SSAB AB (publ)

We can drive our transformation from the position of strength. The level of earnings during the last years has been record high. We have achieved a 40% global market share in wear resistant steels and we have taken the lead in the green transformation of the steel industry. We plan for major investments in the Nordic operations, putting SSAB in a superior cost position. The blast furnaces and coking plants will be closed and our CO2 emissions will largely be eliminated. Pilot shipments of fossil-free steel to customers already began in 2021. We will continue to increase the share of high-strength steels and premium steels. This will be done with industry-leading profitability and create value for all stakeholders. Join us when we're transforming the future of steel.

So welcome. Good morning and welcome to this presentation of the SSAB Q3 Result. My name is Per Hivström. I'm responsible for investor relations and presenting today we have our president and CEO, Martin Lindqvist and our CFO, Lena Krelius. We will start here with Martin. We'll give an overview of the third quarter. Then Lena comes in and goes deeper into the numbers and then Martin comes back at the end with the outlook and the summary. And at the end we will have good time also for your questions. So by that, please Martin, start the

presentation. Thank you, Per. And good morning and welcome to this Q3 Report presentation. If we look at the highlights for Q3, we had somewhat lower earnings compared to Q2, but I would claim that we still had, given the circumstances and the headwind we experienced, especially in the European market, we had good profitability. We continue to generate good results in special steels in America. We had an operating margin in special steels of 24% in America. We were at 35% during the third quarter. But we do what we typically do when we experience headwind on the market. We become more cost-cautious. We have set a target on group to reduce cost by more than 500 million sec where of 50%, roughly 50%, is structured. And that is a good thing to use the possibility to become more, when the market is tough, to become more cost-cautious. It is about permanent and temporary layoffs. It's work our banks and so on and restrictions on new hires. But the most important part, I would say, is what we internally call multi-skillings. We start already now to prepare for the future. And develop people so we, all of us working within SSA, we can do more than one job in the future. So that's an important part building for the future, but also handling the headwind on the mainly European market. We continue to see a good trend in safety. Rolling 12 months, we were at 0.94 in LTI frequency. That's not world-class yet and we have a couple of big sites like Hemelina, Rae, Montpellier and Oxelö-Sund that are really approaching world-class performance when it comes to safety. We continue, as we should, to generate strong cash flows. We had an operating cash flow of more than 6.3 billion during the quarter, which is in line with the second quarter and slightly lower than the fourth quarter 22. Still good and strong cash flow generation. And with that cash flow generation, we come outside our financial target, which is to have a net gearing or a net cash position of 20% of equity, so plus minus 20%. We ended the third quarter of 2024. When we look at that financial position and when we think about the market outlook and the upcoming investments in the transformation, we see the possibility to launch now a share buyback program of 2.5 billion SEC until the next AGM. And the reason why we do this is that we are confident that we will continue to perform well by increasing our product mix with focusing more and more on high-strength steels and Q&T. And I will come back to that in a second. If we look at special steels during the third quarter, shipments were impacted by a weaker market, especially for strip-related products in Europe. The good thing is that prices held up, and they should do that over the business cycle. And that means that the profitability were still on fairly stable level compared to Q1 and Q2, so around or just below 2 billion. We are continuing to build our strong market position with products that add significant customer value in the form of higher productivity, better sustainability performance, lower weight, better fuel consumption, and more stable prices over the business cycle. And if we look at the product family, we have be usually divided up between where Q&T, structured Q&T, protection Q&T, tooling Q&T, latest segments, additive powder, or powder manufacturing. We start with the wear segment of the Q&T that typically goes to, as an example, truck and bodybuilders, material handling, mining, quarries, recycling. We have a very strong market position. The global market share is above 40 percent. And in certain segments, certain geographies, it's much stronger than that. So that's our prime product where we constantly develop new products and help our customers to applications. Structured Q&T, we sell under the name of strength, goes mainly to lifting and forestry, so these are structural steels with long resistance. So strong market share there as well globally. Protection, unfortunately, the uncertainty in the world has increased the demand for protection. Q&T goes both to civil application and military application. Our brand name there is Armox, probably the best armored plate produced in the world. Tooling, we work towards tooling and engineering companies under the brand name Toolox. And then AM powder, or the powder we have started to produce now in Oxelösund, goes mainly to customers' 3D printing. And this is a very good way of getting fossil-free powder and use it for prototyping and small series or small batches of products that we develop ourselves, but mainly together with customers. We look at Europe, weaker market, headwind, more pronounced seasonal slowdown than we usually see. Typically, we see slow July in the Nordics and a slow August in mainland Europe, but this year it was slower than normal. We have measures to lower cost both structurally and short term and increase flexibility. And here is where we mainly work with what we internally call multi-skilling. What is holding up pretty good is even though the volumes are going down, automotive advanced high strength steels at automotive is holding up pretty well. And if we look at some recent examples where we increase our market share or take market shares, for the most advanced high strength steels, we are talking yield strength up to 2000 mega pascals. These are four examples of new products, but this is also part of the partnership program together with future customers for fossil-free steels. We start already now to ramp up volumes and come into new platforms in advance of being able to produce and deliver both SSAD0, but also in the future fossil-free steel. So this is a good business driver and makes together with the uniqueness of the products as to grow and continue to grow this market over time. If you look at the menu, Lucas, I would say when I look at this picture and I looked at it yesterday and I said this is stable, stable prices, fairly stable volumes, stable profitability, EBIT margin of 35 percent which is really really good. Some pressures on market prices on the spot market in Q3, but generally stable demand. We had some during the quarter transport problems and conjunctions in the transport system, but apart from that I would say stability. To the north, the reflection of the European I would say the Nordic steel market, weak market conditions in Q3, lower shipments, lower volumes, measures to lower costs. I would say more than 50 percent here are structurally lowering costs. If we look at the EBIT, it was minus 113. If we take away revaluation of inventories, we had a positive underlying operating result. So of course we hit a lot by revaluation of stocks. Rookie construction, seasonal improvement versus Q2, less pronounced than normal and the reason for that is of course that the construction market is very very weak and has been weak so far this year and will continue to be weak, but they are doing a good job reducing costs and structurally change the company and even though the market conditions are very tough, they can post an operating result for the third quarter of 28 million sec. Some words then about SSAB zero, the ramp up of zero SSAB zero continues and as you might remember these are products based on recycled steel using fossil free electricity, biocarbon and biogas. So no carbon emission offsetting or mass balancing allocation schemes. So this is purely fossil free steel production. We see very strong demand from segments like heavy transport, automotive construction, not only in Europe but also in US and this is said earlier our platform to continue to leverage growth. So part of our partner program where we now start to deliver zero steel, small volumes of fossil free steel and ramping up new customers, new segments, new applications for the future. So with that Lennar, it's time for a deep dive into the financials.

