Tessenderlo Group NV (TESB) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to the Tessenderlo Group 2019 Results Conference Call. I am now pleased to present Mr. Stefaan Haspeslagh, COO and CFO; and Mr. Kurt Dejonckheere, Group Controlling and Consolidation Director, IR. [Operator Instructions] I now give the floor to Mr. Stefaan Haspeslagh. Sir, please go ahead.

Hello, good afternoon or good morning. Welcome to our conference call in respect of the full year '19 results. First, I wanted to take you through some business highlights. As you know, 2019 marked the 100th year anniversary of Tessenderlo Group. We commemorated this milestone with a big family event. We published a book with all specific important events in the history of the group, highlighting our history. And on the family day that we organized for this commemoration, we had over 2,000 participants being family members from the group and they're working with us. In the first half of '19, Tessenderlo Group, we introduced Claro. Claro is a revolutionary tissue engineering product for 3D applications, and it's part of the Bio segment valorization. Within DYKA business unit, we keep on opening new branches to support our business. We opened branches in Anderlecht, which is close to Brussels, and in Trebon, which is in the Czech Republic. On July 10, we had an Extraordinary General Meeting, approving a number of amendments to the article of association and the introduction of loyalty voting rights. And I can tell you, the picture is misleading as we had quite a number of participants to that meeting. In June 19, Tessenderlo Group acquired NAES Belgium from the American NAES Corporation, which is a subsidiary of Itochu Corporation. Since the beginning of this T-Power operations, NAES Belgium has been responsible for the operation of the T-Power 425-megawatt combined cycle gas turbine plant, and which is now a 100% subsidiary of Tessenderlo Group. At the end of December '19, DYKA Group agreed to acquire the production plant of REHAU Tube near to Bourges in France, that's right in the center of France, from the German REHAU Group. And the plant specializes in the manufacturing of sewer, soil waste, storm and water management and telecom pipes and fittings. So from that live plant, we expect to service better the southern part, everything being down from Paris in the French market. And we have some major events after balance sheet date. PB Leiner inaugurated a new collagen peptide plant in Santa Fe, Argentina. So we had -- or we have a gelatin production plant there. And now we integrated the collagen peptide line for production and is now actually running. This is a considerable extra production volume that we will have available inside the group to serve worldwide markets. And also within the Industrial Solutions segment, we decided that S8 Engineering would not exist anymore as a separate business unit, but that the activities would be integrated into Tessenderlo Kerley Inc. We decided to focus on internal and projects with partners instead of looking in the market for additional projects. We were hit quite seriously by Storm Dennis in the U.K. As you know, that storm created a lot of floodings in England, and we were hit at our 3 forest plant. Thanks to our team, we were up and running very shortly after, and the impact will not be material of this disaster on the group results. For information, we are currently studying the options for construction of a new gas power plant in Belgium. We would do that. We are studying eventually to build one next to our existing T-Power plant in Tessenderlo. We are publishing this because we are making requests and studies for agreements with the government to be able to make a construction and connection to the grid. It's not sure that this will happen. This will depend on the profitability and feasibility and also on the fact that we can get all agreements in order to go ahead. Then very important, we want to give an update on the COVID-19 virus hitting the world and hitting also our operations. First, I can tell you that we are taking all possible necessary steps to make sure that our people, our colleagues can work safe, healthy, in our plants and in our businesses. And now we have some obligation towards the society in order to keep some vital services and flows of crucial goods ready. So we are producing, for your information, basic chemicals for the production of drinking water. This is based on side streams in the form of hydrochloric acid from the production of SOP. So this means that our factory in Ham and our factory in Loos are today responsible to ensure that we provide the products for production of drinking water in the Belgian and the French market. Also the flood -- plant in Loos is producing [indiscernible] for disinfecting public places or factories and things like this, which is today, also very important. In respect of the food chain, the gelatin production is continuing as well for food as medical application. Then in France and U.S., our crop nutrition and crop protection products for agriculture are considered of vital importance. This is vital importance because, in the Northern Hemisphere, we have spring starting so the planting season is starting, which is very important for the continuous supply of food this year. And plastic pipe systems for maintaining drinking and water supply systems and polluted water evacuation, where we are supplying people with the necessary parts and pieces in order to solve urgent problems or to be able to continue to do their job. With Akiolis, we are also protecting the meat chain in France, and this is considered by the French authority is very important. As you know, France is a major producer of meat, and we have been asked to keep the protection in place of the meat chain. At present, our activities are running in line with expectations. We have some disruption in the DYKA Group that we are managing on a daily basis. We can tell that our plant in China, in Nehe for the production of gelatin has already restarted after it has been closed due to the COVID virus. We do not know yet what will be the impact of all these events on our financial results. Every day, we have new situations which we have to manage. There is also, every day, new decisions by local authorities, by governments, how we can operate, how the supply chain can go, how our logistic chain will go and how customers can operate. So as many companies, we are managing this on a daily basis, and we hope that this event will not go on for much longer. However, we have to follow the instruction of governments. So Kurt, I would like you to present our half year 2019 and full '19 results.

