Earnings call: Imerys reports solid Q3 growth, maintains full-year EBITDA outlook

Imerys (NK:PA), a global leader in specialty minerals, reported a strong third quarter in 2024, with CEO Alessandro Dazza announcing a 3.8% volume growth year-over-year.

The company saw organic revenue growth of 4.1% in Q3 and an adjusted EBITDA of $148 million for the quarter, contributing to a 3% increase to €533 million for the first nine months.

Despite divesting paper market assets and a challenging environment, Imerys confirmed its full-year adjusted EBITDA guidance between €670 million and €690 million.

The company's geographic diversification and resilient business model have helped it navigate weaknesses in the automotive and industrial sectors, particularly in Europe.

Key Takeaways

• Imerys reported a 3.8% volume growth year-over-year and a 4.1% organic revenue growth in Q3.
• Adjusted EBITDA for Q3 was $148 million, contributing to a nine-month total of €533 million, a 3% year-over-year increase.
• Full-year adjusted EBITDA guidance remains at €670 million to €690 million.
• Performance varied by market, with strength in consumer goods and weaknesses in automotive and industrial sectors.
• The company is optimistic about organic growth and market share gains, especially in the U.S.

Company Outlook

• Imerys maintains a full-year adjusted EBITDA target of €670 million to €690 million.
• The company's resilient business model, diversified portfolio, and geographic footprint are seen as key strengths.
• The outlook for the photovoltaic market is strong, with anticipation of a recovery despite current high inventories.
• A formal confirmation of a decision by a female judge on November 4th is expected to initiate a voting procedure on their reorganization plan.

Bearish Highlights

• Sales in the refractory, abrasive, and construction segment slightly decreased year-over-year due to weakened automotive sector activity in Brazil and low industrial activity in Europe.
• The Graphite & Carbon business experienced a 1% negative variation in Q3.
• The company remains prudent about Q4 due to ongoing negative macroeconomic conditions.

Bullish Highlights

• The lithium-ion battery market is recovering, supporting a 7% improvement in the Graphite & Carbon business from Q2 to Q3.
• The Quartz Corporation joint venture faced limited disruptions post-Hurricane Helene, with production normalizing.
• Imerys is gaining market share through innovation and strategic investments, particularly in the U.S.

Misses

• Adjusted EBITDA for Q3 was impacted by a €17 million hit from asset disposals and lower joint venture contributions.
• A non-cash loss of €302 million related to a translation reserve impacted net income but not shareholders' equity.

Q&A Highlights

• CEO Alessandro Dazza acknowledged the tough automotive market in Europe but showed confidence in mid-term prospects of joint ventures.
• CFO Sebastien Rouge addressed potential tax impacts in France, stating they would not be material to the company's operations.
• The company discussed logistics strategies and their limited impact on product economics, with a focus on transport efficiency.

Imerys has demonstrated resilience in the face of a challenging global market, posting solid growth figures and maintaining positive guidance for the year's end.

The company's strategic focus on diversified markets and geographic presence has allowed it to weather sector-specific downturns, particularly in the automotive industry.

With an optimistic outlook on organic growth and strategic market share gains, Imerys is positioning itself for continued success as it navigates the current economic landscape.

Full transcript - None (IMYSF) Q3 2024:

Operator: Good day and thank you for standing by. Welcome to the Imerys 2024 First Nine Months and Third Quarter Results. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Alessandro Dazza, CEO. Please go ahead.

