Earnings call transcript: Altria Group’s strong 2024 growth and future outlook

Altria Group (Market Cap: $9.57B) reported robust financial performance for the full year 2024, with significant increases in revenue, EBITDA, and net profit. The company achieved a 9% rise in revenues to €218 million, aligning with its trailing twelve-month revenue growth of 8.66%. EBITDA surged by 59%, reaching €218 million, reflecting a 26% margin compared to 17% in 2023. Net profit doubled to €107 million. The company also reduced its net debt by 40% to €214 million, achieving a net debt to EBITDA ratio of 1x. According to InvestingPro analysis, the stock appears overvalued at current levels, with a P/E ratio of 660.3x.

Key Takeaways

• Full year 2024 revenues increased by 9% to €218 million.
• EBITDA margin improved to 26% from 17% in 2023.
• Net profit doubled, reaching €107 million.
• Net debt was reduced by 40%, enhancing financial stability.

Company Performance

Altria Group demonstrated strong financial results in 2024, driven by increased revenues and improved operational efficiencies. The company’s strategic focus on reducing costs and leveraging market opportunities contributed to its robust performance. Industry trends, such as stable wood prices and decreasing chemical prices, supported the company’s cost management efforts. Additionally, global pulp demand showed mixed results, with dissolving pulp demand increasing by 6.3%.

Financial Highlights

• Revenue: €218 million, up 9% from the previous year.
• EBITDA: €218 million, a 59% increase year-over-year.
• Net Profit: €107 million, doubled from the previous year.
• Net Debt: Reduced by 40% to €214 million.

Outlook & Guidance

Looking ahead to 2025, Altria Group anticipates stable cash costs and plans for capital expenditures between €50-60 million. The company expects to produce approximately 50,000 tons of dissolving pulp. Additionally, there is potential for pulp prices to increase from €1,000 to €1,220 per ton. The Gamma Project is pending an environmental license, which could further enhance the company’s growth prospects. InvestingPro data shows the company maintains a healthy financial position with a Current Ratio of 1.61 and an impressive Altman Z-Score of 10.78, indicating strong financial stability. The next earnings report is scheduled for May 1, 2025.

Executive Commentary

Josef Josepina, CEO, stated, "We expect to have further progress on our growth projects during 2025," indicating a focus on strategic initiatives to drive future growth. Miguel Silva, CFO, emphasized the company’s cost management strategy by stating, "We’ve been managing very strictly our fixed costs." These comments reflect the company’s commitment to maintaining financial discipline while pursuing growth opportunities.

Risks and Challenges

• Potential impacts of global trade tensions on market demand.
• Fluctuations in pulp prices and raw material costs.
• Regulatory challenges related to environmental licenses.
• Economic volatility in key markets like China.

The earnings call highlighted Altria Group’s strong financial performance in 2024 and its strategic initiatives for future growth. The company remains focused on cost management, market expansion, and innovation to sustain its competitive position.

Full transcript - Altera Corporation (ALTR) Q4 2024:

Conference Moderator: Good morning. We welcome you to the Altria Full Year twenty twenty four Results Conference Call. During the presentation, all participants will be on a listen only mode. There will be an opportunity to ask questions after the presentation. If you would like to ask a question during the Q and A session, you may do so by pressing the star key followed by five on your telephone keypad.

If you are experiencing any difficulty in hearing the conference at any time, please make sure you have your headset fully plugged in or, alternatively, please try calling from a different device. I will now hand the conference over to Mr. Riese Esario, Head of IR of the Altria Group. Now your line is open.

Riese Esario, Head of Investor Relations, Altria Group: Good morning. Thank you for joining us today for Altria’s twenty twenty four results conference call. We’ll review our financial performance, market conditions, operational highlights, future perspectives, followed by Q and A at the end. To do this, we have with us today Mr. Josepina, the Group’s CEO and Mr.

Miguel Silva, the Group’s CFO. I’ll hand over now to Mr. Josepina.

