SSAB Ab

Good morning and welcome to this presentation of the SSAB Q2 report. My name is Per Hillström. I'm Head of Investor Relations at SSAB. Presenting today, we have Martin Lindqvist, President and CEO, and also CFO, Leonid Trejalius. If we look at... Oh, sorry. If we look at the agenda, here we have the agenda. Martin will start with a brief overview of the quarter. Then Lena will come with some more details on the financials. And then Martin will close up with the outlook and a summary. And at the end, we will have time for questions. for your questions. So by that, please, Martens, start.

Thank you, Per, and good morning and welcome to this quarterly presentation. We start with some highlights. We saw somewhat higher earnings in Q2 compared to Q1, but of course a big drop compared to the very strong or exceptionally strong second quarter last year. We saw continued good results in special steels in Americas, but we also saw the European market weaken during the quarter and getting an uncertain outlook for the rest of the year. And in order to meet that and mitigate that, we focus on two things, cash flow generation, I will come back to that, and then actions to lower costs. And we have, during the last couple of years, built a flexible system or a more flexible system. where we can take away temporary employees, we can do some structural changes, we can work our banks, we can reduce new hires and other fixed costs. So the target is to reduce, on a group level, costs by more than 500 million SEK on an annual basis. We saw a continued good trend in safety, and this is lost time injury frequency per million working hours, including contractors. We are just north of one lost time injury per million working hour, which is good development compared to the last number of years. And we continue to focus on the ambition to become the safest steel company in the world. We continue to generate decent cash flow and we had a decent cash flow generation during the second quarter as well. The reason why the balance sheet is slightly weaker than the end of 2022 was that we paid out 9 billion SEK in dividend during Q2. But as I said, strong balance sheet within our financial targets. If we look at special steels, earnings continued on a good level. We had an operating margin or an EBIT margin of 23%. We saw in Europe for strip-related products, slightly weaker market, or we expect slightly weaker market than in Q2. No big changes, but some hesitation. But overall, a good and strong performance. Americas continued with earnings on a good level. We had an EBIT margin of 34% during the quarter. The shipments were somewhat lower than in Q1, and we experienced some bad weather conditions during the end of Q2. We had some thunderstorms and other things happening, so we missed the shipping targets. With a couple of days or a week, and that will come back in Q3 then, but that led to somewhat lower shipments in the second quarter compared to our internal plan. We saw stable market pricing during the first half of the year, so on good levels and stability for plate prices. In Europe, we had a better result than previous quarter, but of course a big drop compared to the very strong second quarter of last year. Here we see the measures to become more cost effective or to lower cost and meet slower European market. We had stable production, we had stable shipments. Automotive advanced high strength steels continue on a high level. We also see that we had very low shipments to construction-related products, and that is also visible in rookie construction. And we saw spot prices moving down during Q2, and that will be visible in Q3 in our P&L due to the normal lag. If we look at Tibnor, we met weaker market conditions. Q2 last year we had record high earnings, including inventory gains. This quarter we had inventory losses when we revaluated the inventories. Here we also do measures to lower costs in line with what we do in SAV Europe. And then rookie construction, we usually see a seasonal improvement compared to the winter season in the summer half year, so to say. And we saw that, but that was much less pronounced than a normal year. And we do cost savings there, and we saw some of it visible already in Q2, but the majority will come in Q3 and Q4. And as I said, All in all, on a yearly basis, we aim to reduce costs with more than 500 million. If we look at the transition, the green transition and sum up Q2, we continue to ramp up the production and the sales of SSAB0 with the big and huge interest from the market. We formally and the board took the decision of the transformation in Oxidescend during end of May. And we have started a project to explore eventual possibilities for DRI production in Ra in the future. And this fantastic picture is from end of May or beginning or in June when the TTC meeting was held in Luleå. So we had Secretary Blinken and some other high-ranked politicians and officials visiting our hybrid plant and giving us the opportunity to explain what we are doing and what we are aiming for. And if we look at the plan to convert SSAB into a fossil-free steel company, I would say that we are on track. We are ramping up the zero steel production with the ambition to produce and sell at least 40,000 tons this year. We took the decision end of Q2 to convert Oxelösund And the next step will be the two mining bills, one in Rohe and one in Luleå, and those decisions will be taken 24 and 26. And if we look at what we are aiming for, and this is repeating a bit from the Capital Markets Day, but still, we took the policy decisions in January 22 to convert SSAB into fossil-free steel production. And in Luleå, We are aiming for building a mini-mill with melt shop, hot strip mill, finishing and shipping, cold mill complex, an integrated process with melt shop, hot strip mill, cold mill complex in one facility there. We are very dependent on grid connections and electricity. We have discussions with relevant authorities when we will get that possibility to get electricity. In Ra, we are also planning to build a mini mill and close the existing blast furnaces and strip mill and coke plants and so on. We are also aiming to build an integrated process with steelmaking and direct rolling in one process line. And we are also looking into the option to add hydrogen DRI production. Here we have positive signals on grid connections and electricity. So I would say overall, we are following our plan. The challenge is, of course, grid connections and electricity. With that, Per.

Very good, Martin. Thank you. And then we invite Lena here to discuss a bit more the details of the financials. So please, Lena, go ahead.