Voestalpine Ag Unsp/Adr

Ladies and gentlemen, welcome to the Fostalpine Publications 3rd Quarter BY 2024-25 conference call. I am Valentina, the call-to-call operator. I would like to remind you that all participants will be in listen-only mode and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and 1 on your telephone. For operator assistance, please press star and 0. The conference must not be recorded for publication or broadcast. At this time, it is my pleasure to hand over to Gerald Resch, Investor Relations Manager. Please go ahead.

Thank you very much. Good afternoon, ladies and gentlemen. Welcome to the analyst conference call for the first three quarters of Business Year 2024-2025. Next to me are sitting our CEO, Herbert Eibensteiner, and our CFO, Gerald Mayer. As usually, we will start with a quick presentation with business development, actual situation, and financial figures. And afterwards, we will be happy to answer your questions. I would like to hand over now to Herbert Eibensteiner.

Thank you very much. Good afternoon, ladies and gentlemen, to our presentation about the business year third quarter. And let me start with two slides out of our strategy. And when you look at the left-hand side, you can see what – global megatrends we saw when we implemented this strategy and I think very, as we see in our recent geopolitical development, this is globalization or de-globalization and trade restriction is The environment we are in, we see the climate change topic still there. And on the other hand, we are well aware, and this is more or less worldwide, that we have a demographic and sociocultural change. And you are well aware that we see a rapid, really rapid technological change. Change our strategy should safeguard our economic viability and also strengthen the resilience of First Alpine. And what we want, and this is a clear goal, we want to have sustainable value enhancing growth. What are the goals for the coming years of this strategy? As I mentioned before, this value enhancing growth in this very dynamic environment we are in. The focus here is clearly in our processing activities. When you look at the second item, decarbonization, the steel production is volume-wise on a strategic hold position. The focus is clearly on this decarbonization and keeping this top quality and technological approach when it comes to products. We take advantage of these new mobility requirements, and this is not only automotive. This is railway infrastructure. This is airplane business and others. And, yes, we need an energy transition. We are part of that, but we also want to benefit from this transformation also. with our own products, which is the case wind, water, water power, and photovoltaic. And very important is this on the right-hand side, this first bullet point, internationalization in a changed trading environment. This means production local for local. You may have heard of it. I told it several times that we did investments, for instance, in the U.S. and just to avoid not only tariffs, but also to make sure that logistics and all the other things are manageable so that this is the local for local approach. A few example, production is moved to the U.S. for the hyper warehouse business. It's 40, 50 million coming from Europe in the last years. Now it's directly produced in the U.S. We see that turnout business is a very local business in the U.S., so it's by America. by America topic, so that's the reason why we grow our business there. But there are some other examples, for instance, railway infrastructure in Egypt and local production of turnouts, the same we do actually in South America. So this is a very important thing for us and is also part of the growth story as an example for the for the railway business, but we do also divesting of activities if it's necessary, and I will explain that afterwards as well. Competitive production sites is clear. We do that. We take the opportunity in difficult times to improve our efficiency. and we do that in automotive, but in all the other divisions as well. Very important is that we have this technological leadership approach, means that we are focused on high quality, high technological products. This is important for us. We do not think about commodities and only in higher qualitative product. And employees are always very important because qualified people are key to our success. Just to give you a brief overview of where we are focusing on in the upcoming years. As I mentioned before, it's clear this is our... Portfolio optimization, I think you are well aware that, and you have seen it in the figures, we have put arrows for sale, and we have successfully closed this transaction at the end of January, and that means strategic-wise the reduction of the European footprint and more standard tool steel products and so we can focus our product mix on high end tool steel and special steel mesh metals and on the other hand it was a loss making activity which is now a positive I would say investment also for the future development. We do some other reorganization of our businesses in high-performance metals, supply chain optimization, organizational changes, efficiency program, and the same we do in automotive components. As an example, business in Germany, we will – bundling our competencies in several companies, and we will close down one factory in Germany that brings costs and also cost improvements. And Garrett Meyer will tell you that this reorganization is more or less digested until the end of the year when it comes to costs. And smaller business for automotive tools, cam business, has been closed by the steel division. I think it's not necessary to explain again our transformation strategy. So far, we really appreciate our lower risk decarbonization strategy. We are in the middle of the first step of our decarbonization path. In a nutshell, we closed down two blast furnaces and will be replaced by electro-arc furnaces. How is the project proceeding? You know it's a capex of 1.5 billion euros. 25% of the capex is already spent and 60% is awarded. We will ramp up this project in the beginning of 2027. All the other steps have to be decided in the next years to come. Now we are working on the first, in the first step. Let me move to the development, sorry. The development in our markets, you know, Europe is our weakest market, and First Tulpene was impacted by an ongoing weak economy. In contrast, railway systems, aerospace and warehouse and rec solution did very, very well. Not only in Europe, but particularly in Europe, North America, in general, our plants performed very well. And so when it comes to oil and gas exploration, you know, our OCTG business, has slowed down in Q3. All the other activities, railway systems, warehouse and rack and tubes and sections performed very well. Brazil, always interesting, all in all satisfying, but in the last quarter, We see a slowdown in tool steel production coming from the strong rise of interest rates of the Brazilian government. So, in China, all in all, very good. Thanks to ongoing strong production in the In wintertime, mostly at the end of the Q3, we suffered a little bit from the weekend of the German OEMs. In China, all the other companies were doing quite well. So let me come to the divisions. Steel division performed overall very well in generally in a very difficult steel market. And Q3, I would say that December was really, really weak from the maintenance stops or stops of the automotive industry. But when you look at the earnings, we increased a little bit the earnings year on year in the steel divisions. High-performance metals, very challenging in tool steel, but aerospace continued to perform very well. very well, and metal engineering was constantly strong with high demand for railway infrastructure, and I've mentioned that before, not only in Europe, but globally. Metal forming differently, very weak development automotive components. That's the reason why we do this efficiency program there. And warehouse and rack solutions. And as I mentioned before, tubes and sections in the U.S. performed quite well. So far, the market overview. And now let us come to the figures.