RHI Magnesita NV

LSE:RHIM

Earnings Call Transcript 2021-Q4

[Operator]

Good

morning,

and

welcome

to

the

RHI

Magnesita

FY 2021

Results

Call.

My

name

is

Adam,

and

I'll

be

your

operator

today.

[Operator Instructions]

I'll

now hand

you

over

to

Stefan

Borgas

to

begin.

So,

Stefan,

please

go

ahead

when

you

are

ready.

[Stefan Borgas]

Thank

you

very

much.

Good

morning,

ladies

and

gentlemen,

from

Vienna.

These

are

interesting

times.

2021

was

quite

a

remarkable

year.

After

the

corona

crisis,

we

thought

that

we

were

going to

come

into

stable

waters,

but

that

wasn't

the

case.

We're

going to

explain

to

you

why.

Now,

2022

is

starting,

and

we

were

thinking

that

the

post-corona

supply

chain

problems

are

finally

under

control

and

we

were

coming

into

stable

waters.

And

yet

again,

we're

getting

surprised

by

global

volatility.

This

is

probably

the

topic

we

need

all

to

get

used

to.

Volatility

is

here

to

stay.

We

don't

know

what

will

hit

us,

but

certainly

for

the

time

being,

we

have

to

be

very

reactive.

So,

let

me,

without

any

further

delay,

give

you

the

summary

of

2021.

2021

was

a

year

of

very

strong

customer

demand.

Our

market

shares

could

recover

on

top

of

the

buoyant

and

very

strong

growth

of

demand.

We

delivered

–

the

revenue

increase

was

very

strong.

We

delivered

the

price

increase

programs

that

we

had

to

deliver

because

of

a

massive

increase,

especially

in

supply

chain

cost.

Mainly,

this

was

seen

in

Q4.

We

had

unprecedented

supply

chain

challenges

as

a

basis

of

this.

We

decided

to

do

two

things,

of

course;

pass

the

cost

onto

our

customers.

This

worked

quite

well

and

we

recovered

our

profitability

fully

by

the

end

of

the

year

in

the

fourth

quarter.

But

we

also

decided

to

significantly

increase

our

inventories

during

the

course

of

the

year

step-by-step

across

the

entire

chain.

Despite

all

this

disruptions,

we

also

progressed

our

strategic

transformation.

The

optimization

projects,

the

investment

projects

all

over

the

world

that

you

might

appreciate

also,

were

very

much

in

challenge

from

all

of

the

supply

chain

problems

from

our

suppliers

into

these

CapEx

projects.

But

we

could

also

sign

two

M&A

transactions,

one

in

Turkey

and

one

in

China,

that

shows

that

our

M&A

agenda

is

also

nicely

on the

way.

Let

me

point

out

on

the

next

slide

that

also

on

health

and

safety

side,

we

continue

to

be

very

stable.

This

is

a

core

value

for

us.

We

will

not

give

up

health

and

safety

of

our

employees.

Later

on

when

we

talk

about

Ukraine

and

Russia,

we

will

point

this

out

again.

This

is

at

the

top

priority

of

what

we

do.

Plants

are

operating

at

full

capacity.

Employees

are

stressed.

We

have

to

give

them

a

huge

thanks

for

all

of

the

engagement

that

they

showed

during

2021.

And

despite

this,

accident

rates

remained

at

a

very

low

level.

Let

me

give

you

the

financial

highlights.

Our

revenue

grew

very

strongly

by

16%

in

the

year.

Our

profitability

recovered,

although

relatively

late

in

the

year,

but

recovered

very

nicely.

We

could

deliver

the

year

within

the

guidance

that

we

gave

in

the

middle

of

the

year.

Most

importantly

is

that

our

margins

in

the

fourth

quarter

of

the

year

are

back

to

the

target

margins

of

around

12%

EBITA

that

we

want

to

see

in

our

business

as

a

minimum.

The

gearing

went

up,

of

course.

This

is,

let

me

say,

not

a

big

area

of

concern,

because

the

entire

increase

of

the

gearing

is

strictly

linked

to

the

buildup

of

inventories

that

we

have.

So,

this

is

a

capital

that

we

have

employed

in

the

company

that

we

can

convert

into

cash

relatively

quickly.

In

these

times

of

uncertainty

with

Ukraine,

it

might

actually

turn

out

to

be

a

little

bit

of

an

advantage

to

have

good

inventory

levels

everywhere.

Let

me

go

into

the

different

parts

of

the

business.

The

Steel

Division

volume

growth

was

stronger

than

the

market

everywhere.

Overall,

our

margins

are

a

little

bit

down

because

of

the

cost

headwinds,

especially

from

freight

and

from

raw

material

costs.

But

this

is

very

much

due

to

skew

of

the

higher

cost,

of

course,

having

to

be

absorbed

by

us

before

the

material

makes

it

through

the

supply

chain

and

we

can

then invoice it

to

our

customers.

As

I

said

before,

in

the

fourth

quarter,

this

was

pretty

much

through

the

system.

If

we

look

at

the

Steel

Division

by

region,

we

can

see

that

in

those

markets

in

which we

still

see

growth

potential,

India,

China,

we

could

gain

very

nicely.

Also

in

Brazil,

where

we

had

some

recovery

to

do,

we

could

deliver

this

recovery.

The

US

volumes,

if

you

look

at

North

America

on

this

slide,

look

that

we

were

behind

the

market,

but

we

are

not

behind

the

market

there.

This

simply

has

to

do

with

the

fact

that

in

the

COVID

crisis,

the

blast

furnaces

were

moved

down

more,

and

they

recovered

faster

now,

compared

to

the

electric

arc

furnaces

and

the

blast

furnaces

we

have

traditionally

a

lower

market

share.

So,

that

doesn't

concern

us

at

all,

because

overall

the

market

share

was

kept

same

in

Europe.

In

our

Industrial

Division,

the

margins

are

flat

on

an

overall

basis,

again,

very

much

because

of

the

skew

in

the

cement

business

that

saw

a

very

strong

recovery.

But

the

profitability

really

only

improved

in

the

fourth

quarter.

Anyway,

the

cement

business

is

relatively

seasonal

in

the

fourth

and

in

the

first

quarter

of

each

year

because

of

the

repair

cycle

of

this

industry.

In

the

Industrial,

in

non-cement

business,

in

the

project

business,

we

don't

yet –

we

did

not

yet

see

a

strong

top

line

recovery.

