Salzgitter Ag Akt Shs

Good morning, ladies and gentlemen, and welcome to the analyst conference of the half-year result 2026 of Salzgitter AG. The conference will be recorded. At this time, all participants have been placed on a listen-only mode. The floor will be open for questions following the presentation. Let me now turn the floor over to Gunnar Groebler, CEO, Birgit Potrafki, CFO, and Markus Heidler, Head of Investor Relations.

Thank you, Ms. Schenke. And good morning, ladies and gentlemen. Welcome to the Gitter AG conference call for the first half of 2026. Joining me today, you just heard our CEO, Gunnar Groebler, and our CFO, Birgit Potrafki. Following a short presentation of our results and current business development, we will open the floor for your questions. Before we begin, please note this call is intended for the capital market. We kindly ask members from the media to contact our communications team directly. And with this, I hand over to you, Gunnar.

Markus, thank you very much. Good morning from our side. Very happy to be with you today and guide you through our first half of 2026, which has been, bottom line, a positive first half of this year. We will show this in the upcoming minutes in the presentation. Let me quickly go through some of the facts and then follow by you Birgit on the financials. As you are well aware of, we are always starting with health and safety. As you know, we have a clear health and safety strategy and we have a clear health and safety target. Unfortunately, primarily due to harsh weather conditions in the start of 2026, our numbers for the first half are not looking as we want them to be and as we expect them to be. You see we have this set of targets, just shy of 6.6 on the ITF, we're way above that. So we have intensified the work on group-wide trainings on preventive health measures to improve second half and still reach our target for the full year 2026. So some way to go. We're happy with the development over the last years. However, this year needs further improvement and we're working on that. It has been a very It has been a very intense year and a challenging half year. This clicker is doing what the clicker wants to do but not what I want to do. Challenging market conditions in the first half year. Geopolitical you know better than we do how the environment looks right now and it will remain, and this is our view at least, Highly volatile intents also for the remainder of this year. ETS reform, there has been a lot of discussion and outreach on the ETS reform. We have seen the first proposal from the commission, a first proposal. I think that is very important to understand of that commission. This balancing of between CO2 prices and investment certainty is certainly something that needs further discussion and also lobbying. and the remainder of this year. First results or the results will only be available first half of 2027. Big step for us. We have acquired 100% of the HKM. We'll go through that in a second. And also, as said, encouraging first half year also in the numbers. So that's certainly something we will talk you through. Volatility and geopolitical tension. Somehow. I'm the problem today. Yeah, we are. Geopolitical tension will remain. You see, the map of Europe, unfortunately, the color coding for the state of Hormuz is not perfect. It's certainly something where quite some uncertainty comes from these days, and this will also remain. And as a result of that, at least partially, the GDP remains weak and also the steel demand in Europe remains weak. Regulatory tailwinds is something that we have seen and I just mentioned and we'll go through that now in more detail. What has happened on the EU trade policy is that it has been very active in terms of decision making and also implementing of new tools. The carbon board adjustment mechanism has started in 1st of 1st. We have seen already positive impact of the CBAM on the price side and also on the reduction of imports. The new steel safeguard measure has taken effect 1st of July this year. Also here, significant reduction in imports. Yes, there will be an impact of prices or we have seen an impact of prices already. Plus 30 Euro if you look at X-Works Italy for Hot Rod Coil. So the effect that we intended to see there... This is a bit annoying now with the clicker. Apologies for that, technically we can improve. The intended effect are already visible. I think what we need to state, and we have said that before, the new steel safeguards, we have seen market participants acting proactively on the implementation of the new safeguard measures by importing prior to the 1st of July. So this material needs to be worked through the value chain prior to seeing the full effect of that. What happens now for 426 on top of those is trade defense measures, anti-dubbing measures on the Cold War steel and further anti-dubbing measures especially when it comes to hot rod coil coming out of Turkey. So there EU is still active and I think what we have seen with the steel and metals action plan last year I mentioned ETS before. As said, we have seen the first proposal of the EU Commission. My read of that is given that it has been a very sort of cautious proposal. We will be testing the water, testing how the reactions are and then now we will see a refinement, a readjustment of the proposal as well as positioning from both the Member States as well as Parliament. What is good from our perspective is that the EU ETS as a system remains essentially unchanged. We see that EU believes in ETS the way it is designed. However, we also see that the current draft proposal is not, as I promised actually, is not putting first movers at an advantage or at least at par with those that have not moved so far. So here certainly we need further alignment with the Commission and further explanation to the Commission. We have started that process already. So we shouldn't sort of overvalue this first proposal. It's the starting point of a trilogue between Commission, the Member States and the Parliament as well as accompanied by industry and other stakeholders in here. ETS is only one thing. We should always keep in mind that it has to be sort of accompanied by compensatory measures outside ETS. Let me point out two things here. The LEED markets for CO2-reduced products made in EU. LEED markets is the concept that has been widely discussed also in the member states, and we