SSAB Ab

Good morning and welcome to the presentation of the SSAB Q3 report. I'm Per Hilstrom, Investor Relations at SSAB, and with us today here we have Martin Lindqvist, President and CEO, and also Lena Kralius, the CFO. And if we look at the agenda, Matti will start to go through the third quarter. And then Lena will dig in more into the financial details. And then Matti comes back in the end with a few slides on the outlook. And finally, we will have a Q&A session, both from here in Stockholm in case of any questions, but then also from the phone lines. So by that, please, Martin.

Thank you, Pat.

And good morning, everybody. I will actually spend a second or two on this picture because this bucket, as you see, is called Exmor. It's a very good example of the business model in SSAB special steels. This is a brand we have developed for buckets, among other things. produce prototypes. We design them and produce prototypes in a daughter company in Australia called G&G. and then we license out the possibility to use these buckets or produce these buckets to global bucket producers and they are of course produced in only in our material they are much lighter than an ordinary bucket the life length is typically two times as long as an ordinary bucket there are a lot of benefits and this is one good example of how we develop and drive the special steels market so Remember Exmoor and remember that this is one of many examples how we develop and build the market. If we then move into the third quarter, it was, I would say, given the circumstances, a decent quarter with good profitability in SSAB Americas and in Special Steels. That compensated for a weaker market and a weaker outcome in the European businesses, maybe Europe, Tivnor and Roke Construction. I will come back to that. We continue to develop our safety performance. This is one of the KPIs. We measure lost time injury frequency. We are now at 1.15%. which is not, of course, in line with the target, which is zero, and the ambition to become the safest steel company in the world. We're not there yet, but we are moving in the right direction and see good progress in this development. And this is about building a culture in SSAB, and we are on our way. We continue to have a decent balance sheet, and I will come back to that a bit later. If we then dive into the divisions, I mean, special steels, it is about driving market growth, and that's why I use the example of the Exmor bucket. And we do that by developing new applications that are typically stronger, lighter, and more sustainable, and that customers are willing to pay more per kilo of steel, but at the end pay less for a bucket because of reduced weight and increased productivity. So we do that together with having a leading product offering and developing new grades and new products all the time. And then, of course, a global sales organization with local stocks. And if we look at how we have sold so far this year up until Q3, we have had 40% or a bit more than 40% of the volumes going into Europe. 30% going into North America and the remaining 30% roughly going into the rest of the world with Asia, Latin America, Middle East, and so on. And if we look at the products, the majority is, of course, the QT products produced in Oxelösund and Mobil, but also 20% being advanced high-strength hot-rode steels then produced in Borlänge and Roa. So a fairly good spread of different markets. And as I said, the profit was good. We had an EBIT margin in Q3 22 of almost 29% and had a record operating profit of 2.4 billion. If you look at America's, plate prices started to decrease somewhat during Q3, but from very high levels, and they are still at very good levels. The spread are at historically high levels. we saw and see good demand in several segments and going forward, the infrastructure build and the energy demand could be positive for plate demand over the next few years. So it looks quite okay. And if we look at Q3, we had more than 3 billion in operating profit and an EBIT margin of almost 37%. Then Europe was slightly different. We saw already end of, or beginning of Q2, we saw demand weakening. And we have seen weaker demand in Q3, which is fairly typical because we have the seasonal slowdown in July in the Nordics, August in the rest of Europe, but clearly a slower demand in Q3. We, during Q3, adjusted production, both in color-coating lines, in galvanizing lines, and also in cut-to-length lines. We took down production already in Q3. And looking into Q4, we expect to continue to see a weak demand. And that's why we have taken the decision to put forward a repair of one of the blast furnaces in Rohe. That was originally planned to do end of 23 or beginning of 24. But given the market situation, we took a tactical decision and said this is a good timing. And especially the Q4 is always the Q4 and the second half of December is always the second half of December. Very hard to predict what kind of volumes we will get out the last two weeks of December. So we decided to do this from end of November and take it down six to eight weeks. And that will help us, of course, to do this in a good timing, given the business cycle. But it will also help us not to build more working capital or to release working capital. So I think that is Good decision. Looking into Tivnor, we saw lower shipments. We saw inventory losses and windfalls in inventories due to negative prices for steel. The underlying profit was still positive, but overall, including the windfalls, we had minus 176 in operating profit. Rokey Construction, 160 million SEK. Clearly a slowdown in the construction segment already in Q3. And we saw also the high inflation impacting demand and new builds. And that, of course, affected rookie construction. So all in all, I would say a quarter with fairly few surprises compared to what we planned for. And we saw what we expected to see in Q3. Moving then over to our transition into fossil-free steel. This is one picture from a seminar we held in Stockholm together with POSCO, where we invited all the major steel producers in the world into Stockholm. We had more than 125 participants at Fotografiska Museet in Stockholm on this hydrogen, iron and steel making forum. And we had more than 1,000 participants over the web for two days. So it's a huge interest to inspire each other, learn from each other, and develop ideas and look how we can do this as an industry together going forward. So a very, I would say, inspiring and positive event. If we look at how we work with customers, we continue to see a strong demand for fossil-free steel, and we, during Q3, announced our first North American strategic partnership with Oshkosh, a big producer of commercial vehicles. They are now a partner. We'll get fossil-free steel and start to produce their applications in fossil-free steel. We also, during Q3, saw Volvo Trucks beginning to do small scale introduction on fossil free steel in their heavy electric trucks. So it is moving on. And if anything, the interest and the demand is increasing day by day, week by week, month by month, which is very positive. If we look at our own possibilities then, We got an approved application for the 230-kilovolt cable power lines to Oxelösund from Energiemarknadsinspektionen. That will be most probably appealed, but now the process has started, so we know that we will get electricity. We don't know exactly when. We continue with the feasibility studies for our planned mini-mills in Luleå and Ra, and they are moving on according to plan. What is, of course, important is that this transition, not only for SSAV, but I would say for a large part of the industry, will require sufficient availability of fossil-free electricity, both in Sweden and in Finland and elsewhere. And we need to have that at the right place at the right time. And that is something that we are working very hard with. Another topic that is really hot is what we call level playing field and we work a lot with politicians and we need to intensify that work with the new Swedish government but also with the Finnish government and with the European Union to make sure that there will be a level playing field across Europe regarding state aid for the transition. October, and in conjunction with this conference, I talked about fossil-free iron and steel making. The hybrid development also filed a number of patent applications to the European Patent Office. And what we have done in hybrid together with Vattenfall and LKAB, we have developed a method to produce fossil-free sponge iron that has much better qualities and much better handling properties. than if you produce DRI using natural gas as an example. Those patterns we have filed for, and then we need to decide within Hubrit in the future how we share that and license those findings out. But these are important patterns that saves not only a lot of costs, but also gives a lot of positive benefits to the quality. So with that, Leanna, I hand over to you to go through the financial and come back in a couple of minutes, go through the outlook for Q3 and sum it up.