Aurubis AG (AIAGF) Q4 2022 Earnings Call Transcript

Aurubis AG (OTCPK:AIAGF) Q4 2022 Earnings Conference Call December 21, 2022 8:00 AM ET

Company Participants

Angela Seidler – Vice President of Investor Relations

Roland Harings – Chief Executive Officer

Rainer Verhoeven – Chief Financial Officer

Heiko Arnold – Chief Operating Officer

Conference Call Participants

Rochus Brauneiser – Kepler Cheuvreux

Ioannis Masvoulas – Morgan Stanley

Maxime Kogge – Oddo BHF/Commerzbank

Christian Obst – Baader Bank

Operator

Good afternoon, ladies and gentlemen, and welcome to the Aurubis AG Conference Call regarding the Annual Report of the Fiscal Year 2021-2022. At this time, all participants have been placed on a listen-only mode. The floor will be open for your questions following the presentation.

Let me know turn the floor over to Angela Seidler. Please go ahead.

Angela Seidler

Thank you very much, and welcome ladies and gentlemen. My name is, as he already said, Angela Seidler. And I would like to welcome you. I am sitting here together with our CEO, Roland Harings; our CFO, Rainer Verhoeven; and the COO, Heiko Arnold. They will lead you through the presentation this afternoon.

We are very sorry that we were not able to publish the figures at the beginning of December, but the cyber attack on our IT systems unfortunately required a postponement. So, happy to have you all in here so close to Christmas. We know that this is not the easiest time of the year. Yesterday evening, we published, after the supervisory board meeting and ad hoc announcement concerning our growth project, our dividend policy change, and the forecast for the current fiscal year.

And with this said, I would like to hand over to Roland Harings, who will start the presentation.

Roland Harings

Yes, thanks, Angela. Also from my side, warm welcome to our call to see our annual results call this year. And again also, apologies for being late this year due to the cyber attack, but we will come to this subject, cyber attack, and how we went through this [during it] [Ph]? What a year? My colleagues on the Executive Board and I are very proud to have led Aurubis so successfully through this crisis-filled year together with our strong management team. We managed to generate the highest earnings in the company’s history, and have therefore proposed the highest dividend since the IPO, and despite multiple crisis management, most recently during the cyber attack just mentioned, we stuck to our strategic course and, yesterday, presented important growth projects to the supervisory board, which were approved.

You were informed of this yesterday in an ad hoc announcement, we are just — and we are also taking Aurubis into sustainable growth path that we intend to finance from our own resources. We managed the company through [strained] [Ph] supply chains caused by Russia’s war of oppression in Ukraine, rising energy prices, and most recently the cyber attack. And despite all this, supported by good metal, product, and sulfuric acid markets and a good smelter performance we were able to increase our operating EBT by as much as 40% in the end, and the ROCE went up to 19%. The cash flow of €288 million is lower than last year, but can easily be explained by the build-up of inventories, in particular of input materials during the shutdown in Hamburg, and will turn around quickly in the course of the current fiscal year.

Our strong performance combined with our impressive growth path has prompted us to reconsider our dividend policy. At the same time, we will continue to allow shareholders to participate in the success of the company. Our proposed dividend [technical difficulty] €1.80 per share, the highest dividend since our IPO.

Coming to the next slide, and have a brief look at the production [technical difficulty]. Despite the major expenses in Hamburg, we were able to increase our throughput of concentrates at our primary smelters. With a good overall performance of the smelter network, the extraordinary successful performance in Pirdop is particularly worth to mention here, with more than 400 days of production without any interruption, without any standstill.

Regarding recycling, including our smelters in Beerse and Berango, we were again able to process over 1 million tons of recycling input materials with attractive refining charges. Capital output was mainly in line with the previous year, running at full capacity. Based on very good demand for our copper products, we see high production figures with wire rod, shapes, and flat rolled products. Specifically flat rolled products, has to be taken into account the sale of the plant in Zutphen, and the [service tender] [Ph], and also the renovation of our plant in Stolberg after the flooding event in July, 2011.

Sulfuric acid production was again in line with the concentrate throughput at a high level and also therefore above last year’s figure. Going now to the market conditions, ’21-’22, the copper price showed volatile development during the reporting period [technical difficulty] before then declining and floating at a level close to $7,700 at the end of the fiscal year. Looking at the different markets now, we saw a sufficient supply in quantity and quality of concentrates, with rising TC/RCs towards the end of the fiscal year. Underpinned by significant greenfield and brownfield projects, the concentrate [offer] [Ph] is anticipated to grow by 3.7% in 2022, with further significant increase in the next calendar year, according to Wood Mackenzie and our own research.

The anticipation of a better supplied concentrate market in the next calendar year is also reflected in the newly set benchmark TC/RC of $88.00 per ton, and [8.10 cents] [Ph] per pound for framework contracts in the next calendar year. This represents a 35% increase compared to the benchmark of the current calendar year. Again, as you know, our policy is long-term supply, long-term contracts. We are already well supplied with concentrates into Q2 ’22-’23. And we maintain our long-term supply strategy with long-term annual or even longer-term contracts.

A short look at the recycling markets, over the course of the fiscal year ’21-’22, we have seen the sufficient availability of scrap material on the global sourcing markets with [indiscernible] RCs during the reporting period. On a lower level compared to the year before, where we had some extraordinary price [effects] [Ph] and RCs, specifically on scrap number 2.

CRU estimates an average RC of about €300 per ton during the fiscal year ’21-’22 for scrap number 2 without logistic costs. This compares to €522 in the year before, so this underpins how significant the numbers were in the year before. The RCs for complex recycling material were yet again more stable, and less volatile during the fiscal year. Looking forward, our production sites are already supplied with material beyond the first quarter of the current fiscal year.

Some statements regarding sulfuric acid, the sulfuric acid markets were tight with very high price levels well into Q3 of the last fiscal year. Driven by subdued demand, both from European chemical and also fertilizer industry, costs due to high energy prices, and specifically natural gas prices, we saw a reduction in demand and also a drop in acid prices towards the end of the fiscal year. This resulted in a different significant earnings contribution by — Well, reduced contribution towards the end of the quarter of the last fiscal year. The current market situation is that we still expect lower earnings contribution from acid sales in the current fiscal year. However, you have to keep in mind that we have long-term contracts in place, and some of the markets are very short-term from the pricing, and we some more stabilization, but although Rainer will talk about the market outlook in more detail later.

Regarding ACP, our Aurubis copper premium for calendar year ’22, this number was set at $123.00 per ton. Reflecting the strong demand in Europe and also some cost increases, we have announced our ACP for the coming calendar year ’23 to a level of $228.00 per ton, and we see that this is reflected and accepted in the market by our client base reflecting the strong demand that we see. U.S. dollar, we have a long provision of about $500 million in the fiscal year ’22-’23. And in line with our hedging strategy, we have hedged 70% at a rate of 1.133 for the current fiscal year, and around 35% at a rate of 1.082 for the fiscal year ’23-’24 already.

