Befesa (Xetra:BFSA) Q1 2026 Earnings Call

0:00 Ladies and gentlemen, welcome to the First Quarter twenty twenty six Results Conference Call. I'm Lorenzo, the Chorus Call operator. I would like to remind you that all participants will be in listen only mode and the conference is being recorded. The presentation will be followed by Q and A session. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Rafael Peretz, CFO. Please go ahead. Good morning, and welcome to the first quarter twenty twenty six results conference calls of Befesa. I am Rafael Pere, CFO of Befesa.

0:47 And this morning, I'm joined by our group CEO, Assier Saronandia. Assier will start with an executive summary of the period. Then I will cover the business highlights for the steel dust as well as aluminum salt slag recycling businesses. I will then review the first quarter financials by business, and we'll cover the evolution of commodity prices, our hedging program and finally, cash flow, net debt leverage and capital allocation. As here, we'll close the presentation providing an update on the outlook for 2026 and an update on our growth plan. Finally, we will open the line for a Q and A session. As always, this conference call is being webcast live, and you can find the link in our website. Now let me turn the call over to our CEO.

1:33 Sergio, please. Good morning and welcome also from my side. Please move to Page five with the financial and business highlights for the first quarter of twenty twenty six. We had a good start into the year despite a challenging macroeconomic environment. Adjusted EBITDA increased by 4% to €58,000,000 and the margin improved accordingly from 18% to 20%. This development was driven by both segments, steel, dust and allude. Net income and earnings per share increased by a double digit rate, being up by 11% year over year. Both KPIs were driven by operational improvements as well as better financial results.

2:25 At last year, Q1 was impacted by maintenance activities, resulting in overall steady steel dust volume against a volatile market backdrop. In aluminum, we are seeing signs of recovery, especially at the end of the first quarter despite challenging business environment. Regarding 2026, we expect another year of earnings growth and with adjusted EBITDA ending the year between $250,000,000 and EUR $270,000,000. We expect quarterly earnings to gain momentum as the year progresses, driven by lower maintenance and higher volume. I will comment on the outlook in more detail later. Moving on to Page six, business highlights for the steel dust business.

3:16 In Europe, total steel production remained on a declining trajectory in the first quarter. Production declined by 3% year over year, reflecting overall weaker demand. The EAF route was less affected by these pressures and steel dust supplies remained stable and deliveries continued at solid pace in Europe. In The U. S, the steel production increased by 6% in the first quarter of twenty twenty six, Supported by overall solid demand, this trend is also reflected in the load factor, which rose to 63%. We are starting to process that from new EAF steel dust contracts gradually.

4:04 In Asia, Turkey started the year with a softer steel production, while Korea sees business as usual with low factors almost similar to last year. Lastly, the situation in China has not changed. The market remains weak and low factors at low levels, remaining breakeven at PLN and cash flow. Moving on to Page seven with the business highlights for the aluminum solder slag recycling business. Starting with solder slag, the year started softly, mainly due to lower secondary aluminum production in Europe, resulting in an average capacity utilization of 82%. We have already started to see an improvement in business environment by the end of the first quarter going into the second quarter and are confident that capacity utilization will recover in the next quarters.

4:58 Similarly, our secondary aluminum segment followed the broader European trend, resulting in a decline in volumes. However, measures implemented in recent quarters, particularly a stronger focus on operational discipline and cost efficiency enable us to preserve profitability. Looking ahead, the Befesa S. A. Expansion will support further diversification of our customer base and end market structure starting already with the ramp up in the third quarter. Now Rafael will explain the financials in more detail. Thank you, Asir. Moving on to Page nine, the financial results for the Stiltas segment. Adjusted EBITDA in the first quarter of twenty twenty six million was $58,000,000 representing 4% year on year improvement.

5:47 Higher volumes of work sold compensated for unfavorable FX movements in the quarter. EBITDA margin improved from 25% to 28% in the period. At group level, utilization in the steel dust remained unchanged year over year at 65%, primarily impacted by mandatory shutdowns. On a regional breakdown, The U. S. And Europe increased utilization, which was offset by Asian markets. During the quarter, SIM price in U. S. Dollars increased by 14% on an average to an average of $3,243 However, the unfavorable euro dollar exchange rate caused that the increase in SIM price in euros was just 3%. Considering the SIM price and the hedging, the blended price in the quarter was €2,615 pretty much in line with the previous year.

