AMAG Austria Metall AG

VSE:AMAG

Earnings Call Transcript 2020-Q1

[Operator]

Ladies and gentlemen, thank you for standing by. I am Haley, your Chorus Call operator. Welcome, and thank you for joining the AMAG Austria Metall Q1 2020 Results Conference Call. [Operator Instructions]

The forecasts, budgets and forward-looking assessments and statements contained in this presentation were compiled on the basis of all information available to AMAG as of the present time. In the event that the assumptions underlying these forecasts prove to be incorrect, targets be missed or risks materialize, actual results may depart from those currently anticipated. We are not obligated to revise these forecasts in the light of new information or future events.

This presentation was prepared and the data contained in it verified with the greatest possible care. Nevertheless, misprints and rounding and transmission errors cannot be ruled out entirely. In particular, AMAG and its representatives do not assume any responsibility for the completeness and correctness of information included in this presentation.

This presentation is also available in German. In cases of doubt, the German language version shall be authoritative. This presentation does not comprise either a recommendation or a solicitation to either purchase or sell securities of AMAG.

And I would now like to turn the conference over to Felix Demmelhuber, Head of Investor Relations. Please go ahead.

[Felix Demmelhuber, executive]

Good morning, ladies and gentlemen, and a warm welcome to our conference call for the first quarter 2020. Today, our CEO, Gerald Mayer, will present you the development in the first quarter.

As usual, afterwards, we have the Q&A session.

Now, Gerald, please start your presentation.

[Gerald Mayer, executive]

Good morning, ladies and gentlemen from my side. Warm welcome to our earnings release of the first quarter 2020.

Q1 2020 began as the second half of 2019 was roughly. So let me remind you that in the second half 2019, we had tailwinds in the Metal Division. We had some headwinds in the downstream business which mainly came from the distribution side and the automobile side.

All in all, the profitability of our first quarter was up compared to previous year. So if we look at revenues. Revenues slightly down, mainly driven by the aluminium price and with some impact of lower volumes. I will talk about this a little bit later.

Operating result, EBITDA is up by roughly 10%, 11% from EUR 33 million to EUR 36.5 million. Net income after taxes is up roughly 50%, EUR 11.5 million after EUR 7.6 million in the prior year.

Of course, COVID-19 and corona also impacted AMAG, but just, let's say, a little bit in the first quarter. We saw the first impact mid of May or end of May in the second half -- of March, sorry.

COVID-19 is also responsible that we are not in the position to give you today a forecast for the rest of the year and for the whole year 2020, it is not possible for us to do a forecast now. The level of uncertainties is way too high. And the only thing we can say is that we will see a noticeable decline in the result of the coming, let's say, months, weeks and months and perhaps quarters.

Let us go to Slide #5. This is about the aluminum price, alumina price trends. What we can see here is that in the first quarter 2019, we saw an average aluminum price of USD 1,880 per tonne of aluminum. The price decreased in the first quarter. The average number in the first quarter 2020 was USD 1,713 per tonne. So means that we are $167 down.

On the other side, also the average alumina price came down by roughly USD 100 per tonne if we compare the first quarter 2020 to the first quarter 2019. This is a reduction of $100 means roughly a reduction of USD 200 per tonne of aluminum produced, which also means that we definitely compensated the decrease in aluminum price via a lower raw material price impact.

So what was the main reason. Also to remind you, last year, we still were suffering, in particular, in the first quarter from higher raw material prices, which date back to the year 2018. So from this side, raw materials more or less compensated a lower impact from a lower aluminum price.

Then on the next slide, you see shipments of AMAG were down in the first quarter compared to the prior year by 11%. In particular, at the Metal Division, it was -- it's just, let's say, a delay of deliveries based on -- due to a snowstorm, we will catch up here definitely in the second quarter from today's perspective. So it is a cutoff issue. And the impact was not the 5,500 tonnes you see here, the impact from the snow storm was 10,000 tonnes all in all. We were 5,500 tonnes behind. So if I would adjust this number, we would even be up with no snow storm impact in the Metal Division. I will talk about the main reason a little bit later.