Thank you Martin. Let us begin by looking at the shipment volumes which is the graph on top on the right hand side on the slide. This is the total of steel division shipment volumes and as already mentioned a reduction from Q2. Reduction was 12% in Q3 and if we shortly analyze this versus the outlook that we gave, we know that the special steel division was lower in shipments than the outlook and that was mainly related to the European market demand being lower than what we anticipated. Europe division was in line with the outlook and America's only slightly lower and that was due to the logistic constraints that Martin already mentioned. If we then look at the revenue which is next to the shipment graph, we can see that the reduction was not as big as it was in shipment, it was 7% and if we also analyze briefly the prices, the outlooks that we gave, all the divisions were better than in the outlook we gave and that was mainly due to the strong premium mix that was in the outcome and also slight support of the FX impact. If we then look at the profitability, EBITDA figures below on this slide, 18% in Q3 which was stable with the Q2 performance, 5.3 billion in EBITDA in Q3 while Q2 was 5.9 and if we split this 5.3 per delivered steel ton, we can see that it was very stable with the previous quarter. And then analyzing the reasons underneath this performance, Q2 performance close to 5 billion and Q3 4.4 in operating result. Prices as already mentioned, slightly higher compared to previous quarter and the main contribution coming from special steel division. Total was 400 million positive impact on the EBITDA and special steels contributing 320. Slightly less from Europe with 30 and Americas with 50. Volumes already discussed, 12% lower and here the biggest contributors were Europe division and special steels. Europe division dropping 16 and special steels 14%, both related to the market demand. Stable variable cost and that is supported by stable raw material cost. Fixed cost giving a positive impact and that's primarily due to seasonality with lower summer temporary workers but also we can claim that part of the savings actions start to be visible in this as Martin already mentioned. Minor impact of revaluation of FX items and the capacity utilization with negative impact to EBIT 330 million SEC and that is mainly due to the annual maintenance outages during Q3 in Europe division and Oxeluzund was starting the maintenance at the end of the quarter. When comparing to previous year, clearly the biggest impact coming from the prices and as it says here special steel division is the only division still having a higher price level compared to last year. Contribution here with 100 million positive while Europe division and Americas with 1.3 billion negative. Volumes slightly higher and here we have the impact, positive impact from Europe division and Americas while special steel division was 7% lower and also here to comment about the automotive shipments being held holding the Europe Europe shipments on a good level. Variable cost supported by the lower raw material cost contributing positively. The fixed cost being higher than last year and here we also have the impact of the FX rate weaker Swedish crown of 200 a million negative and the rest is coming from the higher FTE with higher salary related cost and higher materials and services cost. Minor impact also in this comparison with the revaluation of balance sheet items and the capacity utilization is having minor negative impact. To remind that last year we had higher cost of maintenance during Q3, this year a lower cost but we have also reduced the capacity utilization in the Nordic mills to balance with the demand so that is also included here and increasing the unused capacity cost during this year. Cash flow, strong cash flow generation and here we compare with the previous year earnings lower, big difference in the working capital as you know this year the focus has been in the cash generation and here we have a positive impact of working capital also in Q3 which is opposite when we analyze previous year that was impacted by the buildup of raw material stocks. Maintenance capex higher than last year, taxes lower and the strategic capex in Q3 was 700 million SEC and here in this table it is netted by the accounts payable of 360. -to-date strategic capex is 1.3 billion and as you know it will start to increase along with the Oxalo-Sund EAF conversion project. All of this summing up to 5.1 net cash flow in Q3 and if we sum it up with the Q2 net cash position of 11.7 we are landing on a level of 16.8 at the end of Q3 and this will be now the basis to start up the share buyback program as Martin already presented earlier. Raw material of you if we compare the volatility this year compared to last year it is clearly less volatile and also between quarters we can see that relatively stable purchase prices. Iron all stable as in also in coking coal prices and the outlook remains stable. Similar trend with these scrap prices all in all we anticipate that the average raw material cost remains stable also during Q4. Maybe to remind that we have the winter stocking season started in the Nordic mills and that will continue during Q4 and we can see then the raw material inventory increasing during the last quarter. And the maintenance cost table which has not changed a lot since we previously showed this one. During Q3 a lot of maintenance actions in Europe division and also starting the maintenance audits in Oxelösund at the end of Q3 which will also continue during Q4. There will also be maintenance in Mobil mill and Rahe strip mill. So a lot of maintenance activities during the last quarter and the table here is illustrating how the costs are impacting the divisions. I guess that's my last slide and then Martin will continue with the outlook.