That's

due

to

the

fact

that,

here,

the

project,

of

course,

take

a

little

bit

longer.

Our

order

book

in

this

business

is

very,

very

strong.

Last

topic

before

I

hand

over

to

Ian

is

on

sustainability.

As

you

are

hopefully

aware,

one

of

our

biggest

short-term

drivers

to

improve

our

CO2

footprint,

but

also

to

improve

the

sustainability,

the

environmental

sustainability

of

the

company

is

the

increase

of

raw

materials

that

comes

from

secondary

sources

on

the

breakouts

of

our

customers.

Here,

we

have

made

very,

very

good

progress.

And

we

give

you

on

this

slide

here

the

quarterly

development

in

order

to

show

what

the

velocity

is

in

this

particular

area.

We

have

linked

our

debt,

our

financing

to

ESG

criteria,

so

we're

very

serious

about

this.

We

are

–

no

one

in

the

industry

is

on

the

avenue

on

which

we

are

in

terms

of

recycling

and

in

terms

of

CO2

capture.

We

brought

you

an

example.

How

does

this

look

like?

Because

this

is

much

more

complicated

than

it

looks

at

first

glance.

Traditionally,

if

you

take

materials

that

come

from

the

breakouts

of

our

customers,

you

get

breaks,

you

get

new

finished

products

that

look

like

the

picture

on

the

left

here,

with

many

cracks.

And

this

is,

of

course,

a

problem

for

our

customer,

because

their

hot

metals

penetrate

into

these

cracks.

We

have

developed

a

technology

with

which

we

can

now

use

these

secondary

raw

materials.

And

the

end

products

that

we

make

from

those

look

exactly

like

products

that

come

from

virgin

material

from

the

mines,

as

you

can

see

here

on

the

right

side.

There

are,

in

general,

other

elements

of

R&D

that

make

very

good

progress.

We've

brought

another

example

here.

This is this

is

our

Magnano

product,

which

we

launched

in

the

Americas.

And

these

are

nano

graphite

coating

materials

that

we

can

implement

in

our

products.

And

the

result

of

this

is

that

the

energy

loss

for

our

customers

goes

down

quite

dramatically.

This

will

help

our

customers

to

save

energy

cost,

reduce

CO2

this

way,

and

of

course,

for

us,

eventually

it

will

count

on

our

Scope

3

emissions.

With

this,

I'm

at

the

end

of

the

overview

and

I'm

very

happy

to

hand

over

to

Ian.

[Ian Botha]

Thanks

very

much,

Stefan,

and

good

morning,

ladies

and

gentlemen.

I'll

now

provide

a

more

detailed

update

on

our

financial

performance

during

the

year.

Starting

with

the

profit

and

loss

statement,

we

delivered

adjusted

EBITA

of

€280

million,

which

was

at

the

bottom

end

of

our

guidance

range

of

€280

million

to

€310

million,

which

we

issued

at

the

time

of

our

third

quarter

trading

update.

Performance

within

the

guidance

range

was

dependent

on

the

successful

implementation

of

price

increases

and

there

being

no

further

increases

in

our

cost

of

production.

We

were

able

to

achieve

our

price

increase

target,

delivering

€127

million

of

benefits

in

the

2021

financial

year

against

the

target

of

€130

million.

However,

there

were

further

cost

increases

in

the

fourth

quarter,

which

eroded

this

benefit,

notably

in

freight,

in

purchased

raw

materials,

and

in

energy.

And

I'll

go

into

more

details

on

costs

later

on.

Our

adjusted

profit

after

tax

increased

by

35%

to

€222

million

as

the

2020

financial

year

was

impacted

by

adverse

foreign

exchange

movements

that

did

not

reoccur

in

2021.

The

board

has recommended

a

final

dividend

of

€1

per

share,

bringing

the

full-year

dividend

to

€1.50

per

share,

including

the

interim

dividend

paid

to

shareholders

in

the

second

half

of

last

year.

This

maintains

our

core

dividend

at

the

same

level

as

2020,

with

an

earnings

cover

ratio

of

3

times,

in

line

with

our

stated

policy.

Changing

the

slide,

revenue

increased

strongly

in

2021,

up

16%

in

constant

currency

terms

to

€2.55

billion.

Volumes

are

back

above

2019

levels.

And

in

addition,

we

delivered

some

market

share

gains

on

top

of

keeping

pace

with

the

general

volume

recovery

in

steel

and

other

industries.

This

has

been achieved

during a

year of significant

disruption

to global

supply chains,

but

also during

the

peak

year

of

our

internal

investment

program.

Many

of

our

sites

have

been

undergoing

significant

upgrades,

whilst

needing

to

run

at

very

high

levels

of

capacity

utilization

to

meet

the

strong

rebound

in

customer

demand.

The

price

increase

program,

which

delivered

€127

million

of

benefit,

was

heavily

weighted

towards

the

second

half

and

the

fourth

quarter

in

particular.

This

is

due

to

the

time

delay

in

realizing

the

benefit

of

higher

prices

after

they've

been

negotiated

and

agreed

with

customers.

The

strong

sales

volume

growth

translated

into

a

€79

million

benefit

at

an EBITA

level.

We

further

improved

our

profitability

with

the

strategic

measures,

adding

€36

million

from

cost

savings

and

€13

million

from

the

sales

initiatives

in

2021

on

top

of

the

benefits

delivered

in

2020.

You

can

see

€127

million

benefit

on

the

price

increase

program

flowing

directly

through

to

EBITA.

This

was,

however,

more

than

offset

by

the

cost

headwinds

we've

been

facing

totaling

€152

million.

Freight

increased

materially,

up

€68

million.

We

incurred

€69

million

of

additional

raw

material

costs

on

externally

purchased

raw

material.

Whilst

we

are

vertically

integrated

refractory

producer,

we

do

still

need

to

purchase

around

30%

of

our

magnesite-based

raw

material,

our

electro-fused

material,

and

all

other

non-magnesite

materials,

like

alumina-based

products.

On

the

positive

side,

operating

at

higher

volume

saw

a

€51

million

benefit

from

higher

fixed

cost

absorption.

Finally,

as

expected,

the

temporary

cost

savings

we

introduced

during

the

pandemic

in

2020, like

for

site

closures

and

the

short

time

working,

these

came

to

an

end

and

came

back

into

our

cost

base

in

2021

with

a

€43

million

impact

against

our

guidance

of

€40 million.