6:39 Coke and electricity costs were slightly down year on year. I will provide more details on our energy costs in some minutes. Moving on to Page 10, financial results for our Aluminum segment. Aluminum Sulzer Larg segment delivered €9,000,000 of EBITDA in the first quarter of the year, which represents a 10% year on year increase compared to the same period of 2025, even in a challenging environment. The year on year €1,000,000 positive EBITDA development was mainly due to higher collection fees in Salt Slag as well as overall lower energy and operating costs. This positive development was partially offset by lower volumes in both segments as well as slightly lower metal margin in the quarter. We operated our plants at a solid utilization rates of about 87% in salt slag and 66% in secondary aluminum.

7:33 As explained by SCR, we are seeing a recovery in the secondary aluminum business already in the second quarter and are confident about the development over the rest of the year. Moving on to Page 11, zinc price and treatment charges. Regarding zinc LME prices during the first quarter of twenty twenty six, zinc traded in the range of $3,000 to $3,487 per ton, showing a particular positive trend in the first month of the year. The average single ME price in the first quarter of twenty twenty six has been $3,243 or €2,770 per ton. On the right hand side of the slide, on treatment charges.

8:20 Treatment charges foreseen have been settled in April at $85 per ton for the full year 2026 compared to $80 of last year, 6% higher compared to 2025, which was all time low record level. This fact confirms that the supply seen concentrate market is still very tight with the spot treatment charges below the current annual benchmark. Turning to Page 12 on hedging. As explained in the previous call, we have taken the opportunity of the recent rally in the zinc price to be very active on our hedging program. Our hedging book has been extended to and including July 2028 at an all time high level of $3,100 per ton.

9:08 For 2027, the hedge is set at $3 per ton. This provides stability and visibility over the coming quarters. Turning to Page 13, Befesa energy prices. The page shows the evolution of the three main energy sources that we have in coke, natural gas and electricity. With regards to coke prices, which today represents roughly 50% of the total energy bill, the normalization that started in 2023 continues throughout 2026. Average coke price in the first quarter was around €147 per ton, consolidating its downward trend compared to the previous quarter. Regarding electricity, which today accounts for 40% of the total energy expense, prices are at a similar level than in the fourth quarter of last year, around €111 per megawatt hour after a significant correction in the second quarter of twenty twenty five.

10:08 Gas prices saw a slight increase in the first quarter of twenty twenty six to 51 per megawatt hour. We remain cautious regarding the impact that the situation in The Middle East may have on the development of energy prices and general inflation for the rest of the year. Turning to Page 14, the cash flow results. Operating cash flow in the first quarter of the year reached 38,000,000 of which represents an increase of 12% compared to the same period of the last year. On the EBITDA to cash flow bridge, starting with €58,000,000 adjusted EBITDA, I'm going to the right. Working capital consumption amounted to 17,000,000 in the first quarter.

10:54 As in previous years, the first quarter working capital is typically impacted by seasonality. This will be recovered throughout the year, especially in the last quarter as we have already seen in the last years. Taxes paid in the first quarter came in at EUR 3,000,000 compared to EUR 7,000,000 in the same period of last year, resulting in operating cash flow of EUR 38,000,000 in Q1, up 12%. On CapEx, in the first quarter, we have invested €15,000,000 in regular maintenance CapEx across the company, euros 11,000,000 in growth CapEx related to the Benburg expansion project in Germany. In summary, total CapEx of €26,000,000 in the quarter. Total CapEx for the full year is expected to be around €70,000,000 which is expected to be front end loaded with the second half of the year reducing the level of investment.

11:51 Total interest paid amounted to EUR 9,000,000, reaching EUR 10,000,000 with other minor items. In summary, final cash flow amounted to EUR 2,000,000 in the first quarter. Cash on hand stood at EUR 145,000,000, which together with our EUR 100,000,000 undrawn revolving credit line provides Befesa with more than EUR $245,000,000 of liquidity. Net debt was greatly reduced by 10% to EUR $550,000,000, resulting in a net leverage of 2.25 at closing of the quarter, a strong improvement compared to 2.78 at March 2025. Turning to Page 15, the structure and leverage.

