© 2024 Alpha Spread Limited. All Rights Reserved.
www.alphaspread.com is not operated by a broker, a dealer, or a registered investment adviser. Under no circumstances does any information posted on www.alphaspread.com represent a recommendation to buy or sell a security. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. In no event shall Alpha Spread Limited be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or available on www.alphaspread.com, or relating to the use of, or inability to use, www.alphaspread.com or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance.
You don't have any saved screeners yet
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Ladies and gentlemen, good afternoon. Welcome to the SCHMOLZ + BICKENBACH Q1 2018 Results Conference Call and Live Webcast. I'm Alice, the Chorus Call operator. [Operator Instructions] And the conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast.At this time, it's my pleasure to hand over to Mr. Ulrich Steiner, Head of Investor Relations and Corporate Communications. Please go ahead, sir.
Thank you, Alice. Good afternoon, ladies and gentlemen. Welcome to the SCHMOLZ + BICKENBACH telephone conference on the first quarter 2018 results. With me on the phone today are our CEO, Clemens Iller; and our CFO, Matthias Wellhausen. All documents for the first quarter, including the following presentation, are available on our website since 7:00 a.m. this morning. During today's conference call, we will make forward-looking statements as described in the disclaimer on Slide 2. These are based solely on our expectations or forecasts of future developments, and may differ materially from future results, performance or achievements. With those comments, I now hand over to our CEO, Clemens Iller, please.
Thank you, Mr. Steiner. Good afternoon, ladies and gentlemen on the phones. Welcome to the telephone conferencing. Thanks for joining us, listening here to the presentation of our first quarter figures. We'll split the presentation as usual. The first part, I'll talk about the most important figures of a good first quarter, and the progress made in the integration of Ascometal. My colleague and CFO, Matthias Wellhausen, will then dive deeper into the figures for the first quarter. Finally, I will give you our assessment of the current market situation and the outlook for the 2018 financial year. Let us turn to the first quarter and move on to the Slide #5. We start with the -- a remark related to the impact of Ascometal on the first quarter results. It should be noted that our earnings include the new Ascometal business unit for the first time now. After the transfer of ownership on February 1, 2018, Ascometal is now fully consolidated. All figures we are presenting today does include Ascometal's results for 2 months. It is also important to note that the figures for the prior period in the first quarter of 2017 were not adjusted. This resulted in an effect, which will be explained to you in more details in the course of the presentation by Matthias. Thanks to a sustained good market situation and the contribution of Ascometal, sales volumes rose by 11.5% to 545,000 tons in the first quarter. This resulted in sales of almost EUR 829 million, an increase of 17.1% compared to the same quarter in 2017. Ascometal, as expected, did not yet make positive contribution to EBITDA. Therefore, adjusted EBITDA of EUR 70.3 million increased with 5.6%, disproportionately lower compared to revenue. Group result increased 3.5x, reaching EUR 59 million after EUR 16.5 million in the previous year quarter. However, the sharp increase is also due to one-off effect, which Matthias will explain to you in more detail in his speech. Due to the acquisition of Ascometal and the usual seasonality, free cash flow of minus EUR 102.7 million was significantly lower than the prior year quarter. The good quarterly figures were mainly driven by an unchanged friendly market environment. This also resulted in a further increase of raw material prices in sequential terms so compared with the fourth quarter of 2017. Except for ferrochrome, average prices rose at double-digit rates in the quarter. Nickel, for example, rose by 14% and scrap by 13%. Ferrochrome also rose but at 3%, less than the other raw materials, which also apply to the oil price, which was around 8% higher than at the beginning of the quarter. Looking at our end market, the uptrend in this market also continued. The -- in mechanical and plant engineering, the German Industry Association, VDMA, reported a double-digit percentage increase in worldwide order intake after continuation of the upswing had already been observed in January. Also, the car industry in Europe grew slower than before. The numbers of passenger car registrations rose by almost 1% compared with an already strong prior year quarter. We also received positive signals from the oil and gas industry. The rotary rig count, a good sentiment indicator for the industry increased by approximately 60 compared to year-end 2017, and was thus also significantly higher than the number of approximately 740 rigs recorded in Q1 2017. Also, the fracking market signals some growth now. The economic environment was, therefore, favorable in almost every respect in the first quarter. This is also evident from the regional development, as you can see in the Chart #7. The 17.1% increase in group revenues was due to strong growth in the core region of Europe and differentiated growth rate in the other 3 regions. The Asia, Africa, Australia region was particularly impressive with an increase in sales of just under 27%. This was driven by high-double digit growth in India, where we opened a new warehouse last year and above-average growth in Asia outside China. In Europe, revenue increased by 18.5%, due not only to the generally good state of the European core markets and industry, but above all to the