MetalNRG Q2 2026 Earnings Call Transcript

Quartr
Provided by Quartr
August 6, 2026

Key Takeaways

  • Positive Sentiment: Strong first-half financial performance: Revenue increased 11% to nearly €4 billion, EBITDA rose 23% to €550 million, and attributable net profit grew 23% to €313 million. Operating cash flow exceeded €800 million, helping reduce net debt by approximately €500 million and lower net leverage to 1.7x from 3.1x at year-end 2025.
  • Positive Sentiment: Broad-based business growth: Energy EBITDA rose 15% to €331 million, metals EBITDA increased 15% to nearly €150 million, and infrastructure and concessions EBITDA nearly tripled to €82 million, supported by stronger execution and a backlog exceeding €2 billion.
  • Negative Sentiment: Legacy project charges remain a risk: Metlen recognized additional completion costs on troubled M RESET/M-Project contracts as they approach delivery. Management said the worst is likely behind the company and reaffirmed its commitment to deliver 11 of 13 projects during 2026, but further execution risk remains.
  • Positive Sentiment: Critical-metals and defense expansion advanced: Metlen secured financing and its first commercial gallium offtake agreement, while its Circular Metals platform and defense operations progressed with additional partnerships and contracts. Management indicated potential gallium production expansion toward 60 tonnes and significant defense EBITDA growth from 2027 onward.
  • Neutral Sentiment: Guidance and capital allocation remain cautious: Despite a strong first half and expectations for seasonal improvement, management declined to raise 2026 guidance. Full-year capital expenditure is expected to remain below the initially planned €1 billion, while the company continues its share buyback, dividend plans, and preparation for a possible METKA IPO in the second half of 2026.
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Earnings Conference Call
MetalNRG Q2 2026
00:00 / 00:00

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Operator

Ladies and gentlemen, thank you for standing by. I am Geli, your Chorus Call operator. Welcome, and thank you for joining the Metlen Energy & Metals PLC conference call to present and discuss the Metlen first half 2026 financial results. All participants will be in listen-only mode, and the conference is being recorded. Should anyone need assistance during the conference call, you may signal an operator by pressing star and zero on your telephone. At this time, I would like to turn the conference over to Mr. Evangelos Mytilineos, Executive Chairman; Mr. Christos Gavalas, Group CEO; Ms. Fotini Ioannou, Group CFO, and other senior executives. Mr. Mytilineos, you may now proceed.

Evangelos Mytilineos
Executive Chairman at Metlen Energy & Metals PLC

Good afternoon to Greek friends. Good morning to our U.K., U.S., and other West European friends. We thank you all for joining us today for Metlen's first half 2026 results conference call. The presentation materials have already been published and are available on our website. Joining me today are Christos Gavalas, Group Chief Executive Officer; Fotini Ioannou, Group CFO, and members of the executive team. Let me begin by saying that the first half of 2026 marks an important step forward for Metlen. 15 months ago, we outlined a clear medium-term roadmap during our capital markets day in London. Today, I'm pleased to say that after setbacks suffered the previous time, we are firing on all cylinders to execute against that plan successfully, I hope that the underlying strength of our business is becoming increasingly visible to the community.

Evangelos Mytilineos
Executive Chairman at Metlen Energy & Metals PLC

Our performance during the first six months of the year demonstrates the resilience of our integrated business model and the quality of the industrial platform we have built over the years. Sales increased by 11% to almost EUR 4 billion. Group EBITDA rose by 23% to EUR 550 million, and net profit attributable to shareholders increased by 23% to EUR 313 million. Perhaps equally important, operating cash flow exceeded EUR 800 million, allowing us to materially strengthen our balance sheet and reduce net debt by approximately EUR 500 million within six months. Our leverage ratio improved significantly to 1.7x net debt to EBITDA, demonstrating both the strong cash-generating ability of the group and our continued financial discipline. Fotini will tell you more about the numbers right after. Looking at our businesses individually, energy continues to perform strongly.

Evangelos Mytilineos
Executive Chairman at Metlen Energy & Metals PLC

We have successfully completed the simplification of the segment into two integrated platforms, creating a more focused structure around our integrated utility business and our renewables storage and energy transition activities. We are seeing already the benefits of this approach through improved coordination, stronger execution, and better capital allocation. At the same time, our partnership with PPC Battery Storage creates a new growth avenue and further strengthens our position in one of Europe's most promising energy markets. In metals, the strategic importance of our investment program continues to grow. During the period, we secured EIB financing and additional institutional support for Europe's first industrial-scale gallium production facility. More importantly, though, that the H1 event, but shows we signed our first commercial gallium contract covering a significant portion of future production and providing a strong market validation of both the project and our broader Critical and Rare Metals strategy.

Evangelos Mytilineos
Executive Chairman at Metlen Energy & Metals PLC

This milestone also marks the launch of MCRM, Metlen Critical and Rare Metals, a new dedicated platform bringing together critical raw materials and Circular Metals under a single strategic structure. We believe these activities share common technological, operational, and commercial characteristics, creating a unique growth platform positioned at the center of Europe's strategic autonomy agenda. Following the successful commissioning of the pilot plant and the achievement of recovery rates exceeding expectations, we are steadily advancing towards the commercialization phase, creating a new source of high-value, sustainable metals production for the group. M Technologies also continues to progress rapidly. The expansion of our defense industrial lab in Volos is advancing ahead of the targets we communicated to investors, while new international partnerships continue to strengthen our position within the European defense ecosystem.

