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Imerys S.A. (IMYSF) Q4 2022 Earnings Call Transcript

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Imerys S.A. (OTCPK:IMYSF) Q4 2022 Earnings Conference Call February 17, 2023 4:00 AM ET

Company Participants

Alessandro Dazza - Chief Executive Officer

Sebastien Rouge - Chief Financial Officer

Conference Call Participants

Sven Edelfelt - ODDO

Mourad Lahmidi - BNP Paribas

Jean-Christophe Lefèvre Moulenq - CIC

Cameron Needham - Bank of America

Eleonora Martignoni - M&G

Alessandro Dazza

Good greeting to each of you. Thank you for joining america coming to reappraisal Imerys’ Q4 and 2022 Full Year Results. With maine today, arsenic usual, Sebastien Rouge, our CFO.

Let maine commencement by giving you immoderate highlights of nan twelvemonth we conscionable closed, a twelvemonth which confirmed again Imerys’ beardown financial capacity and resilience successful a very challenging context. 2022 was marked by an bonzer inflation, pinch prices of power reaching grounds levels, peculiarly successful Europe during nan summer. In this context, Imerys managed to adjacent nan twelvemonth pinch a affirmative positive publication of adaptable costs, arsenic we will spot successful a fewer slides. We delivered double-digit integrated maturation astatine 12.5% for nan afloat year. Volumes were negatively impacted by nan situation successful Russia and Ukraine, by continuous lockdowns successful China, an important state for nan group. But nan diminution of insubstantial accumulation which is backmost to its humanities trends aft a short rebound station COVID, arsenic good arsenic a definite weakness successful business markets, particularly successful Q4 wherever we could spot a important customer destocking. Sebastien will heavy dive connected this later on.

What is astir important, contempt declining volumes, Imerys demonstrated its resilience and posted an summation successful EBITDA of 11% for nan twelvemonth and an summation of 23% successful existent nett income pinch Q4 ‘22, supra past twelvemonth performance. Just arsenic a reference and to underline, I judge nan bully performance, our existent nett income successful ‘22 is astatine nan aforesaid level arsenic ‘21, though we person sold astir 20% of the company, I punctual you, nan HTS business.

As said, existent EBITDA, up 11% year-on-year, €720 million, supra nan guidance we had communicated successful November, which I punctual you was 690, 710 range. The group generated an operating rate travel of €105 cardinal earlier strategical CapEx despite beardown ostentation connected moving capital. Again, Sebastien will springiness you much details. We accelerated our spending connected strategical CapEx, €85 cardinal successful 2022. We want to quickly summation our capacity and support early maturation successful fast-growing extremity markets. I will remark much connected this later on.

Finally, Imerys has completed nan disposal of nan high-temperature solution business to Platinum, an American backstage equity, connected January 31 of this year. Based connected nan beardown results of 2022 and nan proceeds from nan disposal of nan HTS business, nan Board of Directors will propose to nan General Meeting of Shareholders successful May to salary a dividend of €3.85 per stock compared to €1.55 per stock paid past year, which represents a payout of €327 cardinal and includes €200 cardinal from nan proceeds of nan HTS disposal.

If we now look astatine connected nan adjacent slide, nan improvement of nan group complete nan past fewer years, Imerys confirms its business exemplary is resilient moreover successful challenging times. We recovered, arsenic you tin spot connected nan near side, we recovered quickly aft nan COVID situation successful ‘21 and mastered good nan caller inflationary environment. The group was capable to summation its EBITDA, which reached grounds levels astatine what we telephone aged perimeter earlier nan HTS disposal, connected nan right. This singular accomplishment was possible, acknowledgment to our position of starring supplier of really specialty solutions, diversified footprint, some geographically and extremity markets but besides thanks, I believe, to nan tremendous effort of nan teams to activity connected costs, to power costs and expenses. In particular, I would for illustration to punctual 2 programs that contributed to this performance: Our IQ programme business excellence; and our STEP programme driving purchasing and proviso concatenation improvements.

Let’s now person a look astatine nan markets we serve. The two, let’s say, caller aliases still ongoing divestiture, HTS and nan assets serving nan insubstantial market, will position Imerys connected charismatic increasing extremity markets. On nan near of nan slide, you person nan erstwhile vulnerability to extremity markets, connected nan right, wherever we guidelines coming aft nan HTS divestiture, still including our insubstantial business. As you tin see, insubstantial business exposure, 9%, 10% is still significant, but will beryllium reduced aft nan contemplated disposal of our assets. The caller Imerys is importantly little exposed to robust and steel, which arsenic I ever said, per se is simply a bully market, but cyclical. You tin besides statement connected nan correct nan relevance of nan power and electronics market, that we now want to show separately arsenic this will beryllium a driver of early maturation for this group. Construction will stay nan astir important marketplace for Imerys followed by user goods. I will spell successful specifications connected each of these markets successful nan pursuing slides.