see it more and more. More and more positive connotations to the concept of LEAP markets, also from industry, also from our customers, like, for example, the automotive industry. And the second measure we still have to work on, especially in Germany, is energy prices. We need to get energy prices on internationally competitive levels. That is a low brainer. And why that is, I'll show you in a sec. and also here we have had good and intense discussions also with German policy makers. Katharina Reiche visited our site in Salzgitter just a week ago and rest assured energy and energy prices has been one of the key topics that we have to Looking at raw material and energy prices, we just talked about energy prices. Let me start with the right-hand side. You see the electricity and natural gas has jumped upwards as a result of the Middle East conflict. The current peak in electricity on top of that is weather-related. You will have followed that we have seen shutdowns of nuclear power plants in France, in the eastern part of Europe. Thank you very much. Freight is one issue for the iron ore, again, something that is connected to the Middle East conflict. Coal has been higher on a temporary level, which was primarily due to weather impacts in the mining regions, but coming back now, as you can see, as those weather impacts have been removed. Looking at seed prices, basically a good development. Since July last year, hot oil coil X Ruhrgebiet has improved. We are now seeing 715 per ton. So that's a good development. You also see the recent increase based on the regulatory development that I just mentioned. Also compared to China and the US respectively, I think also here again in the middle and with a stable and good development. And we see no signs, despite the low consumer market, we see no signs for this to change in the second half. Now looking at Das Gitter and looking at our key figures for the first half, I said it's a positive development. Yes, we see improvements in all segments. In all segments we have seen a stronger first half 26 than we have seen first half 25. And this is a mixture of basically two things. One is the... The development of market prices versus raw material prices, so mining of the margins, but even more so, we have seen that also our own work that we have done in terms of restructuring, in terms of cost reduction, pays off, and this is what you see in the results. If you look at trading, with a positive result of almost 40 million euros First half of this year is clearly a result of the heavy restructuring we have undertaken last year. We have already reported to you guys, but just as a reminder, roughly 30% of the jobs have been cut on the trading side. Steel production, predominantly P28, our performance program, roughly 50 million alone from Basketer Flachstahl's contribution here. It is really improving through the entire company, including also Rupes, also here we have seen a stronger first half compared to last year. So good development here and certainly something we will continue to work on that we also can see that next year. Now looking at two major projects we have been through or that we are carrying through. One is Dialkos, of course. We had a rush start into the year. I mentioned weather that has of course also impacted the construction site. But we've been able to catch up given that weather is not really an issue these days. The Hypen Tower is now fully assembled, 120 meters, second largest tower that we have now on site next to the DRI. Large components have been installed. and especially on the power supply system utility power supply system we are well on schedule here with the development so commissioning in the late summer 2027 is our plan and there is no sign that there will be a delay on that just also to remind you this is only the first phase of Salkos we have at least two more phases to go and here we are using the modularity of Salkos to really find the sweet spot in the decision-making for the next phase, which would be an electric arc furnace. The investment decision has been paused. We have reported on that. But rest assured, the preparation for this second step is well underway. So we're doing the engineering. We're doing sort of the business case modeling for that so that we are able to execute as soon as we deem this are being the right time. Second big step of the first half of this year is of course the acquisition of HKM. We have been able to strike a deal with the two co-owners ThyssenKrupp Steel and Ballerek. We are now since 1st of July 100% owner of HKM. We have bought into HKM with a clear And yes, this comes with heavy restructuring in HKM and we have been very We are looking at roughly 3,000 people employed in HGAM today and we will reduce that by 2029 to roughly 1,000. This has been discussed and negotiated with the Works Council and with the unions and is signed so we have certainty on the numbers and certainty also on the cost impact of that and this has been part of our business case all the way through. together with the investment and Birgit you will show us some more numbers on the HKM later in this presentation. Let me finish with an outlook for 2026. The regulatory measures that are mentioned will certainly also help us through the second half of this year. We have seen improved demand in terms of production from European steelmakers, European producers. The German association Wirtschaftsvereinigung Stahl showed a 9% increase first half 26 compared to first half 2025. So that is certainly positive. However, fundamental demand needs to further pick up. and we also expect the special funds on infrastructure and defense to be more visible late this year and predominantly in 2027 so that will also then certainly help especially us in our product mix going forward. I think we should also mention that especially for the steel processing side given that this is predominantly project business we also need Those impulses from special funds and other sort of projects to remain on the good level that we've seen in the first half. As said, market is stabilizing at lower level. We have been sort of through the worst in 25. We're now picking up. We said in March, back in black, I think we underpin that we are clearly in black and we remain in black in 26 with a good recovery and a good result we're going to foresee for 2026. With that, I hand over to you Birgit to guide us through the financials.