Evangelos Mytilineos
Executive Chairman at Metlen Energy & Metals PLC

As you know, very recently, the business secured an important new contract with HOUTRIS, further enhancing visibility and validating the growth trajectory of the platform in the international markets as well. As the scope and technological focus of the business continue to expand, we are also evaluating the evolution of the brand towards Advanced Metal Technologies, a name that better reflects the broadening capabilities and strategic ambitions of this fast-growing segment. As geopolitical developments continue to reshape defense priorities across Europe, we believe this business is exceptionally well-positioned for long-term growth. Infrastructure and concessions is emerging as another important growth driver. EBITDA more than doubled during the first half, supported by strong project execution and an expanding backlog, further validating our strategy of building a diversified industrial group with multiple sources of sustainable earnings growth. At the corporate level, our presence in London continues to strengthen.

Evangelos Mytilineos
Executive Chairman at Metlen Energy & Metals PLC

Our inclusion in the FTSE 100 and the broadening of our international shareholder base represent important milestones for the company and a recognition of the transformation achieved over recent years. The launch of our share buyback program further reflects our confidence in the long-term value of the business and our commitment to shareholder returns. Looking ahead, we remain confident in our medium-term objectives. The structural themes supporting our growth remain intact. Energy security, Critical Raw Materials, industrial resilience, defense, and infrastructure. In all these areas, Metlen is investing, expanding, and building capabilities that we believe will continue to create significant value for the shareholders over the coming years. With that, I will now hand over to Fotini to guide you through the financial performance in more detail, and then we will be back to you to discuss your questions and remarks. Thank you.

Fotini Ioannou
Group CFO at Metlen Energy & Metals PLC

Thank you, Chairman, good morning, good afternoon, everyone. As the Chairman highlighted, Metlen delivered a strong performance during the first half of 2026, demonstrating the progress that has been achieved across the group and across all segments. There are three key themes that I would like to underline. First, that you see record-level performance in all our key financial metrics, supported obviously by EBITDA increase in all our sectors. Second, most importantly, this increase in profitability translated into very strong cash generation. Third, the combination of the two allowed us to materially strengthen our balance sheet while obviously continuing to execute our strategic investment program.

Fotini Ioannou
Group CFO at Metlen Energy & Metals PLC

In order to elaborate a little bit more, our revenues increased by 11% year-on-year to almost EUR 4 billion, the group EBITDA increased by 23% to EUR 550 million compared to EUR 445 million. Net profit after minorities increased again by 23% to EUR 313 million, while EPS rose to 2.18 compared with 1.8 in H1 2025. Going to each sector one by one, looking first at energy, our whole energy sector delivered EBITDA of EUR 331 million, increasing by 15% year-on-year, supported by stronger performance across both of our integrated platforms, the integrated utility platform and M RESET. Going first to M RESET, we had a good start to the year with EBITDA coming in at EUR 116 million, roughly 30% higher year-on-year, with significant achievements across asset rotation and EPC and operational risk.

Fotini Ioannou
Group CFO at Metlen Energy & Metals PLC

We completed the sale, as you know, of roughly 280 MW solar portfolio in the U.K. as part of our asset rotation strategy, demonstrating the group's ability to develop mature and monetized renewable energy assets across geographies. Significant progress has also been made across energy storage. As we have communicated in the past, more than 400 MW of BESS projects were energized across Greece and Italy during the period. Most importantly, we made significant progress in executing what used to be the old MPP project, the legacy contract that affected our 2025 performance. We have committed to the market that by the end of this year, we would deliver the vast majority of these projects, we're well in line with that commitment. Since the beginning of the year, we achieved significant milestones in all projects and especially the three problematic ones.

Fotini Ioannou
Group CFO at Metlen Energy & Metals PLC

We achieved the first fire milestone at the GrudziÄ…dz project. We handed over one of the three OCGTs for the Drax contract, we already reached the readiness to receive waste milestone at Protos in the U.K. As I'm sure you appreciate, as the legacy projects are approaching completion, we recognize additional completion costs in our H1 results as these projects continue to the final stages of delivery. The enhanced controls that we have communicated in the previous conference call, they were introduced in the period following the challenges that we had in 2025, remain firmly in place and bear fruit. Moving on to the fully integrated utility, also solid performance. EBITDA increased by 8% to EUR 215 million, this performance importantly was achieved despite lower wholesale electricity prices and obviously demonstrates the strength of our integrated model across generation and supply.

