Jastrzebska Spolka Weglowa SA

WSE:JSW

Earnings Call Analysis

Q1 2024: Margins Under Pressure Amid Sales Increase

In Q1 2024, the company experienced a modest 2.3% increase in sales revenue, reaching PLN 3.4 billion, primarily due to higher coke volumes and price hikes. However, EBITDA fell by nearly 24% to PLN 532 million, driven by a decline in steam coal sales and increased material costs. Net losses were recorded at PLN 9.7 million. Coal production decreased by 7.5% to 3.3 million tonnes because of geological issues and safety protocols. The company plans to revisit its dividend policy next year, aiming for more consistent payouts. CapEx spending for Q1 was reduced by 30.7% from the previous quarter.

Overview of Q1 Performance

In the first quarter of 2024, JSW reported a slight increase in sales revenue from PLN 3.3 billion in Q4 2023 to PLN 3.4 billion, reflecting a 2.3% growth. This increase is attributed to higher coke sales volumes and a small price uptick in coke sales. However, it is essential to note that sales of steam coal dropped significantly, contributing to overall challenges in sales performance.

Production and Sales Challenges

Total coal production in Q1 2024 was 3.3 million tonnes, down from 3.38 million tonnes in Q4 2023, marking a decline of 7.5%. The dip in production is linked to geological difficulties and operational hurdles, including a significant fire incident in the Pniowie mine that affected two longwalls. This has led to lower steam coal sales, which fell by over 19%, causing a domino effect on revenues.

Revenue Composition

In terms of pricing, the average coal price stood at PLN 1,058 per tonne, while the average coke price was PLN 1,317 per tonne. It's crucial for investors to consider that the relationship between coke and coal prices improved recently, but the market still shows signs of imbalance, affecting profitability in the coke segment.

Financial Health Indicators

JSW's EBITDA for Q1 2024 was PLN 532 million, which represents a nearly 24% decline from the previous quarter. This drop reflects reduced inventory levels and increased material costs. The net result for the quarter was a loss of PLN 9.7 million, largely influenced by the decline in EBITDA.

Strategic Investments and Future Outlook

The company has acknowledged its capital expenditures which amounted to PLN 1,067 billion in Q1, a decrease of 30.7% from Q4 2023. Investment focuses on modernizing core production facilities and exploration of new energy sources. JSW aims to realign its operations to adapt to the evolving energy landscape while also prioritizing safety across its operations.

Management's Commitment to Cost Optimization

JSW's management is committed to optimizing both operating expenses (OpEx) and capital expenditures (CapEx). They highlighted the necessity of linking future investments to enhanced production capabilities. A detailed analysis of the cost structure is underway, with indications that adjustments may be made to align spending with production targets.

Dividends and Shareholder Relations

For 2023, JSW did not issue dividends, as required by terms with PFR, but management expressed hope to resume dividend payments in the near future, reiterating a commitment to shareholder returns. They aim to ensure better communication and transparency with shareholders going forward.

Market Position and Industry Trends

Looking ahead, the management remains optimistic about the demand for steel and coking coal, driven by significant infrastructure investments. Analysts predict a continued increase in global steel demand, with expectations of about 30% growth by 2050. JSW intends to position itself to capture opportunities emerging from the EU's green transition while remaining wary of potential shifts in production technologies.

Earnings Call Transcript 2024-Q1

[Ryszard Janta, executive]

[Audio Gap] [Interpreted] And I pay a lot of attention to data analysis and to ensure that the ratios of the company are properly formulated and formed. And this is what I'm going to do well being here at JSW.

And so if we look at costs and revenue and ensuring the financial foundations of the company, these are going to be the paramount -- of paramount importance to me. And so this market is a global market, a highly volatile market. We're competing with global players. And so in this market environment, we're going to look for new opportunities, new customers, new opportunities.

And so, I believe that jointly with Jolanta Gruszka we're going to be able to devise the best possible solutions. In terms of mining, we're focusing along with Mr. Adam Rozmus, to ensure that we have the run rate restored, having in mind what has happened in recent quarters in terms of deteriorating that run rate.