Thank you. First of all, a warm welcome also from me to you. Happy to have you here. Please excuse us for struggling with the technology here. It seems like We are always jumping to the end of the presentation if we do not keep a certain time frame. So let's try to deal with that challenge. I hope it keeps everybody's attention high. As Gunnar has just said, the economic environment is not yet providing meaningful support, which is somehow a bottom, but not yet really meaningful support that we can see here. And what is helping us, and also Gunnar has said, talked about these other EU trade defence measures, which are having or will be having a positive impact on price levels. Despite the absence of the economic tailwind, we achieved a significant year-on-year earnings improvement. And Gunnar has shown that, and I'm really happy to see that we could reach that in all segments. All teams really did a great job here, I have to say. We expect this positive trend to continue also in the second half of the year, albeit at a somewhat slower pace than what we have seen in the first half. I will also spend some words later on that because I know we may have some different expectations here. Our performance that makes me especially happy continues to deliver really, really strong results. After half of the year, we have almost reached the full year's target. And as Gunnar has laid out, from July onwards, HKM will also contribute positively both to revenue and to earnings. All this, of course, before purchase price allocation effect. We do not, and I can say this, we do not expect any significant Net cash outflow from the consolidation. If we look at the first half of the year, our net financial position is exactly where it was one year ago. The difference is just 4 million euros. So quite stable year over year. And including the HKM consolidation, our outlook for the net financial position for the total year remains broadly stable. So I can say with confidence that the business is now increasingly well positioned to benefit from any future improvement in economic conditions. So looking at the half years numbers, we see on the left upper side, our sales revenues amounting up to 4.6 billion Euro, which is 1.6 The EBTA and the EBT are significantly above previous year in all segments and the main contributions of course coming from Arubis but also very strong contributions from steel producing as well and as I mentioned before all the others also contributing in a good way. And here you see a little bit grayish the figures that are not the adjusted result figures and here you see that even the EBT including The evaluation effect of the exchangeable bond, here we are also clearly positive. If you look at the right side, working capital, we see an increased working capital of 2.6 billion Euro, mainly coming from accounts receivable, and this is increased compared to one year before. and all of this is resulting then also in our operating profit which reaches 59 million euro in the first six months and this has an input on our net financial position as I mentioned before very stable compared to one year before. If we look at our income statement and Gunnar has mentioned already and I have mentioned already the contributions that are of course spread all over most of the items in the profit and loss statement but let me show you the structure of the profit and loss statement where we have the biggest contributions and here I would like to mention two major How to say, categories that lead to the fact that we have reached such a good result. One is if we look at our cost of materials, we see in the box below a significant improvement compared to the year before of €122 million and to give you also a relationship This cost of materials represents 61% of our sales revenue, while one year before we were still spending 65% of our sales revenue for cost of materials. and the other nice big wheel figure you see more on the right side the plus 113 million euro mainly driven by the nice performance of our Arubus participation here also having a nice major impact on our profit and loss and all of this resulting in the 258 million euro EBT and with including the valuation of the exchangeable bond also positive 76 and then after taxes we come to a result all in of 43 million Euro. Looking at our balance sheet, and here starting with the asset side, we see an increase in our assets of 374 million Euro, driven mainly by three impacts. First impact, if you look at the non-current asset, Of course, here we see the impact of the AROBIS evaluation and this is partially compensated in a negative way because the funding he received, they decreased the investments we have done because the fundings were also related to former spending. And we see cash and securities have been increased also due to inflow of fundings. and the other current assets are mainly accounts receivable. If we look at the equity and liability side, here are two things to be mentioned. First, our equity ratio is stable with 42% and second, we have a switch between long-term and current liabilities and this is due to the remaining maturity of some of the financial instruments we are using. Coming to the cash flow statement, starting with the left side of the operating cash flow, I have mentioned the 59 million euros already we have received in the first half of the year. One year before, we could manage to receive 81 million euros and the difference is mainly driven by a different way of the development of the working capital which increased while in the second quarter last year we could significantly increase. If we look at the right side of the cash flow statement we see that we could increase our cash up to 1.2 billion Euro and what is really nice is that we see that in all categories we have a plus, even in the cash flow from investments and also in the cash flow from financing, a smaller amount here for the cash flow statement. Investments and depreciation. We had quite an over-seeable number in the first half of the year, amounting up to €88 million when we look at our investments. also strongly influenced of course by the funding we received was 290 million Euro and for the total year we are looking at investments of 650 million Euro and included in this are 100 million Euro investments in HKM. And you see that the majority of the investments goes and all the business that is not Zykos related because the Zykos portion also for the total year will be profiting from the funds that we have received and that we still will receive in the upcoming month. Very happy to talk about the performance program P28, because as I have mentioned before, on the right side you see the target, €122 million, and next to that you see what we have effectively achieved after six months, €97 million, which is already 80% of the total year's target. and as you may remember we have overachieved our targets that we have set for last year significantly so we are quite confident that we will not only reach our target for 2026 but that we will also be able to again overachieve our target and Gunnar has also mentioned the major contributor here you see with above 50 million euro is the steel production area, followed by steel processing and technology. And again, I would like to mention that restructuring effects are not represented in this program. This is why the nice restructuring effects we have seen in trade are accounted for in a different category, not in P28. I mean, Gunnar has shown it. We have lost quite significant sales in the trade area and we could improve the profit. And that is also strongly influenced, of course, by the effect that we realized due to our restructuring activities. HKM of high interest, I know. Results, positive contribution we will see in the second half of 2026. When we will consolidate HKM. And we will see, and of course this before the purchase price allocation effect. I have mentioned that already before. We will complete that by the end of this year. And of course, the results, we will see positive impact on the revenue side. And if you ask how much, you can look at how much we have shifted our guidance. That's the major portion, of course, coming from HKM. and looking at the profit side and of course you will ask that question how much is the profit going to be that you will have in addition I can say as much as this is a mid-sized double digit million value and if you look at the balance sheet effect of course the consolidation of HKM will prolong our balance sheet however it will not I know that this is one of the most, how to say, the figure of most interest to you. And a lot of questions are asked and will be asked of course about single views like restructuring or investment in transformation. However, I have to really stress that we have to look at HKM as a whole. So we have money that comes from operating activities of HKM, we have the contributions from the former shareholders and we receive funding for the transformation and that money of course will be used to transform the company, to do the restructuring and also to do the investment. So what is the figure that is for me the most important one to look at is, if we look at Weizgitter as a whole, including HKM, how much additional cash overall will be required due to the fact that we now own HKM? and I can disclose the figure that is mentioned here, which is within the next three years, the net additional cash over all of these items that I have mentioned just right now, we will need 100 million Euro over the next three years. So I think that's quite an overseable amount. And of course, since we talk a lot about Zalkos and since you are all very familiar with the Zalkos figures, It's just logic that we also talk about the investments for the transformation at HKM. And here we are talking about round about 900 million Euro and we will receive 200 million Euro fundings. And as I mentioned before, there is no need to be how to pay concerned because the overall optimistic view shows in the next three years it's around 100 million Euro net additional cash that this will require. So that is the number I ask you to keep in mind. Taking all of this together, looking at our guidance, of course you have seen that our sales amount now up to 10 billion Euro, EBITDA VX between 725 and 825, a pre-tax result between 325 and 425, and the return on capital employed Marginally above the previous year's figures. And I also know that you are challenging us again on whether we keep to be too prudent rather than being too bold, looking at where we are after the first half of the year and comparing that to our guidance. I can tell you we feel quite confident with our guidance. I would also like to already give you some information here, why is this the case. First of all, we will have seasonal effects, as we always do have, coming from the summer period and coming from the Christmas period. We will have downtimes for maintenance, of course, influencing the business. We had one time effect in the first half of the year. Not sustainable effects were around about 20 million euros. And taking all this into account, we think that we will still continue the nice path we have seen in the first half of the year. However, as I have mentioned in my introduction, a little bit, very slightly more moderate. And with this, I think we are starting now the Q&A session and are getting ready to receive your questions. So next, Jan.