12:38 Befesa today has a long term efficient capital structure with optimized financial cost. Net leverage improved significantly to 2.25 at the end of March, marking the eighth consecutive quarter of leverage reduction. For 2026, net leverage is targeted around two times and below two times onwards, reflecting Befesa's continuous commitment to disciplined capital management. We will prioritize the growth CapEx on these projects that will deliver immediate cash flows upon completion, like the approved project of Bembourg and other market opportunities that may appear. Also, we will keep the annual regular maintenance CapEx around the level of €45,000,000 over the coming years. On dividend, we are committed to maintain our dividend policy to pay between 40% to 50% of the net income to shareholders.

13:29 For 2026, the Board of Directors will propose the EGM to pay a dividend of EUR 40,000,000, equivalent to EUR 1 per share or 50% of the net income. This dividend is 37% higher than the dividend paid last year. Moving on to Page 16. Befesa is entering into a new cycle of low CapEx and high earnings, resulting in a strong free cash flow generation and shareholder value creation. In the last years, we have gone through a high CapEx cycle, which has allowed the company to expand our operations globally into The U. S. And China. Now that this cycle is completed, we are entering into a new cycle of limited total CapEx below $80,000,000 per year, along with high earnings resulting in a strong free cash flow.

14:17 Our total cash flow after three years of negative cash flow, 2025 has marked an inflation point delivering strong financial cash flow. Total cash flow is expected to follow a positive trajectory, reflecting the company's improvement and stronger underlying cash generation. Finally, as I already mentioned, leverage is expected to be kept below two times over the coming years, allowing greater optionality in future capital allocation decisions. Now back to Assier on outlook and growth. Moving on to Page eighteen, 2026 guidance. The start into the financial year 2026 has developed according to our expectations. We expect 2026 to be another year of earnings growth.

15:06 On EBITDA level, we expect to end the year between $250,000,000 and $270,000,000 which translates into a growth between 311%. After 4% EBITDA growth in Q1, we expect growth to gain momentum as the year progresses. We expect total CapEx in the year to be around EUR 70,000,000. This will enable us to further reduce leverage to around EUR 2,000,000 from last year's level of EUR 2.3 Moving on to Page 19, going through the main elements. We expect the steel gas volumes in Europe to grow only modestly as we are already running at very high utilization. Volumes in The U. S. Will increase, driven by new contracts with the steelmakers.

15:57 In the rest of the world, steel dust volumes are expected to develop broadly in line with last year. Salt slag operation are expected to maintain broadly stable volumes compared with 2025, enjoying higher collection fees. The metal margin for secondary aluminum is anticipated to improve gradually over the course of the year, particularly after bottoming out in the third quarter of twenty twenty five. We are already seeing an improvement in the business environment in Iberia, which make us confident. For energy costs, we expect a mix of development in 2026 with global coal prices slightly down to stable, but natural gas and electricity prices increasing in Europe. General inflation continues to impact maintenance, auxiliary materials and personnel costs across all regions, creating a negative pressure point in the cost structure.

16:51 We should be aware that developments in The Middle East will influence energy prices and overall inflation for the rest of the year. As explained by Rafael, due to ongoing tightness in the zinc concentrate market, the benchmark treatment charge settled at $85 in 2026, just slightly up compared to last year's 80 Hedge activity foreseen remains stable with the average 2026 hedge price set at approximately $2,990 per metric ton, consistent with 2025 levels, suggesting a neutral hedging position. Total CapEx for the year will be around EUR 70,000,000 with around EUR 45,000,000 for regular maintenance and the remaining for growth in the expansion of Belmont.

17:42 We will continue following our disciplined capital allocation strategy and ongoing focus on free cash flow generation, and we therefore anticipate further deleveraging with net leverage declining to around 2% by year end. Moving on to Page 20, our expansion project in Befesa Germany. We are on track with our planned decision for expansion project and expect Befesa S. Start production in the second half of twenty twenty six. This is another important milestone in Befesa's growth journey as we continue to strengthen our aluminum business and expand our recycling capacity in Europe. This project is an example of how we diversify our customer base and end market exposure to a less volatile business.