first time consolidation of Ascometal. As a reminder, Ascometal generates roughly 40% of its revenue in France, 20% in Germany and another 15% in Italy. By contrast, revenue in North America increased by only 3.1%, mainly due to structural changes in the market for fluid and somehow steel for pumps in the oil and gas business. In this subsegment, customers switched to other steel grades that Finkl does not offer yet. And that's the temporary loss market share despite the launch of the innovative HVX steel. However, we are confident that we will be able to make up the shortfall in the coming quarters, thanks to HVX and investments in the new equipment. The last region is the rest of America where double-digit sales growth was also achieved, also starting from a very low base of approximately EUR 10 million. If we go on to the individual product groups on Chart #8, we will see 2 main developments. Firstly, the acquisition of Ascometal increased the importance of quality and engineering steel for the group. The share of this product group in the total sales volume now amounts to 75% after 70% before. Secondly, it was the steel that drove the good volume development in the first quarter with an 17.2% increase in sales volume. By contrast, sales volume in the stainless steel and tool steel product groups declined by 2% and 4.8%, respectively. The reasons for this can be found at DEW in Germany. On the one hand, significantly lower consignments stocks throwing by key customers. And on the other hand, a wave of influenza in Germany that led to a worse-than-normal delivery performance. However, the low volumes were largely offset by higher-average sales prices. The price of our steel rose year-on-year by 5.1% from EUR 1,447 per ton to an average of EUR 1,521 per ton. This was the result of higher base prices and alloy surcharges. As in previous quarters, strong demand allowed base prices to be adjusted upwards. In addition, the increased prices for scrap and alloy metals were automatically passed on to customers via the contractually agreed alloy surcharges. The average sales price of EUR 1,521, again, shows 2 effects from the acquisition of Ascometal. First, the average sales price for the entire portfolio has remained virtually unchanged compared to the fourth quarter of 2017, which does not seem logical in view of higher raw material prices. This can be explained by the higher proportion of low alloy quality in engineering steel in the product mix. As their prices are structurally lower than for the other products groups due to the lower proportion of alloy metals, this also draws the average sales price naturally down. Secondly, we see an increase in the sales prices of the quality in engineering steel product group from over 18% to EUR 1,006 per ton on a quarterly comparison. This increase reflects the higher-average sales prices of Ascometal quality in engineering steel compared to those in the old product -- in the old group before the acquisition. For comparison in its old composition, we achieved average sales prices in this group -- this product group of EUR 945 per ton in the fourth quarter of 2017 and EUR 851 per ton in the first quarter of 2017, significantly lower than the EUR 1,006, I mentioned, per ton now achieved in Q1 2018. Before I report on the progress made in the integration of Ascometal, I would like to remind you once again on the integration plan. I already showed you Chart #9 with the rough schedule for the 3 phases of the integration at the presentation of the full year figures in March. The long-term sustainable industrial concept requires a gradual integration of production flows into our group. With the transfer of assets to us on February 1, the phase of stabilization has begun. The second phase, the aim is to harmonize processes and transfer them to the platforms of the SCHMOLZ + BICKENBACH Group. And the third phase was overlaps with Phase #2. We will plan and implement the industrial concept step-by-step. The Chart #10 shows where we are in the integration process today. After the complete transfer of the acquired assets, we immediately began to work out the industrial concept in detail. We already have a very good picture of how we want to tackle implementation over the next 2 to 3 years. The analysis will be completed within the next few weeks. We have recruited a new management team to ensure operations as an independent business unit in line with our other business units. A CFO and a CSO are already recruited. The legal and organizational structures were also adapted to enable immediate action to be taken and to clearly define the reporting lines. For example, Ascometal sales offices in Germany Poland, Italy, Spain and the U.S. now report to the sales and service business unit. The integration team have already worked on many other fundamental topics. For example, the IT infrastructure was harmonized to chart of accounts mapped on Ascometal and around EUR 30 million of receivables were included into the existing ABS program. In addition, an investment of around EUR 800,000 was approved for a finishing line at the Hagondange plant, and we integrated the new business unit into our BUs, the leading trade fair in Düsseldorf, the wire, which was taking place in April. We are thus sending a clear signal to our customers that Ascometal will once again be a strong and reliable partner after its insolvency and the integration into the SCHMOLZ + BICKENBACH group. So you see much has been done, much remains to be done. We see ourselves on schedule in this respect and we'll work step-by-step on the successful future of the new business unit. Let me summarize my overview on the first quarter in one sentence. We have made a good start to the 2018 financial year, and the integration of Ascometal is progressing as planned. And with that statement, I would now hand over to Matthias for closer look at the quarterly figures.
