Release Date: July 26, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Altri SGPS SA (STU:ACJ, Financial) reported a significant increase in EBITDA for Q2 2024, reaching EUR74 million, a 48% improvement from Q1 2024.
- The company's EBITDA margin improved to 30.8% in Q2 2024, up from 22.5% in Q1 2024.
- Net debt was reduced by EUR15 million during the quarter, despite distributing full-year dividends of EUR51 million.
- Altri SGPS SA (STU:ACJ) continues to develop diversification and growth projects in segments such as bioproducts and textile fiber.
- The company achieved a 6% increase in production and a 9% increase in volumes sold in the first half of 2024 compared to the same period in 2023.
Negative Points
- There was a slowdown in demand from China and Asia overall in the last weeks of Q2 2024.
- The company anticipates some correction in pulp prices during the second half of 2024.
- Altri SGPS SA (STU:ACJ) expects some additional inflation pressures depending on the evolution of pulp prices.
- The company will undergo a scheduled maintenance for its largest unit, Celbi, in late Q3 2024, which may impact production volumes.
- Despite positive market conditions, the company maintains a cautious outlook for the second half of 2024 due to potential market disruptions and cost pressures.
Q & A Highlights
Q: What are your expectations for sales volumes for the year? Are you still guiding for a mid-single digit increase?
A: Yes, we continue to target a mid-single digit increase in sales volumes for the year. We anticipate a slight impact in the third quarter due to scheduled maintenance at our Celbi unit, but overall, we expect to meet our target.
Q: Can you provide an update on your view for cash cost declines for the full year?
A: We expect cash costs to stabilize in the second half of the year, with an overall year-on-year evolution in the low single digits. This is mainly driven by a slight increase in energy costs, but overall, we remain on target for stable cash costs.
Q: The reported CapEx figure for the second quarter was low. Should we expect an increase in the second half to reach the mid-40s levels guided for the full year?
A: Yes, the first half CapEx was lower than anticipated, but we remain committed to our full-year guidance of mid-40s in terms of CapEx. You should expect us to be in line by the end of the year.
Q: Can you comment on the improvement in gross margin and the impact of wood prices?
A: Our gross margin improvement was driven by cost optimization and favorable pricing. Wood prices have been stable since the second half of last year, and we expect them to remain stable for the rest of the year.
Q: Why didn't you sell more pulp volumes given the strong prices?
A: We sold 9% more in the first half of the year and have been managing our inventory levels prudently. We are also preparing for scheduled maintenance at our Celbi unit, which requires maintaining healthy inventory levels.
Q: Can you explain the price trends for dissolving pulp versus cotton?
A: While cotton prices have softened, demand for dissolving pulp, particularly viscose and lyocell, remains healthy. This has supported current price levels and even allowed for some increases.
Q: What is your outlook for the second half of 2024 and beyond?
A: We expect demand trends to stabilize in the second half of 2024, with Europe and North America being the most dynamic regions. We anticipate some correction in pulp prices but maintain a positive outlook for the 2025-2028 period.
Q: How are your diversification and growth projects progressing?
A: Our projects, including the valorization of acetic acid and furfural at Caima, are on track and expected to be completed by the end of 2025. We are also in the process of obtaining the integrated environmental license for Gama.
Q: Can you provide more details on your sustainability efforts?
A: We have improved our Sustainalytics rating to 14.5, maintaining a low-risk status. We have also engaged in several community initiatives and events promoting physical exercise and mental health within our workforce.
Q: What are your expectations for cost stabilization in the second half of 2024?
A: We expect cost stabilization for the second half of 2024, similar to the first half. However, we cannot exclude additional inflation pressures depending on the evolution of pulp prices.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
