Salzgitter Ag Akt Shs

Ladies and gentlemen, welcome to our annual analyst conference. My name is Markus Heitler. I'm the head of Salzgitter AG's investor relations department. I'm here today with Gunnar Gröbler, our CEO, and Birgit Potrafki, our CFO. They will give you insights into the economical and political environment we are facing, as well as in the business development of the group and the strategy. And finally, we will dive into finance. After that, we will have the usual Q&A session. Just for transparency reason and as a last remark, the whole web conference will be shown on our website. So, just that you know what question to ask or not to ask. And with that, I'd like to hand over to you, Gunnar. Thank you very much, Markus.

Warm welcome from our side to the annual analyst conference with the full year numbers of 2024. Prior to diving into the details, which Birgit will do, let me perhaps kick it off with some remarks on the overall environment and how we have performed through the year. Let me start with something that is very close to our heart as members of the board, but also to everybody in the company. which is occupational safety. As you can see, the long-term trend since 2018 is intact. We're reducing our LTIF. We're reducing or improving our operational and occupational safety. And we have again improved in 2024 vis-à-vis 2023. So that is a good sign. Our target, of course, remains zero accident. This is something we stand for. This is something that we also ask the team, the entire team to stand for and support both our colleagues, but also third parties working on site to really get to that target. So that remains an ambition that we have that remains a clear focus on our day-to-day work. So from there to the political and economic environment that we have, we have seen quite some political development over the last couple of weeks, I should say, which I would like to highlight in short. So on the upper part, you see the European development. On the lower part, the U.S. development. Let me start with the U.S., We have seen quite a number of discussions on tariffs in the US. There's still a bit of an unclear picture. What I clearly support is that EU keeps the door open for further negotiations, for further discussions to really get back to a to a stable system that we all can work with because this lack of stability, this unclarity is certainly not good for business. For us at Salzgitter, the direct exposure is relatively limited. We are not exporting a lot of material into the US. We are rather looking at material that will be diverged from formerly moving into the US, now moving into other geographical regions, one of that being Europe. Hence, we are very happy with the political discussion and measures taken by EU on safeguards and on anti-dumping measures. So safeguards, the review is completed and will be put in force as of April 1st. This will cover roughly 4 million tons of steel that is flowing into Europe today. This is approximately 20% of all the imports and approximately 6% of the overall market in Europe. So a substantial tonnage that is newly covered with the safeguards. And secondly, on the anti-dumping measures, we're looking at Japan, Vietnam, Egypt. Roughly 10% of the hot-rolled strip market is covered here, so also substantial move and protection of the European steel market that you can see here through those two measures. Thirdly, it's good that EU continues the dialogue on duties on Russian semi-finished products It is still hard to understand why Russian slabs are entering Europe. We've seen an increase in market share for Russian slabs since the Ukrainian war started of 4%, certainly something that is not intended by EU, I assume. So, hence, I fully appreciate the ongoing discussion there introducing duties on Russian products. EU underwent a quite intensive discussion from the European Green Deal to the European Clean Industrial Deal and with a clear focus on base industry. It's very good to see that you have three key industries that are covered by EU. Specifically, it's the automotive industry, it's the chemicals industry and steel. Chemicals and steel being base industries and hence also strategic industries in Europe. And they are also now claimed as strategic industries in Europe. And the steel metals and action plan is a very good signal and sign of the EU that steel is seen as strategic. The steel methods action plan covers a couple of elements as you can see on that slide. I think it's very good to see the safeguard measures as I just laid out, but also acknowledging that the carbon border adjustment mechanism, CBAM, needs improvements, and those improvements are named in that action plan and are to be resolved within this year prior to CBAM coming in action as of next year. It is also very good to see that EU looks into lead markets for green products, lead markets for green steel, something that the industry clearly supports, something where we also see that the transformation towards the green steel is supported by the clean industrial deal and where also our low-emission steel standard that we have implemented in Germany last year and that is now becoming European, it can be a very good basis for that discussion going forward. What is obviously relatively weak in the steel metals action plan is energy, given that EU is now setting the sort of legislative boundaries for energy, hence... Despite that, there is a clear signal towards the member states to reduce energy costs and to help the strategic industry to get that burden lowered. I think that is a clear signal that EU sets to all member states and for us certainly a good signal going forward. That's Brussels looking at Berlin. I think what we have seen over the last couple of days, I should say, is that there is a very clear move towards investment funds for infrastructure. and additional investment funds for defense. Let's talk infrastructure here for a second. The special fund is set to be around 500 billion euros. Of course, once that is decided, which is supposed to happen today, In the Bundesrat, this will need some time to trickle down to actually orders in the industry. But we see clearly an impact on the German economic output, approximately 1% next year, starting hopefully already in the second half of this year. and then increasing to 2% in 27, and the peak in that investment would be then in the late 2020s, beginning 2030s. So you see this is a long-lasting element that clearly supports us as steel industry, given that infrastructure depends on steel, be it infrastructure for logistics, roads, trains, rails, what have you, but also infrastructure for energy in the context of, for example, hydrogen pipelines, but also electricity grids, offshore wind or onshore wind turbines, et cetera, et cetera. a clear focus on steel-intensive products through that special fund for infrastructure. And we at Saskita clearly want to participate in that and we are well set through the wide variety of products that we have to also participate in that. We are strong in infrastructure already today, so we have all the context to our counterparts, to our customers, and we'll intensify that. Having a look at the market environment more in general, let me pick a couple of points of that. The special fund, as I just said, will kick in the second half of this year. But to do that, it needs to be implemented very quickly and forcefully. So I urge the German government to be very clear on this special fund and help also industry to make use of that. But it cannot be all that the German government, the new government will have to look at. It's still a need for structural reforms. There's still a need to really review bureaucracy. review sort of the social security system, review tax systems that cannot be replaced by these special funds, by the focus on infrastructure and defense. So clear urge also to the new government and it's at least comforting to understand that the current discussions in Berlin are covering those aspects as well. On the European steel market side, it is an increase or we expect an increase in 2025. But a long and strong recovery is not really foreseeable. It's not that we see sort of a dramatic pickup in 25. I think we're moving into 25 as we left 24 with a bit of an indifferent market behavior from different sides. So here also. Clear signals from Brussels like the trade defense measures are expected and need to come into force to support the steel industry, support us in our strategic value that we have to the European Union. Next to the political and market side, looking at raw materials and energy prices, well, On the raw material side, we have seen quite a fluctuation in 2024. As you can see from the graph, iron ore from almost 150 down to something like 80, so cutting in half and now being a bit around 100. Let's see how that develops over the next couple of months. Same on the coking coal side, starting north of 300, now being below 200, so it's really something that we observe very closely to make sure that also from the hedging perspective, we are making good trades here and secure our cost base on the raw material side. Energy, while you could say electricity is a bit of a flat development, relatively high still, but coming from much higher numbers in 2023, however, What we all should keep in mind, grid costs are not included here. So we're looking at the electricity prices as of EEX, Grid costs are not included and you all know that grid costs have increased quite significantly in the last years in Germany. Hence also the plea to the German government to look into energy costs, to really look into infrastructure costs for electricity and make that affordable for an industry that is active on the global market. Natural gas has picked up through the year 2024, peaking north of 50 euros, also due to the gas storages sort of coming to, which isn't quite normal through the winter, but emptying through the last couple of months. Let's see how that now develops also with the warmer weather kicking in as we speak. Looking at steel prices, well, on the left-hand side, spot prices in Northern Europe, as you see, in 2024, we have seen a further decline in prices coming from still relatively good prices in 2023, and we're going to see that in the numbers as well. Through the year 24, especially the sections and plate has been somewhat stable and the hot rod coil prices picking up as of beginning of this year. So let's see how that now further develops. Looking at HRC prices internationally, you see that pick up on the blue line as we see it left. Black line is US market has picked up given all the turmoil