Grupa Kety SA

WSE:KTY

Earnings Call Analysis

Grupa Kety Reports Strong Q3 Performance Amidst Market Challenges

Grupa Kety achieved a solid Q3 with a revenue of PLN 1.355 billion, up 3% year-over-year, while EBITDA marginally decreased to PLN 253 million, maintaining a high margin of nearly 19%. The EPS segment saw a 9% volume growth, although EBITDA dropped to PLN 54 million. The company plans for a Q4 EBITDA forecast of over PLN 900 million, reflecting a slight 5% downward adjustment. Key acquisition of SELT is expected to enhance earnings with growing market prospects, particularly in sunshielding products, indicating a promising trajectory despite current economic challenges.

Q3 Results Overview

In the third quarter, Grupa Kety reported a stable performance amid challenging market conditions, achieving a total revenue of PLN 1.355 billion, a 3% increase from the previous year. The EBITDA for the quarter was PLN 253 million, reflecting a modest decline but maintaining a robust margin of nearly 19%. Despite these figures being lower year-on-year, all business segments reported volume growth, demonstrating resilience within the company.

Segment Performance Insights

The Extruded Products Segment (EPS) experienced a 9% volume increase, attributed to the utilization of new presses that began operating in the second half of the year. Although sales revenues rose by 2%, the segment’s EBITDA fell to PLN 54 million, showing signs of pressure from lower demand in the construction and automotive sectors. In contrast, the Flexible Packaging Segment (FPS) showed stability with a 1% volume increase and 5% growth in sales, highlighting its role as a defensive segment against economic fluctuations.

Impact of SELT Acquisition

The recent acquisition of SELT, completed in September, is expected to bring significant synergies and growth opportunities. With an estimated PLN 1 billion profit potential when fully integrated with Aluprof, the strategic move aims to capture the blooming market for solar screens, which is projected to expand, driven by climate-related regulations. SELT's initial contribution is forecasted to add PLN 5 million to PLN 8 million to EBITDA in Q4.

Challenges and Market Conditions

Management expressed concerns regarding the broader European market, stating that current economic conditions are difficult, and visibility for growth remains limited. They referenced regulatory challenges that could hinder competitiveness against Asian markets, particularly highlighting issues stemming from environmental regulations imposed by the EU. As a result, guidance for Q4 suggests a cautious outlook, with expectations of achieving around PLN 900 million in total EBITDA for the year, slightly down from earlier forecasts.

Forward-Looking Strategies

In response to current challenges, Grupa Kety plans to present a comprehensive strategy by the end of the year, focusing on optimizing operations and addressing margin pressures. The management remains proactive, exploring paths to enhance efficiency and reduce costs, particularly within the EPS segment, which has struggled amidst low automotive demand. The company is confident that adaptations and strategic movements will lead to recovery and growth.

CapEx and Debt Management

For the fourth quarter, Grupa Kety anticipates capital expenditures between PLN 50 million and PLN 70 million, down from previous periods as key projects have concluded. The company's net debt has increased to PLN 1.4 billion, influenced by the SELT acquisition, however, a new PLN 530 million credit facility ensures flexibility in financing. Management is committed to maintaining financial stability while navigating market uncertainties.

Dividend Distribution Plans

In a positive development for shareholders, an additional PLN 370 million dividend is slated for distribution on November 6. This signals the company's commitment to returning value to shareholders despite navigating a challenging fiscal environment.

Earnings Call Transcript 2024-Q3

[Michal Malina, executive]

Good morning, and welcome to the presentation and discussion of Q3 results. Today's presentation will be split as usual in two parts. First part will be -- the representatives of the Board will discuss the issue -- the presentation that will be displayed, and then we will move on to Q&A. For those of you who haven't managed to download the presentations yet, let me remind you that it is available in the Investor Relations tab in the Grupa Kety on the stock exchange on the website. There, you will find presentations and also a recording of today's meeting.

We will start with an intro from CEO, Dariusz Mañko.