Alessandro Dazza: Good evening to all of you. Sorry for my low voice, impacted by the weather in Paris. Thank you for joining us tonight to review Imerys Q3 and first nine months 2024 results. Next to me, this evening as usual, Sebastien Rouge, our CFO. And as usual, please let me start with some highlights of the quarter we just closed. I would say, a strong quarter for Imerys. Demand for our Specialty Minerals was up, thanks also to good market share gains, resulting in volumes and revenue growth compared to last year. Net of perimeter effect, and I remind you that the beginning of July, we divested our assets serving the paper market. So, net of this effect, volumes were up 3.8% versus last year after Q2, which was also up 2.7%. So, two quarters in a row with a strong performance, certainly outpacing the market. On the nine years, thanks to these two strong quarters, over the nine months, we are in positive territory volume-wise, again. Positive news also with regard to pricing. We announced, if you remember three months ago that the trend of prices would reverse and it has reversed in Q3. Prices are up 0.3% versus last year, and year-to-date, still slightly negative on the back of the Q1, which was still impacted by returning some surcharges to customers. On the profitability side, our adjusted EBITDA for the quarter was $148 million, reflecting the perimeter effect, the disposal of the assets serving the paper market in July and the lower contribution of joint ventures versus last year. It was announced as expected, and Sebastian will give you more details in this regard later on. The rest of the business, our Performance Minerals business, in particular, delivered a very strong performance, driven by strong volume recovery and a positive price/cost balance, and then we'll come back on this. For the first nine months, cumulated, we posted an adjusted EBITDA of €533 million, up 3% versus last year and representing a solid 19.2% margin, 150 bps higher than last year. Group overall generated nine months -- in the first nine months, €214 million of current net income, group share, up 11.3% versus last year, again, underlying a robust year-to-date performance at the end in an economic, macroeconomic and geopolitical environment, which remains challenging and uncertain. So, even more, I think, important is performance. Based on all this, we confirm our guidance with an adjusted EBITDA for the full year 2024 between €670 million and €690 million. On this following slide, we deep dive a little bit more on our sales performance. And you see the impact of perimeter highlighted here. Q3 revenue solid, as I said, 4.1% organic growth, following 2.1% last quarter -- versus last year, of course. Good performance coming from the U.S., which is holding up well. European activities still we've enjoyed also a light rebound, especially around consumer goods and Asia also doing okay. Weakness in, I would say, automotive and industrial markets really in Europe, which are lagging behind past performances. Prices reverted, as I said, to a positive trend in the third quarter as we have announced. Year-to-date, we are back in positive territory volume-wise, and just slightly negative on pricing. But overall, Imerys is organic -- growing organically again. If we now look at EBITDA performance, the graph on the left side highlights the significant improvement of Imerys EBITDA and adjusted EBITDA margin in the first nine months of the year, reaching 19.2%, as I said, up 140 bps versus last year. What are the drivers, stronger operating leverage and an improved year-to-date joint venture contribution, more than offsetting what we lost in terms of perimeter with our recent divestiture. On the right, if we focus on the evolution of prices and costs compared to last year, this graph illustrates, I think, very well our ability to adjust selling prices to cost inflation. In H1, when we had to give back some prices after the very high increase of last year, we could more than compensate with strong savings on the variable cost side. Now, that variable costs are catching up, our sales prices are catching up as well as we maintain, in all quarters, a positive price/cost contribution. I think this is clearly a strength of this group. Finally, I would say on the note on the right, I think it's remarkable to note the impact of our cost savings programs that generated €93 million of gross savings or gross gains since the beginning of the year, which is a 3.5% improvement in our cost base. If we deep dive a bit on our end markets rapidly and recent trends in Q3, construction, it remains subdued. And if you go a bit in detail, Q3 is in line of what we saw for the rest of the year. Weakness in Europe, in general. U.S. holding in terms of statistics, but thanks to infrastructure and nonresidential, which remains strong, whereas residential, which is our main market, Imerys' largest exposure, still subdued. Similar trends in Asia with China partially recovering, thanks to these government stimulus programs, but fundamentally in residential areas still lagging behind. Interest rates have started dropping, but we do expect a recovery of these end markets on the back of the large deficit in housing in all our main markets, being Europe, being the U.S. This could -- should, I would say, trigger solid demand for our mineral solutions in the quarters to come. Consumer goods holding well in the U.S., helped by a robust job market that continues, a bit flattish in Europe despite lower inflation. I think people are still saving in this uncertain economic environment. Growth in China also limited because of increased household savings and low confidence, but should, we believe, still be positive overall for the year. If we move to automotive, certainly, the biggest source of worries today. Excluding China, all other markets show clear weakness and unfortunately, this is expected to continue in the coming months and recent announcement for all the big car makers, I think, reflect this high incertitude for the months ahead. Europe posted probably a bit of a stronger drop and a negative outlook for the rest of the year. The same for Japan. North America is destocking. China is really the only one moving up, driven both by domestic demand and booming exports. Everybody expects H2 to be a bit lower, but still growing. Energy going well, positive trend overall. China investing massive in solar, a bit of higher industrial activity worldwide. So, overall, we look positively to this market. Electronics that experienced strong growth during COVID and then a negative catch-up is finally going back in the right direction. So, good progress in electric vehicle contrasted. Decreasing in Europe and the U.S., not only the expected growth is not there, the recent months showed a decrease compared to last year. We believe it's temporary, but it's a fact more than compensated by strong, strong Chinese market, production, domestic sales and exports booming. Last slide on the markets. I would say, industrial activity in general, remains weak in Europe, and we don't see short-term a significant rebound. It held well in the U.S. It is slowing down towards the end of the year, as economists tell us, but it remains still at good level. And it's okay in China. These programs from the government are starting to show an impact and exports remain very strong. Iron and steel, it's a market that remains under pressure. Europe, you see a plus for the quarter, but it's really because the very, very low comparison of last year. I think iron and steel makers are not particularly happy in Europe with current level of demand. U.S. is low holding, a bit more protected. In China, that has been exporting a lot comes also under pressure, both on the export side, but also a weak construction market that is a big user of steel and we expect this trend to remain in China for the coming quarters. I hand over to Sebastian for more details on our financial performance of the quarter and the nine months.