The

impact

of

the

cost

increases

largely

falls

on

our

refractory

margin,

which

weakened

to

7.8%,

whilst

the

contribution

of

our

raw

material

assets

increased

to

3.2%,

in

line

with

higher

market

prices

for

the

raw

materials

we

consume

internally.

As

Stefan

highlighted,

we

see

the

weak

refectory

margin

as

a

temporary

development.

We

restored

refectory

margins

in

the

fourth

quarter

of 2021

with

the

benefit

of

our

price

increase

program,

and

we

are

focused

on

preserving

this

in

2022.

Raw

material

prices

in

the

first

two

months

of

this

year

have

held

higher

levels

on

average

compared

to

2021,

and

we

are

capturing

this

benefit.

Looking

at

our

costs

in

a little

bit

more

detail.

Freight

is

one

of

the

largest

categories

of

cost

increases

and

increased

from

8%

of

our

cost

of

goods

sold

to

12%.

You

will

all

be

aware

of

the

very

difficult

conditions

in

the

freight

market

this

past

year,

with

spot

rates

on

average

over

200%

higher

year-on-year;

difficulty

getting

containers

and

only

35%

of

those

containers

actually

arriving

at

their

destination

on

schedule

is

down

from

around

80%

in

previous

periods.

The

energy

price

increase

is

another

well-publicized

feature

of

current

markets.

Our

energy

costs

increased

by

a

quarter

to

€187

million

in

2021,

much

of

that

in

the

fourth

quarter,

partly

offset

by

the

benefits

of

our

hedging

program.

Today,

our

key

exposures

are

to

natural

gas

and

power

prices

in

Europe,

and

to

oil

prices

globally.

Key

raw

material

prices

are

set

out

on

this

slide,

and

you

can

see

two

significant

step

increases

in

the

fourth

quarter

of 2020

and

the

fourth

quarter of

2021

that

together

contributed

to

the

$69

million

increase

in

raw

material

costs

year-on-year.

On

this

slide,

we

have

set

out

a

quarterly

view

to

demonstrate

the

success

of

our

price

increase

program

in

restoring

margins

to

a

more

acceptable

level

of

12.5%

in

the

fourth

quarter.

The

dip

that

you

can

see

in

the

third

quarter

is

due

to

the

impact

of

the

unscheduled

kiln

outage

at

Radenthein;

Radenthein

being

a

key

plant

for

the

production

of

high-margin

refractories

for

the

industrial

sector.

And

this

had

an

EBITA impact

of

€8

million

very

largely

in

the

third

quarter.

In

total,

we

went

through

four

rounds

of

price

increases

with

customers

in

2021.

And

this

increased

frequency

of

price

discussions

is

likely

to

remain

a

feature

of

our

industry

going

forwards,

at

least

for

so

long

as

the

current

cost

volatility

continues.

Moving

to

working

capital,

and

maintaining

continuity

of

supply

for

our

customers

came

at

the

cost

of

a

significant

increase

in

our

inventories,

which

increased

€0.5

billion

and

finished

the

year

at

€977

million.

This

was

partly

offset

by

the

increase

in

accounts

payable.

And

together,

these

contributed

to

an

increase

in

working

capital

to

€677

million,

up

just

over

€300 million

year-on-year.

In

the

chart

on

the

right,

you

can

see

that

much

of

the

increase

in

inventory

is

driven

by

higher

costs

of

€170

million

and

increased

activity

of

€125

million.

Some

of

the

increase

is

also

a

result

of

longer

transit

times

with

goods

on

the

water

or

held

up

in

port

congestion

for

a

longer

period.

Some

was

also

a

deliberate

action

on

our

part,

as

we've

shared

at

the

third

quarter

trading

update,

to

ensure

that

we

had

raw

material

available

to

see

us

through

the

Winter

Olympics

in

the

first

quarter

of

2022,

and

to

maintain

sufficient

stocks

throughout

our

supply

chain

to

ensure

continuity

of

our

own production

and,

importantly,

deliveries

to

our

customers,

we

increased

inventory.

We

do

expect

to

be

able

to

unwind

this

excess

inventory,

but

this

can

only

be

done

when

global

supply

chain

reliability

improves,

and

there is

no

sign

yet

of

that

happening.

We

are

operating

on

the

assumption

that

disruption

is

going

to

continue

in

2022

with

the

intention

of

releasing

inventory

as

soon

as

market

conditions

allow.

Turning

to

our

net

debt.

High

working

capital

is

the

main

reason

for

the

€430

million

increase

in

our

net

debt

to

end

the

year

just

over

€1

billion.

We

continue

to

benefit

from

significant

headroom

in

terms

of

available

liquidity,

which

is

€1.2

billion

on

the

31st

of

December.

We

refinanced

over €1

billion

of

debt

facilities

in

2021,

and

this

is

reflected

in

the

long-dated

maturity

profile

that

you

can

see

on

this

slide.

All

of

this

refinancing

was

ESG-linked,

consistent

with

our

sustainability

strategy.

Gearing

at

2.6

times

is

clearly

higher

than

our

target

range

of

0.5

to

1.5

times. And

we

expect

this

ratio

to

reduce

in

2022

towards

our

target

range,

as

we

passed

the

peak

of

CapEx

on

our

internal

investment

projects

and

as

our

EBITDA

increases

and

with

our

strategic

initiatives

and

organic

growth.

The

obvious

route

to

strengthen

the

balance

sheet

will

be

to

reduce

the

level

of

inventory.

But

as

I

said

on

the

previous

slide,

this

can

only

happen

when

the

global

supply

chain

returns

to

much

improved

levels

of

reliability.

And

with

that,

I'm

happy

to

hand

you

back

to

Stefan.

[Stefan Borgas]

Thanks,

Ian,

very

much.

Let

me

wrap

up

the

presentation

part

of

the

call

with

a

view

on

our

strategic

initiatives.

As

we

approach

2022,

we

can

see

that

we

are

behind

the

target

in

2022

of

our

strategic

initiatives.

This

is

almost

entirely

due

to

a

time

lag

triggered

by

the

COVID

year

and

a

half.

Of

course,

the

problem

that

we

couldn't

access

customers.

Therefore,

our

sales

initiatives

are

behind

for

over

a

year,

probably

in

some

cases

almost

two

years.

And,

of

course,

many

things

were

then

delayed

because

of

the

supply

chain

topics.

Good

news

is

that

we

can

raise

our

target

to

€110

million

that

we

can

gain

from

the

cost

savings

from

2023

onwards

after

the

projects

are

completed.