[Dariusz Mañko, executive]

Good morning, and welcome, ladies and gentlemen, to the next conference of Grupa Kety. I forgot my glasses, so allow for -- please allow me for a moment. Still I want to say what's in my head. Very good Q3. What you see in the presentation in point one, with very weak economic conditions and indicators, which clearly say that Polish and European economies are the areas of special interest to us. Construction, assembly, industrial production are at a very weak point. But despite such situation, we've acquired volumetric increase in sales in all segments. This is almost a mantra, but that speaks to the strength of our organization, and this is a very good message for us.

And of course, what follows are very good results in the EBITDA and net profit, although year-on-year, they are a bit lower. Please note that these indicators and the certain market situation that we are on is very difficult. My comment to this would be as follows: Previously, many times, we've had to clash with weaker economic conditions caused by external factors.

And overall, the situation would improve because either we would have subsidation of the automotive in Germany or any other means set off that would lead to improvement of economic conditions. And because of that, Poland and other areas could reenter the path of growth.

And right now, as I understand, after today's communication, our shares have dropped by over 4.5%, which is understandable because we have not presented a good forecast until the end of the year. However, we are not able to present and we didn't want to sugarcoat anything because the situation is difficult with each day, we fight for every kilogram of order, each packaging, each single aluminum profile that we can sell because the market is difficult. We do have a plan. So please don't worry.

For those of you who are sharing their -- who are selling their shares, please don't because each crisis or each trouble that Europe is facing, we can step out of that, but we need a plan for that, and we will present such a plan on the occasion of presenting the strategy by the end of the year. I think that we need to search for positives in this difficult European market, which, in our opinion, doesn't necessarily have growth prospects. We don't see what could serve as a driver of growth in Europe. It seems that regulations from Brussels have gone so far and not necessarily in a well-thought-out way that industry and the construction business and other branches of economy have serious problems in competing with markets such as Asia.

If we have, if no reasonable measures are taken, then we will have a problem. When we're talking about regulations related to environmental protection, it's not that Grupa Kety doesn't support those trends because we are in favor of becoming more and more green, and we're trying to fulfill those requirements, but we don't necessarily believe that requirements created in such a manner by Brussels that they are helpful to European economy. To the contrary, because of them, Europe is becoming less and less competitive compared to Asian markets. On a positive note, we have the fact of closing in the SELT acquisition process. This is a key player in solar screens.

Next slide, please. Now this is acquisition of very interesting healthy asset, modern plants in several locations with modern machine park and modern up-to-date products that can reach Western Europe. And for us, this will be one of the growth factors. So we want to create a Sunscreen segment, the fourth segment in Grupa Kety, which today is integrated with Aluprof, but we would like to have a special unit in Alupol that would deal with products related to Sunscreen protection. This is a very interesting area, much less diluted and we see opportunities for export in moving into Western Europe.

And we want to largely base growth strategy on this -- on the growth of this sector also in the context of the strategy for upcoming years for the Kety Group. I will not list in detail because the seller doesn't necessarily wish for that to be revealed, but they're also who sold us SELT and who in the past sold Aluprof to us deserves to be named an honorary at least resident of Alupol because right now, if we combine the 2 businesses, we will have over PLN 1 billion in profit, a very prospective market with great products.

And under our banner, this part of Alupol can develop very rapidly and become one of the key players in Europe. So one man can be a starting point for really a business that we Poles can be -- can boast about and be proud of in the future. So when you have your vacation in France or Spain or Greece, you'll be able to say, yes, this sunscreen is from Poland. This product, this blind is from Poland because that is our ambition to compete on the European market very strongly with these products. This is an extension of value -- added value for Aluminum profiles in our segment.

And this is a certain element of our thinking -- strategic thinking for the future as to the direction that we want to move into. We surely want to move into more processed products that we can compete with on the European markets. And what I've mentioned related to European regulations, the green energy, renewables, that is a serious and difficult topic.