Let’s commencement pinch Construction, nan biggest, nan astir important for us, arsenic I mentioned successful erstwhile communications. Markets intelligibly showed grounds of slowdown some successful Europe and North America, possibly a spot little successful nan remaining parts of nan world. Drop successful nan U.S. is rather impressive, 10% fundamentally for 3 quarters successful a row, intelligibly relating to rising liking rates, partially shortage of workforce and higher earthy worldly costs. In Europe, nan weakness is little evident, comes mostly from little residential request and caller builds, astir apt for very akin reasons. France is simply a bully illustration arsenic we cognize from nan newspapers. This inclination will astir apt proceed besides successful nan first portion of 2023. On nan contrary, we do expect a robust betterment successful China aft difficult years. Consumer equipment markets proceed to advancement well, confirming resilience moreover and sometimes unexpectedly successful specified an inflationary situation arsenic we unrecorded today. The diminution successful power prices successful Europe should thief to support this inclination arsenic good arsenic a bully beardown occupation marketplace successful nan U.S.

On nan adjacent slide, automotive. Another important market, accumulation levels look bully connected nan table, person improved, but acknowledgment to a much favorable proviso concatenation and a very debased comparable ground past year. I punctual you nan Jeep crisis. Still, successful Europe, particularly successful Europe, I would opportunity accumulation remains importantly beneath pre-COVID levels, which for me, offers a bully opportunity for continuous maturation successful nan future. Energy and particularly electrical vehicles person been very move markets, boosting request for lithium ion batteries, wherever Imerys decidedly plays a role. Electronics has been a spot softer connected nan backmost of precocious ostentation and spending reductions.

On nan past descent connected nan markets business applications remains important for nan group. Weakness successful demand, particularly successful Europe astir nan extremity of nan year, wide slowdown of activity connected nan backmost of precocious costs of energy. Same is intelligibly evident connected nan bottommost correct connected robust and alloy demand. Graphic paper, still an important marketplace today, arsenic I said, astir 10% for nan group, astatine slightest for nan clip being arsenic return, I would say, to its humanities inclination of diminution aft a bully ‘21, I punctual you, aft nan COVID crisis, pinch nan objection possibly pinch immoderate areas successful Asia wherever depletion of insubstantial is still increasing connected nan backmost of increasing population.

Let’s move connected to nan costs side, costs and prices connected this slide. As I said astatine nan beginning, Imerys has managed to offset done pricing, nan exceptional emergence successful input costs successful 2022. The effect of ostentation shown connected nan figures connected nan correct portion of nan array is simply unthinkable is successful magnitude. The equilibrium value adaptable costs, arsenic you tin see, was affirmative for nan afloat year, and I really deliberation this is an exceptional accomplishment fixed nan context. I deliberation nan worst is behind. I judge we person passed nan highest of this inflationary spiral, astatine slightest successful manufacturing, and I do not expect input costs to emergence immoderate longer. This should springiness america nan anticipation to yet return immoderate savings to our customers. It’s important to safeguard this transparency and nan narration pinch our customer base.

Let’s now move connected to nan main CapEx of this year. As mentioned, we spent €85 cardinal successful these ample and strategical projects. Jade, what we telephone Jade internally, nan Jade task successful China will let Imerys to nutrient locally precocious facet ratio minerals for lightweighting of polymers, typically for automotive applications based connected our patented proprietary technology. China is today, by far, nan largest automotive marketplace successful nan world. This CapEx puts Imerys astatine nan halfway of nan happenings. Commissioning is underway and should beryllium completed earlier nan extremity of this quarter.

Now our graphite and c business, we are conscionable completing nan 3rd accumulation statement and person started nan building of nan 4th accumulation statement successful Belgium to grow c achromatic proviso to lithium-ion batteries, aliases artillery makers. At capacity, these 2 lines will adhd complete €100 cardinal apical statement for nan group astatine bully levels of profitability. In synthetic graphite, successful Bodio successful Switzerland, we expect to decorativeness our 3rd description earlier nan extremity of 2023. Also successful this case, products will chiefly reside rising request successful lithium ion batteries.

Last but not least, we proceed our activity connected our lithium extraction project, nan EMILI project. And I’m very happy to denote that for nan first time, we person produced successful a laboratory scale, nan first grams of not only lithium, but battery-grade lithium, confirming that our exertion works. Important besides to mention that EMILI has been selected arsenic a winning task wrong France 2030 program, and will person a assistance of astir €22 cardinal for R&D and piloting.

On nan adjacent slide, a fewer words connected innovation. I will not spell done each nan products, but nan group has launched much than 80 caller products successful 2022 pinch 3 main areas of focus: greenish mobility, arsenic we conscionable mentioned; sustainable construction; and a batch of caller solutions, earthy solutions for user goods. What is important that each invention task coming is screened pinch nan alleged portfolio sustainability appraisal framework. So pinch clear rules, verified and audited by an independent body, why do I opportunity this? Today, customers want caller products, but they want sustainable products for nan future.

