Outokumpu Oyj New

Good afternoon and welcome to Otukumbu's fourth quarter results webcast. I'm Juhan, responsible for investor relations. We will begin with a presentation from our CEO, Katja Ter Horst, and our CFO, Mark Simon Schaar. After the presentation, you are welcome to ask questions over the line. With that time, please, to hand over to you, Katja.

Thank you very much, Juhan. Also very, very welcome from my side. We are here today in a studio in a very snowy, beautiful Helsinki. So let's go then directly to the business and talk about the fourth quarter and also some key comments on the full year. So if we look at the whole year as such, I think the comment there is that the stainless steel market did remain weak and was very much pressured by the uncertainty we saw on the markets and also the especially low-priced Asian imports coming to Europe. So our full year adjusted EBITDA then decreased to 167 million, and the profitability improved very clearly in BA Americas and in Ferrochrome, but then declined in business area Europe, if you compare year on year from 2024. Then the Q4-25 profitability was impacted both by market weakness, but also the temporary challenges we've been having with the supply chain planning solution in the ERP rollout in business area Europe. We do expect more favorable market dynamics going forward, and I'll come back to that in a little while. I also would like to remind you that we are advancing our Evolve Growth Strategy by investing in the pilot plan in the US to develop this property technology we've been talking about, which is aimed at producing low CO2 metals, and first focus being on ferrochrome and high chromium content. C-PAM and tariffs are now the two elements that we see changing the import picture both in North America and Europe. So on the left side you see Europe. The Q4 figures include October and November. And you can see that the imports have gone down. Same has happened in North America because of the tariffs. And this is something, especially now in Europe, that we do expect to continue this quarter. Wanted to give also a bit of a sense from the Q4 of the sentiment in different customer segments. So you basically see here our key customer segments and the colors are giving a bit of the sentiment. And you can see that the sentiment has been quite subdued. So either no change or even a little bit slightly negative on the automotive and heavy industry side. But now that we come to the beginning of 26, I think it is changing a little bit. So first I would like to comment on Europe that We clearly see that CBAM and the expectation of the coming safeguards are supporting demand for European suppliers. It's not necessarily helping to increase the end customer use demand, and there we don't see really clear signs of recovery yet. But demand for European producers we do see supported by the policy instruments. Then on America's side, I would say that we now see some first signs on market recovery or economic recovery, however you want to call it. And that was also reflected a bit in the clearly better PMI index that was published in January. It basically jumped into 52.6 points. And I think that is also what we see in our order books and the sentiment that we see being somewhat more positive than before in the Americas. There's one customer case here I wanted to share with you because it is basically an example of one of the product developments in Outokumpu that highlights how our innovative material development, in this case the Lean Duplex Forta, provides a solution for a very challenging customer need in real life. and it also helps to support the energy transformation and sustainable production of minerals and metals. So the customer here is Metso, very much in the space of mining and minerals and metals. Then moving forward, commenting then a bit on the Q4 result more, So we have clearly here a situation where Europe was weak, also for the whole year, and where BA Americas and Ferrocom had a very solid performance. The European weak financial performance very much based on the market weakness and the sustained pressure from the imports. And then I said earlier, also in the Q4, some temporary challenges that we've been having with our supply chain solution in this ERP implementation. We have had significant improvement profitability in BA Americas. That has been driven very much by the higher volumes and lower cost. And then really in BA Ferrochrome, we actually seen a third consecutive year of improvement. And we also do see the robust demand continuing for our low emission European Ferrochrome. And then maybe on their own measures, I could comment that we had the target to have 60 million savings in short-term cost saving measures. So we have reached 63 million by the end of the year. We have also reached the targeted level of 350 million on this three-year run rate program that we've been running by the end of 25. And therefore also that program is now closed. Then moving to sustainability and commenting on some of the key items there. So our solid sustainability performance continued in Q4. We were also present in COP30 and had some really good interactions with some of our customers, but also different politicians talking about energy, talking about energy, carbon capture and other important topics. On safety, we are on a world-class level in the process industry. We had a challenge in Q3, and I was very happy to see that now in Q4, we are really back on track in our safety performance with a total recordable incident frequency rate of 1.4. If we then look at the recycled material content, actually all the quarters in 2025, we were at the record high level of 97% of recycled material content. And of course, together with the actions we've taken in energy efficiency and optimizing our processes, this has really delivered continued emission reductions for Outokumpu. And this becomes a more important topic going forward. So the low EU ETS emission intensity that we have, coupled with the free allowances that we have going forward, is really supporting our competitiveness. And I come back to that a little bit later. Our sustainability leadership was also recognized externally. Earlier in the year in 25, we got again the Ecovaris Platinum and then towards the end of the year, the CDP's A rating for the climate was received. Then, a couple words about how CBAM and the phase out of the free allowances under the EU ETS are expected to impact our business. So when you look at the left side, CPAM basically impacts the top line, while then the discussion of the free allowances is a cost question to the industry and for the players. So both in stainless steel and in CPAM, or both in stainless steel and ferrochrome, so the key importers to Europe have carbon intensity default values that are clearly higher than the European benchmark. And this is clearly expected then to shift demand more towards the European suppliers. So you can see here in the left and in the middle, the black bar presenting the imports and then the green bar representing the European reference values. Further than I would like to point out that Outokumpu has been one of the early movers in smart decarbonization, and that has now resulted in a very competitive position under the EU ETS. So we basically have available free allowances covering our needs until 2030. I have here then an other example on how we can reduce carbon emissions through partnerships that actually create win-win business concepts in the ecosystem. So this is a partnership that we have announced as an MAU with Norse eFuel, where basically the concept is that for the side stream of our ferrochrome production, the CO gas, we can – deliver that to Norske Fuel for the production of sustainable aviation fuel. The beef here for us is that we are really, by selling the CEO gas, we are really reducing quite substantially our emissions, and for them it's a very cost-effective and good raw material for producing sustainable aviation fuel. So here let's see how this continues going forward, but these are continuously the type of opportunities we are looking in partnerships. And then now I think I would like to hand over to Mark Simon to talk more details about our financial position and the result.