And

our

sales

initiatives

are

still

more

or

less

at

the

same

level

than

before.

Let

me

give

you

a

few

pictures,

so

that

you

can

see

that

your

money

is

really

delivering

something.

Here

is

the

new

plant

in

Hochfilzen

in

the

Tyrolean

Alps,

which

produces

now

probably

the

best

quality

of

dolomite

raw

materials

in

Europe,

also

at

larger

scale.

This

plant

is

fully

in

operation

and

is

working

quite

nicely.

On

the

next

picture,

you

can

see

the

new

tunnel

kiln

in

Urmitz

in

our

German

site

that

was

commissioned

in

the

fourth

quarter

of

this

year.

You

can

see

this

is

a

super

modern,

high-tech

piece

of

equipment

that

will

allow

us

to

significantly

increase

capacity

here,

consolidate

with

some

neighboring

sites,

and

therefore

deliver

the

benefits.

If

we

look

at

the

sales

strategies,

you

can

see

on

flow

control,

we

have

recovered

very

nicely

to

the

2019

levels.

The

solution

contracts

have

made

good

progress.

We

rebased

the

calculation

a

little

bit

here.

So,

therefore,

we've

given

you

the

last

three

years

and

you

can

see

the

progress

we've

made

here.

And

most

importantly,

in

India

and

in

China,

where

we

did

have

lower

market – or

where

we

still

have

lower

market

shares

than

in

other

parts

of

the

world,

we

made

very

good

progress.

These

two

geographies

now

make

up

around

18%

of

our

global

business

already.

As

a

example

for

this, we

have

bought

shares

in

a

company

in

China

and

together

with

our

partners,

we're

going to

build

a

new

plant.

This

is

already

fully

in

construction

in

Chongqing

in

China.

This

gives

us

access

to

a

different

geography

and

to

a

different

product

class.

And

in

Turkey,

on

the

next

slide,

you

can

see

that

the

agreement

to

buy

company

called

SÖRMAŞ

has

been

agreed

and

signed.

We

are

now

waiting

for

the

Turkish

antitrust

authorities

to

give

us

the clearance.

This

is

a

downstream

investment

for

us.

As

you

know,

in

Turkey,

we

are

already

producing

raw

materials.

We

would

very

much

like

to

keep

these

raw

materials

in

the

country,

expand

the

production

of

SÖRMAŞ

there

in

order

to

supply

the

strongly

growing

Turkish

market

with

local

production.

That's

the

target

here.

We

can,

hopefully,

take

this

over

as

soon

as

we

get

the

approval

from

the

antitrust

authorities

sometimes

over

the

course

of

the

next

months.

Yeah, let

me

summarize,

ladies

and

gentlemen.

RHI

Magnesita

takes

its

leadership

in

the

global

refractory

industry

very

seriously.

We

continue

our

strategic

transformation

despite

all

of

the

volatility

and

all

of

the

headwinds

that

we

experience

year

after

year

now,

and

it

looks

like

this

will

not

end

for

the

time

being.

Our

production

optimization

plan

is

close

to

completion.

We

will

continue

with

our

journey

to

strengthen

the

company

through

M&A,

especially

in

the

markets

that

are

attractive

for

us:

India

and

China.

We

are

also

the

sustainability

leader

in

the

refractory

industry.

We

are

well-positioned

for

a

global

decarbonization

in

the

long

run,

but

we're

also

reducing

CO2

already

in

the

short

run.

Nobody

in

the

industry

is

anywhere

closely

as

engaged

as

we

are

in

this

area.

And

last,

but

not

least,

we

are

the

innovation

and

technology

leader

in

the

market.

We're

not

forgetting

innovation

in

the

classical

refractory

technologies.

But

we're

also

adding

new

knowledge

and

new

innovation

in

the

area

of

recycling,

where

a

lot

can

still

be

done

in

order

to

upgrade

the

quality

of

the

raw

materials

that

come

from

the

breakout

of

our

customers.

And

finally,

the

heat

management

capabilities

of

RHI

Magnesita

are

unmatched.

Nobody

can

deliver

these

full,

complete

solutions

for

our

customers,

and

this

is

what

we're

continuing

to

build

out.

Our

customers

recognize

this.

That's

why

the

percentage

of

solution

business

in

our

portfolio

is

increasing

year

after

year.

Thank

you

very

much

for

listening.

And

now,

Ian

and

myself

are,

of

course,

very

happy

to

answer

your

questions.

[Operator Instructions]

[Operator]

Our

first

question

is

from

Mark

Davies

Jones

from

Stifel.

Mark,

your

line

is

now

open,

please

go

ahead.

[Mark Davies Jones, Analyst, Stifel Nicolaus Europe Ltd.]

Thanks

very

much.

Lots

going

on,

obviously.

So,

can

we

start

first

with

pricing

and

costs.

The

exit

run

rate

in

Q4

looks

much

healthier.

Looking

forward

to

2022,

obviously, we

get

that

full

run

rate

of

price

increases,

but

we

also

get

a

full

run

rate

of

higher

cost

levels.

So,

if

things

on

both

sides

stay

roughly

where

they

are,

is

there any

reason

why

that 12.5%

can't

be

sustained

or

built

on

in

2022

or

are

there

other

lagged

effects

coming

through

now?

[Stefan Borgas]

Mark,

the

big

challenge

now

in

2022

is

energy

costs.

This

has,

of

course,

dramatically

increased

starting

in the

fourth

quarter

already.

So,

we

have

some

of

these

costs

in

the

inventories

that

we

have.

But

it's

continuing,

of

course,

accelerated

now

by

what's

going

on

in

the

Ukraine.

I

saw

Brent

was

at $100

per

barrel

this

morning.

So,

that

will

continue.

And

this

is

the

same

order

of

magnitude

then

shipping

cost

was

last

year.

So,

we

cannot

sit

back.

I

think

I'm

quite

confident

that

we

can

maintain

the

margin

level

that

we

have

at

this

moment.

All

of

the

order

book

shows

this,

but

we

can't

sit

back.

In

a

little

bit

lower

level,

but

still

also

on

the

cost

side,

our

labor

costs

go

up

significantly.

We

have

about

three

times

the

salary

increases

this

year

that

we

experienced

in

past

years.

So,

that

has

some

effect

on

us

as

well.

It's

not

as

big

as

shipping

and

energy,

but

it's

there

to

be

managed.

