Acerinox Sa

Good morning to you all, and welcome to Atherinox's third quarter 2025 results presentation. As you well know, geopolitical uncertainties, regional conflicts, and tariff wars continue to affect world markets. Consequently, the third quarter has been another challenging quarter. However, as a group, we have demonstrated our resilience in the light of the difficult market situation. As we will explain in this presentation, we continue to focus on working capital reduction and solid cash generation. During this call, we will hear from our CEO, Bernardo Velazquez, our chief corporate officer, Miguel Fernandez, and also Esther Camoz, our CFO, who will explain our third quarter results and provide outlook for Q4. Before we start the presentation, let me remind you that this conference call is being broadcast on our website, atherinox.com. And now I'll hand you over to our CEO. Bernardo, please go ahead.

Thank you, Carlos. Good morning, everyone, and thank you for attending this presentation. We have released this set of results in the lowest part of a long cycle that is basically defined by the geopolitical conflicts, tariffs, negotiations, and uncertainty. If something can define this part of the cycle, it's uncertainty and confusion. How can you prepare a budget for next year? How can you organize your commercial strategy if you don't know whether you will have tariffs with several countries or not? You will be able to export or not. And then everybody is just working on a daily basis. It's what we call from hand to mouth. From hand to mouth means that our customers are only buying when it's strictly necessary for them to replace materials. So in this situation, logically, the consumption is quite low. and everything has been postponed. The recovery that we expected has been postponed. We have no doubts that this recovery finally will come and that the new trade measures will help the even stronger recovery of Acer Inox. We have new trade measures in the EU, or expect to have very soon new trade measures in the EU. We have the Section 232 and other tariffs in the United States, and we are also negotiating some tariffs in South Africa. But in the meanwhile, we need to concentrate our efforts in the short term, and that means that we need to concentrate in cost-cutting and cash generation. With uncertainty, with the current situation, with everybody preparing the end of the year, quarter four cannot be much better. It will be more or less the same rhythm than Q3, but with a shorter period, because the seasonality is very strong in the United States and Germany, and finally December is half a month. So this is what we are releasing this outlook that we expect a Q4 to be lower than Q3. And it's basically because of seasonality. Miguel.

The market, the main market highlights for 2025 clearly are driven by the uncertainty, as has been mentioned. We are a cyclical company working in a cyclical business. We are in the low of the cycle, and most of the specialists are considering that probably we have reached the bottom, but we still are in the bottom of a cycle, so we must accept that. The demand has not recovered and is in the third consecutive year in the Western world of not recovery after such a strong correction that was experienced in the year 2023 in which both America and North America and Europe corrected more than 20%, still we have not recovered that level, so still we are waiting, and the uncertainty is creating these unique circumstances that never in life three years, three consecutive years with no recovery in the market. And as a consequence of that, obviously, there is a clear effect in prices, mostly in Europe as well as in Asia. And consequently, this is having also its effect with a slowdown in some of the Asian countries for moving more production onto Europe, which clearly is not contributing. Our main advantage is clearly the diversification. Because of that, we try to explain it in a simple way. In this slide, just showing where there are green shoots, we are in advantage, clearly, to take the most of these green shoots when appearing. We are sailing in troubled waters, this is clear. But we are taking advantage for the green shoots appearing, for example, in our main relevant market, which is the North American stainless steel. You can appreciate in these traffic lights that where there are more green shoots is in America. The inventories are below historical levels. The imports have been going down. This is as a consequence of the probably commitment to the industry that is a driver of the American market. The American administration always has been committed to the industry. The Buy American also is a clear characteristic that differentiates the American customers. We are taking advantage of that. The imports have been going down. In addition, we have new measures. The increases of the Section 232 obviously has been having its effect. And as a consequence, the prices in the states are having a positive evolution. So this is clearly the market where we have appreciated a sooner improvement. In the high-performance alloys, this is a bittersweet. It's bitter because at the end also we are experiencing in this sector the absence of investment that is characterized by the uncertainty, so all the relevant projects are being delayed, so especially the chemical process industry is actually facing that. as well as the oil and gas in which these more or less relevant projects have been delayed. So as a consequence of that, our European produced high-performance alloys are experiencing that the order book now is getting slower, but the strategy of diversification and moving to other sectors, which made our decision to invest in the States, invest in Haines, and especially in moving also to the outer space, creates that now we are in position of taking advantage of the better momentum that is coming from the outer space industry. So as a consequence of this, the recovery is coming. We have appreciated already the the recovery in the in the long product nickel base we are more based in the flat products and this is now coming and shall start coming because the supply chain is a bit different but it looks that for the 2026 clearly this is a sector which is going to drive the profitability mostly of haines so so this is the the sweet part and then other other sectors like the industrial gas turbine also is taking a good momentum especially now driven by all the investment in data center for artificial intelligence, as well as more or less all the necessary uses for all the hydrogen transition. So this is the part that is positive and probably shall have a better momentum in the coming months and mostly in the 26th. where we are not seeing yet relevant green shoots is in the European stainless steel market, not in the conditions we have experienced up to now. Later on Bernardo shall explain the new reality. But up to now, It could be considered that the increase in the apparent demand of 10% is healthy, but clearly is not the case when it's coming as a consequence of an increase in imports of 36%. So the main effect of this, as I told before, still the Asian players are putting material in Europe, especially anticipating what could be the more commitment of the union to the industry. So this is driving this increase in imports. 36% in the current market condition is huge. And as a consequence of this, the inventories are growing. And the final effect is that still we have seen significant price pressures that has been characterizing the third quarter. So this is more or less the global escape of what has been the situation up to now. Let's analyze now what's coming.