Fotini Ioannou
Group CFO at Metlen Energy & Metals PLC

Power generation in Greece reached about 4.4 TWh, while our market share in electricity through Protergia increased to 21.5%, roughly 150 basis points versus H1 2025. Moving to metals, our EBITDA increased by 15% year-on-year to almost EUR 150 million, this was obviously driven primarily by stronger aluminium prices and enhanced cost efficiency. As you know, through our hedging ahead strategy, our aluminium and majority of calcine and alumina sales for 2026-2028 have been hedged at progressively higher prices, together with the hedging of the key input costs, it provides us with increased visibility on earnings margins and cash flows in the coming years. The group also continued to shift our alumina sales towards contracts linked to LME as opposed to the alumina price index, further supporting the alumina profitability. Final segment, infra and concessions. We delivered another very strong result.

Fotini Ioannou
Group CFO at Metlen Energy & Metals PLC

EBITDA increased to EUR 82 million, almost tripling the EUR 31 million recorded in the first half of 2025. This performance reflected accelerated project execution, particularly across projects funded through the RRF, disciplined project management, and the continued expansion of our infra and concessions portfolio. Our total backlog, including projects at an advanced stage, exceeded EUR 2 billion, and this obviously increases the scale, the quality, and the visibility of this segment's future earnings. Turning now to what I think is the most important feature of this set of results and our first half of performance. We have committed to reach net leverage below two by the year-end. We managed to bring that in at the end of H1. Our net leverage decreased to 1.7x compared with 3.1x at the end of 2025. As you appreciate, this is a significant improvement over a six-month period.

Fotini Ioannou
Group CFO at Metlen Energy & Metals PLC

Our cash flow from operating activities exceeded EUR 800 million during the period, reflecting strong cash generation and very disciplined working capital management. Looking ahead towards the end of the year, despite significant outflows planned for the second half of the year, we remain confident that this leverage ratio will be at least at the same level as it is now. Closing the first half in its totality demonstrates our ability to grow our earnings, convert those earnings into cash, continue to fund our investment program, return capital to shareholders, and strengthen our balance sheet simultaneously. Thank you.

Evangelos Mytilineos
Executive Chairman at Metlen Energy & Metals PLC

Thank you, Fotini. First of all, apologies for starting four minutes late, we had to expect a lot of friends to join in, we have, as we speak, 202 friends online. Therefore, again, apologies for the delay. We have a number of questions that have been sent to us by mail, we have one or two questions which have been verbally expressed to us. Of course, everybody is invited to make a comment or place any questions as the conference call unfolds. The first one is from Mr. Alain Gabriel from Morgan Stanley Research and goes like this: "I hope you are well." We are very well, thank you. "May I please send through these questions below the call? Thank you." First one, gallium.

Evangelos Mytilineos
Executive Chairman at Metlen Energy & Metals PLC

Can you give us a bit more color on the commercial terms and how confident you are on your ability to secure similar terms of the remaining 75%? That's a very interesting question. Very much de rigueur, as we say in French. Everybody talks about the gallium business. I will try to be as open as possible because the disclosure agreement that we have with our first buyer is extremely strict. On the commercial terms, some people are wondering what is the usual terms of pricing of the critical metals. This is not like the London Metal Exchange or other exchanges. These prices benchmarked on the publications of Argus and Fastmarkets, which are twice a week each, that is where the prices are set. If there are discounts, premiums, or whatever, this is a different story.

Evangelos Mytilineos
Executive Chairman at Metlen Energy & Metals PLC

If you want to make as analysts, your calculations, this is what you have to look at. Payment terms, delivery terms, and others, unfortunately, we cannot make any comments. Regarding our ability to sell or secure the sales of the remaining 75%, that could be a nice joke because we could sell not only our 50 tons, we could sell 200 tons if we had, but unfortunately, we don't have. The remaining 75% will be sold in the next period of time. We have here to understand that gallium, because of its dual use in civil and military applications, it's an extremely sensitive product, and one has to be very careful to who it can and to who it cannot sell gallium. That's not any metal.

Evangelos Mytilineos
Executive Chairman at Metlen Energy & Metals PLC

We have to take also into account that some of this material, we would like to see ending up in European consumers. I have to admit that the interest from European consumers is way below the interest of the American, Japanese, or South Korean consumers. I'm afraid it is a possibility that the Europeans will be left out totally. I'm sorry to say that, this is a reality. On the energy side, development run rate of your renewables projects under construction is now below those that are in operation. Is that a temporary dip or is that a new normal? I think that is a temporary dip, and it has to do with the many issues. Christos, who is sitting next to me, may like to add one or two things about it. Christos.

Christos Gavalas
Group CEO at Metlen Energy & Metals PLC

Thank you, chairman. Some of the M RESET, we call it activity. We have provided a year and a half back, the outlook for the medium term, which is there. More than half a billion EUR of EBITDA as a contribution to the total profitability going forward. We see the asset rotation still strong and very promising. In fact, as we currently stand, approximately two and a half gigawatts of asset rotation projects are under construction. The least is not having the one that we have already sold, and this is an opportunity for us to say that the model is a bit different. On the asset rotation activity, we have de-risked it by pre-selling the assets that we are constructing. We have a risk-free model, and we are mindful of the third leg of that operation that has to do with connection that we cannot really control.