around trade measures since January this year. So this has been reflected directly in the prices on the orange line on the bottom. This is China. You see the uplift through the year, which is a fiscal package that China has launched after the summer break. which led to this price increasing, but since then relatively flat. So no major impact foreseeable for us as of now coming from prices. Now, looking at Salzgitter specifically, and starting with the financial year 2024. Of course, Birgit will go into all the details, so I will spare that for you, but perhaps two, three highlights. As you see, crude steel production went up. This is because of the realigning of blast furnace A in 2023. Hence, we have been up to full production in 2024 again. This is what you see in the delta of 680. But we also see external sales went down by 880. This is the price development I just highlighted. This is what you see here. Prices have come down compared to 23. And that's the effect that sales also went down to just above 10 billion euros. All in all, we're looking at earnings before taxes minus 296, almost 300. What is comforting, though, is that the operational performance has been strong. We're looking at an operational result of just shy of 110. So from that angle, I think we have positive signals from our own operational performance in 2024. Looking at the different businesses, steel production, see the numbers won't go into details. But just as I said, sales and earnings lower mainly due to prices. This is exactly the story that I just told. Outlook. Demand is sufficient, so we see a stable and sufficient demand to utilize the capacity that we have. Of course, we're still waiting for further pickup on prices. 5.30, it has been this morning, so there's still headroom for us to ask for sections. We see a gradual, but only a gradual recovery, especially in the product mix. There's still room also for us to further improve through the year 2025, and here, Fiscal packages like the one on infrastructure could certainly help as soon as it kicks in. Looking at steel processing, certainly more of a... Problem child, if you want to say so. In 24, you see a lot of minus numbers there, especially on the Delta side. Heavy plate demand declined. Prices went down. We have seen postponement in projects when it comes to line pipe, especially this H2 backbone that Germany has decided upon. Precision tubes, same story. Stainless, we sold. It is deconsolidated as of fourth quarter 24 because that's when we closed the deal. The outlook, again, also here we are... Looking at headroom or room to further improve in the plate mix, we certainly see infrastructure being an important part here. There is at least on the pipeline side a bit of an uplift visible. We have booked roughly 100,000 tonnes over the last two weeks in different projects. By the way, also a project in the US, so customers in the US are betting on our pipes, are betting on or appreciate our products, I should rather say. And they also take the tax risk given all the uncertainty. So our products are still highly valued in the US. So markets there are picking up slightly. Let's see how that continues over the course of this year. Trading. I think we have seen a strong international trading over the last year, so that has covered a bit our difficulties we had on stockholding steel trade. Stock prices went down and notably down, so that put some pressure on the stockholding trading. Again, the international trading was good. International trading, For this year, however, given all the uncertainties we have on the trade barriers is certainly under pressure. Let's see how that develops over here. As soon as we create or policymakers create more stability here, it will certainly help the international trading again. Stockholding trade, we have made improvements. We are in a restructuring here and certainly expect to see results of that in the course of this year. And Birgit will talk you through the numbers there as well. Last but not least, technology has been high-performing, good development through the entire year, especially in KHS. I've seen a record all-time high in result in KHS. So that is certainly good and something we will also carry through through this year with a good order backlog for 2025 and also good traction on sales expected for this year. So, stabilization on a very high level despite the special effects that are mentioned at the bottom. With all of that, we're looking at a management guidance which looks at sales between 9.5 and 10 billion, EBITDA 350 to 550 million euros, pre-tax, with all the uncertainty that we see in those markets is still relatively wide, minus 100 to plus 100 million euros, and ROSI should be improved vis-à-vis last year. Let's look a bit at the strategic directions that we have set up in our strategy 2030. We're covering circular economy, profitability and growth and customer-oriented solutions. Looking at circular economy, we have further worked on specific projects that are covering the circular economy. Closed loops as one example, we mentioned already last year, we have intensified our work there. but also work with yellow goods customers where we launched CO2 reduced yellow goods that will be now shown on the Bauma, the fair that starts a couple of days from now and then will be set up and operate on our site here in Salzgitter. Profitability, the performance program Birgit will walk you through, has been intensified. Measures take effect. We already see in 2024 that this performance in 2026 is taking measures and we have further intensified our work here and it's good to see that we had traction there. On the growth and customer side, the energy transition is certainly something where we see ourselves well positioned with CO2 reduced steel for hydrogen pipes with heavy plate for the wind industry and others. So that is certainly something that we will continue to monitor and to focus and to be active on those markets. We take a holistic approach. That's part of the strategy. Let me dive into organic growth for a second. Field production, closed value streams, circular economy is what we focus on here with a closed loop strategy. products where we take the scrap from certain customers, turn the scrap into high quality steel and then return that steel, sell that steel to the same customer again. We're expanding that business with the competence that we have on the scrap side and on the steelmaking side. I think we are perfectly positioned here to play exactly that market. Processing, I talked about the H2 ready pipes, which we're going to continue there. And we certainly focus on the sustainable energy market, as mentioned before. Trading, let me mention here Defense, our company Universal, which is part of the trading unit. is already active on the defense side, but not only Universal. The entire suite of products is usable and will be used in the defense sector, so certainly a growth area that we see. And Universal is one of the key elements in-house already today that will help us to also broaden our footprint here, both in pipes, both, and this will be then precision tubes on the heavy plate side, secure as our product family for defense products will be a growing market going forward. Technology, there's a high interest in our PlusMax business, in our PlusMax technology, especially in India and Africa. So that we will focus on that and we will certainly strengthen our international network of production hubs across the globe to really cover the different markets with their respective and specific needs. Sarkos, reliable, flexible, sustainable is exactly sort of how we look at it. We are in full swing with building Salkos on site. All the major components are under construction. We're halfway through in really building the entire site. If you have the opportunity to visit us, it's impressive to see the size of it and the complexity of what's going on right now. whilst we're still in full production on that very site. So that's really impressive, and I'm very proud of the team that is working on that and delivering on this each and every day. What is important, the funding for Salkos Stage 1 is fully secured. We are in full sort of swing here and will not reduce speed or reduce scope in Salkos Stage 1. Hence, we will be able to deliver roughly 2 million tons of steel, green steel, to our customers as soon as we are operational. We have launched our product brand Zalkos last year and sort of have created that Zalkos product family. Also very active and successful in the market. The low emission steel standard less is something that the industry has developed over the last year. So we are now able to certify our steel and be clear on what it means to have green steel. What is green steel and we can identify that now. and get it standardized and certified by a neutral certifier so that we also can support green lead markets with our products. Last thing is energy. There's always a discussion around hydrogen. Will hydrogen be available? Will it be sort of at the right cost level? As I mentioned also in the years before, we have a lot of flexibility here. The technical setup that we chose allows us to start with a mixture of natural gas and hydrogen. That will already deliver a 60% reduction on the CO2 side. And then we're moving on to 95% as soon as we have hydrogen through the pipeline available. Zarcos, I talked about the site, 602,000 additional people on site right now, so that is really a complex exercise we're undergoing right now, but well underway. On the energy side, I talked about hydrogen. Let me perhaps mention us being among the top 10 signers of PPA. last year in Germany with a total of 1.7 terawatt hours now signed in renewable electricity. So also here on the green side, we are well underway. Coming back to product defense, Unfortunately, I have to say, defence has become a very intense discussion, not only in Germany, but in the whole of Europe. Last night, I think, in the discussions there, we are well set up with a suite of different products, as I just mentioned, and we will, through a task force defence, now leverage defence. this portfolio vis-à-vis our customers and help them to ramp up their production, help them to deliver on the targets that EU has set up here. And the notion that one hears from Brussels that this Investments should be covered by European companies predominantly is certainly another sort of hint or more than a hint that it will support the steel industry, will support this strategic industry in Europe. With that, I'd like to hand over to you, Birgit, and you're going to guide us through the financials, please.

