RCS - Metlen Eng & Metals - FLASH NOTE - FINANCIAL RESULTS FIRST HALF 2024

Metlen Energy & Metals SAAnnouncement

25/07/2024 08:00

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RNS Number : 8086X  Metlen Energy & Metals SA  25 July 2024

METLEN - ENERGY & METALS

FLASH NOTE - FINANCIAL RESULTS FIRST HALF 2024

 

Steadily pursuing internationalization and growth

Record-high H1 Net Profits performance

The internationalized and diversified growth model demonstrates significant
resilience. Substantial industrial investments and RES expansion

 

Athens, Greece - July 25, 2024 -METLEN (RIC: MYTr.AT, Bloomberg: MYTIL.GA,
ADR: MYTHY US) announces its H1 2024 financial results.

 

ü Turnover amounted to €2,482 million, compared to €2,516 million in H1
2023, despite the significant de-escalation of energy and natural gas prices
throughout the semester.

ü Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA)
reached €474 million, compared to €437 million in the corresponding period
of 2023, while operating margin increased by 169 basis points.

ü Net Profit after minorities reached €282 million vs. €268 million in H1
2023. The corresponding Earnings per Share came in at €2.04 from €1.94 in
the corresponding period of 2023.

ü Net Debt, on an adjusted basis, came in at €1,774 million, excluding
non-recourse debt. Despite the intensive CAPEX program that is in full swing,
adjusted Net Debt to EBITDA stood at 1.76x, level on par with or better than
the performance of companies with investment grade status. Following the most
recent upgrade of METLEN by FITCH and S&P, the Company is now just one
notch away from achieving the goal of investment grade, for the first time in
its history.

 

 

Commenting on the Financial Results, the Chairman and CEO of the Company,
Evangelos Mytilineos stated:

 

"H1 2024 strong financial performance, confirms the establishment of METLEN in
the historically high levels of performance achieved after the 2022 corporate
transformation.

 

During a year of significant challenges, in an environment of high interest
rates and intense geopolitical instability, METLEN's business model, which
incorporates, at its core, the vital synergies of the Energy and Metal
Sectors, demonstrates once again the required resilience, allowing us to be
optimistic about achieving the ambitious business targets we have set for the
entire year".

 

 

1.   KEY FINANCIAL FIGURES

 

 

 amounts in m. €    H1 2024  H1 2023  Ä %
 Turnover           2,482    2,516    -1%
 EBITDA             474      437      8%
 EATam              282      268      5%
 EPS*               2.04     1.94     5%
 Margins (%)                          Ä(bps)
 EBITDA             19.1%    17.4%    169
 EATam              11.4%    10.7%    70

 

 

 

Turnover amounted to €2,482 million compared to €2,516 million in the
first half of 2023, marking a 1% decrease despite the significant
de-escalation of energy prices, specifically both electricity prices (DAM:
-54%) and natural gas prices (-33%).

 

Earnings before interest, taxes, depreciation and amortization (EBITDA)
increased by 8% reaching €474 million, compared to €437 million in the
corresponding period of 2023, benefiting both from the consistently strong
performance of the Metals Sector as well as the continued upward course of the
profitability of the Energy Sector and particularly the activity of the
Renewable Energy Sources (RES), which contributed approximately 1/3 of the
Company's total EBITDA. At the same time, METLEN succeeded in strengthening
its profit margin, which in terms of EBITDA increased from c.17% in the first
half of 2023 to c.19% in the first half of 2024. This was mainly the result of
the increased contribution in the profitability mix of Sectors with
particularly qualitative characteristics, such as RES, Metallurgy as well as
the Greek Utility.

 

METLEN posted once again a record high H1 performance led by the Energy
Sector. In particular, on top of the significant contribution of M Renewables
(RES in Greece and abroad), which saw its profitability significantly
increasing (+61%) year-on-year, the Energy Sector was also benefited from the
substantial strengthening of the Greek Utility, which, in terms of market
share, reached the 20% level, at the end of the first half of 2024, both in
electricity production and supply.