Josef Josepina, CEO, Altria Group: Good morning everyone and thank you for attending Altria’s conference call. Rolly is pleased to host this call with investors and analysts to share Altria’s results and talk about the market environment and future development. If you turn to Slide number two, we comment on some of the main highlights of 2024 and the fourth quarter of twenty twenty four. Global pulp demand decreased by 1%. The hardwood pulp demand registered an increase of 1% after record in 2020.

China was more volatile with the strongest start of the year followed by a slowdown by midyear and a take up near year end. Europe and North America were more stable with a positive evolution during the whole of 2024. Demand for dissolving pulp continues sounds with high single digit positive trends in both volumes and prices. EBITDA increased by 59% to €218,000,000 in 2024, a margin of 26% that compares to 17% in 2023. A favorable free cash flow generation allowed for 40% net debt reduction in the year to EUR $214,000,000, placing our net debt to EBITDA ratio at one time.

On diversification and growth projects front, and as already mentioned in the previous quarter, Altria has developed the acetic acid and fruitful project at our industrial unit Kaima with an estimated IRR above 15% and an EBITDA margin near 80%. The launch is expected for the first quarter of twenty twenty six. At Biotech, the full migration of BHKP production into dissolving pulp by end of twenty twenty six is going to have according to plan. On the Gamma project, we had some positive news with the Schoonzer de Galicia issuing a favorable environmental declaration about the project confirming it fully complies with all required environmental regulations. Additionally, Altria signed a contract to acquire Granalia Forest and Granalia Logistics, a strategic step to increase our presence in Galicia on the fiber supply side.

Moving on to Slide three, global pulp demand was slightly negative in 2024, but hardwood pulp ended 2024 with a positive evolution after being negative in the nine months through 2024. Europe and North America posted stable double digit growth numbers through 2024, while China posted a negative evolution, but improving the last quarter of the year. The multi year trends of hardwood gaining market share to softwood continues and may increase further with the expected challenges for Canadian softwood producers. In Slide number four, global demand for dissolving pulp continues to grow well above demand for paper pulp with volumes increasing by 6.3%. In Slide number five, inventories at European ports have been stable during the second half of twenty twenty four in line with the historic average of 1,400,000 to 1,500,000 tons.

In Slide number six, average fixed prices for hardwood pulp in Europe were 18% higher in 2024 versus 2023, while 20% higher in the fourth quarter versus the same quarter the previous year. However, the peak price has reached in July at $14.40 dollars per tonne and has corrected following the same trend in China with an average correction of 20% during the fourth quarter of twenty twenty four comparing with the third quarter. Pulp prices were at a level of USD1000 at the December. If you turn now to Slide number seven, we see dissolving pulp prices with a stable and low volatile trend having grown by 9% in the quarter year on year and 1% in the last quarter of the year versus the same quarter versus the previous quarter in 2024. These prices are net and sourced from China, so now it’s fully compatible to the European BHQP prices that includes commercial discounts.

At Slide number eight, we show our production and volume sold in 2024, which are quite stable when comparing with the previous year. Going into Slide nine, volumes sold maintain a similar pattern when looking at sales per region, while the end use is led by tissue with resolving pulp slowly increasing its weight. I’ll now like to pass the call to Miguel Silva, the group’s CFO, who will comment on the main financial highlights of 2024.

Miguel Silva, CFO, Altria Group: Thanks, Josef. In Slide number 10, we can see slower volumes from a less dynamic market in the second half of twenty twenty four had its impact on pulp prices in the fourth quarter, making revenues to decrease by 10% and EBITDA declined by 32% in the fourth quarter of twenty twenty four when comparing it with the third quarter of twenty twenty four. In Slide 11, looking at the accumulated numbers for 2024, the picture is quite different with revenues growing by 9% and EBITDA by 59%. Going to Slide number 12, we can see that Altria ends 2024 with a 26% EBITDA normalized level when comparing to 2023. We believe it should be worth noting that in a quarter as the fourth with the lower price point of the year, we have been able to achieve an EBITDA margin above 20%.