Prior to that, again, an apology for the mess up with technology. I hope that you still were able to follow. But please be reminded that presentation is available on the internet. So if there's anything you want to sort of get to through the Q&A, please do. Apologies. It's not our standard and we certainly do better next time.

Ladies and gentlemen, if you have joined by telephone and would like to ask a question, please press star, nine and pound key on your telephone keypad.

If you would like to withdraw your question, please press star 3 and pound key. If you are connected online and listening via the web interface, please click the telephone handset button and then the raised hand icon. This will allow you to ask questions verbally as well. If you are experiencing any technical issues, you can also send written questions. Please use the ask question button. So we already have many questions. So we start with the first one. from Reinhard Van der Waals from Bank of America. The stage is yours.

Hi there, Gunnar and Birgit. Thank you very much for your time. Maybe just first a question on market conditions. The recent price increases that we've been seeing in HRC, do you think any of that has been driven by the European water levels, whether that be sort of steepening of the cost curve or impacting supply?

Thank you, Rainer, for the question.

Of course, we are monitoring water levels, especially on the River Rhine, very thoroughly, given that this has, of course, an impact on HGM. So far, we have not been impacted by low water levels at Saas-Gitter, but your question was more general.

I think it's too early, really, to see price increases through weather conditions like the low water levels on the rivers. But certainly that continues to be the case. And if water levels further drop, then you might see sort of shortages there. And then it might have an impact on price. So far, I would say we haven't seen that. At least I'm not aware of any price increases due to restrictions on production.

That's very clear. Thank you, Gunnar. Maybe just a follow-up question on the market conditions. We've heard some sort of mixed comments from your peers about what volumes could look like in 3Q. Some saying it'll be up, some saying it'll be down. I mean, in your business, are you expecting the usual kind of Q3 seasonality in volumes? Or do you think that TRQ is maybe already going to deliver some volume benefits?

Well, I think in Q3 we're going to see the effect of the TRQ starting. As I mentioned, some of the traders have reacted proactively, have proactively sort of bought material and shipped to Europe prior to the TRQ kicking in, so that we will see, that needs to work through the value chain, but I would assume that some of the TRQ effects will be visible already in Q3. However, When it comes to flat, I would say stable development going forward, especially plate and large diameter tubes, which are more project related businesses. Certainly we need to see a pickup here. And as Birgit mentioned, those market has been relatively silent last quarter. So we certainly need a pickup after the summer break. So certainly something we're working hard on. Thank you, Gunnar. Thank you, Birgit. I'll pass it over. Thank you, Reinhard. So the next question comes from Tristan Kresser from BNP Publica.

The stage is yours.

Yes, thank you for taking my questions. The first one is on the cash needs you mentioned for HCM. It's a very large EAF and I think you need to build all the additional infrastructure investment around it. So 900 million for the full thing on the gross basis seems a bit low, but do you have built some contingency? Are you really confident that that's the highest point you'll have to spend? and then if you can help us also understand the restructuring cost maybe the cadence of it and the total amount and is the yeah I will have a follow up on that but I'll start there so cash needs yes we are confident with the 900 million euros we have HTM has and we have reviewed that

We have done a quite thorough project work on it and with our experience from Salkos we of course have sort of critically reviewed that and we're confident that those 900 millions are sufficient and yes we have contingencies in that budget so there's a bit of headroom also here. We shouldn't forget that HGAM is in a pretty lucky position given that the grid infrastructure is already there. So unlike our project in Weissgitter, no grid infrastructure needs to be built and also space is available there. So they are in a relatively favorable sort of environment for a project like this. So that's one element. Restructuring costs, basically, it was predominantly the reduction of personnel. As said, this has been negotiated, so we have certainty on that. The main element of the personnel reduction will only come late in the process, because this is when we stop the second blast furnace, and with that, the coking unit, the center plant, and also parts of the power plant, potentially. So that's when the larger headcount reductions will actually appear. So that it is. We have not disclosed the total amount of the costs, but it is well in line or I would say slightly below what you have seen in other restructuring processes in the German steel industry.

Okay, so that's going to come more in 2029, if I'm correct. That's when you plan to shut down the second BF?

Correct, correct. But what I forgot to mention, of course, with the shutdown of the first BF, we have already a significant impact already this year. But you're right, the larger portion then comes in 2029.

So there is some restructuring costs impacting 2026 due to the shutdown of the first bathroom, is that correct? Yes, exactly. Okay, and that's including the guidance you provided for the consolidation of HVAM?

That is absolutely included, yeah. The rule of thumb is one quarter of the cost in 2026 and three quarters in 2029, just to give you a bit of a ballpark.

Okay, that's here. And just on the 100 million for the next three years for HCM, you also have, I think, including your CapEx guidance update, 100 million from HCM for just those two quarters. So what is this 100 million? I guess it's not maintenance, but yeah, just trying to reconcile those two figures if we need to factor in some additional maintenance for HKM in the coming years as well.

Yeah, so what is part of the 100 million euro is of course the update of the remaining glass furnace is one part, a major part. And then what you need to keep HKM up and running every year, no major other If your question is on what do we have to expect in the upcoming years as investments that are not related to the transformation towards the electric aquanet, you can count between 50 and 100 million euro investments.

For HTM?

For HTM, yes, yes.

Okay, so the cash impact over the next three years, that's excluding maintenance?

No, I would like, thanks for putting that question again. The 100 million I have mentioned, that is the amount that you need looking at HKM in total. Taking into consideration all needs For restructuring, for investments, be it the grey route, be it already investments for the green route, and all this funded by the shareholders' contribution, funded by the activities that HKM is organizing, and by public funding. And all the total picture, including also the investment I have just mentioned, including also the investments for the electric arc furnace. This figure is including all of this.