Thank you Lena. So if you look into Q4 then and start with the segments the customer segments. I would put heavy transport as neutral, healthy level of heavy truck production in Europe, good activity in shipbuilding in the US so yellow or neutral, automotive, signs of slowdown in the car demand due to inflation and higher interest rates but structurally growing the advanced high strength steel market and share and especially for the most advanced products and as said earlier also moving into new platforms, new customers in advance of the shipments of SCB Zero and fossil free steel. So I would put that neutral as well compared to sequentially compared to Q3. Construction machinery slower I would put it between weak and neutral. Good demand in North America, weaker demand in Europe and China definitely weak. With till handling somewhat cautious sentiment within mining stable demand in recycling so overall around neutral. Energy strong, good demand for wind power and other renewables and that is of course an important segment for our plate business in North America and then we have the two red dots. Construction European market impacted by inflation, higher interest rates etc. So construction business clearly doing or seeing a very weak surrounding and then service centers and the flip coin of it. Focus on inventory management towards year end and the big question will of course is always be if prices move up in Q1 we will see apparent demand or restocking from service centers at the end of the quarter and if prices continue to move down we will see continued destocking into Q1. So that's always hard to predict especially for the second half of December but looking at volumes and the stock levels at service centers they are not on a very high levels in some areas I would say rather the opposite. So when we look at the outlook for fourth quarter and guide as we always do for shipments and prices we say that in special steels we will see stable shipments and somewhat lower prices. In Europe we will see somewhat lower shipments due to outages and so on significantly lower prices. In America we will see somewhat lower shipments and lower realized prices and what we also see is that the demand for high strength steels weakened especially for street products in Europe and the fourth quarter outlook remains to continue to be on that level. So nothing new really. So to sum it up continued good trend in safety and why do I talk so much about safety first of all that safety is our priority number one and the target we have is to become the safest steel company in the world but also that the correlation between good safety performance a well-run company and the profitable company that correlation is very high so that is a very good KPI for many obvious reasons. The weak European market we handle that measures to reduce cost we have a good cash flow generation and we are launching now the share buy back program. We continue to lead the green transition the investments in Oxelösund and in other places continues. One very important verdict came here beginning of October from the environmental court in Sweden regarding the Oxelösund cable and that of course verdict which was very clearly written could of course be appealed and will most probably be appealed but this was a very important step for the transformation in Oxelösund and I said now a couple of times we continue to see strong demand for SABCR huge interest from our for our transformation into fossil free steel production and we will pretty soon here in the coming weeks launch a couple of new very interesting partnership programs with big OEMs. Yes thank

you Mattin and Lena for the presentations and then we can start to go into the Q&A. Just a reminder there as always if you have more than one question please state them one at a time to give Lena and Mattin the chance to answer so by that I will ask the operator to present the instructions for the Q&A so please operator.

Thank you to ask a question you will need to press star one and one on your telephone and wait for your name to be announced. To withdraw your question please press star one and one again. Once again if you would like to ask a question please press star one and one on your telephone keypad. We will now go to your first question and your first question comes from the line of Alan Gabriel from Morgan Stanley please go ahead.

Thank you good morning I have two questions the first one is on decarbonisation Martin can you give us an update where we stand with your various decarbonisation projects how comfortable are you with the CAPEX figures you have given us and why not really engage more actively with countries like Finland or the US as alternative locations for your green mold if Sweden would not really offer any incentives that's the first question.

