SSAB AB (publ)

Good morning and welcome to this presentation of the SSAB Q2 report. My name is Per Hilsum. I'm head of Invest Relations at SSAB. I'm presenting today, we have Matti Lindqvist, President and CEO, and CFO Lena Kraelius. And the agenda, as normal, Matti will start to talk about the quarter shortly. Lena will then go into the financials in more detail. And then Matti comes back with the outlook and a summary. And then we'll have a good time for questions at the end. So by that, please, Matti, start.

Thank you, Per, and good morning and welcome to this quarterly presentation. If I start with the highlights, I would say that the result was fairly stable, just south of the three billion in operating profit. And it was lower versus the same quarter last year, mainly due to lower U.S. plate prices. And I will come back to that. We continue to see a good development of one of our most important focuses to become the safest steel company in the world. We are now at an LTI frequency per million working hour, including contractors at 0.64. And we also see the total recordable continue to decrease. The quarter, we made a decent cash flow generation. We had an operating cash flow of 3.2 billion during the quarter. And Lena will come back to that. A short update on the transformation to fossil-free steelmaking, that continues. During the second quarter in North America, we produced and sold 40,000 tons of SSAB zero. And SSAB zero, as you might remember, is produced out of scrap, but with zero scope one and two emissions. So 0.0 kilo carbon dioxide emissions per kilo produced steels. We have also updated our science-based targets when it comes to reducing greenhouse gas emissions. And they were approved by science-based targets initiative. We have also put in place a new combined green and sustainability linked finance framework, which provides an opportunity for us and in the future to issue both green and sustainability linked financing instruments. And we have also signed an early service agreement with the supplier of equipment for the mini-million Lulio, consisting of two electric arc furnaces, secondary metallurgy, taster and strip rolling mills. So that is also, they also take place during the second quarter. If you look into the divisions, I would say in special steels, like in Europe, we saw a weaker market in Europe and more stability in demand in rest of the world. So fairly similar volumes, so slightly higher volumes compared to Q1. We had an operating result of 1.659 billion SECs, so earnings still on a good level. We saw prices down 2% versus the first quarter, 24. We also during the quarter launched the world's first emission-free steel powder for commercial deliveries. So we are now selling fossil-free steel powder, which gives the possibility to combine the properties of our high-strength steels with light structural possibilities of 3D printing. And I've said it before, this will be a very important product for SSAB in the future. If you look at SSAB Europe, we saw a slight seasonal improvement versus Q1 in volumes. We saw fairly stable prices and we saw an operating result of 400 million SECs. We're still affected by the strike in Finland in two ways, I would say. The negative effect or the cost of the strike was 125 million in Q2 and it was, of course, bigger in Q1, but still we saw effects of it in Q2. But we also saw effects on the market, that the Finnish market didn't really pick up directly after the strike. There was a hesitation also on the market. But all in all, a fairly okay result given the circumstances. What was good was the strong development, continued strong development of advanced high-strength steels to automotive. We had shipments in Q2 at record levels, 185,000 tons. And it is a combination of two. First of all, the advanced product offering we have, including the smart and seat-dick steel grades for cold forming and the third generation dual-phase steel with high formability. Here you have one example to Kirschhoff where we sell Ducal CR 2000 megapascal for battery protection to ID bus. And the other part is, of course, that we are now starting to ramp up volumes in advance of fossil-free steel production and coming into new platforms starting to qualify materials. So that gives the good and positive development that we have seen now in the automotive segment. Looking at Americas, I would say that shipments fairly much in line with previous quarter and I would say cautious market. If you look at prices, they were down 7% versus the first quarter in the second quarter and they have decreased but from a very high level. And as I said, we continued the ramp up of SSAB 0 and as I said in the first picture, we produced and sold 40,000 tons in Q2. Tid-Nor and Roky Construction clearly feeling the weaker market, challenging market conditions. In Tid-Nor, shipments were supported by project orders and we also saw positive effects from cost savings during the quarter, the cost savings that we have implemented both in Tid-Nor and Roky Construction. And the same goes for Roky Construction. Challenging market conditions, yes, a seasonal improvement but with a very slow construction market in Europe and I would say especially in the Nordic market. And even here, we saw positive effects from implemented cost savings and that work continues. So with that, Lena.