Thank you, Stefaan. If we look at the left side of the table, you can see the half year results '19 compared to 2018. And we see that the revenue of the group has increased to EUR 818 million. It's an increase by 5.4%, but when we exclude the foreign exchange effect and if we would also exclude the impact of T-Power, as T-Power only contributed for 1 quarter in 2018, while it contributed for a full year in 2019, we see that, in fact, the revenue has increased by 2%. The adjusted EBITDA of the group increased in the second half of 2019 to EUR 123 million. It's an increase by 53%, but if we exclude the foreign exchange effect, about EUR 2 million, and also the impact of IFRS 16, about EUR 13 million, and we exclude also the additional contribution of T-Power, we see that the adjusted EBITDA, in fact, increased in the second half of 2019 by 21%. On the right side of the table, you see the figures for the full year 2019 compared to 2018. Revenue increased to EUR 1.743 billion. It's an increase when excluding the foreign exchange effect and the effect of T-Power, it's an increase by 2.4%. The adjusted EBITDA increased up to an amount of EUR 268 million, compared to EUR 178 million 1 year earlier. And on the table just below, you find a reconciliation between the 2 years, and you see that the T-Power additional contribution for 3 quarters added EUR 38 million to the adjusted EBITDA. The impact of IFRS 16 leases has impacted the EBITDA by EUR 25 million. The foreign exchange impact was EUR 8 million, mainly on the U.S. dollar within the segments Agro and Bio-valorization and the effective growth of the group was EUR 19 million or about 11%. The profit and loss for the period, EUR 98 million at the end of 2019, compared to EUR 92 million in 2018. We should, however, also remark that, just like in previous periods, there are also exchange gains included, exchange gains on nonhedged intercompany loans, mainly in U.S. dollar. And if we would exclude these exchange gains from the results, the result would have been around EUR 90 million in 2019, compared to EUR 79 million in 2018. Capital expenditure amounts to EUR 104 million. 2 items which are also included this year, is in fact, lease contracts, which have come to a maturity. They have not been renewed, but we have bought the assets instead. This has an impact on the capital expenditure for about EUR 12 million. And also the renovation of the new HQ building in Phoenix in the United States also added about EUR 6 million to the capital expenditure. The operational free cash flow of the group, EUR 146 million, compared to EUR 57 million 1 year earlier. And in fact, this increase is mainly due to the higher adjusted EBITDA. So the operational free cash flow is the adjusted EBITDA minus capital expenditure, minus change in trades working capital. We saw an important increase in the adjusted EBITDA, while the increase of the capital expenditure was offset, in fact, by the lower variance in trade working capital. The net financial debt of the group at year-end 2019 amounted to EUR 348 million, in line with the end of 2018, with the exception that in 2019, we also added the financial debt related to IFRS 16 leases for an amount of EUR 64 million. So without IFRS 16, the net debt would have been about EUR 284 million at the end of 2019, so a further reduction of the debt compared to 2018. The Group revenue per segment. In fact, if you look at 2018, 2019, it's quite the same. The 3 original segments of Tessenderlo Group each contribute about 1/3 to the group revenue. T-Power, now fully impacting also 2019, has contributed 4% to the revenue of the group. We see a different picture if we look at the group adjusted EBITDA per segment. In 2018, the Agro segment contributed more than half of the adjusted EBITDA of the group, about 62%. This has reduced in 2019 to about 44%. Industrial Solutions still contribute about 15% to the group adjusted EBITDA. For Bio-valorization, we see that the rate has increased. Last year, it contributed about 15% to the group adjusted EBITDA, now it has increased to about 21%. T-Power for the first time fully for the full year contribution to the EBITDA has contributed about 19% to the adjusted EBITDA. If we have a brief look at the different activities, different segments one by one. The Agro segment, we see that revenue has increased to EUR 602 million, but in fact, it has decreased by 1% if we exclude the foreign exchange effect. The adjusted EBITDA increased to EUR 118 million, that has, in fact, decreased by 4% when we exclude the foreign exchange effect and also IFRS 16 impact. For Crop Vitality, we saw, in fact, in 2019, a slight increase of the revenue, thanks to the extension of the Agro season in the United States, which positively impacted the volumes we sold in the second half of the year. We had a decrease in the first half of the year, but in the second half of the year, we saw an increase. Despite a slight increase of revenue, the adjusted EBITDA decreased in 2019, although the continued margin pressure in the second half could be offset by the higher volumes. Agro protection business, NovaSource, there, we saw that revenue remained stable in the second half of 2019, and therefore, do not compensate the decreases in revenue in the first half, which was in fact due at that time, even bad weather circumstances. This lower revenue resulted therefore also in a lower adjusted EBITDA for the year. For Tessenderlo Kerley International, we see that in 2019, the revenue decreased. That effect in the second half of the year, the increase of the SOP sales price was not able to offset the volume decrease in sulfates. This in contrast with the first half of the year. However, the adjusted EBITDA of Tessenderlo Kerley International, it increased, as the lower impact -- as the impact of the lower SOP could be