And so if we're looking about the mining model, we're thinking about [indiscernible] and we're waiting for the experts' opinion, opinions on that subject. We're looking at the ability to bump up the run rate by having additional investments to open up new [indiscernible]. And so we're working on a new financial model and the new cost policy. I would like to assure you that jointly with the CFO, Mr. [ Ostrowski ], we're going to look and scrutinize all of the numbers very closely.

So today, as we look at the level of raw materials needed for energy transition is low, we are a key player for the sustainable development of the European Union. We do know that in the long run, the steel production business can change, can modify and they might switch the focus to a more sustainable approach, and we're going to transition in parallel with that industry. So we have to be flexible. We have to actively look for new areas of development, and we going to work together with Mr. [indiscernible] on that subject.

And one of our unchanging priorities is the safety of our crew, being of our staff, being a good neighbor and having a transparent approach to our shareholders. And the fact that a dividend was not paid for 2023, after having made that recommendation and looking at the contract with PFR, and having made a presentation to the Supervisory Board. This doesn't mean that we're deviating from our dividend policy, it's my idea and my hope that we're going to be able to return to that dividend policy, and this will become the rule that we're going to be able to pay that dividend to the shareholders of JSW.

And then we can go on to the presentation of the company's results. And we look at Q1 first. So if we look at coal production, we were at 3.13 million tonnes of coal. We had nearly 830,000 tonnes of coke. We had 21.3 active longwalls, and so MCCC in the first quarter was 737 watts per tonne. If we look at sales revenue, we were at PLN 3.4 billion. The average coal price was PLN 1,058. And if we look at coke, it was PLN 1,317 per tonne. And our EBITDA was PLN 532 million, and the net result was minus -- was negative in the rate at 9.7, and we'll have more information, more data further color commentary about these numbers in the course of the subsequent slides, which we'll discuss.

But now I'd like to give the floor to Jolanta Gruszka, who is responsible for development.

So in the annual presentation, you can see basically where we are in terms of achieving the group goals and objectives up until 2030. Well, the new management team is in place as of the 6th of May, and we're now with the team, we're now analyzing the operational situation of the group, and we're taking efforts to ensure that we're going to be able to achieve our short-term and long-term strategic objectives without any disruption, all the way up until 2030. They have been defined in the strategy.

And so if we look at the strategy relating -- or so what's happening in the environmental set of things and what's happening in the macroeconomic sphere is the challenge for us. And so along with Mr. Rozmus and the whole management board, that our Mining segment will return to what we have put in place in the strategy, we will analyze a various number of strategic areas that are critical importance and what's for our group and looking for new opportunities and what's happening.

And so as a new development officer, along with the team, we want to think about the orientation of the all group, about the reorientation [indiscernible] being a Green company and being broad-based. So I'll give the floor now to Mr. Rozmus to talk about the production results.

[Adam Rozmus, executive]

[Interpreted] So ladies and gentlemen, in Q1 2024, so JSW produced 3.3 million tonnes of coal as opposed to 3.38 million tonnes of coal in Q4 2023. So, this was a decline of basically 7.5% versus 3.1%. And so this was a result of some of the geological difficulties we encountered because of the tectonics of the deposits and the Borynia-Zofiówka-Bzie mine, and as a result of having to do some preventive work in terms of methane dangers in Pniówek.

So the level of production, which is down by 7.5% is a result of how many numbers of long [walls] we have available for operation and what their production capacity is. And so in terms of one running meter of a longwall and to what extent we've made progress there.

So if we look at these numbers, they change over time, and they're constantly changing, moving from 19 up into 27, which is the plan for the end of the year. So this is strictly dependent upon, of course the natural hazards, geological conditions about the equipment we have, machinery as well as the number of [cruise], longwall [cruise] [indiscernible] have in operation in order to be able to do that mining work.