Clemens, thank you very much. Ladies and gentlemen, I welcome you to today's conference call also from my side. It's a lovely day in Lucerne. So we all hope that this is a good sign also for the future of the industry in the next forthcoming time. Yes. Let me straightaway follow Clemens' presentation on Asco by turning to the opening balance sheet of Asco. Indeed, we have made good progress here over the past 2 weeks to assess the net assets in detail. Please look at Slide #12, this shows the preliminary opening balance sheet as of February 1. This can still undergo some minor changes, but it is based on a very detailed external assessment of assets and liabilities. And the assessment was based on the classical approaches to derive the market value. So this is how it -- how we got -- went about it. And the fair value of the acquired net assets, we can say now amounts to EUR 81.1 million. And now this stands against a significantly lower purchase price, as we have indicated on earlier occasion, which amounts to only EUR 35.1 million. The purchase price, just to remind, is principally paid in this case, 4 groups of recipients. One is the former owner. They received a minor amount out of this configuration. Secondly, the leasing companies from which we repurchased leased assets, which we deem necessary for the operations. Thirdly, it supply -- going to suppliers, whose deliveries were secured by existing inventories. And fourth, the -- to the holder of bonds, which was secured by inventories. So these are the principal recipients. And what you see, of course, from the data is that the difference between the value of net assets and the purchase price totals then EUR 46 million. This so-called bad will or negative goodwill has had a corresponding onetime positive effect on other operating income. That's what you see in our P&L and it's reflected in our EBITDA as well as in the earnings after taxes. So it's a one-off, EUR 46 million.On the other hand, this positive impact is opposed by restructuring costs, which have been incurred by us over time. When we were presenting the annual results in March, I used a picture that the acquisition of Asco is comparable to the purchase of a nice villa at the lake, in need of renovation. So very good location, favorable purchase price, but in order to make full use of it, some of the discount still has to be reinvested. And so in the first quarter, the first significant amount of such extraordinary expenses was incurred and considered in our P&L. That was EUR 13 million, mainly relating to the temporary purchase obligations for semis from Ascoval. You will remember that we did not take over this part of the former Asco group. So the amount of EUR 13 million provides for the entire disadvantage of this contract compared to market conditions. Then both amounts, the income of $46 million and the expense of $13 million are, therefore, of a temporary nature and linked to the restructuring of Asco. Hence, we have adjusted the IFRS EBITDA by these amounts. Going forward, we are currently working hard to define in detail the further necessary restructuring measures and expenses. And Clemens said, it will take a couple of weeks. Now this analysis may well also extend into the third quarter. However, we can already expect that the overall expenses in the income statement will remain below the negative goodwill. So that the P&L impact -- net P&L impact of goodwill minus these extraordinary restructuring expenses will be a favorable one. Let us now turn to Chart #3 (sic) [ #13 ], key operating figures. That's crude steel production, sales volumes and order backlog. The integration of Asco enabled us to increase crude steel production by 11.8% year-on-year coming then to 589 kilotons. You may remember that last year in the first quarter, we had already achieved a very good capacity utilization in the first quarter, driven at that time also by our customers' needs to increase inventories again after the long destocking period. Now we were able to further increase the capacity utilization in Switzerland. However, the other plants remain slightly below this previous years' very good level. So overall, a slight decline for the old parameter of SCHMOLZ + BICKENBACH. So it was Asco who really drove the increase. Asco, that is important to mention, enjoyed overall a very good market demand. However, there is still some organizational catch up to be done in production, which is relating to some deficiencies from the difficult time before the takeover. So there's clearly still room for improvement before we reach the technical production capacities and capture also the market opportunities that Asco provides. Overall, the production increase translated also into sales due -- on the back of a very strong demand. So we saw a similar increase like in production for, say, this was 11.5%. Overall, we reached 545 kilotons, and that is despite that we streamlined our production portfolio last year at Steeltec, that triggered the volume reduction of approximately 10,000 tons per quarter. So this was included in this number and made up for that. Yes. When you look at the order backlog, the continued strong market dynamics are clearly reflected here. There was no discontinuation of the favorable trend into the new year. The order book is still very well filled. Actually, it reached a new high at 700,000 tons at the end of quarter 1. And please note that this number does not yet include Ascometal because we cannot yet report this reliably and consistently with respect to the rest of the group, but this will happen going forward. Yes. So let us turn to Slide #14, net sales and average selling price. Also here, we see the effect of the positive development sales prices compared to the first quarter, and of course, the consolidation of Asco. Clemens mentioned