SSAB Ab

Good morning and welcome to this presentation of the SSAB year-end report. Another relatively strong year for us. Together with us presenting today is President and CEO Martin Lindqvist and CFO Lina Kraelius. And if we look at the agenda, we will have Martin starting by summarizing the year and the quarter. And then Lena, as always, will present the details on the financials. And then at the end, Martin will come back with the outlook. And then we will also have good time for questions at the end of the session. conference so by that please martin start your the presentation thank you parent and good morning

Start with some highlights in 2023. We had another strong year, not as strong as the record year last year, but still 16.5 billion SEC in operating result. We continue to generate strong cash flows. We had a net cash flow before dividend of 16.2 billion, and that gives us also a very strong cash conversion. We continue to develop our safety performance. We have, as you know, and we have talked about it before, the ambition to become the safest steel company in the world. We are not there really yet, but we are progressing. And I would say most of our major sites closed 2023 without any lost time injuries. We continue to lead the green transition. We have seen commercial shipments of SSAB 0 during 2023, and we continue with the pilot shipments of fossil-free steel. And the transformation of the new Nordic assets have started now with the transformation in Oxelösund, and I will come back to that. If you zoom in then more on Q4, it was It's impacted by maintenance in both special steels, Europe and America. And we also saw, both in Q3, but also in Q4, a weaker European market. And we saw profitability going down in all three steel divisions sequentially compared to Q3. If you look at some business highlights and start with the high strength steels or QNT, advanced high strength steels and QNT, we saw stable prices despite the weaker market. Special steel prices were down 2% versus the record level in 22. We also saw that customers were more and more buying from stocks, favoring short lead times due to the uncertain environment. We saw continued good growth in advanced high-strength steels to automotive, where we were outperforming the general steel market volume-wise. And we are, as you know, the world leader when it comes to these smart and synthetic advanced high-strength steels, especially for cold forming. And that is, of course, also helped by the introduction of SSAB and the fossil-free journey that paves the way for new businesses. We are into new platforms, working with new OEMs, and that volume will continue to grow in the coming years. Another strong year on the US plate market. We increased our market share to 31%, one percentage point, compared to 22%. And as I said, we had a successful ramp-up of the SSAB0 production in Montpellier during the year. And we launched SSAB Syrup as a new unique product in 2023. That is a product based on recycled steel using fossil-free electricity, bio-carbon and bio-gas. So no emissions and we are not using emission offsetting or mass balancing allocation scheme. So this is 0.0 kilo carbon dioxide per kilo of steel. We had the ambition to produce and ship more than 40,000 tons in 2023. We ended up shipping and producing 50,000 tons. And we have seen a huge interest for this product, not only on the European market, but also globally, and especially, I would say, in the US. I will come back to that. And this is, of course, also one of the platforms to leverage future growth. When we look at partnerships, we, during Q4, announced three new partnerships. One together with Scania, where we will decarbonize all steel deliveries from SSAB to Scania's heavy-duty vehicles at the latest 2030. Sandvik, another important partnership, where they will use fossil-free steel initially in the production of their loaders and trucks. A very important partnership. And then GE Vernova, that are now producing wind towers with the lowest carbon footprint in the wind industry using SSAB0. So three very important partnerships during Q4. And we see, as said, strong interest from customers for these more environmentally friendly plate products in the North American market. We also see that the underlying demand is helped by the federal programs that drives investments in, I would say, especially energy and infrastructure. And on top of that, the demand for melted in America favors local producers. So when we look at the demand, U.S. plate demand, we expect that to once again, in mid-term, reach historical peak levels of around 10 million tons. So a very positive view on the North American plate market, medium to long term. We continue to run our transformation. Oxelösund is the first mill out where we are building now the electric arc furnace and that will be up and running 2026 and then we will close the blast furnaces and the coke oven batteries. We have the environmental permit in place. We have secured the power allocation and in January just this Monday. We actually got the final permit for the power lines approved as well. So we are following our plan and we had the start of the construction work in November visited by the Swedish prime minister. We have also now in January gotten the power allocation for our transformation up in Luleå. So I would say that to sum it up so far so good we are following our plans and keeping to our ambitions with that lena i hand over to you for financials thank you