And with this, I would like to hand over to Rainer, who will go more into the financial details.

Rainer Verhoeven

Thanks, Roland, and good afternoon everybody. Let’s have a look at our key financial figures for the year ’21-’22. Our revenues increased significantly, by 14%, driven by the higher metal prices, of course, that we saw throughout the year, as well as the higher sales of all copper products, to €18.5 billion. The gross profit increased accordingly to 13%, in line with this higher revenues and the very strong market conditions, but as well also a good operational performance. We’ll get to the details when we talk about our segments here. Despite significantly higher costs, we managed a 40% increase in our operating EBT overall compared to last year, resulting in the best annual result in the company history so far.

Last, not least, with an ROCE of 19%, we strongly exceeded our ROCE target of 15%. At this point, I’d like to mention the adjustment of our operating EBT definition in comparison to last fiscal year. In order to better reflect the operating earnings situation of the Aurubis Group, independent of valuation effects that derive from the IFRS accounting standards, we adjusted the operating EBT definition by also eliminating the unrealized reporting data-related effects of market valuation of the energy derivatives. So, we took out mark-to-market valuations of the energy derivatives, and in the last years, we only took out the metal derivatives so far. So, that is new, the energy derivatives are included now because we had high volatility, and you saw that in the annex to our annual report, that we had otherwise quite extreme positive results from those derivatives.

Going to the next page and having a look at our gross margin splits, you will see that the gross margin splits in ’21-’22, shows the well-balanced different earnings pillars of the Aurubis business model. And they are pretty much comparable to the last year. Driven by higher metal gains arising from increased prices for metals, the metal gains made up the most significant component of the gross margin with 38%. Premiums and products also contributed very significantly driven by high sulfuric acid prices as well as increased sales of copper products. Year-over-year, the contribution from treatment and refining charges, both from concentrates and scrap number 2, were subdued especially due to the reduced scrap RCs compared to last year.

If we now go to the cost situation of the group, [technical difficulty] [12-month figures] [Ph], we see a general cost increase for all [technical difficulty] here shown with €1.9 billion. Energy costs are the biggest contributor to the group-wide cost increase year-over-year. The overall picture of our 12-month figures show that the cost split remains rather stable versus last year. However, energy shows the biggest increase in costs with an increase of 65% from €207 million to €342 million in this fiscal year. Personnel costs were rather stable at just an increase of 3%. Here, the, let’s say, result of our performance improvement program helped to stabilize this cost. Consumables, like chemicals and packaging materials, have also shown an increase mainly due to the higher production volumes, so more transportation, more packaging, but also a steep increase in prices for certain input materials such as chemicals.

If we now look to the energy price development, we have, let’s say, broadly discussed those already in the calls of the last fiscal year, but we saw a significant energy increase of 65% or €135 million year-over-year for the Aurubis Group. This was mainly driven by the restricted natural gas deliveries caused by the Ukrainian war. And just as a reminder, the figured displayed here show the energy costs less any deductions from indirection CO2, electricity compensations, as well as state refunds provided to our sites, for example, in Bulgaria. So, we show the net costs of energy for the Aurubis Group here.

Looking forward, we will continue to work on the further electrification of our production processes and invest in decarbonizing our production. We will get to more on this when we come to the projects later on. One thing is for sure, secure supply of energy at reasonable prices remains the most if not — Yes, well, I would say the most relevant topic for the Aurubis Group in general.

Looking out to the key performance indicators, we see a continuing solid and robust picture. An equity ratio of 54%, a negative debt coverage ratio, and a net cash flow of €288 million mirror the excellent result from the last fiscal year. The very good earning situation also allowed us to further reduce our financial debt. Compared to last year, we have to say the net cash flow is clearly reduced due to the buildup of inventories of the raw materials and intermediates as already explained by Roland earlier due to the extended maintenance shutdown in our Hamburg plant. But again, these fluctuations will pan out throughout this current fiscal year. This good financial position provides the basis for continuing on our strategic growth path.

Now let’s have a look at our balance sheet. On the asset side, inventories increased in connection with the buildup of inventories due to the standstill in Hamburg already explained, and continued high average metal prices, which have been already mentioned earlier. The trade receivables increased due to stronger sale of copper products, reduced cash position -€259 million is mainly due to the early repayment of our financial debt, of our promissory notes in the amount of €256 million. Even though the balance sheet has grown by some €450 million year-over-year, the equity ratio increased to an incredible 54%. Main reason for the strong reduction in provisions is the increase in interest rate especially for discounting our pension liabilities. The other liabilities increased mainly due to further trade payables in connection with the inventory buildup already explained, from our Hamburg plant.

Let’s have a look at the segments. As most of the earnings drivers have already been explained, I will be brief on highlighting some key figures here at the multi-metal recycling segment. All in all, the throughput levels and cathode production has been on comparable levels to last year. At €205 million, the operational EBT was lower. However, €51 million, if I am not mistaken, below the previous year’s figures. On the positive side, MMR benefited from high metal gains based on high metal prices and higher refining charges for other recycling materials for instance, shredder material.

However, significantly lower scrap RCs for scrap number two combined with a steeply increased energy costs for both electricity and natural gas had a negative effect year-over-year on the segment result. Due to the outlook on scrap number two and constantly high energy prices, we booked an impairment of €26 million in the MMR segment on goodwill and intangible assets by the end of Q4 last year. As a result, we show reduced EBT but continue with an ROCE of 25.7% which is still considerable above our target of 15%.

In the CSP segment, the operating EBT more than doubled to €390 million compared to last year. The segment benefited significantly from higher sulfuric acid prices or revenues and due to let’s say prices but also sales volume, increased metal gains, and a very strong demand for copper products throughout the year ’21-22. These beneficial market conditions combined with good operating performance especially in our primary smelter in Pirdop with concentrate throughput considerably above the prior year.

On the cost side, the segment also faced significant headwinds from high energy cost and increased prices for consumables. We managed, however, to pass on those costs to a good extent to our customers. On the product side, rod demand was extremely stable, earlier mentioned by Roland, at high level over the entire year, shapes production rose significantly by almost 20% compared to the previous year. The volume on the flat rolled side was negatively influenced as a consequence of the flat even that we had installed back last year. In addition, the volumes for system plant were only included until the end of July this year.

Return on Capital Employed, ROCE, reached 18.7% compared to 11.2% in the last year, very good result made up with the increasing capital cost. [Technical difficulty] already announced yesterday and in line with the investment package for [technical difficulty] its current dividend policy until further notice. And we will propose the highest dividend in the company’s history at the end of general meeting and will continue to allow our shareholders to participate appropriately in the company’s success in the future.