We haven't changed the ambition we are as I've said many times we are dependent on outer circumstances we need environmental permits we need power allocation and we need cables and that is moving on with the latest verdict in conditions for that transformation so in raw it's moving on quite nicely we are now in the process we are in a fast track when it comes to the environmental permits so we will have we applied for that in August and in Finland the fast track is within 12 months and if I know Finland after all these years correctly it will not necessarily take all that well month it could go faster the power cable is on its way the 400 kilovolt cable in Luleå we are struggling a bit we are very happy that Svenska Kraftnät has announced that they will build the 400 kilovolt cable and that will be hopefully in service 2028 we are working with environmental permits so so that's moving on and then we see of course as said before huge interest from other parts of the world but but the main focus is the Nordic transformation and we are we're working with and trying to as said create circumstances in order to do that in a timely manner but but it's not 100 percent under our control that's what I'm trying to say

thank

you

and my second question is on Europe you are guiding for stable costs lower volumes but also significantly lower realized prices so on an excel spreadsheet this would imply negative EBITDA for Europe do you think you have done enough cost optimization to avoid a negative EBITDA for division going forward

you never do enough but what we really do now is to not only be cost cautious but structurally and fundamentally change the cost so so what we are focusing very much on internally as one of the main focus areas is what we call low point profitability so increase flexibility increase i mean every krona we can move from fixed to variable is worth a lot of money for us and so we also do a lot there so to make sure that we can i mean come out better every downturn than the previous downturn and and with the ambition to become the most profitable steel company not only on the top of the cycle but also in relative terms on the bottom of the cycle so so i think that work is ongoing it has been ongoing for quite a while but what you typically do on top of that when when you experience headwind on the market is you do this usual stuff and i after all these years in the steel industry i usually say internally should not never ever underestimate the possibilities it gives when the market becomes a little bit tougher and you have done it before we will continue to do it and we will come better day by day week by week month by month quarter by quarter

thank

you thank you we will now go to your next question and your next question comes from the line of tristan gressa from bmp paribas please go ahead

yes hi good morning and thank you for taking my questions i have also two the first one on special deal you got four stable shipments into q4 despite the maintenance outage and some market weakness you flagged is that fair to see this 300 000 on volume as kind of the trough volumes moving forward and also how much of that demand weakness you flagged is already baked in into your asp guidance should we expect further pricing weakness into next year and if that's the case do you think this pricing weakness with what you have with your backlogs is going to accelerate or the scale of the pricing weakness is going to be somehow consistent with what we've seen so far that's my first question but

i don't know if this is an answer to your question but over time you should expect us to continue to grow special steel volumes then it can differ between quarter of course but structurally we should continue to grow the special steel business and the volumes and we have targets strategic targets that we have communicated and we have targets beyond that as well so over time i'm not worried because the products are so unique that if you want to work with productivity or environmental efficiency or cost efficiency it is worth using these kind of products and the products i presented earlier in the presentation so it will continue to grow structurally that i'm 100 sure of then how it goes between one quarter sequentially and another some ups and downs when it comes to prices you should also expect prices to be volatile but much less volatile than for standard products so on a higher level with less amplitude so so they should be that's what we see now they follow to some extent or they follow other steel prices but but with less much less amplitude and much more stable over time so you should expect us to continue to develop the volumes increase the volumes and become over time better and better to generate profitability in that division

all right that's um that's helpful um and my second question is on america's um so we've heard a u.s mail saying uh that uh very little of the infrastructure spending has actually flowed through so far is that also your sentiment what you're seeing on the ground and does that mean that we still have this big catalyst ahead of us and more short term as well on the plate market in the u.s have you seen demand moderated a bit and what has been driving recent pricing weakness there thank you

i think what we have partly seen in q3 is a wait and see from certain segments and i would say especially from the steel service segments but structurally it's important to remember that the u.s plate market is structurally under supplied and with now with inflation react reduction act and infrastructure spend bill the demand the demand will structurally increase and we talk about a lot about energy about the wind and so on also a lot of of needs for infrastructure like bridges and so on so power transmission power poles and so on so so we are quite over time positive to the u.s plate market then of course i mean they will always be a difference between real demand and apparent demand and it will always be i mean the steel service segment in u.s is quite big compared to to europe and you typically see them playing with stocks and anticipation of price movements so you will see volatility there as well and typically if you look historically that has been one of our most volatile divisions but now structurally it is has this has partly changed and if you also look at so as an important part of both the infrastructure bill and and inflation reduction act before there was a lot of talk about produced in america's now that now the demand is in order to participate in these programs it needs to be melted in america so over time i have a very strong confidence in the u.s plate market and us being the market leader with sometimes above 30 percent but that was a around 30 percent of the u.s plate market we should be we should be well often and especially when you look at our cost position at our two mills x works we are we are really good so so i'm not worried and it can differs between one quarter and another it's exactly like it can like it can in in any division but over time it looks positive

