Acerinox Sa

Good morning, everyone, and welcome to the Therinox second quarter results presentation. This quarter has been a very positive quarter for the group, despite the continuing geopolitical uncertainties and regional conflicts. With an 85% quarter-on-quarter EBITDA increase, the strength of the CSST division in the U.S. has again proved to be the driver of our solid results. It is not worthy to mention the strong order book in aerospace and defense sectors, as well as the recovery of Acerinos Europa within the European market. The new print measures have started the 1st of July and we are optimistic with regard to the future of the European steel industry. For this presentation, we will hear from our CEO, Bernardo Velazquez, our Chief Corporate Officer, Miguel Ferrandis, and our CFO, Esther Camós. Before we start with the presentation, let me remind you that this conference call is being broadcast on our website atherinox.com. And now I hand you over to our CEO. Bernardo, please go ahead.

Thank you, Carlos. Good morning, everyone, and welcome to this Atherinox Q2 results presentation. You all know that we have a new normal environment that is safe. with our tariffs, sanctions, geopolitical uncertainties, conflicts and so on. And in this environment, it is easy to focus only in the short term. But we at Aferinox, we drive with our high beams. We are focusing in the long term and sticking to our strategy, loyal to our strategy. I think this is the key of the success of these results. In this macro scenario, with a strong position in the United States, improvements in Europe, and focusing on efficiencies in our excellent program, developing synergies, we can say that we are proud of this set of results. Our EBITDA, 176 million, has been 85% higher than Q1, and in the total semester, 271 million is 27% higher than the same period last year. We have a stronger order book. We have higher prices. We have summer breakdowns ahead. So that is the reason why our financial debt has increased due to the working capital increase, basically stocks. but we are pretty confident that we will focus to go to a ratio of around 2 at the end of the year. So everything is under control as we normally say, our focus is our strategy and control the controllables and in this situation we are delivering reliable results. Consumption is low with all these uncertainties. Still consumption is low in all the regions. In the United States, apparent demand, according to our estimations, has gone down 8% after four years of a low cycle. Imports also have been reduced, basically because of the higher transport costs and the stable situation in the United States at 2 points from 24% to 22%. And inventories, the river is cautious. Inventories remain according to our estimations 10% below the historical average. We have the section 232, thanks God, that is providing stability to the market and I think is helping to the target of the United States industrial policies reshoring and re-industrialization. We have seen several examples before. We have spoken about the appliance Thank you very much. We don't see real good signs still for recovery. We're going to speak about data centers. This is true. We can see in this time still a business we see better performance for data centers in the heat exchanger sectors. We have a stronger order book in rivers, so we see some investments in infrastructure. It's a little sign that the truck industry is starting to improve, what is a good sign in the United States, but still In Europe, the situation is changing. I think the new situation is a game changer. Sibam started 1st of January and since that time imports have gone down from 24% to 16%. This is important because the target with the new trade measures is to go to a level of 12-13%. So Sivan has already reached the level of import that was desired in the European Union plan. And now with the new measures that have started in 1st of July, we can only expect consolidation. Consolidation of this level and stability. Stability for us means low imports, that is more local production, that is more volume and that is Thank you very much. We are very happy and very excited with this. From the last meetings that we have, we have the new quotas. New quotas have already been published and the European Union is penalizing the countries that are responsible of the world overcapacity. This is very important because the worst and many more. A responsible country with a responsible supplier that is our Columbus Stainless, the European Union has kept the same level of imports, the same level of quotas that we have been using in the last three years. This is also important for us.

If we move to the HPR markets, you know our strategy has been driven by diversification. Thank you very much. driven by the industrial gas turbines, driven by the space exploration, driven by the aerospace in both civil aerospace as well as in defense. So all these sectors now are booming, are creating also prices going up. We have experienced in the second quarter the two highest order entries per month in Athens. and then we are seeing that it's a much steeper ramp than the post-COVID effect so in that regard the momentum is excellent probably the backlog shall reach historical maximums also at the end of July so the timing is very good it was appreciated early in the aerospace as was mentioned the long product recovery and then finally it has been coming to the flag product where currently we still are more base but the prospects remain very good in regarding of the outer space for example the construction which obviously in volume is the most relevant the construction in the narrow body aircrafts in Boeing in Airbus according to the comments is growing more than 40% so what we have is currently for the coming years more or less the appreciation that this is a sector which by far is going to have a spectacular performance. In addition, in the power generation industrial gas turbines, mostly driven by the data centers, the electricity necessities for the data centers are going to double in the coming years. So this unprecedented needed for dispatchable power generation. and in this regard the large gas-fired combined cycle plants clearly are the solution so obviously we are there. So the momentum in alloys in America is brilliant. In regard to Europe the situation is different. We still are waiting for investment projects. The most relevant sector for BDM as you know is the oil and gas. It's obvious that the oil and gas Thank you very much. Thank you very much. further complications with the 232 for example section in the states which is not allowed also for covering that markets combined also with the entry on the most commodity types of also new Asian players so this is more or less keeping that the chemical process industry is keeping a low part of the cycle it shall recover but also let's assume that there are some Parts of the chemical process industries that are having probably a good momentum for the coming future, as for example, can be a clear case the nuclear one. When we go to the results of the semester, the CFO shall explain in detail per section the stainless and the high-performance alloys, but just a general comment, first of all, Gradually improvement during the year, quarter per quarter, we have increased melting production more than 10%, reaching 540,000 tons in the second quarter. We have about a million tons in the first semester, which is 2% above the figure of last year. What's remarkable is the effect on the margins, and especially the contribution on EBITDA. We have had a quarterly EBITDA of 176, which is 85% increase than the previous one. At the end of the first quarter, we made a certain adjustment and we explained them. so the quarterly EBITDA was 95 but we explained that we have made some adjustments in the second quarter has not been necessary to make any adjustments so more or less it's not necessary to report any specific adjustments we are in this figure of 176 which makes a semester EBITDA figure of 271 million euros if we are not We are able to reach this annualized figure which should be above the 500 million euros which clearly is a demonstration of our efficiency, the improvements in our efficiency especially in a time in which we are also suffering the The effect on certain costs related to the Middle East conflict, which has been for the semester around 9 million euros, could have been even worse, but also the diversification on our procurement has allowed us to minimize this effect. But still, that effect is in place. At the end, we are clearly successful of the achievements. The operating cash flow, as has been mentioned, is driven by the increasing working capital, but that increasing working capital is needed to accompany the recovery of the market in both volumes, as well also as in the increase in the cost of raw materials. So we are consequently not concerned regarding this net debt reported, even though the clear commitment as as our CEO has mentioned is to be in the range of two times which for us is in the current CAPEX program and in the current days of the market we think it's a remarkable figure also.