Christos Gavalas
Group CEO at Metlen Energy & Metals PLC

We are picking only those that do not run this risk. Last point, if I may make on the blend of what we call now asset rotation in relation to what was the case a few years back. You know that standalone solar is suffering on the back of very low pricing, the demand comes mostly from batteries globally. This results to a different mix, meaning most of them are coming hybrid as a request. Some of them battery standalone, and this is going to represent the mix going forward, which is going to be quite the opposite as it used to be in the beginning. It used to be more solar, less batteries. It's going to be more batteries, less solar.

Christos Gavalas
Group CEO at Metlen Energy & Metals PLC

The last point has to do with Australia, that is very much linked to that observation, meaning that we are going into hybridize that project as well, as the case has been with Chile. For this reason, we do expect 2027 to be the year of disposing it. Thank you very much.

Evangelos Mytilineos
Executive Chairman at Metlen Energy & Metals PLC

The last question of Mr. Gabriel is, "Can you elaborate more on your net working capital performance over the quarter, which was much better than many have expected?" Fotini, please.

Fotini Ioannou
Group CFO at Metlen Energy & Metals PLC

Thank you, Chairman. Yes, as I mentioned at the beginning, cash generation and cash management was a key priority for us throughout the first half, with a strong focus obviously on improving cash conversion across all of our businesses and strengthening working capital. The principal drivers that led to the EUR 820 million operating cash flow in the first half were obviously very strong cash conversion from our traditionally cash-generative businesses. Namely, the fully integrated utility and the integrated aluminum value chain, together with good asset rotation proceeds and very disciplined working capital management across the group. Especially in H1, we benefited from the collection of receivables that were overdue in previous periods, as well as commercial arrangements and customer prepayments that we managed to secure in long-term contracts and long-term relationships that we have with our clients.

Fotini Ioannou
Group CFO at Metlen Energy & Metals PLC

I think as a final point, what I want to point out is that we managed to bring in this net leverage improvement and this operating cash flow without jeopardizing in any way our investment plan or our CapEx plan as that was planned for H1.

Evangelos Mytilineos
Executive Chairman at Metlen Energy & Metals PLC

Thank you, Fotini. We go to the next set of questions, actually, from Mr. Nestoras Katsios from Optima Bank. Question number one, your strong H1 performance, coupled with expectations for an even stronger second half driven by seasonal factors, suggests that full year 2026 results could reach the upper end of your guidance range. Are you considering an upward revision to your guidance?

Evangelos Mytilineos
Executive Chairman at Metlen Energy & Metals PLC

I agree with Mr. Katsios that the results of the first half could merit an upgrade in our guidance. We prefer to stay on the conservative side and keep the guidance as it is. Second question, how is the METKA IPO progressing? Are you still on track for a potential listing in second half 2026? Depending on global and local market conditions, the IPO of METKA in the second half of 2026 is a strong possibility.

Evangelos Mytilineos
Executive Chairman at Metlen Energy & Metals PLC

Number three, could you update us on your aluminum and alumina hedging levels in coming years, and how should we think about their impact on the metal segment's future profitability? Have you also fully hedged your input costs? Hedging is a difficult business, and that's why many companies try to avoid it. On the other hand, in situations like the one that we are going through now, and when a company has the possibility to lock in prices that are way above its cost basis, our practice has been to lock in both the sales prices as well as the prices of the inputs, at least the main materials. That has now been the case as well, and as you very well point out, it concerns the years 2026, 2027, 2028.

Evangelos Mytilineos
Executive Chairman at Metlen Energy & Metals PLC

This concerns both aluminum and alumina, and following the trend of the prices of the last I would say nine months, the trend of the hedging prices has also been on an upward move. Mr. Marios Bourazanis from Eurobank Equities. Number one. You have a bond maturing in second half 2026. Are you considering early repayment? More broadly, do you intend to refinance the bond or repay it using available cash?

Evangelos Mytilineos
Executive Chairman at Metlen Energy & Metals PLC

This EUR 500 million maturing bond bears a coupon of 2.25%. Therefore, early repayment makes, as you can realize, absolutely no sense. Whether repayment of the bond will take place with available cash, I remind you in our results, we speak about a total liquidity of EUR 5 billion, of which EUR 2.6 billion is cash. Whether repayment will take place with this cash or through a refinancing operation, depends entirely on the market conditions.

Evangelos Mytilineos
Executive Chairman at Metlen Energy & Metals PLC

In general, repayment of our capital markets obligation is never linked to refinancing. Our operations in the capital markets are totally independent and linked only to what we, as management, consider as appropriate conditions. I want to be very frank and clear about it, never link the two as far as our company is concerned. Repayment of a bond is one thing, going into the capital markets to raise money is another thing. They don't go together, not for us. Question number two on metals. How should we think about the timing of the recent aluminum alumina pricing uplift in your results? Should the alumina benefit be even more visible in second half due to pricing lag? Will the full aluminum benefit come through mostly over 2027, 2028? It's a bit early to talk about 2027.

Evangelos Mytilineos
Executive Chairman at Metlen Energy & Metals PLC

I will make a small exception and I will say without gallium, the results of the metals sector is going to surprise the market community very much. This is as much as I can say at this stage. Mr. Ioannis Noikokyrakis from Alpha/AXIA Securities. Good afternoon and thank you for taking my questions. Number one, could you help bridge the gap between EBITDA and operating cash flow in H1? What level of operating cash flow do you expect by year-end 2026?