Let’s move connected to thing conscionable arsenic important arsenic invention is ESG, our responsibility. We person – we had launched our first 3-year ESG sustainability scheme successful ‘19 that came to an extremity successful 2022. We person mostly and successfully achieved nan targets. More – here, you person a practice of a fewer of them, much is elaborate successful our cosmopolitan registration document. What are we going to do successful nan future? We are launching a new, moreover much eager scheme for nan adjacent 3 years, ‘23, ‘25, which will proceed to attraction connected what we judge are nan pillars of our sustainability efforts: Our people; our customers and products; and our planet. We group nan barroom moreover higher. We want to proceed to beryllium nan reference successful our manufacture successful position of sustainability. Again, I will not spell successful nan specifications of this table, and I’ll fto you cheque these arsenic good arsenic different KPIs that we are listing successful our [indiscernible]. Nevertheless, I would for illustration to walk a connection connected nan very past statement of nan slides astir ambiance alteration and greenhouse gases emissions.

And connected nan adjacent slide, you will spot what we person done. Until today, Imerys has group targets connected nan simplification of CO2 emissions successful comparative terms, therefore, successful narration to sales, targets that we person intelligibly mostly achieved. We person now decided to make a measurement alteration – successful 2 large changes. First, we person decided to align to nan 1.5 degrees trajectory. In nan past, we were aligned to nan 2.0 degrees trajectory. Second, we target to trim greenhouse gases emissions successful absolute terms, not relative. It intends tons of CO2, period. Our extremity is to trim CO2 emanation by 42% until 2030 from nan reference year, which was 2021. It’s a very eager target. I judge we tin execute it and we want to execute it for our planet.

Last year, to springiness you immoderate numbers, we person reduced our greenhouse state emissions by 10% successful absolute position and we will accelerate successful nan coming years. We person identified respective decarbonation levers, you spot connected nan near broadside of nan slides. But honestly, this will not beryllium capable to scope this 42% reduction. We request more. We count that technological developments successful nan coming years will help. And by nan way, we person 8 years to get there, and we will make it.

I now manus complete to Sebastien to spell successful much specifications connected our financials.

Sebastien Rouge

Thank you, Alessandro. Good morning, everyone. And fto maine locomotion done nan cardinal aspects of our financial performance, and we’ll commencement pinch revenues.

Sales reached €4.3 cardinal successful 2022, a 16.8% summation versus anterior year. This was mostly driven by a bully integrated maturation of positive 12.5%. As we person seen passim nan year, nan publication of prices has been significant. Also, if you look astatine Q4 alone, it’s a small spot little than what it was successful Q3 erstwhile we still look successful comparative terms. The gross besides included a affirmative rate effect of €211 cardinal that’s supported by nan summation of USD arsenic compared to euro wide successful nan year. The antagonistic €72 cardinal of perimeter that you spot is related to nan early divestiture, successful particular, nan hydroscaling business successful North America.

If we look now into much item connected our 2 business segments, we commencement pinch Performance Minerals. This conception generates 66% of nan group’s turnover, pinch income of €2.9 cardinal successful 2022. All geographies saw improved trends pinch like-for-like revenues up 13.6% versus ‘21. The group faced immoderate customer destocking successful Q4, this was particularly successful EMEA, while nan activity was sustained successful nan U.S. and successful Asia.

Overall, besides if we look by market, we person a soft insubstantial marketplace passim nan year. On nan affirmative side, we person an wide level of activity that was supported by nan income of ceramic and building products going to nan building industry; a amended capacity of filtration and agriculture markets that we study nether user goods; and precocious request for c achromatic and synthetic graphite that goes to mobile energy. Also, we noted a rebound of nan automotive marketplace successful Europe. Current EBITDA of nan conception accrued to €555 million. That’s a separator of 19.5% arsenic compared to sales.

If we look now astatine our refractory, abrasive and building business, our 2nd conception recorded income of €1.4 billion, and correspond 34% of Imerys’ consolidated revenue. In nan past quarter, nan gross was impacted by important customer destocking and by nan shutdown of immoderate ample customer plants, successful peculiar successful Europe. On nan different side, nan business continued to use from dedicated commercialized initiatives and caller merchandise launches. In particular, nan request of specialty binders for building and infrastructure remains supportive. In India, our caller greenfield cognition successful Vizag continues to ramp up and serves nan move home refractory and building markets of this portion of nan world. Current EBITDA increases to €202 cardinal pinch a separator of 14.1% arsenic compared to sales.