Sebastien Rouge: Thank you, Alessandro. Good evening everyone. We will go through some of the key aspects of our financial performance. You will see, for the first time in our results, the full effect of the disposal of the assets serving the paper market. An important aspect of the release is to make sure that this perimeter effect does not overshadow the good performance of Imerys' underlying business. If we start by revenue on the third quarter, the perimeter effect we mentioned, minus €83 million in Q3 is mostly related to the assets serving paper. You will note a continuing recovery of volumes, up 3.8% in the quarter, and they are now positive year-to-date. The price also continued to normalize after two years of high inflation. Even with market-driven adjustments, as expected and as announced, prices were positive in Q3 as compared to last year. All in all, for the nine months, sales reached €2.8 billion and show positive organic growth for the first nine months of the year, and I would say, for the first time of the year as well. If we look now into more details at our three business segments and the different business dynamics, beginning with our biggest segment, Performance Minerals. In Americas, the business was up 11.6% organically in the third quarter. It benefits from strong volumes, especially in consumer goods and market share gains all coupled with positive prices. In EMEA and APAC, sales reached €308 million in Q3, also an organic growth of 5.7% as compared to last year. Plastics performed well as we also managed to gain some market share. The segment also benefited from the ramp-up of our new plant in China dedicated to light-weighting solutions for automotive polymers. Filtration and life science improved as well. Pricing is back to a positive trend. If we look at the global picture, the performance activity shows the solid performance with 8.2% organic growth in the third quarter, and it drives a 2% organic growth for the first nine months of the year, where also we see the increased dynamic in the Americas. If we look now at our solutions for refractory, abrasive, and construction. The segment recorded sales of €284 million in Q3 with slight decrease like-for-like as compared to last year. Volumes were impacted by the weakness of the automotive sector directly impacting our Brazil activity. European industrial activity as mentioned by Alessandro was low in the last three months, whereas the U.S. demand was actually more solid. In the same period, prices were almost stable, a good achievement in a deflationary environment. Since the beginning of 2024, generated more than €900 million of sales with an organic variation of minus 1.6%. Now, we complete this segment review with the solutions for the energy transition. Our Graphite & Carbon business posted a 1% negative variation in Q3 versus last year. But the good news is that it improved sequentially plus 7% as compared to Q2 of 2024. The business was supported by the lithium-ion battery market improvement as destocking in the value chain is almost over. It is partially offset by some price adjustment, highlighting the competitiveness of this market. Just one word about the Quartz Corporation, our high purity quartz joint venture, we observed only limited disruptions after the Hurricane Helene hits the U.S. operation. The production is gradually coming back to normal in the U.S. and we have no supply interruption to our customers. We still expect a strong growth of the overall photovoltaic market even if in the short-term, the value chain is impacted by high inventories. Let's look now at the group profitability as a whole. In the third quarter, first, adjusted EBITDA reached €148 million, down versus last year, principally due to a perimeter effect of minus €17 million, following the disposal of our assets serving paper. We also, as we announced, had a lower contribution of our joint ventures in Q3, a variation also of minus €17 million as compared to Q3 2023. It means that the adjusted EBITDA of overall our underlying business increased in Q3 by €10 million, thanks in particular to the good performance of our Performance business. If we now look at the profitability for the first nine months of 2024, adjusted EBITDA reached €532 million, an increase of 3% versus last year. It represents a 19.2% margin on sales, which has to be compared with 17.8% in 2023. It is worth mentioning the positive evolution of variable costs that you see on the graph, lower than last year and also more predictable. Forward prices for freight and energy give us a better visibility to the input costs and enable our businesses to normalize the contractual relationship with their customers. If we look now at the other elements of our income statement for the first nine months of 2024 driven by the increase of EBITDA, the current operating income improved by 9.8%, reaching €330 million or 11.9% of sales. With tax expenses and financial expenses very close to last year, the current net income from continuing operation landed at €214 million, up 11% versus last year. The really exceptional elements of our P&L are the net other operating expenses that represented €357 million mostly coming from the translation reserve associated with the assets serving the paper market that we divested in July. The translation reserve, we already spoke about that, is largely related to the historic devaluation of the Brazilian real since the acquisition of these assets decades ago. As a remainder, and we announced that already at closing, this translation reserve has been recycled to the income statement as other income and expenses in accordance with applicable IFRS standard. We remind you that this is a non-cash loss of €302 million, and even if it drives down the net income, it does not have any impact on the group shareholders equity and then no impact on the solidity of our balance sheet. I now hand over to Alessandro for the outlook and the questions.

Alessandro Dazza: Thank you. So, let me wrap-up the short presentation with our outlook for the coming months. We continue living for sure in a challenging environment, but Imerys has proven with its track record of resilience in challenging environment that we can deliver. We have shown solid operating performance. We have a diversified portfolio of Specialty Minerals, and we have a geographical large footprint. All this makes us confident that we will deliver our adjusted EBITDA target for the full year, which I remember, €670 million, €690 million. Thank you very much. And I suggest we open the floor to questions.

Operator: Thank you. [Operator Instructions] The first question comes from the line of Ebrahim Homani from CIC. Please go ahead, your line is now open.

Ebrahim Homani: Hello Alessandro, hello Sebastian. Thank you for taking my question. I have three, if I may. The first one is about the guidance. Am I too optimistic if I say that the size of the guidance is now closer than it was in H1 given your numbers? And my second question is about TQC. Could we have any update on the situation as solar panel price seems to remain weak? And my last question is about the tariff litigation in the U.S., if we can have an update on that also?

