Aperam SA

MAD:APAM

Earnings Call Analysis

Company Guides Higher Net Debt, Buybacks Continue

The company has signaled a rise in net debt due to pre-emptive stocking for planned investments and seasonal builds but anticipates a slight release in net working capital throughout the year. An EUR 11 million provision was registered in Q4 for fixed costs linked to 'leadership journey 5' gains. With a cyclical business model, the firm asserts that its net leverage ratio considers the full business cycle, referencing a sizeable EUR 500 million of net working capital from a recycling acquisition. Share buybacks remain a priority, following a decade-long trend of strong shareholder returns. Lastly, a non-recurring tax booking was made in Q4 due to legislative changes, but this is not expected to repeat.

Navigating the Current Cycle and Preparing for Growth

In the recent earnings call, the executive team discussed the cyclical nature of their stainless steel business and how they're managing net debt in the midst of these cycles. The company is gearing up for a presentation in late February, which is poised to disclose significant information about the business's new direction. They emphasized their strategy for producing premium products over simple commodities. This approach is expected to create differentiation and value for Aperam. As they enter a transformation phase, there's a strong sense of optimism about the company's future despite current challenges in demand and market cycles.

Strategic Management of Net Debt and Working Capital

Net debt is projected to rise in Q1 due to two main factors: pre-planned investments which led to an increase in inventory and traditional seasonality in working capital, indicating a build-up for forthcoming stronger quarters. However, the company anticipates a slight release of net working capital throughout the year. A significant focus was placed on the management of net debt against the backdrop of cyclical trends and the recent recycling acquisition, which brought in EUR 500 million of net working capital. The executives stressed the importance of an operational strategy that does not prioritize the reduction of net debt at the expense of potential share buybacks or shareholder dividends, aligning with the company's historical approach to creating shareholder value.

Emphasis on Operational Efficiency and Shareholder Returns

Aperam is embarking on its next leadership journey focusing on operational excellence (Leadership Journey 5), with already-booked provisions of EUR 11 million for cost-cutting and restructuring measures. Capital expenditures for this initiative are largely complete, with the exception of some lower double-digit million euros expected to yield benefits. The executive team highlighted their track record of dependable shareholder dividends and share repurchases, maintaining that they will continue to uphold strong shareholder return policies. The company's enduring objective has been to establish a competitive edge by optimizing operational efficiency, a strategy that remains at the core of its transformation.

Optimistic Outlook Despite Market Challenges

The management's confidence in the company's prospects is undiminished despite encountering the normal cyclical downturns associated with the stainless-steel sector. They anticipate a recovery in demand, although the timing remains uncertain. The company's investments and innovative measures are expected to pay off, illustrating Aperam's resilience and capacity to prosper even in fluctuating markets. The executive team concluded by reassuring investors that Aperam consistently demonstrates robust cash profitability and a steadfast commitment to effective shareholder value creation.

Earnings Call Transcript 2023-Q4

[Operator]

Hello, and welcome to the Aperam Q4 2023 Results Conference Call. Please note, this call is being recorded. [Operator Instructions] I will now hand you over to your host, Mr. Tim Di Maulo, CEO, to begin today's conference. Thank you.

[Timoteo Di Maulo, executive]

Hello, everybody. I'm happy to meet you around this call after our -- the publication of our results and the podcast. I'm here with Sud Sivaji, the CFO of the company, and we will be happy to take your questions. The floor is yours.

[Operator]

[Operator Instructions] The first question comes from the line of Tristan Gresser calling from BNP Paribas Exane.

[Tristan Gresser, analyst]

I have 2. The first one is on the demand environment, notably in Europe. I think in your remarks, you said that the normal market is still far away. But if I look at the outlook by end market you have in your presentation, it does not look that bad. I can see that consumer good and catering demand is improving from prior. So I'm curious to have your thoughts on the situation right now in February. Is it fair to say that you're seeing some green shoots?