Casting Division and Rolling Division, both are down roughly 3,000 tonnes per tonnes for the first quarter. Main reason here we have market conditions in the Rolling Division, mainly coming from the distribution sector.

We also had minor impacts, really minor impacts from COVID. So first quarter mainly was not really touched by corona.

The shipments in the Rolling division on the next slide, and I think this is a very interesting slide, you see our diversified portfolio. We roughly offer 6,000 or more than 6,000 different products to roughly 800 customers. And then the split, this is what you can see here is that we are not really depending on one of those areas. Our biggest single customer is in the packaging industry, at the packaging foilstock products account for a little bit less than 20% of our total portfolio.

We supply sheets and plates for a wide range of industry. This is the 25%, let's say, stake of our total portfolio. We supply roughly 14% to treadplate and 14% to the aircraft industry. We ship roughly 13% to automotive OEMs and so on and so forth. And then we have bright products, high-strength alloys, in particular, for sports and so on.

So what you -- I would say the take of this slide is that we are wide diversified. And this is our core business concept and was a successful business concept and model in the past. And we maintained and will maintain this also in future.

Next, slide, Slide 8. Revenue of AMAG Group. I mentioned, it is down by 10%, roughly. So quite significantly, on the one side, I would say -- and we see that on the bottom of this slide, the main reason why we are down is 1/3 is the aluminum price. I mentioned the aluminum price is $167 per tonne less than in the comparing period Q1 2019.

Volume and mix effects account for roughly EUR 20 million in the sales line item or 2/3 of the decrease. So we saw a downside development in sales.

On the other side, next slide, and I mentioned it in the beginning, very positive. EBITDA is up by 10% or EUR 3.5 (sic) [ EUR 36.5 ] million and net income is up by more than 50% or EUR 4 million in the first quarter.

Perhaps why is net income even in total numbers? Let's say, the positive effect higher than in EBITDA, you would, of course, expect tax effects and so on, which would, let's say, bring, let's say, this delta down. The main reason is that we have Canadian dollar effects, FX effects in the interest income, in the financial income, and this is the main reason why we have EUR 4 million compared to EUR 3.5 million in EBITDA of increase in the profitability and net income.

EBITDA by segment. I mentioned in my introduction that the year 2020 started as the year 2019 ended. And I remind you now how the year 2019 began. It was really difficult at the beginning of the year 2019 for the Metal Division. EBITDA was positive, but just a little around EUR 1 million. So more or less a very weak first quarter last year for Metal Division.

As the second half was very positive in Metal Division, and we continued on this track in the first quarter, we see a deviation of plus EUR 13 million roughly compared to the first quarter last year in Metal Division. This includes valuation effect of roughly EUR 3.5 million. So an operate -- from an operating side, operations side, solid op performance, positive effects because of the tariffs, which were suspended mid of last year, positive effects from lower raw material prices, resulted in roughly EUR 10 million of increase result in addition to the EUR 3.5 million valuation results. So very good first quarter for Metal Division.

Casting, more or less at the level of last year. Rolling Division down EUR 10 million. And I mentioned on the one side, we saw lower prices, lower volumes. On the other side, we also had a negative valuation effect there of also EUR 3.5 million. So if you would exclude that, it's not that bad. But of course, we saw an impact, in particular, of prices and volumes in the first quarter, and this is more or less as it was in the second half run-rate wise second half of 2019.

A quick look to our bridge to the EBITDA reconciliation on Slide 11. So first quarter last year, EUR 33 million. And you see, and we made it transparent here that the impact of raw material accounts for more than EUR 12 million. Out of this EUR 12 million, EUR 9 million is the impact of alumina.

Volume, the impact of lower volumes is EUR 4 million roughly, and the aluminum price is roughly also EUR 4 million negative. So this is how we bridge from EUR 33 million prior year first quarter EBITDA to the EUR 36.5 million in the year 2020.

Lower top line sales, combined with higher profitability result in higher margins. And so our EBITDA margin ended up at 14.8% compared to 12% in the prior year. And EBIT margins at 6.3% compared to 4.7% in the prior year. This is to add to what I said up to now. So this is, I would say, also see the positive development there.