Alessandro Dazza: Yes, Ebrahim, with pleasure. We've given the guidance and we confirm our guidance without further comment on the guidance itself, which remains a range. And probably your second question addresses also part of the answer why there is a range because businesses are subject to markets. And we have seen, for instance, in our existing joint venture on Quartz that we have had a weak third quarter on the back of high inventory, just consequently destocking, especially on the solar market. Semiconductors holding well. Optical fiber, other markets are doing really well. Solar, which itself is doing very well with double-digit growth, very strong and announcement to that are even more positive in terms of expected investments in the photovoltaic world and installations going forward. We have to live through a destocking. As you know, the market is largely in China. Therefore, our visibility remains limited, which, by definition, gives a certain uncertainty on the timing of recovery and restart, but not if it will restart. It's a great market, it will deliver, let's live through the destocking. Specifically on the on our joint business. Fortunately, the hurricane has done limited damage, especially on people, nobody was hurt in our employees or families. There had been some material damage, especially around infrastructure. We are working to restart fully the production. It is limited. Unfortunately, our dual set up U.S. and Norway allow us also to guarantee full supply to our customers, having some inventories in the value chain and in Norway, so we have reassured our customers that we will be up and running certainly before there is any issue in terms of supply. We don't comment on prices as we never did, but the information that came up in the news and in certain comments from market player around the summer were more relating to the lower quality quartz, let's say, the lower purity, which is typically a sand, is not really the market where we play. We play in the high purity quartz, 5x9, which is something else. It's not, let's say, a commodity, but it's really a high added value that has its own rules. And the third one is around talc. If you recall our last communication, we have two deadlines coming between July and today. One was the potential settlement agreement reached by the North American talc entities with Johnson & Johnson (NYSE:JNJ), which was signed, filed, and approved on October 8. It's one of the many agreements that are part of the overall plan of reorganization. That's the name, which has been filed with the court and the hearing took place yesterday -- the day before yesterday and yesterday. Today was still an option to attach another day. There was no hearing today. We are waiting for the judgment of the judge. Once again, we remain confident that these agreements will stand the reviews of the court and potential oppositions. And normally, if and once approved, should bring us to the next step, which is a voting process that theoretically should be launched very soon if approved. We were confident a month ago. We are confident today and we look forward to the decision. It's a matter of days. The judge will publish it in the next few days. And then the process continues because the voting takes 60 days and there will be a calendar -- an estimated calendar, but everything moves along as we have announced since I would say, beginning of December.

Ebrahim Homani: Thank you very much Alessandro.

Alessandro Dazza: Thank you, Ebrahim.

Operator: Thank you. We will now take our next question. And the next question comes from the line of Sven Edelfelt from ODDO BHF. Please go ahead, your line is now open.

Sven Edelfelt: Yes, good evening. Gentlemen. Thank you for taking my question. I would have three, if I may. So, the first one is on the asbestos actually. If I'm not mistaken, there has been a document published today on the Delaware Court on that document refer to a date, which is on the 4th of November for the judge to approve or launch the vote. So, in this document, I can even find the ballot for plaintiffs to vote. So, everything is very valuable. So correct me if I'm wrong, but this is very positive on the -- to some extent, I mean, you didn't mention this Alessandro in the answer to a previous question. So, that's the first question. And then I would have two, the other one. The next one is on the Quartz Corporation. After the hurricane, as you had some orders from Chinese customers, have you been able to raise price potentially given there has been many damage to Spruce Pine mine as well as the logistics. So, maybe if you can elaborate a bit on that would be great. Lastly, how should we view the organic trends in the coming quarters? Usually, Imerys, as always, a very strong rebound, let's say, after a certain period of weakness. And we had like two years of very strong destocking effect this time. So, how should you view the coming quarter? Is automotive weakness a reason to believe the rebound should be different for you this time? Thank you.