[Timoteo Di Maulo, executive]

So I think that there is a weight between the different segments. But in any case, we are -- we have a very weak construction as you have seen. We have the consumer goods, food they are close to normal, but they are still below. Few elements have to be said that this is a global view in which you have Brazil and Europe. And you see, for example, in consumer goods, brand in Europe improves, but we are really far in Europe from the normal level. While in Brazil, the demand is very solid, and we are happy with this level of demand in Brazil. The similar in the industry, when you see energy, chemical, et cetera. So you see that oil and gas, which is a project, a big project, et cetera, which are mostly related to quarter plates are good, but the rest is softer, while in Brazil its good. So maybe we will be more specific in the future, but I am repeating what I say in Europe, demand is far from having been normalized. We still are in low cycle, and we see this in all indicators. We see this from the speech of the distribution, distributors, in particular, which are very close to the final demand as a Service & Solutions are reporting that demand in Europe is really very low compared to the normal.

[Tristan Gresser, analyst]

Okay. That's very clear. And then my second question is on volumes. I think with CapEx for the year of EUR 150 million, which is quite lower than anticipated. I wonder what kind of stainless volumes you're targeting for the year? I know that getting back to pre-COVID levels of maybe 1.9 million tonnes for stainless is a bit of a stretch, but can you at least break above 1.7 million tonne? And then if we see some restocking, which I think best cases maybe Q2, Q3, can this CapEx figure be adjusted upward if volumes are better?

[Timoteo Di Maulo, executive]

So first of all, I would like to better explain what is CapEx. CapEx is a part which is maintenance CapEx and the other part is a project. So indeed, in the last 2 years, we have invested a lot in line with our leadership journey 4 on what has been the CapEx for the improvement of the footprint. And so you have, for example, in the Slide 109 of our, let's say, presentation, you see the split in the different year. When we refer to EUR 150 million is the level of CapEx in which we have the maintenance CapEx, the regular maintenance CapEx to maintain all our plans, we have ESG and we have all the related small project, but we have not big projects, which are not anymore in the scope of the leaders journey 4, leadership journey 4, in leadership journey 5, we are targeting today measure which are mostly on efficiency on the ramp-up of what has been invested. And so this has not a direct link with volumes if for a small part, which is the flexibility that we have every time, the more you use the plant the more you need some maintenance CapEx because it's a normal consumption of the tools, okay? But this is, let's say, not at all or it cannot be a forecast -- a forecast for the volumes of the year, which is from today, we have a relative view on what is Q1, but after Q1, Q2 and Q3 is completely not visible for the moment.

[Operator]

The next question comes from the line of Ioannis Masvoulas calling form Morgan Stanley.

[Ioannis Masvoulas, analyst]

A few questions from my side. First one on Stainless & Electrical division. If we look at Europe performance appears to be somewhat weaker in Q4 versus one of your closest peers that reported this week. Do you anticipate to close the gap and return to be the profit leader in Europe over the next couple of quarters as the incremental leadership journey gains come through or could that take longer?

[Sudhakar Sivaji, executive]