Cash flow trend also positive. So the cash flow from operating activities was EUR 15 million compared to roughly EUR 8 million in the prior year. We have, of course, the impact of higher results on the one side and also positive impact of working capital compared to the comparing period.

Cash flow from investing activities down at -- down to EUR 15 million from EUR 22 million. So we ended up with a free cash flow of roughly 0 for the first quarter.

Next slide gives you our financial status. So net financial debt is down, and we reduced it step by step in the last quarters. End of the first quarter 2019, we were at EUR 330 million roughly. Now we're at EUR 291 million.

On the right side of this graph, you see that our liquidity position, cash and cash equivalents is quite high with EUR 270 million. And this gives us a good base for the crisis we are right now in.

A quick look to all our divisions. Metal Division, once again, we saw increased production volume on the one side, good operating, let's say, result. Good operating performance. We increased the volume because we completed our pot lining activities in the second half or middle of last year. So from this perspective, quite positive.

On the other side, as I mentioned before, we have the snow storms, we have weather-related delays in deliveries, and so the shipment volume was impacted by roughly 10,000 tonnes.

We also saw some positive effects, of course, because of lower material prices. And we had some valuation effects from currency fluctuation, in particular. So all in all, Metal Division saw a very good first quarter.

Casting division, what I would say and if we will compare it to the prior years, it is more or less an average first quarter, impacted by a slightly lower automotive industry demand. And this is also reflected in the external shipments, in the decline of external shipments or total shipments. And we saw first impacts also from COVID. But as I mentioned before, in Q1, that they still were very minor.

Rolling Division, our biggest and most important from the strategic side division, we invested in particular there in organic growth, as you know. Shipments there were down. And the reason -- the main reason, as I mentioned before, the shipments were down there is market driven, in particular, from the distribution, let's say, side of our business. So this is the main reason why we were down here compared to the prior year.

Also, we had some pressure, I would say, on margins here and there, and this is the reason why we are down roughly EUR 10 million, in addition to, as I mentioned before, EUR 3.5 million roughly in the valuation effects in this first quarter.

Let us talk a little bit about the outlook now, and I refer to Slide 19. I would say the starting point and the base is our strategy and our wide positioning with production, primary production in Canada, very well positioned, low cost, first quartile in the CRU cost curve. We base our activities here in Austria on recycling activities. Our main raw material comes from Europe. This is aluminium scrap and this is how we feed, let's say, our rolling production and our cast house here in Austria. So we have a wide positioning there, and we have at least, to a major extent, secured supply and no impact up to now in the supply chain to Ranshofen or to Canada.

We have a wide range, and I showed it before, a diversified product and customer portfolio, and we focus on special products. And given what we also saw during the last crisis, this helped a lot to shift, let's say, our company through difficult times.

The outlook for 2020. I think we had a good start. This is what I just reported and presented to you. Of course, we also started to be influenced by COVID-19, by the pandemic. And now it is really difficult to give forecast because why? Because I think no one can knows now the duration on a worldwide context of this pandemic situation. No one knows when does the second wave come? Does a second wave come? To what extent will it come, so it is really not foreseeable right now. And then to our opinion, the main economic impact will follow, let's say, the virus and will perhaps take a little bit longer. But this is really very difficult to evaluate and analyze right now.

What we can share with you here is latest CRU estimate and they -- CRU says that aluminum rolled -- the demand for primary aluminum and rolled products should be down by 7% to 8% or impacted by 7% to 8% compared to the prior year.

The visibility, if we talk to our customer, is really low or low or not there. So our customers are also in certain areas, not everyone, really, struggling to give us guidance as their supplier, how things will develop. So the visibility right now is really low.

Where we are totally stable is in the supply of foilstock to our customers there for the packaging industry. So all in all, out of COVID, what we see right now is high volatility, and we see stable demand for foilstock. We see low visibility and impact right now, in particular, in the automotive and in the aircraft industry, which account roughly for perhaps 1/3 of our portfolio in Rolling.

