Nexa Resources S.A. (NYSE:NEXA) Q2 2023 Earnings Call Transcript

Nexa Resources S.A. (NYSE:NEXA) Q2 2023 Earnings Call Transcript July 28, 2023

Operator: Good morning and welcome to Nexa Resources Second Quarter 2023 Conference Call. All participants will be in a listen-only mode. [Operator Instructions] This event is being recorded and is also being broadcast via webcast and may be accessed through Nexa’s Investor Relations website where the presentation is also available. After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] I would now like to turn the conference over to Mr. Rodrigo Cammarosano, Head of Investor Relations for opening remarks. Please go ahead.

Rodrigo Cammarosano: Good morning, everyone, and welcome to Nexa Resources’ second quarter 2023 earnings conference call. Thanks for joining us today. During the call, we will be discussing the company’s performance as per the earnings release that we issued yesterday. We encourage you to follow along with this onscreen presentation through the webcast. Before we begin, I would like to draw your attention to slide number two, as we will be making forward-looking statements about our business. And we just ask that you refer to the disclaimer and the conditions surrounding those statements. It is now my pleasure to introduce our speakers. Joining us today is our CEO, Ignacio Rosado; our CFO, Jose Carlos del Valle; and our Senior Vice President of Mining, Leonardo Coelho. So now I will turn the call over to Ignacio for his comments. Ignacio, please go ahead.

Ignacio Rosado: Thank you, Rodrigo, and thanks to everyone for joining us this morning. Please, let’s move now to slide number three, where we will begin our presentation. Let me begin by giving you a brief overview of our second quarter of 2023. We continue to experience a volatile macroeconomic scenario as weak economic indicators from China came in below expectations. Additionally, concerns over the global growth outlook, in addition to persistent inflation in some sectors of important economies and tight monetary policy are negatively affecting base metal prices, especially zinc, the main metal in our portfolio. In the second quarter, zinc price fell 19% quarter-over-quarter, and 35% year-over-year. In this difficult scenario, we are working on a portfolio of initiatives focused on cost reduction, CapEx, and working capital optimization, which I will discuss in more detail later in the presentation.

Our net revenue for the quarter reached $627 million, 24% down year-over-year mainly driven by lower LME metal prices compared to the second quarter of ’22. Net revenues decreased by 6% quarter-over-quarter, also reflecting the lower LME metal prices, which was partially offset by higher mining production and metal sales volumes. Our adjusted EBITDA in the second quarter of this year was $72 million compared to the $133 million in the first quarter of this year. This performance was mainly explained by the impact of lower LME metal prices as explained initially. Despite this significant drop in prices, we were able to deliver a positive cash generation, and we would like to reaffirm that our 2023 annual guidance remains unchanged. Aripuana is progressing well and at the end of June, the plant downtime hours reduced significantly.

The plant reached 76% of that nameplate capacity, while the recovery rates improved as well as the quality of the concentrates. In terms of exploration activities, our brownfield exploration programs are moving towards increasing the life of the mine in our mining operations. As mentioned also in our previous presentation, we are prioritizing the studies related to the Pasco Integration Project to consolidate our robust strategic organic growth option for Nexa in the near future. We remain confident in the long-term fundamentals of our industry and our business. We will continue focusing on safety, productivity and cost control in order to create value for all of our shareholders. Now moving to slide number four. In slide number four, regarding the operating performance of the Mining segment, you can see that zinc production increased to 81,000 tons, up 2% year-over-year, mainly explained by an increase in treated ore volume and the start-up of the Aripuana mine.

Compared to the first quarter of this year, zinc production was up 8%, explained by the resumption of operations at Cerro Lindo and higher volumes from Aripuana. In relation to cash costs, mining cash cost in the second quarter of this year increased to $0.37 per pound compared to $0.16 per pound in the second quarter of last year, mainly explained by lower by-product prices and higher TCs. However our cash cost in the first half of 2023 positively exceeded what we forecasted in our guidance for the year, decreasing almost $0.10 per pound compared to the lower end of the range. Looking at our cost per run-of-mine, which is the one metric that we control, it decreased quarter-over-quarter due to higher ore mined and the implementation of initiatives to reduce our costs.