Ioannis, let me explain the performance. I cannot speak for our process competition, which you're talking about, but I can speak for Aperam, right? So in the Stainless and Electrical segment, we have already clearly guided when we presented the Q3 results that for the second half of the year, we will have EUR 50 million, and I actually said the number, EUR 50 million onetime effect from rolling energy hedging. This has been clearly guided to the market. So if you split that up by 2 quarters, it is basically EUR 25 million each per quarter, which is there in those results. So this is basically because energies were hedged on a rolling basis when energy prices were high, it's if you want theoretically like buying natural gas, keeping it on our books and then writing it down. But we report it as part of EBITDA because we consider this as adjusted EBITDA as normal business. So we have given that clear guidance. So that onetime effect has to be taken out of our EBITDA when looking forward. So when we guide towards EBITDA, which is slightly negative but tending towards 0 for Q1, it is onetime effect goes away from that minus 34 you see, and despite Brazil having the lowest volume quarter in Q1, we are confident that our competitiveness will return to where we can actually speak despite a net price cost squeeze, especially because of the leadership journey and cost control crisis measures we are introducing in Q1 okay? So that's the framework on which we have to operate on. The second part is, I think you have asked a good question on our cost competitiveness and the leadership journey gains. Let me give you that we have shown EUR 186 million of gains on leadership journey for the last leadership journey. Let us just take Europe, for example, and there have been several factors as we have discussed, which is cost inflation, which, to a large extent, still remains, but then energy cost inflation. For a baseline of 2019. Energy costs on an absolute basis have gone close to EUR 240 million higher. So if you look at it end of the day for Aperam, there is actually -- if you see a slight improvement in prices because of trade defense. And if you net out, you will see that even EUR 60 million of the leadership journey gains remain in our books despite the low situation and being consumed by all those losses. So we continue to be positive that going forward also, this booster we have announced will bring us back to competitiveness as specifically because they are concentrated in Europe. So to summarize, I've given you a framework on which to operate on. What Q4 actual performance was and what was the losses? Just reminding what we said in Q3. Second, I've given you also an outlook on Q1. How Q1, we expect to reach this improvement despite Brazil performing at lowest volumes and having a price squeeze in Europe. I hope that gives you enough color to work with.

[Ioannis Masvoulas, analyst]

That's very useful. And sticking with the division and looking at Brazil, could you comment whether the Brazilian business was EBITDA positive in Q4 before and after inventory valuation?

[Sudhakar Sivaji, executive]

Absolutely.

[Timoteo Di Maulo, executive]

No doubt, Brazil has always been positive. Brazil is a very positive unit. One of the best contributor in percentage. And what you have to see is based in Brazil in the past was presented combined with [ BIM ] Energia. Now these 2 have been put in 2 different divisions. And this is an effect of around EUR 30 million for the Brazilian unit. But Brazil remains very profitable. They are very competitive in what they do. They have this advantage of choosing their product mix. And the market in Brazil in terms of volumes is very good as we have seen before with the market, with the segments. The only tailwind is that the international prices, which are the price that due to China.

[Ioannis Masvoulas, analyst]

I fully understand that. That's great. And just to clarify then, would you expect Brazil to remain EBITDA positive even on the seasonal trough in Q1?

[Timoteo Di Maulo, executive]

Yes.

[Operator]

The next question comes from the line of Patrick Mann calling from Bank of America.

[Patrick Mann, analyst]

I just wanted to go back to maybe European demand. I mean, you -- obviously, your release and the podcast, you sounded very, very negative and you spoke about, it's the lowest -- lower than the financial crisis, lower than COVID. Is this cyclical? Or do you think there might be a structural impact here? And maybe you do have services and solutions, you do have -- you are quite close to the end customers. I mean, are we just seeing very low utilization rates at customers? Or do you think there's been closures of capacity and maybe you've permanently lost some customers? That's the first question.

[Timoteo Di Maulo, executive]

So for the moment, we don't see a really capacity closure. We have here and there some of the capacity closures that have been announced in Germany, et cetera, but not a very big capacity closure. Cycles are always cycled. So we tend to forget that this happened, but each time that there is a cycle, there is a huge drop in volumes. And I'm quite positive on Europe because in Europe, you have 2 parts. You have the fact that cycles have been driven down by the consumption and the other part has been due to the huge import. You remember that we have had also imports up to 40% in Europe. Now with all the trade defense, we have a level play field, which is much better than in the past. And the only thing that we expect is a recovery of the demand. This recovery of the demand will be partially also linked, for example, in the construction with the cost of money, which is we think everybody think is not structural. And when it will arrive sooner or later is the question that you can have, but this is the -- how we see it? We see this as a cycle which you see we have a very low level of inventory in Europe in absolute terms. So as soon as the demand comes back, Europe will restart having results.