Alessandro Dazza: Thank you, Sven, for your questions. What you referred to is -- let's start on the Chapter 11 process. What you referred to are probably some minutes that have been already published. That, for sure, are rather positive because what you say, it means fundamentally an approval and of course, we have read and we assisted to the audience. An approval in principle of the plan and therefore, even the starting date of the voting. We have been -- we have learned to be cautious on our -- on this topic since given our past experiences, therefore, we really would like to stick for a formal confirmation to the moment the judge publishes and enters in the register her decision because she's a female judge. But for sure, the hearing went definitely well. So, I hope all you said will be confirmed. The 4th of November is next week, Monday. So, I hope all of this will be formally confirmed through a formal entry. And therefore, then we will, for sure, also communicate. I believe that starting a voting procedure, although it's not the end because the end is positive vote, but I think it's an important information, therefore, if the plan of reorganization is published, and the voting process starts, we will definitely issue a small communication for the market to be aware, which could be as soon as the beginning of next week, definitely positive. On TQC, once again, we don't comment on prices. But fundamentally, I think both the main player in these markets and ourselves through our joint venture, we have reassured the markets that -- also thanks to relatively high inventories today is because of low activity. We did not -- we will not cause any disruption in the market. One could say it is a pity, you could profit. The reality is the market is relatively soft at the moment, as we -- as I said before and as you can see in the numbers, because you can interpret through the profitability of the company -- is a soft market. We have our main plant in Norway. Therefore, we can supply the market. So, the market -- there was nervousness around the hurricane because the question is, is total damage, is a long, long-term damage or is something that can be fixed. Unfortunately, is this the case for the people, for the area and for our plants is something that can be fixed in a reasonable time. And therefore, I believe the market will not suffer shortages, which, at the end, is the best. People to rely on this product is key. It's good if it's available and people don't have to worry. So, we will not abuse the situation. On the contrary, we will help our customers to continue producing without interruptions. And it looks like it's going in the right direction. On the third one on organic growth, typically after a crisis, there is a rebound. So, it's normal. I think Imerys is sensitive to volumes because we have a relatively high leverage. So, a rebound in volumes for us can be very profitable. We have done two good quarters. I think if you look at peers or similar companies, similar market publishing in these days before and after us, there are very few that post organic growth of 4%, driven by volume because the market around us is not particularly buoyant. So, we are doing a good job. We are gaining market share. I think we are in good markets today after the work we have been doing in the last three years and we have products that probably grow more than the market because of penetration, more usage. I don't think we are yet in a rebound. If you look at automotive, you mentioned it, automotive is a mess. So, we can only get better. Maybe will stay slow. Maybe we go down still a bit further, but we can only get better. Housing, construction, it can only get better. It will, as rates fall. We do expect a significant rebound in U.S., France, Germany, and Italy. The need for houses is very high. So, the moment that people believe in rebound, in normal mortgages, we should see this rebound. So, the way I interpreted is the world is still at slow pace. We have, of course, institutions and consultants that tell us a forecast for the future of the economy. Everybody points at a rebound in 2025. But six months ago, they told that the rebound will be at the end of 2024. I think the end of 2024 is worse than the beginning of 2024. So, economy is what it is, but we are living, I think, uncertain times. They normally should go back to a more solid healthy growth with volumes, Imerys will do very well. It's doing well in a difficult market. It will do very well when we believe it. But we don't have a crystal ball. Is it Q1 2025, I doubt it. Is in Q2? Maybe it will move. Is it Q3, Q4? It's ahead of us. We need confidence. We need the interest rates, we need a bit more certainties, the geopolitical situation, the American elections. So, there are a lot of things that are holding back the confidence of consumers, of investors, of companies that hold back their investments. But we've been holding for a while. There are needs. So, it will come back strongly. And then I hope that we materialize what you say, strong recovery after a slow cycle. But I'm very happy what the company has delivered the last two quarters, frankly. Thank you, Sven. I hope I addressed it.

Sven Edelfelt: Okay. Thank you, Alessandro. Let's light candle for 4th of November. Thank you. Have a good one.

Operator: Thank you. We will now take our next question. And the next question comes from the line of Aron Ceccarelli from Berenberg. Please go ahead, your line is now open.

Aron Ceccarelli: Hello Alessandro, hello Sebastian. Good evening. I have three questions. My first one is in -- is about the U.S. Maybe can you unpack a little bit the performance in the U.S. in Performance Minerals because clearly very strong volume growth driven by consumer goods, but we are not seeing many companies in consumer goods growing these days so fast. So, I would like to maybe understand what's driving that? The second one would be on the exit rate of Q3 and how -- maybe if you can provide just some comments around October. And I remember last time we spoke, you were clearly a little bit more cautious, as everybody, I would say, around Q4. I would like to understand maybe if that feelings have remained the same or the situation from a business perspective has really improved. And what that means for pricing going into Q4? The final one is on synthetic graphite and carbon black. I think the Q2 results were quite confident on a rebound of this business. I think we saw the volume growing and not the pricing. So, how should we think about revenue development into the end of the year for this part of the business? Thank you.