Yes, of course I will. A warm welcome also from me to you out there. And, yeah, Gunnar has already addressed it, and I would like to stress it again. 2024. was a year with really strong headwind, especially in the steel areas. And we used that year, this very, very difficult year, we used that to significantly reduce our potential risks in our balance sheet, and also we have used that year, Gunnar has already teasered it, to extend our performance program, and I will lay this out in the course over my presentation. So the very strong wind we find back in our sales, €10 billion compared to last year reduced. However, EBITDA was not too bad, it was €445. And that was even stronger than we announced to you in autumn last year. So quite nicely stronger performance here. The overall EBT, Guna has mentioned already, highly negative, minus 296. However, mainly driven by one-time effects of total 400 million euro negative. And out of this 400 million euro, 280 million euro were one-time write-offs. I will give some more details in the next slide. and around €120 million we have foreseen in order to restructure our businesses. So that was putting a heavy burden on our results last year. However, if we take that burden away, we see this very nice number on the upper right side, €109 million. And this is our performance without these one-time effects. And this is mainly driven, Gunnar has mentioned it already, from our KHS group out of the technology sector. And, of course, Aurobis was performing also very nicely. Our also very nice development we see in our cash position, in the cash flow, was more than 400 million euros. And this was mainly positively influenced by our working capital level, which was brought down, which we could bring down. due to stringent management below 2.5 billion euro by the end of the year. And all these impacts also positively impacted our net financial position. That's negative and that's planned negative because we are investing in our transformation and that's costing quite some pre-investments. So this trend going more a little bit down the negative line a little bit more is planned And with our management, especially on the cash side, we could limit the downtrend by the end of the year also significantly. So we were reaching slightly below minus 600. Continuing the history of a stable dividend payment policy, we are suggesting to pay 20 cents per share to our owners in order to honor their trust in us. Income statement. The headwind we find back in our sales. Gulnar has mentioned the number already, minus 780 million almost. And we have another figure that saw quite a huge movement, and this is the depreciation here. So there are two major assets where we decided to have depreciation down to zero. The first one is our MPT group, our precision tubes group, and we depreciated the whole group from €130 million down to zero. We took the same decision for our HKM participation. That was in our books worth 110 million euro and we also depreciated that down to zero. And that of course will ease the income statement on the depreciation side this year and the following year and all these kind of depreciations we did will have less burden worth around 30 million euro in the upcoming years. And of course, what we see here, the result from investment accounting for using the equity method. Here we find back also the nice result from our Arubus share. looking at the balance sheet of course we are oh sorry wrong side looking at our balance sheet we find back of course the increase in our assets mainly driven again by cycles and we also find back an increase in our share in our how to say yeah in our participation in our rubles accounted here in the balance sheet was 140, I have to look at this, 9.6. And what we also see here, I have already said we could nicely reduce our inventories as well as our trade receivables. not only against the third quarter but also against the previous year. We find this back here in this very positive reduced numbers. And the last line I would like to lay out, this is assets hold for sale and that was our MST group, stainless steel group. which we sold at the beginning of November. Gunnar has already mentioned this already before, so that is now also out of our books. If we look at our equity side, our equity was reduced in line with our financial results coming from the profit and loss side. And this was more or less compensated by a similarly amount of higher bank landings. That was mainly driving the equity side here. Cash flow statement. We started into the year with cash equivalents of 939.7 million euros. And we had a nice cash flow from operating activities. I already mentioned that nice number, 408 million euros. And the last time when we spoke at the end of the third quarter, this number was negative. And it was around minus 95 million euros. So by really working very strong on the working capital, we managed to improve that by 550 million euros within the fourth quarter of last year. The cash flow from investment activities, investments, but also cash in from selling the MST Group, amounted up to 677 million euros. And cash flow that we received from financial activities were worth 331.9 million euros. So the overall changes in cash, quite foreseeable, 62.5 million euros. So the end value or starting value of this year, 1 billion euros. Working capital, I have already mentioned that our cash was mainly driven by the movements in our working capital. You see here the comparison to the third quarter where we were still slightly above 3 billion euro and now slightly below 2.5 billion euro and also the decrease compared to the year before with minus 285. Investments planned, we invested quite an impressive number in 2020 for €899 million. Also a big portion here for our Xycos. You can see again the construction site on the right side. And I really love to see Gunnar smile whenever he talks about Xycos. That's the engineer, right?

But it's impressive.