If we look now astatine nan group profitability arsenic a whole, nan existent EBITDA for ‘22 reached €720 million, up 11% year-on-year. This takes into relationship a alteration successful measurement publication for €101 million. A continuing affirmative value publication complete €700 million, which much than compensated for nan €483 cardinal nett summation successful adaptable costs, which was a consequence of highly precocious ostentation connected energy, freight, earthy materials and packaging passim nan year. We statement besides an summation of €103 cardinal of fixed costs and average, besides now impacted by nan emergence of inflation. As a result, existent EBITDA accrued to €720 million. As a percent of sales, separator decreased to €16.8 million, mostly because of nan mechanical effect connected inflation. If we look astatine nan 4th fourth alone, existent EBITDA was stronger successful absolute position and successful comparative position arsenic compared to nan Q1 of 2021.

Looking now astatine nan different elements of our income statement. In absolute terms, nan existent operating income increases by €81 million, a spot much than nan EBITDA summation that we conscionable looked at. Net financial consequence was antagonistic astatine €50 million. impacted by FX variety and marginally by nan rates increase. Income taxation expenses, €105 cardinal corresponds to an effective taxation complaint of astir 27%, successful statement pinch nan 1 of 2021. Current nett income from continuing cognition frankincense accrued by 22.3% to €284 million.

We person nett operating income and expenses successful – of €807 million, and they are mostly impacted by an impairment nonaccomplishment that we person booked connected nan ongoing disposal of nan assets serving nan insubstantial market. You’ll retrieve that we had started to book this nonaccomplishment successful Q3. And it now, for nan afloat year, reaches €108 million, frankincense explicate most, if not all, of this line. All successful all, nett income was astatine €237 million, very good successful statement arsenic compared to past twelvemonth and besides includes nan publication of nan discontinued activities.

If we look now astatine nan rate travel generation, we study a existent free operating rate travel of €20 million, powerfully impacted by ostentation and moving capital, and by nan summation of strategical CapEx that was mentioned by Alessandro. This fig includes €406 cardinal paid successful superior expenditure, of which €85 cardinal are circumstantial maturation CapEx doubled arsenic compared to past year. You retrieve that we person deliberately accrued our letter cover for maturation CapEx arsenic portion of our superior allocation strategy. The nett rate besides includes €233 cardinal summation successful operating moving superior arsenic compared to December past year. It is mostly driven by nan mechanical effect of ostentation connected nan valuation of our inventories and receivables. It will evidently beryllium driving our attraction for an betterment successful 2023.

If we look now astatine nan wide equilibrium expanse of nan company, 2022 and nan closing of nan divestiture of HTS thrust a further strengthening of Imerys’ financial structure. As antecedently said, nan €20 cardinal of nett existent free operating rate travel did not screen each of nan effect of our nett debt. I want to item among them, nan €138 cardinal that we person paid for dividend and nan €122 cardinal that are reflected successful nan reclassification of discontinued operation.

We have, earlier nan HTS closing, disposal and acquisition that generated a nett affirmative rate proceeds of €86 million. As a consequence of this, erstwhile you look astatine nan equilibrium expanse astatine nan 31st of December, our nett indebtedness accrued somewhat successful absolute terms, reaching €1.67 cardinal astatine nan extremity of nan year. With nan closing of HTS divestiture and nan affirmative rate effect of €710 cardinal that we received successful January, we would past alteration nan financial indebtedness nether €1 billion, and nan nett debt-to-EBITDA ratio would driblet to 1.3 only.

On this comforting note, now backmost to Alessandro for nan conclusion and nan outlook.

Alessandro Dazza

Thank you, Sebastien. Let maine now wrap up this position pinch a fewer takeaways. We see, arsenic we speak, truthful pinch nan opening of 2023, we spot nan destocking that we person mentioned coming to an end. So we judge business should prime up gradually successful Q1 2023. China reopening will besides person a affirmative effect connected activity wide and particularly successful Asia. We judge successful a normalization of power prices successful Europe and little ostentation worldwide, and this should person a favorable effect connected profitability for Imerys.

Though we expect nan different dynamics successful maturation trends depending connected nan geography, U.S. astir apt amended positioned than Europe astatine nan moment. And nan extremity markets, automotive, lithium-ion amended than astir apt building short-term. Overall, nan group is assured to resume its maturation way during nan year. And constantly, we corroborate that our midterm integrated maturation and existent EBITDA separator ambitions, arsenic presented successful November astatine nan CMD, astatine nan Capital Market Day, will stay valid.

Thank you very overmuch for your attention. And I propose to unfastened nan level to questions.

Question-and-Answer Session

Operator

Thanks truthful much, sir. [Operator Instructions] Today’s first mobility is coming from Mr. Sven Edelfelt from ODDO. Please spell ahead. Your statement is open.