Therefore the executive management board recommended dividend of €1.80 per share. This will correspond to a dividend yield of 3.3% based on the share price of almost €54 at September 30, 2021. This corresponds to a dividend payout ratio around 18% of the Group’s operating result. In the coming years, we will consider [technical difficulty] investments needed and the legitimate interest of our shareholders when determining the dividend payoff. Coming to the outlook for the market for the current fiscal year, the concentrate market remains on a growth track from both the supply and demand side with the additional supply outpacing smelter demand in calendar year ’22 and ’23 according to CRU and Wood Mack’s latest projections.

With the new benchmark set at $88 per ton and $8.8 per pound, an increase of 35% [technical difficulty] for current fiscal year. Based on our [technical difficulty] first quarter of the current market, the short term market [technical difficulty] with recycling materials of both types beyond Q1 2022 and ’23.

On the sulfuric acid, the ICIS and CRU both expect reduced demand from the European fertilizer and chemical industry due to the high energy cost. And we see that already currently happening. Given the next expectation of prices, we foresee a clearly reduced earnings contribution from assets for the current fiscal year. The Aurubis copper premium for the calendar year 2023 has been set at $228, well above the previous year level. From which, we expect positive earnings contributions or we can clearly calculate them.

Coming to our copper products, rod, shapes, and the flat rolled business, we foresee a stable demand trend. And expect this to continue during the coming fiscal year ’22-23. Product demand for rod, shapes, and flat rolled products is still expected at high levels for the foreseeable future even though we currently see a small dent due to the let’s say approaching Christmas period.

Now coming to the cyber attack, rather special event, I would say something not really needed. After the closing of our fiscal year ’21-’22, Aurubis was the victim of a cyber attack on October the 28th. We informed the capital markets and you already of this via an ad hoc message. For security reasons, all relevant systems had to be disconnected from the Internet for an in-depth analysis of the implications of that attack. The following data showed that, first of all, Aurubis has a very resilient IT infrastructure and scale, the important message we were able to maintain production at all smelter sites during the whole effect.

With a reliable crisis management of the Aurubis Group, within a couple of days, communication systems were back up and running and communication with clients, customers, external and internal stakeholders was functioning again, extraordinary effects from all our employees and we thank everybody for that. And of course, the external service providers, Aurubis was able to restore all IT systems inside a very short timeframe and again, proved its resilience to the various crisis that came up in fiscal year ’21-’22 and again the financial loss is rather below one for Aurubis on that end.

Coming to the financial guidance, based on our latest assumptions for both the earnings drivers and the cost components, Aurubis provides the forecast for the group reside and continues to expect a very good operating EBT between €400 million and €500 million for the current fiscal year, and an operating ROCE between [technical difficulty] we expect an operating EBT between €100 million and €150 million and an ROCE between 11 and 15%. For Custom Smelting product segment, we expect an operating EBI of €350 million and €410 million in the range of and an ROCE of 15% to 19%.

That’s all for the figures and now I am back to Roland.

Roland Harings

Thanks, Rainer. Let’s talk about our strategy. Exactly one year ago, we at our Capital Market Day and I can really say today we are in full swing of execution. Our strategy is precise and defined plan for sustainable growth based on three pillars, secure and strengthen the core business, pursue growth opportunities, and industry leadership in sustainability.

First, let’s speak on our core business, it includes primary smelting, our multi-metal processing, and specifically our precious metal recovery, and of course recycling. It also covers our cathodes and wire business, and the core products such as sulfuric acid and iron silicate.

In the middle, you can see that we will be strengthening our business. Here we have defined and are currently executing specific projects. These projects will make us stronger. The next pillar is about growth. I think we can be very happy about one key finding in our strategic process. Our markets, our suppliers, and our customers need Aurubis to grow. We can even go one step further.

For sustainable future the economy and society needs us to grow, including recycling quarters, the push for closing recycling loops, the target to reduce CO2 emissions, and therefore transport and export distance and volumes. All these means that more capacities are needed to treat more and more complex recycling materials, and we can use these growth opportunities, we can invest in these capacities.

We have the financial means and the experience and the technology and this is our core business. Our third strategic pillar is sustainability. It’s core of our reason for existence. It’s our purpose. We work sustainably and our products and service support sustainability. We have defined clear and ambitious targets to measure our sustainability progress.

Our most important growth project in the fast growing markets for recycled materials is our new recycling site in Georgia, in the U.S. Yesterday, we have seen the announcement our Supervisory Board approved the investment for the second module, due to the very good market outlook, we decided to accelerate this investment, you will remember that we broke ground for the first module in June of this calendar year.

Our project continues to progress. Over the course of the year, additional contracts for the construction of the plant were completed, pending regulatory approvals have been granted. And we have started with recruitment. Due to the high proportion of copper paste from [Aaron 1] [Ph], just reflecting on our modular concept of extending our recycling capacity, the engineering efforts for RM2 is significantly lower. Many block areas are sufficiently dimensioned even after the expansion example select treatment casting plans to cope with the expansion from the second module.

The additional space required for the expansion is small and covered by existing property. [Technical difficulty] The expansion is integrated in the optimized materials and the extensions were already considered in the original environmental permits. We decided that it’s time for the second module is now. U.S. Recycling Market is continuing to grow. And this offers a sound investment case. The recycling boom in the U.S. is leading to good availability of relevant recycling materials.

And we see an increase in the importance of sustainability in the USA as well. There is an increase of local recycling markets due to the decline of copper scrap exports to Asia, supply of relevant recycling materials, PCB, ITW, and metal smelter growing at 5% to 6% per annum through 2030 in North America, rising collection rates, falling exports sorry and industry growth are key growth drivers and supply the underlying basis for our investment case. Combined with low attractive energy prices and good stable availability, this results in a highly attractive and profitable investments.

With the second module, we will double our smelting capacity with recycling input materials and our end product copper. We will build two more TBRCs and one additional lead tin furnace in the plant enrichment. So, four top blown rotary converters and two lead-tin alloy furnace will be there in operation in total. The current property and infrastructure are already being prepared. And we should not forget that there is still plenty of room on the site for even further expansion.

On the next slide, you’ll see the ambitious project timeline with module number one, starting in ’24 and now plan module number two starting in ’26. This well underlines our ambition on the screen feed expansion plans to pursue the growth opportunities in this very attractive recycling market.

[Technical difficulty] And on top of the Model 2 expansion, we are also taking into account a capital expenditure adjustment for additional infrastructure on the site requirements or preparing the site for the future. And also taking the inflation and costing reasons that we see in the U.S. now into account of €90 million for model number one. In total, the €640 million investment will generate an EBITDA of €170 million and will generate around 200 new jobs in the region.