Yeah, it's really impressive. 2025 will be another impressive spending year, also strongly driven by Zalkos. So the construction site will continue to grow and will continue to develop itself towards the start of production. Gunnar has talked about organic growth as part of a holistic approach for economic stability. I would like to talk a little bit about our initiatives concerning performance, how we organize our performance, how we organize positive impacts on sustainable competitiveness. We are more or less having four pillars. I will start with the left one. On the left side, you see our portfolio activities. We are constantly shaping our portfolio, which means we are selling things like the MST Group and we are also buying parts, shares, or even whole small companies like we did here with two small companies supporting the strength and competitiveness of our KHS group. So we are going both directions here. And over the course of time, you will find, of course, different topics here. And whenever we are ready to talk, we will inform you. Structure, we have discussed restructuring. So we have foreseen quite a significant amount to restructure our trade business. Out of the 120 million restructuring costs we have foreseen in 2024, a little bit above 90 million euro are affecting our trade business. So that has a major focus. And I already mentioned also that we were depreciating our precision tube business down to zero. At the same time, the business continues, which means we need to care about setting it up in a way that it can be able to perform. and performance guna has already slightly addressed our performance 2026 program this is already existing since um since let me think two 2022 three years and we have spent quite some energy to extend that program We had a look into purchasing. We had a look into logistics. We had a look into price and margin. And we decided to tackle another 250 million, which means we are doubling our investment. our activities in this field here. I will show you how this spreads over the years in the next slide. And of course, when economy is down, there are some measures that you switch on and off depending on the economy because they are not sustainable. Such things as postpone investments, short time work, being very restrictive with hiring activities and cutting down on budgets. So you see, quite some pillars, quite a holistic approach that we are tackling in order to get more and more competitive on the cost side. So here the two programs, the existing program 2026 and the new parts we put together in one holistic program that is now called P28 because we extended it two years from 26 to 28 and P stands for performance and we are quite confident that we will be able to organize this progress because as you can see here in three years we have already materialized more than 130 million euros so this is our ground this is our basis on up from this basis we are going into the next year's with this ambition here amounting up to half a billion Euro, again doubling our targets here for the next years. And before I hand over to Gunnar for the conclusion, I would like to make the financial conclusion. A year with strong headwind. We knew we cannot change the headwind, but we knew we could do something setting our sails. So what we did, again, we were working on our resilience. Cash side, as I have mentioned, intensifying restructuring activities, brought down balance sheet risks, and extend our performance program. And with this, I hand over to Gunnar.

Thank you very much, Birgit. And I think resilience is exactly the right word for what we have shown through the year 2024 and also where we laid the basis for the years to come. Resilience in the company as such, resilience in our ability to deliver to the business but also resilience in our strategy i think it is it is also comforting to see that our strategies as guitar g 2030 is resilient even in very difficult market circumstances like we have seen them in in 2024 and this will also be a challenge then for us in 2025 you mentioned it and i mentioned it before the start into 25 was also challenging however We see opportunities going forward. We see potential that we certainly want to grasp and will grasp as soon as it materializes. And this is, again, energy, it's infrastructure, it's defense, it's security. I think just to mention a few of them. but also whatever sort of the regulatory frameworks offers on automotive industry will certainly also on the back end support, the steel industry will support us as one of the key players in the steel support to the automotive industry. So there is... Clearly work to be done. You mentioned the performance program. We're well underway here and it is an ambitious program. Half a billion euro within the upcoming three, four years. That is ambitious. The team for that is set up. The internal sort of mindset for that is set up. So we are very confident that we're going to deliver on that program and that will help us to transform. It will help us to transform consistently as we have done in the past, but also sensibly, that we don't do stupid things. And here again, Zalkos, the modularity of Zalkos helps us to do exactly that. We can react on market development. We can react on political development. We're not tied to the mast for the entire transformation. We can maneuver within that transformation to find really the best place for us at Salzgitter to stick to our plan to transform the company, but do it in a way that is consistently and sensibly and also profitably. Because without profits, it won't work at all. Our ambition is we continue to lead the transformation, we continue to lead the transformation into a future that should be brighter for steel than it has been in the past. With that, I'd like to conclude and we're happy to take your questions. Thank you very much for your patience so far.

Right, let's start. I see Christian is the first. Please, Christian, go on.

Hi. Thanks a lot for taking my question. I have three, if I may. Can you specify the CapEx expectation for 2025? I see there is a chart, but then if you can specify the range of the CapEx and also the associated subsidy cash flow, which you expect to come in from the government for the SALCOs program. That is question number one.

Cashflow and Salkos.

Well, if we just don't know whether we got you right. Let me start. And if I'm off topic, you just tell me, right? So I understand the question was on the cash out profile from the support scheme that we get from the government for Salkos. Is that correct?

Yes. Yes.

So the way it works is that we have a granted total amount of a billion euro and we basically hand in invoices to government every quarter. So whatever has been built on site will then be further invoiced to government and then they pay that portion out of the 1 billion with all the invoices we hand in. They approve that and then pay out the cash. So we have a build-up of support over the years amounting to a billion. It's not that we get a billion at the very beginning or a billion at the end, but it's just a... move alongside with our investments. Does that answer your question?

Yeah, I mean, very much. But is there any kind of expectation on the amount that is likely to come in 2025?

some very positive information that we had some spillover concerning the subsidies that were expected or that were not expected, that were supposed to correlate with spendings we had last year. So a significant income of the subsidy amount of this year is related to cash out for investments of last year. So the portion of subsidies compared to our spendings for Salkos is profiting from the spillover effect here.

I think that spillover effect is 155 million euros that we're expecting now to come in first quarter. But then as Birgit said, the investment is peaking in 2025. So we're looking at roughly... a bit higher amount than we had last year. So expect an additional subsidy amount of what will be roughly 200.

With the spillover effect, it's more than 300. More than 300, including the spillover.

I understand. My second question is on the electricity requirement for the Zalcos. So you made an encouraging comment that you have signed 1.7 terawatt hours of PPAs. In that context, do you mind helping us as in what is the expected total power demand for the Zalcos? And then the PPAs which you have signed, is there any kind of a broader price range for those PPAs you want to give us to the market?

Well, talking price range, we are looking at different external price curves that are available on the market and we are within that range. I hope you appreciate that I won't be more specific because that is of course information that our customers and our competitors love to have as well. with that 1.7 terawatt hours we're actually good to to provide sarkos phase one with the green electricity that we need also coming from the support scheme that is set out because that also has some requirements on us especially on the green green electricity side so with that we are good to cover sarkos phase one

Okay, and my last question is on the cost saving program. Impressive numbers you have delivered and also the targets. Is there any way you can help us the allocation of these cost savings as in which of the divisions is seeing maximum amount of the cost savings accruing?

You're talking about the additional 250 million euro I have shown, right? I will give you a glimpse into the additional 250 million euro that we have just launched. And here the major portions worth between 100 and 130 million each are coming one side, it's no surprise, from the purchase side. And the other big portion coming from the sales price and margin side. And we have like roughly 20 million euros coming from logistics. And in addition, we are also tackling next to the cost portions. We are also tackling 130 million on the inventory side in order to release further cash here.

If I may add, I think the big portion of that is then allocated to the steel production part, right? Given the size and the cost block within our company, most of the savings will be allocated or are allocated at the steel production side.

Thanks for adding.

