Outokumpu Oyj New

Good afternoon and welcome to Otokumpu's second quarter results presentation. I'm Johann, responsible for investor relations. We will start with the presentation from our CEO, Kati ter Horst, and our CFO, Marc-Simon Schaar. And after the presentation, you have the opportunity to ask questions over the lines. And with that, Kati, I hand over to you.

Thank you so much, Johann. So welcome also from my side. And we will first, with Marc-Simon, cover the Q2 result. And then I will comment a little bit more in detail our very recent investment decision today. So if we start now with a result on Q2, profitability improved to 100 million euros from 65 million euros in Q1. And this improvement was mainly driven by the improvement in business area Europe. Business Area Americas continued its strong performance and we also saw Ferrochrome result further improve in the second quarter. Of course in Europe it's clearly that it's the regional measures in Europe, mainly CBAM and then also the steel safeguard measures that have supported the market. While we can say that in the US the market has been, and the demand on the market has been more robust, especially in the industrial segments, and for ferrochrome, especially our low-emission ferrochrome from Europe, in this geopolitical situation, the demand has been at a good level. We are today talking about our evolved strategy, two important steps as milestones to proceed and progress with our strategy. One is the investment in high-nickel alloys, and the second one is really the publication of our first patent applications, and I come back to that a little bit later. We usually always look at what do the imports look like. I think the main message here is that the imports in Europe have clearly stayed at the lower level. They were a bit higher in Q2, 17% compared to Q1, 15%. I think this is also a little bit being up front of the steel safeguards. Thank you very much. Thank you very much. Basically, the heating and ventilation, air conditioning segment has done well. And then we see energy area being one. So those are the highlights we would have. On consumer side, transportation side, automotive, both continents, the demand has been sluggish. On deliveries, I think it's really important to comment here now a little bit. Our deliveries in Europe in the quarter two, they were the highest in three years, which brings the group deliveries also to the highest in three years. But I also would like to highlight Ferrochrome. So also in Ferrochrome, we had a four-year high in the deliveries. You don't see maybe America's moving that much is maybe what we have to remember that we have 250,000 tons of our coal trolling capacity in Mexico, which we cannot currently use really to the full benefit of America's due to the 50% tariffs from Mexico to the US. But volumes played a big role in Q2. Then on sustainability, so I'm very happy to say that our safety promise further improved from Q1. So we arrived on the total recordable incident frequency rate at 1.4, which is kind of better than our target level 1.5. The four-hole half year was now 1.6. So this is a work that continues, but I would say that we are... Thank you very much. I think it's important to say that being recognized by both the Financial Times as one of the Europe's climate leaders for the third time now in a row and also by Time among the world's most sustainable companies, it really matters because it provides independent validation that the sustainability leadership is real, it's measurable and internationally recognized. and these rankings assess not only the climate commitments but also demonstrate progress, transparency and business performance. So such recognition reinforces our position as the sustainability leader in stainless steel and really supports our strategy of creating competitive advantage through decarbonization and circularity. With this I will hand over to Marc-Simon to go more in detail in the result.

Thanks, Kati. Good morning, good afternoon, also from my side. In the second quarter, stronger profitability combined with continued capital discipline enabled us to further strengthen our financial position. This gives us a solid foundation as we keep executing our Evolve growth strategy. In line with our guidance, group-adjusted EBITDA increased from 65 million euros in the first quarter to 100 million euros in quarter two. While the net of timing and hedging impact in the quarter was less favorable than we had expected, our underlying operating performance was actually even stronger, driven primarily by higher margins in business area Europe. And speaking of Europe, I am pleased to report that the business area has returned to positive EBITDA. Our operating cash flow remained solid at 85 million euros, allowing us to bring net debt down to 224 million while preserving our strong liquidity position. With that financial overview, let me turn to the performance of our business areas, starting with the business area Europe. The market environment in Europe was largely unchanged from the end of the first quarter. European producers continued to benefit from supportive regulatory measures, though end-use demand remained subdued. Anouk de Graaf, Paivi Allenius Beyond the volume growth, profitability in business area Europe was further supported by higher realized prices and lower fixed costs of sales in the second quarter, following the backlog-related pressure we felt in Q1 from the supply chain planning solution challenges we had. With that, let's move on to Business Area Americas. Business Area Americas continue to deliver a strong financial performance, underpinned by growth in some segments, showing improved demand, such as data centers and related investments into infrastructure, energy, as well as heating, ventilation, and air conditioning. The Mexican market also continued to show early signs of recovery with the manufacturing PMI moving above 50 in June for the first time in a year and its strongest reading since March 2024. In addition to the 4% higher volumes, profitability in Americas benefited from higher selling prices driven by an increase in the alloy surcharge supported by increase in commodity prices. These positive factors were partly offset by higher costs mainly related to freight and non-conforming material. Business Era Ferrochrome was able to increase its adjusted EBITDA in the second quarter versus the first quarter, supported by the solid demand for our low-emission European offering as well as higher selling prices. Overall, the demand remained healthy across all regions, with North America continuing to be the strongest market. On the supply side, production containments in South Africa remained in place for most of the quarter. Although electricity support measures have initiated production ramp-up, export volumes remained historically low, so the impact on the market prices during the quarter remained limited. We also continued with our expansion into higher margin ferrochrome products. and compared with the charged chrome market, the high carbon and high chromium ferrochrome as well as other special product segments are expected to be less exposed to the anticipated increase in South African production. Now combined with CBEM, we do see that this is reinforcing the strategic value of our portfolio expansion. Now with that, let me close with a few remarks on cash flow and leverage. Supported by the improvement in profitability, our operating cash flow remained solid in the second quarter. Together with some release in working capital and capital expenditures of 34 million euros, our free cash flow improved to 51 million euros compared to 34 in the first quarter. The working capital release came despite higher business activity and rising commodity prices during the quarter, once again demonstrating our continued focus on capital discipline. The stronger free cash flow enabled us to further reduce net debt to 224 million euros, as mentioned earlier, despite of the first dividend installment we paid in April this year. And finally, with both, Profitability up, net debt down, our leverage ratio declined from 1.3 to 1.1 in line with our financial policy. And with that, back to you, Kati.