SSAB Ab

and welcome to this presentation of the SSABQ1 report. My name is Per Hillström. I'm Head of Investor Relations. And with us today, we have Martin Lindqvist, President and CEO, and also our CFO, Leena Clayadeus. If you look at the agenda, Martin will start with the first quarter in brief. Leena comes with the financials, bit more details, and then Martin at the end with the outlook and the summary. And at the end, there will be good time to ask questions, and we will come back to the instruction of that. So, with that, please, Martin, the floor is yours.

Thank you, Per. And good morning, everyone. If we start then with... The first quarter, we had, I would say, a strong start of the year. We had steel prices on high levels. We had raw material costs also being on high levels, and Lena will come back to that. We also had an unplanned stop or a shield heart in one of our blast furnaces in Rawa, which affected the first quarter. And that gave us slightly lower volumes than we had really planned for. But I think we managed to... use the volume allocations in a good way and continue to strengthen within our niche segments. We kept costs, SG&A, on the same level as Q1 2019, even though we were running operations at a very much higher activity level. We also continued to develop our safety culture and moving 12 months. We are now at an LTI frequency per million working hours. of 1.6 and year to date we are well below that. And we continue to see good development when it comes to special steels both when it comes to profitability but also shipments and volumes. Some words about Russia's invasion in Ukraine that has of course kept us very busy during the quarter. The strongest focus has been on our 76 employees in Ukraine and also on their families and relatives. Many of them have for the time being moved over to Poland where we have been able to take care of them and use our facilities and with the help of our Polish employees create some kind of a safe and sound environment for them. We stopped all sales to Russia and Belarus directly. We have also stopped all new purchases of iron ore and coal and other materials from Russia. We have been working hard to secure supply of raw materials, iron ore and coking coal and others, for the future. That has been a focus during Q1 and will continue to be a focus We have also decided to write down our assets in Russia and Belarus, and that is a one-off in the report and going forward we are fairly confident or confident that we will continue to source volumes enough to keep production running when it comes to raw materials but of course we will continue to see disruptions in the supply chains problems with containers problem with rail cars problems with the ships and so on and that we have been seeing for the last two years i would say If we then look at steel prices, and these are spot prices, and they started to move down in the beginning or end of last year and beginning of the quarter in Europe, but apparent demand increased during Q1 and spot prices went up. In U.S., prices stayed on a very decent or very good level. And when we look forward, we see that we will continue to have slightly higher prices, the contract prices, but we will also see higher raw material cost. And we expect that the peak we saw in apparent demand will normalize. So underlying demand stable, apparent demand more in line with real demand during second quarter. If you look at the divisions, we had strong performance in all divisions. In some of the divisions, we even had record earnings. In Europe, we were slightly lower than in Q4, but still on very good levels with an EBIT margin of 26%. Special steels, record earnings, EBIT margin of 27%. In America, of course, very strong performance with an EBIT margin of 40%. Rookie Construction had an EBIT margin of 10%, which is really good because Q1 is always seasonally the slowest quarter. So not a record quarter, but definitely a record first quarter. And the same goes for Tibnor with an EBIT margin of 9%. So all in all, good performance, good profitability in all divisions and all daughter companies. If we look at the green transition of the steel industry and what we are doing, we came out with a strategic decision to rebuild our facilities in Luleå and Rae when we released the Q4 report, and to accelerate that in order to meet customer demand. We are now, or we have started the feasibility studies for Luleå and Rae and the mini mills, and that is proceeding according to plan. What we are working quite hard with now is access to power or electricity, which will be a key factor, and that we are working with together with the governments in Sweden and Finland. We have also during the quarter announced two new strategic partnerships with Polestar, the automotive company, but also with Epiroc, We have also been recognized by the EU Innovation Fund that has decided to support not only hybrid, but also the Oxelösund conversion. For Oxelösund, we will get around 30 million euro in support from the Innovation Fund. With that, Lena.