Thank you, Martin. A bit more detailed analysis around the figures but let's start with the shipment which is on the top right-hand side on the slide. Q2 shipments amounted to 1,646 kilotons and compared to Q1, it was 63 kilotons higher. Seasonally, Q2 tends to be the best quarter of the year but when we compare to the previous year, second quarter, we can see that the reduction is 76 kilotons and that is indicating the lower or weaker market in the European market as already mentioned but also downward trend in the North American plate market. If we compare the shipment outcome with the outlook we gave in April, we were in line in Europe division and Americas but missing in the specials deals with slightly lower volumes. Revenues in Q2, 28.3 billion, increase of 1.2 billion compared to Q1 and that is driven by the shipments as the prices on group level were on average relatively flat. And then the reduction compared to previous year was 3.5 billion and that is then both prices and shipments impacting that but I will explain more details shortly. EBITDA Q2, 4 billion, Q1 was 4.1 and then last year being 5.9 so reduction 1.9 billion. The same trend illustrated in the EBITDA per ton. More details around the result and firstly we compare with the first quarter of this year. EBITDA was 3.2 and Q2 outcome on 3. Minor positive impact with the prices and just to bear in mind that here in this graph we have also added the FX impact which was positive and then also the mixed impact and already mentioned the good mix support from the automotive business. So the positive contribution from Europe division which was actually almost fully offset by the reduction in the prices in Americas. Volumes, 63 kilotons higher than Q1. Biggest contribution from Europe division, 52 kilotons higher than previous quarter. Slightly higher in special steels and Americas being relatively flat. Variable cost, the main raw materials in Nordic mills has developed downwards as well as the scrap in US mill but this positive impact was offset by the higher cost of consumables, freight and energy and also here we have the negative impact of the FX added. Fixed cost seasonally compared to first quarter this is always higher. Majority of this is coming from the higher personal cost which is related to the summer temps and also some higher repair and external services costs and also FX has a negative impact of 70 million in this part. Capacity utilization, slab production in both quarters on similar level but rolling production was 165 kilotons higher in Q2 thus we have a positive impact. Of course both quarters were impacted by the strikes as already Martin mentioned. More so in Q1 and also partially in Q2. If we then do the comparison with the previous year, EBIT on a level of 5 this year 3 so that deviation of 2 billion majority of which coming from the prices as illustrated here. And the biggest contribution coming from America's division, there the prices reduced 18% quarter on quarter compared and the contribution here is negative 1.4 billion. Prices in Europe division were on average 6% lower and in special steels 3% lower. So this is a good reminder of the fact that the America's division is the most volatile division when it comes to prices and while the special steels prices being more resilient. Volume impact negative 365 and this is now split majority of which split between Europe division and special steel division which is illustrating the weaker market demand. Variable cost 1.2 billion positive impact and this is now coming through all the division majority of which naturally coming from the Europe division. Effects impacting the fixed cost negatively of 25 so actually fairly small deviation in this quarter on quarter analysis to bear in mind that yes we have done the cost savings in Tipno and Roki construction which is supporting to keep this deviation on such a small level. Capacity utilization negative 180 million and this is now coming both from special steel division and Europe division volumes being slightly lower than last year. Cash flow as already said fairly decent operating cash flow generation in Q2 not going to go through line by line but to summarize in the comparison of year to date versus last year earnings are slightly lower. The working capital having slightly higher negative impact during 23 we were reducing the inventories from exceptionally high level while this year the inventories are more on a normal level. I would claim that the working capital is in a good control of course for the annual maintenance there is some preparation with the inventories during Q2. We can also see that the CapEx expenditure this year year to date is higher than last year and that is of course linked to this transformation activities. And then the dividend payout was done in Q2 almost 5 billion last year it was close to 9 and then the share buyback you can see here on a separate line the Q4 and Q1 activities. Amounting to the total share buyback program of 2.5 billion and during Q2 we actually canceled the shares that we were buying under this program. Here an updated view on the CapEx estimate for this year. Previous estimate was 5.5 and now we have updated that along with the Lulea minimil CapEx plan to be on a level of 6.3. We don't have a longer term CapEx plan because what we know is that it will for sure change still but the estimate is that it will peak during 26 and 27. Net cash position end of Q2 on a level of 14.1 billion. Reduction around 4 billion compared to end of last year and the biggest item here is clearly the dividend that was paid in Q2. The net debt equity ratio being only slightly higher than the financial targets we have for this ratio. All the raw material graphs illustrating the latest raw material price development during Q2 it came down in all iron ore, coking coal and scrap. We don't foresee that the prices will peak during Q3 rather remain stable and when it comes to raw material availability we don't foresee any risk related to that in coming quarter either. Maintenance table as illustrated here majority of our maintenance outages will take place in Q3. Special steel starting their outage at the end of Q3. In Europe division we have more extensive maintenance this year in Luleå. There will be maintenance in Boling, Raahe and Tube Mills. And then in case of Americas they have semi annual maintenance in Montpellier. Last year they didn't have but this year we will have. And they have also rescheduled the maintenance to start a bit earlier during Q3. And with that Martin will continue with the outlook.