In slides thirteen and fourteen, and although there was a decrease in profitability in the fourth quarter of twenty twenty four versus the previous quarter, the full year results were quite positive with EBIT growing by more than 100% and net profit reaching EUR107 million more than doubling the twenty twenty three results. On Slide 15, we have some comments on the cost side. Cash costs decreased by 3% in 2024 versus 2023, slightly better than our forecast of stability mentioned during the last quarters. The incident in the cogeneration turbine at Selby had an economic impact of around EUR 6,000,000 during the fourth quarter of twenty twenty four. We confirmed the turbine to resume operations at the March.

We had an additional positive non recurring effect of EUR 2,500,000.0 related to a premium attributed through the electricity sales tariff for Kaima’s new biomass boiler. Wood prices have been fairly stable during 2024 with a slight decrease during the quarter due to a better mix less extra Iberia imports. Chemical prices have been trending downwards since 2023, almost every quarter. However, there was an increase in the fourth quarter of twenty twenty four that is likely to still have some impact in the first quarter of twenty twenty five due to some supply issues with caustic soda. In Slide 16 refers to net debt reduction of EUR 36,000,000 during the fourth quarter of twenty twenty four, a 14% reduction in the quarter.

The sound EBITDA and the strict working capital management were also helped by lower investments. In Slide 17, we have Altria’s net debt evolution during the full year of 2024. Net debt decreased by 40% during the year, making the net debt to EBITDA ratio in 2024 to stand out one time. The $143,000,000 total cash flow generation in 2024 is a consequence of solid EBITDA, lower investments, a strict working capital management and also a reimbursement from the tax authorities of about EUR25 million of income tax paid in excess in 2023. ’20 ’20 ’5 should be different as we do not have the tax effect and CapEx requirements should be higher.

I will now pass the word back to Josepino.

Josef Josepina, CEO, Altria Group: Thank you, Miguel. Slide number 18 mentions Altria’s ROC level in 2024 reaching 23%. The current level of return on capital employed is already above Altria’s historic level of 18% and above the industry’s average. In Slide number 19, we share an update on some sustainability developments and efforts of the group during the quarter. Altria launched the program with Lisbon’s Catolica Lisbon School Of Business And Economics.

This was the ALP program for almost 10% of its workforce from all of the group’s companies with the goal to promote both personal and professional growth. We also organized the first time events with all wood suppliers and our aim was to promote solid and transparent relationships with our key suppliers who play a significant role in our value chain. The Altria Group was also in Baku, Azerbaijan taking part of the United Nations Climate Change Conference COP twenty nine. This is a statement of the group’s commitment not only to sustainability, but also to climate action, which contributes to achieving the goals set by the Paris Agreement. In Slide 20, and considering some highlights on key projects, although we are a few quarters from completion, we share the main figures on the acetic acid and portfolio production units at Kaima.

Total CapEx investment of EUR25 million partially financed by green funds should return a stable annual EBITDA of 5,000,000 within expected IRR 15% or above depending on the level of subsidies. In Slide 21, we mentioned some figures of the project to fully migrate biotechs, the HKP production into dissolving pulp. We highlight the average selling price of dissolving pulp to be 41 higher on average in the last five years with an expected operating cost 10% to 15% above the HKP’s cost. Slide number 22, we add some highlights on the gamma project which includes an expected CapEx of about $1,000,000,000 and an IRR estimated to be above 10%. If you turn finally to slide number 23 and looking ahead, we have seen some reactivation in demand near the end of the year in China, which has been supporting the increase in pulp prices during this first quarter of twenty twenty five.

We have good indications from Shanghai pulp week that the latest price increase announcement should be implemented. So from a lease price in Europe of $1,000 per ton on DHKP at the December prices may move by the March to $12.20 dollars with the implementation of the last announcement of $60 in March. Nevertheless, the January increase included the relevant inflation in commercial discounts which are expected to impact prices. On the cost side, we maintain our view of stable cash costs or slightly increase for 2025. On the diversification and growth projects, we should start producing higher volumes of dissolving pulp out of biotech in 2025 with likely volumes to reach around 50,000 tons this year.