Thank you, Martin. Let's dive into the financials, analyzing a bit more. If we start with the sales, Q1 reaching a level of 31.6 billion, which is remarkable. And if we compare with the last year, Q1 being just below 20 billion, we are talking about deviation of around 60% higher sales level, which is then the opposite if we analyze the shipments. Shipments Q1 on the level of 1,664 kilotons. And compared to last year, it was above 1800. So we are having around 10% lower volumes. So clearly, when analyzing these graphs together, we can see that on average, the prices have been around 70% higher this year compared to last year, which is pretty well in line with the graph that Martin was already briefly showing. EBITDA and EBITDA margin Q1 on the level of 9.2 billion, 29%. When comparing to last year level, we have doubled the margin as last year we were on the level of 2.9 and 14.5%. And the graph here on the low side is illustrating the EBITDA per delivered ton. And Q1 this year being on the level of 5,500. And then compared to last year, it has been level 1,600. So quite remarkable improvement. And when we break down the impacts, clearly the biggest positive impact is with the prices. All the division contributing to this Special steel division over 50% higher average prices. Europe division over 70%. And with the Americas, we're talking about over 100% increase in price level. The biggest impact coming now from Europe with the biggest volumes. Then the deviation with the volumes compared to last year, minus 10%, as already mentioned. And there are different reasons with the lower volumes. We had this Raahe blast furnace repair activity that took five weeks. Reducing the volumes. Then we also saw lower volumes with automotive segment and also lower volumes coming through from the Americas division where we had some production disruptions as well. Raw material cost compared to last year is on a high level with an impact of 3.8 billion negative. Pellet actually was on pretty similar level this year compared to last year, but this is mainly now related to substantially higher coal prices and alloys. Fixed cost higher compared to last year. And this is coming through both from personal related cost. This year we had a higher portion of personal related bonuses. We didn't have those last year during Q1. Some higher level of repair activities, materials and services were higher. But also we can see that this cost increase with the variable cost is of course impacting also materials and services, which are here categorized as fixed cost. So the cost level has increased. Capacity utilization, negative impact, and this is now mainly from the Raahe site, but also partially from the America site, but substantially lower scale there. And in the other, we have some provision done for the custom payments related to Oxalos and Hamn. And then comparison to Q4, which was really good performance itself, just below 7 billion. Prices continue to go up. And here we have the biggest impact now coming through from Special Steel Division. Special Steel Division prices continued to go up on average 12%. Europe Division prices were relatively flat quarter on quarter. And America still continued to improve with 8%. Volumes compared to fourth quarter last year on a higher level. Q4 usually is a seasonally lower level. Variable cost. This is now coming through from the pellet and coal. Cost being on a higher level than Q4. Fixed cost lower. Q4 we had high annual maintenance activities, which we don't have during Q1. That's the deviation. And the same reason for the capacity utilization. Most of it coming from Raahe. And then the other having the provision I mentioned. All this generating really strong cash flow, high earnings in this case netted with the negative development of working capital, but that is mainly related to the accounts receivables along with the higher sales and higher sales prices. Taxes in line with the higher earnings and all this generating the strong cash flow just below 3 billion SEK. which is also illustrated here in this graph, which is still developing to positive direction. Net cash position improving year end. It was on the level of 2.3 billion, now 5.7 billion. Comparing Q1 last year, we were still negative. We had still a certain amount of debt. But all this cash definitely needed to remind that we have the dividend payment during April, 5.4 billion, which we actually have already paid out. This slide, we have not changed at all. Still, the cash need for the year estimated to be on the level of 8.5. Biggest part going definitely for the CAPEX activities, and this is now both RNC and strategic activities. The strategic projects ongoing at the moment are the Oxelösund conversion, as well as the mobile Q&T expansion. somewhat lower interest expenses and higher taxes along with the higher earnings. But no changes for this picture, as said. If we then talk about the raw material cost, which is having impact for Q2, negative impact, This graph is illustrating comparison year on year. And as I referred in the bridge already, pellet prices and their consumption cost being on a similar level during Q1 this year than it was last year. But then what we saw happening during last year was that the pellet prices started to go up Q1, Q2 and reaching the peak during Q3. somewhat lower Q4, but now we have already seen that Q1, it started to go up month by month and that cost will have an impact in Q2 definitely. Coking coal developing even more upwards throughout the whole year. And we already see higher cost impact during Q1. And it will come through also during Q2. So definitely higher variable cost impact for the coming quarter. Here we have this scrap graph illustrating Q1. on a lower level last year than what is this year, some more volatile scrap prices. On average, we're talking about 16% higher cost level this year compared to last year. But this is good to bear in mind when I give the floor back to Martin to talk about the outlook.