all right that's uh that's helpful just maybe a quick follow-up on that so in terms of the timing of this entire infrastructure spending coming through and positively impact demand and potentially prices is that something you see more to come in let's say q2 next year is that where you think this this could actually hit

i think it will will come to a larger extent i mean with this big wind farms as one example being being planned i think on the east coast in u.s there is a lot of interesting pro projects being planned so so we will see more of that coming yes if it's exactly the second quarter when it is but it will come that's my opinion

all right thank you

thank you we will now go to the next question and your next question comes from the line of bastion sonnagovic from deutschia bank please go ahead

yes good morning all um my first question is just on the price dynamics and specialist deals and i wanted to check again i guess you've been guiding obviously for prices to be down a little yet obviously the margins are still significantly above previous levels relative to where we can see current margins in the more spot oriented business such as such as your european operation so from the way you look at this um is there basically still just a time lag for how far margins have holding up and and they still will reverse back towards the levels we've seen in the previous years or do you think anything has really also structurally changed here in terms of margin mix um etc that is my first question what

is changing over time is the mix both in europe but but also in specialist is we talk a lot about them sometimes we're a bit sloppy talking just about q and t but there is a lot of different products within q and t if you take the prime segment or the crown you hardox we are launching now new products that are developing on on the market better better availability better bendability thinner plates with the same abrasive resistant properties and so on so it's about shifting the market so i mean if we can move from from hardox 450 to hardox high tough for hardox 650 there is a huge difference in in prices and margins so it is a combination of ability and prices on a higher level or more stable prices even though they are not of course fully unaffected by spot prices but more stable on a higher level and then constantly moving with the mix day by day by day you won't see any huge changes week by week or quarter by quarter but constantly also improving the mix gives us better resilience and better stability that goes for every kilo we can shift from if you take hot rod coils to to outside the nordic region every kilo we can move from that segment to automotive advanced high strength deals makes a huge difference when it comes to profitability margins and last but not least stability

okay great now that's very interesting kalamath in would you be as confident to say i mean the sub 200 levels on margins which we've had like in the years like 17 80 19 etc we're not going to see those again would you be as confident to say that no

because

i don't

know what will happen i mean especially now in a very very unsecure world but structurally we should be much better off as a company and also in special steels than than last time and we will continue to be that over the cycle so so everything else equal would say that we will be better off but then you never know i mean the word is changing constantly so for me this is about i wouldn't call it a relative game but but the relativity i mean we need to come out better and better and better given the circumstances and also better than our peers and that's a constant struggle we have a program for that in ssab it's our way so working we call it ssab one day by day become better and better involving all 16 000 employees including myself

okay great no thanks for that then my next question is just on your on your capacity utilization and the way you run your mills you obviously have quite a bit of maintenance upcoming i think most of those breaks however i think more in the downstream side of the operations do you have any plans to react to the current market environment while also taking out some of your upstream capacity i

think the timing for our maintenance here in q3 q4 is given the market quite good so apart from that of course you never know where the market will go but i think we have a decent order book decent circumstances so so we'll see but we plan to run the maintenance as lena described and and immobile now in u.s. we have two males and we do every second year we do the maintenance so last year it was a month earlier now it's mobile so no plans right now on top of that

okay great and then my last question is on your coal inventory and and here i'm wondering whether you have completed the build of your coal with coal inventory ahead of the winter and if so um is your inventory uh your inventory uh in prices here already reflecting the very strong recent coal price development which we've seen the last couple of months

part of the winter stocking has been started and is ongoing so not all the winter stocking done yet and the pricing is of course tied also to the index so we will be seeing some increase in the purchases but i would say that the timing also with the winter stocking has been good because now it seems that the prices have been continuing increasing so we are in a good process in that and you need to remember

that you're going to this year as well with with the higher stocks than normal due to the invasion of ukraine we had to find new suppliers and and build higher safety stocks so we have in that aspect a pretty good starting point

so could you let us know like how how far you're done with the restocking is it like 70 or so 80 percent or

i don't have the figure and i know that it is ongoing

nothing different compared to i mean we we do as we always do and that's of course as you know due to the ice situation up in the bolt in northern baltic sea we need to do it before the ice comes because then we can't bring in the

thank you we will now go to the next question and your next question comes from the line of most is all out from jp morgan please go ahead

hi good afternoon everyone um thank you for taking my question so my question is just on europe and the market and recent talks between europe and the u.s on how to tackle the global excess capacity issue what do you hope from these discussions here between the eu and the u.s on how we can potentially level the playing field here especially from imports with china this is the second year now that european steel producers are having to curtail capacity to address market imbalance and i guess just a quick follow-up to that is now with talks um halted until year end do you see possibility to uh perhaps direct some uh shipments into the u.s market that's my first question