On Project Gamma, the attribution of the favorable environmental declaration by the Schonze makes us believe the integrated environmental license could be announced in the near future. In conclusion, Altria had a strong 2024 with more stable market conditions and improved financial performance. We expect to have further progress on our growth projects during 2025 and focus to executing our strategic plan, optimize operations and deliver value to our shareholders. Thank you for your attention and we look forward to your questions.

Conference Moderator: Our first question comes from Manuel Lorente from Santander.

Manuel Lorente, Analyst, Santander: So my first question for Paul was on this on the pass cost front. I think loan issuance are moving parts playing in the positive evolution pass cost on the four quarters alone. My perception is that the main contributor of this positive performance is linked with that look mix in a premium prem stock. So could you elaborate a little bit more about the front business, this contract with your message somehow with other sector trends that we are seeing?

Josef Josepina, CEO, Altria Group: Okay. Manuel, if I understood the question correctly, you were asking about cash cost evolution and underlying factors that impact to in 2024. So the ones you’ve mentioned clearly have taken a key role. I mean we’ve seen stable chemicals. We’ve had I would say a better fiber cost base purely on the mix that we’ve had.

And at the same time, we have very good efficient operations. We maintain a lot of discipline in terms of our fixed costs and therefore we ultimately achieve a very favorable result.

Manuel Lorente, Analyst, Santander: Okay. And regarding upcoming trends, when you are mentioning that you should expect cash cost for 2025, you are expecting taking into consideration in the last quarter or the full year?

Josef Josepina, CEO, Altria Group: So for 2025, I think you want to be looking at the full year. I mean, our main target is to keep these cash costs year on year fairly stable. There will be as you would expect some variation through the quarters. If I look at the first quarter, we don’t have yet the cell beat cogeneration turbine yet operational which we will through the end of this month. That always brings a little bit of instability on the production level.

On the other hand, energy in particular natural gas is somewhat slightly elevated, But we intend the overall combination of continued discipline and continue to drive operational efficiency. As I said, our expectation is for the year to be pretty stable at the same level as last year, even though you may see some slightly, I would say inflation in the first quarter, but eventually compensated in subsequent quarters from what we’re seeing right now.

Manuel Lorente, Analyst, Santander: I see. And probably the last one from my side. CapEx on the other hand has been a little bit mute in this last part of the year. Should we spend expect a rebound in 2025 because of the, let’s say, the speed up of the new diversification projects. So what are your thoughts regarding CapEx trends for 2025?

Thank you.

Josef Josepina, CEO, Altria Group: Yes. Well, timing always plays a role. So we’ve had clearly we were very determined to keep a good control of CapEx last year. It’s obviously dependent on the investment cycle. We are going through an investment cycle with several projects ongoing.

So, if you look at 2025, I think you’ll probably see based on our current expectation CapEx will be in the range of $50,000,000 to $60,000,000 which will be to complete the ongoing investment projects that we have been talking to you about.

Manuel Lorente, Analyst, Santander: Thank you. Thank you.

Josef Josepina, CEO, Altria Group: Welcome. Thank you.

Conference Moderator: The next question comes from Alberto Espelozin from GB Capital. Now your line is open.

Alberto Espelozin, Analyst, GB Capital: Yes. Hi, good morning and thank you for the presentation and for taking my questions. I have two, if I might. First one is on the sector, if you could please share your views on demand trends by region and end use. And how are these BH KP dynamics reflected in your order book and volume expectations for 2025?

And the second one is on the Gamma project. Following the recent approval of the environmental permit, could you remind us of the expected timeline going forward? I assume the next key milestone is securing project financing. How is that progressing? And have there been any developments on that front?

Thank you.