What we did up to now is, and this is my last slide here, is that we implemented short-time work in Ranshofen. And Austria provides a very good, highly flexible, short-time work regime and tool. And with this tool, it is very -- it's really possible for us to reply highly flexible to, let's say, fluctuations in capacity utilization for our facilities in Austria. And this was implemented 1st of April, by, let's say, not a big extent. So roughly half of the people are part of the system right now. And they consume it perhaps at the level of 30% -- in average 30%, I would say. So it is not too bad up to now. It's actually the bit is that it is really difficult to foresee what is happening in the next weeks and months. So this is the reason why it is difficult for us, or possible for us to give a forecast right now. The only thing we see, and I can give here is forecast is that we will see a decline definitely in the second quarter, and then we have to wait what happens then.

So this was it for my presentation, and I'm looking forward to answer your questions right now. Thank you.

[Felix Demmelhuber, executive]

Thank you very much. Now we can start off the Q&A session.

[Operator]

[Operator Instructions]

And the first question comes from the line of Rochus Brauneiser of Kepler Cheuvreux.

[Rochus Brauneiser, analyst]

Hope you can hear me. I have a few questions on the current business outlook. So Mr. Mayer, maybe you can get a bit more specific how you see April volumes right now in terms of where we were last year and based on your current visibility, which is obviously not very good. How you see directionally May progressing? And also in this context, can you talk about to what extent and from which customers you have been facing order cancellations and where the order books are currently standing at. That's maybe the first part of my question.

[Gerald Mayer, executive]

Yes. April. April, in, let's say, primary division, no impact up to now. So we are producing at 100% capacity. We are shipping the volumes. So April for primary is okay. Of course, the impact from the price side are there. But as I mentioned, and I gave you the guidance there, where we are right now in terms of alumina and aluminum. So you can calculate, I think, the impact. But volume-wise, no impact. And I would say minor also from price trends is a bulk of the decrease in aluminum is compensated by aluminum and other raw material price decreases.

For April in Rolling Division, I would say we are -- perhaps compared to the prior year, perhaps 15% to 20% down in April. This is what I can share with you right now.

With regards to May, for Rolling Division, the visibility is definitely a little bit lower and what we expect for May is perhaps a similar impact, perhaps a little bit higher. But right now, I would say, we are also guiding and running the company now on a week-by-week basis and also applying our short time working tool, which we have in Austria also on a week-by-week basis. But I would say it's not too wrong to say that it should be roughly or a little bit worse compared to what we saw in April. This should be the situation for Rolling.

For the Casting Division, I would say, you definitely know that casting supplies, in particular, foundries for the automotive industry. So we are depending there on 60%, 70% on automotive. Of course, the impact there was higher in April. So we were down roughly, I think, 40% compared to the prior year. And if I would forecast right now from a today's perspective, May and perhaps also June, we think it should be a little bit better than April was because, of course, some of our -- many of our customers are ramping up now their plants again, but definitely not on, let's say, full capacity. They are by far not there. It is a step-by-step process. And I would say, it should be better in the next weeks. And this is also what we see right now for the coming week. So compared to Rolling, Rolling in a little bit, I would say, worse. Casting a little bit better compared to April. This is what I can share with you regarding forecast. And I really ask for your understanding that we cannot go further right now in terms of timing because we simply do not have also the guidance from our customers.

Regarding your question, where did we see cancellations? I would say in many -- for many of our customers, it's more a postponement type of measure. And they asked for postponement, some were asking for cancellations. And it's both. It is aircraft and it is automotive and automotive-linked industries.

Packaging, super stable. I would even say it could go up a little bit. And yes, and also we'll see how sports develop and industries like that. We are quite positive in this regard.

[Rochus Brauneiser, analyst]

Okay. That's quite helpful. Maybe can we touch one point. I think Q1 cash flow was okay-ish. I think inventory are higher. What can we expect in terms of your working capital trends as far as you can see now for the second quarter because there is this kind of high uncertainty and it's all about your speed and flexibility to adopt to that level. So what do you expect to happen in terms of working capital build or release in Q2.

[Gerald Mayer, executive]

In our industry, I think, in the crisis mode, what happens normally is that we see a positive impact in the first step in working capital. Why is this the case? The aluminum price trends down, and this translates in the following weeks and months in positive effects in working capital is the first reason.

The second reason is that normally, when volumes come down, receivables go down, the volumes in inventories also go down. And this also translates into a positive impact of working capital. The extent, of course, is mainly driven by the volume impact, which is really difficult now to foresee.