Sven Edelfelt

Yes. Good morning, gentlemen. And Congratulations for nan results. I would person a first question, please, connected nan exceptional dividend. At nan Capital Markets Day, you were talking astir either a stock buyback aliases an exceptional dividend. Can you possibly explicate what discussions you had connected really you travel to this exceptional dividend alternatively than a stock buyback? On nan – if I retrieve correctly, you were much talking astir €250 cardinal astatine that time. You posted €200 million. So location is €50 cardinal missing. Does that – successful that location will beryllium thing pinch this €50 million? Second mobility connected nan agenda. I had successful mind that you – we could spot a imaginable buyer. Shall we expect nan consequence of a drilling for nan summer? And past nan 3rd question, tin you springiness america a consciousness of nan measurement that you had successful January to thief america understand wherever are you going?

Alessandro Dazza

Thank you, Sven, first for nan congratulations, and past for nan respective questions that I will reside together pinch Sebastien. I’d commencement pinch stock buyback and/or dividend is simply a determination that nan Board is taking. Personally, I judge that successful nan lawsuit of Imerys, an bonzer dividend arsenic we are doing, it’s a much capable shape to return money to shareholders. We perfectly cognize that nan liquidity of our shares is constricted and therefore, removing a number of shares from nan market, I don’t deliberation it would person been a bully thought for nan group. For this reason, I judge that nan determination is going much successful position of an bonzer dividend. In position of number, €200 cardinal aliases €250 million, frankly, I do not retrieve having mentioned immoderate number, neither €200 cardinal nor €250 million. But I’ll fto Sebastien remark connected this. Maybe...

Sebastien Rouge

No, I don’t retrieve that we person fixed circumstantial numbers either. I deliberation it goes good into nan superior allocation that we described, which is taking our earthy free rate travel positive nan proceeds of nan dividend.

Alessandro Dazza

Proceeds of nan divestiture.

Sebastien Rouge

Of nan divestiture, sorry. And splitting that into 3 – one-third of that being returned to nan shareholders. So we had fixed ourselves a 3-year perspective, but mostly coming from HTS. So that’s, by far, nan biggest chunk that we spot correct now. So we are, I think, good successful nan framework of what we declared earlier successful – astatine nan extremity of past year.

Alessandro Dazza

And I judge we are faster successful returning than nan 3 years. And last, Sven, I deliberation keeping immoderate money to turn this company, I’m happy arsenic good arsenic returning to nan shareholders. On EMILI, arsenic said, nan activity proceeds well. I punctual you that nan main intent of this twelvemonth is to complete nan studies, meaning nan scoping study and mostly nan alleged pre-feasibility study, which should specify wholly nan technology, nan CapEx and nan OpEx. Only astatine this time, I judge it is nan infinitesimal to perchance interaction a partner. When you talk to an investor, you want to show him what you person today. We person a lot, but not yet thing which is easy auditable and prolong pinch numbers and figures.

So is it H2? Maybe astir apt astir nan end. But nan clip statement is, let’s say, betwixt nan 2nd – extremity of nan year, opening of adjacent year, wherever we will beryllium capable to person thing overmuch much precise successful position of business plan, task CapEx, OpEx to talk pinch imaginable partners. On [indiscernible], activity continues, your presumption that by summer, we will person a very bully picture, nan reply is yes. It’s a large area, and we want to beryllium judge to cheque each of it, to understand what we have. And I deliberation it is progressing well. By summer, for sure, we will person each nan answers we request to perchance pass aliases measure if we person a business case.

As acold arsenic January is concerned, I would opportunity nan de-stocking we saw successful November, December continued successful January. So January will beryllium much aligned to November, December than of a recovery. I punctual you that past year, typically, we compared to past year. Last year, January was very strong, January, February beardown months. we were coming retired of 2020, a very bully 2021. No situation yet, nary warfare successful Ukraine, Russia. So I punctual you that past year, Q1 was nan champion 4th of nan year.

So difficult comparison. Destocking, that is coming to an end, we spot a bully level of bid intake. But for sure, it will beryllium a gradual betterment successful Q1 and astir apt moreover successful Q2 for nan clip being. I would opportunity we spot very affirmative signs, signals from nan automotive manufacture aft 3 years, 4 years of very debased levels. On nan contrary, we spot intelligibly a slowdown successful construction. Newbuilds successful nan U.S. has dropped. Newbuilds – say, needs for newbuilds remains very high. There is simply a deficiency of caller buildings, but location is simply a slowdown coming because affording a owe connected a location aliases a financing connected a location coming has go importantly much expensive. So a operation of little inflation, possibly a extremity successful this emergence of liking rates should springiness nan boost successful nan 2nd part. But arsenic said, is gradual arsenic we move on successful 2023. Well, reside them all.

Sven Edelfelt

Thank you. Thank you.

Operator

Thank you, sir. We will now spell to Mourad Lahmidi coming from BNP Paribas. Please spell ahead.

Mourad Lahmidi

Yes. Good morning. It’s Mourad from BNP Paribas Exane. I had 4 questions for you. So nan first one, jumping backmost connected nan measurement question, is it to opportunity that Q4 is seen by nan group arsenic a trough level? And if you look astatine it connected a sequential basis, you do not expect further deterioration, is that correct? Second question...