Okay. Including the maintenance but also including the cash generation of the plant. Yes. Okay. Maybe last question. Can you help us a bit understand what you should expect in terms of for the coming quarters.

For the coming quarters, I have talked about that in one of my slides. So, we have spent €88 million in the first half of the year. The figure was especially low due to the funding that we received worth €290 million. We expect, including HKM, to spend in the total year €650 million without HKM €550 million. As I mentioned, for HKM, you can count in for each year between 50 and 100 million euros, depending on the topics that need to be invested. And for Zykos for next year, you may count for roundabout something around half a billion euro investments for 2020.

Okay, and the funding, the 200 million that you need to receive, that's going to be H2 or next year?

No, the 200 million funding will spread along the total investment of the 900 million because what is happening in the procedure is that once you have paid the machinery provider, you are able or we are able, once we have paid them, We are able to ask for the reimbursement to the states and to the German Republic. And then they are quite quick in paying that. But this goes along with the investment that is really, how to say, done, where you really had the cash outflow, yeah?

Sorry, I meant the funding for CELCOS Phase 1.

Sorry, you were not at HKM. Sorry, I was thinking you were still stuck with HKM, but you're not talking about CELCOS funding?

Yes, CELCOS, I think you still need to, you got 1.1, you need to get 1.3, so there's 200 extra. That comes in H2 or next year?

Yeah, half-half. Round ball, half-half.

Okay, thank you.

So, next question comes from Maxime Korka from AutoBHS. You can speak now.

Yeah, good morning all. So, first question I'm staying on FTM. So, you mentioned the mid-double-digit impact on EBDA in H2. Is that purely an accounting impact or is that A reflection of the underlying contribution of HKM, can we perhaps annualize that to about 100 million to get a view of a sense of its recurring contribution?

Maxime, I cannot tell you what you can model in your model, and you're right, it's Thank you very much. for HKM results for 2027, right now.

Okay, okay, but is that purely accounting or it's really the underlying contribution there in H2?

I don't get the question to be very honest.

Is that, I mean, is that purely...

It's a mixture of both, right?

There's an element of underlying business and there's an element of sort of accounting there.

Okay, okay, thank you. At this stage, you don't want to split the two, yeah? No.

No, as you have said, Maxime, what's important also to keep in mind is that effects from the purchase price allocations are not yet included into this figure, yeah?

All right, all right. And I would have thought that the financial contribution of Valurek and ThyssenKrupp would already be recognized in the balance sheet at the onset of their position, but I guess it will also flow progressively over the next three years now as restructuring needs and capex needs also increase. Am I right to understand that?

Absolutely right, Maxime, yes.

Okay, all right. Okay, thank you. Knife has switched to Q2 results. It had won on the trade division. The trading division had very good results once again, and this time it was not driven by exceptionals. But I imagine there is Some valuation adjustments including to that. Can you perhaps give us some sense of the underlying result for trading versus valuation adjustment contribution there?

Yeah, I can give you one reason why the results were so nice. You're right. In the first quarter, we had a most sustainable one-time effect of 10 million euros or 11 million euros, to be more precise, which we did not see in the second quarter. And the good result in the trade was also driven by a very favorable combination of material costs And for your next question, how do they look at the second half of the year? They are a lot more prudent when they look at the second half of the year. The geopolitical tensions are putting pressure on international trade and here we all deal with a high degree of uncertainty.

Okay, now that's clear. And just the last one, it's on your tax position because as far as I understand you have recognized on your so precisely it's not recognized on your balance sheet but you have 4 billion of of Tax Loss Carry-Forwards accumulated over the past years and so far you hadn't recognized Anything of that or very limited amounts because you had limited profit generation ability but now that things are improving a lot that you're returning to healthy profit generation ability. Should we expect that to be recognized on the balance sheet? So perhaps not at the 30th of September but at the 31st and further beyond this time frame?

Yeah, of course. We will make use of that as soon as we can. That's very clear. And you're absolutely right. Since our business results were not in the range that we could make use of, these losses carried forward. We just simply didn't. And some of the positive results we achieved were mainly organized abroad. We also couldn't in some parts, but of course, As soon as we can, we will make use of that. That's absolutely clear.

Okay. And then we should therefore expect that tax outlays will remain minimal over the past next year. Over the next year, sorry, because you have so many tax losses before once.

As long as these results are able to be accounted against the losses brought forward, yes.

All right. No, thanks. Nice stuff there.

So the next question comes from Bastian Zunagelwitz from Deutsche Bank. The stage is yours.

Yes, good morning. Thanks for taking my questions as well. And I've got a few more follow-ups on HKM, if that's okay. Maybe you can bring us up to speed there. But what has been the recent production levels in 2025 at HKM level? And how exactly does the planned blast furnace setup look like from here onwards? I understood that one of the two blast furnaces is currently being relined. But will that even come back? That's my first question.

Let me answer the blast furnace question. The reason for taking this blast furnace out of operation is, as you said, the relining and basically upgrade the blast furnace to then go back into operation in August and then carry HKM through the upcoming three years. So you might recall that the whole concept is based on us Producing capacity in HKM already this year. We have an installed capacity of roughly 5 million tons. We will reduce that to two and a half, meaning one blast furnace. And that's exactly the blast furnace that is relined right now. As soon as that one is operational again and stable, we will take out the other blast furnace and close that one down. And that is then the first part of What we discussed with Tristan also when it comes to the restructuring, reducing the workforce roughly one-fourth. So that would certainly happen. And production levels for the two-class furnaces in 2025 have been good. You know, the whole structure of HCAM has been that HCAM basically produced an optimal level to support the three shareholders So, production levels in 2025 have been on a very good level.