Cost items like construction has become the main cost item of Aurubis Richmond. Full order books of construction companies led also today’s rising prices and the expected cost increases especially with respect to electrical equipment, steel structure and concrete will be closely monitored and are now included in our business case.

With this significant project that we are doing in U.S., I would like to hand over to Heiko Arnold, who will talk about the other very important investment projects that we have decided now for Europe.

Heiko Arnold

Thanks, Roland, and warm welcome also from my side to this call. I’m happy to present another very profitable project under the pillar secure and strengthen the core business. The CRH project, which stands for Complex Recycling Hamburg is a further investment in our site here in Hamburg, CRH is a process developed in house to increase metallurgical capabilities within the Aurubis smelter network. The new facility at our site will treat both internal and external, intermediate, and recycled materials with additional treatment and refining charges and metal recoveries. It will further optimize the utilization rates of existing facilities and enhance the flexibility of input materials for our smelters. CRH will further enhance independents from third parties and allows increased output of precious metal with a shortened process time.

Let’s have a closer look at some project, this CRH project is another important project for further internalized [Technical difficulty] €150 million for the new state-of-the-art facility at our Hamburg site. This facility includes the construction of the new Top-blown rotary converter or TBRC for short, as well as a process gas cleaning system to ensure that we adhere to the most stringent emission standards.

CRH will process roughly 32,000 tons of TBRC bearing material external input material while also processing internal complex, intermediate, and recycled materials to process and extract more valuable metals with this process, Aurubis is further closing the loop of value chains and extracting metals in the most sustainable way. Following the construction and the ramp-up phase of the facility in Q4 2025, we expect very positive earnings contribution of approximately €40 million EBITDA per annum once in full production.

Let’s move sides to our other primary smelter side in Pirdop, where we continue our path towards decarbonisation of Aurubis. On top of our strategic investment for growth and recycling and securing and strengthening the core business, we also have new projects under the pillar industry leadership in sustainability. With the construction of two additional solar parks, Aurubis is taking the next step towards sustainable multi-metal production. Aurubis Bulgaria will consequently work towards a greener electricity mix, and meeting the sites energy goal to cover 20% of the energy needs of own renewable energy production by 2030.

Let’s hear again have a closer look on the detail. Aurubis will invest an additional €12 million into the further expansion of the solar parks on our site in Bulgaria, was what we have learned from the first PV plant in Bulgaria, we will be able to generate very good recovery rates for the solar panels. After one year of green electricity production, we can announce that the PV 1 plant has exceeded our anticipation of 11,000 megawatt hours production and was able to generate 13,500 megawatt hours per annum of green electricity for our site in Pirdop.

With the additional solar projects now planned, Aurubis will be able to reduce the smelters external electricity consumption by around about 30,000 megawatt hours annually and we will not stop there, we aim to invest an additional €8 million for additional expansions that are already in planning and with the additional €8 million of CapEx, the modules, so the solar panels are already being purchased. These projects will result in CO2 savings of 34,000 tons per annum compared to a coal fired power generation and directly contributes to our CO2 reduction targets.

And I’ll hand over back to Roland Harings.

Roland Harings

Okay. Thanks, Heiko. Aurubis has a strong track record in sustainability and we are proud of extending our leadership in the sustainable production of copper. Our leading position in environmental protection today arises from early investments into our production plants, with projects investing in first measures for energy efficiency, and second increasing the recycling input and industrial heat recovery.

These investments form the foundation for Aurubis [Technical difficulty] we will continue to see work on initiatives for significant reduction. From the last update we shared with you, 2019, we were able to yet again reduce the carbon footprint of our lifecycle assessment down to just 1,460 kilogram of CO2 per ton of copper produced, compared to the global average of 3,833 kilograms of CO2 per ton of copper. We are proud of these achievements, and we will strive for further reduction in the future.

Last but not least, we need enablers to successfully implement strategies in the company. In the Fusion Project, which involves the migration of all major Aurubis sites to a uniform SAP S4/HANA system, and the standardization of business processes, our goal and aspiration is to create synergies across locations and departments. The investment volume of about €60 million is noteworthy. We will initiate numerous changes in the company that will affect almost every department. The goal is to design seamless interlocking processes across all departments and locations to reduce repetitive tasks and manual data entry. This will make our processes, such as material and financial flows, faster, more transparent, and less prone to errors. When implementing strategic project, these enablers should not be forgotten because they create room for the actual strategic tasks.

Now, coming to the last slide, putting it all together, we have updated our financial guidance with all the projects now approved by the executive and supervisory boards. Correspondingly, we have updated the financial guidance into three pillars. The first short-term pillar includes all approved investment and projects. The second pillar includes all the project included in our midterm planning but which have not yet been approved as projects or investments. And the third pillar includes all projects derived from the long-term perspective until the end of this decade. In total, we decided on a growth CapEx budget of roughly €1.00 billion, with an EBITDA contribution of €230 million.

Not included in our medium-term planning are additional modular recycling projects in Richmond, and also projects in the battery recycling that we are working on that which are not decided and not yet in the plan. Our strategic growth area does not stop here. The project pipeline continues until the end of this decade. With these CapEx decision of our further growth, we have decided to adopt a more flexible dividend policy. In line with our strategy, we will develop Aurubis into a clear growth stock.

With that said, we thank you very much for your attention. And I would like to hand back to Angela.

Angela Seidler

Yes, thank you very much, gentlemen, Roland, Rainer, and Heiko. We are now ready for answering your questions, and happy to receive them.

Question-and-Answer Session

Operator

[Operator Instructions] And the first question comes from Rochus Brauneiser. Please go ahead.

Rochus Brauneiser

Yes, sorry. Good afternoon, and thanks for taking the question. I have a few questions on CapEx and cash generation. Can you give us guidance on what you expect in terms of CapEx this year? And can you break it up between your normal CapEx envelop and what you specifically aim for gross investments. And in this context, can you also give us kind of a rough idea, based on the project you outlined today, when you see the peak in the gross CapEx occurring as of now?

Rainer Verhoeven

So, thanks for the question, Mr. Brauneiser. Rainer Verhoeven here. So, we expect some €600 million to €700 million of CapEx in the year ’22-’23. For when will it be peaking, I would say pretty much in the year thereafter. That is currently the goal. So, we will be, to the highest, I think to €800 million, something like that, in the year thereafter, which is ’23-’24, that should be the peak year as of today. But please bear in mind, as Roland mentioned earlier in his presentation, we are talking on the current midterm planning, we are talking about the projects that are included on the last page, in the left column, and in the middle column.

We are not including further strategic growth projects which might come and might be decided at a later point in time, which also will then change, of course, the guidance on our CapEx exactly, that was the slide with the growth strategy where we showed the CapEx, no, that’s what I was referring to.