[Patrick Mann, analyst]

Okay. It's a good point on interest rates and construction because I think everybody does agree that, that's the next step there would feel like we're in the trough. Second question, if it's okay. Just on your geographical exposure, I mean, if I look at your 2 European peers, right, there seem to be investing as fast as they can in the U.S. and other markets. How do you think about the geographical exposure? Are you happy with your footprint being Europe and Brazil? Or do you feel like there's somewhere else you can expand into? Is that the U.S.? Is it somewhere else?

[Timoteo Di Maulo, executive]

So I think that all the story of our, let's say, view for the future, is driven by the fact that we balance the activity of pure stainless steel with activity, which are in the alloy and in Aperam recycling and renewables, okay? Remember that, around 50% of our people are not working in pure stainless steel production. So United States is a market which is what it is. We have a lot of headwind due to specific American policy, et cetera. It's a pity. We are not there. Okay. That's a fact. This is not -- this is not sorting our story. We are not depending on United States and on legislation there for the large majority of our results. We are differentiating our business model to be in different segments. We are in Asia, for example. We are expanding in our activity alloys in India. We have had -- we have a very specific, let's say, niche product in China. We are expanding in Brazil. So our business model is to expand geographically. United States is out Okay. It's a fact. We are not profiting of the tailwind of the legislation of today of United States.

[Sudhakar Sivaji, executive]

If I can add to that, Patrick, just one question based on some statistics, which we have presented in last Capital Markets Day as well, right? So One of the examples which Tim has quoted will help illustrate that discussion, which we presented, which is, we look at capital employed very seriously. If you look at it, any strategic growth has to come definitely, but not at the cost of employing capital and driving -- depriving of shareholder returns. So for us, when we decided on the alloy strategy to go organic, if you look at it, last quarter, when we presented the numbers, we have guided that in the alloys organic expansion, we had to -- between CapEx and net working capital we've had to invest around EUR 200 million in terms of capital employed to get this alloy doubling of the EBITDA. For us, that is a very efficient EBITDA, which is -- you're talking about investing EUR 200 million, EUR 210 million and getting a EUR 50 million EBITDA return over 3 to 4 years as part of our growth story. So that is something which is very key to us because we are focused on taking capital employed and putting it where we see that we can get the best returns, yes.

[Patrick Mann, analyst]

No, it all makes sense. I suppose it's just when you look -- it almost looks like everybody else is fleeing in Europe. So I suppose it ties into my first question on the structural versus cyclical. So -- but yes, I appreciate your answer.

[Operator]

The next question comes from the line of Maxime Kogge calling from ODDO BHF.

[Maxime Kogge, analyst]

Regarding recycling and renewables actually, I mean the performance was again flabbergasting this quarter. It's still difficult for me to really understand how it works because you communicate on a normalized contribution of EUR 85 million per year, so that's about EUR 20 million, EUR 25 million per quarter. So the difference that you achieved this quarter, is it only due to valuation gains? Or is there something else at play because at the same time, I see that prices are slightly down for the division? So that's my first question.

[Sudhakar Sivaji, executive]

Maxime, that's a very good question. So if you remember the EUR 85 million, what we guide as normalized EBITDA, right? So it depends on factor that every quarter is the same. Obviously, not every quarter is the same, right? End of the day, if you look at it, for us, recycling and renewables in Q4 came because of, as you can see, in the last quarters, scrap price is going up, number one, right? On the stainless side, you've seen scrap prices go up, and we have benefited from that. This happened because in Q3, as you know, the whole stainless world started destocking. And when you start destocking, you cut at your suppliers first and then you realize a quarter later that you've destocked too much, and so you go for a higher pickup of scrap and as a result, scrap prices went up. So that's first structural one. The second one is that you do understand as part of our recycling, we have 2 distinct businesses. One is addressing the stainless industry and another one is our special alloys division. I remind again that we are the world's largest specialty alloys recycler catering to the aerospace industry. What that means is that in our Utica division, we've had -- also thanks to the better performance of the Aerospace division, especially now that long-haul flights are coming back post COVID, we've had an increase. The third part is in our Bioenergia division, thanks to the investments we are making and the productivity improvements we are making, we've had improvements in profitability. And the last part is, yes, there are some valuation effects, but these valuation effects are not something which are going to repeat every year. Secondly, these valuation effects always are about valuing what you price would for the next season, which is the next year. So, so far, we've always seen that the value is justified and it is never written down as you see in our numbers over the years. So Q4 always has slight valuation effects based on where the price of wood is for the next season. So these are the 4 effects. I hope I've given you enough data to work with.