Now moving to slide number five. In slide number five, regarding the operating performance of the Smelting segment, metal sales totaled 149,000 tons in the second quarter of 2023, down 2% from the second quarter of last year, and up 4% compared to the first quarter of this year. The quarter-over-quarter performance is mainly explained by slightly higher production volumes and sales strategy in line with our working capital improvement initiatives. Smelting cash cost in the second quarter of this year decreased to $1.12 per pound compared to $1.46 per pound in the second quarter of last year, and $1.25 per pound in the first quarter of this year. In both periods, this decrease was mainly explained by lower LME zinc prices affecting the cost of concentrate purchases, which were partially offset by lower by-product prices.

Our conversion cost, which is the metric that we control remained flat quarter-over-quarter. Now, moving to slide number six. On this slide, I would like to highlight the competitive position of our Mining and Smelting segments. In times of tight prices, it is important to understand how resilient and competitive our portfolio of operations is. As you can see our Mining and Smelting segments are positioned in the lower quartiles of the cost curves. This competitiveness is supported by flagship polymetallic mines and smelter operations with competitive energy costs, access to raw materials and their competitive conditions in addition to adequate logistic costs and operational efficiency. Now moving to the next slide. In slide number seven, I would like to highlight the productivity program we are performing at some of our mining operations.

It is a broad program that seeks to operate on different efficiency levels including initiatives such as higher availability of mine equipment, manpower reduction, optimization of mining methods, and reduction of scope and rates of our main contractors. All of these initiatives are aimed to increase productivity, reduce our headcount, reduced fixed and variable costs and optimize investments and working capital. The next stage of this program will extend to our other mines and our smelter operations, which we expect to start in the next few weeks. Ramp-up activities at Aripuana continue to progress significantly. And we are currently focused on steadily increasing plant throughput rate, asset reliability, reduction of plant downtime hours as well as improving metal recoveries and concentrate grades and quality.

During the quarter, treated ore volume was 372,000 tons, an increase of 100,000 tons from previous quarter, while zinc production reached 6.5 thousand tons, up a 166% (sic) 156% quarter-over-quarter. In the next slides, we will see some of these improvements. For the upcoming quarters, we expect to conclude the adjustments related to the bottlenecks in the pumping and piping systems that we mentioned in the previous quarter, and further improved the recovery and concentrate grades. We also continue with mine development activities at Arex and Link mines. The exploration activities in the quarter progressed as planned. And we are focused on upgrading the mineral resource at Babacu deposit and expanding again our mineral reserves at the end of 2023.

Now moving to the next slide. On this slide, I will talk about the progress of some of our main KPIs for the ramp-up phase of Aripuana. Starting with the plant downtime in the upper left side, we noted a reduction of 32% quarter-over-quarter. Average plant capacity utilization increased by 32% in the second quarter to 66%. And in June, utilization reached 76%. This utilization already includes the plant downtime hours. Therefore, if we do not consider those hours, the utilization would be at much higher levels. That is why we are focused on plant reliability. Finally, we can see the progress of zinc recovery, which reached 63% in June compared to 48% in March. And the quality of concentrate in zinc increased significantly. Now moving to the next slide.

On slide number 10, you can see that compared to the first quarter of 2023, zinc production grew by 156% reaching 6.5 thousand tons in the second quarter. Copper grew by 36%, while lead and silver production grew by 37% and 61% respectively. That said, we are confident with the progress of the operation and we will remain focused on completing the ramp up in the coming months. Now moving to slide number 11. On this slide, I would like to highlight that we continue to advance with the technical studies for the Pasco Integration Project. As we had been discussing in previous calls, this is a project with the potential to unlock important value for Nexa through economies of scale, cost improvement and extension of the life of the assets. We have four work fronts underway, focusing on the integration of the underground mines, increasing the capacity of the El Porvenir plant, increasing the capacity of tailings storage facilities as well as studies for support functions.

Exploration activities are following our program for the year, which already included activities focused on supporting the mineral inventory for the project. We are moving forward with the project and expect to submit it for approval by our Board of Directors in the fourth quarter of this year. Now I will turn over the call to Jose Carlos del Valle, our CFO, who will present our financial results. Jose, please go ahead.