but if you talk about what can we do then to avoid chinese import in the future i think the cbam is very important now we have a very high ambitions in europe and a strong pressure from authorities and politicians but also huge interest from customers to to reduce the emissions and now for any european steel producer it's start to cost money to to to buy emission rights and and the marginal the cost of the marginal ton for the forest typical european steel producers gone up with up to 200 euro per ton of course we need to handle that exactly as you said we need to see a level playing fields we can't burden the european steel industry and then allowing import from countries where they have a much worse environmental footprint and then on top of that chip it by boat for number of weeks emitting in a lot of more carbon dioxide emissions and then let that put pressure on on the european store demands on the european steel industry and then let everyone else just have a free ride so so i think that is very important and i'm hoping that of course the best would be if we had the global more global rules and the level playing fields when it comes to emissions and emission rights that would be the best case but i think it's important or i think it's wise for europe to to to lead that and but then we need to also create a level playing field you can't burden the european steel industry and let anyone everyone else just ship steel with even worse environmental performance into europe without any tax border adjustments so that's what i'm

looking for just a very quick follow-up to that though do you believe that with the current c-band implementation that europe can remain competitive near term especially when you account for higher production costs and any premiums on on lower co2 content do you feel that you can still remain competitive on a global on a global scale

yes i do because i think over time it will be as a end user's set putting demands on on the products we buy so so for me this problem with global warming is one of the most important problems we have as mankind to to tackle so i think ups and downs during the journey but we need to go in this direction and the steel industry will definitely go in this direction when we started to talk about this back in 2016 2017 people were just if you're put it kindly nodding their heads and said this is Martin this is completely wrong now you have really lost it now that the european steel industry is moving in this direction i foresee that the global steel industry must and will also move in this direction then of course it will take longer time in certain parts of the world but i think the demand will be there and it will be a necessity for the steel industry that stands for 10 percent of the global emissions to take the responsibility that we take our responsibility otherwise there is no possibility that we can come even close to the targets we have set up in the paris agreement so for me this will be end user driven or or or demand driven from the market but maybe that is a positive view but that's what i believe

thank you very much for that and i guess the any other question from me so just on the annualized cost savings of the 500 million do you know how much was realized in q3 and perhaps what your your expectations into q4 should we just assume it's a quarter of that 500 million already you should

you should assume that we are at full run rate end of q4 end of this year and it's a bit more than 500 but but still and 50 percent of it or roughly a little bit less than 50 percent of it is structured the other the rest is is these usual cost measures that we do and we experience headwind

and the other cost savings at rookie construction as well the

majority of the construction is structured okay and the action has come a little bit further because they experienced the headwind on the market earlier than the other divisions okay understood

thank

you

thank you we will now go to your next question and the next question comes on the line of johannes guinzillas from dnb please go ahead

hello everyone hope you can hear me

yes we can hear you johannes

great great so i have a good good just to follow up a bit on the networking capital i mean last year you had such a release on networking capital in the fourth quarter now you did really well on networking capital in the third quarter are you still expecting the quarter to be a period where you can release more networking capital that maybe some some color on on how you see networking capital because of your ambition for next year

q4 will continue on a good level on similar level at least compared to q3 as you know we are you mean

an additional release you mean

yes and then typically in in our business we have the one we tend to have a negative working capital behavior because of these big inventory piles that we will pay during q1 so q4 will still be positive outcome

we have set set their targets now we haven't been so clear historically we have been focusing a lot on working capital and capital efficiency but now we have clear targets we call it cash conversion per division per business unit so there is still room to become more effective

then on the new buybacks how should we think about that i mean are you sort of using these tools as a kind of a mechanical way you're buying let's say every week or or you know in in a smooth way until the next agm or any other plans of how to sort of pursue the buybacks if you can some light on that and and also how did you come up to 2.5 billion as a mandate

before i let lena in you should view it as a sign of confidence first of all and then secondly 2.5 we were exceeding the targets we looked at the market situation the future investments as own and then did i would say an assumption that we felt were prudent and the trigger point of course that we were exceeding our financial targets so so i think it's around a nice figure okay but

we should yeah

yeah and as do we purchase of course the purchasing is done between the time frame and it is given as assignment to our partner bank and 2.5 billion is perhaps also a figure which is due to the limitations in the daily trade that you can do based on the regulations so that was a good figure for limited time time span because we need to end it before the next agm meeting

okay that's helpful and then my final question is on on the new product ssa b0 is this something you expect to give you some kind of extra earnings that can be visible in the group in the coming quarter or is it like still early stage in terms of you know

it is early stage we are aiming for i think it's 40 000 tons this year this is a way of first of all building market for the future and we felt that waiting for the hybrid to come out is still a number of years down the road so this is what was one way to to build market and build market presence and knowledge and start to build products with customers and also give us the possibility to as said now come into new platforms new new new segments new customers so that's good and it was also a way as we talked about on the capital market state to establish a premium for these kind of products which we have done in the market and so so will it be visible by 40 000 tons it it is a lot of steel if you see a pile of 40 000 tons it's huge but in the big scheme of it with what is it seven eight million tons it's not so much so it will be visible in the in the pnl the coming quarter

yeah understood um just a final thing on the zero product i think you mentioned that the capital market state that the established premium is 300 us dollar is that correct and is it still valid