So,

by

no

way

can

we

sit

back

and

relax.

[Mark Davies Jones, Analyst, Stifel Nicolaus Europe Ltd.]

Indeed.

And

perhaps

I

can

ask Ian

[ph]



if

we

can

have (00:28:37)

an

extended

period

of

higher

than

expected debt.

Can

you

just

remind

us

where

covenant

sits

and

how

comfortable

your

relationship

banks

are

with

running

those

debt

levels?

I

can

see

the

commercial

need

to

keep

inventory

and

keep

the

whole

system

moving,

but

is

that

something

you

got

backing

for?

[Ian Botha]

Mark, thank

you.

So,

our

debt

covenant

across

all

of

our

gross

debt

is

3.5

times.

That

3.5

times

is

calculated

excluding

the

IFRS 15

debt.

And

therefore,

on

an

equivalent

basis,

our

actual

figure

is

2.5

times.

And,

yes,

we

have

a

stable,

long-term

supportive

banking

syndicate

of

11

banks

weighted

towards

Austro-Germanic

banks

that

have

been

with

RHI

for

many,

many

years,

and

we

continue

to

count

on

their

support.

[Mark Davies Jones, Analyst, Stifel Nicolaus Europe Ltd.]

Excellent.

Thank

you.

And

if

I

can

just

do

one

third

one.

Any

potential

second

order

threats

from the

Russia/Ukraine

situation?

I

mean, have

you

looked

at

how

much

of

your

production

base

in

Europe

is

in

regions

that

are

entirely

dependent

on

Russian

gas

supply?

[Stefan Borgas]

So,

there

are

three

aspects

to

this

crisis.

The

first

one,

which

is

the

most

important

one,

I

think,

and

the

most

–

one

that we should

take

the

most

serious

is

the

people. We

have

employees

in

Ukraine

and

employees

in

Russia,

and

we

are

very

focused

on

trying

to

help

them,

especially

the

ones

living

in

Ukraine,

them

and

their

families.

This

is,

like

safety

and

health,

the

most

important

thing

that

we

need

to

take

care

of

now

in

the

next

days.

So,

we're

focused

on

this.

The

second

aspect

is

the

business

that

we

have

in

Ukraine

and

Russia.

It's

a

total

business

of

around

€90 million.

I

think

we

need

to

assume,

in

a

worst

case

scenario,

that

this

business

might

cease

during

2022

and

maybe

in

longer

term

as

well.

It

depends

on

sanctions,

on

many

things. It's

difficult

to

judge

this.

But

there's

big

production

interruptions

in

Ukraine

now.

And

if

sanctions

continue

to

escalate,

then

probably

we

cannot

deliver

very

much

into

Russia.

So,

that's

the

second

aspect.

It's

a

pity,

but

I

think

that's

about

the

extent

in

which

we

would

see

this.

This is

about

3.5%

of

our

turnover.

And

the

third

part

is

probably

the

issue

with

the

biggest

financial

impact

in

the

short

and

medium

term.

This

is

the

gas

supply

from

Russia,

especially

our

Austrian

raw

materials

plants

are

very

much

exposed. Hochfilzen

in

[ph]

Tyroliya

(00:31:28)

that

you

just

saw

has

the

ability

to

use

coal.

So,

we

could

switch

relatively

quickly

to

coal.

In

Austria,

60%

of

the

coal

also

comes

from

Russia.

But

here,

we

could

find

alternative

sources,

I

think,

relatively

quickly.

But

the

other

raw

material

plant

in Breitenau

is

entirely

dependent

on

gas.

Most

of

this

comes

from

Russia.

So

here,

this

is

rather

a

serious

situation.

We're

already

in

emergency

planning

and

we

have

to

see

how

this

develops.

I

think

this

is

a

risk,

but

it's

almost

impossible

to

forecast

this

at

this

moment

in time.

The

finished

goods

plant

in

Europe

could

probably

switch

to

liquid

gas

and

other

alternatives,

a

little

bit

easier,

because

also

the

consumption

is

not

so

high.

It

will

remain

a

challenge

also.

This

is

a

European

issue

or

an

issue

for

the

European

plants.

There

could

be

some

upside

if

Russian

imports

of

finished

products

of

steel,

copper,

things

like

that

cannot

happen

anymore.

This

will

strengthen

the

European

producers

and

the

Turkish

producers

and

other

producers.

So,

I

think

from

a

market

perspective,

we're

not

that

negative,

but

the

gas

supply

is

a

challenge

very

difficult

to

quantify

today.

We

were

more

relaxed

on

Friday,

when

we

wrote

this

RNS

and

Q&A,

and

then

acceleration

of

sanctions

happened

over

the

weekend.

So,

I

think

we

have

to

take

it

day-by-day

at

this

point.

[Mark Davies Jones, Analyst, Stifel Nicolaus Europe Ltd.]

Indeed.

Thank

you

very

much.

[Stefan Borgas]

Next

question,

please.

[Operator]

Nothing

further

in

the

queue

at

present.

[Operator Instructions]



We

have

a

question

from

Harry

Philips

of

Peel

Hunt.

Harry,

please

go

ahead.

[Harry Philips, Analyst, Peel Hunt LLP]

Good

morning,

everyone.

[Ian Botha]

Good

morning,

Harry.

[Harry Philips, Analyst, Peel Hunt LLP]

I

hope

everyone

is

keeping

their tin hats on.

Just

a

couple

of

questions,

please.

The

first

is

around

China

and

India,

which

is

already

up

to

18%

of

sales.

Just

how

say

– sorry,

there's a

horrible

echo

on

the

line.

In

five

years'

time,

say,

where

would

you

hope

they

ought

to

go

and

how

much

would

further

investment

would

you

need

to

put

into

the

regions

to

facilitate

that?

And

then

the

second

is

around

solutions.

You've

given

us

the

chart,

which

is

very

helpful,

but

is

the

40%

target

still

readily

achievable

in...

[audio gap]

(00:34:23-00:34:33)

[Stefan Borgas]

...China

and

India

for

2025

or

so,

because

it

doesn't

make

sense.

In

China,

much

depends

on

consolidation,

on

industry

consolidation.

It

is

quite

encouraging

what

is

happening

there.

So,

I

think

we

can

continue

on

this

path.

And

in

India,

this

is

very

much

a

matter

of

the

growth

of

the

Indian

market.

The

Indian

market

is

really

the

only

big,

large

scale

market

in

the

world

that

is

growing.