the approximate revenue increase of 17% resulting from that. He also mentioned that the sales price -- the average sales price at EUR 1,521 was higher than a year ago, but approximately at the same level as in the previous quarter. So after 7 consecutive quarters of increase, it seems to indicate a flattening of the dynamics. But I think Clemens well described in his detail that this is indeed not yet the case. Because if you -- it can't for the mix effect through higher engineering share due to Asco, then you see that prices have further risen by approximately EUR 50 per ton against quarter 4, EUR 50 per ton against quarter 4. And this further increase reflect, in particular, the higher base prices of our long-term contracts. We have succeeded in finding solutions with our customers, in particular, for the sharp rise in electrode prices in the course of 2017. So good development here. Coming then to Slide #15, all this translates into the bottom line. Yes. We saw that the EBITDA increased to EUR 70.3 million, the adjusted EBITDA. There is an increase by 5.6%. This was achieved despite a slightly negative EBITDA from Asco. These 2 months of accounting bottom is a little bit less than a EUR 1 million of loss in EBITDA, much according to our expectations. The result reflects our success of cost improvement measures as well as our focus on pricing for value add. It doesn't -- didn't come, so to speak, easy. Because indeed, the cost environment is strongly inflationary, and that is not on labor in this context, but also on certain consumables, on certain services and also material. And we were very well able to compensate a double-digit million increase in the quarterly result. So a good success this EUR 70 million. However, the consolidation of Asco created the expected dilution of the profitability ratios. You're aware of that. The adjusted EBITDA per ton declined by around 5% to EUR 129 per ton, and the EBITDA margin came in at 8.5% compared with 9.4% in the prior year quarter. But again, when you exclude the Asco effect, the ratios would have exactly been the same as in the previous year's quarter 1. So then as explained, the adjusted EBITDA does not include the positive net effect from the acquisition of Asco. If you add back the EUR 32.8 million, the IFRS EBITDA, the unadjusted EBITDA for the quarter becomes EUR 103 million. With that, on balance, we achieved a group result of EUR 59 million, which was EUR 16.5 million in the same quarter of the previous year. Yes. Coming now to cash, Slide #16. We reported in the first quarter a free cash flow of minus EUR 103 million. Well, as you know, the cash flow in the first quarter is regularly negative at SCHMOLZ + BICKENBACH, due to the seasonal increase in activity and net working capital against quarter 4. For instance, in the previous year, I think we had an increase of EUR 90 million. You go 3 years back, it was EUR 70 million. However, this year was stronger. It was more pronounced what we saw as an increase in quarter 1. That was pronounced by 3 developments. First of all, the increase in sales and hence for net working capital was particularly pronounced due to the higher market prices. Now they will increase further as we just discussed from Q4 into Q1. Then, in addition, influence #2, we have increased our safety stock of electrodes. You remember that we did not only have a strong price increase in electrodes, but also quite a challenge in securing supply. That lesson led us to stocking up what we want to have in our inventory. And thirdly, of course, the acquisition of Asco has already kicked in. Partial payments of the purchase price and further increase of the working capital to improve production flow. But also these payments, I mentioned, to Ascoval -- to the Ascoval contract led to recurring cash out flow. So then, net working capital was almost 1/3 higher than at the end of 2017. Then the efficiency of net working capital as measured by the ratio to sales deteriorated slightly. The ratio went from 26% at the end of '17 to 27.4% at the end of quarter 1. Now please note that this, of course, also somewhat overstated, this kind of calculation, as Asco sales were only in there for 2 months, and of course, the working capital fully. So hence, the denominator understated the ratio. Yes. Capital expenditure was slightly higher than the first quarter last year, going up from EUR 11 million to EUR 15 million. This was an account of the -- of further tranches for the strategic investments that we decided last year. You remember, we have this big project in the walking beam furnace, the Swiss Steel and the Nadcap at Ugitech.Yes. These developments have been, of course, visible in our net debt. It's on the next slide. You see that the net debt rose to EUR 557 million at the end of March. That was an increase of EUR 115 million compared to the end of December. As a result, also the leverage ratio went from 2.0x to 2.5x at the end of March. And that was then 0.1x higher than in the same period last year, which was when we had not yet consolidated Asco. Now the net debt was covered by our credit lines and the bond that we have outstanding, both of which together make EUR 925 million as against this net debt of EUR 557 million, so good headroom. In that, it was particularly pleasing that by the end of March, we were already able to include around EUR 30 million of Asco's receivables in our very efficient ABS financing program. And Clemens mentioned that as a very good integration success that was really record speed also with our partners at the bank went very well. Yes. In summary, I can say that the first quarter of '18 has developed very positively and still high order backlog and a solid economic situation give us confidence for the coming months. And Clemens, I think, you will go through the more detail now.