Okay. Okay. Thanks a lot. I'll go back in the queue.

Thank you.

Thank you.

All right. Then we move on to Bastian, please.

Yeah, hey, good morning all. Thanks for taking my questions. Maybe I'll start off with a quick follow-up on the cash flow side. Maybe you can just put the things together for us for the bigger picture in terms of what you're expecting on the cash flow for 2025, i.e. what is the actual net capex you expect post the reimbursement payments which you have currently scheduled? Then maybe also just give me a very strong working capital performance in the fourth quarter. Is there any reversal you expect for the full year now, given that things are maybe rebounding a little bit? And is there maybe a net debt number which you're steering for the end of the year? I'm mostly remembering you were guiding us for $1 billion for 2024. You came out at almost 50% of that. So nevertheless, if there's a number you have in mind and you could share that, that would be great. That's my first question.

Yeah, fair point. So as I said before, 2025 will be another year of peak spending. So it will be slightly above 2024. And yeah, that is after subsidies already. These figures we have shown are after subsidies. And of course, that is no secret that the year-end cash impact coming from working capital always see a rebound in the next two or three months. We also will see that rebound or we have already seen it. However, that effect is not coming up to the same extent the reduction has been because we have organized some sustainable, especially on the inventory side, some sustainable reduction here. Concerning the net financial position, yes, we came out not exactly 50% below, let's say, but however, 40% below. However, you're right, that is quite a nice number. So I still stick to my guidance that I have given in the last call, which is between minus 1.5 billion euro and minus 2 billion euro. GUNA has shown the uncertainty reflected in our EBT guidance. However, I think we would be rather on the lower side than on the higher side.

Got you. Understood. Okay, cool. Then my second question is basically on your operational results, maybe going into a little bit of detail there. So when we look at training, you had, I think, 93 million negative items, mostly for restructuring in the fourth quarter. And I guess that means, if I'm not mistaken, that your underlying performance was actually 21 million negative. which is, I mean, pretty impressive compared to the negative 9 million in Q3 in an environment where you face a lot of headwinds, falling prices would typically weigh on your margin. So was this fully underlying? And if so, can we extrapolate the 20 million plus run rate into the first quarter? I guess in theory, by now you should be having some tailwinds from prices. So I would think you could on that basis possibly improve. But again, I'm not so sure the 20 million in the fourth quarter has been fully sustainable and underlying. And then maybe also, can you step through the key drivers for the other divisions in the first quarter in terms of the EBT trends you're seeing compared to the fourth quarter on an underlying basis?

I will start with some facts and figures and then Gunnar will continue with some more market aspects. So concerning the trade, the positive impact from the fourth quarter on the operational side was not so much coming from the business. It was more coming from year-end effect, which are not necessarily sustainable. So I would rather be prudent about continuing that into this year. That was one question and the other question about facts and figures was about how we see the other segments. Guna has shown the price curve for the hot-rolled coil for example and also for plates. So what we see that last year we were profiting from contracts that were fixed in a period where the price level was still significantly above where the price level is when contracts are fixed now, meaning the past few weeks and the next few weeks. We will have a challenge from the price side due to the reduced price levels, especially in the automotive business. And plates are also still under a lot of pressure. However, we expect that the anti-dumping procedures and just recently announced tax rates will have a positive impact. that we will also really feel on the plate side and maybe with some more markets insights from Gunnar.

Yeah, thank you. I think just adding on the trading, what we've seen last year is that the international trading has been very, very strong, right? So we have seen quite a good contribution from the international trading to the overall trading business. We're seeing that getting more complicated given all the trade discussions right now, where then our customers are becoming more hesitant. So international trading will not sort of... is not starting as good into 2025 compared to Q4 2024. And then on the steel processing side plate, as Birgit said, we are not seeing the right mix right now in our customer requests, which puts a bit of pressure on the margin mix. But again, given all the sentiment politically, but also from a more infrastructure industrial side, we see good, at least there's a good potential for the second half of this year that markets might pick up. And as plate is a bit more short term than hot rod coil is, we should be able to benefit from that. On the pipe, I think positively to be noted that we have, especially on pipelines, we have been able to book a number of contracts in the first two months of this year. Interesting enough, also from the U.S., where the U.S. customer also takes the contract. the trade barrier risk. So we are seeing that market picking up and potentially also with all the hydrogen backbone discussions now really getting more and more into delivery. We should also profit from that through that year.

Yeah, and one more information I can share is that the fourth quarter, especially also in the trade area, was profiting also from positive impacts coming from the exchange rate effects. So that also had quite a significant impact at the end of the year.

Understood. Okay, great. Thanks for the color. Then just maybe lastly, moving back to a slightly higher level topic. I mean, we've been having a couple of announcements on the EU policy front in the last couple of days. And you seem to be reasonably upbeat on, I think, the trade defense side in particular. So I guess so far we've not yet seen like a major impact in the market from what has been announced. So what do you think? is needed then to really drive prices up? Do you think standalone, I think the trade measures will be enough for that? And then secondly, on decarbonization. So if the European Union now goes and expands the C-band downstream and also does create lead markets, that would probably be a quite important factor for you to risk your strategy on decarbonization. So is there any visibility which you have in terms of what exactly the European Union plans to do here? And do you believe that this will go far enough? And then also in the context of lead markets, I guess autos have been your highest value and your highest margin product for the So do you believe that some private sectors like autos could be ultimately included in the lead market concept? Or do you feel that that is less likely today?

Well, thank you. Let's start with the trade measures and your question around that part. Well, first of all, we see the safeguards now kicking in first of April, and we see the next trade defense measures kicking in then the week after. So things are happening as we speak. And as I laid out, this is a significant portion of the overall market that is covered by those safeguards and the trade defense measures. Hence, we also expect a certain price uplift in Europe, given those measures kicking in. Candish, one of the information providers on the steel side, I read the other day, is expecting a pickup 30 to 50 euros per tonne. It's not our numbers, it's their numbers, but that should give you perhaps some guidance what other people think around safeguards. When it comes to CBAM, the Steel and Metals Action Plan covers CBAM and covers the deficiencies we have in today's system coming out of this trial period that we are in right now. And there's a clear path towards year end where those deficiencies should be tackled and should be resolved. And especially the export element is mentioned there. So it's great that Europe or Brussels acknowledges the deficiencies and it has a plan how to resolve those. Now, what needs to be done now is to really sort of get that into action, get that into the CBAM concept and make it in a way that it's not just a bureaucratic burden, but really a measure that then ultimately holds. So that work still needs to be done. However, this acknowledgement is the first very important step now for the next steps to follow. And last but not least, lead markets. Well, first of all... given that the whole decarbonization idea or program or activities is something that comes from society. it's pretty natural that you also look at public procurement first when you talk about lead markets. And that's the discussion we're seeing, not only in Brussels, but also in Berlin, and then also trickling down on the federal states in Germany and communes and below. So that is one element of lead markets. You asked specifically for automotive. What is interesting to observe in Brussels, there's an active talk about green corporate fleets. So a lead market within the automotive industry that is tackling corporate fleets. So we see this as conceptually, and we have discussed that with the Commission very intensively, we as a company, but also through the associations, there's a clear and interesting concept to use the corporate fleets as the trigger for lead markets in the automotive industry. And given that corporate fleets are sort of large, There's quite a short period of duration of certain cars in that fleet that also would trigger quite a good lead market coming from the automotive industry. So we clearly support that idea. We clearly support that way of thinking. And if that comes through, it would be a great also showcase that green steel in the automotive industry really works. But next to that, perhaps to close on that, next to that, what we're also seeing is that large automotive companies are themselves already looking into implementing elements of green steel into their regular cars, into their manufacturing processes. So talking Mercedes as an example, where they acknowledge, they're telling and they're using this also, in their sales pitch that they include first green steel components in their cars.