We

have

a

good

position,

but

here

this

is

a

matter

of

investing

into

capacities

through

intelligent

combination

of

plant

expansions,

but

also

some

targeted

acquisition.

So,

this

percentage,

I

believe,

will

easily

surpass the

20%

of

the

share

of

wallet,

but

how

far

it

would

go

I'd

rather

not

make

any

predictions

now.

The

solutions

percentage

of

40%

is

ambitious.

We,

obviously,

need

some

exponential

growth

in

order

to

do

this.

But

it

is

also

supported

by

a

lot

of

new

digital

products

that

will

complement

our

traditional

offering,

and

they

are

only

coming

to

the

market

now

in

the

next

one

or

two

years.

And

then,

the

growth,

of

course,

comes

thereafter.

So,

the

40%

is

still

in

reach.

We

don't

want

to

give

this

up,

but

I

acknowledge

it's

ambitious.

Maybe

it'll

take

a

couple

years

longer,

depends

on

how

well

our

customers

will

accept

these

new

total

solutions.

By

the

way,

also

the

recycling

of

the

breakout

materials

makes

a

big

part

of

the

solutions

potential.

[Harry Philips, Analyst, Peel Hunt LLP]

Got

it.

And

that

sort

of

leads

really

onto

my

next

question,

which

is

the

whole

sort

of

greenfield

sustainability,

how

recycling

fits

into

that.

You

have

the

SSAB

announcement

a

couple

of

weeks

ago –

three

weeks

ago,

where

electric

arc

is

being

brought

on

stream

and

a

new

look

at

the

new

capacity

coming

on

stream

in

North

America

and

huge

buff,

almost

total

dominance

around

electric

arc.

And

just

how

you

sort

of

deploy

your

strategy

around

those

dynamics.

[Stefan Borgas]

Yeah.

So,

the

electric

arc

furnace,

of

course,

is

the

sweet

spot

for

us.

This

is

a

magnesite-dominated

refractory

environment.

We

have

a

huge

technology

leadership

in

this

area.

Our

market

share

in

the

electric

arc

is

much

higher

than

in

the

blast

furnace,

as

you

could

see

in

the

2021

US

numbers,

as

I've

explained

before.

So,

this

is

quite

good

for

us.

This

should

give

us

above

average

growth

opportunities

here.

There

are

two

other

elements

to

the

decarbonization

of

our

customers.

One

is

the

refractory

materials

that

help

them

to

save

energy,

like

the

Magnano

that

I

talked

about

in

my

presentation,

like

better

measurement

of

energy

efficiency

of

refractories

and

all

the

things

around

heat

loss

there

at

the

customer

and,

of

course, the

recycling,

because

this

is

a

clear

reduction

of

Scope

3

CO2

cost

for

our

customers.

If

we

look

at

the

electric

arc

furnace

environment

before

and

after

decarbonization,

today,

the

CO2

emissions

attributable

to

refractories

are

about

3%,

3.5%

from

the

perspective

of

a

steel

company.

So,

it's

not

that

big,

and

therefore

not

so

much

in

the

prime

focus.

Once

a

steel

plant

is

converted

to

a

green

electric

arc

furnace

environment

with

hydrogen

reduction

rather

than oxygen

plants,

then

the

percentage

of

CO2

attributed

to

the

refractories

will

go

up

to

15%

to

20%.

And

at

that

point

in

time,

it's

very

important

that

the

refractories

are

low

carbon

products

as

well,

because

we

will

be

very

high

on

the

radar.

And

that's

what

we're

working

towards,

so

that

we

have

these

solutions

in

place

before

the

situation

arises.

[Harry Philips, Analyst, Peel Hunt LLP]

And

in

terms

of

the

customer

sort

of

response

to

that

or

whatever,

just

how

– are

they

driving

it

very

hard

themselves

and

sort

of

aligning

with

yourselves

to

produce

solutions

or

are you

– is

it

still

one

way

you're

bringing

solutions

to

the

customers

or

how

is

that

dynamic

working

at

the moment

in time?

[Stefan Borgas]

It

depends

on

the

individual

customers.

We

have

very

advanced

customers

who

are

pushing

the

envelope

on

every

aspect

that

they

can.

And

here,

of

course,

we

have

big

open

arms

oncoming

with

our

own

solutions,

mostly

towards

what

helps

them

directly

in

their

own

Scope

1.

So

that

works.

But

there's

a

customer

segment

still

also

out

there

that

is

not

very

much

focused

on

this,

and

they

want

low-cost

refractories,

period,

and

not

yet

pay

any

premium

for

green

products.

This

exists

as

well.

But

this

is

shifting

even

in

markets

like

India,

where

decarbonization

wasn't

that

big

on

the

agenda

until

very

recently,

this

is

starting

to

change.

So,

there,

also

we

see

the

leading

companies

pushing

for

these

kind

of

solutions.

Surprisingly,

in

the

US,

of

course,

because

of

the

push

towards

EAF,

the

interest

is

very,

very

high.

In

Europe,

it's

mixed.

In

South

America,

it's

not

yet

so

strong

with

the

exception

of Gerdau, who

is

super

advanced

and

very

focused

and

very

visionary

in

this

area.

And

in

the

rest

of

Asia,

I

think

it's

quite

mixed

also.

In

China

also,

there

are

quite

some

customers

who

are

super

engaged

in

all

of

the

circular

economy

area

and

also

in

these

innovative

products

that

help

them

to

save

energy,

and therewith

CO2.

[Harry Philips, Analyst, Peel Hunt LLP]

Okay.

And

one

very

last

question,

just

around

pricing

into

the

current

year.

I

mean,

clearly,

the

realization

in

Q4

was

tremendous.

But

with

–

as

you

say

cost

going

higher

and

what

have

you,

I

mean,

price

increases

already

going

through

and

you

sort

of

feel

reasonably

happy

that

your

action

and

sort

of

environment

around

that

is

quite

stable

in

terms

of

how

you

manage

it.

[Stefan Borgas]

Yeah.

So, from

everything

that

we

can

see

now

for

the

first

quarter –

when

I

say

everything,

we

can

see

all

the

cost

increases

that

we

can

see

and

that

we

can

list

in

the

first

quarter –

things

look

quite

solid.

I

have

to

say

that

our

sales

force

has

done

a

tremendous

job

here

to

change,

also

change

the

way

we

look

at

price

management.

This

always

in

our

industry

used

to

be

a

project

planning

and

implementing

a

price

increase.