[Maxime Kogge, analyst]

That's helpful to us, this color. And second question, a bit on the same topic is on your objective of synergies with R&R that has been raised from EUR 24 million to EUR 40 million. How are you able to increase this amount that much given that the acquisition took place, I mean the [ ELG ] acquisition took place 3 years ago? And can you, I mean, give us a bit more color about the drivers behind this increase?

[Timoteo Di Maulo, executive]

That when we have had the visit of the Capital Market Day, some of you have been able to understand how difficult is this kind of collection of scrap from hundreds of different products, et cetera, and how it is possible to leverage on synergies. We have also declared that at EUR 25 million were expected to be the synergies over -- with the ramp-up of 3 years. Now we have handed to the second year, and we have seen that we were ahead of time in terms of leveraging the synergy. And so we have raised the target to the team because we see that there is further potential. This further potential is in the way we collect sort and use the scrap in the mill and the logistics, et cetera. And you can be sure that these are part of our Phase 5 of the leadership journey and will be accounted every time. But we are quite, let's say, solid on these kind of synergies. And you see that this is in the numbers.

[Maxime Kogge, analyst]

Okay. And they will be recognized in -- mostly in SME, right, rather than in R&R?

[Timoteo Di Maulo, executive]

Mostly, but not only.

[Operator]

The next question comes from the line of Bastian Synagowitz calling from Deutsche Bank.

[Bastian Synagowitz, analyst]

Yes. I have a couple of questions left, please. And with the first one, I would like to come back to the pricing dynamics in Europe and the cycle as well. Because I guess from what you're telling us and also, I guess, from what your competition is saying, I think there seems to be at least a little bit of mini rebound even though that may be just seasonal. And I guess from what you say also, you confirm that inventories are low, imports are low as well. So what I'm wondering is, why does the European landscape really struggle so much to establish any price discipline despite the fact that no one is really making literally any money into, I think, most literally cross-subsidizing the European stainless operations with other more profitable businesses. So do you share that view? And yes, just curious to basically hear your thoughts here.

[Timoteo Di Maulo, executive]

Probably in your question, there is the answer. Okay? When there is subsidies from other, let's say, geographical part, there is less stress in having let's say, discipline in the profitability of Europe, okay? I can tell you, with low volumes we have seen in the past that people which have [ pretty ] high sponsorship tend not to focus on what can be extracted by the European market. I'm positive on the fact that this cannot last because not all the operator in the market have the same culture. And I strongly believe that this period is due to a cycle. Inventory are low. And whenever demand will come back with the protection that we have with imports, the situation of our prices will recover fast.

[Bastian Synagowitz, analyst]

Okay. The second question I have is on the scrap market and the tightness we're seeing there, I think, given your exposure your best position to answer that. So I mean, what's really driving this? We have, yes, I guess, stainless price is still 30% above Europe. But if we look at the scrap price, I think European prices are quoting about $100, $150 above the U.S. And again, it seems to be disconnect, which really doesn't make sense. Do you see any like signs that this tightness is easing? Is it just mostly stockpiling of the scrap collectors and obviously, at the same time, maybe weaker scrap generation because of lower, I think, industrial production levels, and maybe lower scrap generation? Or is there just anything or any sign you see that this is easing to really reestablish, I would say, the right balance between both stainless steel prices and the secondary market?