Fotini Ioannou
Group CFO at Metlen Energy & Metals PLC

Chairman, I think this is the same question that I've already replied to. As I explained, operating cash flow was helped by strong cash conversion from our underlying businesses and very focused working capital management. Going forward, net leverage ratio will remain at least at the same levels as where we are now and working capital management will continue to be a priority.

Evangelos Mytilineos
Executive Chairman at Metlen Energy & Metals PLC

Thank you, Fotini. It doesn't matter to repeat the question and answer any question twice, as long as we make ourselves very clear to all our friends who are now 213, and make sure that they all understand exactly the answer. Number two, what is your CapEx outlook for the remainder of 2026? Additionally, how much do you expect to invest in 2027 and 2028? Christos, please.

Christos Gavalas
Group CEO at Metlen Energy & Metals PLC

We keep on growing. This was clear from the outset, both on metallurgy and energy. Numbers is going to be a bit lower compared to what we were anticipating in the beginning of the year because it was a bit higher last year and it has been as a result, a bit higher leverage as end of 2025 indicated. As a total, it's going to be much lower than EUR 1 billion that we have initially thought. It's going to be split between metallurgy and energy after many years of spending money only to energy. Now it's going to be split. You know that we spend money on increasing aluminum, bauxite, gallium. On the one hand, defense-related projects that will result in a completely different level of earnings 2027 onwards.

Christos Gavalas
Group CEO at Metlen Energy & Metals PLC

Even though that we anticipate this number to be coming in second half Probably a bit lower than EUR 1 billion, as I told you before. At the same time, dividend is going to be paid financial cost and tax. As Fotini said twice, we stick to our commitment on the leverage metrics to stay at least at the levels that we have currently indicated.

Evangelos Mytilineos
Executive Chairman at Metlen Energy & Metals PLC

The third question is, you previously guided to a year-end net leverage ratio below two, yet you have already achieved this target in H1 2026. Should investors expect further deleveraging in H2 2026?

Fotini Ioannou
Group CFO at Metlen Energy & Metals PLC

Again, sorry.

Christos Gavalas
Group CEO at Metlen Energy & Metals PLC

Third time.

Fotini Ioannou
Group CFO at Metlen Energy & Metals PLC

For the third time, despite the expected dividend payment and the increased CapEx in H2, as Christos mentioned, we will have ample financial flexibility, and we will remain at least at the levels of leverage where we are now. Thank you.

Evangelos Mytilineos
Executive Chairman at Metlen Energy & Metals PLC

Thank you. Mr. Vangelis Karanikas from NBG Securities. Good afternoon. Two questions from my side, please, mostly on your metals business. First, congratulations on signing your first gallium off take agreement, which provides early commercial validation of the project. Could you provide more color on the pricing mechanism and contract duration? I assume you are not in a position to disclose the identity of the off taker. Is there room for any potential capacity expansion above the 50 tons?

Evangelos Mytilineos
Executive Chairman at Metlen Energy & Metals PLC

Well, of course, as we say, we cannot disclose the identity of the off taker. I repeat, this is a very severe disclosure clause in our contracts. We are trying to exhaust our technical possibilities. Not only exhaust, but stretch our technical possibilities to expand our production to 60 tons. We will not be able to say more on this one before the second quarter of 2027.

Evangelos Mytilineos
Executive Chairman at Metlen Energy & Metals PLC

This is our goal. At the moment, we're talking about 50 tons. About the color on the pricing mechanism, I referred you five minutes ago to the Argus and Fastmarkets publications, which publish twice weekly the price of the market. Almost all contracts for these products are usually made on this basis. Now, regarding the rest of our business on the gallium. Again, I have to say that it's only a matter of time or a very short time that we will book as many quantities as we wish to very selected buyers. I repeat for a second time, we are really patient in order to cover any European needs that may come up.

Evangelos Mytilineos
Executive Chairman at Metlen Energy & Metals PLC

I would like to make it very clear, I say it again, over and again, because we want to avoid criticism that the European company, which is the first to produce gallium on a commercial scale, is selling the material to the world and not to Europe. I'm sorry, I have this to say once and again. Regarding the financial side of the gallium, some of you may remember that in the Capital Markets Day in London in April 25, first of all, we had split between the gallium business and the Circular Metals business. As I said, this is now one division. It's called Critical and Rare Metals.

Evangelos Mytilineos
Executive Chairman at Metlen Energy & Metals PLC

This is now one division. We had said at the time, we had indicated an EBITDA for gallium at EUR 40. At that time, the price, if I remember well, was about $800 /kg. Always when you look at these prices, the price we are talking about is the high price, because they have a low price and a high price. When I'm talking about commercial sales, it's always the high price. The high price at the moment is $3,250. At that time, as I said, it was $800. You can make your calculations. What is more important, I think you should all know, the negotiation with the first buyer, which is a massive company in size, was a lengthy and difficult negotiation.