This

is

not

a

project

anymore now.

This

is

part

of

ongoing

operational

everyday

business,

because

the

volatility

has

so

dramatically

increased

and

our

customers

have

accepted

this.

Our

customers

are

attributing

a

much,

much

bigger

emphasis

on

supply

security

than

on

pricing

only.

At

least

most

of

them,

I

have

to

say.

This

is

the

reason

why

we

decided

to

invest

into

inventory,

because

this

is

the

quid

pro

quo.

So,

first

quarter

looks

quite

good.

Second

quarter,

I

would

say

we

can

be

reasonably

confident

as

well.

But

this comment

I

make

without

knowing

what

will

happen,

especially

on

the

energy

cost,

especially

in

Europe.

Ian,

anything

to

add?

[Ian Botha]

I

think

that

the

key

sensitivity

that

we

have

is

around

energy, energy

costs.

And

as

we've

spoken

before,

our

hedging

program

extends

well

into

2022.

So,

we

–

around

two-thirds

of

our

energy

cost

is

hedged.

The

key

exposure

that

we

really

have

is

European

gas,

European

electricity,

as

well

as

oil

on

a

global

basis.

And

that

really

starts

to

impact

us

from

the

end

of

the

second

quarter

into

the

second

half

of

this

year.

So,

price

increases

are

going

to

be

important

for

us

to

maintain

the

margins

we

established

in

the fourth

quarter.

[Harry Philips, Analyst, Peel Hunt LLP]

Fantastic.

Thanks

very

much,

indeed.

[Stefan Borgas]

Thanks,

Harry.

Do

we

have

another

question?

[Operator]

We

do,

from

Dom

Convey

at

Numis.

Dom,

your

line

is

open.

[Dominic Convey, Analyst, Numis Securities Ltd.]

Good

morning,

both.

Thanks

for taking

the

question.

Just

want to

follow-up

on

Harry's,

if

I

may,

specifically

with

regard

to

the

pricing

dynamic

and

if

we

think

about

the

EBITA

bridge

for

2022.

Apologies

if

I

may have

missed

it,

but

have

you

given

the

equivalent

figure

to

that

€130

million

price

increase

target

that

you

had

for

last

year?

What

would

the

equivalent

number

be this

year

in

order

to

maintain

those

margins

at

the

12.5%

Q4

exit

rate?

[Stefan Borgas]

Ian,

do

you

want

to...?

[Ian Botha]

Yeah.

Dom,

thanks for

the

question.

So,

we've

intentionally

not

given

that

guidance

at

this

point

because

of

the

uncertainty

around

the

cost

pressures

around

energy

and

non-magnesite-based

raw

materials.

But

if

you

go

back

to

an

EBIT

bridge

and

the

building

blocks

for

2022,

our

margin

of

12.5%

in

the

fourth

quarter

last

year

did

benefit

from

a

strong

cement

season.

So,

if

you

extend

the

period

and perhaps

look

at

the

second

half,

which

is

£150

million

of

EBITA,

you

double

that

up.

You

take

into

account

the

strategic

initiatives,

which

are

targeting

to

deliver

around

£35

million

of

incremental

EBITA,

and

the

fact

that

there

may

be

some

modest

2%,

3%

volume

growth

during

the

course

of

the

year,

you

get

the

key

building

blocks

for

our

2022

EBITA.

[Dominic Convey, Analyst, Numis Securities Ltd.]

That's

very

clear.

Thanks,

Ian.

[Operator Instructions]

[Operator]

Next

question

from

Mark

Fielding

at

RBC.

Mark,

your

line

is

open.

[Mark Fielding, Analyst, RBC Europe Ltd.]

Morning.

[Stefan Borgas]

Good

morning,

Mark.

[Mark Fielding, Analyst, RBC Europe Ltd.]

You

actually

touched

on

the

question

I

was

going

to ask

and

[ph]



that

answer

(00:45:53) was

I

was

curious

as

you've

talked

about

the

Q4

sort

of

12.5%

benchmark.

Just

– I mean,

[indiscernible]



(00:46:00)

flagged

seasonality,

but

what

is

the

normal

quarterly

seasonality

in

the

first half,

because

I'm not

sure

we've

had

a

normal

year

in

the

last

three

or

four

years?

[Stefan Borgas]

Yeah.

[Mark Fielding, Analyst, RBC Europe Ltd.]

So,

cement

is,

obviously,

stronger

generally

later

in

the

year

and

in

Q1.

How

do

we

think

about

margin

seasonality

through

the

year

in

this

business

in

general?

[Stefan Borgas]

Yeah.

There's

not

so

much

margin

seasonality,

at

least

from

a

demand

perspective,

but

more

revenue

seasonality,

and

that

comes

almost

entirely

from

the

cement

business.

The

cement

customers,

they

buy

our

materials

usually at

the

end

of

the

fourth

quarter

and

in

the

first

quarter

in

order

to

repair

their

kilns.

This

is

in

the

northern

hemisphere

where

most

of

the

customers

are.

Why?

Because

in

the

winter,

many

kilns

are

shut

down,

and

then

before

they

start

again

with

the

start

of

the

construction

season,

they

use

the

refractories in

order to

prepare

the

kilns

for

a

restart.

This

is

the

reason

for

this

seasonality.

It

looks

like

this

year,

the

cement

kilns

have

run

a

little

longer

in

2021,

and

the

shutdown

is

a

little

bit

late.

So,

it

might

–

we

might

have

the

peak

month

in

April

rather

in

March.

That's

how

it

looks

like.

But

this

is

the

season.

And

then

the

third

and

the

second

quarter

usually

are

a

little bit

weaker,

because

we

have

very

little

cement

sales

during

this

time.

And

then,

in

the

fourth

quarter,

it

picks

back

up.

This

is

the

seasonality.

Does

that

answer

your

question?

But

the

margins

are

more

or

less

the

same

from

one

quarter

to

another.

[Mark Fielding, Analyst, RBC Europe Ltd.]

Great.

Thank

you.

[Operator]

Next

question

is

from

[ph]



Neeraj

Prakash

from Whiteside Capital.

Neeraj (00:47:53),

go

ahead.

Yeah,

hi.

Thanks

for

taking

my

questions.

So,

first,

just

wanted

to understand

the

strategic

thinking

behind

choosing

India

as

a

manufacturing

hub

versus

other

countries

like

China,

Mexico,

or

directly

the

Middle

East,

which

is

where

you're

going

to be

currently

exporting

your

products

from

India.