Rochus Brauneiser

Okay. Can you shed some light on your expectations regarding [indiscernible] free cash flow based on the EBITDA, the guidance you have given for EBITDA of €400 million to €500 million. Are you expecting to be free cash flow positive under that circumstances? And regarding the dividend payment, would you be willing to pay a dividend, if needed, from the substance rather than from free cash flow?

Rainer Verhoeven

So, free cash flow [technical difficulty] with this CapEx figures, I mean it’s clear, even with the EBT guide of €400 million to €500 million, you know that our — yes, our depreciation is increasing, which also means that our EBITDA is increasing. But still, I mean, by this investment, over the next two, three years we will look at negative free cash flows overall. That’s [with the year] [Ph]. Nonetheless, on the dividend, as mentioned earlier, we will consider and reconsider every year how the situation is. And our shareholders will participate in the profitability of our company, also in the running business, so — because why do we have a negative free cash flow? Not because of bad running business, but because of the high investments.

So, we will look at our EBT figures year-after-year, and decided based on that what will be the dividend payout to our shareholders. And we will, of course, also even with negative free cash flows, tend to pay a dividend to our shareholders.

Rochus Brauneiser

Okay, understood. And probably in that context, probably just on — can you maybe say or share what you think about your share buyback policy and what you are doing with the existing treasury sales you have in your books?

Roland Harings

Yes, I think just repeat the position that we have also stated in the past. We have acquired these shares, and we take them either for finance purpose or M&A activities. And that’s how we are standing today. And there is no change of this policy.

Rochus Brauneiser

Okay, good. And then the last point is on the battery recycling project. Can you give us an update where you stand here? And is the starting point for that project changing with the acceleration in the U.S. and have you already thought about where to build such a battery plant? Is this more a story for the U.S. or you still seeing it’s more on the home turf?

Roland Harings

So, specifically, so you’re asking regarding battery recycling, right, not the [multiple speakers] —

Rochus Brauneiser

Yes, the EV batteries, yes.

Roland Harings

Battery? Yes, we have started our recycling pilot plant for battery for the so-called “Black Mass,” in March this year. And we have achieved very, very encouraging positive results of recovery of all the precious materials in this black mass. Now, we are in intensive discussions with all market participants. And you know we all know that this is a very, I’d say, a market which is still going to be established. [Clearly also] [Ph] battery volumes for recycling — significant recycling volumes will only be available in the market towards the end of this decade. So, we are not in a rush to build up significant capacities. And we have also, therefore, not decided where we are going to put the investment in the first place. Clearly, we are open. Europe is a very attractive region, as U.S. is a very attractive region. So, we are not ruling out or not focusing on any region at this point in time.

Rochus Brauneiser

Okay, that’s clear. Thank you very much.

Operator

And the next question comes from [Sylvan Brunette] [Ph]. Please go ahead.

Unidentified Analyst

Good afternoon, gentlemen, and thank you for the presentation. The first question maybe just to put things into context. Wanted to get a bit more color behind what was the trigger in your understanding and the reason behind the decision to accelerate so much investments in [indiscernible] not exactly the most reassuring compared to the last few years where we were used a version of Aurubis was living within its means, and making sure shareholders would benefit from a return on their investments through the cycle. My first question, so why this acceleration at this point in time?

My second question on the build-up of at Hamburg, if you could help us quantify that number, if you look at there, year-on-year difference in balance sheet, that looks like a €400 million impact, but not all of that would have been Hamburg alone. So, if you could help us strip out that effect, please? Thank you.

Roland Harings

No, I think to answer your — specifically your first question, clearly we are in the growth mode. We have announced, with our Capital Market Day, last year, that we see significant opportunities in these three pillars as I mentioned, strengthening and securing the core, building up growth opportunities in the recycling market, and then on the area of sustainability to further decarbonize our production. Having said this, we see even more attractive market conditions in regions, like U.S., than we have seen then in the year before. With our announcement and the execution of the project, the feedback from the market, from our business partners and suppliers has been extremely positive. And this really led the — our decision to accelerate the next module of our recycling expansion in U.S. That’s also the strength and the beauty of our strategy, that we have modules that we are able to accelerate and add capacity without doing all the engineering and all the work again, but that we can really take additional capacity into the market faster than if you would do this on a traditional greenfield, complete new investment.

And if fine, and perhaps also your question regarding shareholders, just to remind, we are proposing through the General Assembly, the highest dividend ever, with €1.80 per share. So, I think this is more than a strong participation of our shareholders to the successful growth of the company. And we will also continue to do so and give them a fair, good participation in our success. But we are not, let’s say, see ourselves kind of locked in to this 25% ruling because investing in our rules, investing in our growth agenda is, from our perspective, an extremely good value proposition for our shareholders, which is how I would define it for the second part of your question.

Rainer Verhoeven

Yes, thanks. There was a question on the inventory build-up. Let me try to answer it in a bit a different way. We had a net cash flow of €228 million this year, if I am not mistaken. And we have €800 million, something like that, in the last year. So, there is a huge swing. And I need to start with the last year because there is quite a tsunami sloping into this year. In the last year, end of last year, we had the [stanza] [Ph] in our [indiscernible], where we emptied pretty much the tankhouse. Our electrolyte, this plant, was running pretty empty. With that, the net working capital was there, let’s say, artificially reduced. [Technical difficulty] in addition to that, we had [technical difficulty] led to the fact that we had the strong build-up there towards the end of the year of our net working capital.

Please bear in mind that also [technical difficulty] [speak for us, be about] [Ph] real figures, how much is it? Well, you can easily count some €400 million inventory build-up. As you can see, year-over-year, we had an increase in inventories of €432 million, so that is, in principle, the effect. Breaking it down to what is now intermediate product, what is the different types of metals? I think that doesn’t make sense at this point.

Unidentified Analyst

Just one follow-up maybe on costs, if you could help us understand what carryover cost inflation should we expect, more so in say the first-half of the year given you guys have already covered the first quarter of your current fiscal year, what sort of remaining inflation trends across your, let’s say, controllable costs, including or excluding energy? Are we looking at the moment please? Thanks.

Rainer Verhoeven

So, yes, let’s say, first of all, as I said earlier, I mean energy remains an important topic. And on the other side, you can see that even though energy is an important factor for costs, all-in-all, the increase on the energy side is rather I would say, “Harmless,” because we are pretty much hedged. What does pretty much hedged means, we in the group are consuming some two terawatt hours of electric energy per year. One terawatt hour we consumed in our German plants, this one terawatt hour is based on a pricing formula, which includes the fixed components. It includes the CO2 component, and it includes the coal component, it does not include any gas, nor any prices, which means year-over-year, we have seen an increase, but it’s a completely different level than the EX prices that we are currently seeing. So, for the German one terawatt hour, we are pretty fixed. Let’s take the Foreign terawatt hour on electricity, on the foreign terawatt hour, rather half of it is consumed in Bulgaria.