[Timoteo Di Maulo, executive]

So the scrap market is a real, let's say, market dominated by supply and demand. There has been a phase of, let's say, destocking and then when the stock were too low, there has been phase of restock. And every time there is this movement of destocking, restocking, you see the price -- the movement of price or scrap. On the basis, you have to consider that the scrap in Europe is balanced in the sense that supply and demand are balanced, okay? It's a question of a temporary, let's say, shortage to the effect of inventories.

[Bastian Synagowitz, analyst]

So basically, also from what you say is you're already seeing essentially the restocking in anticipation of better prices in the upstream supply chain in scrap, but obviously not yet with your customers. Is this what you're saying?

[Timoteo Di Maulo, executive]

Probably, yes. Probably there is the expectation that volume will grow and demand will grow and that there is an appetite to anticipate on the volumes. Of course, you have to see that the typical reflects is maybe to be careful during the period in which the prices were very low. So in Q3, the beginning of Q4, prices were so low in terms of sales that everybody has slowed down the collector scrap, et cetera, and all of the sudden, they have restarted and this goes up and down of the demand.

[Bastian Synagowitz, analyst]

Okay. Then my last question is actually on this new bio oil business, which you mentioned obviously in your presentation. So I'm wondering what is the current capacity? Where could that capacity go to? And maybe also, could you give us even a broad sense for where the ASP level sits? So I guess is it a business which really matters or can matter in the group context?

[Timoteo Di Maulo, executive]

So first, it will matter. It is a very interesting business, but I would like to, let's say, to let this argument for the Capital Market Day, we will have very soon in 27th of February in Paris. As this will be one of the part that will be largely, let's say, disclosed with you will have and you will see concretely in what we are referring to. It is a very nice business, very nice in the sense that we are producing for plant as we have done with the Charcoal by the oil, which has a real premium on the simple oil.

[Operator]

The next question comes from the line of Moses Ola calling from JPMorgan.

[Moses Ola, analyst]

Just 2 questions from me. So the first really is just on the net debt guidance for Q1. Could you please just talk us through the moving parts of that and especially on working capital, what we can expect with slightly higher pricing and slightly higher volumes into the quarter? If I look versus last year, those are smaller builds than normal seasonality would suggest, is that the same level of working capital build we could expect this year?

[Sudhakar Sivaji, executive]

So Moses, we've guided to a higher net debt, right? So the higher net debt worked through because of 2 things. One is the fact that we had already guided in Q4 that we had some investments planned for the beginning of this year. And so we had stocked up for that, right? So when you stock up for that, there is a technical effect because first your payables get reduced because you stopped purchasing just a month before the investments start and then it moves through the inventory. So that's one effect which will result in Q1 net debt. And second one is obvious seasonality, where in Q1, you do build for the stronger quarters going forward and as a result of that. But for us, if you look at it, net working capital, we have guided and I've clearly mentioned in the podcast for the entire year, we even expect a slight release.

[Moses Ola, analyst]

Okay. That's understood. And then also just on the leadership [indiscernible]. Are you able to perhaps guide on the net gain net effect in terms of the cost of implementing the program versus the gains?

[Sudhakar Sivaji, executive]

The next leadership journey, Moses, the cost of implementing, let me generate it in 2 parts. One is the OpEx part and another one is the CapEx part. The OpEx part primarily associated with the cost cutting and restructuring measures, which we are going through. In the Q4 of 2023, we've already booked EUR 11 million provision, as you have seen as part of our P&L. That is going to be the cost for the fixed cost part, okay? In terms of CapEx, most of the CapEx investments are already done, as Tim has mentioned. There might be a few, I'm talking about lower double-digit million euro for the sake of leadership journey 5 gains.

[Operator]

[Operator Instructions] The next question comes from the line of Maxime Kogge again from ODDO BHF.

[Maxime Kogge, analyst]

Just 2 questions left on my side. So first on your net leverage. I know you were at 1.6x, and I haven't done the calculation yet, but this level will probably be even higher in Q1 given that you will have lower year-on-year EBITDA and higher net debt. So when do you think it will be possible for you to get back to 1x of net leverage, which is your net debt objective? Is it by the end of the year? Or is it later in 2025?