Evangelos Mytilineos
Executive Chairman at Metlen Energy & Metals PLC

It was in very good spirits, I really have very good impression and memory out of this negotiation. There was only one issue that the counterparty made it a deal breaker, and that was a cap on the price that the deal, during its duration, could not exceed. I cannot, of course, name the price. All I can say is that the price of the cap is way above the current prices. The fact that the company of this size and knowledge of the market, the insistence on a cap, even at so much higher price, means something to us and our ongoing five-year business plan. Keep it in mind for your own analysis as well. It was the only deal breaker issue. Second, could you provide an update of the Circular Metals platform?

Evangelos Mytilineos
Executive Chairman at Metlen Energy & Metals PLC

In particular, could you elaborate on your strategy for scandium, germanium, and the other critical metals expected to be recovered through the platform following your comments on the 2026 AGM that additional initiatives are expected to follow. Scandium and germanium are indeed the two rare metals to follow gallium. Our research and development and technical teams have made a lot of progress, and I hope we'll be able to announce positive development in the next months. As for the Circular Metals first plant in Thessaloniki, commissioning is going ahead, first high purity metal oxides expected in 2027. Let me make now a definition here, which I think is important for you as well. All these metals, scandium, germanium, gallium, and the more well-known metals like copper, aluminium, zinc, and so on, they're all included in the list of 34 metals of the European Union called critical raw materials.

Evangelos Mytilineos
Executive Chairman at Metlen Energy & Metals PLC

As I said before, our division now is Metlen CRM, Critical, Rare Metals. Not raw, rare. Why rare? Because scandium, germanium, and gallium may be in the same list, but at the same time, they are rare metals. That is why we make the definition in the name of the division so that everybody knows what we are talking about. Usually, the rare metals come in smaller prices and much, much higher prices. Whereas critical metals, they come in much larger quantities and lower prices. The Thessaloniki plant is concentrating, as you know, on the extraction of metals from waste materials through proprietary patents that are already established. Our hope for this plant is that it will be an even bigger success than the rare metals, gallium, scandium, and germanium. Stay tuned on this one.

Evangelos Mytilineos
Executive Chairman at Metlen Energy & Metals PLC

It is, I can assure you, our best bet. Some people think it is gallium, scandium, and germanium, and indeed they are, as you can realize from the numbers of the gallium and the cap that the buyers want to put on the price, that if you knew, you would make completely different calculations. The big quantities and the future is absolutely on the extraction of metals from the waste materials. Big hopes on this one. Mrs. Agapi Mavrogianni from Beta Securities. Congratulations on the results. Three questions from our side. What is the distinction between critical metals and rare metals? Thank you very much. I just said two minutes ago. I hope my answer is satisfactory to you. If not, please, in the Q&A period, please ask me again. Number two, at the Capital Markets Day, you outlined a number of strategic initiatives.

Evangelos Mytilineos
Executive Chairman at Metlen Energy & Metals PLC

How would you assess the progress made against your objectives, particularly in your newer growth platform, such as infrastructure, defense, and critical raw materials? That is a question, if I may comment, which is very much to the point because the rest of our business is well known to you, and we keep you very well posted about the developments which are gradually and steadily all the way up. The relatively newer things in which I would not include defense, which we only made a different division, but defense has always been in our portfolio. Thank you. Allow me to say that infrastructure and construction is superseding all our hopes on its results, and the management had told me that the years 2024, 2025, 2026, every year, we will double the results. They seem they keep their promise.

Evangelos Mytilineos
Executive Chairman at Metlen Energy & Metals PLC

On the defense side, they said the same, except for the fact that the results are accelerating a little more speedily. We had, if I remember well, about EUR 12 million-EUR 15 million EBITDA in 2025. We now have EUR 30 million in 2026, and the first draft budget for 2027 points at EUR 85 million. Not to mention 2028 or 2029. The last one, which is the critical and rare materials, I just made the comment. I do not need to add or say anything more. Number three, how do you view the outlook of M Renewables going forward? Christos, please.

Christos Gavalas
Group CEO at Metlen Energy & Metals PLC

I guess most of that has been covered by previous answer. We stay put with the guidance provided to the market last year. It's going to be a core business for Metlen going forward, more than EUR half a billion medium-term as a contribution, which is considered to be a core alongside metals and utility. Composition is going to be a bit different between storage and solar. This is, again, the answer. Thank you for asking.

Evangelos Mytilineos
Executive Chairman at Metlen Energy & Metals PLC

These were the written questions. We are now going into the normal session of Q&As, and I can see Jason Fairclough as the first name on the screen. Jason, please go ahead.

Jason Fairclough
Jason Fairclough
Analyst at Bank of America

Can you hear me okay?

Evangelos Mytilineos
Executive Chairman at Metlen Energy & Metals PLC

Can hear you very well, Jason.

Jason Fairclough
Jason Fairclough
Analyst at Bank of America

Excellent. With a little bit of an apology, I think I'm going to ask you to repeat yourself again, Mr. Mytilineos. You have had quite a tricky 12 months at Metlen because of the legacy MPP projects. We had the two profit warnings last year. I think last year, we thought that you'd fully provisioned for these problem projects. In the first half, you've had to take more charges on those projects. I guess, could you give us some confidence that this expensive part of the journey is nearly over? Will you definitely deliver the three problem projects this year?