So if we look at the segments and start with heavy transport we see a reduction in heavy truck production in Europe. But on the other hand a stable trend I would say for railcars in Americas. Automotive we see clearly a structurally growing advanced high strength steel market and we have a strong position there. Other parts of automotive being a bit more called slow. So all in all also neutral. Construction machinery, weaker demand in Europe and a slowdown in North America. There are potential for some recovery in China. Material handling I would say also neutral fairly stable demand within mining. Energy the only green dot with a strong market and especially for wind power and other renewables and I would say especially in North America. Construction is clearly weak and continues to be weak and no signs of an improvement yet in the Nordic market. A service center's cautious approach both in Europe and the US with inventory levels on normal or slightly lower than normal size. So there will be restocking but for the time being a cautious approach. We could then sum it up and look at Q3. We see seasonal downturn I would say more pronounced than normal. We have tried to move as much of the scheduled outages into Q3 and as Lena said America has brought it forward. Forwarded maintenance compared to previous plan and will take it fully in Q3 instead of previously planned Q3, Q4. And that will of course that plan maintenance will adjust production to the lower demand. If we look at shipments we expect lower shipments in special steels and Europe and then significantly lower in Americas where we have the semiannual maintenance outage in Montpellier. And prices somewhat lower for special steels and lower in Europe and in Americas. So if we sum it up before we start the Q&A, strong focus on safety is yielding results. We are not at zero yet but we are approaching that level. We have a good level of earnings in special steels and we have been focusing on pricing management. We should see more stability in earnings, more stability in pricing in special steels. We have the record level of automotive advanced high strength steels shipments and we see continued strong market for our products into automotive. And the investment programs in Luleå and Oxelösund continues and we are targeting their substantial benefits. We are eliminating all the CO2 emissions from operations. We are meeting the growing demand of emission free products and harvesting a green premium. We build systems with much more flexibility and lower costs and we can with these systems, new systems continue to grow the high strength steel and premium steels products. And this gives a lot of benefits compared to continue to invest in existing production. So with that Per.

Thank you, Martin. Thank you, Lena. And now we can prepare for the Q&A session. And just a reminder there, as usual, if you have more than one question, please take them one at a time to make the process work, run a bit smoother here. So then I will ask the operator, please present the instructions.

Thank you. To ask the question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again. We will now go to the first question. One moment please. And your first question comes from the line of Alan Gabrielle from Morgan Stanley. Please go ahead.

Good morning, team. I have two questions. I'll ask them one at a time. So the first one is on the aggregate capex guidance for 25 or at least indication of guidance in light of the spending that was put forward at ULEO. Do you see the case? And that's the first part of that question. And the second part of that question is that do you see a case for you spreading out the capex over a longer time period to avoid this recast block crunch should the current pricing environment persist? That's my first question. The

outlook we gave that was for this year, actually, it was not for the next year. We don't have the guidance for next year yet. Remains to be seen how it turns out. We will get back to that closer to end of this year. To bear in mind that the capex is restricted with the environmental permit that we haven't received yet and that is expected by the end of this year. And of course, the negotiations still with the OEMs ongoing. So remains to be seen how it will be spread. How it looks now, it seems that the peak of the capex will be taking place in 26 and 27. And of course, the funding plans we have ongoing, not yet finalized.

Thank you. Thank you. And my second question is probably for Martin on the US place market. Do you think that the market structure is changing at all in the Americas? And would it be fair to assume that the supply discipline that we have seen over the last few years is no longer there in light of a bit more aggressive competitors from within the US, but also from Canada?

I think structurally the place market in US is under supplied. And we need to remember that prices are coming down from very high levels. And when prices are coming down and they are still on good levels, prices are coming down. We see hesitations among steel service centers, I would say, especially. And that gives a lower apparent demand. And that's why we are then adjusting the production plan maintenance outage. Given the focus in US with the on-shoring, with the Inflation Reduction Act, with infrastructure bill, we see a very good possibilities and bright future for plate products within energy, within bridges, within tank cars, rail cars and so on. So we expect that Q3 is a bit slower. So yes, let's use that opportunity to do the maintenance and then be ready to kick off when the market turns.

Thank

you. Thank you. We will now take the next question from Adrian Gilani from ABJ Sundal Collier. Please go ahead.

Yes, hello. A couple of questions from my end as well. First off, in Europe, if we don't see any improvement in prices from the current, sort of very low levels that we're seeing right now, is there any risk that you might need to idle any of your blast furnaces? And is that an option that you are evaluating at the moment already? What

we have seen the last, I would say, couple of years is a better discipline within the European steel industry and we have been seeing idling of capacity when prices are at these levels or lower because you need to take into account the marginal cost of buying emission rights also for European producers. So one would expect if history repeats itself that we would see idling of blast furnaces. We have not been doing that and now we have reported the second quarter, of course, it remains to be seen how we come out in relative terms with peers. But I think with the strong growth in automotive and so on and the prospects we have, I think it needs to be a bit tougher than this if we are going to start to think about idling blast furnaces.