So coming back to Q1 and the sum up, the recap. And so the fire that took place in Pniówek in December of last year was of significance. And so that meant that two of our longwalls had to be shut down. And that means the Q1 production or output was lower.

So if we look then at the corridor works, we can see that in Q1, we're up to 19,750 running meters. And so -- this is an increase of 4.2% over Q4 2023. This was due to achieving our key assumptions with respect to maintaining the current front as well as looking at the strategic areas of the mines.

And so if we look at coke production, we can see a decline of 5.1% and this is linked to a decline in production in the corresponding period. Thank you very much. Now I'd like to ask Jolanta Gruszka to tell us a little bit about what's happening in the market environment.

[Jolanta Gruszka, executive]

[Interpreted] Ladies and gentlemen, so at the beginning, we'll talk about the trends that we've seen in this period. Steel production in Q1 was up by nearly 9% across the world if we look at -- in comparison to Q4 2023. And so this is true also in the EU as well as across the world. In Q1, there was a certain amount of optimism. We saw steel prices were climbing, especially if you're looking at flat goods. And this was supported by the closures of blast furnaces at the end of last year. And there was also the filling in of inventories. And there was also some disruption on the Red Sea, as a result of the conflict in Israel.

And so if we look at the flat goods [indiscernible], we saw that prices were growing in a stable footing. So if we look at these price increase, it was primarily up until the end of January, beginning of February, then we saw oversupply, a bit of a glut, as a result of blast furnaces coming back online. And as a result, prices started to dip.

At the beginning of March, if we look at the top quality coking coal, we had prices in excess of $300 per tonne, but the increase of spot quantities, which showed up at the beginning of March, it led to a sharper decline in prices than had originally been seen. And so, we saw prices drop back to about $240 to $150. The primary source or cause of prices declining in March. Well, this was because of what steel mines were doing.

Well, oftentimes, they're the final users of coal. But as the steel market was growing soft. These entities were selling these deliveries that were booked in advance, and they basically added some additional supply to the market.

And so if we look at hard and semi-soft coal, we can see that in Q1, the prices fell by more than 7.5% versus Q4. If we look at coke prices in the last 2 quarters, things have happened differently than in China. So we had a coke price upswing of nearly 3%, where as in China, the decline was below -- I mean, it was bigger than 6%.

And so we can say that the relationship or the ratio of coal prices to coal prices has improved, but it still makes it impossible for coking plants to generate a positive return. On the next slide, we can show you the comparison of our prices to market prices. And so we can see that if we look at the reference period, so which is October of last year and all the way through February of this year. And we can see this ratio is down to some 80-odd percent. And there are a number of reasons for that. And this was because of the change in the mix of sales. In Q1, we had a much smaller percentage of the top-priced products. So the higher quality coal. And this was a result of the events that transpired and at a mine in JSW, where we had basically decline in production or output.

I think it's worthwhile to mention that we're comparing the average prices of our coking coal grades with the top quality coking coal in the market. So this premium level, that's the top-quality product. And if we compare that to Q4 of last year, the decline was some 12%. So it increased by 12%. And so it bumped up to 320 from 294, but we're not showing that here, but it's worthwhile to emphasize that the reference price of semi-soft coking coal fell by 5%. So these changes of prices, having in mind also the change in the sales mix, meant that we had a bigger decline in the average price to the reference price.

So if we look at the European market, we're up to 98%. That's our coke prices in relation to the prices of [indiscernible] coke on the European market. It's worth well to mention if we talk about coke. We don't have a clear market benchmark such as the Australian coking coal benchmark, so there's a bit of a problem with the market quotations here. And that's primarily because we have different terms or times when coke is priced. We have some quarterly contracts. Sometimes we have monthly contracts. I mean the prices are set on a monthly or a quarterly basis. And sometimes we have a product that's sold on the spot market.

So if we look at steam coal price achieved by JSW versus the index for the power industry, we're at 98% here. And so this indicates that our prices are pretty much on par with market.