Alessandro Dazza: Starting on the U.S. It's growing because we're good. Very simple. I think we have been doing a good job. In terms of market share, we have done a bit of innovation. We have invested in some capacities in markets where we see growth. And what we've been telling now for several months is starting to be visible. And I'm not surprised when you say other companies don't show this growth. I'm not surprised. So, it's really partly market share. There is a bit of innovation. There are many new products. There are markets that are growing faster. Don't forget the U.S. has been protected. So, you have some investments going on to replace typically Chinese imports. So, if you are in the good markets, that's what you address. And that's what we really see coming. What is ahead of us, Q4. You're right, when we announced in July, it was quite euphoric. After the summer, it was very -- it was prudent or more prudent because all the macroeconomic news we heard from July on were negative. What we hear today remains quite negative, frankly. We don't here -- look at automotive, as I said before. So, I continue to remain prudent, but it doesn't mean that Imerys will not grow. It was prudent for Q3, and we delivered plus 4%. So, I think we can outpace markets. Of course, if markets grow for us is 2 times good. But I remain confident that this trend that we have seen in Q2 -- we have seen in Q3 will continue. There is no reason, good market, good products, good commercial actions. So, I hope we don't see a total, as you said, 4th of November, but I don't think the 4th of November will change the world. I think the two candidates stands, especially from an economic point of view, I don't see these big differences. If the government will be split as the last polls indicate, there will not be major changes of policies, which means good for us, stability, interest rates down, the economy will be good, even as we go. Don't ask me a forecast for Q4, as I didn't do it in Q3, I will not do it in Q4. If I look at what's -- we are on the 30th of October, we have not closed the month, but I don't see worries. I don't see a collapse. On the contrary, I see a trend which is not a solid rebound, but I see Imerys that continues growing. We will see November, we will see December. Pricing we entered the year, we said we have to give back something to customers. We've done it. We said, as the year we go on, the comparison to last year with smoothen plus some price increases will be transformed -- sorry, some surcharges will be transformed in price increases because costs are growing. Labor is growing. Some costs are growing. So, we will pass in positive territory. We delivered Q3, we are positive. Q4, we will be positive. I'm sure. And last is around synthetic graphite and carbon black. Destocking, as Sebastian said, largely done. We only see some spots. So, single customer that are less successful with the batteries or with the end electric vehicles that still have a bit of inventories, but we are back on solid organic growth. Basically we are flat on sales in Q3, minus 1%, but we have given back last year significant pricing. So, volumes are up a lot, very solid, and it will continue. We are the preferred supplier. One product may be better than the other, one area, geographic area better than the other because of these pockets of less successful battery makers or EV makers, but the trend is back to growth. Even with Europe softening and America softening. China, I think it was the month of August. It was the first time in history that China sold more EVs than combustion cars. And this trend is not there to reverse. It will continue. So, on the mid, long term or even the short one, I think we will continue to grow.

Aron Ceccarelli: Thank you very much.

Alessandro Dazza: Thank you.

Operator: Thank you. We will now take our next question. And the next question comes from the line of Jason Fairclough from Bank of America. Please go ahead, your line is now open.

Jason Fairclough: [Foreign Language] Thanks for the call tonight. Look, two quick questions for me. One is maybe a simple one on the JVs. And the second one is just on your outlook commentary, particularly around autos. So, just on the JVs, I wanted to just check my numbers. Is it correct that the quarterly progression on the contribution from JVs from Q1 through Q3 goes €55 million, €28 million, and then €5 million. I guess my question here is, how do we think about the progression from here? And did you maybe get ahead of yourselves when you change the reporting on these businesses after Q1? Second question then is just on autos and especially for Europe. It looks bad. I mean, globally, it looks bad, but Europe, it looks really, really bad, like a different level of bad. We have VW talking about closing factories in Germany for the first time ever. So, I guess how are you thinking about capital allocation to the European businesses that service European autos? Would you actually consider shrinking this footprint?

Alessandro Dazza: ZZZZZZZZZZZ So, I start with the second. What you say is totally true. So, in terms of market expectation, Germany, Volkswagen (ETR:VOWG_p) is all true. I see the announcement of Volkswagen rather as a positive one, time to wake up. If this industry in Europe wants to remain competitive, you have to look for efficiencies. So, in a declining market, if you don't address your costs, look at Imerys last year, if you don't address your costs, you're not going to be competitive, it's the beginning of the end. So, as much as it's a hard decision and it will have an impact on social impact, if you don't do it, you're a loser and there is no future. So, they will not produce less cars because they close three factories. They will produce the cars they need to produce in other factories, optimizing their costs, and I hope one day to be more competitive. So, it's the way business works. So, that's it and we'll live through this one. In terms of allocation, first message is if you have a mine, it's difficult to move it, impossible to move it before fundamentally where we are. Products are used in different markets. And if you look at our typical pie of end markets, automotive represents around 12% and its worldwide. Our last big investment greenfield was minerals for polymers in China because we saw that market being more promising than the European one, and that's where we put our money three, four years ago, started last year, ramping up is one of the positive volume effects that you see. We were with the right product in the right market, so the right decision. Would you be -- would I build a greenfield plant in Europe today to serve the automotive? I guess, the week after I have a new job, to be very straight. It would be a very risky investment. So, indirectly, the answer to your question is yes, you put your money, your capital allocation where you see good businesses. And I think Imerys today has done the job to clean up. We have good businesses. And then where the trends are. We invested a lot, Graphite & Carbon -- carbon black and graphite because batteries will be with hiccups, up and downs, will be the technology of the future growth. And now we do also a bit of geography and frankly, U.S. has shown to be very dynamic. So, we are very glad to have a significant presence. We are looking at Asia more, frankly, because we expect the future to be a steadier and we are very cautious in Europe. It's a fact. Today, Europe is, from a competitive point of view, under pressure. So, we will be more careful. But yes, it's part of what you do when you run a business, allocation is the first -- and looking at specifically figures, Sebastien, I think Jason's figures are?