Okay, understood. That's very interesting. I guess automotive fleets are probably a pretty fast-churning market for you, so that would be definitely helpful.

Thanks for that. Thank you. Now we come to Jeffrey's call. It's your turn.

Thanks for taking my question. Just two from my side. Cole, I'm sorry.

I'm sorry, Cole. We are kind of hearing you double. Maybe you can switch off your speaker or whatever it is.

A speaker would be bad because then we can't hear you at all. But it's difficult to hear you, Cole. That's right. I know where that works. Okay.

No, unfortunately not.

Call, I'm sorry. Call, I'm sorry.

Call, I'm sorry.

We can't hear you, sorry.

Okay, I'm sorry, we weren't able to hear you.

maybe we move on to the next then we give it another try and otherwise you write an email to me and i will read out loud okay so that's okay for you i suggest we jump to boris please from capital yes hello gentlemen uh everybody sorry um

I kind of recognize the same question from Gaul, but maybe I'll give it a try. I have two questions. The first is on defense. The second is on infrastructures. I would be interested to know how much exposure do you have as a group to the defense today and how much incremental growth or incremental demand you foresee from the evolution of European policy on defense? And specifically on the other topic, on infrastructures, basically the same questions. You stressed that the group is quite well positioned already on that part. But what incremental demand do you foresee from the measures from the fund announced and voted today by the Bundesrat?

Yeah, thanks for the question, Boris. And if that's the question Cole had, then... We might help you through that way, Cole. Now, on the defense side, the exposure today is relatively limited, given, of course, the defense being sort of a minor customer part over the last 10, 20, 30 years. um now that changes so we are starting volume wise from a relatively low level um it's if you look at the overall um say it's it's below one percent uh but there's clear significant um there's significant uplift here and what what is good for us here is that we did invest in the heat treatment line in ilsenburg you you recall we did that investment early 2020s This got online. The heat treatment line is now extremely well positioned to deliver our product family defence. So the defence feels secure in the different categories. So we need that heat or you need a heat treatment line and there aren't that many in Europe so we are extremely well positioned to to participate in the growth that everybody anticipates on the defense market. Next to plate, there's of course also a market on the precision tube side. We are already delivering today precision tubes into into the defense market and certainly something we will continue and broaden. As said, we're putting all of that together in a task force defense to really be able to address the entire market with a full suite of products that we have. Does that answer your question?

Yes, but have you quantified the upside there?

No, Boris, sorry, but it's just too early to quantify and to have a reasonable number that I would be able to present to you guys here. I think that is just too early because we haven't really seen how that whole bucket will then trickle down and what will be focused first and how things will evolve. And certainly, I think we can give you an update in one of the analyst calls through the year.

But maybe a different way to put it, but if we look at Europe, it's roughly 2% of GDP which is invested in defense today. So if you are to go further up for 3, 3.5% of GDP, Would that mean that basically there would be a 1% additional growth for the overall European steel demand in Europe, or do you think there is much more scope?

I personally think, but again, we need to do the math there and we need to see how that plays out. Given that EU has clearly said this defense investment should be covered by European companies predominantly, I think the additional growth is rather in Europe than with defense systems coming from outside Europe. So you have followed the discussion on fighter planes that we had lately in Europe. So you certainly will have a shift more to European players when it comes to defense, hence also more to European Tier 1, Tier 2 suppliers like we are on the defense deal side. That's my guess right now. But again, Boris, take that with a grain of salt. It is just too early to say, right? Sure. Infrastructure, we're talking roughly 100,000 tons heavy plate today. And that certainly can be increased, can be improved. We have the capacity to do so. We have the capacity to shift also within the product mix. Here again, the heat treatment line plays a crucial role for heavy plate. And the investment we're doing right now in Mülheim on a heated rolling for wind also plays a crucial role because then we can address that market in a much better way, in a much sort of broader way than what we can do today. So certainly here we will also participate in the infrastructure side. addition then the pipes and i just talked about first bookings already in that in that space over the last two weeks i think it was okay yeah thank you thank you all right next in line is andrew jones andrew please thanks can you hear me okay yes

Cool. Just back on the steel action plan, I mean, there's some other aspects to it around trying to address the impact of, obviously, high energy costs, improved circularity to kind of improve the availability and therefore cost of scrap, those sort of things. Could you give us your thoughts on how impactful some of these measures could be? I mean, they seem to be quite vague now. From what I can see, I mean, they talk about promoting use of PPAs, and you're obviously all over that already. Maybe using some tax flexibility. I mean, is there any significant element of tax in the cost you pay for power today? Is there much scope to improve on that? Likewise, some of this stuff about permitting and things like that. I mean, just basically, does any of it make any real difference in your view?

It certainly does, Andrew, it certainly does. So given that EU or Brussels is not in charge when it comes to setting energy costs and the structure of energy costs, they all, of course, can only hint to certain elements. And you mentioned the PPA. Well, as you rightly say, we're well covered on the PPA side already. Any improvement there, of course, is welcome, but we're well set there. However, The indication that you find in the steel and metals action plan concerning energy costs that should then be followed through by the different member states, they are pretty strong when it comes to electricity tax to reduce that to the absolute minimum, when it comes to grid fees, when it comes to sort of further reduction of levies that you have on national level. And I at least got feedback from two, three European member states that they were waiting for such a guidance coming out of Brussels in order to react to that now within their national energy framework. So I certainly expect cost reduction measures for energy, for industrial use of energy, electricity predominantly, also in Germany. And if you look at the current negotiation ongoing between the two parties, Christian Democrats and the Social Democrats, energy is high on their agenda. And in their first paper they published 10 days ago, reduction of energy costs for industry was already mentioned. Hence, I expect some leeway also for Germany. Permitting is perhaps not our biggest concern. Permitting is rather than for the infrastructure part. The shorter permitting processes are, the quicker you can implement infrastructure. Hence also the quicker we can participate in that market and it doesn't drag out for too long.