18:31 Berber will also contribute to our Slide eight through tighter earnings growth momentum in 2026. Moving on to Page 21 about the European steel industry. Europe is accelerating its transition toward electric car furnace steelmaking, largely driven by decarbonization targets and supportive policy frameworks. Between 2026 and 2030, 30 new EAF projects has been announced to come online. This represents more than 22,000,000 tons of new EAF capacity, which equates to 24,000,000 increase compared to the sixteen ninety million tons of electric car furnace capacity in Europe. As a result, EAF penetration is expected to rise from the current 45% over the next five to ten years, supported both by these new projects and the progressive replacement of blast furnaces.

19:25 Given our strong market position, established customer relationships and ongoing business development efforts, Befesa is strategically well positioned to capture the significant volume growth expected from this structural shift. We are already engaged in advanced negotiation with key customers to support this expansion phase in the coming years. Moving on to Page 22 about The U. S. Steel industry. In The United States, electric car furnace steel capacity is projected to increase by more than 25% by 2028, equivalent to around 21,000,000 tons of new steelmaking capacity. This expansion translate into over 300,000 tons of additional steel dust, creating a substantial opportunity for Befesa S. A.

20:14 Operation. With a total installed capacity of 650,000 tons across our U. S. Plants, we are now well positioned to leverage this growth. Our goal is to progressively ramp up utilization to below 70% today to around 90% by 2028 as new electrical furnace capacity comes online. The combination of our modernly sized Palmerton facility, long term customer relations and strategy geographical footprint near key steel producers ensures that Befesa is ready to capture this next phase of growth in The U. S. Market. Thank you very much. Thank you, Asir. We will open the lines for your questions. We will now begin the question and answer The first question comes from the line of Lars Stueben from Berenberg. Please go ahead.

21:32 Hi, good morning. I have a question just on the energy side of things. Could you provide the breakdown again, if possible? And I know you mentioned it briefly in the presentation, but just to get some more color. And also just generally, I know you you you've given some detail around how you're thinking about this in the full year guidance. But is there anything you've kind of changed from, I guess, 2022 in terms of your your energy exposure and how you're thinking about sort of hedging some of the volatility? That would be the first question. And then the second question would be, could you confirm whether maintenance shutdowns took place again in the first quarter or if we should expect anything else in the remainder of the year? And then finally, on European EAF, it seems like some of the, you know, the the projects there are progressing quite well.

22:23 Could you give a feeling on on general timing on when you might make a decision regarding the expansion for EsiTech on your end of things? Thank very much. Thank you, Lars, for the question. I will take the energy question. We didn't hear very well your second question. So if you can repeat that. French French project. And then the third. Sorry, can you repeat the second question last year? Didn't get that one. Yes, yes, of course. The second question was just around whether you undertook maintenance shutdowns again in Q1 like you did last year, I think, was the case. Yes, that's clear. Okay. On energy, basically, our total energy bill today is around EUR 100,000,000, okay? Out of that, around 50% is coke.

23:09 We are not seeing coke prices impacted by the current situation in The Middle East. 40% around that is electricity and 10% is natural gas, okay? Well, although we have seen some peaks throughout the first quarter, the average price in the first quarter of energies are, as I explained, are pretty much in line with the previous year. Maybe natural gas is picking up slightly versus the previous quarter, but it's nothing super relevant. As you know, natural gas and electricity typically impact our secondary aluminum business. And although the first quarter in secondary aluminum business has not been very strong, we are seeing a strong business performance improvement in the second quarter already, okay? So our ability to pass through these energy price increases to the customers in aluminum is pretty high, okay? So we don't see that the situation is similar to the one that we saw for in 2022, where the main impact was obviously on natural gas, but especially on coke, given by the fact that there was a lot of production of coke coming from Russia and Ukraine.

24:20 On maintenance, Andre Siedeka, Assier will take. Thank you, Assier, for the questions. Yes, maintenance, basically, I think I used to tell you guys that normally, it's very difficult to move the very far the maintenance because normally, the yearly basis stoppages is the how the kilns run normally. So yes, Q1 was expected to be the lowest in the year once again. Q2 could be higher than the Q1, of course, and probably higher, but we do expect higher volumes that Q1 and for last year. And the highest obviously is the Q4. Q2, Q3 could be similar, but Q4 for sure. All in all, we expect, as we said, some growth in volumes treated, especially driven by U. S. But yes, the Q1 is the weaker.