Sebastien Rouge: Yes, the figures themselves are right. I will remind that it's -- we have several JVs within the figures, but one is bigger than the other, there is no doubt. At the end of the day, we communicated on the fact that Q1 was a little bit out of the ordinary on the positive side and we remain confident that it was a good thing to change a little bit the way we present the numbers because it has forced everyone to highlight the value of the JVs that was a little bit transparent before we were doing so. So, somewhere, we pay the price when it goes up and down. But down the road, we are very confident of the midterm prospects of these investments. And we are sure that the way we present, nobody will forget. So, as Alessandro says, it's not a matter of -- if it will rebound, it's a matter of when. And we want to make sure that you take into consideration the value of this business when you look at Imerys as a whole.

Alessandro Dazza: It's a matter of transparency. So, we want to be as transparent. These both businesses -- Solutions for Energy Transition are both growing fast, net of destocking. So, I think it was adequate to give them the proper visibility and recognition because they will be a big pillar of Imerys' future growth going forward. Their percentage we grow and by the way, Jason, when you're at €5 million, it's difficult to go down. The probability that you go up is probably higher because below €5 million, there is not much left. Thank you.

Jason Fairclough: That's funny. I appreciate the color there, Alessandro. How do we think about the run rate, the normal level of profitability in this business? Is it normal? Or is it just going to be all over the place? Is this €20 million, €25 million a quarter?

Alessandro Dazza: We don't do forecast on specific businesses and certainly not on this one at this time. So, we'll not answer this question, Jason. As I said, I think what is important to retain exposure is, number one, photovoltaic; number two, semiconductors and then smaller markets, optical fiber and so on. The end markets are great markets. So, you can have a hiccup in the middle because of a destocking or high inventories. But fundamentally one day, we should see in -- on the back of a hype, you tend to overproduce or maybe overstock once you learn, and the same was for EVs three, four years ago. Normally, we should see in the future a much more stable trend, more structured, and consolidation comes to the market. So, the level time will tell, but I do not expect this volatility going forward because the end market is not volatile by definition. It's a straight curve up. We ourselves are investing massively in solar. China is investing hundreds of -- millions of gigawatt hours, all governments, Africa, people see the future of electrification in Africa will go straight to solar because you don't need big grids, you don't need big installations. So, there is a potential for these markets for me that it's great. It's just immense. Thank you, Jason.

Jason Fairclough: Okay. [Foreign Language] Thanks everybody.

Operator: Thank you. We will now take our next question. And the next question comes from the line of Laurent Daniel François Runacher from LRESG Advisory. Please go ahead, your line is now open.

Laurent Runacher: Hi gentlemen. Congratulations on your results. Thank you for taking my questions. Many have been already asked. So, I will try to be imaginative. I would like to focus once again on TQC because when I've been looking at what went on the region on Spruce Pine location? I discovered that the railway, which is supplying -- the railway that is used to transport the materials is totally out of order. So, I'd like to understand currently if we assume that the plants are ongoing and able to produce like before the hurricane, very -- still a very large problem of logistics because the railway is destroyed. There is one bridge, which is totally destroyed, which was supporting the railway line. So, I just want to understand that now maybe it's more difficult to transport the quartz from Spruce Pine, you need maybe to take a road. How do -- does it to cut the long duration, add to cost. And maybe you have a better position because you have a dual production site. And you can use without additional costs, or the stock you have in Norway versus your main competitor, Carl Bechem [ph], which have all their staff in Spruce Pine. Is it a fair way to see the market. Is there a big disruption in terms of logistics or it's not so costly to transport from Spruce Pine? This is the first question. The second is relating to French taxes. So, we understand that the French companies will enjoy the pleasure to have an exceptional tax in 2025. I'd like to know if in your case, it is material or not so much because at the end of the day, you've got a very international business and many customers are located in France. So, I'd like to understand if this additional tax -- this higher tax rate would hurt you that much. So, these are basically the first questions.

Alessandro Dazza: Thank you. I will let Sebastien address the tax -- potential tax impact. On logistics to commence, what you say, for sure, it is true, having two separate locations. We definitely have a natural hedge because you have containers on the water going to Norway and you have, by definition, a buffer inventories in Norway for your production. So, for sure, for customer that looks at our business, at our joint venture, definitely will have more -- we will feel more alleged and more comfortable with the setup we have because we were not only the place that was hit. Then, as I said before, we do believe that the damages remain limited. There should be no disruption and therefore, everything will be okay. On the logistics, I know a lot of my plans. I'm not sure in this specific case, if we transport by train or by train only, you can truck, I'm sure if the railway is broken, but I really cannot tell you how we transport today. What I know is a high-value product -- high added value product. So, I think changing from truck to train should not kill the economics of this product. So I don't think logistics should be both for us and our competitors should not be the one killing the business. Since I don’t know the answer, I will make sure that I understand how we transport. And on the tax--?

Sebastien Rouge: On the tax, first of all, it's also a long journey to follow exactly what will come out of the 2025 tax flow. Overall, it cannot be material as I think as you entered into the question, France is less than 7% of our overall activity. On the other side, that's our headquarters. So we've got more than 7% of the cost. So, obviously we pay a fair amount of tax in France, but not that much income tax. So, even if there is an extra load, there is no reason it becomes material at your level.