Evangelos Mytilineos
Executive Chairman at Metlen Energy & Metals PLC

Fotini, please. We will answer, and if necessary, I will add something.

Fotini Ioannou
Group CFO at Metlen Energy & Metals PLC

Hi, Jason. Thank you for the question. Yes, as I said before, we have committed to deliver 11 out of 13 projects within 2026. We're well in line to do that. As all of these projects, including the main three problematic ones, they come to a close, and they come close to delivery. I think you can see from what we shared that we made significant progress across all of them, including Protos. As these come to a close, we have to take additional completion costs. Okay? These are obviously depicted in the overall M RESET profitability. Given that all these projects will be delivered in 2026, I think the worst is behind us. Let me put it that way.

Evangelos Mytilineos
Executive Chairman at Metlen Energy & Metals PLC

Also, to add, Jason, that Fotini mentions 11 out of the 13 projects, because the other two, one of the other two is the EGL sub-sea cable between Scotland and England, which is very big, and it's going very well. Another project that is also going very well. That's the deal.

Jason Fairclough
Jason Fairclough
Analyst at Bank of America

Just a second one, if I could, again, we've sort of touched on this, I'm going to end up making you repeat yourself a little bit. The balance sheet de-leveraging is quite dramatic, it does seem to be driven quite a lot by moves in working capital. I've got some investors that are asking, how should we think about actual cash flow in the second half? You said leverage likely at least flat into the end of the year. Do any of these working capital moves need to reverse, Fotini?

Fotini Ioannou
Group CFO at Metlen Energy & Metals PLC

Not at all, Jason. No. Not at all. As I said, commitment is there. Net leverage will be at least where it is now. Working capital management will continue to be a priority, obviously, that may further reflect positively net leverage in H2.

Evangelos Mytilineos
Executive Chairman at Metlen Energy & Metals PLC

I think probably your client did not exactly understand that point. The point was that the de-leverage will stay at least where it is now, taking into account that we have a much higher capital spending in the second half. Even then, we expect considerable positive cash flow on the other activities. Considering the increased CapEx, I think we will have a balanced second half.

Jason Fairclough
Jason Fairclough
Analyst at Bank of America

Okay. I'm going to be a little bit cheeky ask a third one here. One question I've had again from investors is, you guys have a very large cash balance, yet if we look at interest income, it seems to be very low. Why don't you do better on your cash balances?

Fotini Ioannou
Group CFO at Metlen Energy & Metals PLC

Shall I take this, chairman? Thank you, Jason. Yes. First, we've discussed this also in the past, and it's a very valid question. First of all, I'm sure you appreciate that the cash balance that is reported at the reporting date is not in any event the average cash balance that we have in the period. Cash accumulation is inherently seasonal, and it very much relates to the completion of specific milestones of EPC projects or asset rotation proceeds that come in, as was the case, as you remember, with the disposal of the Chilean portfolio at the end of the year. We have committed, in addition, a significant part of our group's cash balances are held by entities that are in our SPVs, and within a broad geographical footprint, which basically makes, let me call it cash pooling, a little bit challenging to a certain extent.

Fotini Ioannou
Group CFO at Metlen Energy & Metals PLC

We have committed to improve a lot on that in 2026, and it's an ongoing exercise. Furthermore, I think, just as a final point, I'm sure you must have realized by now that we are a group that intentionally prioritizes liquidity, and that is a priority. That's where we are.

Jason Fairclough
Jason Fairclough
Analyst at Bank of America

Okay, thanks very much. Appreciate it.

Evangelos Mytilineos
Executive Chairman at Metlen Energy & Metals PLC

May I add on this last one? The question was a little bit contradictory with the previous question earlier, whether we are going to pay out bond maturing in October, or we are going to refinance. I'm very glad to say, or to repeat to you, that we don't need to refinance because we have quite a lot of cash. That, I think, should make shareholders happy, not unhappy. You can always improve on your asset management, but this is a very dynamic exercise. As Fotini says, the cash balance at the end of the six-month period does not mean that all throughout the six months you have the same amount of cash in the bank. Thank you, Jason.

Fotini Ioannou
Group CFO at Metlen Energy & Metals PLC

Yep. Thanks very much, sir.

Operator

The next question is from the line of Krishan Agarwal with Citibank. Please go ahead.

Krishan Agarwal
Krishan Agarwal
Analyst at Citibank

Hi, can you hear me?

Evangelos Mytilineos
Executive Chairman at Metlen Energy & Metals PLC

Please go ahead, Krishan.

Krishan Agarwal
Krishan Agarwal
Analyst at Citibank

Thanks a lot. Most of the questions have been answered. The one question on metal business, where performance in the first half was very strong. My assumption is that progressively the hedging prices are going better in the second half, should we expect the overall EBITDA performance more than the implied rate of EUR 300 million for the metal business on a full year basis? Related to that, does the large fee payment that you have received from the metal customer, does it have any relation to this significantly better performance in the metal business for the first half and second?

Evangelos Mytilineos
Executive Chairman at Metlen Energy & Metals PLC

As I said, Krishan, the results of the first half, they may merit an upgrade on the guidance, we will stick to the conservative side and stay on our guidance as was given during our AGM. Regarding the hedging, it is true that the hedging prices are progressively going up in the next quarters as the market is following the trend of the physical market of the previous months.