And could you quantify – I mean, if they basically said no taxes related to industrial uses of energy related to power cost, I mean, what does that do to the actual realized price that you're paying?

Well – It's very difficult to say, Andrew, because we don't know what they will agree upon ultimately. Just perhaps to help you bridge that a bit. You might recall that there was a grid-free exemption for energy-intensive industry in Germany up until end of 2023, when then a national court withdrew that exemption. That was a package of around 5.5 billion euros to help energy-intensive industries. This is a double-digit million-euro number that hits our cost line, ultimately bottom line.

Double-digit million? Yes.

Okay. Yeah, go on.

And on scrap and the potential there?

Sorry for missing out on scrap. Look, we are an integrated company. We have our own scrap yard, not only yard here. We have our own company processing scrap. We are well balanced when it comes to the acquisition of scrap, the management of scrap, the processing of it. We invest into scrap processing on-site here in Salzgitter to be honest. really sure that we get the right quality also for high quality grades coming out of a mixture of DRI pellets and scrap pellets. given that our customers also demand a higher level of circular material in their products. So we are not so concerned on the availability of scrap. Of course, the more you move forward with the decarbonization of the steel industry in Europe, the more scrap you're going to need. The more our customers demand circular material in their products, the more scrap you need. And then you get to a point where Europe has to answer the question whether it's meaningful to export roughly 20 million tons of scrap every year to outside Europe and then re-import the steel or whether it's then value-wise not better to keep that scrap in Europe and transform it into high-value goods like hot rod coil, what have you, than in Europe. So that discussion is ongoing. It's part of the discussion. steel and metals action plan, I would say not for here and now, but certainly for a time in three, five years when that becomes apparent and necessary.

Okay, thank you. All right, then we are handing over the button to Maxime from Ollo.

Okay, good morning. Can you hear me well? Yes. okay so first question is something you highlight in the annual report is a required repair on blast furnace so I wondered what impact that could have and how you are going to adjust your production perhaps give us some ideas of the timing and perhaps related to that can you also reassure us on the Hot rolling mill that has suffered a fire incident earlier this month. I mean, have you fully recovered from it? And what will be the impact, if any, on Q1?

Let's start with the fire, Maxim. I can gladly tell you that the hot rolling mill is up and running again and producing well. We had an outage of roughly a week after a minor fire accident. There was no harm to the machines but some harm to cables. that needed to be replaced so that's all done so we are in full production again and we're trying to recover as much as we can on the lost production we will not be able to fully recover the lost production hence we will be slightly short on the sales side for Q2 but it's to me a minor from a production side a minor issue you have the numbers on top of your head

Looking at the EBT side, it's worth 14 million euro of EBT loss related to the quantities we lost. So that is not of major impact to our overall result.

No. So that is unfortunate, but things happen and I'm very happy that no one got injured. That's the first thing. So everybody stayed safe and team got it back online very quickly. So thanks to the guys out there that actually did a good job there. Then on the blast furnace C, you mentioned if I got it right, you're relating to us taking blast furnace C out of operation for a couple of days this year. This is actually a two-fold issue. We're doing some minor sort of overhauls on that blast furnace. The main reason for taking it out of operation is through Zalkos. We are impacting our steel mill on-site in Salzgitter, so we have to reduce volumes there. And in order then to have an optimal mix of in-feed in the blast furnace, we'd rather run the two larger blast furnaces on a nominal level and take out blast furnace C. Now we can combine those two elements, the reduction of production for a shorter period of time and the need for some overhaul on blast furnace C and we can combine that and through that optimize the outage time. Otherwise, we would have another outage in blast furnace C next year and that will now be taken into account already this year. So it's just an optimization of those two elements and probably happening, if I'm not mistaken, Q2. Does that answer your question?

Yeah, that's clear. And the second topic I would like to discuss is, I know you're quite reluctant to discuss the topic, There has been a takeover announcement in November. In January, we had a price on the table. And since then, there has been no further news. So are you still talking with the two interested parties on a potential build? And is there in Germany a kind of... put up or shut up rule that would at a certain point lead the two bidders to actually make an offer or withdraw it.

Maxime, I'm reluctant to talk about it, but let me try to give an answer to that. Look, we have been informed that this consortium of those two companies are interested in taking over majority share in Salzgitter AG. We have been informed Q4 last year. There has been a press leakage on a potential price. We have not seen a firm offer yet. We have only seen indications. We are in talks with that consortium in trying to understand the economic and the business concept of what this consortium is trying to accomplish. We have not received a firm offer. The firm offer would trigger a timeline. Then we as management board, but also supervisory board, will have like 14 days to come up with an evaluation of that firm offer and a recommendation to our shareholders. But given that that firm offer is not there, we will not do that. And given that that firm offer is not there, there's nothing that we can evaluate right now that is sufficiently clear also to be talked about in this group.

Okay, and thanks for the call. And just related to that, because we get some questions from investors on the topic, but is it possible to give us more color on the extent of the current collaboration in terms of sales realized with these two parties? I understand that you are selling Slag to Gunther Papenburg. That's right. Perhaps you're also sourcing some scrap from TSR. Is it possible to give us more color on this topic and possibly to quantify it?

I can give you some color on it. Yes, we are in business relations also with TSL. TSL is the largest provider of scrap in Germany. And with our company, Doimu, which is the third largest provider of scrap and processor of scrap, of course, there are business contacts and we're sourcing also scrap from TSL. Is that the only source of scrap? No, it is not. But there are sort of business relations that we have and had already prior to this offer being launched. being brought forward. Same with the Günter Papenburg AG. There are business activities, joint business activities, or we have business contacts on the Slack side. I think it's also fair to say if you would visit our site, Salkos site right now in Salzgötter, you would see also Günter Papenburg activities there as part of the construction. But nothing unusual, not that we have sort of expanded that or decreased that through the current process. And yeah, we just continue as is. And then let's see what happens over the next couple of weeks.

Okay, cool. So thanks for the transparency and going back to the queue.

Thank you, Maxime. Thank you very much. And now we are flying from Paris to Munich, Christian.

Yes, thank you. Good afternoon already. I have a question concerning, I was a little bit surprised, to be honest, when it comes to cost reduction and optimization. So if I look to your sales, it's minus 7%. But material expenses only minus 4%, 3 point something. And personal expenses increased by approximately 7%. So even if I compare this with maybe 2018, which was the last normal year, so to say, so sales increased 8%. And on the other hand, we had a 16%, so double the increase of personal costs. So this is, I think, some kind of a major issue. And there is no improvement so far. It was the other way around. Maybe you can elaborate a little bit on that and how this should go on further. This is the first question.