Jose Carlos del Valle: Thank you, Ignacio. Good morning to everyone. I will continue on slide 12. As you can see, beginning with a chart on your upper left, total consolidated net revenues for the second quarter decreased by 24% year-over-year, mainly due to lower LME metal prices and slightly lower smelting sales volume. Compared to the first quarter of 2023, net revenue decreased by 6%, also driven by lower LME metal prices. This decline was partially offset by higher mining production and an increase in sales volumes. In the first half of the year, consolidated net revenues reached $1.3 billion versus $1.6 billion in the first half of 2022, a decrease of 17%. Consolidated adjusted EBITDA in the second quarter of 2023 was $72 million compared to $302 million in the second quarter of 2022.

This important reduction was driven primarily by 35% and 11% declines in zinc and copper prices respectively as well as by higher operating costs related to the start-up of Aripuana. Compared to the first quarter of 2023, adjusted EBITDA decreased by 46%, explained by lower metal prices, and by the negative impact of the exchange rate, partially offset by higher by-product volumes and a positive hedge effect. In the first half of this year, consolidated adjusted EBITDA reached $205 million versus $519 million in the same period of last year, also explained by the reasons mentioned a moment ago. Now let’s move to the next slide 13. On the top left of the slide, we can see that in the first half of 2023, we invested $116 million in CapEx, of which sustaining investments, including mine development totaled $115 million.

The total investment in the second quarter was $60 million. As mentioned by Ignacio, we have been implementing initiatives and programs focused on cost reduction and on working capital and CapEx optimization. It is likely that some of these initiatives may result in lower CapEx intensity for the year. Therefore, we may revise downward in the next quarter our guidance for 2023. With regards to mineral exploration and project evaluation, we invested a total of $44 million in the first half of 2023, of which $23 million was related to mineral exploration and mine development to support exploration activities. Now let’s move on to the next slide in which I will discuss our cash flow generation in the second quarter of the year. For the second quarter of 2023 and starting from our $72 million of adjusted EBITDA, net of non-operational items, we paid almost $40 million related to interest and taxes.

And spend $63 million in sustaining CapEx in our operations, including Aripuana. Additionally, loans and investments had a negative impact of $6 million. We then had a positive impact of $6 million due to the effects of foreign exchange on our cash and cash equivalents balance driven by the appreciation of the Brazilian real against the US dollar. Finally, there was a positive contribution of $83 million due to an improvement in working capital, in part as a result of management initiatives implemented in the second quarter of 2023. Combining all the effects described above, our free cash flow in the second quarter of 2023 was $34 million. Now moving to slide 15. On this slide, you can see that our liquidity remains healthy and we continue to present a solid balance sheet with an extended term debt profile.

Cash balance increased and net debt declined in the second quarter of ’23 as a result of positive cash flow generation during the period. As a result, current available liquidity was approximately $721 million including our undrawn revolving credit facility of $300 million. In relation to our debt, it has an average maturity of 4.2 years and a 5.6% average cost. It is important to mention that as of June 30th, our total cash is sufficient to cover the payment of all our obligations maturing in the next four years, with only 2% of total debt maturing by the end of 2023. Finally, despite the $40 million increase in our cash balance, leverage measured by the net debt to adjusted EBITDA ratio increased from 1.9 times to 2.8 times quarter-over-quarter, mainly because of lower adjusted EBITDA in the last 12 months driven by the prevailing trend of lower LME prices.

Now moving to slide 16, talking about some key market fundamentals. First, I should highlight that in the second quarter of 2023, LME zinc price averaged $2,356 per ton, down 35% from the second quarter of 2022 and 19% from the first quarter of 2023. The main reasons for this decline in LME metal prices were, concerns about the health of the global economy, persistent high interest rates, driven by resilient inflation in some sectors and in relevant economies, and the lower-than-expected pace of recovery of the Chinese economy driven in part by some key economic variables surprising to the downside last quarter. However, despite tight prices in the short-term, we believe zinc fundamentals remain positive in the mid and long-term, supported by potential lack of feasible supply to fulfill forecasted demand, which is expected to be driven by investments in infrastructure, constructions and the auto sector, now also boosted by electric vehicle sales.

Regarding copper, the LME price is down 11% from the second quarter of 2022 and 5% from the first quarter of 2023. In terms of demand, we are all aware that copper will play a key role in the energy transition. On the supply side, volumes from greenfield and brownfield projects are expected to come online in 2024 and 2025 contributing to a mild surplus in the market, which could revert in the following years. Now I will hand over the presentation back to Ignacio for his final remarks.