offset by increased margins. And also, we should take into account that the second half of 2018 was negatively impacted by significant production issues in Ham and in Rouen events, which did not occur in 2019. The second segment Bio-valorization. We see there that the revenue has increased quite big, in fact, to 7.5% to EUR 543 million. The adjusted EBITDA has increased to EUR 57 million, in fact, an increase by 66% when we exclude even the financial or the foreign exchange impact as well as the impact of IFRS 16, so it's an increase by EUR 18 million. And the first activity PB Leiner, our gelatin activity, there we see that the revenue increased in 2019, thanks to the higher volumes. And that had also an impact on the adjusted EBITDA. The adjusted EBITDA increased not only because of the increase of volumes, but also this, combined with a better product mix, we sold, in fact, more collagen peptides and also lower raw material prices. For Akiolis, there we saw, in fact, in 2019, a decrease of the volumes, although this decrease was more outspoken in the first half compared to the second half of the year, because in the second half of the year, the volumes were also positively impacted by a heat wave in France. Despite these lower volumes, we were able to keep the adjusted EBITDA of Akiolis stable, mainly thanks to the evolution of downstream market prices. For the third segment, Industrial Solutions, we see in fact that the revenue remained more or less stable, EUR 526 million, it's an increase by 1.2%. The adjusted EBITDA increased to a level of EUR 41 million, it's an increase by 18% or, in fact, about EUR 5 million. In DYKA Group, we saw that the revenue increased, it benefited from favorable market circumstances. On top of that, also, in 2019, and the years before, we opened new branches, we enlarged our product portfolio. So all of these things also had a positive impact on the adjusted EBITDA. The adjusted EBITDA increased, mainly thanks to higher volumes, but also thanks to an increase of the production efficiency as a result of investments we made in previous years. For Performance Chemicals. Performance Chemicals, there we saw in 2019 a lower revenue, mainly because of the technical issue that we had at a plant in Loos in the second half of the year. The adjusted EBITDA of 2019 remains more or less stable compared to 2018. The result improvement that we had in the first half of the year was offset by the technical issues in the second half of 2019. For Mining & Industrial, the results remained stable compared to prior year. For S8 Engineering, as already mentioned, it will be integrated again in the activities of Tessenderlo Kerley Inc. We saw an improvement of the adjusted EBITDA compared to 2018, although the adjusted EBITDA remained negative. It remained negative, but it improved, thanks to additional internal projects to which the costs could be assigned and also a further reduction of costs. Our fourth segment, T-power, while T-Power, in fact, performs in line with expectations as they fulfilled all tolling agreement requirements. In 2019, the group has reviewed the T-Power financing structure, has also reviewed ongoing long-term maintenance program, and as already mentioned also in the key events we acquired also NAES Belgium, who was responsible for leading the operations of the plant. If we look at the reconciliation of the adjusted EBIT. Just to the net result of the group, adjusted EBIT, EUR 135 million. We had EBIT-adjusting items previously called nonrecurring items of minus EUR 12 million. This includes a positive element, the recycling of currency translation reserves. Following the liquidation of our gelatin plant in China for EUR 3 million, there were also some negative effects included in these items, some impairment losses, the impact of the decrease of the discount rate applied to some environmental provisions, which led to higher provisions, and also some other costs related to the electricity purchase agreement for which the own use exemption is not applicable anymore. So the adjusted EBIT minus the EBIT-adjusting items leads to an EBIT of EUR 123 million. The net finance costs of the group, they amount to minus EUR 7 million, but the regular finance costs of excluding the foreign exchange gains would have amounted to about minus EUR 15 million. We have income tax expenses for minus EUR 19 million, mainly related to activities in the U.S., in the segment Agro and also in Bio-valorization. The share of result of investments is a minor amount of EUR 0.3 million, and this brings us to the net result of just below EUR 98 million. For the outlook. The statements are, of course, forward-looking and the actual results may differ materially, but the group anticipates that the 2020 adjusted EBITDA will be higher compared to 2019. But this guidance does not include, at this moment, any potential impact from COVID-19. It's a new factor of uncertainty, which will have a significant and which has a significant economic impact worldwide. But its effect on the adjusted EBITDA of the group is currently too difficult to estimate. At this stage and given the evolving landscape, it's too early to determine what the impact will be on the 2020 results. The Board of Directors will propose to the shareholders annual meeting in May not to pay out a dividend for the year 2019. The group believes that more shareholder value can be created through further investing the available funds to the growth of the company, rather than via the distribution of dividends. The financial calendar for 2020, we have the annual meeting of shareholders on May 12. And on August 27, we will also publish our half year results for the year 2020. The annual report as well as the sustainability report, they will be available on our website as from next week, April 2, they will be available.