In Bulgaria, we have seen a cap at 250 Bulgarian Lev, until the end of December 2022. So, the full calendar year 2022 more or less. Now, just recently, it has been announced that the Bulgarian government has decided to lower that cap even to 200 Bulgarian Lev, all-in-all, including distribution fees, I’m not 100% sure now, we are looking at energy prices of €114 per megawatt hour. Yes, expensive compared to before the prices but nothing in comparison to the EX prices that we’ve seen.

So, the other half is pretty much Belgium, there we have two plants, one is fully hedged at absolutely reasonable prices, the other one is not hedged at all. Overall, we can say on the electricity, we have no issue, on the natural gas side we have some hedges available still at a low level we have to admit. But we are switching pretty much in the beginning of next calendar year, 40% of our total natural gas consumption two alternative energy sources we have talked about that is LPG, fuel oil. And we will change the smelters here in Germany. So, that also besides the fact that we get security for those plants, we also get better prices on those alternative fuels. So, the energy topic is a topic for Aurubis and will remain so. But nonetheless, we are pretty safe on that end.

And on the others, I would say on the consumables we have seen steep increases, if we look to caustic soda to whatever chemical you want to take, we have seen increases two digit even up to three digit or even doubling the prices. I would say that, especially those chemicals are driven by the energy prices, as well, as we see the energy markets coming further down now, or let’s say, calming down, I would say we have seen the worst in the chemicals market as well. So, we don’t expect further big increases on the consumables side which is then the next major impact factor on the costs. And then of course you have personnel expenses. They are a big cost factor for Aurubis and here for sure we will see inflationary tendencies also coming up. We are looking to the normal inflationary tendencies that we have, let’s say, all over the place highest in Bulgaria. That is — I would say that is the summary hopefully to your question.

Roland Harings

That’s let, Rainer. This is also known and taken into account with our prognosis of the range of €400 to €500 because there are no unknowns in these cost positions going forward. And again to underpin what Rainer said on the energy side, we have compared to other energy intensive industries and industry players, we have a very, very stable and predictable situation here as [technical difficulty]…

Unidentified Analyst

Great, thank you. Thanks so much. That’s helpful.

Operator

And the next question comes from Ioannis Masvoulas. Please go ahead.

Ioannis Masvoulas

Yes, hello, can you hear me?

Angela Seidler

Yes, we do.

Ioannis Masvoulas

Perfect. Perfect. Thanks very much for the presentation. A few questions from my side, the first, again, going back to CapEx, you have several growth projects in the pipeline. You did mention €600 million to €700 million for fiscal year ’23. But just wanted to figure out, what’s the sustainment component of CapEx that you’re looking to incur in fiscal year ’23, and by how much the sustaining CapEx raise once you have all those projects fully up and running, and I’m talking about the ones you have announced as part of the €1 billion total CapEx?

Roland Harings

Yes, so the numbers we shared with you today in the call, these are all growth projects, we have not talked about our sustaining CapEx, the magnitude of sustaining CapEx has just been looked up. But to give you an idea for example, in product, a major standstill is about €40 million of CapEx, but I think the exact number will be around €200 million on top of our growth CapEx that we have announced there.

And if you look at the total numbers, if you adjust the growth strategy chart, where we have these three pillars, on the short term, medium term and long-term, if you have the short term and the medium term, again in the first column was $1 billion is decided and in execution will deliver €230 million EBITDA bottom line. And in the medium term, we have around €400 million plans with the results of about €100 million, these are in our midterm planning included, but yet not decided. We are working on this. So, if you add in the midterm plan these two buckets together, we are talking about €1.4 billion of investments, delivering €330 million bottom line. So, this is our growth agenda in the framework of the MTP.

Rainer Verhoeven

In addition, there was the question from Ioannis also, how does the level of the sustaining CapEx move after all the strategic projects have been implemented? I can only answer with a typical bathtub curve. So, once you have invested, you will have a couple of years where the reinvestment in those completely new plans will be rather low. And then the investment starts kicking in. But we did not calculate this figures yet for sustaining CapEx in let’s say it will be 2030 and further years.

Ioannis Masvoulas

Okay, thank you. Second question, again on CapEx, in the past few quarters, you talked about your extensive derisking steps up the Richmond project that will allow you to keep costs in check. In this context, can you talk about this €90 million CapEx increase? What aspects of the project were exposed to inflation because my impression was that you had locked in all the major inputs and how much of these €90 million is attributed to some additional infrastructure corporate requirements that you alluded to earlier in the call?

Rainer Verhoeven

Yes, sure. That’s to distinguish here, what we have stated we have locked in and have signed contracts with SMS regarding to supply of the equipment. This is the fact and that’s also contract with a fixed price. But the execution, the construction side in U.S. has turned to be a much more dynamic market than we anticipated at the time.

So, there are a couple of factors. So, first of all, it’s a different market environments or certain cost position have increased, other to our assumptions at the time. And we have also decided to enlarge the scope of the project, because we are preparing the infrastructure and I think I mentioned this shortly in my short presentation here that we are building now the site and the infrastructure for the growth in RM2 but also some investments anticipating further potential steps in U.S.

So, like I will give you one idea, the craning of the site. So, what is the total plot of land? So, we have decided that we do this once without knowing when and if we are going to do further expansion programs, however, we said this is money well invested, because we do in ones and one because, and then we have this inflation side, which we have also taken to council, in a project of €300 million investment in this inflationary and very dynamic environment in U.S., I state we have done well, while containing and keeping this project still within this reasonable cost increase that we have seen and announced yesterday.

Ioannis Masvoulas

Most clear, thanks very much. And then switching to the fiscal ’23 outlook, the EBT guidance of €400 million to €500 million appears fairly robust in a historical context for the group. Yet if we look at the return on capital employed pretax as you are guiding for this 11% to 15%, if I take the midpoint that would be actually below your stated target to be above 15%, right? So, I guess part of it would be explained by the high reward deductible that you already talked about, but how much do you think you can actually release as you are now building new processing capacities that would probably also look in some materials throughout the data production chain. And ultimately, is there any part of the group from today’s point of view, which may be under earning in fiscal year ’23, relative to history?

Rainer Verhoeven

So we’re looking to the questions, first of all, a robust earnings. Yes, true. And as announced by us in our speech, there is quite some earnings components. If we look at the top line, which [technical difficulty] contracts for shakes for current running fiscal year. The unknowns are as always, the sulfuric acid and the scrap RCs for scrap number two, mainly the rest is pretty much foreseeable right now, cost components, I have explained already on the energy side, we got a couple of other cost components.