 

The Metals Sector, in H1 2024, exceeded the historically high levels of
profitability of the first half of 2023 as a result of both the strengthening
of aluminum premia and the price of Alumina API. The record six-month
performance of the Metals Sector, owed mainly on timely actions taken by the
Company's Management regarding the security of favorable LME prices, fully
capitalizing on the opportunities presented in the previous period, while
showcasing an effective cost control. The latter, following the termination of
the PPC contract and the full assumption of the electrification of the
aluminum plant by Protergia, is a key driver for the enhancement of the Metals
Sector's profitability in 2024 compared to 2023. The above, along with the key
synergies of the Energy and Metals sectors, maintain METLEN among the world's
most competitive aluminum and alumina producers.

 

Net profit after minorities that came in at €282 million, a 5% increase
compared to €268 million in the same period of 2023.

 

Following the seasonality of the recent years, METLEN's financial performance
is expected to strengthen even more in the second half of 2024, driven by the
Energy Sector. The above will result in significantly higher levels of
profitability, while the positive financial flows will allow the execution of
all the investments and the further strengthening of turnover with absolute
control over key leverage ratios.

 

Regarding the construction and concessions activity, the Earnings before
Taxes, Interests and Depreciation (EBITDA) amounted to €12.2 million
compared €7 million in the corresponding period of the previous year, with
the prospect of a significant increase in the second half of 2024 as the
backlog of infrastructure projects already exceeds €800 million, while
including projects that are in an advanced stage of contracting, it exceeds
€1.2 billion. The outlook for the construction industry in Greece is
particularly positive, especially for concession and Public & Private
Partnerships (PPP), in which the Infrastructure Sector (METKA ATE and M
Concessions) aspires to play a leading role.

 

 

2.   BUSINESS UNITS OPERATIONAL UPDATES

 

2.1. Energy Sector

 

 amounts in m. €    H1 2024  H1 2023  Ä %
 Revenues           1,988    1,994    -0.3%
 EBITDA             322      303      6%
 Margins (%)                          Ä(bps)
 EBITDA             16.2%    15.2%    100

 

Energy Sector reported turnover of €1,988 million, representing 80% of the
company's total turnover, remained at the same levels with H1 2023. Earnings
before interest, taxes, depreciation and amortization stood at €322 million,
increased by 6% compared to €303 million in H1 2023.

 

Following the corporate transformation, METLEN ENERGY & METALS has
acquired an even more dynamic and flexible shape, able to face current as well
as upcoming challenges. Moreover, the Company is strategically positioned at
the forefront of the Energy Transition as a leading and integrated energy
company, with an international presence in the entire spectrum of the energy
sector (Renewables, Energy & Generation Management, Energy Customer
Solutions, Integrated Supply & Trading and Power Projects).

 

 

 RES - METLEN's Global portfolio            Power (GW)
 RES in Operation                           0.9
 RES Under Construction                     1.4
 RES RTB & Late stage of Development**      2.5
 RES Early Stage of Development             5.8
 Total                                      10.6

* Includes projects of all technologies (photovoltaic, energy storage, wind)

**Project ready to be Build (RTB) or that will reach RTB stage within the next
~ 6 months

 

 

Total capacity of the operational and mature Global portfolio of M Renewables,
which is dynamically expanding in all 5 continents, is ~4.8 GW, while
including projects in Early and Middle stages of development, with a capacity
of ~5.8 GW, METLEN's global portfolio stands at 10.6 GW in the end of H1 2024.

 

Total power production from Renewable Sources, with a total installed capacity
of c.0.9GW, in the end of the first half of 2024 amounted to 632 GWhs, of
which 327 GWhs produced from RES in Greece and the remaining 305 GWhs from
International RES.

 

METLEN, making utmost use of its Asset Rotation Model, proceeded to a
strategic agreement with PPC, during the first half of 2024, for the sale of
projects with total capacity of ~2GW in Europe and particularly in Italy (503
MW), Romania (516MW), Croatia (445MW) and Bulgaria (500MW), with a three year
implementation horizon. The successful Asset Rotation Model allows METLEN to
continue the growth of M Renewables' profitability, while making utmost use of
all available financing tools. As a result of the above, the Company retains a
self-funded RES development model, while maintaining low levels of leverage
and an excellent credit profile.

 

Meanwhile, METLEN effectively continuing its Asset Rotation Model, during H1
2024 proceeded with the sale of photovoltaic (PV) projects (SPAs), with total
capacity of 531MW.