Okay, Kurt, thank you. I just want to come back on the outlook. So in the outlook, we make a clear distinction between how our EBITDA would have evolved if there would not have been a COVID-19 impact. We believe that we have taken the right decisions in terms of product development, investments, debottlenecking, marketing -- market approach. That we were convinced, in normal circumstances, that EBITDA would be growing. So the guidance in respect of the impact of the COVID virus, we -- is changing every day because governments are taking everyday measures impacting the business, also the consumer in the end and our distribution, transport systems evolve and change every day, all of them having an impact on our EBITDA. So as soon as we have more information, clear information about the impact, we will inform and according to the instructions by the FSMA, the Belgian authorities, to make sure that our stakeholders are well informed. So these are really special times right now. Special times where we give a lot of attention to the working condition of our people and especially the health conditions in which they can operate. So we consider social distancing and disinfecting the working environment, very important. We must say that we appreciate today very much what our teams are doing as they keep very important services running. They keep important factories in respect of the food chain, the drinking water, wastewater treatment products in operation. So we admire our teams and we are thankful to all of them to keep these vital things running for society in general in the countries where we operate. So today, the focus is to make sure that we create an environment where we can keep on operational in these difficult times, and at the same time, where we can respect and make sure that people can work in the healthy conditions. So I don't know, we can go over now to the questions.