25:12 And how weaker are normally the queues depends as well in the days that you need to do the maintenance periods and so. But at the end of the day, the importance for us is that we have stocks, we have the deliveries, and we can run the furnace in a higher level in the Q2, Q3. Regarding the France, yes, you are right, there are some projects ongoing and coming. You have the Tata one in U. K, you have the SSAB in Sweden, you have Sagittel, you have Befesa PIM, you have as well, Arcelor Gijon has started already, well, starting to ramp up and so on. Well, our idea now is probably during '27, 2028 start with the project, but it's not still defined because, again, the projects of the steelmakers are there, but are not running.

26:04 I mean, running quick, I said, probably they are slow and going very careful. So we want to keep more or less the idea of those years, but can be move, I don't think more than six months. So in the range of '28 and running '29 probably is our main idea now to be confirmed, but no very different than that unless any issue coming with a steel dust or steel sorry, production projects from the steelmakers. We don't hope already. Understood. Thank you. Thank you, Lars. Next question comes from the line of Shashi Shektar from Citi. Please go ahead. Hi. Good morning, everyone, and thank you very much for this opportunity.

26:53 I have a couple of questions. First, how much capacity utilization you are targeting in the steel dust business in US, Europe, Turkey, and Korea this year? And my second question, what zinc LME prices you have used to estimate your 2026 EBITDA estimates? That's it. Thank you, Sachi. Asiya will take the first question, Ana will take the one LME. Yes. I think the capacity utilization, probably you can get the reference for '25 in Europe and Korea and Asia in general. And the one what we do hope to increase this year is The U. S. Part.

27:49 We do think that it's possible for us to increase to 73 to 75 capacity utilization this year based on the newest Tildas contract. This is coming from the high 60s in the last year. The rest is more or less the same because the capacity in Europe is very low, it's almost fully, fully utilizations. And the situation in Turkey, Korea and China, we do hope that they are going to be more similar than 25. So all in all, we do hope to be in the levels of above or around 75% in the year. This is in the global Befesa expectation. And regarding the assumption on LME price on the upper and the lower ranges of the guidance, well, I think what we have said, Sachi, is that the guidance consider a number of moving parts.

28:49 As you can see on Page 19, there are certain elements which are well known, like the treatment charge and the hedging, but there are other elements which are not so well known. LME price is obviously uncertainty, but it is also energy prices, FX and so on, okay? So I cannot give you a precise number. What we do is we create like a more optimistic scenario across a number of variables and a more pessimistic scenario across another the same number of variables, okay? And with that, we come out with the upper and with the lower part of the range. But I cannot give you a precise number because there are so many moving parts embedded in the upper and in the lower part of the guidance. Yes. Got it. Thank you very much.

29:36 Thank you, Sachin. The next question comes from the line of Oliver Carvey from UBS. Please go ahead. Yes. Hi. Good morning. Thanks for taking my questions. Maybe just another one on Energy Impact, just trying there. What assumptions are you making on gas and electricity prices in your guidance? It sounds like you're calling sort of the pet coke level flattish through the rest of the year. Or sort of if you could give us a sense of the EBITDA impact of a change in, let's say, 10 per megawatt hour of electricity and gas, that would be helpful. Then the second question would be on secondary aluminum.

30:24 I was just wondering if you could talk to us about the upside and downside scenario given the disruption we're seeing on the supply side, any impacts on metal margins? I think you talked at the last call of something like the 8,000,000 to €10,000,000 EBITDA level as a level you're confident with, but is there any upside there? And then just on EAF volumes, so I think you talked about weak volumes in Turkey in Q1, but an expected improvement in the second quarter and second half. Can you just talk a bit about the impact of the European safeguard measures on your non European footprint, please, given also the export share of that market?

31:12 And maybe I'll take the rest in the queue. JOSE Thank you, Olivier. Well, on energy, basically, we are expecting coke prices to continue, as I said, the downward trend, not strongly, but gradual, slightly positive result coming from slightly better prices across all regions. And you could say that, that's like the middle part of the guidance range. And on electricity and natural gas prices, I would say also that the average of last year is like the midpoint of the guidance range. As I said, quarter, we are seeing very stable prices. Obviously, if the crisis in The Middle East continues, that may have an impact, but that is an uncertainty that we have. So that's what I can tell you, Olivier, regarding energy impact.