Thank you. Okay, I will start with the sales side in comparison with the material cost side. You're absolutely right and also the graph Gunnar has shown resulted in our profit and loss in the fact that the sales price decreases were burdening us more than the relief on the material cost side. Even though we have seen the relief, it's quite significant. However, it was not enough to come close to compensate the decrease in sales. Concerning personal cost, we have a personal cost increase this year resulting from three major impacts. First of all, there are restructuring costs that are not sustainable that have burdened, of course, the amount of 2024. Second, the minor increase is due to people we newly hired. This we mainly did in our technology area and here mainly outside of Germany. Gunnar has mentioned all these nice developments internationally and of course we also need people and hands to deal with that increasing business. And we also had some hirings in our area for Salkos in order to organize the transformation between the grey route and the green route. So you can be very sure that of course personal cost is of high interest to us. And we very carefully, especially last year, very carefully decided on where to increase and on where to pull the brakes. That was about materials, sales and personal costs. And you wanted to add something, Gunnar, no?

No, I think you covered it very nicely. Just then, right? She did well.

Yeah. Thank you. Thank you for that. And so we can expect some kind of a flattenation or maybe a decrease going into 25%.

What we have seen, we have sold our MST group and in the MST group we had 1,000 people working or are still working there, right? But now they are working for Konya and they are not working for Salzgitter AG. So this is a decrease of 1,000 employees and we sold the company at the beginning of November So we still had the headcount cost until end of October into our books. And what we will see is an increase in personal cost due to tariffs that we definitely will find back in this year.

Okay. Then, of course, very impressive was the... net debt or cash flow development of course nevertheless if i look on a year-on-year comparison i also see that inventories only declined by approximately four percent while sales went down by eight percent and uh so normally i would think especially when you're going into this year and say there's there's something which is not really improving still very sluggish that inventories went down normally faster than sales. So can you a little bit explain why this happened?

Yeah, we have two special effects on inventories that were burdening our inventory level last year and also showing the nice potential for this year. So burden number one were the slabs coming from HKM because we could not, how to say, use all the slabs that we are buying from HKM in order to produce plates from them and bring them into the market. So that is why we needed to put quite some of them on stock. Second, we are having a customer project for Siemens Gamesa, where we're selling plates for wind turbines. And here we needed to buy the slabs from an Italian supplier already last year in order to process them further this year and to sell them this year. So that was a spillover effect over the year end. And third, that was not yet indirectly burdening us. When I have mentioned our cost improvement program, P28, I have shown you the slide where we are tackling 500 billion euro cost savings overall. In addition, we are tackling 130 million inventory reduction because we think that there is still some potential to optimize our inventory level.

Okay, thank you. So you mentioned HKM. I have an additional question on that. You have a 30% stake. You have written it down to zero. Have you made any provisions concerning a possible closure as the ThyssenKrupp CEO is demanding the closure maybe in due course, which might lead then to 50 to 100 or even more million expenses for you if they are really closing down everything very quickly? Do you make any provisions so far?

We have not any provisions foreseen in our year-end closing 2024 for whatever way, a strategical way, HKM may go. So there is nothing foreseen in our books.

Let me add to that, just to make it very clear. So you mentioned ThyssenKrupp being very outspoken on what the direction should be. They own 50%, hence they are also in the lead of coming up with a possible solution. We shouldn't forget that both ThyssenKrupp and us, we are today relying on output coming from HKM. So whenever you talk closure, you also need to talk about, okay, where does the material then come from? So we are not, we said from the very beginning, we said we are good with HKM. If ThyssenKrupp wants to step out, we are... not in a position to take over the entire HCAM and run it as is, continue to run it as is. So that's certainly not our intention and we will not be able to do that. However, we expect a constructive discussion on what potential options there might be to also secure and safeguard the delivery of slabs today coming from HKM, potentially tomorrow coming from HKM or from a third party. But that needs to be organized, that needs to be discussed and implemented and certainly is a prerequisite for us to continue discussions on closure.

Okay, of course. And that would have been my additional question, because you get the pre-material for plates, probably from HKM, for instance. So are you looking for other parties to deliver that, for instance, coming from Italy already?

We are examining... Sorry, didn't want to cut you short.

Oh, that was a question.

Okay. Now, we are, of course, examining the different options that we have. Can we produce it somewhere else within the group? Can we source it from a third party? Can we do other things? That's exactly sort of the progress or the activity that is ongoing and will then be discussed amongst the shareholders to then come to a joint conclusion, whatever needs to happen with HKM.

Okay. And the last one, we have very low inventories in the EU so far. Do you see any uptick in any industry to increase a little bit the inventory? This is the last question.

We have talked about that to our colleague who is leading the trade area. And unfortunately, he came back with the information that he cannot see any movement here, unlike the other years. And where we have experienced more activities, especially at the starting of the year, right? So we have no impulses here so far.

Okay.

Thank you very much.

We hope for the best, of course. Sure. Thank you.

Thank you, Christian. Christian, you are long enough in the business to know that there is a chance that all people are trying to rush through the same door in a couple of months or weeks. And there's a chance as well, right?

Yeah, of course.

Thank you. We're going to discuss that later through the year again, right? Okay. Now we are going back to Zurich, Bastian.

Yeah, thanks for squeezing me in for a quick follow-up. Actually, Christian has already preempted at least part of my question, but also related to HKM. So in this scenario of a full closure, is there any risk that you have to inject cash related to, for example, cash calls for debt guarantees, if there are any, or for the operational wind-down?

There is, of course, if you sort of would close it, there is, of course, a risk to inject cash for sort of restructuring. We are talking people in the end. We are talking sort of ramping down production activities, safeguarding sort of whatever needs to be safeguarded there. So there is a potential risk. But again, then, I would say too early to say right now, Bastian, given that we don't know sort of what the final outcome of this whole equation will be.

Okay, sounds good. Now, I guess the employee numbers are reasonably well disclosed, but on the balance sheet side, are there any guarantees you've been granting to secure the debt side? And maybe also could you help us on the current balance sheet on the net debt on an HKM level?

No, we don't disclose the HKM figures for HKM. We don't do that. Sorry.

Okay, but do you have any debt guarantees or?

Not that I know. No, not that I know. No.

Okay. Got you. Thank you.

Should we check out Cole again?

I already wrote an email to him or he wrote an email to me. All these questions were being answered. Okay. I also said to him we are looking forward to seeing him on Tuesday.

Oh, yeah, sure. Cole, we will meet in London.

Great. Christian, is it still a lifting hand or just forgot to take it down? All right.

I got to take it down.

All right. Thank you. Thank you. Then I guess there are no other questions. So in the end, it's to say we'd like to thank you for this lively participation. Hope all your questions have been answered. If not, you know how to reach Jan and me. today or within next week. And with that, I'd like to give the closing words to you, Gunnar.

Again, thank you very much for joining in, for listening in and for the lively discussion. It's good to get your questions, good to get the feedback to understand where you are coming from. And we're looking forward to see you through the year. You start off next Tuesday and certainly hope to see most of you then through the year. So far, so good. You all have a hopefully approaching nice weekend. And again, thanks for participating. Thanks for listening in. Take good care. Thank you.