Yes. Thank you very much, Matthias. Ladies and gentlemen, this brings me to the end of the presentation and the outlook on Chart #19. The synchronized global economic upswing is in full progress. This is reflected in robust fundamentals in most customer industries and a sustained higher order backlog. We expect the special long steel industry to continue to grow in 2018, both in sales and [ for add ] value, as we expect a further shift towards more demand in production and steel applications. We currently see this in our unchanged high-order backlog. As far as the development of raw material prices is concerned, we expect continued high volatility, which will, however, remain supportive for our business. By contrast, cost inflation, which has built up in a good market environment in recent months, could have an unfavorable effect. In order to absorb this inflation, we will continue to apply cost discipline as we have done successfully in the past. Based on these assumptions, we do not want to change our guidance at this point in time, and expect adjusted EBITDA to range between EUR 200 million and EUR 230 million. And we also do not change our view that for the time being, it would be at the upper end of the guidance. With these comments, I would like to close then the presentation and give you now the opportunity to ask questions.
[Operator Instructions] Our first question comes from Rochus Brauneiser, Kepler Cheuvreux.
Just few questions from my side. The one is on your volume trend in the engineering steel business. I guess, you mentioned that you had been lower year-over-year on adjusted basis, but obviously, mostly driven by this onetime items. Can you give us a number or the total effect of this effect? And what is your ballpark expectations for volume growth adjusted for M&A in 2018? First question.
Yes. The extraordinary -- if I may. The extraordinary impact -- I think you're referring to the restructuring of our Steeltec that has an effect of roughly 35,000 tons per annum. So this is what is...
Minus. Yes. Minus.
That is not recurring. In terms of guidance of what we shared -- we are seeing this year, I think we haven't been guiding really on that. What you should be expecting is rather quite a modest change versus the previous year that we will be able to compensate for the impact here from Steeltec, but no major changes. Once again, the reason is simply being that we were already pretty well loaded in the previous year. So in terms of volumes, not much of a change.
Okay. Maybe on Ascometal, can you give us an update on this Ascoval situation? So you are now continuing to supply Ascoval. What will happen beyond the existing contract and -- starting from next year? And is there -- can you already give us a bit of a sense on what kind of restructuring IT cost and other things might be ahead of us? And are you still thinking to end the year with these 1,200 employees at Ascoval?
Maybe I can start, Mr. Brauneiser, with the first part. And I have to say that was a mistake. I think that maybe you have the wrong information. It's not that we supply Ascoval, Ascoval supplies us. So in the past, you have to see that also the previous management of Ascometal has already recognized that the 2 melt shops in Les Dunes and in Hagondange are old. They need investment. And therefore, they have made an arrangement with Vallourec to run the joint venture, close 2 melt shops in Les Dunes and in Hagondange and use the melt shop in -- yes, but also in the north of France to supply this to places. And with -- that thing has been started, the homologation. As you know, Hagondange, the matchup is still running, so there was no need. But in Les Dunes, the melt shop has been closed in October last year. So they have done a lot of work to do the homologation. So when we took over, the concept, of course, had to be changed because we want to supply this from the melt shop in Germany. That was the reason why we didn't want to take Ascoval. Nevertheless, also for us, we have to do the homologation with our customers now on this new supply chain. And for that reason, we have agreed to continue to buy, not to supply to buy from Ascoval. And this is what Matthias was talking about. Now one of the reasons why Ascometal and Vallourec were suffering is because this melt shop is not as competitive as our places in Germany. And therefore, we had to digest here a higher price and the market price that we are used to. That is the story.