32:08 On secondary, Alu, I think, Achille, you can take that. Yes. Thank you for the question, Alvia. When in the secondary aluminum, we really despite the fact that the Q1 came at the beginning of the year, especially January with some extensive the producers and so on because the Christmas period December, they prolong the started up of the year. Later, they are coming back to normal volumes and the margins we can feel in March and especially now in April probably helped, but the high aluminum price, the margin are improving very clear. So yes, we are optimistic with this and probably the range that you say, the 8,000,000 to $10,000,000 probably we can see now with a little bit more comfortable despite, as I said, the fact that the Q1 is still a little bit far from that. But yes, we see the recovery is coming in that level.

33:04 And regards to the electric car furnace, it's a good question about the first, the measures that the European market is taking with the CBM, C band or even with idea to put the quotas and less imports, well, this is still to see. Well, in any case for us in the European market, it's difficult to grow under the current circumstances. So the steelmakers are all expecting to increase the production and as well the prices are going better in Europe. So this is a fact. How does affects to the rest? I think that the main affectation could be probably China that were having records of export last year and probably will be affected by they can go to other Asian plants and we will see. In the particular case of Partia, I think they have their own circumstances and the Q1 is more related to the once again starting up the year than normally they get for maintenance stoppages. So we don't see changes.

34:05 And based on our deliveries on a daily basis is what is the best for us to understand how the things are going. So we do hope the year will be similar than last year in that case. The measures, we will see what happens. Thanks. Maybe I'll just ask my last one on EPS. Just if I look at the delta between the low end of EBITDA guidance and the minimum EPS sort of guidance, that's around sort of EUR 160,000,000 something of below EBITDA, let's say, of course. Is that sort of the level we should be thinking about? Or any risk this is higher? Just wondering about sort of the how we should think about the range at EPS level.

34:55 That makes sense. That assumption makes sense, Olivier. Okay. Thanks. Thank you, Olivier. The next question comes from the line of Fabian Piesta from Jefferies. Please go ahead. Hey, good morning, gentlemen. Thanks for taking my question. Some were already covered, a couple left. So first would be the target margin in secondary aluminum after the burn book expansion and adding beverages to that portfolio. Can you give us a flavor for that? Is that something where you were expecting to move more towards the mid single digits margin in 2026 already and then further in 2027?

35:50 Or how can we think about that? Second is on interest expense recovery from potentially improved margin ratchet. Could you quantify that? Are we looking at finance expense of more towards €30,000,000 in 2026 or is that too early? And the third and last, could you maybe precise be more a bit more precise on your capital allocation strategy going forward? I guess M and A is not the biggest topic, but could we also expect buybacks for your capital allocation strategy? Thanks. Going back to the queue. Thank you for the question, Fabian. I will take the Aluminum one, the margins. Well, we really hope that the margins in Aluminum, the increase in Vrbo will help because it's more secure, but I think that is moving in the one single digit is the case. It's going to help because it's more stable than other because it's a tooling basis contract in this case and it's healthy. But the margins really are more dependent on the situation of the market. So projecting in a mid or in the top part of the single digit, I think that could be a good range to have a reference in the aluminum.

37:06 Regarding the interest expense that we expect for the year, Fabian, yes, between EUR 30,000,000 to EUR 35,000,000 is a very reasonable assumption, okay? Let's say, as the year moves on, we will fine tune the number, but starting the year. Think that's a good reference. JOSE And about the capital allocation for the future? Yes, capital allocation, yes. I think we have said that we and I think it's a very important message for everybody to understand. We are entering into a new cycle. All the heavy investment is already behind us that has enabled us to expand our footprint globally to The U. S, which is a very attractive market and to China. And well, now that the capital allocation priorities are very clear. On the one hand, we need to spend 40,000,000 to €45,000,000 on maintenance CapEx to keep our asset base running properly.