 

With regards to Metlen's own pipeline, the development of the ~340MW is
continuing unobstructedly, while during H2 2024, the commencement of the
construction of additional 550MW is expected. The Greek portfolio utilizes
resources from the Recovery and Resilience Facility (RRF).

 

Regarding the international portfolio, METLEN is currently constructing PV
projects with total capacity of over 1 GW, which are expected to be
commissioned soon.

 

In the context of the Global Energy Transition, through the shift towards RES,
as well as the Sustainable Development Strategy adopted by the Company in
recent years, METLEN proceeded in May 2024 to the signing of two 10-year PPAs
with Keppel DC REIT for the energy supply in two Keppel DC REIT facilities in
Dublin, generated by two PV farms in Ireland. The above should provide "green"
energy, reducing carbon dioxide emissions by 6,250 tonnes of CO2 per annum.

 

Regarding the third party projects, the execution continues unobstructed, in
countries like: Spain, the United Kingdom, Greece, Italy and Romania, with the
contracted backlog (signed pending contracts) amounting to €221 million,
while an additional €360 million are in final negotiation phase.

 

 

 

Greek Market Data - Q1 2023

 

 Production per Unit type  TWh   H1 2024  H1 2023  H1 2024    H1 2023
                                                   % of mix   % of mix
 Lignite                         1.5      2.1      6%         9%
 Natural Gas                     9.0      6.5      37%        28%
 Hydros                          1.8      1.6      7%         7%
 RES(1)                          11.8     9.6      49%        41%
 Net Imports                     0.3      3.5      1%         15%
 Total                           24.5     23.5     100%       100%

(              1)Renewable Energy Sources

 

 METLEN Generation (TWhs)  H1 2024  H1 2023  Ä%
 Thermal Plants            3.9      2.2      81%
 RES                       0.3      0.3      14%
 Total                     4.2      2.4      73%

 

H1 2024 was marked by a significant increase in electricity demand, recording
a year-on-year growth of 4%. The largest increase, compared to the
corresponding period in 2023, was noted in electricity generation from natural
gas thermal plants, which increased by almost 40%, with Renewable Energy
Sources (RES) following with a 23% increase compared to H1 2023. On the
contrary, lignite-based electricity generation decreased by 30%, and energy
imports from third countries were nearly eliminated (~1%) compared to 15% in
H1 2023.

 

More specifically, the three combined cycle plants (CCGTs) and the one
high-efficiency generation plant (CHP) produced a total of 3.9 TWh from 2.2
TWh in the corresponding period of 2023, resulting in an c.80% increase in
METLEN's thermal production. Metlen's thermal production represents 43.4% of
the electricity production from natural gas units in the country, from c.33%
in 2023.

 

The significant increase in the production from thermal units production in
the first half of 2024, compared to H1 2023, is primarily driven (despite
Arpil's scheduled maintenance) to the operation of the new CCGT unit (826 MW -
in hot commissioning stage). Therefore, due to very strong demand,
particularly in Q3 2024, production for the second half is expected to be
significantly enhanced. The new CCGT contributes decisively to support the
country's transition towards an energy mix with significantly lower carbon
footprint. The above, coupled with the high degree of efficiency and
flexibility of our units as well as the procurement of natural gas at
competitive prices, are expected to significantly boost H2 and consequently
2024 profitability.

 

Power production in Greece, both from the Company's thermal and renewable
units, amounted to 4.2 TWh, representing 17.3% of total demand from 10.4% at
the end of the first half of 2023. Over the past year, METLEN has managed to
nearly double its production and thus its market share, which, due to the
increase in RES production along with the full integration of the new CCGT
unit (826 MW), is expected to continue its upward trend in years to come.

 

 

 

 METLEN - Supply of Energy & Natural Gas      Ç1 2024   Ç1 2023   Ä%
 Market share                                 16.7%     12.8%     -

 

Regarding the electricity supply activity, Protergia, is steadily
strengthening its presence in the retail market, with its market share in
electricity at the end of June 2024 approaching 17% (HEnEx market shares -
including Volterra's market share), up from 12.8% at the end of June 2023.
METLEN is targeting to exceed 20% of the Greek consumption, creating an
integrated "green" utility with international presence. Taking advantage of
the vertical integration of the Company's operation in the Energy Sector,
METLEN has managed to establish the integrated energy provider of the new era
("Utility of the Future"). Thus, Metlen has the capacity to absorb the
pressure created by sharp price fluctuations for the benefit of consumers, as
recently highlighted by Protergia's August pricing policy announcement.