All right. I got it. Is there any particular reason why your new structure in France is now built up by legal entities for all individual manufacturing sites? And isn't that creating more complication in terms of the whole organizational structure?
No. Not really because, Mr. Brauneiser, one is the legal structure, the other is what you really live day to day. And DEW has also 4 places. Ugitech has several places. At the end, it's the day-to-day thing that you live. And with that, you will have kind of little holding that is placed in Hagondange. So it's more or less another separate holding in Paris or somewhere as they were used in the past. So you will not see really a big change -- by the way in Germany, we know that we call [ SCHMOLZ ] concept, mother house concept. So they run this place and have the holding there as well. But the legal entities have also the advantage, especially in France, as you know, the situation with the unions are more difficult than maybe in some other parts of Europe. So you can divide then the negotiations place by place.
Okay. That make sense. Maybe finally on demand, can you give us a sense how you see the steel demand trends in France versus Germany right now? And what -- do you observe any changes on an industry basis between today and like 3, 4 months ago? Anything you're noticing there?
I mean, not in the segments that we are in, Mr. Brauneiser. For the time being, I mean, all of our mills are busy, really busy. We have -- Swiss Steel is full, yes. DEW is full. So therefore, the French market is good. And I would not today really anymore distinguish between France and Germany. In the markets that we are in, which is automotive, this is a European market, and the problem we still have in Ascometal that Matthias was referring to is much more on the people side because with the uncertainty of the insolvency process and even before we took over, a couple of people have resigned. And what we are doing at the moment is we try to fill the shifts again, so that we can fulfill the demand, yes. It's actually not that the demand is bad as we cannot fulfill the demand. So the one that could do more capacity wise is Ascometal. The other plants are already operating at their limit.
Okay. Finally, can you give us the schedule for the residual EUR 20 million of payments for the assets of Ascometal?
That -- I have to say that of the cost that is largely by the end of quarter 2 will be done. So when you see the quarter 2 results, it should be done.
[Operator Instructions] The next question comes from Carsten Riek from UBS.
First one is also on Ascometal. Because you mentioned that the restructuring charges will still be close at least to the bad will you already booked. Can you give us a sense whether this is back-end loaded to the fiscal year, means third quarter, fourth quarter? What do we expect -- or do you expect already some more restructuring coming into the second quarter? That's the first question. Then I'll follow up with some more.
Yes. No. It would be back-ended, as you say because what we expect with our ongoing analysis is clarity on the details of the industrial concept more in that time frame and from there on. Obviously, you would then enter into the details also of the restructuring plan itself, which then needs to be announced before you can take provision. So yes, it's more towards the end of the year.
Perfect. The second question I have is on the net debt. You pointed out it is higher than usual. The free cash flow wasn't as good for several reasons. Could you confirm that the net debt peaked for the fiscal year '18 in the first quarter? And that going forward, we see more positive free cash flow?
It's a bit hard to assess. I won't say that is necessarily the final peak because what would happen is that -- as [ Rochus ] was just saying that so there's a cash out, of course, coming for the remainder of the cash consolidations. Then there will be to some extent also additional CapEx kicking in during the course of the year of Asco. And then, finally, whether we have already reached the optimum level of working capital in Asco, I'm not so sure about. Now what I -- what you should be expecting, though, is that leverage remains in a very decent, let's say, lever. We did guide, I think, in the commentary so far that, of course, the 2.0x will not be in reach by the end of this year. This is clear due to the nature of restructuring that we do of Asco, but it will certainly stay below the 3x or whatsoever. So it will stay in decent -- at decent level.
Okay. Understood. The last question is around the guidance because you mentioned you're fully loaded. You can't see yet any deterioration in the demand, which makes me believe that second quarter should be at least as good as the first quarter. If I assume that, then you already have more than 60, maybe even 2/3 of your guidance for the full year in the books for the first half. From that perspective, it looks a little cautious, the full year guidance. Is it -- what kind of risk do you see apart from the seasonally lower volumes in the second half, which could make it difficult, at least to not overachieve the current guidance?
