Eregli Demir Celik Un/Adr

Ladies and gentlemen, thank you for standing by. I'm Polina, your course call operator. Welcome and thank you for joining the Adr Demir conference call and live webcast to present and discuss the second quarter 2026 financial results. All participants will be in a listen only mode and the conference is being recorded. The presentation will be followed by a question and answer session. Should anyone need assistance during the conference call, you may signal an operator by pressing star and zero on your telephone. Please note, Reliv Demir Celik Fabrikalar Itaj Erdemir may, when necessary, make written or verbal announcements about forward-looking information, expectations, estimates, targets, assessments, and opinions. Erdemir has made the necessary arrangements about the amounts and results of such information through its disclosure policy and has shared such policy with the public through the Erdemir website in accordance with the Capital Markets Board regulations. As stated in a related policy, information contained in forward-looking statements, whether verbal or written, should not include unrealistic assumptions or forecasts. It should be noted that the actual results could materially differ from estimates, taking into account the fact that they are not based on historical facts but are derived from expectations, beliefs, plans, targets, and other factors, which are beyond the control of our company. As a result, forward-looking statements should not be fully trusted or taken as granted. Forward-looking statements should be considered valid only considering the conditions prevailing at the time of the announcement. In cases where it's understood that forward-looking statements are no longer achievable, such matter will be announced to the public and the statements will be revised. However, the decision to make a revision is a result of a subjective evaluation. Therefore, it should be noted that when a party is coming to a judgment based on estimates and forward-looking statements, our company may not have made revisions at the particular time. Our company makes no commitment to make regular revisions, which would fully cover changes in every parameter. New factors may arise in the future, which may not be possible to foresee at this moment in time. As a start, I would like to turn the conference over to Ms. Idil Onay Ergin, Investor Relations Director. Ms. Ergin, you may now proceed.

Thank you very much, Polina. Good afternoon, everyone. Welcome to our conference call and webcast for Agony for the first talk of 2026. First, I will go through our initial presentation, which you can find on our website, and you can also follow it through the webcast. Then, at the end of this presentation, there will be a Q&A session, as usual. Our presentation consists of two sections, as you already know. The first one is the market overview, and then the financial results. So, let's start with commodity prices. On page 3, you will see the prices of steel-related commodities and HRT. During the second quarter of 2026, global market pricing was primarily driven by escalating geopolitical tensions in the Middle East, volatility in energy prices, and expectations regarding central banks' monetary policy trajectories. In the first half of the quarter, U.S.-Iran tensions and supply concerns regarding the Strait of Hormuz increased cost pressures in commodity markets by driving up oil and logistics costs. In the steel and raw material markets, pricing throughout the quarter was mainly shaped by cost and geopolitical developments rather than demand. Additionally, weak domestic demand in China, low consumption in Europe, and a slowdown in global steel demand limited the rise in prices. Pressure from energy costs eased towards the end of the quarter. No significant recovery was observed due to the strong dollar-type financial conditions and weak final trend in the global steel market. On page 4, you will see the production, consumption, exports and imports figures of Turkish steel markets. In the first six months of 2026, Turkey maintained its position as Europe's largest and the world's seventh largest crude steel producer. In the January-June period, crude steel production increased by 8% to 19.8 million tons. This growth reflects resilience in domestic output despite the challenging global steel market conditions. Going back to the slide, while exports rose slightly by 1%, Production and consumption increased by 5% and 7% respectively. Imports remained in line with the previous year at 9.3 million tons. As a result, the export-import-publish ratio increased to 84% in the first six months of 2026, slightly higher than the previous year. The European Union remained Turkey's largest export market in the first half of the year, followed by MENA and CIS. In the January-June period, China maintained its position as a leading supplier despite a year-on-year decline, followed by South Korea and Russia. As the EU's Carbon Border Adjustment Mechanism enters its definitive pace on 1 January, carbon intensity has become a more prominent striking factor in steel imports. In addition, the EU's new steel import regime took effect on the 1st of July 2026, replacing the previous safeguard system due to free tariff-based quotas were reduced by approximately 47% compared to the 2024 reference level, while the out-of-quota duty was raised from 25% to 50%. These changes increase carbon costs, quota availability and pricing risk for 2K steel exports to the EU. So, let's take a look at the financial results and the operational metrics. On page 6, you will see the summary of our first half results. We achieved $2.8 million revenue. Also, we generated $281 million EBITDA and $201 million net profit. On page 7, you will see the operational indicators of our company. Following the commissioning of the final two investments in our previous investment package during the second quarter of 2025, our could-still capacity utilization ratio gradually increased since then and reached the 95% level. Accordingly, sales and production levels returned to their normal levels. Supported by strong demand in Turkey, we achieved sales of 4.2 million tons in the first half, and we aimed sales volumes of over 8.2 million tons in 2026. So let's take a look at the segmental breakdown of domestic sales and export volumes on page 8. As you can see from the pie chart, there has been a slight change between sectors when we compare it to last year's breakdown. There has been a transition from distribution chains, general manufacturing and auto to pipeline profiles on a percentage basis. We see similar changes between factors in the launch product, although its share in total sales is relatively small. Our export rolling was 602,000 funds in the first half, representing around 14% export share in total sales. Although our focus is the domestic market, we also consider exports as an alternative market. This year, we aim to keep the share of exports in total sales in the 10% to 15% range. Due to the strong domestic demand and our flexibility to shift to other markets, we expect the impact of the EU's new steel import regime on our company to be limited, which I mentioned in the details in the first slide. On page 9, you can find a breakdown of revenue for domestic and export sales. 84% of the revenue comes from domestic sales in line with the domestic volume. Despite the export pressure in the domestic market, we achieved to generate $281 million EBITDA. We generated $75 EBITDA per ton in Q2. And our EBITDA per tone guidance for 2026 stands in the range of $75 and $85 per tone. In the third quarter, we expect EBITDA per tone to increase through increasing HIC prices and our companies including sales volumes. Due to the regulatory change in June, setting the corporate tax rate applicable to earners from production at 12.5% starting from 2027, the impact of this rate change has been reflected in the deferred tax calculation. This deferred tax income is one-off and the full year impact has been reflected. As a result of that, we generated $201 million net profit in the first half of 2026. On page 10, you can see how we reached a net profit from Elista. One of the largest items was depreciation, which was $164 million in the first half. The other major item in this chart was financial expenses of $104 million. The tax income amounted to $202 million due to the deferred tax income.

And after other expenses, net profit was $201 million.