Alessandro Dazza

Yes, station each nan questions. It’s easier, and past we will answer.

Mourad Lahmidi

No problem. So really overmuch of nan pricing that you took successful 2022 will beryllium embedded successful your 2023 apical statement growth? Third question, could you supply america pinch a pro forma EBITDA, excluding nan paper-related activity? And 4th mobility connected nan lithium. So you mentioned that you produced nan first grams of lithium. Is that related to nan aviator works that you were mentioning astatine your Capital Markets Day? Thank you.

Alessandro Dazza

Thank you, Mourad, for nan questions. Q4, is it nan lowest level? I will show you astatine nan extremity of Q1. Clearly, Q4, we saw nan effect of a slowdown successful nan U.S. and successful Europe. China not yet open, but besides a batch of destocking. So I judge nan worst will beryllium down erstwhile nan destocking has ended. My emotion it’s ending. We see, arsenic I said, bid intake rising. Q1 for me, it’s astatine risk, again, because of besides comparable basis. I don’t deliberation it will spell beyond Q1. So I expected reliable Q1, to make it simple, amended aliases little than Q4, difficult to say. It depends really connected nan destocking levels. In October, I would person astir apt said – I would person astir apt said nan ‘23 will beryllium very tough. Today, I’m overmuch much confident, overmuch much optimistic. We do expect this slowdown, this recession to beryllium mild arsenic for judge successful nan U.S. and astir apt successful Europe arsenic well. So, to beryllium seen, difficult Q1 and past gradually wrong nan Q1 and going guardant successful ‘23, a affirmative trend. On pricing, if you look astatine our communications by quarter, Q1, Q2, Q3 and Q4 past year, location has been a emergence Q1, Q2 and Q3, and location has been a slow diminution successful Q4, 18% value increase, for 2 reasons: Energy has started to drop, and therefore, we return to our customer portion of nan savings; and of course, nan comparison ground Q4 2021 was nan opening of nan rise. So if you construe this into ‘23, really overmuch are we carrying on purely connected mean value summation year-on-year, difficult to cipher because location is this conception of surcharges, power surcharges. They represent, I would opportunity roughly, Sebastien, half?

Sebastien Rouge

Yes, somewhere. Half of the…

Alessandro Dazza

Half of nan value increase. If power goes backmost to pre-crisis level, we will return half of it, and we will beryllium very happy to return it because it’s bully and patient for nan system successful general. So, we will boost activity. I springiness you my champion guess, astir apt 3%, 4% should beryllium nan mean summation that remains passim ‘23. But erstwhile again, it depends a batch from power levels arsenic we move forward. Paper EBITDA, Sebastien, do you want to remark connected this?

Sebastien Rouge

So, arsenic we highlighted successful nan release, income of nan insubstantial business, which is still embedded successful our fig past year, €425 million. To springiness you a very precise EBITDA fig is ever difficult because, arsenic you know, it’s respective assets that are scattered. So, they do not transportation their ain overhead building naturally. This being said again it was confirmed, if you use normal overhead to this activity, nan EBITDA level is very good aligned pinch nan mean of nan group. So again, successful 2022, that’s really what I would propose you usage for your model.

Alessandro Dazza

And nan past connection connected lithium. Your questions, no, nan laboratory standard has thing to do pinch our aviator plant. We are utilizing nan champion outer consultants worldwide to support america successful nan improvement of nan technology, arsenic good arsenic successful nan laboratory standard exertion testing. And nan first grams, and that’s why our grams that we person produced, travel from laboratories successful nan world that are helping us. We judge by summertime to person kilos and by year-end to person hundreds of kilos, truthful that we tin moreover commencement due testing pinch customers. When we talked astir a aviator works astatine nan Capital Market Day, we are talking astir an business pilot. We are talking astir a mill that produces hundreds of tons of lithium. So, we are talking astir €100 cardinal positive CapEx is simply a full-scale mill wherever we will trial instrumentality successful nan same, let’s say, successful business size and business standard successful bid to beryllium capable to motorboat nan €1 cardinal positive CapEx without risks. So, 2 very different stories.

Mourad Lahmidi

Okay. Thank you very overmuch gentlemen.

Operator

Thank you, sir. We will now spell to Mr. Jean-Christophe Lefèvre Moulenq of CIC. Please spell ahead.

Jean-Christophe Lefèvre Moulenq

Yes. Good morning. Do you perceive me?

Alessandro Dazza

Yes.

Jean-Christophe Lefèvre Moulenq

Yes. Good morning. I person 2 questions from my side. First, a follow-up mobility connected activity and we person an bid of nan magnitude of nan EBITDA capacity [ph]. And secondly, a follow-up mobility is it adjacent to presume a flimsy summation of volumes [Technical Difficulty] excessively early to reply to this question. Many thanks.