So if we look at the sales of coal, produced in the group. So it was down in Q1, and this is a result of sending out less coal to internal buyers and external buyers. This is a direct consequence of the decline in production and the supply. Therefore, of the top quality coking coal grades. And so we have revenues on sales of coal to external customers, external customers is down by nearly 11% at 10.7%. And this was primarily because of what was happening on the steam coal market. So we had a decline of -- in excess of 19%, where there was a decline in the volume of some 34%.

And so the revenue of just coking coal has not changed much at all. And we see that the price bumped up by more than 1%, but the sales revenue has been kept at the same level. So as I mentioned, it's primarily the sales mix that has been modified and I mentioned that and explained that a moment ago.

So if you look at the sale of coke, in the first quarter. And so we can say that it's up by some 25% in Q1 over Q4 2023, this is because of how overseas markets operate. And so we have basically quantities that we're in the port harbor in the end of last year, and shipped at the beginning of this year, and that's why we have such a major upswing. And so the average coke sales price is up by less than 3%, and that means that we have higher coke revenue and from hydrocarbon sales, it's up by 25.2%. And so we can see that we're far from the balanced market. What we've seen in March, we can see that the relationship between coke prices and coal prices have improved, but we still cannot generate a positive financial return in the coke segment because of this imbalance in prices.

And then the last slide, from my area, this is inventory. So if we look at the coal produced in the U.S. group, at the end of Q1, we see that our inventories were up by a little less than 11%, and this is primarily because of what's happening on the steam coal market, because the steam coal inventory is 250,000 tonnes. We have less than 170,000 tonnes of coking coal inventory. So this level of inventory is also inclusive of the coal in the yards of our coking plants. So we have a very low level of inventory of coke. We're down by some 54% and so as I mentioned, these swings are primarily a result of the dispatching of products on the oversees markets. So I'd like to give the floor to Mr. Rozmus, who will tell you a little bit about our investments in Q1.

If we look at CapEx in the JSW Group in Q1 2024, we spent PLN 1,067 billion. And so this is down by 30.7% over Q4 2023 on an accrual basis. So we had the following items here. In the coal segment, we had PLN 861.3 million spent. And here, we should mention investment construction works, and this was PLN 323 million. And so we have these mining pits, and then we have the wash plants, which is PLN 37 million; then environmental protection, which is PLN 6 million and then other investments of PLN 31.7 million.

Then we have the purchases of finished goods. And so we have the purchase and modernization of mechanized shields. So we also have winning machines. This is PLN 16.6 million and then transportation equipment, PLN 32 million; and then other purchases of PLN 30.4 million. And so the CapEx for expensable maintenance were there. Then we also to shore up the longwalls and then for leasing, so it's some PLN 52.4 million. So in the coke segment, we had CapEx, which is up by PLN 22 million over the last quarter of last year. And the most important line item here, which contributed to this level is the execution of some key tasks.

So modernization of the coking battery number 4, in Przyjazn as well as the construction of the Radlin power plant. Power generation unit. Thank you very much. And we'd like to give the floor to Mr. [indiscernible] who will tell you about the financial highlights.

[Unknown Executive]

[Interpreted] Today, I will try to walk through the most important financial highlights in Q1 2024 on an efficient basis. But -- during these subsequent meetings, we'll be able to talk a little bit at greater length, not only about the numbers, but also about our updated financial model, which Mr. Janta, our CEO mentioned, and we can also talk about our revised cost policy.

So as we compare Q1 2024 to Q4 2023, we can see our sales revenue is up from PLN 3.3 billion to PLN 3.4 billion, which is roughly a 2.3% uptick. The main factors that contributed to this increase in our sales revenue was the higher level of coke volumes, and they gave an additional PLN 268 million. And we also saw price increases for the coke that was sold, and that gave us a PLN 37 million additional upswing.

And so if we look at coking coal and the differences there and the price deviations were limited, and that's why they had a minor impact on the results. But amongst the most important factors that had a negative impact on sales, we should mention the decline of steam coal sales and the price decline.