Josef Josepina, CEO, Altria Group: Thank you, Alberto. So starting with your first question in terms of the sector, we’ve seen through 2024 some significant developments in the overall pulp market was I would say positive from the second half of twenty twenty three through the first half of twenty twenty four. As we commented in November during our third quarter results, we were seeing a stabilization of demand in China during the fourth quarter and prices seem to be stabilizing near marginal cost of integrated producers. In Europe, I think it was better than in 2024 versus China, but clearly the rapid decrease in bulk price in China in the summer pushed some of our paper customers to delay some of their orders as long as prices were on a converging path to the Chinese prices and eliminating any arbitrage between the two regions. So, I think what we’ve been seeing clearly early twenty twenty five, there was an improvement in demand levels in China.

Pulp prices, I think reacted quite rapidly. There’s been three price increase announcements in the first three months of 2025, of which two are already implemented. We see that a third one for March will be implemented as well. Let’s see what happens beyond March, especially now after Shanghai pulp week, at least we’re getting a relatively positive sentiment. But let’s see how these implementation is taken by the market, although purely from a demand perspective.

I think we’ve seen a good development last year across all segments. There was growth in paper. There was significant growth in tissue segments. You’ve seen on dissolving pulp as well from our end above 6% growth and that’s a continuation of the long term trends that we’ve seen in the market. So overall, I would say, we should continue to see some positive development at least on the demand side and effectively on the supply there’s been some constraints which have carried momentum through the first quarter.

You’ve had first quarter very heavy maintenance schedules in Latin America. Brazil has one to dissolving wood pulp output and they’ve now announced actually they’ll extend that into second quarter. That’s all pretty much captive demand anyway. We’ve seen some reduced operating rates in North America and some of the European mills. Part of that due to fiber constraints, which is a situation we have not seen in Iberia.

And there has been also some shipment and production problems in Brazil and a few other geographies. In China, the closure of Xiaming also have created some supply gaps and we’ll have to see how that’s going to evolve in the near term. So, I would say overall the momentum, it’s a positive momentum, both from pricing and volume standpoint and stopping short of what happens with some of the potential for significant tariff wars, which although we don’t expect a significant impact in Europe, given the current inflow and outflow of pulp specifically towards North America, we should see at least our expectation for 2025. It will be a fairly stable year probably in line with what we’ve seen last year, if you take the whole the year as a whole. Regarding your second question on the Gamma project, so clearly we’ve stated from the beginning that in order for us to have the right conditions to take a final investment decision, we would have to have certainty in terms of our license and permits.

We’ve had a very positive development with the positive environmental declaration. I think that’s a very favorable development, but there still remain several permits ahead that we’ll have to work through and expect that those will be favorable as well. But clearly the second one on the financing, there is there’s been ongoing discussions through the recent past clearly on ensuring that we have a decision on the level of potential financing and support that we could get from European funds and that one is it’s outstanding and we hope to receive more clarity at least in the coming months or somewhat in the near term. We also have the connection to the electricity grid, which needs to be included in the national electrical grid planning and that’s something that still needs to happen. We don’t see it as a roadblock necessarily, but obviously it’s an important step before we have full visibility in terms of being able to make a decision.

So, thank you for your question, Albert.

Alberto Espelozin, Analyst, GB Capital: Understood. Thank

Conference Moderator: you. The next question comes from Bruno Veza from CaixaBank. Now your line is open.

Bruno Veza, Analyst, CaixaBank: Yes, good morning. Thank you for taking my questions. And I have three. I understand from your comments about the market sentiment and the positive momentum for the market both in terms of demand and supply that you expect a positive price trend to continue. We mentioned already that the third hike announced should be reflected in the market soon.

My question here is, we have been seeing over, let’s say, last month or something like that, pretty much stable prices in China after a very strong increase at the beginning of the year, a bit surprisingly the strong increase at the beginning of the year, but also a bit surprising the stability now that after the Chinese New Year festivities, we will be having the return of demand in China to the market. So my question here is, why do you think prices have been this stable over the last month? And if this could signal that the market is already a bit stretched in terms of pricing of price increases after the good brands seen in January and February? This will be the first question. The second question, if you could give us an update on new projects in the industry, I think that OKIE has a capacity expansion scheduled for the end of this year.