It's like we have already -- in March, when we did our yearly numbers, we have exactly used that tone that we said, yes, it's cautious. What is the risk? The risk you have seen just recently very -- unfortunately, very impressive how quick the political landscape is changing. And therefore, I can only say this is a risk. Fortunately, there's also good movements. You can see North Korea that was for us somehow also scaring. We see that there is, at the moment, calming down, but we still have a lot of crisis. We still have in U.S. situation that changes from day-to-day. One day, we have 25% import duties. The next day, it's postponed for a month again. So this leaves a lot of uncertainty. And our customers, especially in the U.S. are not very happy with the situation. So therefore, yes, we are not being exposed, but this is the kind of risk. So what we have said is by the end of the first half year, we would then say is this guidance still the correct one or do we need to adjust.
Okay. So it's mainly from a political perspective that you are still...
Yes. From the customer side at the moment, there is not really a big shadow. Yes, in March, the car industry was a little bit lower and so on. But I would not say really that we are seeing a big change. Yes, all this big famous indicators, the purchasing manager index and the Ifo Business Climate are a little bit weaker than before. But is that a change? I cannot see that at all from the discussions we have with customers and the order intake.
The second lag that is a general disclaimer you know that is -- it's always about the raw material prices. You've seen the nickel reaching above 60,000 and adjusted drop back to 13,000. So that remains always a source of uncertainty with respect also to working capital. That is why I'm a bit vague here. If nickel goes to 20,000 or something like that, of course, there will be also additional working capital needs. So of course, also that the EBITDA will be better. So these are the general uncertainties that we can't control.
Our next question comes from Laura Varriale from Platts.
As you said that you're trying to fill shifts again at Asco, I'd like to know whether this is across all plants. And where are the -- exactly the utilization rates at the plants.
I'm very sorry, but your question was interrupted a couple of times. The line was not very well.
Okay. Can you hear me well now?
Yes. Yes. Yes.
Okay. So as you said that you're trying to fill shifts, again, at Ascometal. Is that across all plants? And where are the utilization rates at the plant?
We don't really measure technical utilization rates. What we do is we refer our production always to the year 2014, which was kind of a reference year for each quarter. And here what we see is that, basically, all plants are at or above that level. The only one that is currently, let's say, a little bit lagging behind that level is the one in Chicago. All others are either at new highs or at the level of 2014. So it's as good as that. Therefore, Asco, what Clemens was referring to is, we have to differentiate between effective, I would say, capacity utilization and the potential capacity utilization. Asco is constrained not by the technical installation as such, it is currently constrained by the manning and the organizational setup. And that's why we are establishing the additional shift because simply the manning has been missing. In all other plants, this is not the case. Here, we run our normal 3 or 4 shift regimes as it applies to each of the plant.
Okay. So is this at Les Dunes, Hagondange and Fos-sur-Mer or...
Yes. Exactly. There's...
There's 2 more smaller ones, but there it's not really an issue. They're running pretty much on budget. So that's not the problem. It's the 3 and indeed especially in the south of France, we see this problem. Where -- you have to see, if you know the industry a little bit, we have both in Les Dunes and in Fos, we have big ArcelorMittal plants just side-to-side with us. And then it's natural that people who are maybe a little bit afraid because their employer is in insolvency that maybe tomorrow they don't get their salary payment. So therefore, they have looked over the fence, and since the carbon steel site at the moment seems to run also well, they have changed the sites.
The next question comes from Tom Zhang, Crédit Suisse.
Just one quick question. A couple of your competitors more on the stainless side have been talking a lot about increasing input penetration, particularly since 232. I realized you guys are a bit more in the specialty long steel, but maybe if you can just give a few words on what you're seeing import wise for tool steel and stainless long.
I would wonder whom you are talking about as competitors here because that must be the flex side most likely. We are not seeing big changes at the moment. Not so far. It's true. I mean, I'm also saying that we are, of course, a little bit worried about maybe competitors changing their supply structure because they have this problem in the U.S. and then coming more to Europe. But for the time being, you don't see a big change or diversion of supply volumes.
Ladies and gentlemen, that was the last question for today.
Okay. So then we can close today's call. Thank you for taking part in the conference call today and your interest in SCHMOLZ + BICKENBACH. As usual, if you have any further questions or comments, please let us know. We look forward to continue the dialogue with you. Thank you very much again, and goodbye.
Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.