So EBITDA here in Q1 of this year was PLN 532 million. So it was down by nearly 24% over Q4 2023. So the major impact or the major contributing factor was the decrease in inventories and the increase in materials. And so we can say that had a negative impact, and this was a result of the decline in sales prices, and then the decline in sales generally of steam coal. So there were some positive factors contributing to EBITDA in Q1 2024 versus Q4 2023. That's higher price, higher volume of coke sales and then costs were down by [nature].

So if we look at net working capital, including our close to end investment fund, we can say that the net working capital is down by 10.8%, but it's still at a positive level 5.5%. In the first quarter of this year, we had a net result, which was in the red of PLN 9.7 million. And the main reason was due to EBITDA decline.

If we look at the costs by nature, we can see that the costs have moved down from PLN 4 billion to PLN 3.8 billion, and this was because of external services and materials. So these two declines, well, in external services were down by PLN 99.5 million. Materials were down by PLN 91.9 million. And so this was primarily linked to the lower decline -- so the lower run rate.

But you also had decreases in mining damages corrections, there was less done there. And some of the negative factors were as follows: we had higher employee benefits of nearly PLN 35 million, and that meant that we had to pay higher results -- so insurance contributions. And so basically, there was some other increases here.

If we look at the mining cash cost, it grew by 8.6% and it was PLN 738 per tonne. And the main factor that caused MCC to grow. Well, that was because of the fact that we mined less coal. But if you think about some of the good information, if you look at the unit conversion cost, we were down to PLN 308. And so this was a result of basically reducing costs by some [indiscernible] and so we'd like to show you some of the main cash flows. So if we look at cash flow, it was down, primarily because of investment cash flows, because repayments of PLN 1.26 billion, plus repayment of loans and borrowings of PLN [indiscernible] million. So we can say that changes in inventories had a positive impact because we then had an improvement in cash flow of PLN 222 million. Then we had a change in trade and other receivables PLN 172 million. That's it. Thank you very much.

[Ryszard Janta, executive]

[Interpreted] So ladies and gentlemen. You can look at our full presentation on our website in the tab called Investor Relations. We encourage you to take a look at that. Now we'd like to go to the Q&A session, and we'll try to respond to all of your questions that our IR Department has collected.

[Ryszard Janta, executive]

[Interpreted] Let me read the first question. Will the new management Board has managed to look at the current situation of the company? And what are the most important tasks for the management Board. Can we ask you for a list of priorities?

So I think we responded to this question during the preface to our presentation. So I'd like to go on to the next question.

What is the -- what's going to happen with the pay rises in 2024? Have you had a meeting with the social party on this subject?

Right. This subject is in progress in terms of mediation. And so basically, the first mediation meeting was held with the social, now the mediator will meet with the management. And then we'll have a meeting planned with -- in the presence of the mediator.

Okay. Thank you very much. And I'd like to ask you whether or not your optimization efforts will also -- pertain to CapEx?

So having in mind the fact that we have falling output, is it justified to spend PLN 4 billion on that. So in this question, we talk about optimization. Well, optimization is something I will target multiple times. We're trying to optimize in terms of the functioning of JSW and the overall group. So this company is taking efforts to optimize its cost base, as well as its in capital expenditures.

Every decision to make an investment is justified in detail. And it's analyzed and the amount of spend should be linked to the current level of the run rate and the planned level of the run rate. So as we do our investment activity, we're focusing on ensuring that we can deliver the current output targets, but we also want to invest in the future.

Ladies and gentlemen, without making investments in the deposit, it will not be possible to conduct mining activity in the future. And so the level of CapEx in individual years, we'll have a direct impact on the run rate that is achievable. And so CapEx has to be aligned to our production plans, our output plans, and as they're optimized, then CapEx will be tweaks that if our production guidance changes.