[Operator Instructions] We already have a question from Wim Hoste from KBC.

I have a couple of questions. And the first one is on collagen peptides. And can you help us understand a little bit what is happening for you in that part of the business? It seems that market dynamics are extremely -- are positive there. On the other hand, also, competition is increasing capacity. So can you maybe help us understand what you are doing? Why you are so hopeful on that segment? And also quantify the kind of magnitude of capacity expansion you just concluded or commissioned? That's the first question. And then the second question is I wanted to try my luck on the new gas power plant you are studying. Can you elaborate a little bit on what kind of time frame do you expect to build this kind of facility? And would it be similar in size and CapEx requirement as the current T-Power facility, you have any clarity on that? And then third and last question from my side is on the guidance. Yes, you are hinting for a higher EBITDA without COVID-19. Does that mean that, yes, the COVID-19 impact you're not including in guidance is only limited to kind of forest plant closures or is it also not taking into account, for example, the negative impact of economic slowdown on businesses like DYKA and some of the other segments you're operating in?

Okay. Thank you for your questions. To start with the collagen peptides. We have been developing a very good product, which is at the top end of the market. This is why we believe so much in our product. Indeed, there is coming new capacity on the market, and the market is growing substantially. However, with -- this is how we have included it in our forecast. However, there, once again, we will have to see how the COVID-19 situation will impact the consumer behavior. The second question, in respect of the gas plant, unfortunately, I can't give you no more details there. We are just talking to the government and see what would be allowed. So this is today completely open. The time frame is that if we would have all permits and if the project is viable, then we hope to be ready by the time that an eventual CRM introduced by the government really if so, if it would be applied, then by that time, it would be ready. So it's a lot of open questions. As I mentioned, the reason we mentioned it is because we want to anticipate communication about this instead of stakeholders having to find this out from the government that we are asking for permissions. Then the guidance. As I mentioned very clearly, the guidance is based on the state of the economy and all the information we have basically around the year-end, where we made our fast forecast in respect of the new year. And so in this guidance, the first part, where we say that the EBITDA would be growing, we have not included any COVID-19 and any consequential problems in respect of COVID-19 on the economy in that first part of the guidance.

Okay. Just if I can come back to the collagen peptide discussion, can you quantify the capacity expansion you just concluded?

I can tell you, it's an important expansion we have done in terms of our capacity. However, for competition, we will not give the detailed capacity that we have invested.

We have another question from Nathalie Debruyne from Degroof Petercam.

Also a couple on my side. The first one would actually be on ag because we have seen some more margin pressure despite the strong volumes. I'm seeing SOP is not going that well. But given that we are now more [ stream up ] down the road, could you perhaps indicate to us how the season started, especially in North America, but also in Europe? And whether if you fear that despite the fact that these products are quite essential for the food supply chain, that you might see some plant closure in Europe and in the U.S.? And then the second question would be on Industrial Solutions because you also mentioned that most of your products are actually essential because they go for water treatment, essentially. But if I'm not mistaken, there is also a substantial part of the business that is linked to the general construction market that is obviously for the moment being delayed, especially in Europe because of COVID-19. So could you confirm that and maybe give me a bit of an indication of what portion of the business in PPS or DYKA is linked to the construction market in general, European? And then the last question, a quantitative one and probably an annoying one, I'm guessing, but what is your CapEx budget for 2020?