[Sudhakar Sivaji, executive]

So Maxime, I wanted to remind on our financial policy, our net debt or the leverage ratio, we say it's over the cycle. So we take clear sign in the fact that it is a cyclical business, especially the stainless segments. And I know their contribution is becoming smaller to the part of the business, but still, it is a cyclical business. And so we always guide for net leverage ratios over the cycle. That is the first one. The second one is that as part of our recycling acquisition, we have clearly mentioned, and at the time of acquisition, we bought EUR 500 million of net working capital. Now this EUR 500 million of net working capital for the recycling business is something which I've mentioned in the past, has to be treated like a trading company, which means this is inventory which is bought in, and I think we've had this discussion and 70% of that is sold within the next 6 to 8 weeks are already sold, which means that you have a net working capital which is primarily the debt. So as a company and as a management who efficiently want to use capital employed, we do not want to take the hard-earned cash, which we typically give back to shareholders or invest in the company and use it to repay debt used for financing a trading net working capital. So if you understand my answer, I think it will give you a span that we should get used to operating with this net working capital and this level of debt with the recycling business. So if you want a clean delta without net working capital debt, if you see, you should subtract this EUR 500 million net working capital for the recycling business. And then you will see clearly that -- and that is my reason why I keep stating at Capital Markets Day, we are still a 0 net debt company. I hope that is clear.

[Maxime Kogge, analyst]

No, that is clear. Yes. So against that backdrop, I understand the focus is not necessarily on reducing net debt at all costs. It can also be share buybacks, right, when there is opportunities?

[Sudhakar Sivaji, executive]

Exactly when we have cash, we have always given share buyback back that the track record says that over the last 10 years in terms of shareholder dividends, both in absolute and percentage wise, we are at benchmark level in the industry and that is something which we would continue doing.

[Maxime Kogge, analyst]

Okay. And just a technicality, you booked a big deferred tax benefit in Q4. I don't think you gave the results, the details of it. Can you provide some now?

[Sudhakar Sivaji, executive]

Yes. It is basically in some of the legislation, we had a onetime tax booking related to how legislations change and how we expect future taxes to be used there. And that is the reason. It is not going to repeat. It is a onetime tax assets.

[Maxime Kogge, analyst]

Okay. And no cash, I mean, no cash impact.

[Sudhakar Sivaji, executive]

No. This quarter, no. But hopefully, in future, when you use those tax assets, we do have to have some benefits.

[Operator]

We currently have no questions coming through. [Operator Instructions] There are no further questions, so I will hand you back to your host to conclude today's conference. Thank you.

[Timoteo Di Maulo, executive]

Thank you very much for all your questions, which are very, very interesting and for attending our earnings Q&A of today. Of course, we will, I hope, to see the majority of you very soon in our show and especially in the Capital Market Day, the 27th of February. This 27th of February will be extremely interesting because you will see something different and what is differentiating Aperam from its own, let's say, past and origin. We are suffering today of the typical cycle that comes with the business of stainless steel, which is the majority of our business. The company is in a transformation mode. It has a different, let's say, profile, and this will be explained in large in the 27th of February. We are very confident on the fact that what is part of our DNA that is leadership journey, efficiency, execution, et cetera, will show up very soon. We have a very ambition leadership journey 5, which is based on efficiency. So finding all the self-help measures that can give us the competitiveness for which we have always been known, and we are back to the most competitive footprint in our -- in the area in which we are operating. I am confident that the demand, which has been facing a low cycle will come back. I cannot guarantee you when, but it will come back. And the -- all what we are doing, all the investment we have done ahead of any competition in the last year will show you the results of the company, and you can be, let's say, granted on the fact that our share policy -- shareholder policy will remain the same policy of the company, which has always demonstrated to be very cash profitable. Thank you very much, and see you soon.

[Operator]

Thank you for joining today's call. You may now disconnect.