And what does that mean? Is it like 4 million tons?

I don't have the output number on top of my head for the total HKM, because I only looked at our share. It has not been published. So, unfortunately, I cannot deliver that number. It has not been published. It has gone through three different shareholders.

Okay, fair enough. And so then, as the one blast furnace which is currently being reliant, as it's coming back, when will the second one leave? What's the broad timing for that? Is it going to be early next year? No, no, no, no, no, no.

As soon as the reliant blast furnace is operational and stable, we will take that one out. So it's going to happen in two, three, seven years. Very quickly after the reliant one is back in operation.

Yeah, okay. But basically, if we look at its high level, even with your not, I guess, disclosing the 2025 numbers, basically what's happening here is that we go from a two-blast furnace operation back in 2025 to basically an exit run using just one blast furnace at the end of this year.

Absolutely, yes.

So it's a net cut. Yeah, okay, very clear. And then just getting back on the CapEx guidance, which you're guided for with 50 to 100 million maintenance, Birgit, that's a pretty broad range. Is this referring to just a one blast furnace operation, or is the upper end of that still based on two blast furnaces?

Yeah, it's for what we expect for this year and the next years, yeah. So it's a range. It's for the one blast furnace and you're right if you see that we have run two blast furnaces this year for half of the year or HKM did and then we will have one then of course you can assume where you maybe find yourself back between the 50 and the 100. I'm not going to give a more precise figure because as I have said, we are still now in the process of putting our midterm plans together. So it would just not be fair to give any more precise figure because it's simply not there right now.

Thank you very much. already next year from what you say. I guess if you cut 500 people, that's giving you a decent mid-double-digit cost-saving amount already. I guess it would be quite surprising if you would be taking this on without at least covering the full amount of the maintenance capex, right? So I guess whatever you would expect as an earnings contribution must probably fully cover that. Is that a fair assumption?

Fully cover the restructuring cost you mean?

Fully cover at least like probably the maintenance capex plus premium.

Yeah, as I said before, looking at it as a whole, we have, as you know, as we have talked about, that HTM is organizing some results from business activities. We have the contributions from the shareholders. and the funding is of course 100% related to the electric artfulness but all of this funding plus 100 million spread as I have mentioned before is enough to pay for Carpex, for restructuring and for the transformation.

We shouldn't forget that part of the takeover HKM was also a delivery contract that we We have signed with ThyssenKoop Steel. So for the year 26, 27 and 28, we'll deliver slabs to ThyssenKoop out of HKM, with the biggest portion being in 2027. So from an operational business, we should also expect good results from HKM in that year. So basically, the short answer to your question is yes.

Yeah, okay, okay, thank you. Then last question, is there any early color on the PBA effects from HCAM which we may see? Will they be positive? Will they be negative? Any quantification?

No, it's too early. Please understand that it's really too early to color that figure already as of today. Our teams are really busy dealing with that right now.

Sounds good. Thanks so much for taking my questions.

Thank you. So, the next question comes from Boris Baudet from Kepler Jevru. You can speak now.

Hi. Can you hear me well? Very well. Hi, Boris. Hi, Boris. Okay, very. Hi, everybody. Yeah, I stay on HKM. So I get it that it's a net 100 million cash that you need to cover the needs for HKM but I'm curious to know whether there is a specific sequencing across those coming three years like I would guess some cash drain at the start and then things getting better over the end of the period because You only get 200 million public funding to cover the cost of the new EAF to be built over three years. So also wondering if there is any additional public funding you would expect from the European level, maybe in connection with the ETS reform, be interested in getting that point. Thank you.

Thank you Boris. Let me start and then hand over to you. With the additional public funding, there is no additional public funding in our business plan. So if there would be an opportunity, of course, we would try to grasp that. But there is no expectation on additional public funding in the business plan. And secondly, Boris, we shouldn't forget that also the two shareholders that left HKM Deliver substantial contribution to the whole financing of HKM restructuring plus the investments. So it's not only the public funding, but also money coming from the two shareholders that we will use and make use for the upcoming work that we have with HKM. The question, right?

I can tell you that the majority is not going to hit this year. So it's quite evenly spread, I would say, over the years. No significant impact already this year.

Okay. Okay. Thank you. And maybe a follow-up on the contribution from . Is it fair to assume something like a billion euros total?

We have agreed not to disclose the numbers on those contributions, sorry that we can't comment on that.

Yeah, I guess we'll have to wait for the publication of their provision.

Maybe a possible way.

Yeah, thank you. Thank you, Boris.

So the next question comes from Andrew Jones from UBS. You can speak now.

Hi, can you hear me again?

Yep. Cool.

So, yeah, we've had lots of questions on HKM. I'm still slightly confused just to keep it simple. If you're talking about your net capex of net of any subsidies or contributions from Thyssen or Balarak, broadly, how should we look at the capex schedule over the next few years? You're saying 650 this year. I think you were saying that gross Salcos should be 500 next year. What was the net number and what's the likely total for CapEx next year? And can you give us a ballpark for 2018?

Yeah, talking about Salcos phase one, this year and next year, I have shown that this year the CapEx will be quite overseable. In our graph you have seen that. Due to the nice high public funding we have received, we have talked about that there are around about 200 million euro open of public funding for Zylkos Phase 1 and that they will be more or less evenly spread over this year and next year. And next year we will see quite a high Zylkos spending year, as I have mentioned. around about half a billion euro after funding. So it's a net figure.

That's a net figure, okay. Yeah. So, I mean, if we're talking about net figures, HKM shouldn't be adding much to that. And if we add in sort of maintenance of what's a fair number for maintenance these days, I mean, all in, if we say 500 plus, I don't know, 50 for HKM plus, I don't know, 300, I would rather, I think 800 would most likely be too prudent.