Okay. Thank you for your questions. If I might start on the ag, the season has started in the U.S. So I would say we have, this year, a reasonably normal, starting of the planting season as such. I would say it's the same right now in Europe. So the season temperature are normal on the -- for the -- for this time of the year, especially, it's not raining as much as it has been in the last 2 years, so that the season can start normally. The second part, we have -- sorry, we have not seen up to now any plant closures in Europe. The main countries, France and the U.S., they consider the production of fertilizer as a vital importance. And in respect of Industrial Solutions, indeed, we see the construction industry in Europe being delayed. And there, I can tell you, we are following the trend of delays that you are generally seeing in the construction business. And then in respect of CapEx, we would estimate that around EUR 80 million CapEx on the high side that we would realize, depending really if we have some new projects during the course of the year that we are studying.

Okay. And if I may follow-up on a few examples that you gave. First of all, on the CapEx, does that, the EUR 80 million, include the potential lease contracts that will come to an end and so if you would consider purchasing the assets or not?

Yes. These are not included, to be honest. So this will be on top of the figure I gave to you.

Okay. Yes. And then maybe on ag, if I can come back on the margin and the development so far because we also see competition here and there. It's been a few years now that we talk about crop industry. We have not seen them so far, but there are some rumors that they are preparing an entry. But wondering, given that your fertilizers are considered as vital and essential, especially in those periods, very awkward circumstances, is this thing that you would have additional pricing power in 2020?

As the season is just starting right now, I can give you no indication on pricing volume -- on pricing evolution. We are just at the beginning of the season. So we will be able to come back to you on margin evolution because price is one thing, but it is mainly the margin evolution that is important to us. We will have a better view when the season goes a bit further, as right now, it's just starting really.

Okay. But can we still consider that, given that energy cost in general is coming down, that it -- should prices remain stable, it should be beneficial?

If prices would be stable, they stay beneficial. Well we have to see how the -- how our raw materials evolve. We are buying sulfur, we are buying ammonia. We have to see how these evolve when the season is really starting up now.

Our next question comes from Christophe Beghin from Kempen.

I have one question with regard to T-Power. When does RWE need to decide if the exercise option to extend the contract by 5 years, the tolling agreement? And I didn't hear you clearly, did you say that the CapEx budget for 2020 is around EUR 80 million, 8-0?

Yes. Thanks for your question. In respect of the RWE contract, I believe they have to levy the option in 2023. And in respect of CapEx, indeed, the number is 8-0 million, plus replacing of leasing contracts, mainly trucks coming to an end during 2020.

Our next question comes from Mutlu Gundogan.

Yes. A few questions. The first one is on Bio-valorization. Your EBITDA margin has practically doubled. It is up 550 basis points year-on-year. Can you tell us what the most important driver of that increase was? Is that the volume impact from gelatin? Is that higher prices? Is that product mix? Or is that lower raw material prices? And I forget almost -- or IFRS 16? So could you give us an indication -- I know you're not going to give any numbers, but can you give us an indication what the most important driver was behind that increase in margins? That's the first question.

Mutlu, it's hard -- you gave the 4 elements that indeed have been impacting the evolution of our margin. What is the most important? I would say it's mix and volume.

And do you believe that, that is sustainable, that mix and volume? I mean, the fact that you're adding the new collagen peptide plant in Argentina, does that mean that you would expect that the mix will only improve further in 2020?

Well, in normal circumstances, we see that the market is developing quite well, that the consumer likes very much our product.

Okay. The second question is on Industrial Solutions, to be precise, on Performance Chemicals. Because it seems that the results were again impacted by technical issues at the plant in Loos. Can you tell us what happened here and what the impact on EBITDA was?

What happened? Mutlu, I would need a chemical engineer to tell you exactly what happened. As you know, it's a brand-new plant where our people are also learning a lot on how to operate this plant, learning together with external parties. The fact that it's new means, in this type of operation, it takes some while -- a while before you get all -- mainly all the software errors out of it or the software optimization that needs to be done. And this is taking some time.

Okay. And what was the impact on the EBITDA, Stefaan?

It's between EUR 4 million and EUR 5 million, it would be.

EUR 4 million, EUR 5 million. And are the issues solved now? Is the plant up and running? Is utilization high now?