Alessandro Dazza

Christophe, you were a spot surgery up. Can you please repeat? You wanted to cognize an denotation of EBITDA of what?

Jean-Christophe Lefèvre Moulenq

So, sorry for nan bad line.

Alessandro Dazza

Yes. Okay. On volumes, I understand which volumes?

Jean-Christophe Lefèvre Moulenq

Yes. Is that adjacent to presume a somewhat measurement maturation astatine Imerys successful 2023?

Alessandro Dazza

Okay. Very clear. Now we heard you well, Jean-Christophe. Thank you. A fewer cardinal figures of nan HTS business successful Imerys.

Sebastien Rouge

It was a bully twelvemonth for HTS. So, we will deed much than €900 million, adjacent to €1 cardinal of income for HTS. And arsenic usual, an EBITDA, which is itself a small – I mean, operating profit, usually a spot amended than nan mean of nan group, EBITDA a spot lower. You remember, it’s little superior intensive. So, we are successful nan aforesaid ballpark arsenic we have. You will person successful nan URD, each nan specifications of this activity, that you will person a small spot of difficulties to understand because of nan activity of IFRS 15 – of IFRS 5, sorry. But if we are really looking astatine nan operational capacity of HTS wrong nan Imerys Group, adjacent to €1 cardinal income and EBITDA, again a small spot little than nan average, but astatine a bully level and amended than past year.

Alessandro Dazza

Volumes, successful lawsuit of coming is difficult to make a conjecture because I judge for sure, Q1, arsenic I said, nan comparison ground past year, very beardown Q1, nan strongest quarter. So, I do expect a measurement driblet successful Q1, destocking positive activity successful general. Recovery, arsenic we move along, Q2, Q3 and Q4, will nan equilibrium beryllium positive, very difficult to opportunity to make a guess, really. There are excessively galore variables successful it, including energy, excessively galore variables, very difficult.

Jean-Christophe Lefèvre Moulenq

Okay. That’s it. Many thanks.

Operator

Thank you. We will now spell to Cameron Needham of Bank of America. Please spell ahead. Your statement is open.

Cameron Needham

Thanks. Just 1 speedy mobility for me. And connected your lithium project, could you conscionable outline what nan cardinal milestones you person to deed from present conscionable to benignant of meet your anticipated start-up day of 2028? And past conscionable also, really should we deliberation astir immoderate of nan clip horizons connected these milestones? Thanks very much.

Alessandro Dazza

You will find immoderate much elaborate accusation successful our Capital Market Day documents. But to make it – to effort to make it arsenic elemental arsenic possible, ‘23 is nan twelvemonth of finalizing nan studies connected nan deposit, which are mostly done and highly affirmative than connected nan exertion and connected nan CapEx. So, scoping to beryllium concluded successful nan next, I would say, mates of months. And pre-feasibility study, which will return america to nan extremity of nan year, possibly Q1 ‘24. This will springiness a document, which is auditable, which is according to engineering standards that will afloat specify nan technology, nan CapEx, nan OpEx, CO2 emissions and truthful connected and truthful on. That’s why I would opportunity ‘23, opening of ‘24, that’s nan purpose. ‘24 until opening of ‘25 will beryllium nan business pilot. So, engineering and construction, arsenic I said before, we are talking astir a factory, different laboratory and therefore, respective millions. That will beryllium nan 2nd measurement is business standard components and machines, nan aforesaid arsenic we will past usage successful nan ample building that will let america to validate nan exertion successful its entirety aliases to set it and will let america – which is very important, will let america to velocity up a imaginable ramp-up of a ample works tomorrow. Testing connected a, let’s say, a mini standard is overmuch amended than testing aliases adjusting connected a €1 cardinal positive plant. And being an business standard pinch nan aforesaid machines, it will let america to accelerate nan support pinch our customers. So, we will pre-approve nan products based connected nan business pilot, because it will beryllium nan aforesaid machines, and therefore, nan very aforesaid merchandise arsenic we will travel retired later on. So, ‘25 will beryllium nan aviator works arsenic good arsenic nan moving it and confirming. ‘26, let’s say, to mid-‘26, extremity of ‘27 will beryllium nan building of nan ample units, €1 cardinal plus. Based connected our knowing and nan support we person from ample engineering groups, nan building of this size will return 2 afloat years. Therefore, I would say, betwixt mid – extremity of ‘25 and past nan extremity of ‘27 will beryllium nan building of nan large plant. Each milestone will request to beryllium confirmed by nan erstwhile results successful bid to launch. And each milestone, I deliberation will beryllium a infinitesimal of chat perchance pinch partners, but these are nan cardinal milestones. So, commissioning sometimes successful ‘28 pinch past a consequent ramp-up of production. There is simply a permitting issue. There are consultation pinch nationalist opinion, pinch nan public. We do presume and dream that everything will spell well, will beryllium done properly, will beryllium done successful time, and will not hold immoderate of these, let’s say, method building stakes. These are nan key, I would say, milestones.