Laurent Runacher: Thank you very much for your question [ph]. I've got the last one. The former questions were related to automotive. But in my view, the biggest share of your client industry is construction in the tune of 40% of yours sales. So, is it fair to say that mainly half of that chunk of 40% has not recovered already because residential is very weak currently. So, in a way, it's a good news because with interest going down, you've got a big engine of a recovery there that has not been currently light on, whilst you already enjoy something like 4% like-for-like growth?

Alessandro Dazza: Thank you, Laurent, for your last question. Yes, construction is our main market, as we always say, between, say, 38% and 40%, and we are largely exposed to residential, as we said. So, infrastructure is a smaller part. I would say -- I would guess it's around 70% residential. So, housing, that's a house and apartment takes a lot of minerals. How much is recovered? I don't know. Fundamentally, we are still living in -- among the lowest levels in terms of construction. I think France a day or two days ago announced the lowest level in 20 years. So, it can only go up. That's what I was saying. It can only go up and still we are doing well. So, it's two strong messages. It can only go up, and we are still doing well. The U.S. was less severely impacted, I have to say. Still, they had several quarters of negative housing permits and new starts. We see the trend turning. We're by far, not at the level we were a year ago or year and a half ago. But again, that's why there is potential to grow and it will grow with interest rates. It's very related. So, for me, how much is recovered, I don't know. There is a big recovery potential ahead of us. And in the meantime, we enjoy the work we do in terms of new products, penetration, in market shares. So, thank you very much Laurent.

Operator: Thank you. We will now take our next question. And the next question comes from the line of Auguste Deryckx from Kepler Cheuvreux. Please go ahead, your line is now open.

Auguste Lienart: Hi, good evening to all. So, I have two questions. First, you mentioned a gain in market share, which has led to an increase in volume. Are you able to quantify how much of the 3.8% volume increase come from growth in the end markets and what come from the gain in market share or at least some order of magnitude? And my second question is on solar. So, if we look at the results from solar panel manufacturer or even the communication from Mersen, the figures for the third quarter are poor and the outlook is also poor. So, can you help me to make the link between this element and you rather encouraging communication concerning the recovery of quartz? Thanks.

Alessandro Dazza: I'm afraid that we disappoint you a bit, Auguste, on the first one, very complicated because you have different markets, different geographies and that makes it very difficult to really try to quantify. And you have a number, 3.8% volume growth, how much is each geography. So, I -- difficult really. And it would be -- and I don't know, it would be a total guess. For me, first we track for each single market, the competitive landscape, and it goes down really to product and market, the competitive landscape, market share gains and market share losses because we also lose, we are not only winners and the net result. What it comes up from the analysis of the different markets is that we are, at the moment, gaining shares. So, that's the internal tracking we do. And if you remember a year ago or a bit less than that, I said exactly the same in the other direction. We have lost some market shares in full transparency, against Asian imports when electricity or energy in Europe was extremely high. So, we are fighting back with a normal level of energy and in other markets independently from energy. So, that's so far from my transparency really, what I can say. And the other indicator, if you look really at comparable businesses, customers or peers doing the same, some are listed, some published, when you see negative volume and you see positive volume in Imerys, probably there is a market share gain. So, that's -- but it is very difficult to quantify. And the second one on photovoltaic on solar. I've not seen the communication for Mersen, but if Mersen sells components to the photovoltaic market, as for sure, the same mission as we have today, selling high purity quartz with photovoltaic market. There is limited production. So, the producer of photovoltaic panels, modules, cells, panels, as you want to call them, have slow down significantly because of high inventories in finished products. So, I'm not surprised if Mersen says we are down, and we don't see when for the very same reason, as I said before, what -- its public knowledge as well is installations of photovoltaic. I think we are close to 20% growth. It's booming. So, it will eat these inventories, and then we will see coming back all the way up the value chain for us and for Mersen. So, it's two different things.

Sebastien Rouge: Not the same time horizon as well.

Alessandro Dazza: It's two different things, one is finished products and one is upstream, our components, our minerals. I don't know what Mersen sells is probably around their connectors, electric. They have a big business in electro. So, I guess it's around the connection, but it's the same. They give components or raw materials to build a panel. If you don't build panels because you have so many stocks, their business must be down as ours. It's, by the way, a confirmation that is not Imerys, but it's an inventory issue in the value chain or in the production chain. Thank you, Auguste.

Auguste Lienart: Thanks. Get well soon Alessandro. Bye, bye.

Alessandro Dazza: Thank you. Bye.

Operator: Thank you. As there are no further questions, I would now like to hand back to Alessandro Dazza for any closing remarks.

Alessandro Dazza: I think you never asked so many questions the night, I was pretty sick. So, I will remember in the future. No, I thank you very much for the great interest you show in Imerys, it's very appreciated. And thank you very much for the evening and talk to you soon.

Sebastien Rouge: Thank you. Bye, bye.

Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.

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