If you could give some visibility on that, your expectations for that project and any other potential project, particularly in China that could be a risk for the market until the year end? This will be the second question. The third question, but looking to your P and L, we saw an increase of double digit in terms of payroll expenses. Just trying to understand the reason behind this. How much of this is pure inflation?

How much of this is an increase in terms of FTEs and what could we expect for 2025? Thank you very much.

Josef Josepina, CEO, Altria Group: Thank you, Bruno. A few questions regarding on let me start with the market sentiment question. Obviously, we are seeing I think a positive momentum. As you mentioned, we’ve seen some stable prices. Why have they been stable?

I think two primary reasons specifically in China, you’ve had Chinese New Year, which usually the market tends to take a bit of a pause, at least through a period of two weeks. And I think there was some expectations on a wait and see what happens in with Shanghai pulp week. So, usually buyers going into Shanghai pulp week tend to take a bit of a pause. We’ve seen that that usually doesn’t move any prices. But our understanding is the 20 USD that were announced for China will be going forward at least from some early feedback we have from Shanghai bulk week.

So I think it’s just very circumstantial considering the time of the year. With that said, there is I would say some anxiety in some of the markets in particular looking at the potential for significant tariff wars and how will that impact the global flows of products. I think there are some question marks still on the development of the Chinese economy. So, all of that is clearly adding some anxiety to the market and you would likely see at least some hesitation or some pausing. So our expectation at least looking at what’s happening in China is probably considering the current price increase.

It’s probable that the market could take a breeder at least to gain some better direction given the recent announcements or the changes in recent announcements. There seems to be some volatility in terms of gaining that direction. So it’s likely that the market will be looking to gain better perspective on the direction, particularly on the economic front. Regarding new projects, I mean, we understand Oki is going on. That particular project would not impact Europe because it would not be certified products.

So, we wouldn’t see it necessarily coming to Europe. There could be some change in terms of some of the flows, but given the growth that we see in Southeast Asia, parts of Southeast Asia, we would not expect any significant changes at least from expectations. I mean, that volume will find its way into the market. But I don’t at least we don’t expect that to be a significant factor in terms of supply demand, certainly not in Europe. And on the P and L, perhaps I’ll ask

Miguel Silva, CFO, Altria Group: Miguel to

Josef Josepina, CEO, Altria Group: comment, but we did see actually a single digit increase, but it’s also circumstantial part of it is on the overall development. We did not have significant inflation in terms of payroll, but I’ll let Miguel come in.

Miguel Silva, CFO, Altria Group: Yes. Just to complement what Jose just said, we’ve been managing very strictly our fixed costs and that, of course, includes our payroll costs. What happened to justify that single digit high single digit increase is on one hand, we had 2023 was still a new year with significant inflation and we try, of course, to compensate our people as much as possible. And on the other hand, we have better results, which means that we increase also the variable pay that is directly related to the results of the company. And we have all that in our 2024 results.

That’s it. We have no increase in FTEs. So that is the explanation.

Josef Josepina, CEO, Altria Group: Yes. So just to complement on what Miguel said, we’ve been making we’ve dedicated significant effort on ensuring that we keep the organization relatively stable. So effectively RFP numbers are flat year on year. We also have early last year reached an agreement with unions for a two year contract across all of our operations, the different plans. So, effectively, we have very good visibility in terms of how that’s likely to evolve.

Thank you, Bruno.

Bruno Veza, Analyst, CaixaBank: That’s Collier. Thank you very much.

Conference Moderator: The next question comes from Luis de Toledo from ODDO. Now your line is open.

Luis de Toledo, Analyst, ODDO: Good morning. I had a question. I was referring to the potential trade wars that you mentioned, so I think it’s already addressed. Are you concerned about the shipments you do of resolving to Asia if Europe becomes tough into Asian imports or retaliation measures? And my second question would be regarding the comment you made on the challenges that Canadian softwood producers might be having.

I don’t know if you could elaborate on that. Thank you.