Also, they’re not yet fully fixed, but I would say pretty much therefore, yes, the EBT guidance €400 million to €500 million robust figure and we are pretty convinced that we can deliver on that figure. So, why is the ROCE now a bit subdued, if you want to say so. For sure, I mean, we are investing something like €600 million plus into our plants on an annual basis, which clearly exceeds the depreciation which is a bit above €200 million currently in our company. So, therefore, we have an increase in capital employed. And we will especially see that of course in the MMR segment due to the fact that Richmond build count into the MMR segment. So, for a couple of years, we will not achieve our 15% on the MMR segment, due to the investments.

Ioannis Masvoulas

Okay. And just to clarify on the methodology, what sort of capital employed data you’re using for this target? Is it end of the fiscal year ’23 or end of year fiscal year ’22?

Rainer Verhoeven

We always use the capital employed of the end of the fiscal year, which means if we calculate for the 30^th of September 2022, we look at the balance sheet and capital employed in the balance sheet of ’22. And we take on the EBIT side, the last four quarters which then is the total fiscal year ’21, ’22 from 1^st October 2021 until 30th of September 2022.

Ioannis Masvoulas

Very clear, very clear. Thanks for that. And just the last question for me on going back to the energy costs. There are several moving parts and you already talked about the electricity and gas components of your energy cost base. But if we were to look at your exit rate in the last quarter, you just reported right, if I look at the energy costs you had around €110 million for the quarter, and annualized is around €440 million, €450 million? Is that a reasonable base for fiscal year ’23? Or shall we expect to see a further increase in energy costs year-over-year, based on your I guess, guidance, based on the guidance range?

Rainer Verhoeven

So we will say roughly €400 million, €420 million is something that you could calculate both on the full-year basis.

Ioannis Masvoulas

So you broke up a bit, you said €400 million to €450 million or?

Rainer Verhoeven

€400 million to €420 million.

Ioannis Masvoulas

Great, that’s very clear. Thanks so much.

Operator

And the next question comes from Maxime Kogge. Please go ahead.

Maxime Kogge

Yes, good afternoon. Yes, considering the fact that that we’ll be spending a lot of CapEx over the next few years that you will be free cash flow negatives, yes. Would you rule out any M&A in that context? And because I understand you’re very much focused on organic growth and related to that, are you envisaging to set up the net leverage target something like that to that, I mean the financial community has a better grasp of your financial policy? Thanks.

Roland Harings

So regarding your — the first part of your question, which I will take, Rainer will answer the second. M&A is not excluded, definitely not. It’s part of our continued search to find some M&A targets, as we have stated in calls, this excellent target that we have acquired with Metallo, there are unfortunately, no more Metallos at least to our knowledge in the world, if so, we would go after, but we are permanently looking into additional adjacent business opportunity in our multi-metal arena. And the answer, M&A is not included with our growth agenda and the organic growth that we are pursuing. Second Part, Rainer will take.

Rainer Verhoeven

Hello, Maxime. So, you were asking on a net leverage target. So, the target that we have of course is to keep an equity ratio above 40%, that is due to the fact that we need to have a solid balance sheet, because we need to be the bank of a solution also for the concentrate suppliers, which use typically our long-term contracts to get the loans at their banks, that is typical. That’s a quite well received with the banks. So, therefore, the 40% equity ratio stays in place.

Maxime Kogge

Okay, that’s 40% out of the total balance sheets of equity ratio?

Rainer Verhoeven

Absolutely, yes, 40% equity versus the total balance sheet, yes.

Maxime Kogge

Okay. Okay. And regarding the newly announced CRH project, I thought it looked a lot like I mean, the former FCM project, I mean, that was shared in 2019. So, can you perhaps get us through how it differs from the former project? And what lessons maybe you have learned from the failure of the project? I mean, considering I mean, this new large scale 1?

Heiko Arnold

This is Heiko Arnold speaking. Regarding your question and whether the CRH project looks like the FCM, clearly it is not. The CRH project is the value of tapping into a portfolio of TCRC bearing materials in the copper lead area, which we want to expand. The FCM project was much bigger, and content included a lot more projects.

Maxime Kogge

Okay, okay. And just finally, regarding the battery project, when do you expect to make a decision? I mean, is this year I mean 2023 or will it be further ahead? And I understand that the main hurdles probably lie in the difficulty to set up the full value share and offer one-stop solution to automaker rather than the technical difficulties which seems to have been overcome more or less, so I mean it will be helpful here to give us more color in that respect?

Ronald Harings

Yes, we are not in a position to announce any decision there yet. One thing is clear, we have a very good technology and recycling business with very, very good recovery rates for all the important metals and also within, which is very important going forward with a very attractive OpEx position.

So, what are the production costs to recycle these materials? And with this, we are in the different investigation, what is the next right step, but we have no fixed timeline on when this decisions will be taken. And therefore, if it’s ’23, ’24, no statement here, important is the real recycling market, end-of-life recycling market will only be there of significant volumes in Europe or North America towards the end of the decade. So, therefore, there’s also no rush in order to go in with significant investments too early, because these investments, if we enter will be industrial scale, and they need volume. That’s where Aurubis is strong, recycling complex materials at industrial scale.

So, therefore, we will not make any hard timing on the decision going forward. And to your second part of the question, the total supply chain, we are the expert in metallurgy. So, recycling black mass is our core competence. What is the needed on the, let’s call it the upstream and the downstream side around recycling or recycling these batteries. This is something which we certainly will do with partners. And we are not excluding even JVs at this point in time. But we don’t see ourselves being the disassemblers and the collector for batteries, this is not our core competence, there are other companies who are better positioned and have already networks in place and here we are discussing. So, clearly our positioning is black mass recycling, and the upstream, downstream is in discussion how it is going to be set up.

Maxime Kogge

Okay, thank you. That’s all for me.

Operator

And the next question comes from Christian Obst. Please go ahead.

Christian Obst

Yes, thank you for taking my question. Good afternoon. Just one remark, some times, the line was a little bit bad. But nevertheless, I hope it works now. Sorry, coming back to the €90 million, I take it a little bit at a cost overrun over the €300 million investments in Richmond. Just a year ago, you stated this was conservative, and there is enough headroom and so on and so forth. And we say the plant price is fixed and also investing a little bit into the site going forward. So, there is a 20% to 25% cost or something like that. So, how will you clarify or see that this will not happen again with one-off or other projects going forward. What have you changed?