37:59 Secondly, we have a commitment to pay a dividend to our shareholders of 40% to 50% of the net income. Then we want to keep the leverage below two times for the coming years. That is something that we are fully committed. And then obviously, we have some projects like the one of RecifeTech that Assia explained around the corner, which is delivering a very super high attractive return for our shareholders. After that, all the cash excess will be delivered to the shareholders either via extra dividend or as a share buyback. I don't think M and A Fabienne is at the moment in the pipeline or in the rather. We as you know, we are operating in a very niche environment, very niche industry. The big M and A opportunity was in The U. S.

38:46 Already. We are not part of our strategy is not to get into any other businesses other than our core business, Stilda and Solsklaq. And obviously, as we have already explained in the previous call, no share buybacks is something that depending on the valuation of the company and the share price, we will definitely consider. Great. Thanks guys. Thank you Fabienne. The next question comes from the line of Jaime Esquibano Maiz from Banco Santander. Please go ahead. Hi, good morning. Can you hear me? We can hear you, Jaime. Okay. Yes. Two questions from my side. One on zinc prices and hedging strategy updates. So on zinc prices, from your channel checks, if you can provide a little bit of outlook how you see the supply demand model, the demand of zinc prices seems to be consistent above $3,000 So just to have your view there. And in terms of hedging strategy, if you can update us until when you have the hedges and if you can if you think you can hedge a little bit more at current prices.

40:05 And the second would be more in the interim. So the stock is down around 6% today, probably illiquidity, we know that. It happened in the past. But what could you say in order to provide comfort to investors in order so in terms of your visibility and in terms of the guidance in order to provide some assurance to the stock in the short run? Thank you. Thank you, Jaime. On hedging, I think you have all the details on the presentation on Slide 12, and I have covered that. We are fully hedged until July 2028 at record high seen price levels in dollars. We are continuing to monitor the obviously, opportunities.

40:58 There are two elements in here. One is the spot price and then the other thing is the future core, whether that is in backwardation, that means the future prices are lower than the current spot prices or the opposite. Yes, we're monitoring. It is true that even in the current volatile environment, commodity prices and especially zinc prices are holding up pretty well. And yes, we will keep you posted. JOSE On the stock, as you have Yes. Well, I think that talking about the stock is difficult for us because obviously, we think that the stock is far from the point it should be if I were managing the market, right? Now being serious, I think that no matter what happened today because probably the reaction at the one was expecting more, one was expecting less, I think we are in line with what we are telling. I mean, it's the next two, three years until we do the next investment in Europe are going to be growing years based on The U. S. Basically despite the because based on U. S. And the volumes and the hedging we have. So we are on our way to EUR 300,000,000 EBITDA in three, four, five years and very, very cash generating company, reducing the leverage ratio probably in the next three years below 1.5.

42:19 So yes, I think we are going to have a very good financial and balanced situation. So I do hope that the share deserves more price. But obviously, market is the real owner of those things and decisions and going forward. I think that today probably is a very short time. But probably once you guys analyze the numbers and reaffirm that we are on our way to this 300,000,000 and growing EBITDA and cash generating, as Rafael explained, we can do more things with the retribution to the shareholders. And well, we're not doing other things. But at the end of the day, I think that we are on path of that and nothing strange has happened in this Q1. We are it's just the point moment of the Q1 because the maintenance, the rest of the year will come good.

43:09 So we are positive FERNANDEZ:] and optimistic that we will reach very soon this €300,000,000 and then we will see the next four, five years. Yes. And from my side, nothing else to comment on top of Assier. What I would say is that this is going to be the third consecutive years of EBITDA growth. We have been deleveraging the balance sheet over the eighth consecutive quarters. EPS is going up. We are in the middle of a shift in the steel industry both in The U. S. And Europe. It is true that China is not delivering, but that's an option. We are not considering China for reaching the €300,000,000 that Assier is mentioning. I think the company is in a very good shape. Thank you, Jaime. Thank you.

43:57 The next question comes from the line of Anis Zskaya from ODDO. Please go ahead. Yes, thank you very much. Good morning and my questions, but I have only one. So it's on the '26 guidance, so it's roughly 18,000,000 year on year improvement 5,000,000. And could you how this improvement is split between higher U. S. Steel dust volumes and the recovery in secondary aluminum, including any contribution from Bienberg in half twenty twenty six? Thank you. Well, I think they are the aluminum and The U. S. Steel volumes are the drivers to go to the high part of the year, but together with the guidance, sorry.