 

Moreover, METLEN, beyond the Greek market, has achieved significant
penetration in other markets in the Southeast European region, in terms of
natural gas supply and trading, as part of the Company's internationalization
strategy. METLEN, maintaining significant natural gas volumes, has become a
major regional player in the supply and trading of natural gas in both the
Balkans and wider Southeastern Europe. This achievement has enabled the
company to secure competitive natural gas prices and the benefit of this
success is distributed through METLEN's synergistic model to all company's
operations. In H1 2024, the Company's natural gas imports reached 25 TWh, with
METLEN representing 43% of the country's total imports.

 

 

 

 Power Projects METLEN           H1 2024
 Backlog of contracted projects  €1.4 billion
 Total pipeline                  €1.8 billion

 

M Power Projects Sector, continuously strengthening its international presence
on projects that support the Energy Transition and Sustainable Development
goals, currently executing 35 projects in 11 different countries.

 

At the end of H1 2024, the backlog of contracted projects amounted to €1.4
billion, while including projects at an advanced stage of contracting, total
pipeline amounts to €1.8 billion, of which only 8% refers to projects in
Greece and the rest in foreign markets, mainly in the UK market, an activity
which is expected to grow significantly. The resources of the European
Recovery Fund also offer significant growth prospects, with Greece being the
country that receives the highest funding as a percentage of GDP.

 

Regarding Ç1 2024 major developments, M Power Projects Sector reached an
agreement for the development and construction of a 560MW CCGT unit with
associated infrastructure at the Adamów power plant in Poland. This is
METLEN's second energy project in Poland, as the company has already signed an
EPC contract and is currently constructing a 560 MW CCGT project in Grudziadz,
again in consortium with SIEMENS ENERGY. The project is expected to be
completed in the second quarter of 2027 and the contract price for METLEN is
approximately €250 million. The total investment exceeds PLN 2.3 billion
(€500 million).

 

Additionally, in H1 2024, the commencement of work on the construction of the
first high-capacity subsea interconnection in the UK came into effect, under a
£1bn contract. Metlen's MPP along with GE Vernova, has undertaken the supply
and construction of two high-voltage direct current (HVDC) converter stations
for the EGL1 consortium with National Grid and SP Energy Networks. The project
is designed to unlock Scotland's vast renewable energy potential, increasing
the UK's ability to transport clean energy where it is needed.

 

 

 

2.2. Metals Sector

 

 amounts in m. €    H1 2024  H1 2023  Ä %
 Revenues           412      480      -14%
 EBITDA             142      135      4%
 Margins (%)                          Ä(bps)
 EBITDA             34.5%    28.3%    620

 

 

 Total Production Volumes (ktons)  H1 2024  H1 2023  Ä%
 Alumina                           431      429      0.5%
 Primary Aluminium                 91       92       -2.0%
 Recycled Aluminium                29       28       4.2%
 Total Aluminum Production         120      120      -0.5%

 

 Aluminium & Alumina Prices ($/t)      H1       H1       Ä%
                                       2024     2023
 3Ì LME                                2,401.7  2,362.2  1.7%
 Alumina Price Index (API)             401.8    352.5    14.0%

 

 

Metals Sector reported turnover of €412 million, representing 17% of the
company's total turnover, posting a 14% decrease on a year-on-year basis.
Earnings before interest, taxes, depreciation and amortization (EBITDA) stood
at €142 million, increased by 4% compared to H1 2023.

 

H1 2024 average aluminium price (3M LME), came in almost flat year-on-year at
2,402$/t. During Q2 2024, aluminium prices maintained their upward trend,
reaching the 2,800$/t area, before returning to the $2,400/t levels. The
increase in aluminium prices, beyond the global growth improvement, is owing
to the recent ban on deliveries of new Russian aluminium production from the
London Metal Exchange (LME), following the sanctions imposed by the US and the
UK, coupled with alumina supply concerns. At the same time, the strengthening
of the US dollar and market fears for higher for longer interest rates, caused
metal's prices to retreat back to $2,500/t at the end of H1 2024 and to
$2,400/t at the beginning of the second half.