The EBITDA, of course, will be a little bit lower, and there, we will have the negative, let's say, impact. But all in all, I expect a positive second quarter from today's perspective in working capital.

[Rochus Brauneiser, analyst]

Okay. Very good. And then can you give us an update in terms of this year's CapEx? And maybe can you give us a bit of an overview what kind of cash preservation measures you're taking or crisis-related measures you're taking right now?

[Gerald Mayer, executive]

CapEx, what we guided up to now was between EUR 80 million to EUR 90 million in CapEx, which will be expected and planned for this year. It is, I think, not realistic that we will -- perhaps as a first step. But we are a specialty producer. And what we decided is for us and what we plan is that we do -- these are not big things, all the strategic CapEx, which we started will be continued and finished off. And this is one casting pit, in particular in our cast house. This will happen, and we continue doing that.

Then other CapEx things, of course, evaluated and are they necessary, yes or no. What I expect from today's perspective, that we will not be above EUR 70 million this year. So this is a reduction, I would say of EUR 50 million, which is the minimum which we will see this year. This is compared to the prior years, not really a high number, so we are definitely down compared to what we saw in the prior years. But I would say, EUR 70 million should be the max for this year, but we are now evaluating on a daily basis, are there other postponements and so on and so forth. What was now the next question was -- capital, the liquidity thing, yes.

In terms of liquidity, what we did, we added, in the meantime, a facility of, let's say, a greener facility of EUR 60 million, which we will put on our balance sheet, in addition to a very high liquidity, as you saw, and I shared it in my slides. So the liquidity position will go up to more than EUR 300 million. You will see a positive impact throughout -- at least from today's perspective in the next weeks and months in terms of working capital. If aluminum price stays low and if inventory goes down. And this is -- can be expected in the crisis mode.

So from our perspective, there is no -- not -- it's not even a small reason to be worried even if the situation lasts for months.

[Rochus Brauneiser, analyst]

Okay. Then maybe the last thing is on the U.S. situation. Maybe can you help me a little bit how U.S. says, the current import situation in U.S. There's kind of conflicting statements tweeted around -- by Trump and how you think your business might be impacted in Canada?

[Gerald Mayer, executive]

Up to now from -- we are not impacted by the logistics, everything to the U.S. from Europe or from Canada is up and running and quite okay. I think what we see now and what we will see in the U.S. is definitely also some postponements as they are simply, perhaps 2, 3 weeks behind us in terms of COVID and what we also think is that what we saw in the past. And I think this is where the U.S. is normally stronger than Europe. They are quicker in recovering. And yes, and this is what we know and see up to now, no impact, and I do not expect now major impacts. And if it's about integration, it's about tariffs, I don't know.

[Rochus Brauneiser, analyst]

Yes. It was more on the tariffs, yes.

[Gerald Mayer, executive]

Okay. Then we have to wait. Up to now, we don't see anything. What I can say is that the U.S. are not self-sufficient in many of our products. And if you look to primary metals, for example, it is, of course, and therefore, they [indiscernible] again, the tariffs because they found out that there's the need in the U.S. for big volumes of primary metal, and they are not self-sufficient. Their own, let's say, production in the U.S. itself. And it is quite similar for our products, which we ship to the U.S. and from Europe. There are also in many cases, it is difficult for them to cover their needs on their side. So I'm not negative here right now.

[Operator]

The next question is from Michael Marschallinger of Erste Group.

[Michael Marschallinger, analyst]

Yes. Just one left on the shipment development in the first quarter. I think it would be helpful if you could split the development in the first quarter on the one hand, January, February versus March, as you said, the [ plant ] closures most were introduced mid-March? And also maybe could you tell us what was the capacity utilization on the group level in March and maybe also in April.

[Gerald Mayer, executive]

The shipment split by month is something which we do not provide. But what I can tell you is that we were up in automotive compared to the prior year. We were up in aircraft compared to the prior year in the rolling -- out of rolling. We were down in distribution out of rolling, and this was mainly market and price driven. That we say, okay, at these prices, we simply are not willing to ship to our customers. So this is what we saw in the first quarter, and these were strategic decisions from our side.