Thank you, Kati. Good morning, good afternoon, everyone, and thank you for joining us today. Despite the challenging market environment, our solid financial foundation positions us well for future growth. Let's take a closer look at our financials at the end of the year. During the fourth quarter, our strong liquidity increased to 1.2 billion euros. With positive free cash flow and the dividend payment in October, our net debt increased slightly, only slightly during the quarter. At the same time, we secured a new unsecured 800 million sustainably linked RCF with a four-year maturity and an option to extend until 2032. The new facility replaced two previous RCFs of the same amount, but with improved and more flexible terms. This once again demonstrates the strong and continued support from our lending partners. Now let's take a look at our fourth quarter profitability. Our fourth quarter group profitability of 10 million euros was mainly impacted by lower deliveries and a lower pricing level in Europe. The decrease in stainless steel deliveries to 365,000 tons was driven by continued market weakness and challenges related to the new supply chain planning solution, as mentioned earlier. These negative impacts were partly offset by improved cost performance and higher electrification aid. Let's now take a closer look at the performance of our business areas in the fourth quarter, starting with Business Area Europe. Overall, the market conditions in Europe remained weak during the quarter. They were evident in manufacturing activity as the Euro area PMI remained below 50, much for the second half of the year, indicating continued contraction in the sector. Against this backdrop, volumes were lower during the quarter. This reflected both the ongoing market weakness and a temporary impact from the implementation of the ERP rollout, which we expect to normalize going forward. The weaker pricing environment also weighed on spreads, namely our price net of raw material costs, and this impact was partly offset by improved cost performance, supported by higher fixed cost absorption as production activity increased. In response to the prolonged market weakness, we continued to take decisive restructuring actions to safeguard our cost competitiveness. These actions form part of the 100 million restructuring program announced in connection of our Q2 2025 result, which runs through the end of 2027. As part of this program, we expect to realize cost savings of 50 million euros this year with a primary focus on business area Europe and group functions. Looking ahead, we also expect demand for domestic producers in Europe to be supported by the introduction of CBAM from the beginning of this year. With that, let me now turn to Business Area Americas. Despite seasonally lower deliveries, Business Area Americas delivered another strong performance in the fourth quarter. improve product mix and lower variable costs more than offset higher fixed costs related to the annual maintenance shutdown in the U.S., as well as lower gains from timing and hedging effects and the usual seasonal decline in deliveries in the America's market. During the quarter, demand in the US continued to shift from imports towards domestic producers following the tariffs imposed by the US administration in July last year. However, underlying end-user demand remained weak. Similar to Europe, manufacturing activity was contracting with PMI levels below 50 throughout the quarter. On a more positive note, we have recently seen early signs of improving market activity in the US. In addition, the Mexican government implemented tariffs on Asian imports, supporting domestic producers such as ourselves in Mexico. Looking ahead, our focus in Business Area Americas remains on strengthening operational excellence to fully unlock the potential of our asset base, while advancing our commercial strategy through an expanded product portfolio and a more differentiated go-to-market approach. With that, let's have a look to business area Ferrochrome. We are very pleased that the strong financial and operational performance in business area Ferrochrome continued during the quarter. Against the backdrop of ongoing supply constraints in southern Africa and continued geopolitical tensions, demand for our low-emission European ferrochrome offering remained strong throughout the quarter. While total deliveries declined due to lower internal demand, external deliveries increased, underlying our strong market position. With the introduction of CBEM from the beginning of this year, we expect this positive trend in external demand to continue. Profitability in the fourth quarter benefited from higher prices, lower variable costs supported by the electrification aid, and improved fixed cost absorption driven by higher production levels. Looking ahead, despite the termination of electrification aid and the increase in mining tax in Finland from the beginning of this year, we see our Ferrochrome business as very well positioned for the future. Our strong strategic setup, the continued expansion of our product portfolio into higher margin Ferrochrome as part of our Evolve strategy, And improving mining efficiency through the expansion of the sub-level caving concept will support further value creation in the business. Examples of our product portfolio expansion include our move into medium and high carbon ferrochrome as well as low titanium products during 2025 already. In addition, recent underground drilling confirms that our mineral reserves and resources provide sufficient oil availability well into the 2050s, offering long-term visibility without the need for any major additional investments. With that, let me turn to some final remarks on the Group's overall financial position. Despite the low profitability in the fourth quarter, our free cash flow improved significantly compared to the third quarter, driven by a strong release in working capital. Our ability to release additional working capital was limited by temporary challenges related to the implementation of the ERP system. As a result of the dividend payment of 61 million euros during the fourth quarter, Net debt increased slightly to 265 million euros. Given the current market environment, our primary financial focus remains on maintaining strong capital discipline with a particular emphasis on working capital efficiency. Now with that, I will hand it back over to you, Kati.