We've all the manufacturers of steel and aluminum. On processed products, they used to be in trouble in the past. Now it seems that the manufacturers of aluminum profiles have a serious problem in hand. This is evident in Europe, and it can be seen in the EPS segment results. It has volumes, it is fighting, but it's very difficult to achieve very good margins here. So I think that would be it in terms of introductory notes.

We can -- it's often said that we're very serious, but I'm smiling despite the fact that these prospects are difficult. But please remember that the company is not today or tomorrow, it's not over 1 or 2 years, it's a company with over 70 years, and these are certain moments. We need to react to them, and we need to do know what to do so that a company with a group with such a huge potential and finances can make benefit of what is happening right now in Poland and in Europe and not to go on the defense.

So yes, it is difficult to quickly react and build margins in EPS, but it's not that we ran out of ideas and we're afraid of what's going to happen in the future. We believe that the difficult situation in Poland and even more difficult among our competitors in Western Europe will open up some pathways of growth in Europe, and that we'll be able to increase our export and build an even bigger group.

So despite a good quarter, but the forecast a bit -- forecast that is a bit misaligned with your expectations for the year, we are very optimistic for what's going to happen for Grupa Kety. So that's it in terms of introduction. Thank you.

[Michal Malina, executive]

And now let me ask Mr. Przybylski, Vice President, to say a couple of words about the acquisition closing. This is what Mr. Mañko started his presentation with.

[Roman Przybylski, executive]

Good morning, ladies and gentlemen. Thank you. As the President said, the transaction closed at the beginning of September, we've assumed 100% of shares in SELT Sp. z o.o. We're starting to become a leader. We started an integration program with dozens of project teams meeting among SELT and Aluprof in order to work out synergies and to work out a target on ultimate model of how this leader of sunscreens is about to work.

These processes are happening very intensely. We're starting to see the first measurable effects and the simplest ones, but important ones. So cost savings related to shared transportation or purchase of energy. The market is -- we assess it very positively. It's at almost PLN 10 billion market with a growing trend also stemming from the climate regulations, but not only regulations themselves, but climate changes that we all know and are -- have been observing the trend that will benefit us. We have an idea for that where these are big synergies in the group, both on the trade side, hence the close cooperation with Aluprof and doing this in this first stage in the ASS segment, but integration of Opole.

So in the EPS segment, which will be of increasing significance. So first closed transaction, first steps underway. We're very optimistic about the future. The financial results in SELT seen to be really good. Thank you.

[Michal Malina, executive]

And now let's move on to the consolidated financial results. So Mr. Rafal Warpechowski, please deliver your part of the presentation.

[Rafal Warpechowski, executive]

Thank you, and good morning. As friends said, this has been a very good quarter, especially against such a demanding market, and we're very happy that all the segments compared to the previous year have improved and increased the scale of their operations. This after factoring in the changes, the macroeconomic parameters such as aluminum and petrochemicals or currencies that profit have changed by plus 3%, so PLN 1.355 billion in Q3, EBITDA was PLN 253 million, which is a very slight drop compared to previous year.

The margin is still very high, nearly 19%. Now financial operations, especially due to the transaction that you've mentioned a moment ago, our interest has been higher and net interest cost now. So the gross profit, PLN 110 million and income or corporate tax 20%, so close to the expected one in Q3 of previous year, we've had a dozen or so million zlotys of recognized asset on account of deferred tax due to operations in zones. Now all investments have been finished at the order of Q2, Q3, hence, deferred tax has no impact right now.

A few words about the results of particular segments. The first one is EPS, Extruded Products segment, which has been mentioned. We can feel the market situation here, and it's the first segment that is affected by it. And it's the first to get out of the turbulation. Here, we've done 9% of growth in volume. And so we can see that successively, we've been using the set of new presses.

