's a graphite, well, when the reactor is being built, when it's totally new, when it's new build an SMR 100 tonnes of graphite, let's say. But in the core, there's a special area, of course, which suffers more from radioactivity, and we'll have spare parts. People don't exactly know when but it all depends on the running temperature for these machines. Some elements might be replaced every 2 years or 4 years or 6 years. This is what we did in the past with the graphite reactors. We had some in France. We still have some in the U.S. and in the U.K. So there's 1/3 that's replaced every 4 or 5 years. And then for -- SiC, they mentioned us. So back to them. I think that the product is based on the life cycle of the reactor, and it's okay for radiation. Next question, quantification and I would say it's too early to quantify these projects. As you can see, we have so many projects. It's too early. We can't give you the numbers.

We've received another question online. Let me see. From [ Philippe de Beauvoir ]. At the beginning of '23, you gave us provisional sales improving by 5% or 6%. And at the end of the year, you have 13% and you're more profitable. So my question is about '24. Could we bet that we would have 9% or more?

It's totally different in '23 or rather in 2022, we had very good tailwinds, and we had an economic horizon with clouds on the way that had been announced. So we thought there's a crisis ahead, but we never saw it. So growth was slowing down in Europe, in the U.S. to some extent. And if you look at China, they've run out of breath. So there's no big recovery in China. And today, if you look at our market conditions, well, we know that the process industries will not be as buoyant as you might think. For instance, for electrical distribution that was really good. It's going to be less the case in '24. So you shouldn't think okay, we can add up more numbers than the numbers that we've been sharing with you.

That's it for all the questions received online. Any more questions in Paris, for the in-person meeting. Oh, yes, please. Question?

[ Emmanuel Pinar ]. I have two questions to ask. Bookkeeping first. Could we have the figures excluding IFRS 16 for the EBITDA margin? And second question about p-SiC, which is your big growth relay for '27. Could you know more about your margin in 2027? Today, you're suffering because of the ramp-up phase. Could you give us colors on that? That is what your objective to reach 12% operating margin for the group.

Well, I don't know about the margin, but I can tell you the difference in value is between EUR 13 million or EUR 14 million in value. So to go back to the previous EBITDA, you have to deduct EUR 13 million or EUR 14 million from the number we've given you.

I can't really say anything about the margin for SiC. Well, if you look at Soitec's margin, it's going to be different from PVTs. And today, our net margins vary depending on the clients. It's due to the volumes, due to what we've done in the past with them. So this margin would be exceeding the margin we have for many more products that we have in the group. You've said 12.5%, okay, but that's because we've improved the margin of some products in the group over the past 4 years, but the cycle is really profitable. And then it's for the car market. So we start from a high point, and we know there will be some trade-offs. And we've included all these elements in our targets for '26 and '27.

Let me think on that. I was thinking more than 20% for semiconductors. That's the number you gave at the end of 2021. Is that still the case? This EBITDA margin, 20%?

It was the EBITDA margin? Yes, I think so. It's bound to be more than 20%, but it's an average.

Any more questions? No more questions.

So we'd like to thank you all. Thank you. For the in-person meeting, we have things to drink. And the Q1 results will be published, I think, on the 25th of April, but you have to double check the date. 25th of April, more or less. Thank you very much. Have a nice day. [Statements in English on this transcript were spoken by an interpreter present on the live call.]