 

Aluminum billet premia showed a significant upward trend, especially in the
regions where the Company operates (Europe), moving from the level of $370/t,
at the beginning of the year, to $600/t today. Premia's steady upward trend is
mainly attributed to the fact that Europe remains a significantly deficit
market, with most of its needs covered by imports from third countries,
including the Middle East and Russia. Simultaneously, transportation and
management costs have risen significantly, reinforcing this upward trend of
premia.

 

Alumina's profitability, in H1 2024, improved significantly compared to the
corresponding period of 2023, as production costs reduced while selling prices
increased. Alumina price index (API), followed a strong upward trend, rising
14% year-on-year to $402/t. Alumina prices have strengthened significantly
from the $350/t level at the beginning of the year to over $500/t at the end
of H1 2024. The above is a result of strong demand, driven by the restart of
some aluminium plants in Yunnan province of China, and Europe, as well as the
constrained Australian and Chinese alumina supply, the result of bauxite
shortages. Potential depletion of local bauxite reserves (e.g. China), could
play a decisive role in prospect alumina prices.

 

Therefore, the need for greater verticalization in the aluminum market is now
seen as imperative, not only for an even more effective cost management, but
also for the seamless continuation of the production process, by securing
bauxite supply, the raw material for alumina and aluminum production. METLEN,
by taking timely actions and making the most of all the opportunities offered
either at the revenues level (hedging) or via cost cuttings and investments
(acquisition of Imerys bauxites, agreement for bauxite mining in Ghana),
manages consistently to lead the Metals segment to new record high levels of
profitability. METLEN, at the same time, has managed to secure favorable LME
prices, an advantageous €/$ FX rate, while its effective cost control,
combined with the significant comparative advantages offered by the
coexistence of the Energy and Metals Sectors, are reflected in the further
improvement of the Metals profit margin, while positioning METLEN among the
most competitive aluminum and alumina producers globally. METLEN, has the
ability to maintain itself among the lowest-cost producers of alumina and
aluminum globally, among others, by utilizing aluminium smelter as a battery,
and charge it, taking advantage of the particularly low energy prices, the
result of power oversupply during certain hours of the day.

 

 

 

Prospects

 

METLEN's historically high performance in the first half lays a strong
foundation for achieving the goals set for the entire year. Further analysis
regarding the Company's financial results, prospects, business developments
and strategy will be discussed by METLEN's Management in the scheduled
conference call on Thursday 25/7/2024, 5:30 pm (GR TIME).

 

 

 

For further information, please contact:

 

Investors Relations

Tel. +30 210-6877300 | Fax +30 210-6877400 | E-mail: ir@metlengroup.com
(mailto:ir@mytilineos.)

Press Office

Tel. +30 210-6877346 | Fax +30 210-6877400 | E-mail:
communications@metlengroup.com (mailto:communications@metlengroup.com)
 

 

Metlen Energy & Metals - evolution of MYTILINEOS Energy & Metals - is
a multinational industrial and energy company, a leader in the metallurgy and
energy industries, focused on sustainability and circular economy. The Company
is listed on the Athens Stock Exchange, with a consolidated turnover and
EBITDA of €5.49 billion and €1.01 billion, respectively. Metlen is a
reference point for competitive green metallurgy at the European and global
level, whilst operating the only vertically integrated bauxite, alumina and
primary aluminum production unit in the European Union (E.U.) with privately
owned port facilities. In the energy sector, Metlen offers comprehensive
solutions, covering thermal and renewable energy projects, electricity
distribution and trading, alongside investments in grid infrastructure,
battery storage, and other green technologies. The Company is active in the
markets of all five continents, in 40 countries, adopting a full-scale
synergetic model between the Metallurgy and Energy Sectors, while undertaking
end-to-end development of major energy infrastructure projects.

For more information, please visit: www.metlengroup.com
(http://www.mytilineos.gr/) | Facebook
(https://www.facebook.com/MytilineosSA/) | Twitter
(https://twitter.com/MytilineosSA) | YouTube
(https://www.youtube.com/user/MytilineosGroup) | LinkedIn
(https://www.linkedin.com/company/6646293/)

 

 

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