The second one has been accessible to us since the beginning of the second half of the year. The income from the sales, there is a growth of 2%, and it reflects the prices of the raw materials and the premiums that we can get on the market. The pressure in the conditions of the weakening demand is reflected in EBITDA. And as a consequence, we've got PLN 54 million, but it's still a double-digit profitability of the business.

As for the product mix, we've got some slight changes here. We can see that the construction there isn't much activity or growing activity, but we've got the most share here when it comes to sales, and it's still performing well. The same is in Machinery segment. It's worse in automotive industry because the problems of the industry are reflected in our product mix.

When it comes to the exports, the share of export is going down, but have a look at the appreciation of the Polish zloty, which has decreased our export sales. Now 2 segments. The first one in the value chain is the big client that is the EPS. And we've been getting back, this natural hedging we have, our market force or strength that we have. So we've been getting back, which is the pressure for the EPS segment at higher volumes, EBITDA is higher. Here, for September, we've already consolidated the results of operations of SELT, which is about PLN 25 million of sales revenues and PLN 5 million of growth in EBITDA. If we didn't have this correction, still the sales trends and EBITDA trends would be increasing. So that's a very good quarter for the EPS segment -- sorry, ASS segment.

At the proportion when it comes to the sunshielding products, it's already partially visible because in the next month, we will have the effect of consolidation. Another segment, the FPS segment, we've mentioned many times that it's a stabilizing segment, so to speak, which does not react to changes of the economy in the areas where the other 2 react. So here, we can see very good stable results in the next consecutive quarter, higher volumes. The 1% of growth in volume is reflected in kilograms. A big challenge for the segment is what we've been communicating for a few quarters already, which is that the packaging is simple and also thinner.

Even a thinner packaging guarantees the parameters, which in the past were only accessible for the most complex units. So we've got a slight increase in tonnage and increase by 5% in the sales and high EBITDA. When it comes to CapEx in the third quarter, it's lower than in the previous ones. But as we know, we've just finished 2 big flagship development investments outlined in the strategy, which is the Aluprof plant in Zlotów and second press in the EPS segment. That's why a lot of expenditure is related to the finalizing of this projects, which have been pursued in the third quarter.

When it comes to the fourth quarter, we are planning CapEx of about PLN 50 million to PLN 70 million. It will be only partially reflected in the perspective of investment expenditure, that is the cash flow. That is the perspective that we are showing here. We think that in comparison with the forecast, which was slightly over PLN 300 million a year, we will be closer to the amount of about PLN 250 million, maybe PLN 270 million, when it comes to payments.

As for the debt, as I said, when it comes to our financial cost, the transaction of acquiring SELT has increased our debt to PLN 1.4 billion -- PLN 1.3 billion of the increase of the net since the beginning of the year or for the 9 months, it's a change in the quarter, the decreasing of the working capital by about PLN 140 million. Yesterday, we announced that there is an extension of a big contract -- credit contract with Pekao S.A., which is PLN 530 million. It has been renewed for another year with an additional feature that it can be rolled automatically if none of the parties withdraws for the next 3 years, which guarantees a good financing structure. This is good news.

The lower share of Euro loans, which is a consequence of acquisition of SELT for a loan in Polish zloty. A few words about Q4. We included it in the a statement that we might not be able to fully complete the original ambitious targets for this year, we are at the level of 3 quarters or 75% when it comes to EBITDA sales. The Q4 is also related to seasonality, and it's always a shorter quarter, and it always brings lower results. So that's why there will be a slight deviation by the end of the year.

Why am I saying that? Well, because the difficulties we've been -- we've mentioned and the visible pressure on volumes, especially in EPS, it has been visible or it was visible in September and October as well. If there is no upturn, we might expect a slight deviation from the forecast. But still the expected result, the deviation that is forecasted today is not above 5% at the level of the EBITDA profit. So we're still talking about over PLN 900 million this year. We will have the second installment of dividend paid out about PLN 370 million. It will be the 6th of November.

Thank you very much. Now we will move to the Q&A session. So we would like to the investor who wants to offer the PT tape. So please contact the packaging team on the website of our company.