[Stefan Borgas]

Yeah.

So,

the

main

manufacturing

purpose

of

India

is

India

for

India.

Why?

Because

the

growth

of

the

Indian

market,

of

course,

is

very

strong.

This

is

a

5%,

6%

growth

environment

for

refractories.

The

Indian

refractory

production,

there

are

– the

Indian

refractory

sales

have

a

lot

relied

on

imports

over

the

course

of

the

last

20 years,

not

just

for

RHI

Magnesita,

but

for

the

industry

as

a

whole.

And

part

of

the

Modi

government

induced

Make in

India

initiative

asks

us

to

domesticize

a

lot

of

this

imported

production.

Specifically,

this

means

we're

moving

production

from

China

to

India,

while

at

the

same

time

the

Indian

demand

grows

quite

significantly.

And

that's

why

there's

a

significant

manufacturing

increase

in

India

going

on

in

the

refractory

industry.

That's

the

background.

India

then,

and

why

has

this

been

the

case?

This

has

been

the

case

because

many

raw

materials

are

just

simply

not

available

in

India.

They're

just

not

in

the

geologies,

but this

fault is just

the

fate

of

nature.

So,

that's

why

there

has

been

this

strong

import

of

finished

goods,

but

with

the

maturing

of

the

industry,

now

we

can

import

raw

materials

to

a

larger

extent

than

in

the

past

and

make

the

finished

goods

there.

With

respect

to

the

Middle

East,

we

have

been

serving

the

Middle

East

mostly

from

India

and

Europe

also

because

of

the

proximity.

In

the

future –

and

this

is

one

of

the

reasons

for

our

strong

investment

and

interest

in

Turkey.

We

want

to

shift

some

of

this

production

to

Turkey

simply

for

proximity

reasons.

You

might

know

that

one

of

the

major

drivers

for

our

big

investment

project

is

that

we

want

to

have

a

more

regionalized

supply

chain.

That's

part

of

this.

So,

India

for

India,

Turkey

for

Turkey

and

Middle

East,

Europe

for

Europe,

China

for

China,

and

so

on.

Does

that

make

sense?

Sure.

This

is

a

follow-up

on

that. What

do

the

incremental

unit

economics

look

like

for

the

€42

million

CapEx

that

has

been

laid

out

for

the

Indian

entity?

And

what

kind

of revenues

can

we

expected

or

margin

profile?

And

do

we

see

Indian

as

a

percent

of

the

overall

revenue

and

– becoming

a

significant

chunk,

i.e.,

it's about

like

10%,

I think, you mentioned in

the presentation.

Do

we

see

that

increasing

exponentially

over

time?

[Stefan Borgas]

For

sure,

this

will

increase,

yes,

for

sure.

Ian, can

we

answer

the

incremental

revenue?

I

don't

think

we

have

this.

[Ian Botha]

We

haven't

shared

that

information...

[Stefan Borgas]

Yeah.

[Ian Botha]

...at

this

point.

Certainly,

we

are

expecting

to

see

further

margin

growth

in

the

business

supported

by

that

CapEx

investment

to

drive

domestic

production.

[Stefan Borgas]

The

India

margins

are

not

yet

at

the

same

level

than

in

some

other

regions.

So,

there

is

a

bit

of

a

challenge

there.

It's

part

of

growth

and

part

of

pricing

pass-through

dynamic,

so

some

of

this

is

short

term.

But,

for

sure,

the

production

and

the

share

of

revenue

on

group

will

continue

to

increase.

Sure.

Yeah.

The

context

of

this

was

just

trying

to

understand

how

this

would

be

accretive

to

overall

corporate

margins

at

a

global

level,

because

we

do

understand

that

the

Indian

entity

itself

has

about

16%,

17%

plus

sort

of

EBITA

margins

because

of

the

labor

cost,

arbitrage,

and

the

efficiencies.

So,

just

trying

to understand

as we

[ph]



cater to an (00:52:00)

export

base

and

India

for

India

as

well,

on

a

overall

RHI

global

level,

what

type

of

marginalization

can

one

expect

in

a

ballpark

level

three

to

five

years

from

today?

[Stefan Borgas]

Yeah,

okay.

We

haven't

shared

this

yet.

It's

a

complicated

calculation.

Sure.

If

I

could

just

squeeze

one

last

one

in.

Any

view

on

the

market

cap

and the

valuation

of

the

global

entity?

We

understand

it's

a

$1.8

billion

sort

of

market

cap.

But

if

you

look

at

the

Indian

entity,

which

is

a

pretty

small

part

of

the

overall

pie

right

now,

that

itself

is

being

valued

at

$1

billion-plus.

Any

sort

of

thoughts

on

this?

[Stefan Borgas]

We're

very

happy

about

the

strong

recognition

of

Indian

investors of

our

business

there.

So, I

think

that's

the

first

thought.

I

think

it's

a

bit

due

to

the

difference

of

valuations

in

the

different

market.

Otherwise,

Ian,

any

thoughts?

[Ian Botha]

I

think

that

we

continue

to

believe

that

the

RHI

Magnesita

group

share

price

is

trading

on

a

undemanding

multiple.

And

clearly,

as

we

deliver

on

our

strategic

initiatives

as

we

retain

the

margins

that

we've

established

to

the

back

end

of

last

year,

hopefully

those

will

be

supportive

for

our

share

price.

But

our

focus

as

a

management

team

is

delivery.

Sure.

Thank

you

so

much

for

taking

my

questions.

Thanks

a

lot.

[Stefan Borgas]

Any

more

questions?

[Operator Instructions]

[Operator]

As

we

have no

further

questions,

I'll

hand

back

to

the

management

team

for

any

closing

remarks.

[Stefan Borgas]

Thank

you

very

much,

ladies

and

gentlemen,

for

dialing

in

this

morning.

Thanks

for

your

interest.

Let's

stand

together

to

see

what

happens

now

here

in

Europe

or,

more

specifically,

in

Ukraine.

We

will

do

our

best

to

mitigate

these

events.

And,

of

course,

we

will

keep

you

informed

with

every

step

we

take

and

with

every

element

that

influences

us.

Thank

you

for

dialing

in

and

have

a

good

day.

[Ian Botha]

Thank

you,

all.

Goodbye.

[Operator]

This

concludes

today's

call.

Thank

you

very

much

for

your

attendance.

You

may

now

disconnect

your

lines.