And if we look at our analysis of the expenditures that are being undertaken, it might be necessary to have an optimization of CapEx. It's one of the things that we may have to do. And so we will have to optimize some of these targets in the strategic documents. And so the question that keeps recurring in the chat. What is the recommendation of the -- what is your opinion on distributing a portion of the profits?

I think we already responded to that. Perhaps Mr. [indiscernible] would like to add something.

[Unknown Executive]

[Interpreted] Our recommendation in terms of distributing profits in 2023 primarily because of the loan agreement with PFR, and the limitations that are there and some certain restrictions. So we don't have a dividend and payout recommendation, but we do uphold the clauses of the dividend policy. And it's our hope that in upcoming years, we're going to be able to give a different recommendation on this subject.

Nevertheless, one should have in mind, certain factors that the final decision on that subject matter is made by the shareholder meeting. That's the most important thing to remember.

[Ryszard Janta, executive]

[Interpreted] The next question, having regard for the current situation, are you thinking about retiring some of the certificates of the closed-end investment fund in 2024? Are you thinking about prepayment of PFR? This is another question about finance. I'd like to ask the CFO to respond.

[Unknown Executive]

[Interpreted] Well, the financial position of the company is being analyzed. I mean, we've only been doing that for basically 2 weeks, with a little bit more time. Right now, having in mind the shortfall of production. So it might be -- it seems quite probable that we'll retire a portion of these certificates, but the decision hasn't been made, even so prepayment or early payment of PFR, we don't anticipate we will follow the amortization schedule.

And so the payments are made -- amortization payments are made once a quarter. And then your most important priorities in terms of mining in 2024. So Adam Rozmus, if you could respond.

[Adam Rozmus, executive]

[Interpreted] Ladies and gentlemen, in the mines of JSW, we look at the highest hazards and how they're associated with one another interlinked. And so we want to ensure that the crews that work there are duly protected have a safe working environment. And of course, then on top of that, we want to be able to reopen some of those production areas, which we had to close in Pniówek because of what happened at the end of last year. And then in April, we had something in Budryk. That's one thing.

The second thing we have efforts to open up remodeled fronts or long walls, and we want to use that to the greatest extent possible by having the proper mining equipment and then having in play also the proper mining teams.

[Ryszard Janta, executive]

[Interpreted] The next question is about the global trends concerning the demand for steel and coking coal. So this is about the market and our market position. I'd like to ask Jolanta Gruszka, our Chief Sales Officer to respond.

[Jolanta Gruszka, executive]

[Interpreted] So ladies and gentlemen, so steel is and will continue to be a fundamental product used across the industry based on the opinions of analysts, up until 2050, the consensus opinion is that the demand for steel will grow by some 30%, royal, 60% of the global demand for steel will come from the production of steel utilizing iron ore.

In the midterm, we believe that glass furnace technology is the least expensive technology, the most effective. It's the broad-based type of production. And what's also important, and perhaps it's the most important that it enables you to get the top quality steel products. If we look at the green deal, this question, it's appearing more and more frequently because of the green deal.

And so there has to be a broad base of infrastructural investments and one of those products that make that possible is steel. That's why we believe that in the midterm, as a coking coal producer. And of course, this is a critical raw material in the EU. We believe that we will benefit from these changes.

In terms of the longer run, the question is what type of technology will steel production employ? So if you want to get rid of coke [Audio Gap] on the steel market, especially in the European Union. And so the speakers highlighted many problems, the accessibility of scrap, hydrogen, cost of energy. And above all, they underscored their fears about European steel producers losing their ability to compete versus steel imported from Asian countries. Let me remind you that in Asian countries, they're still expanding their production companion cities using traditional blast furnaces. India is the main country. We're up in 2030, the talking points suggest that there should be another 80 million tonnes of new capacity added, with 66% of that new capacity using blast furnaces.

So one of the topics that's been discussed quite extensively and something that was emphasized strongly. This was about the Antwerp declaration, which is basically a request to the governments to be thoughtful as they make decisions, relating to the subject matter. And there are 10 areas that are considered to be quite important to the European steel industry, and the idea being that the industry could be protected against basically relocation of that outside of the European Union.