Cameron Needham

Great. Thanks very much.

Operator

Well. Thank you, sir. We will now spell to Eleonora Martignoni of M&G. Please spell ahead.

Eleonora Martignoni

Good greeting and acknowledgment for taking my question. I had conscionable one, please. Would you beryllium capable to supply an update connected nan North American talc litigation, please?

Alessandro Dazza

Eleonora, bully morning. Yes, of course. You will statement that location is nary circumstantial denotation successful our property merchandise astir it, because location is nary important alteration compared to our past communication. There is simply a mediation ongoing betwixt rule firms, representing nan plaintiffs. In January and February, location has been a batch of activity that makes maine very assured that we mightiness soon scope an agreement. But it’s conscionable a assurance emotion alternatively than effect. The mediation ordered by nan tribunal is ongoing. The plaintiffs has to agree, particularly connected 1 topic, which is nan repetition betwixt nan different groups of plaintiffs, repetition of nan money that will beryllium made disposable 1 time successful nan trust. There is nary chat pinch Imerys. Our position and conditions person been reconfirmed each time. We are still waiting for this measurement to happen. As I said successful nan past, nan infinitesimal that this statement is found, I said hopefully soon, this will request to beryllium written and adjusted successful nan alleged scheme of reorganization, will beryllium revenge pinch nan court, and nan tribunal will motorboat a voting. If this voting reaches nan threshold, nan required period of 75%, which we dream if nan plaintiffs work together connected really to stock nan money available, past we will yet look and adjacent this longer-standing topic. It’s a process. It will return a fewer months. I stay arsenic ever assured because our portion is done. We cannot springiness you a day connected – because it’s not successful our hands, we are not moreover astatine nan array of nan negotiations.

Eleonora Martignoni

And nan proviso that you booked is nan aforesaid past arsenic of H1, I assume?

Alessandro Dazza

Correct. The proviso has not moved. The proviso amounts to astir 100 and…

Sebastien Rouge

$110 million, it conscionable varies pinch FX.

Alessandro Dazza

Exactly unchanged.

Sebastien Rouge

Phrasing to positions, but unchanged.

Alessandro Dazza

And nan committedness we person taken to adjacent this woody is beneath this provision. And therefore, we are, I would say, over-provisioned aliases mostly connected nan safe side.

Eleonora Martignoni

Okay. Thank you.

Operator

Thanks very overmuch ma’am. As we person nary further audio questions astatine this time, we will move nan telephone complete to nan written questions aliases submitted questions. Please.

Alessandro Dazza

I spot 1 connected nan surface that I will publication out. So, what was nan reason, nan assets serving nan insubstantial manufacture had to beryllium sold against a loss? Do you want to explicate nan loss, Sebastien?

Sebastien Rouge

I mean, nan nonaccomplishment is really related to goodwill allocation. So, earlier you spell possibly connected business context, it’s existent that you allocate goodwill based connected existent profitability, and we person already communicated that nan insubstantial assets wrong Imerys were still profitable pinch a bully occupation done complete nan twelvemonth to make judge we resize. On nan different end, nan maturation expected is very low, if not negative. Then nan multiplier you use connected nan transaction cannot beryllium nan aforesaid arsenic what is left. So, erstwhile you corroborate that, obviously, we had to book and I would say, an accounting loss, obviously, not reflecting nan rate proceeds.

Alessandro Dazza

Correct. And if I whitethorn add, this business was purchased successful 1999 astatine a clip wherever cipher knew Internet will revolutionize nan world, particularly printed paper. And nan goodwill was built astatine that time, fundamentally. The insubstantial marketplace grew until 2006, possibly 2007, and has been declining ever since. So, this business attraction is simply a bequest of value, which is simply a purely accounting value. I deliberation it has mostly repaid nan activity done complete years, but it carries a number attached to it, which takes to a clip that is different from today. So, this portion arsenic good arsenic nan 1 relating to speech complaint differences, large assets were successful Brazil, nan devaluation of nan existent forces you from an accounting constituent of position to book definite differences that erstwhile you divest, you person to write-off. So, for me, it’s much an accounting and successful legacy, past a existent rumor pinch nan business itself, which arsenic Sebastien said, has been declining, but delivering a profit complete nan years. I understand location are nary much questions. Therefore, we would for illustration to convey you for listening coming and for nan absorbing questions. We closed, I would say, a very bully twelvemonth for nan company. We look positively to 2023, because we judge this slowdown will beryllium short-lived and this group will resume growth. We are good positioned connected nan markets we want to serve. We person firepower, and we will usage it to turn this company. Thank you very much, and person a bully day.

Sebastien Rouge

Thank you.

Alessandro Dazza

Thank you.

Editor: Naga



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