Ignacio Rosado: Thank you, Jose Carlos. Before going on slide number 17, I would like to mention one provision that impacted our net income in the second quarter of this year. In line with our last quarter’s financial disclosures regarding an ongoing investigation of commercial and VAT tax-related practices of certain of Nexa’s customers between 2018 and 2022, I would like to inform that Nexa has been cooperating fully with the State of Minas Gerais authorities. Considering that the current deferred VAT state rules imply secondary liabilities for Nexa if a customer with primary responsibility does not make the required payments to the State, Nexa may decide to voluntarily make some tax payments on behalf of these customers to avoid higher tax exposures in the future and reserves a legal right to recover such amounts from them in the future.

This potential resolution can also include a contribution to the State of Minas Gerais to support its ESG-related efforts and enhance its monitoring and investigating tools to avoid these type of situations in the future. Therefore, in connection with this situation, the company has decided to record a provision of approximately $70 million for the second quarter of this year. We will keep the market informed as appropriate of the evolution of this situation. I would like to close the presentation by mentioning our priorities for the remaining of the year. We will continue working on completing the Aripuana ramp-up on our mineral exploration programs as well as on advancing with the studies related to the Cerro Pasco Integration Project. We will remain focused on productivity, aiming to reduce costs and optimize CapEx and working capital.

This will contribute to strengthening our position in the current challenging price scenario in addition to supporting our balance sheet. We are confident we are on track to deliver our full-year targets. And with the guidance we laid out at the beginning of the year. Thank you all for attending this presentation. With that, we will be happy to take your questions.

Q&A Session

Operator: We will now begin the question-and-answer session. [Operator Instructions] We currently have no questions on the phone. We might be able to move over to webcast questions now.

Rodrigo Cammarosano: Hi, everybody. The first question, thanks for the questions. The first question is from Hernan Kisluk from MetLife. The question is, Nexa sits in the first quartile of mining cost curve, but yet with low zinc prices, the EBITDA margin was only 7%. Does it mean that the higher cost producers are having negative EBITDA?

Jose Carlos del Valle: Thank you, Rodrigo. Hi. It’s Jose Carlos del Valle, CFO. Thank you for the question. Here, the way I would see is — the way I would see is that certainly higher-cost producers are facing — are struggling with these prices. However, the results that we’re seeing for Nexa don’t necessarily represent a — what Nexa’s future performance is going to be. One important item here is that Aripuana is still in a ramp-up status, so that is going to continue to evolve favorably and contribute to our margin in the next few quarters. So that’s one point. And there are always things that may not be that clear for the market in terms of provisions for example. In this quarter, we have had close to $15 million in provisions, that somehow are not really seen by the market are related to NRV to mark-to-market, legal provisions, which don’t happen in a recurring way.

So having said that, higher cost producers definitely see some difficulties at these prices, but I wouldn’t say that the 7% margin that you are mentioning for Nexa is not representative of what Nexa could achieve under normal conditions with these prices.

Ignacio Rosado: And to add — I am Ignacio. And to add to what Jose Carlos is saying, in this case of this 7% and $72 million, which is really low for us, besides the provisions that Jose Carlos is saying, we have the effect of Aripuana. Now, Aripuana is a mine that is still in the ramp-up, so it’s losing money, and that influences that. And one comment that is important is that if you go mine by mine and smelter by smelter, which is the curve of the first quartile that you have, most of them at these prices make money. The thing is that, that money is being used in Aripuana and in other CapEx activities today, so going forward, I will say that, with the program that we are launching and with a profitability increase that we want in our mines and Aripuana now is starting to be positive. The cash flow generation from all operations will improve and will reflect more or less that we are in the first and beginning of the second quartile.

Rodrigo Cammarosano: Okay, thank you, Ignacio. Thank you, Jose Carlos. We have another question here from the audience. It comes from Declan Hanlon from Santander. Regarding the working capital cash generation, can you provide more detail on how these and how you anticipate these management actions to impact the working capital cash cycle in the second half of the year? Secondly, where you see EBITDA from the — for the full year given the guidance line items presently?