Josef Josepina, CEO, Altria Group: Sorry, the last question was on caustic soda.

Luis de Toledo, Analyst, ODDO: No, no, no, no, no, caustic soda. On I thought you mentioned something about the Canadian softwood producers having some challenges. I don’t know if you could elaborate and determine how actually it might be affected, if you can refer to the hardwood and shortwood trends, gaps. And I don’t know if you consider in your growth plans if alternatives such as flop production or something like that. I don’t know if you could elaborate on the Chinese on the Canadian market.

Josef Josepina, CEO, Altria Group: Yes. Thank you, Luis. So on the tariff side, it’s hard for us I imagine for pretty much everyone having a lot of visibility in terms of the tariffs initiatives. Regarding China specifically and regarding our exports to Asia, we do not expect any significant impact. I don’t think we’ve seen a lot of tensions rising at least between Europe and Asia.

I would expect in fact that Europe will be open to identify potential alternatives to its exports into The U. S. So, I don’t think at least in terms of our dissolving pulp and considering that China is a strong importer dissolving pulp, I would not necessarily see a significant risk of that potentially impacting the flow of products. On the regarding Canadian softwood, there has been some limitations in terms of availability of fiber. Canada is extremely exposed to exports into The U.

S. I think it exports on a yearly basis in terms of MBSK over 2,000,000 tons, which is pretty significant and some finished products. That could possibly be one of the key impacts if potentially if you have significant tariffs, which would limit the trade flow. Now whether that fault would find other markets, I don’t think it would be necessarily very feasible given that Europe is still a very strong producer of softwood. What could happen is, I think you may start seeing some potential shutdowns in terms of Canadian capacity.

And if that happens coupled with the challenges on fiber supply, then that would possibly make it easier at least in terms of global market, global flow softwood for some of the European producers. But But in terms of hardwood, what I would say is some of these supply demand impacts have had actually I think a positive impact on hardwood particularly on substitution. We’re now seeing differences in terms of pricing between hardwood and softwood, which are very close to historic highs. Certainly, significantly above what has been the trend anytime you’re above $120 1 hundred and 40 dollars per ton, you tend to drive clear intentions for substitution. We’re significantly above that.

So, some of these potential impacts could actually favor hardwood at expensive software. Thank you for your question.

Luis de Toledo, Analyst, ODDO: Thank you very much. Thank

Conference Moderator: you. The first question comes from Antonio Seladas from AS Independent Research.

Antonio Seladas, Analyst, AS Independent Research: So I have three questions. First one on Gernalia. I don’t know if you can provide more color on the position, namely what you are looking for in the price. Second question regarding the Shelby extraordinary costs over the fourth quarter, SEK6 million, should we expect the same kind of figure in the first quarter? And finally, on CapEx for 2025, I don’t think you mentioned a figure, so I don’t know if you can provide a figure.

And what kind of level of net debt should we expect for the end of the year because currently it is very low? Thank you very much.

Josef Josepina, CEO, Altria Group: Thank you, Antony. Could you clarify just the first question because I think

Antonio Seladas, Analyst, AS Independent Research: Sorry, absolutely. In Granalia, the acquisition, the forest company that you the acquisition that you made in Spain, in North Of Spain, I think if you can provide more color on what are the targets of the acquisition and the price

Alberto Espelozin, Analyst, GB Capital: of course?

Josef Josepina, CEO, Altria Group: Thank you. So, I mean, the starting with the last part of your question in terms of pricing, I mean, it’s not material as an acquisition. So, we have not disclosed the actual number that it would not be anything material. What we do intent and this was as the background for that acquisition is we have had supply operations from a fiber from Galicia into our own facilities for many, many years. We’ve done it through a, I would say, a small organization, which we intended to reinforce.