44:57 But together with many other assumptions about zinc price and about the electricity and energy cost and the inflation, so everything is together. I mean, I don't think it's worthy to say what we are considering. I think it's like basically, we do hope that 10% steel dust volumes increase in U. S. To come into 75% and the margins to aluminum to come to 8,000,000 to $10,000,000 And this is more or less one of the considerations you have. But the zinc and the others probably you guys have to do your model as well, have no sense to discuss about what to put there. The next question comes from the line of Adana Ekoku from Morgan Stanley. Please go ahead.

45:51 Good morning. Thank you for taking my questions. I've got two left as well. So just to follow-up again on the 2026 EBITDA guidance. Last quarter, you mentioned you were comfortable with consensus, which was at about €60,000,000 for 2026. That's now the midpoint of the new guidance. But since then, we've had a much more favorable zinc TCs settlement. So I just want to understand a bit more what's changed since then. Is it just the energy cost outlook? And second, just on volumes to confirm, do you have any maintenance left over for Q2? And on The U. S. Steel dust volumes ramp up, is this more a second half weighted trajectory? FERNANDEZ:] Or should we expect this to be more even?

46:39 Good questions about the comfort table about €260,000,000 Yes, it's true that this year were coming better than we were expecting in the report in the last call. Yes, we were expecting around 100,000,000 110,000,000 and now it's 85,000,000 So it's not a very big difference at the end of the day, but obviously, it's a difference positive. We are happy with that. And yes, still probably the $260,000,065 million euros could be that is a good figure for us to have in consideration. And more or less, the midpoint always that you discuss with you is the point that you get and the point that we are more or less comfortable. Obviously, they were not having the uncertainty three, four months ago about the situation in Iran in this phase of August and so on. So it's difficult for us.

47:25 So we have to put more things on the ideas, the framework to do the guidance. But yes, I think that the midpoint a little bit better, although depending on those things probably is a good reference for us, nothing changed despite the fact that we have some millions better than the treatment charge. In terms of the volume, yes, Q2 and Q3 are going to come better and higher than the Q1. But again, there are still a split some maintenance in the 2Qs less than in the Q1. And the year when we have less maintenance definitely is the Q4. So putting a growing from last year, I think probably last year is a good reference. And on top of this, the 10, 12% that we hoped that we are going to have this year in total probably is a good reference.

48:15 And yes, the volumes in U. S. Are developing as expected at the end of the day. And we do hope that second quarter will come even higher and stronger than the Q1 and Q3 probably and Q4. I think it's growing. And the worst in terms of lower production because the maintenance has over in the year. Perfect. Thank you. Thank you, Adana. We have a follow-up question from the line of Olivier Carvey from UBS. Please go ahead. Yes. I just wanted to quickly follow-up on secondary aluminum metal margins. I'm just wondering if you can comment on the levels you're seeing right now, given the disruptions to production there.

49:06 And then just a few comments maybe given higher electricity prices in the smelter in U. S. Smelter? Yes. Well, I think that we are now in the current situation. Again, the Q1 is not a good example because it's everything affected. And to have an idea of the margin in aluminum, we need to hope this April, May because it's affected by higher energy prices, but higher price as well. Well, the margins are coming higher, but we need to hope, as I said before, in that range. But it's difficult to get the conclusions now. We are watching the increase in margins, but this has mattered up gradually. And we do hope that we are going to be able to transfer the energy increases to the customers at the end of the day.

49:58 But the mechanism for that is basically higher prices? Yes, yes, higher prices, but you have to consider that higher prices in sales, but we have higher prices in purchase with the scrap as well. So that's why we took our margins. And the high price help because you have more price to calculate even the same margin, you get better profit, right? But at the end, it's depending on how you manage the purchase and sales and then the cost to be transferred to the customers. Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Rafael Perez for any closing remarks. Thank you all for your questions. You can also contact the Investor Relations team of Befesa for any further clarification.

50:48 We will now conclude the conference call and the Q and A session. Thank you very much to all of you and have a good day. Ladies and gentlemen, the conference is now over. Thank you