Jose Carlos del Valle: Thank you, Rodrigo. Thank you Declan also for your question. Here I would say that in — the key aspects here are related to mainly reducing inventory so that we can shorten the working capital cycle. And in part it’s simply the reversion of the negative working capital impact that we had in the first quarter. And if you remember I think it was in the last call, we said that this will revert in the next few quarters. So part of that is the reversion of this, and the rest is related to initiatives, as I mentioned, mainly to reduce inventory, trying to optimize transportation and inventory levels in all the operating units to reduce working capital. In terms of EBITDA, as you know, this will be largely influenced by price, which we cannot predict.

So it will be difficult to give you a view on this. What we can say is that we are reaffirming our production levels. So that’s the one piece that we do control and that we’re always focusing on as well as on cost optimization.

Rodrigo Cammarosano: Okay. Thank you, Jose Carlos. We have another question from Jens Spiess from Morgan Stanley. Could you please elaborate on VAT investigation provision? How certain is that the final amount paid will be $70 million. Will you be able to recover that amount from the customers through legal measures?

Ignacio Rosado: Yeah, the provision of this $70 million that we have comprises all that customers that are involved in the investigation today. So we are certain that this amount is a 100% of the amount in investigation. What we are discussing with the authorities is that half of this amount will use tax credits that we have. We have accumulated over years a lot of tax credits. So half of them will be used in paying this amount if we arrive at this condition. And the other half is going to be paid in installments, in monthly installments in 36 months. So that’s more or less where we are in this regard. There is still an investigation for other two clients. That is early days today and we cannot provide any information on that, because the process has just started.

Rodrigo Cammarosano: Thank you, Ignacio. We have another question from Morgan Stanley. The company mentions the possibility to revise down the CapEx guidance for the year. Where would Nexa reduce their investments if it comes to VAT?

Jose Carlos del Valle: Yes, thank you. Thank you again for the question here. It’s too early to tell. And we are not making that revision right now because we’re evaluating what those — what those areas will be. And that’s why we believe that we will be — we would be announcing this in the next quarter. But obviously, it will be in CapEx, and CapEx components are not that critical to the company’s performance or to the company’s safety. And we will be announcing that once we complete the evaluation.

Rodrigo Cammarosano: Okay. Thank you, Jose Carlos. We have another question here. Sorry, we have one question from S&P Global Platts. There have been recurring roadblocks at Atacocha. Do you foresee further trouble with the communities this year?

Ignacio Rosado: Yes, actually the Atacocha strategy has changed very much in the last 18 months. What we are doing now is that — before Atacocha was — the communities around Atacocha were working on pressing the company, stopping the pit, so they claim more amounts on the agreements that were open at that time. So they were pushing the company to pay them more. And if not, I will stop the pit and I will commit vandalism around our offices and on our equipment. So the strategy we did was, we changed, we will say, okay, we cannot negotiate with you in these terms, if we stop the pit and the operations are stopped, you will also suffer. And we have been legally demanding them, we have been firing some of the workers. And we have been cutting all the benefits that these communities — workers of the communities were exposed.

So they can feel the same as us, that these stoppages hurt the company and themselves. So this has been the case for the last 18 months. Most of the communities understood that by doing that, they were — lose situation, and we agreed with most of the communities on an agreement that we close all our agreements, accounts are clear, and we move forward as partners in developing the mine and developing the community. This last stop of [Maushcan] (ph) which is a small community, as I would say, the last one in these context. It took us almost a month — it took us almost a month, we resumed operations yesterday. We were speaking with the authorities and with them. And now we are talking in the same terms as before. So I would say that the answer to your question is, given this new strategy, they know that it’s a lose-lose strategy.

If we stop — if they stop us, I will see that in the coming months and complying with all the agreements that we have and making sure that the community also gains some of the business that generates Nexa, we don’t see any other stoppages. But having said that, this is Peru, it’s very difficult the context sometimes to keep monitoring that. But I would say that, there is a probability that we won’t have any other stoppage in the coming months.

Rodrigo Cammarosano: Okay. Thank you, Ignacio. We have one question from Niel Botha from Ninety One. Net leverage has increased a bit recently, currently at 2.8 times net debt to EBITDA ratio. Where do you see these trading towards year-end. Is there a risk of pressure on credit ratings if this weakening trend in leverage continues?