We do believe that it’s a strategic market. We feel that we need to be closer to the forest operators and to the industry and therefore this was a clear step in order to have a more solidified presence with an organization that is very experienced in the Galician market and we feel that will reinforce our ability to continue to develop our sources of wood from a strategic standpoint. So, we feel that this would give us an operational capacity that we did not have in the past. But most importantly, we clearly wanted to also have a greater commitment towards the industry and be more involved in industry also helping with some of the best practices in terms of forest management. So that’s really the background in terms of what we’ve taken.

And this particular company, it also was one of the main partners that we have worked with in terms of the supply of fiber from Galicia. So effectively we just have if you want to assume the more direct role with that. On your subsequent question regarding Selby and the extra costs, I mean, this was related to the generator at Selby, those that $6,000,000 was essentially the piece that was not covered in the insurance. So our own liability, the rest of it is fully covered on insurance. You always have a little bit of operational instability by not having the turbine working.

But as we’ve stated, I mean, these are this is a non recurring event. We’ve been able to overcome some of the initial challenges. We are operating fairly stable now, but clearly we would not be fully comfortable until we have the turbine back up and fully operational, which it’s now in the process of happening. So our expectation right now is by the end of the month that will be complete. And as I said, this is a non recurring event specifically linked to that incident.

Regarding CapEx for 2025, I have mentioned in just in an earlier question, we are currently through an investment cycle. We’ve touched about on a number of the projects that have been ongoing. And even though we continue to have a very strong discipline in terms of our investment in the development projects as well as our maintenance and environmental CapEx. We would expect looking to this year given that some of the projects are we’re in the midst of some of the projects, one which be concluded by the end of this year, which is acetic acid and fruitful will probably likely be in the range of $50,000,000 to $60,000,000 that will be our expectations. And depending on how the year evolves, it’s likely that you would see somewhat of a slightly higher net debt to EBITDA, but we don’t feel that’s going to be it’s going to change significantly our solid financial position.

So I don’t know if Miguel, if you want to comment anything

Manuel Lorente, Analyst, Santander: on that

Josef Josepina, CEO, Altria Group: regarding net debt to EBITDA or the

Miguel Silva, CFO, Altria Group: No, not really as we don’t know yet how the year is going to proceed. It’s difficult, of course, in terms of CapEx. We know that it will be a different year comparing it with 2024, and the expectation is exactly that, between EUR 50,000,000 to EUR 60,000,000. But there is also a big part that is dependent on the EBITDA. So yes, we expect a slight increase in the net debt to EBITDA, but nothing very significant that will change our good financial position.

Antonio Seladas, Analyst, AS Independent Research: Okay. I don’t know if you can just ask for an additional question regarding volumes, pulp volumes sold that have been well, have been below the trend. Should we expect this kind of volumes to continue or do you expect an increase on volumes? Thank you very much.

Josef Josepina, CEO, Altria Group: Yes. So we’ve had service maintenance back in October. We’ve had obviously with the swinging of dissolving into dissolving pulp with biotech that always impacts somewhat the overall capacity because we have transitions to go through. But I would say on the other hand, we have been increasing our production in Kaima. I think as biotech becomes more stable as well that will have an impact.

Selby this year does not have a programmed maintenance stop. So last year was very much a question of we started off the year with low inventories. We wanted to be very active in terms of our working capital management and therefore we did not want to change that ratio very much in terms of how much we produced and how much we sold, which was pretty much in line on both fronts. I would say this year given that we don’t have that stoppage, there will be potentially a slight increase in terms of total volumes produced and ultimately total volumes sold, but it would not be anything very significant. But we do expect a small increase.

Antonio Seladas, Analyst, AS Independent Research: Okay. Thank you very much.

Josef Josepina, CEO, Altria Group: You’re welcome.

Conference Moderator: There are no further questions. So I will hand over the session to Mr. Jose Suarez de Pina, Altria’s CEO. Now your line is open.

Josef Josepina, CEO, Altria Group: All right. Well, thank you very much for attending the call and for your questions. As we’ve stated, we’re looking forward to another significant year, building off of the strength of last year. As we’ve mentioned, our expectation is that this year will be very much in line with last year. And we look forward to reconnecting with you soon.

Thank you very much.

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