Let us start by looking at the steel shipment performance. As the graph is illustrating, the outcome in Q4 was 1,491 kilotons, which was deviating 19 kilotons from Q3 and 11 kilotons from last year, or the previous year, Q4. So rather stable performance in this comparison. And if we briefly do the analysis versus the outlook we gave, we were indicating special steels to have stable volumes and Europe and America somewhat lower volumes. And the outcome was that Europe and America was relatively stable, while the special steels was 11% lower. And the reasons being that the demand in the European market was lower than anticipated. To mention on top of that, we did have some logistic challenges at year end related to weather conditions, and that was causing some delays in Special Steels and Europe Division. Then if we look at the revenue performance, 26.5 billion in Q4, which was then a drop of 10% compared to Q3 and 13% compared to previous year. And again, if we do a quick analysis compared to the outlook that we gave, we were indicating that special steel's division will have somewhat lower prices. europe division significantly lower and america slower and the outcome was that with special steels we were spot on with the outlook while a europe division was slightly better compared to outlook and america's slightly lower compared to outlook driven by the market price development EBITDA performance Q4 3.4 billion compared to 5.3 in Q3 and compared to 4.6 in previous year. So let's have a look more detailed analysis in the quarterly comparison. We start by comparing Q4 operating result of 2.4 billion with Q3 4.4, the drop of 2.6 billion. And as you can see from the graph, the biggest impact was with prices. All divisions had lower prices in Q4 compared to Q3. Biggest impact coming from Europe Division and Americas, which both were contributing slightly below 1 billion negative impact, while Special Steel Division was still holding prices slightly better, and the impact was less than 400. Volume was 19 kilotons lower, and this was coming mainly from the Special Steel Division, as already commented. Variable cost. Nordic mills had lower raw material and energy cost, and they were contributing positively, while the scrap and alloys in Americas were slightly higher during Q4. Fixed cost, negative impact, but that was mainly due to the more extensive maintenance activities during Q4 compared to Q3. We had maintenance activities in Oxelösund, Mobil and Raahe strip mill. And on top of that, smaller maintenance activities at other sites. Also to bear in mind that Q3 is seasonally lower when it comes to personal cost. That is the holiday season. And Q4, that's more normal quarter when it comes to personal related cost. Minor impact of the effects related to balance sheet revaluated items and the capacity utilization also giving a negative impact with lower production, which was then again mainly related to the annual maintenance outages. We were also running a bit lower pace to keep the inventory levels in good control for year end. The other in this graph is related to insurance compensation in US, which was actually related to the incident during 22 with the burn through in the furnace. Then if we compare Q4 23 versus previous year, the drop is 1.4 billion. And again, fairly similar graph as previous slide. Biggest impact coming from the prices. On average, prices were 10% lower during 23 than 22. The biggest impact coming from division Americas with over 1 billion negative impact, Europe division slightly less than a billion impact and again special steels division holding prices better than other steel divisions. Also Rukki Construction and Tipno had lower prices. Volume deviation 11 kilotons, again related to special steels. And also in this comparison, the raw material in Nordic mills and energy cost was lower than the previous year and scrap cost was slightly higher. Fixed cost higher. We had more extensive maintenance during 2023 compared to previous year. And also personal costs slightly higher with index increases. Also transformation office related costs were slightly higher. Minor impact with the FX and the capacity utilization in this graph actually positive impact. We had higher production in Q4 during 23. Just to remind that 22, we had the blast furnace repair in Raahe. And the other similarly related to the insurance compensation. If we then have a look at the cash flow performance, Table comparing year on year, quarters and full year, and maybe just to pick some things from Q4. First of all, of course, stating that the good performance with working capital, targets set in the divisions to reduce the inventories, the targets were met, good performance by the organization. The acquisition of shares and operations was related to stall shopping in Örebro, acquisition done by TIPNO. And the contribution to affiliated companies was related to hybrid. And on a separate line item, you can see the purchase of own shares, which is then related to the share buyback program we started at the end of October. Briefly comparing full year performance. Lower earnings were well supported by the positive impact in the working capital. Other is related to purchases of CO2 emission allowances. Previous year we were swapping forward and this year we were purchasing more of the allowances. Strategic investments slightly lower than previous year, but this is not related to any delays in the projects, rather the timing of the costs. And we were indicating that we would be spending 5 billion a capex this year, but we turned out to spend only 4.5, but these costs will be moved forward to next year. And as in the report stating, we estimate to spend 5.5 billion next year. Dividend paid close to 9 billion. And the purchases of own shares, as already commented, related to share buyback program and the net cash flow performance was close to 6 billion, which is then leading to net cash position 18.2 billion. The frame set for the share buyback program was 2.5 billion and we will continue the program during Q1 and we will finalize it before the coming AGM in April. And the idea is to propose to renew the mandate for the share buyback program also next year. The dividend proposal is five crowns per share, and this would mean around five billion payout in the second quarter this year. Raw material view, iron ore as well as coking coal prices were increasing during Q4. as did the scrap price picking up towards year end, leveling out in January. And the outlook for Q1 is that the cost of consumption when it comes to raw materials is somewhat higher. And I will end my part with this maintenance cost estimate updated for this year. The difference compared to 2023 is that we will have more extensive maintenance in Americas at Montpellier Mill. Last year we had the maintenance in Mobile Mill, but this year it will be in Montpellier. And a bit more extensive maintenance in Luleå coming summer, but otherwise fairly similar timing-wise and plan-wise with maintenance this year as was last year. And then I give it back to Martin.