Krishan Agarwal
Krishan Agarwal
Analyst at Citibank

Thanks a lot.

Operator

The next question is from the line of Fani Tzioukalia with Euroxx Securities. Please go ahead.

Fani Tzioukalia
Analyst at Euroxx Securities

Hi. Hello on my end. Thank you for the presentation and congratulations on the strong set of results. Most of the questions were answered except for one. I was wondering, do you expect the current geopolitical tensions and the upcoming elections in Greece to affect the medium-term roadmap? Thank you.

Evangelos Mytilineos
Executive Chairman at Metlen Energy & Metals PLC

Greece has enjoyed political stability in the last years and has managed to achieve miracles, I would say, in the global financial scene. That reflects on the performance of the Greek sovereigns. Even considerably better than the Italian ones, close to the French ones. We only hope that the elections will be smooth, and we will not have any political turbulence that may destabilize the Greek market. That will be extremely unfortunate, and it's up to us all to avoid this kind of developments. Let's keep fingers crossed. Not much else to say or do. Thank you.

Operator

Mr. Tzioukalia, are you finished with your questions?

Fani Tzioukalia
Analyst at Euroxx Securities

Yes, that was the only question. Thank you so much.

Operator

Thank you. Ladies and gentlemen, in the interest of time, we are taking one last question from Mr. Richard Hatch with Berenberg. Please go ahead.

Richard Hatch
Richard Hatch
Analyst at Berenberg

Thanks. Yeah, thanks for the call. Just a couple of questions. I'm just curious as we go through the accounts, just on a couple of the items such as the increase in related party transactions year-over-year, EUR 266 million of revenue versus EUR 227 million last year. Also, Fotini, just as I go through the balance sheet, there was a sort of a doubling of other long-term payables. I just wonder if you might just be able to help us out just to understand what's going on in those bits of the accounts, please. Thanks.

Fotini Ioannou
Group CFO at Metlen Energy & Metals PLC

Richard. Yes, absolutely. In related parties, Richard, these are just commercial arrangements that we have in the normal course of business with specific counterparties, where the arrangement that we have with them reflects is a joint venture. As such, everything in terms of revenues and receivables is recorded separately. You can find in this particular case, and you can find more information, I think in note 19, I think it is, of the financial statements on revenues and receivables. The main joint ventures that reflect those numbers are three, two of them in the energy sector and one in the concession. Obviously, what you see there are revenues and receivables for the period. Okay? Should not be necessarily compared with the previous period.

Fotini Ioannou
Group CFO at Metlen Energy & Metals PLC

As far as revenue recognition is concerned in terms of with those joint venture arrangements, the revenue recognition happens the same way as we would recognize revenue in that line of business. In any other transaction. That's on related parties. I think your next question was on payables. Yes, we do have an increase in payables. Some of it is purely accounting. You can see there that we include the dividends, we include the CO2 liabilities, we include the share buyback. A big part of that increase, it's purely the accounting treatment of the payments that, as we have mentioned before, will be made in H2. The other big item is obviously the customer prepayments that, as I mentioned, we managed to secure as part of our working capital management.

Richard Hatch
Richard Hatch
Analyst at Berenberg

Okay. Much appreciated. Keep up the good work. Thanks.

Fotini Ioannou
Group CFO at Metlen Energy & Metals PLC

Thank you.

Operator

Ladies and gentlemen, this concludes the Q&A session. I will now turn the conference over to Mr. Mytilineos for any closing comments. Thank you.

Evangelos Mytilineos
Executive Chairman at Metlen Energy & Metals PLC

As Jason Fairclough from Bank of America said a few minutes ago, it has been a difficult period for us and indeed some, I would say a few of our longstanding friends of the company and the stock almost lost faith in the company, but just almost. In the end, I have to underline the loyalty of our shareholders, which gave us the strength to go and fight these mishappenings and turn around the company at a record time. On behalf of all the team and all the people that work in this organization, I want to thank our shareholders, our friends, stakeholders that have stood by us and to reaffirm that the move to London was not for tourism as some interesting sort of types write in some newspapers. They will find out shortly.

Evangelos Mytilineos
Executive Chairman at Metlen Energy & Metals PLC

I think this lesson for the first half after the crisis should make you all pleased and give you all hope for what is to come. We did not go to London just to be in the FTSE 100. We went to London to move way up the ladder of the FTSE 100. Thank you very much. Enjoy your holidays. Bye-bye.

Operator

Ladies and gentlemen, the conference is now concluded and you may disconnect your telephone. Thank you for calling, and have a great rest of your day.

Analysts
    • Evangelos Mytilineos
      Executive Chairman at Metlen Energy & Metals PLC
    • Fotini Ioannou
      Group CFO at Metlen Energy & Metals PLC
    • Christos Gavalas
      Group CEO at Metlen Energy & Metals PLC
    • Jason Fairclough
      Analyst at Bank of America
    • Krishan Agarwal
      Analyst at Citibank
    • Fani Tzioukalia
      Analyst at Euroxx Securities
    • Richard Hatch
      Analyst at Berenberg
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