Viohalco S.A. (VIO) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by. I am Mina, your Chorus Call operator. Welcome, and thank you for joining the Viohalco conference call and live webcast to present and discuss the full year 2024 financial results. At this time, I would like to turn the conference over to Mrs. Zairi Sofia, Chief Investor Relations Officer. Mrs. Zairi, you may now proceed.

Good afternoon, ladies and gentlemen, and thank you for joining Viohalco financial results of 2024. I'm joined here today by Mr. Efstratios Thomadakis, Viohalco's CFO. As always, we will provide you with an overview of our performance for the period, and then we will take any questions you may have. Efstratios?

Thank you, Sofia. Hello, everybody. Thank you for participating in this call today. To say we are here to share with you the financial results of consolidated financial results of Viohalco for 2024, and we are very proud for that because it's 2024 is actually the second best year in the history of Viohalco, and you will see later on the figures. The revenue has stood up at EUR 6.6 billion, a 5% increase compared to '23. The adjusted EBITDA exceeded EUR 600 million at EUR 604 million, 12.5% increase in -- compared to '23. And on the bottom line of the profitability of our profit and loss, the profit before tax stood at EUR 274 million, almost doubled compared to '23. Another one factor which is worth to be noted is that the net debt has decreased significantly around 20% and standing at EUR 1.5 billion. The CapEx is closed at EUR 400 million, while the majority of our segment, mainly cable segment because of the cable segment, and we will see later on why has proceeded to that investments. And since the results are at that levels, the Board just yesterday proposes EUR 0.16 dividend per share, close to EUR 42 million as a total. So turning in this slide. Here, we can see an overview of the operational performance by segment. The aluminum saw positive trends in sales and profitability, driven by recent investments in Elval plant, which, of course, enhanced capacity utilization and operational efficiency. On the other hand, the copper segment was similarly assisted by an optimized product mix, lower input costs and, of course, a favorable average copper price. The cable segment also demonstrated significant growth due to an improved sales mix and the efficient execution of the high-profile projects. The steel pipes continued its strong performance and with increased production volumes, a good product mix and high capacity utilization. However, as a result of the global downturn of the steel industry, driven by overcapacity of China steel mills. The steel segment has had a weak year. However, the company has retained its leading market position in Greece, while sustaining their presence in the key markets in Greece, Balkans and in Central Europe. Lastly, the real estate division continues to deliver solid growth by focusing on developing new properties and upgrading existing ones, capitalizing on strong tenant demand for high-quality sustainable buildings in Greece. Another highlight for the real estate division was the listing of Noval Property on the Athens Stock Exchange in June 2024. Again, this slide, you see the main 3 elements of our profitability of our performance. You see that the turnover -- 2024 turnover is the second best, while '22 was the best. Please consider that 2022 was a year with higher LME prices. But 2024, we faced a stability, and this is also the reason why we have a strong earnings before taxes or profit before taxes. So this increase is purely growth of the companies, which represent quantities and, of course, margins. Moving on to the next slide. Here, you see the split in between the industrial and real estate division. The main conclusion of this slide is that the industrial division takes the ultra majority of the profitability of the whole group. And you also see the differences between 2023 and 2024. Again, here regarding the industrial division, on the left, you see how the turnover adjusted EBITDA and the profit before taxes can be analyzed by segment who contributed more in these 3 elements. Aluminum in terms of turnover is EUR 2 billion; copper, EUR 1.8 billion; cables, EUR 1.2 billion and the rest follows. The adjusted EBITDA, cables leads this element. Aluminum follows copper and the rest still continues and the same for profit before taxes. Again, this slide tries to analyze who contributed, I mean, which segment contributed more compared to 2023. Again, you will see here that cables, steel pipes or our subsidiary, Cenergy Holdings has contributed the maximum, the most. Aluminum, copper follows and steel slightly weaker, while the international markets and the steel industry in general faced issues during 2024. Here, you see the CapEx and the net debt. Another one thing that you need to consider is that 2024, despite the growth of the companies, we didn't have an increase on the debt. This is because the target of deleverage has been communicated to all of our subsidiaries. And while the profitability remains strong, the subsidiaries, the segments also performed efficient in terms of managing the working capital. So despite the fact that the CapEx almost reached EUR 400 million, the net debt of industrial division is EUR 1.3 million, lower than 2020. And of course, the most significant factor is the leverage ratio. Net debt to EBITDA is below 3, 2.5, which is a historical very good figure for Viohalco. Actually, I cannot recall when it was at that level in the past. Now moving on to per segment analysis. Aluminum, as I said, the turnover stands at EUR 2 billion, closer to 2022 record levels. Turnover was driven by strong momentum in the packaging, mainly sector. The segment overall volume growth is mainly attributed to optimized capacity utilization at the Elval plant. The EBITDA reached EUR 159 million, while it was stable, as I said in the beginning, LME prices during the year resulted in a boosted EBITDA of EUR 160 million. Looking ahead, the aluminum segment is well positioned to capitalize on positive long-term market trends driven by demand for sustainable packaging and energy-efficient infrastructure. Copper segment, the segment similarly reported revenue growth around 2% to EUR 1.7 billion. This was primarily driven by higher average copper prices, which offset pressure on sales volume caused by challenging market conditions, specifically in Europe. The segment increased its operational profitability by 3% to EUR 110 million in 2024. This improvement was driven by more favorable product mix, lower energy prices, increased use of scrap in production and cost reductions throughout the process -- and cost reductions through the operational process. Going forward, process optimization strategic investments have been initiated to expand production capacity for high-value products and increase the range of Sofia Med existing product portfolio. We expect these projects to be completed in 2025. Cable segment. The cable segment achieved a 17% revenue growth in 2024, reaching EUR 1.2 billion in turnover, driven by strong activity, particularly in offshore wind, interconnection markets and onshore projects. Adjusted EBITDA rose by 20%, reaching EUR 183 million, whereas the margins were high. The segment's improved profitability was led by increased revenue from projects and strong demand in the cable's projects business, which maintained satisfactory profit margins. Throughout 2024, Hellenic Cables maintained strong momentum in tendering activity, leading to a record EUR 3 billion order backlog by the end of the year. Steel segments, steel Pipe segment, Corinth Pipework. The segment demonstrated a record result with EBITDA stands at EUR 94 million. compared with 66 in 2024. This is a 42% increase. Sustained demand for pipelines led to a revival and the rapid execution of several projects. Corinth Pipeworks successfully executed a number of prestigious projects, confirming its Tier 1 position as a steel pipe manufacturer for the transportation of natural gas hydrogen and carbon dioxide. Capacity enhancements and optimization initiatives resolved bottlenecks in production through the year. And by the year-end, the order backlog amounted to EUR 430 million. Now to the -- our steel segment, Sidenor. The revenue stands at EUR 1 billion, marginally down from 2023, while the adjusted EBITDA at EUR 38 million. These softer results were largely due to the broader negative trends across the global steel industry. The overcapacity of China, which flooded the markets with steel created a very negative environment for all the steel plants. In conjunction, the Greek construction market remains strong, helping the Greek plants perform better. The segment is always focused on optimizing resource management and maintain a resilient scrap supply. Looking ahead, Greek construction is expected to grow, while European steel demand may remain subdued in early '25 before recovering. We expect key challenges to be energy costs and competition from low-cost imports. Finally, the non-industrial division of ours, the real estate segment, we are excited by its performance. Revenue grew 13% compared to '23, standing at EUR 43 million, and the adjusted EBITDA reached EUR 21 million. Noval Property, the key subsidiary, managed a diversified portfolio of 61 properties, mainly in Greece and selectively in Bulgaria. The fair value of its investment portfolio increased, driven by active asset management and demand for high-quality sustainable buildings. Key milestones included the delivery of the LEED Gold certified logistics center in Mandra in Attica and significant lease agreements for projects in Mets and Marousi, Athens. Higher footfall, increased sales turnover at retail assets and higher rental volume revenue from new and renewed leases contributed to positive results. Following its listing on ATHEX Stock Exchange, Noval Property remained committed to its investment strategy, focusing on unlocking value from its existing pipeline and pursuing new acquisitions of modern high-quality environmental sustainable properties. About the outlook, we have diverse portfolio and strong global demand for sustainable products, Viohalco is well positioned for the future. We expect our aluminum segment to benefit from rising demand for recyclable and energy-efficient products and our copper segment to see growth from process optimization and strategic investments. Cables and steel pipes are set to gain momentum from electrification, renewable energy and grid expansions and both segments are ready for future growth after capacity expansions. The Greek construction sector remains strong, and we expect to remain strong in the future, while European steel demand is expected to recover gradually in 2025. In real estate, we expect the Noval Property focus on new developments and upgrades to drive growth and meet the demand for high-quality sustainable buildings in Greece. Regarding the recent developments in global trade with the announced tariffs, our companies having low exposure in the U.S. market are evaluating the situation and remain strong and well positioned to overcome any issue that may arise in the future. Thank you very much for your attention. And now we are happy to take any questions that you may have.

