Acerinox Sa

Good morning everyone and welcome to our second quarter 2025 results presentation. The call will be hosted today by Bernardo Velazquez, our CEO, together with Miguel Ferrandez, CCO, and Esther Camoz, CFO of the group. As you all know, this has been a challenging second quarter and first half of the year. marked by significant geopolitical uncertainties, regional conflicts, and of course, the tariff war. With no doubt, all of this has impacted the global landscape. During this call, we look forward to discussing the progress we have made in navigating this complex situation. But before getting started, let me remind you that this conference call is being broadcast on our website at erinox.com. where you can also find the financial statements and the management report for the first half of the year. With that, I now give the floor to our CEO. Bernardo, please go ahead.

Thank you, Carlos. Good morning, everyone, and thank you for attending this presentation, and thank you, Carlos, for the interaction. It is really been an uncertain year. We expected a recovery for 2025. Remember, after two consecutive years, with the PMI below 50 in the United States, we expected the situation to improve, and that really improved in January and February, but then in March we again went back to below 50, with all the uncertainties that are affecting all the markets all around the world. Basically, we have a lot of uncertainties in our lives, but in this case I think the tariff war is affecting strongly to our business. Imagine how difficult it is to organize your strategy if you don't know if your customers are going to grow or not based on the different tariffs. You don't know how your supplies are going to be affected by the tariffs. And you don't know how your competitors and import competitors will be able to compete or will be feasible to sell in the market. So all this situation is what is finally happening is that everybody... is in the situation of wait-and-see, even in the United States. It looks like the situation in the United States is better, and it is, but all these uncertainties are also affecting this market. Nobody is buying more than what is really needed. As we say, the market is from hand to mouth. We don't buy more than what is really needed, and many projects are being postponed. So the situation is also affecting to... So this is basically the general situation and this is basically what has affected our results. We expected a better behavior in the year and a better behavior in the future, but still we haven't defined what's going to be the new rules of the game. Still we are waiting for negotiations between the different countries. We expect a soon agreement between the United States and Europe, but still the situation is not coming. And this is what we are putting in our numbers and in our forecast. We are not predicting anything that cannot be predicted today. We are based on today's information. This is what we expect for Q3. What is not bad, taking into consideration that we are in the summer period and normally a slowdown of our markets. Fortunately, USA is our major market and also we have been diversifying in the last years with BDM and things in HPA and this diversification allows us to have more standard results. Remember that one of the reasons to enter in HPA was because trying to avoid or trying to reduce the volatility and the cyclical condition of our business and this is really, really happening today. We believe that once the situation clarifies and once we have a clear picture of what are going to be the tariffs, the Section 232 tariffs, the reciprocal tariffs and all these things, markets will find a way to work with the new rules of the game and the situation will come back to normal. It is important to explain the situation, particularly of ASEAN-North Europe. In the last six years, we have lived and expected a different crisis. Remember 2020, COVID. 2021 and 2022, we had a tremendous energy crisis in Spain. Our energy prices multiplied by times four. 2023, apparent consumption in the United States and Europe went down by 20%. 24, we suffered a five-month strike in Spain. And 25, we have this tariff crisis. Five totally different origins, but at the end, we are living for six consecutive years in a low scenario. And according to the Spanish accounting principles, we have to consider crisis as the new normal. And in this situation, we have made an impairment on the tax credits in Spain that is affecting our result. It's no cash related and it's reversible, but we have to follow the accounting principles and trying to be prudent with our accounting numbers. Having said this, I will not enter in the numbers because later Esther and Miguel will explain in detail, just to consider the strong effect of the US depreciation in our numbers. And of course, again, insisting that our geographical and product diversification is putting Atenos in the best position, in the full position for the new economy and the new situation once all these uncertainties clarify. And with this, I will pass the floor to Miguel.

Thank you. The next slide is called Modern Resilience. At the end of performance, clearly in the first semester has been much more than resilient. Resilience was probably one of the most used words in the COVID year in the previous low part of the cycle. The word that probably defines better the actual scenario is uncertainty. We have uncertainty everywhere. Uncertainty is not only in our sector, but uncertainty is also driving our customers. Nobody regarding the tariffs, nobody still knows in every of our sectors. Any of our customers has yet a clear view of what's going to take place in terms of tariffs, when they are going to be finally fully implemented, where, who is going to be affected, how much is going to be. So as has been explained by Bernardo, no one is taking any specific position, everyone, all of our customers is in our agency. So we need to face that in addition to three tragic wars in different parts of the world. So Europe is affected. This is clearly having its consequences on Europe. We have also the wars in the Middle East, which also provide uncertainties regarding oil and so on. So this is the This is the year we are facing, fully uncertain. In that basis, we have proven to be more than resilient. We have increased our sales compared with the previous first year semester at 10%. We have achieved improvement, 10% improvement in the Q2 compared with the Q1, and we have obtained our first half semester a bid of €214 million. This is This is our first half EBITDA in this environment. Just analyzing it, if you realize that not many years ago, this was even above our EBITDA through the cycle. So clearly, all the efforts done in the last years have proven to be effective. And once again, and this is relevant in our sector, with a strong operating cash flow in this environment even, we have been able to obtain 148 million euros of operating cash flow. So we are more than resilient to the actual uncertainty era, but in addition we are keeping our program, we are keeping our strategy. We have devoted 125 million euros to CAPEX in the first half. Gradually this shall have more relevance in the second half of the year. because we are keeping our organic growth, we are developing our strong programs of investments in our Kentucky plant for the stainless in mass, as well as we are doing our investment programs in . So this is clearly our focus. We are in position of keeping that. And we are obviously increasing our value added and not only the plant of Spain but also we are through this diversification we go to the high part of the parameters you know of the added value contribution and this is clearly appreciated first with the acquisition of EDM and later on more recently with Haynes in addition we keep with our homework for improving or operating expenses and we shall talk later on about our beyond excellence I'm not forgetting any case because it's also part of a DIM sustainability. We have launched, we shall talk later on, we have launched the new eco-acidic knobs. We have more than six types developed in this eco-stainless. We keep being well-recognized in terms of our sustainability merits. We keep the gold award by eco-buddies. We should have been in the platinum again if we're not by the social conflict we experienced last year so this moved down our platinum to gold and with the normalization coming for the next year we are pretty confident that we shall be back again in the platinum and in health and safety also we have obtained an improvement of 8% in addition to filling more or less all our targets in terms of carbon emission reduction so So we must be proud about keeping sailing on the actual circumstances with a strong profitability, being able to keep our strategy and also maintaining our focus on sustainability.