Because you have, as I said, half a billion Euro for Zalkos. You have between 50 and 100 million Euro for HKM, not Green Rules. You will have the first payment for the electric aquanet at HKM already this year and further payment already next year also for the electric aquanet at HKM. And then we have investments around about 300, between 300 and 400 million euros for everything that is not related to the green transformation. So the number 800, I would rather see it as the lower number, rather above that.

Okay, okay. But after that, Falco stops, and then it's just HKM plus maintenance, so it should be going down to somewhere close to that sort of 500 million figure, right?

Most likely, yeah. Yeah, sounds good. I think, Andrew, what we shouldn't forget here is that we have seen also in the past, we have seen the late, right?

So the...

cash out profile has always been sort of pushed out in time so even though big numbers yes but when things are getting paid normally drags out a bit in time so that is certainly an effect that we have seen in the past also with Zakos let's be sure about that and I also expect that to happen for next year and years to come okay and then just on the operating costs of

The new EAF and also the new Salcos production route. If we compare it to the existing production route, like how do you expect OPEX to actually sort of trend? First of all, as we go into Salcos phase one of the main site, and then when you start up the EAF at HKM compared to the existing Blastro setup, how do you expect costs to trend in a sort of stable CO2 price environment?

Yeah, I think there are a couple of very important assumptions that we have to look at, right? If you say stable CO2 prices is certainly not what sort of all the expectations CO2 prices that are publicly available look at, right? They look at a clear CO2 cost increase, even with the ETS reform here. So the signal that we get from anybody or everybody on the policymaking side is that the price signal, the increase Thank you very much. cross the cost curve of a BOF in the early 2030s. So that's when we also expect that by then electric arc furnace DRI is more cost competitive than a blast furnace due to the input cost that you would have there. Of course, we're looking at brand new electric arc furnaces both in Salzgitter and in HKM and I expect them to outperform on the cost side. and any other EAF that we have in Europe.

Okay, that's great. And just one other follow-up, I mean the closure of the blast furnace at HKM, are you, I mean I guess there's kind of a natural life to most of these blast furnaces but clearly the European market will be tightening up as we see the imports drop off in the second half. I mean would it not be I guess it's beneficial to keep that bus that is running to take advantage of some of that additional volume or demand for European steel in the market once imports drop out.

Yeah, of course, we have analysed that and we are closely monitoring how market is developing so far. Our strategy for HKM remains as just described. because you shouldn't forget we would need an offtake of roughly 2-2.5 million tons of slabs into the European market just from HKM and that comes also then of course with quite some uncertainty on the market side but the market is prepared short term to digest another 2-2.5 million tons so we are in talks but for now I would say the The main scenario is that we want to close down the blast furnace. If there are opportunities, of course, we're happy to evaluate those, but we need to be relatively fast with that, because once the coking unit and the blast furnace is switched off, it's impossible to switch them on again. So that will be a decisive point in time where we cannot go back.

Do you think there's a possibility that with these imports dropping out in line with the quota cuts, do you think that we'll need an imported ton paying the 50% tariff to balance the market? Or do you think that domestic capacity is capable of stepping up to meet that additional demand?

A question what you're talking about, right? If you're talking slabs, as of now, slabs are not part of the TRQ, so that's certainly something that is still to be negotiated and included. So from that end, I don't see a big change through regulatory developments. I think the dropping out of Russian slabs will certainly have an impact on the European market. And either through additional imports or then through us with H&M as an example, we can certainly serve that market. And that's also the idea post-2028 when we have pre-capacity with that one blast furnace slash EAF certainly to address that market. That's part of the business plan.

Yeah, I was talking predominantly about the actual finished steel market. If we lose 14 million tons, is there 14 million tons of capacity that can actually restart in a timely manner, from what you can say at the moment?

Well, I can speak for ourselves. We shouldn't forget we have a blast policy that is not in operation right now. It's planned to kick in in Q4. So we have, at least from a Satgitter perspective, we have the opportunity to increase our capacity given when needed. At short notice, so that doesn't take a lot of time.

Okay, but do you think with the issues at Ilver and I guess, you know, those liberty assets, I mean, a lot of that doesn't look like it's coming back quickly. So, I mean, potentially your tons at HKM that might be needed. Do you think the market can step up to meet that demand overall from what you can see in some of your comparisons?

If you look at the European market as a whole, I think yes, the market should be able to step up to fill at least the vast majority of that demand, yes. And if there's more, then certainly we will have to talk about imports and then at a different price point.

Okay.

Yeah. Thanks. Thank you.

So there's another question from Tristan Lessa from PNP Paribas. The stage is yours.

Yes, hi, thank you for taking the follow-up. Just a quick one on the gross capex, well, no, the net capex guidance for 2027. I understand it's not really a guidance, but if you have the first payment of HTMEF next year with all the moving parts, Is there actually a probability that CapEx goes above a billion?

Not that I would, I could see that right now. But then again, let us put the numbers together, and now in fall, and certainly we will also adjust CapEx levels to something that is adjustable for the company. But above a billion, that would be very surprising.

Okay.

That's clear.

And maybe just on Q3, if I understand correctly, so HGAM will be consolidating steel production, and with steel production you'll have the realign of one glass furnace, HGAM, you mentioned the restart of glass furnace, so that's probably Q4. So how should we think about cost? Thank you. On the spread side, I would rather say stable with slight chance of contraction, but just looking at the two of you, but that's how I would guide Q3.

And on the cost elements, the relining is basically done. And that is then capex. Certainly will help also to get the operational cost further downward, adjusted downwards for the blast furnace. With the relines, you normally have a better opportunity to work on your cost levels than with the worn out one. So that's certainly something where I would expect further improvements on the HCM side. And for South Skid I don't see a major change.

Okay. All right. And maybe the last one, just sorry, on the treasury share program. Any reason to believe that the program, the pace that you had on the selling in Q2 would be any different in Q3?