Ladies and gentlemen, there are no audio questions at this time. I will now pass the floor to Mr. Thomadakis for any webcast participant questions.

We just see that we have received 2 or 3 questions -- written questions. The first one is about the capital structure. Whether we consider it optimal, as you have probably seen in 2024 and the transactions that we are doing, the deleverages remain the main target of the whole group. And we do whatever it's possible in order to gain that. But at the same time, we need also to support the companies while they need investments and in order to grow further, we cannot stop that. So the further deleverage remains one of our targets. Regarding the second question, is there any intention for synergies, mergers, acquisition, investments? We have no specific plans at the moment. We'll see in the future. The final one is about the Etem Gestamp. Etem Gestamp, if you remember, is a subsidiary of ours, which operates in the automotive industry, producing aluminum profiles. There are projects that at the moment run for this -- from this company for the automotive industry, for Audi, Porsche and BMW. And yes, and the performance is satisfactory. I hope that I covered these questions. We are also available if you have more.

Thank you, Mr. Thomadakis. Ladies and gentlemen, there are no further questions at this time. I will now turn the conference over to management for any closing comments. Thank you.

Thank you very much for participating in this event of ours. We were very happy to share with you that the 2024 financial results of Viohalco were great. I hope to see you again in the first semester during September. Thank you so much. Bye.

Thank you very much. Bye-bye.