Regarding the impact of COVID, our utilization rate was very high in March. So we were producing more or less at full capacity. Of course, there's always something left to -- and as I showed, we were down a little bit in terms of shipments by 3,000 tonnes. And the total shipment number out of our rolling mill was, I think, 56,000 tonnes and perhaps 66,000-something would have been possible. So we are more or less running or we're running at a very good capacity utilization rate. And this is also true for the cast house. There is always also necessary to understand the product mix. It takes longer to produce sheet or plate for the automotive for -- or the aircraft industry. It can be -- you can produce more if you, for example, simply produce foilstock. So it is very difficult if you compare just absolute numbers in -- from quarter-to-quarter. But what I can tell you is that we were more or less there in the capacity utilization that we should have been. And as I mentioned before, in April, in the rolling mill, we were down roughly, I would say, 15% to 20%. And in the cast house, we were roughly down perhaps 35% to 40%. And this also reflects roughly the impact of what we saw out of COVID. And as I also mentioned before, what I expect for May is a similar number. It should be a little bit better in the casting side, in the casting foundry operations side and that perhaps a little bit worse in the rolling side from today's perspective, but with a lot of uncertainty.

[Michael Marschallinger, analyst]

Maybe just a follow-up on foilstock and packaging. You expect a stable development. So there's no benefit from this current lockdown situation in the Packaging Division or that you see increases in let's say [indiscernible]?

[Gerald Mayer, executive]

As I showed in the split, foilstock accounts for a little bit less than 20%. Like always easy numbers, let's say, 40,000 annual tonnes -- tonnes per annum. And this is roughly our target for this year. And this is from today's perspective, what we also will see this year. Perhaps there you talk about 1,000, 2,000 tonnes up or down. So depending, of course, of the development of the next week. So what we expect is a stable development, perhaps with a slight upside. So this is what we see there. And the reason is that people out there simply consume their yogurt. They need the remedies, the medicine. They need the food for their pets, for pet food containers, which our aluminum is in. And so the demand there is highly stable. And it's also not really more. It is more because people at the beginning of the COVID crisis ran into the shops and grabbed everything they could. Therefore, in the meantime, the demand went up and increased slightly. And also perhaps when you're at home, the lot sizes slow down, the packages are a little bit smaller than if you go to the restaurant and they buy the big, let's say, containers. It is -- and it's also a little bit better, of course, for our industry then. But it is stable, and it was stable. And I know now this company, and I'm with AMAG now for -- I think it's my 14th year, it was always a stable business, always slightly growing, and this is also what we see this year.

[Operator]

[Operator Instructions]

And the next question comes from the line of Christian Obst of Baader Bank.

[Christian Obst, analyst]

Yes. All the best to Ranshofen. Thank you very much for the detailed answers so far. So I only have one left. And it's concerning supply, you talked about secured supply, especially also from the scrap dealers in Europe. But is there some kind of -- or do you see some kind of a risk because they are collecting less in the quarters to come? And they're running for cash, of course. And is there any risk of drying up of the supply chain in scrap? Do you see that?

[Gerald Mayer, executive]

The supply chain all in all up to now, and we saw some grid -- from our side, we were really some sort of nervous because we also did not know how things develop, in particular, in the beginning of corona when the borders were locked when we had the situation in Italy and Spain and France, where we also get some scrap from. And up to now, we did not have, let's say, no, I wouldn't say no impact, but no impact, which would have, let's say, a negative influence on our, let's say, capability or let's say, on our production for the slabs for foundry alloys and, let's say, in the Rolling division. So this was up to now really positive.

And from today's perspective, it should continue like that. So this is what I can share here with you. So we do not see a big risk. I would say. And what I also wanted to tell you here by sharing that we did not have an impact. The good thing in our business model is strategically, we did a step in the last year by, let's say, expanding our recycling activities and expanding, therefore, let's say, also strategically to use scrap. The only real raw material, which is available in Europe itself to use exactly. This raw material we have in Europe to use in our operations and not just, let's say, count on, let's say, primary metal, which comes from Asia, from North America and so on and so forth. So we are not depending, let's say, on regions outside of Europe. This is, I would say, strategically really important to understand. And up to now, very positive, no negative impact.