i mean it's actually said euro but i guess the exchange rate is close to one so so yes you're correct

okay thank you

thank you we will now go to the next question and your next question comes from the line of christian copfer from handles bank and please go ahead

right thanks operator good morning just just few thoughts on my side first on especially i remember you you died before privacy to come up and come down some this time we have a

bad we have a fairly bad line

yeah i have a bad line too i don't know why so you can't hear me we

can hear you but if you speak loud then we can hear you okay

i try to i try to be uh thank you i

try to be uh yeah i try to try to talk to clear them yeah first on special things my market i think you guided ahead of the quarter that prices should come down somewhat and and then they ended up slightly upwards so so now you're guiding for practice to come down again in q4 so so are you more certain this time around that prices really will come down or is it still there you know with the big uncertainty your

memories are good christian yes we were slightly wrong there we they had up better than we expected yes in q3

the mix was also better than

me it's a combination of prices and mix but but i mean as i said we don't guide on mix but mix over time not quarter by quarter but over time will continue to improve

yeah okay fine and then for america's um what what can you say it because you said you had some transportation issues in q3 uh what what is the call it underlying underlying you know shipments that you should be able to to achieve for america's is it you know between take a

look at the decent quarter and and volume wise and the good proxy we had from time to time you always have problems with rail cars trucks you have some storms coming in in mobile you have tornadoes in in montpellier and so on so it is a bit complicated from time to time and we experience that in of course in in especially during this season time of the year in europe as well with the maurice with boats and so on but just winter so we could have shipped more in q3 not massively more but look at look at a decent quarter volume wise and that's i would say would be the run rate

so so over time in america should be you know at least north of 450 000 tons a quarter or

i don't remember the figures but perry's no thing so

definitely definitely yes

yeah okay okay fine and then then just finally um maybe back to special deals again seems from my side at least that you are definitely prioritizing prices over volume even if you of course you mentioned martin that you you should be able to and you are already structurally growing that business over time but is it still fair to say that you you you try to keep up prices rather than to to try to try to push out the you know more you know volumes to the market

um yes yes because we have unique products we have fantastic products and and i mean for me it's so much about stability and and in a very volatile industry creating as much stability as possible and then it's about being firm on prices and especially if you are the market leader you should you should take that responsibility to the extent possible and then of course continuously work with upgrading new products i mean if we would have talked about it 10 years ago we would have been extremely proud of hardox 400 that's in our books and 450 commodities now so we are constantly working with better and better products that helps our customers too and for them it is about productivity it's about load capacity it's about fuel consumption it's about environmental efficiency it's about reducing the number of the length of the wells with 70 percent so i mean yes krona per ton or euro per ton but what the material is getting thinner and thinner and the productivity among end users and customers are getting better and better so it's a slightly different sales model you're not selling necessarily at euro per ton you're more selling a solution and the more advanced products we can bring to the market and more unique we become the better that sales model sticks not a huge difference once again between quarters but this is part of the constant struggle we we work with every day and that's part of the business yeah

yeah that sounds very good i think it's sounds very really good with the strategy for for specials pieces yeah thank you very much thank

you christian

thank you we will now go to the next question and your next question comes from the line of maxime coga from odobhf please go ahead

yeah good morning yeah i'm coming back to this negotiations between the u.s and europe on free trade it seems they are more difficult than than initially planned and and there is increasing risk apparently that the u.s removes the tariff quotas in favor of europe i know that you're mostly that your production is mostly done in the u.s for for u.s demand but still you have some some shipments of europe from europe to the u.s so would you could you be affected by by such a move by the u.s that would take place the first of january next year

yes of course but to less lesser extent than other steel companies i would say because i mean the majority absolute majority of the products we sell in u.s we produce in u.s not only standard plate because that we don't produce and ship from from the nordics but now with the investments and the ramp up of the investments in mobile we can produce i would say 95 95 95 percent of the product spec in mobile that we can produce in in oxidizer so what we are really exporting with probably some some exceptions is the advanced high strength steels from from i would say especially bowling that goes into automotive and if you take the products i showed early in the presentation the high strength yields as high strength smear tensitic grades to be honest there is no one else producing them in u.s so yes we will be affected but with the i mean u.s is our biggest market and we have very strong presence with the majority of our own products and then the the exception is i would say mainly automotive and mainly the the toughest grades toughest grades going to companies like gm and ford and others and their sub suppliers so in relative terms we will be less affected i guess than many steel companies but still affected

okay yeah that's a fool and and and yet so one question is on the u.s auto strike do you have a big exposure to the to the u.s automakers and do you see an impact from from from the strike or is it manageable no

but we have seen impacts i mean we sell we sell a lot to u.s automotive producers the most advanced products so we have seen effects on that within q3 and then it depends where it goes in q4 and onwards but we have seen effects of it in q3

okay

thank you

thank you one moment please we will now go to our next question and the next question comes from alan gabriel from morgan stanley please go ahead