[Michal Malina, executive]

The first question is about the transactions. In the report, we mentioned the cost of acquisition of about PLN 4.7 million. Is it the complete cost related to the transaction? Or is it the only cost that was incurred? Or are there going to be some other costs related to the transaction in Q4?

[Rafal Warpechowski, executive]

It's practically the complete cost, about PLN 4 million is the tax -- PCC tax.

[Michal Malina, executive]

And now the question is related to the results. The EBITDA result, how was it distributed over months? Was it uniform? Was there a declining trend? So can we hear a few words of comments how it was distributed over particular months?

[Rafal Warpechowski, executive]

Well, as I said, there's been a slowing down that was visible in September. But what we can say is that the slowing down or comparison year-on-year or to the budget is only related to this one segment. If you look at the results for the 9 months, we are still over -- we still exceeded. So year-on-year, there is always an increase of a few percent. So in September, we can already say that we collided with the market. And our valuation of Q4 because of that is slightly more conservative.

[Michal Malina, executive]

Another question is related with the market of sunshielding products. How do we estimate the potential of this market development in the years time in Europe in percentage?

[Roman Przybylski, executive]

We will show this as part of the strategy and development plans for the next years that we will show to you in December. But we evaluated -- estimated as attractive because of these trends, this market should develop faster than the European economy or European industry. However, right now, I wouldn't like to quote any numbers and figures.

[Michal Malina, executive]

Another question is related to the EPS segment. So this weaker result of the segment, is it the effect of the higher competition from outside of the EU? Or is there generally weaker demand on the market?

[Dariusz Mañko, executive]

Well, generally, there is a lower demand. For the first time in 30 years, Volkswagen stopped the contract -- the agreement with the employees. So they are going to close two plants. Automotive industry has always been a driving force for Europe and its economy. Unfortunately, it's going down now because we are transitioning to electric vehicles and the EVs produced in China can be much cheaper than those produced in Europe. So the European automotive industry hasn't been dealing well with it. And if they are not dealing well with it, then the whole supply chain is fluctuating.

We participate in the supply chain to the automotive industry. The transport industry is also a big field for us, the second after construction where we locate where we sell our aluminum profile. So for this area, for EPS segment, it's a bit of a problem to find its way on the market. It seems to me that there are no signs that would make us say that the producers of aluminum profiles in Europe have a great future ahead of them.

And another thing is that not everybody has complied with the idea not to buy Russian aluminum because it is in Europe. There is a lot of imports from Turkey and from other countries outside Europe. So it's not safeguarded in any way. This market is not safeguarded by Europe. So the competitors from cheaper markets with cheaper products are winning.

[Michal Malina, executive]

Earlier, we said that after integration of Aluprof with SELT, we will have over PLN 1 billion of profit. Are we speaking about the profit potential or the productive potential? Are we talking profits worth of 1 year or some longer perspective?

[Roman Przybylski, executive]

This is indeed the fact of profit of Aluprof, the Opole last year. So for the previous year was at the level of PLN 750 million. As you see, SELT last year was PLN 280 million. this year is PLN 300 million. So adding these two figures, we have PLN 1, PLN 1.50 billion. This year, it should be a bit higher.

[Michal Malina, executive]

Next question. A 5% deviation down deviation from EBITDA. In Q4, we would arrive at a value below PLN 170 million, so close to last year. Whereas last year, in Q4, we remember that we had over PLN 220 million in reserves. So such situation that we are forecasting, is this a result of a worse result in EPS? Or are the other segments also forecasting Q4 worse than last year?

[Rafal Warpechowski, executive]

We've given that 5% as the result of not correcting the forecast because we believe that this deviation in the forecast context does not cause too many problems. But currently, the forecast is over PLN 900 million in EBITDA. So it's not exactly 5%, but because it doesn't exceed 5%, we haven't verified the forecast. As for the segments, they are planning similar levels apart from EPS. So it's mainly about EPS.