Where we were also a little bit worried, but we undertook some measures, of course, at the very early stages. For example, we need an alloying material magnesium. Magnesium, I think more than 90% comes from China. And we always have safety stocks for weeks here and months, and we also did everything to secure that, no impact there.

In the outgoing supply chain, just to add this, also very important. We saw, of course, impact in the beginning of the year, no containers were available. We -- for sea freight. We saw China was very difficult because the ships did the vessels did not come from Asia to Europe. So we tried to set up new ways, new routes, new ways to ship our material, our metal, for example, to China. We used the first time. We never did this before the train to China and it worked super.

So unbelievable up to now, no impact on the supply chain of AMAG, and we had 2, 3 things and issues, which we solved quite well and let's hope that it stays as it was in the last weeks because up to now, I think our people did a fantastic job there.

[Christian Obst, analyst]

Yes, of course. Maybe 2 additional in that context. One, if I got you right, then you are not building up any major safety stocks in a scrap area. And second one is, can you give us a broad split how much of the material coming into your system. Is this circulating more or less how much do you get new from the scrap dealers? And how much is primary aluminum?

[Gerald Mayer, executive]

This is -- our scrap rate is definitely as high as it always was. And then you definitely know that every product, which is produced here in Ranshofen, every rolled product consists of roughly -- are also found in average of between 75%, or let's say, in average, 75% of scrap. This is the same. So we will always try to optimize as there's no shortfall in scrap. It's not necessary to use more of primary metal. And we use where we need it. And up to now, it was not necessary to set some countermeasures in using, for example, higher levels of primary material to produce our rolled products or our foundry products. So as it was, business as usual there.

And regarding the stocks. We have stocks of slab, of course, always there. Of course, we try to stay quick in terms of how to respond on fluctuations on the market for distributors, in particular, we try to have the right material there to be quick if we need it in terms of scrap and raw material, it's always risk associated. If you have a lot of scrap here, it's [ 1 year ] -- first of all, you need the space. And the second thing is it's always price fluctuation risk then affected to that and related to that, and therefore, we avoid that. And we have some experience how to manage such crisis the last almost 10 years ago roughly. And there is no difference how we do it. Did it there to do how we do it now. And we have a very stable management. They are the same people who managed, let's say, in the cast house, the situation one decade ago are still there. And I think we can use this experience right now quite well from a very experienced management team.

[Operator]

The next question is from Jens Münstermann of LBBW.

[Jens Münstermann, analyst]

Yes. You have several measures in place to save liquidity. And given the fact that your AGM is postponed, can you just give us an indication on your dividend?

[Gerald Mayer, executive]

The AGM is postponed. We are still trying to define the date. So we will can -- publish it definitely soon. We -- I think what we always do is, of course, we did -- and this was published when we did our year-end financials. Our proposal at this time was published. Will it stay the same proposal? I don't know right now. What we wanted to, we use the time right now to understand the impact of COVID. And then after we understand it a little bit more, we might change our proposal, and we will -- as soon as we know it, of course, we go to the market and you will learn about it. But up to now, it was -- no decision is made. But it will be evaluated definitely once again.

[Jens Münstermann, analyst]

Just one follow-up. Will you think it's better to pay a small dividend instead of cutting the dividends?

[Gerald Mayer, executive]

As I said, we will evaluate that. I do not want to speculate here. And as soon as we come to, let's say, to a decision here. And believe me, we are thinking about it, if it makes sense or not, if that makes sense or not, if everything makes sense or not, but I do not want to speculate here. Let us treat it as we did it in the past. And we will share it with you and share it with the investors, with the capital market as soon as we did the decision of the proposal. It is -- we did not do the decision up to now.

[Operator]

[Operator Instructions]

And there are no more questions at this time. I would like to hand back to Felix Demmelhuber for closing comments.

[Felix Demmelhuber, executive]

Okay. Thank you very much. We wish you a nice day. Thank you. Bye-bye.

[Operator]

Ladies and gentlemen, the conference is now concluded and you may disconnect your telephones. Thank you for joining, and have a pleasant day. Goodbye.