thank you just one follow-up questions on section 232 if that gets hypothetically removed how do you expect it to impact the u.s plate market in general and how would you how would your business react to such a measure if it were to happen thank you

you you mean alan if if you would see opening up for for imports into the u.s plate market

yes absolutely absolutely

that would of course us but once again i mean a big part of this infrastructure bill and everything related to inflation reduction act is actually required to be a melted in america so i would say it would affect us and it would affect the market but less so than three four five six years ago due to that demand of melted in america's

thank

you

thank you we will now go to the next question and your next question comes from the line of andrew jones from ubs please go ahead

hi martin and thanks for thanks for the course of our couple questions first of all on blast flash closures you know we've seen a few of the bottom maintenance time being taken in recent times so this sort of time of the year when you have a weakening market we often see that accelerate are you considering any such measures given the weakness in the market and you know if you know what has to change from here for you to you know to actually close the furnace that's my first question also just

we we actually have one blast furnace idle since many years in oxalus and the smaller one in oxalus so that has been idle for a number of years yeah so

but mentally i

mean no but i mean in q q1 i think we saw in europe was it 13 11 or 13 blast furnace being idle now we see of course given the the market situation and also the very weak demand from i would say especially construction one could be led to believe that we will see further closures of blast furnaces we are not there yet i mean you never know what happens next week or month and but but we have no such plans for the time being

okay and just on the buyback you you obviously saw authorization earlier in the year with the fourth quarter results for this 10 percent buyback and obviously it's smaller than than that and you know you've got a pretty large cash pile sitting there you know i would have thought that you would have had the scope to do more then what put you off the idea of scaling it up more was it just your but as lena said

i mean the trigger point was that we were passing or exceeding the 20 target so that was a trigger point and then of course you need to take into consideration future investments market situation and so on and we did that and then you have certain limitations as well you can buy i think it's 20 25 percent of the daily trade and so on and next agm is within five months so so i would say it's both pure mathematics but also i would say a decent sum we test this now and see how it goes but you should see it as a sign of confidence for the future as well so so even the market is tough right now and we have big investments in the transformation ahead of us we should continue to perform decently when it comes to cash flow generation so it's a combination of a good figure but also limitations when it comes to share buyback

okay

that

makes sense and just on finally on on tip nor and rookie which we probably spend less of our time uh analyzing detail then what are your expectations for the fourth quarter should we see more windfall losses in tip nor could be you know should it get better in your view i mean is it we seem to be the the the windfalls

is pure mathematics depending on where the prices are moving so what i expect to see and what we will see is structurally tip nor being improved have a new managing director at tip nor he used to run our tip nor's business in denmark in a very successful way now he stepped on in his new job as managing director for tip nor in in in first of july he has launched this programs it's not only about cost saving it's about efficiency we are constantly in sweden building out what we call handelsdalsgruppen in order to service the smaller fragmented markets we are taking market shares which is important so i expect independent on where the prices are moving that tip nor should continue to become structurally better quarter by quarter in rocky construction i think they're doing a very good job handling a very tough situation and a weak construction market not only in in sweden and finland but also in in europe they are also running efficiency programs developing new products developing new solutions they should also over time become more and more effective and i think they're doing a great job sam eron and his team so so that's what i that's what i expect to continue to see and they should be over time improving and becoming better and better compared to peers okay thanks

thank you

thank you okay we have one further question and the question comes from the line of christian argwell from city bank please go ahead hello christian are you on mute

can you hear me

we can hear you now

hello yes thanks a lot for picking my question and the last one i have remaining is on the cash need my apologies if you answered it already but the cash need guidance for 11 billion for the fully appointed fee is unchanged from the last guidance while if you look at the run date of the nine months it is running at a significant lower level so should we expect some kind of no sharp catch up in the people especially into the cash expenses yes

we didn't update the the cash need estimate of course q4 is still time to spend money if we don't reach that level remains to be seen also in taxes we we most likely will be somewhat lower than than in the in the previous estimate that we gave and of course if there are delays in the in the cup expense when it comes to the oxalozoon project that what might have an impact the plan is still to of course fulfill the given frame

i mean it's important to say in the project as such there are no delays but it could be a timing issue of invoices yeah

okay thank you thank you there are currently no further questions i will hand the call back for anything okay

thank you thank you very much a lot of good questions but now we will conclude this conference thank you martin and lena and thank you for the attention and we wish you a pleasant day

thank you very much

thank you we can drive our transformation from a position of strength the level of earnings during the last years has been record high we have achieved a 40 percent global market share in wear resistant steels and we have taken the lead in the green transformation of the steel industry we plan for major investments in the nordic operations putting ssab in a superior cost position the blast furnaces and poking plants will be closed and our co2 emissions will largely be eliminated pilot shipments of fossil free steel to customers already began in 2021 we will continue to increase the share of high strength steels and premium steels this will be done with industry-leading profitability and create value for all stakeholders join us when transforming the future of steel