[Michal Malina, executive]

The next question regarding SELT. What will be SELT's contribution to EBITDA in Q4?

[Rafal Warpechowski, executive]

SELT operates under specificity as for the group. So Q4 is always a quarter of less -- fewer activities, even more than our segments because let's remember, we're talking about sunscreens or sun protection. So the estimated share for 4 months in SELT will be between PLN 5 million and PLN 8 million. As for EBITDA, whereas the vast majority of that has been recognized already in September. So from the prospect of the group's results, it will be slight -- on the positive, but slight.

[Michal Malina, executive]

Is it possible to improve EBITDA in EPS and return to the growth market without a significant improvement of economic conditions, so through some internal operations, increasing efficiency or robotization, automation processes and similar activities?

[Dariusz Mañko, executive]

Of course, it is an ongoing process. It's not that we have economic conditions like during COVID, and we've been doing nothing, but works on improving efficiency and robotization are a continuous process. And in each budget every year, we have that position included. And that is something that we have been working on consistently.

Can we do anything? This is quite a simple technology. We have a billet, we have a die, we have a press, you extrude. Of course, you can do some -- the yield can be better in some situations where we can do things quicker. But please believe me when I say this, there are no big reserves or cost reserves that we could use in the upcoming year. We have other thoughts and reflections on how we see the Extrusion part segment in the group, but that's more a topic of strategy.

[Michal Malina, executive]

How is the company seeing the prospects in the ASS in the traditional systems, so in architectural systems. Is there any prospect for dynamic EBITDA growth in the future here?

[Dariusz Mañko, executive]

Let me say this, like you see in the presentation, the Aluminum Systems segment has very good results, largely due to our clients who have export to Western European countries. So all network companies selling aluminum facades, windows, doors in Poland, are largely selling those products also abroad. So it's a re-export of our products, so to speak. The beneficiary here is Aluprof Opole plus Aluprof's own work in Western Europe and in Poland.

And surely, we can say yes to this question. We believe that this is such a big area. We factor in all of Europe that we can think only positively on the prospect of sales of our products in Europe. These are very good products at very good prices. And there are no obstacles here. It's only a matter of our skill set, not to have more share in that market. If we do that, Aluprof will be growing very dynamically.

[Michal Malina, executive]

Recently, some stock exchange listed companies have -- we have ML systems have announced certain strategic actions from producing renewable energy or KGL packaging. Is the group observing these entities?

[Dariusz Mañko, executive]

No, we're not.

[Michal Malina, executive]

Now the prospects of aluminum prices. In 2025, manufacturers of aluminum from China will be included in the CO2 emissions system, and we will need to buy allowances. For this reason, is the group expecting some rapid increase of aluminum prices in the future because deliveries of aluminum from the Chinese market globally are significant?

[Roman Przybylski, executive]

In China, manufacturing of aluminum like many other things, is large scale. And part of that production has a big carbon footprint that is sturdy black, but some of the production is also with renewable part and much cleaner. So it is on the European market. Such changes, as you're speaking about, should not be of significance. What's going to matter is the CBAM introduction or CBAM covering aluminum as well in the upcoming years and how the system should look like, how are the existing gaps or imperfections would be closed because there are such gaps.

So this is the issue of re-regulating and the issues related to European regulations that the CEO mentioned. If we have no deep reflections here or activities here, that's where negative market trends can appear, whereas China itself doesn't have too much to say about this really.

[Michal Malina, executive]

Is there any space for releasing reserves in Flexible Packaging segment? Reserves in Q4 of 2023 and this year, are we assuming releasing any reserves from previous years?

[Rafal Warpechowski, executive]

Overview of reserves takes place when closing each quarter, just like for the end of the year for FPS and reserves on customs duties, they have been used up. The amounts have been reconciled. We do not agree with those decisions. From the prospect of settlement and reconciliation with authorities, they have been settled in Q3. So there are no significant reserves in FPS.