Roland Harings

Yes, no, you’re right. But as a bit of a defensive statement, the world has really changed massively in the last 12, or in last 18 months. We have not and that’s the fact, we have not foreseen this extreme inflationary environment in which we are working today, there is still very tense situation on supply chains on getting certain components and on some of the equipment which we have not contracted, have not contracted at the time that also these equipments with this huge industrial activity now, investment activity in the U.S. has also put this into a bidder market and not into a buyers market.

So there are certainly effects which you’re absolutely right, we have not foreseen to the extent as we have seen them today. Having said this, today we have a very high confidence level as we are well advanced in the engineering and a detailed engineering of the project in Richmond, that we have here now, we have seen it, we have seen the cost increases, we have seen what is really inflation, what is also as I mentioned before, a decided scope increase which is also part of the €90 million.

Regarding other projects, I think lesson learned is here. We decided in the project in U.S. to go fast. We focus all our activities on the equipment, signed the contract, and had to design and build approach on the construction, on civil engineering. This is something we are reconsidering for other projects in order to have stability and better predictability of the investment to take this project in all categories to a different maturity level, to a different design level in order to be able not just to sign contracts like we did for Richmond for equipment but also for other major parts like civil engineering or other engineering component. So, that’s something which we — but clearly we are going to balance out between speed and precision because there is always a trade off to go fast and take some more, let’s say, accepted risks or to be safe and be slower. So, that’s really the balance, and we tend or I personally tend also go at the new Deutschland speed, which is not a statement. So, that we go fast and really within a certain say framework to take controlled risk in the execution.

Christian Obst

Okay. Thank you for that. Then coming back also again to the American market, can you give us some details or examples what really has changed that you decided now to accelerate the investment in the U.S.?

Roland Harings

When we announced the first step, we were already sure that there is an highly effective market as we area also sourcing materials for Europe already, U.S. market so we are connected to the market already today. And, what was really encouraging us was the feedback from the supplier base. It’s a huge market for recycling. That’s around 6 million ton of recycled material available in U.S. And therefore, the pre-processers were very, very positive about this investment. And we saw that we have very strong supply base for project. This on top with the very good — sorry, permit process in U.S. where we have now all the permitting done, all before the second phase, we did both module 1 and 2 in one permitting process which is there plus also that we have the size, the execution, the investment, and the site in full swing, all these aspects of strong market — confirmed strong market push for more local production. So, we believe there is also —

Rainer Verhoeven

Energy cost.

Roland Harings

And, yes, Rainer just popped in that energy cost stability in comparison to Europe we have to say U.S. is paradise for energy, for supply, stability, security, price level, hedging possibilities. It’s exactly what an energy intensive industry like ours is looking for. So, this was another important step to build and strengthen this important pillar for Aurubis in the U.S. market.

Christian Obst

Okay. Have you already secured some volumes or prices for module 1 maybe?

Rainer Verhoeven

For Energy you mean?

Roland Harings

Module one.

Christian Obst

No, no, no, for the input material for the [multiple speakers] —

Roland Harings

Input material? Yes, the market is not that you buy. This is a market where we are in close contact. There are some say agreements but not must take, must pay agreements. This is not in place at this point in time. And it’s also not needed because material is available. And to repeat, this is the first plant of its kind in U.S. and is largely a market which will go on stream in mid ’24. So, there is absolutely no concern about availability of material. It’s rather the opposite that we can cherry pick, that we really can pick the best input material for our plant at the time.

Christian Obst

Okay, thank you very much. Then last but not least, question concerning the — it’s all about execution then going forward, I would say you say, you have — [there is] [Ph] two modules of industrial [indiscernible] and then I will talk back to recycling and disclose additional, you have up to eight projects for the next let’s say, eight to 10 years. And then on top of that, you would like to transform everything into a major — there is a major IT project going towards S4/HANA. And how you make sure that the entire management structure is able to deal with all that? And that you can oversee that? And you are not running into some kind of execution problems or maybe that you do not see any problems that might arise at one of these major projects? So, how do you secure that? Have you changed the structure of management and controlling?

Roland Harings

No, I think it’s an absolutely spot-on question. And to be clear, the biggest challenge for us, which we all do announce with our — On the Capital Market Day with the development of our strategy. We have, therefore, decided to significantly increase our management capabilities, for example, with the centralized engineering group, engineering organization which we are setting up to manage the technical side of the project and also the project management side. The same is true for the procurement side. The same is true for the IT side. And the good news is even in a challenging labor market with this Aurubis as a company with this purpose being part of the circular economy, a sustainable and proactive company in this market field, we attract talent. We can really get the right people on board. For the execution of project, we have ourselves put the [indiscernible] in place that we only start project when we have the resources available.

So, that’s our clearly the must condition for the execution of projects because I fully agree with you if we would overload the system with these many activities and would not have the necessary resources, we are at a very execution risk. And this is exactly what we have addressed from day one when we launched our strategy process. So, we are building up the organization in all the necessary aspect, and we are very prudent to start projects and only start them with the necessary capacity and capabilities.

Rainer Verhoeven

And last but not least if I may chip in here. We have extended our executive board from January 1st onwards. I mean this also reflects that we as let’s say we call them sponsors. We as the executive board, we are sponsors of one or other project. And make sure that the workload is still doable also on the executive board level.

Christian Obst

Okay, thank you very much. So, we are looking very much forward going into ’23 and about the execution of everything. So, all the best and Merry Christmas to all. Thank you.

Operator

Okay. We didn’t receive any further questions. So, let me hand back to your host for some closing remarks.

Angela Seidler

Yes, first of all, thank you very much for the question — for the details questions and your interest in Aurubis. Looking at our financial calendar as we are already facing closing of our first quarter, we are going to publish our Q1 results February 6. And will host our shareholder meetings at February 16 2023. Now I would like — yes, last words Roland to you.

Roland Harings

Last words, yes, I think first of all mentioned I think after again a very intense 2022 with many many crisis management everything, it’s time now to say take a couple of weeks off during the holidays here and reenergize. And I would like to extend big thanks to the Aurubis team because what we have achieved this year and I think the summary from Christian about our projects and what we have all on agenda is only possible because we have an absolutely dedicated strong management team here on board. I have to say it’s a real pleasure to be at the helm of this company and to drive this very, very ambitious agenda for growth of the company.

So, with this, I am also very happy now that it’s the 21st of December, and I happily take off a couple of days after an intense couple of months here. And I think on behalf of my colleagues of the all management team, I would like to thank you for your permanent, for your continued interest and challenging of the Aurubis team here. And I also wish you a very nice Christmas Day, nice holidays, good time with your family and friends. And then we will see and talk again beginning of next year. And our contacts are available, so Ferdinand and Angela are here. So, any further questions, anymore point which come up, don’t hesitate to talk to them. They are — not between the holidays, but after the holidays, they will happily answer all your questions again.

So, with this, thank you, merry Christmas, all the best.

Angela Seidler

Thank you. Bye.