The plant is up and running because it's, right now, very important for the production of ferric chloride for drinking water and treatment of polluted water or sewage water. So right now, it's up and running.

All right, all right. And then let me have another swing at the CapEx. Because a few months ago, was it 6 months ago, when we had the conference call for the H1 results, you were still guiding for CapEx of EUR 80 million. And today, we find out that you spent EUR 100 million. So can you tell us where you spent the additional EUR 20 million?

It's mainly -- we have been working very hard on replacement of leasing contract. And there, we took the decision in respect of cash management and cash flow management for the company, instead of leasing them again to lease most of the -- or practically all the trucks that came to end of the leasing period. That's the major difference in the CapEx we talked about and what we realized.

Right. And I think I missed this, but you -- I think Kurt was talking about this in his introductory remarks, but that amount, that EUR 20 million, is that also an amount we should expect again in 2020 as you replace more and more of these lease contracts?

No. It will be -- I think it will be around EUR 10 million. That's what we expect.

EUR 10 million. So -- all right. And then finally...

Mutlu, the full that -- why mention -- we -- why do we mention it separate? Because it really depends on the cost of the money that you have in the leasing contract. So if you have interesting offers, you might decide to finance it. If it's -- if there's no interesting offers, you decide to buy it right now.

Okay. No, that makes sense. And then the final question on the new gas power plant. I understand it's still early days, but what is the business case there? Because your current plant in T-Power is not operating, so how does that work? I mean, will the situation change that dramatically in the next few years? Is that a given, so to say?

First, Mutlu, I need to correct you. Right now, the contract for T-Power is a tolling agreement. So basically we take our plant available to RWE to produce electricity, right? So they manage the plant and they decide how much is loaded and so on. So to say that the plant is not loaded, it's not something we are seeing nowhere. In respect of the future, I tell you, we are broadly looking into this and announcing this since we are starting asking for the permits. But if this is not a viable project, we will just not do it.

Yes. No, I understand that. Just wondering why at the current plants, to my knowledge, is not operating. It's not generating any electricity. Please correct me if I'm wrong there. But you plan...

I believe -- I cannot say more because this is in RWE, you need to ask this RWE, and we cannot tell too much about it, but the plant is running.

Right. So the situation has changed? Can you at least tell us when that started? When they started to run that plant?

Mutlu, we cannot give information when they start and when they stop, sorry. We have a tolling agreement, we are remunerated for the term, but we cannot diverge more information how RWE, how they are running the plant.

We have another question from Christophe Beghin from Kempen again.

Christophe, can we go to the next question?

Christophe Beghin, the floor is yours.

Sorry, I was on mute. Okay. I have another question on the Performance Chemicals division. Last year, you announced that you would raise production capacity of the agro ferric product line and that additional plant includes various projects that would be executed over 3x year period for capacity expansion and modernization at the site in France. Can you a bit elaborate more how far you are here? How -- what is the impact on the volume here? Is it materially?

Right now, we are working on the engineering studies for the expansion of the plant. And we will see how -- because it's also a permitting, a situation that we need to comply with the French authorities. And when this is all clear, we will be able to inform you more on the starting date. But this is in the pipeline. It's been engineered. We have an idea where we want to go. But first, we need to get all the licenses in order to do that.

So there is no -- there is not yet additional capacity available since 2019?

No. There will be no additional capacity right now.

[Operator Instructions]

All right. Thank you, all of you for your interest in Tessenderlo Group. As we tell each time, we have a long-term industrial approach, however, we are looking each and every time to make sure we can improve our performance. This time, we are paying special attention to the working condition of our people, especially the health aspect. We hope that we -- our people are not hit hard by this virus. So that they and their families, they can get through the situation well. And that, at the same time, we are able to execute important and vital function that we have towards society. Thank you very much, and talk to you next time.

Ladies and gentlemen, this concludes today's conference call. A replay of the webcast will be available on the company's website. Thank you all for your participation. You may now disconnect.