And so one of the things that is emphasized here is to ensure that we have the raw materials secured for the EU's needs. So we believe that guidelines have been set for reducing CO2 emissions, but it's a little too early to say what measures will be taken in order to achieve those guidelines, and it's not clear what the final impact on steel production and the utilization of coke in the long term would be.

[Ryszard Janta, executive]

[Interpreted] Thank you very much. Now we have a question about the fire in the Pniówek mine. What is the current situation? Maybe I'll ask our colleagues response for technology and production. So this fire that took place in December of 2023 in Pniówek in the N10 longwall area. Well, we had the passive firing so the passive of put out of that fire.

And so we're at present doing some analysis of the composition of gases there. And we're talking regularly with the teams that's responsible for this subject. And so on the 14th of May, we had the most recent meeting. And based on our analysis of the gases in this integrated mine, it's not possible yet to enter that area. We're trying to intensify our efforts to initiate that gas.

And so basically, we want to reduce the temperature and to eliminate the risk of any type of fires taking place.

Next question. Does the company plan to make any investments in the energy sector?

And perhaps Mr. [indiscernible] could speak in terms of energy in JSW.

[Unknown Executive]

[Interpreted] There are two aspects. One is the energy segment as part of our business. And the next thing is linked to our commitments to reduce emissions by 2030 by 30%. So we anticipate in terms of investments, that efforts will be taken. So we'll be doing some analysis on sources of energy, we're thinking about solar panels. We're thinking about wind and other solutions, something else that we're going to tap into.

This is the REM program, which is methane emissions reduction. So on one hand, there's safety with respect to methane. There's also the business aspect where we have access to this fuel. So we want to use this fuel to the greatest extent possible to maximize or the benefits we can extract from that. So we have an investment program underway in Radlin, which is one of the last -- one of the last investments in conventional energy production.

As I said in one of my previous statements, the next steps linked to the energy sector will be for the purpose of making JSW a greener entity. So thank you very much.

[Ryszard Janta, executive]

[Interpreted] So let me add couple of questions from the chat. One of the participants would like to ask whether the current management board -- Do you have any -- do you intend to do something in terms of how the shareholders were treated by your predecessors? So I'd like to ask if you'd like to speak.

So the current management team is aware of this problem. I think we already responded to this question previously. So let me add. As I said at the outset, we hope that next year, we're going to be able to revisit and start paying the dividends again, this is not something we want to deviate from. So it's our hope that by next year, we're going to be able to start paying a dividend every year, and this will become a rule of operating practice.

Does the management see over employment, especially in the admin section of the business. And do you have a plan in terms of the optimization plan?

It's a little too premature for that, but we're scrutinizing all costs. And so we're building our cost policy basically from the ground up. And so of course, salaries are part of that. And we're looking at that very strongly. It's a little too early to draw any conclusions, but as soon as we have drawn some conclusions, we'll let you know.

So there's a lot of CapEx, which does not lead to a higher extraction or output, or nor does it increase the cash? What is your plan to optimize CapEx?

[Unknown Executive]

[Interpreted] Generally speaking, what we want to focus on are three areas. So it's CapEx, OpEx and the level of production. So if we think about CapEx, some of that has already been kicked off and that will be completed. At present, we are working intensively to ensure that we can optimize that CapEx. It's premature to draw any conclusions. As soon as we have some specific information on this subject, then we'll, of course, as a matter of natural course, advise you of that.

[Ryszard Janta, executive]

[Interpreted] The next question. The next question has already been responded to in terms of the European steel industry as well as Przyjazn in place. I said. Ladies and gentlemen, we'd like to thank you very much for all of your questions, especially the difficult questions we can declare that we're going to be open to interactions with the market.

I hope that over the upcoming months, you'll be convinced of that. So I'd like to thank you very much for your attention, for your attendance. And thank you very much once again, and until next time.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]