[Michal Malina, executive]

Are there any other reserves planned or possible to release in Q4?

[Rafal Warpechowski, executive]

Like I said, there is a number of estimates of reserves depreciation and so on. But if I were to -- if I would be able to talk about what reserve we would create now, it means we would need to start creating it in September, such knowledge would be available. As a standard reviews of reserves are done at the end of the year, but we're not expecting any drastic movements here. We cannot factor them out, but these are reserves such amounts due, which are calculated based on suitable algorithms.

As per bookkeeping regulations, as of today, there are no big amounts anticipated for the group. The consequence of results would be reserves for employee benefits, depending on what the result for the end of the year is. They are not calculated to a maximum amount depending on the segment. These are mechanisms which are repetitive between quarters and ends of years.

[Michal Malina, executive]

And now a question about the extruded profile plant in Ukraine. What is the capacity? And what is the use right now? And what were the results of the plant after 9 months? And what are the estimates overall for 2024?

[Rafal Warpechowski, executive]

Like we've said, the plant, we've assumed under the conditions given it's very difficult to work out a budget. But after 9 months, we have PLN 7 million in EBITDA and PLN 42 million in profit. The plant is operational. In specific quarters of this year, we had different turbulences and access to logistics and energy. We were able -- together with our colleagues from Ukraine, we were able to effectively deal with that.

Today, we are operating and we are even noting some growth as for the scale operations on the local market, but we are not increasing exposure to that company too much beyond what has been witnessed after the outbreak of the war for us. This is a processing plant mainly. As for what about the use of production capacity at the level of, I cannot give you the exact number right now, but I would say 60% -- 75% probably.

[Michal Malina, executive]

And last question so far on the list. The acquisition of SELT, does that exhaust the group's ambitions regarding transactions of this type in the nearest future?

[Roman Przybylski, executive]

The top is related to the strategy, which we will present in December. But surely, what we said, we see growth opportunities for the ASS and FPS segments, we see possibilities of the use of production capacity that we have as part of the EPS in the extension of the value chain. We have growth opportunities in Poland and in European markets. So we will surely factor in any acquisition processes, which would become part of some of our strategy at least. But we will talk about that in December.

[Michal Malina, executive]

One more question. Please discuss the causes and the reasons behind the drop in the Extruded Profiles segment and the increase -- with the simultaneous increase of profit on a weak market, you fight for every kilogram to extrude.

[Dariusz Mañko, executive]

For our business, the most important thing is to function, to cover fixed costs, to be able to have a normal relations with the crew. So the volumes have increased on the press. And historically speaking, it's always been this way. If you know the history of Grupa Kety, we've never done too big of a charge because the profitability was dropping. We need to adapt our sales prices. And okay, you were making a couple of millions less, but you keep on producing, manufacturing and the company is doing its own thing in its own rhythm. That's the most important thing.

When the moment appears to improve or increase prices and improve margins, then we would easily do it. The worst thing that you can do is not to have the orders to fire 30% of the crew to make a big commotion out of it and then return to EBITDA like we've seen in EPS would be difficult. Our task is to give work to the process so that the plant can operate in its normal usual rhythm. No philosophy here, weaker market, worse prices basically.

[Roman Przybylski, executive]

And here, I would just like to emphasize that please have a look at the result of EPS as the reflection of the market situation. The market is weak. There is too much on the pressing plant. It's all connected with the automotive and construction industries. But against this background, our EPS plants are doing quite well. So we could say that these results are quite good against a weak market. This is how we should look at it.

[Michal Malina, executive]

Thank you. I can see that there are no new questions. So thank you to all the participants of today's presentation. Thank you to all the gentlemen. And now I would like to invite you to the next presentation in mid-December and where we will present estimates for the next year and extended information about the assumptions of our strategy. That's the plan. Of course, everything will be presented after the right approval from the Supervisory Board. Thank you very much once again.

[Rafal Warpechowski, executive]

Thank you.