I can take that question and as you have seen from our cash position we have how to say no pressure. We have quite some comfortable cash positions so as we have said we will sell our own shares by doing it in a way that is how to say friendly for the Thank you Tristan.

So we have another question from Dirk Schlamm from DZ Bank. The space is yours. So the next question comes from Dirk Schlamm from DZ Bank. You can speak now. Okay, maybe Birgit has some technical problems, but I saw he also sent the question in written form. Will you read it out by yourself, or should I read it out?

We cannot see it here right now.

No, we can see it here, so if you could read it please, then we can continue.

Yes, he has three questions. So the first question, at Q1 you said you plan to restart Blast. What is the plan for last Furnace C in autumn? Given the relatively weak demand environment and the full consolidation of HKM?

As said, we are looking at Q4 for the restart of last Furnace C. We can do this at relatively short notice, so we will certainly observe market and market conditions But the way we reach the market right now is that we restart in 2021.

Okay, so the second one is, are the current low water levels having any meaningful impact on your business? Is it mainly higher logistic costs or are you also seeing an impact on production?

We don't see any impact on production yet with regard to the lower water levels. If you look at Heidskitter, our main harbour is the Hamburg Harbour, which is not impacted by the low water levels, so there is no change there. When it comes to HKM, we have taken precautious measures to deal with the low water levels on the River Rhine. We also have now transported coal via train from Rotterdam to HKM, and we have also increased stock at the HKM level to be able to run production as planned and so far no indication that we would have to change that going forward. So for Duisburg, water levels are still okay to be reached via vessel and deliver coal and ore. Of course, we have to sort of make use of more vessels given that we can't load them fully but that is something that our colleagues in Duisburg are very well not only aware of but also trained in so no impact on production and yes of course for HKM this means the impact on logistic costs but this is something we can also transfer to the customers of HKM which is only partly that Gitter as I mentioned we also have So those logistic costs will end up there.

Okay, so question number three on technology order intake was weaker quarter on quarter and clearly below last year. How should we think about this development? Is it just normal quarterly volatility or were there some larger orders in Q1 and Q2 last year? Thank you.

Well, thank you, Dirk, for that question. Finally, we get technology to be mentioned. That's very nice. Now, look, of course, there are some seasonal effects in there when it comes to the last quarter and also some projects that were, as you mentioned in your questions, that were available in Q1, Q2 last year. So it's rather project nature than structural nature that you see here. So we're still, I would say, from our perspective, well on track when it comes to cages.

Okay, we have a few more written questions. Some of them are already there for a longer time, so I don't know if maybe you already answered them, but I will read them out. There are three questions from Elaine Gabriel from Morgan Stanley. So the first one is how much would the electric arc furnace at HKM cost? How would the spending be phased and do you think that you will be able to secure additional grants, subsidies for this investment?

I think I mentioned all the points. So the total investment is roughly 900 million cross. If you take the 200 million public funding, it's 700 million net. The facing of the cost is usually rather to the end of a project. and when it comes to additional grants and subsidies I also said that we have not planned for additional subsidies of course if there are opportunities through programs on EU level or national level we will certainly look into that.

Okay, so the next question, how much restructuring costs do you expect to incur at HKM? Over what time period would this be incurred and how much contributions have you received from ThyssenKrupp and Valorek?

Alan, we have talked about those issues. We will not disclose the contributions. And on the restructuring costs, predominantly it is personnel restructuring costs. And as said, 3,000 employees today, 1,000 then end of 2029. And the costs that we have basically agreed upon with IG Metall and as a union and works council is in the same ballpark than others. And then last question from Elaine. Trading had a very strong result in Q3. How much of this performance was driven by windfall gains and how much is from the self-help?

I'm trying to get a sense of how sustainable these profits are.

Now I need to understand Q3 last year you mean. I think there were some... If you look at this year, in first half of this year you had roughly 10 million positive one-off effects in the results. So those were certainly not sustainable through the year.

I can also say that Q3 last year was not especially strong.

I think he means Q2. Yeah, we have quite strong development in Q2.

Q2 this year. Then I have talked about this strong contribution Q2 this year, which was that our colleagues from the trade segment, yes, right, they purchased, pre-purchased quite some material. They were making use of the good material prices, which they can transform into revenues, especially also in the second quarter.

Okay, then we have another question from Emanuele Berru from Reuters, but I think you already answered the question.

Can you estimate the amount of low-rime water levels?

Then we have a question from Stefan Swinger from PrivatInvestor. You mentioned in your prepared marks that you pocketed 50 million euros from the sale of your treasury stock. Are you willing to continue selling at current prices as your cost price is around 63 euros or how would you like to proceed? Thanks.

I think Birgit, you mentioned that already, how the strategy looks like when it comes to the treasury shares. So I think I'll answer it.

Okay, so the last question for now from Jakob Schleider from IMC. Good afternoon. Your order book growth in steel production looks solid at 6% by a Y. Can you comment on what you are seeing in your order books for steel production into the back end of the year? Is this reflective of current spot pricing?

So what we see on the flat side is a stable, positive development on the order intake for also for Q3 and the remainder of this year so far. So we don't see any major changes from what we have seen in Q2, I would say. So it's slightly different on steel processing, as said, much more project-related business. So there will certainly be We are further working on securing projects there. On the flat side, relatively stable development.

Okay, so at the moment there are no more questions. This would be the last possibility to ask your question. You have to press star 9 and pound key on your telephone keypad or you can insert a question via the button down below. If there are no more questions coming, I would hand over to you again for some closing words.

Thank you then. Thank you for your questions and the discussion we had. Appreciate your interest into Salzgitter and into how we perform to date, but also what the plans are going forward. Hope we could clarify most of your questions and concerns. I understand that there were some Thank you for your interest and see you soon again.