Jose Carlos del Valle: Thank you, Rodrigo, and thank you Niel for the question. Yes, that is correct. Leverage has gone up. However, this increase is mainly related to lower prices and lower EBITDA that are consequence of the lower prices. So it’s the part of the leverage that we don’t really control much, right. The levers that we’re focusing on are the ones we are trying to optimize with a business perspective, preserving — preserving cash, optimizing cost, increasing productivity. And the EBITDA is going to be a consequence of that on those factors that we can control. Prices unfortunately, we cannot do much about. So, we’re just continuing to try to make sure that we had the most efficient operations. In line with that, I think it’s also important to emphasize again that all of our operations make money at these prices.

So that doesn’t mean that we cannot improve this further. That’s what we’re working on right now, both at the mines and at the smelters. And if prices improves that’s better. In terms of rating agencies, we have close communication with them. They understand our business and they are aware of the measures that we have been taking to preserve cash and maximize efficiency and productivity under this low price scenario. And as far as we know there should be no impact on our current ratings.

Rodrigo Cammarosano: Thank you, Jose. We have a question from Orlando Barriga from Credicorp Capital. Good morning. Thanks for taking my questions. I would like to know what can we expect in Aripuana for the following quarters given the quarter-on-quarter increase, what are we going to be the cost there?

Jose Carlos del Valle: Yeah, it’s a good question. And I think this also relates to an earlier question that was asked. And we haven’t talked about that yet. In the second quarter, we lost $30 million in Aripuana because of the ramp-up, I mean, the cost on the CapEx are higher than the metal we’re selling in the first quarter was more, was around $40 million to $45 million. And in the third and fourth quarter, we expect that these amounts are going to be much lower, have been the trends there. The downtime hours that is very important for us because it creates reliability from the plant are going to go down. In July, it’s going to be close to 100 hours and that’s going to improve, recoveries are up, quality of concentrate is up.

So the second half of this year is going to create a positive environment for this ramp up. Having said that, to give you an idea of cost guidance today, it’s early, because we are still stabilizing the process, and we’re spending probably more CapEx to make sure that the plant is up and running around 100% basis. We are spending some CapEx more in the mine, so we can prepare the mine to feed the plant in the right direction. So we are not comfortable giving you some of the costs that we have. What I can say is that the negative cash flows that we had in the first half are going to be much lower in the third quarter, and hopefully positive in the fourth quarter. The guidance that we are giving around achieving, nameplate capacity towards the end of the year is still there, you guys can see the KPIs that we are showing, so Aripuana is going in a very good direction.

And that’s actually what we can say today.

Rodrigo Cammarosano: Thank you, Ignacio.’ We have another question from JP Morgan — sorry, Morgan Stanley. You mentioned that Aripuana ramp-up had a $30 million negative impact on free cash flow in the second quarter. How much as the total accumulated impact since the start-up of the program?

Ignacio Rosado: Yeah, as I was saying this year $30 million in the second quarter — in the first quarter was almost $40 million or $43 million as I was saying. And we expect that this number is going to be much lower in the second half of the year because the ramp-up, I mean, the plant is going to generate more quality concentrate, costs will go down, CapEx is going to slow down. So second half of this year, we will be in a much better position and much better shape, I would say.

Rodrigo Cammarosano: And with that we will conclude our question-and-answer session. Now we will hand over to Ignacio for his final remarks. Mr. Rosado, please go ahead.

Ignacio Rosado: Thank you very much. Thank you very much all for attending this call. This was a very difficult quarter for us given the 35 decrease in prices of zinc. As know zinc is the main metal we produce. We are conscious that this situation won’t revert soon. We know that China is still not getting all the indicators in the industrial segment that we need. The — some positive indicators in the states are helping that’s why zinc price is recovering a little bit. But in any case, we are prepared to face these type of prices for the rest of the year. We will have to be prepared, and probably the next year as well. So we are very committed to make sure that we produce positive cash flow. We are very committed that Aripuana will be up and running in the outlook that we are projecting.

We are very committed to achieve our guidance. And hopefully when prices go down, we would benefit from that in our cash flow. The reduction of the debt is a priority for us as well. We spend a lot of money in our Aripuana project. So we are very aware that reduction of that is our priority. We are also committed on that. And you will see the trends that we are projecting in the coming quarters. And with that, I would like to thank everybody. And we will see you in three months presenting our third quarter results. Thank you. Thank you very much to everyone and have a good day.

Operator: The conference has now concluded. Thank you very much for attending today’s presentation. You may now disconnect your lines and have a great day.