I understand. And then also when you say that 2026 and 2027 will be the peak capex years, is that also sort of including the raw head timeline or is that specifically just for the Luleå investment, just to be clear on that?

That's mainly and specifically for the Luleå investment.

Okay, thank you. Please more the profile, but we will come

back to that during the fall, I guess.

Yeah, I understand. And the final one from my end on the volume guidance in Americas. Obviously, whenever you guide for significantly lower, the question becomes that that can mean a lot of things. So should we expect slightly more than a 10% decline or can it be 15 to 20% lower? Can you give us some color on that?

No, but as we said, we have these references behind that table, but there is always significantly lower volumes when we take these semiannual outages. And this year it is within Americas and it was two years ago since we had it. So then we stopped production and do the maintenance and we felt that the market situation was better to do it in Q3 than Q4. So, yeah, look at the history and you see roughly how it looks.

Okay, that's clear. In that case, that's all from me. So thank you for taking my questions.

Thank you. Your next question comes on the line of Tom Schang from Barclays. Please go ahead.

Hi, morning. Thanks for taking our questions. Two from me as well, please. Again, just on Americas. The first one, if I look at the differences in your market outlooks versus Q1, slowdown in construction machinery in North America may change to me. Do you think that's just a bit of pre-election concerns, just something temporary or do you think it's the start of something slightly more structural? I guess we've heard some slightly mixed data, sort of a new start to leading indicators for US construction. Just curious on your thoughts there, please.

It's, of course, very hard to tell, but what we think is that it is temporarily and as I said, the Inflation Reduction Act and some other programs will definitely help the consumption, if you call it that, of heavy plate. And as I said, the market is structurally undersupplied. So it's probably a combination of lots of things, but I think we will see a rebound in that segment. That's my theory.

Understood. And then the second one, just on US energy. Could you maybe talk a bit around your market position in the context of traditional versus new energy? You've sort of mentioned, you know, wind is quite strong, but I think some of your competitors, particularly with some of the sort of thicker gauges of steel that you aren't able to produce, have better position in sort of offshore wind. I'm just curious if, you know, if we see a shift towards more traditional oil and gas investment in the US, is that a potential for you to sort of regain or gain market share or is it more sort of neutral?

Definitely a possibility, but what we see very strong demand is within wind utility poles and so on, but wind and the combination of our, with our SAB0 products makes a lot of sense. So we see wind fabricators very interested in using SAB0 when they produce these wind towers. So we see a strong demand and a huge interest and then offshore will eventually come on or big offshore projects. So that's also very positive. So wind, I would say, and energy is probably one of the segments where we see the best possibilities short and midterm. Got

it. Is there a significant difference in sort of mixed profitability between sort of your, you know, oil and gas plate and wind plate other than SAB0? Or is it the same thing?

Not any huge differences, no.

Understood. Thank you. I'll turn it back.

Thank you. Your next question comes from the line of Mavis Loon from BNP Paribas. Please go ahead. Hello Mavis, is your line on mute?

Hi, this is Tristan Gressler from BNP Paribas. Can you hear me well?

Yes. Yes.

My first question is a follow-up on the U.S. market. Some of you here yesterday have said that the outlook for plate may be improving into late 2024 with infrastructure picking up, wind picking up as well, and import quotas being going down. So is that a view you share as well, that Q4, we could finally see a rebound there? And could that also be the reason why you're advancing maintenance to Q3?

A very short answer to that question is yes.

All right. Thank you. And then on Europe, you mentioned that inventory appear normal and not particularly low. So does that mean you don't expect any type of restocking in September? And what should take on the quota change? Because there is the view that we could see lower imports, a bit of restocking that could be positive for European pricing momentum in September. No,

but when we guide, we don't expect any restocking in September among steel service centers. As you said, inventory levels in the supply chains are normal or slightly lower than normal. So we don't expect when we guide any restocking, if that would happen towards the end of the quarter, that would be, of course, positive.

All right. That's fair. And maybe a follow up on that. When you say you expect a seasonal downfall that is more pronounced than normal, when I look at the guidance you have on volumes, it seems pretty in line with typical Q3 maintenance quarter. So I'm wondering if there's anything additional we should expect there when it gets spread in Europe, they're relatively stable. Given the impact of really large maintenance, is there the possibility of any of the big three divisions approaching breakeven into Q3?

We had a little bit difficult to hear you there, Tristan, but I think your question boiled down to EBITDA result. And I think we will not comment so much, but of course the result will be clearly lower, of course, given the outlook and given the maintenance. I don't know, Lena, if you want to add something on the EBIT level.

That's a good summary.

Okay. Was there anything more, Tristan, in your question? We might have missed it.

No, my question was that you're saying there is a more pronounced downturn than normal. When I look at the guidance for volumes, it's pretty standard for Q3. So is there anything specific we need to be aware of? And is any of the big three division could approach breakeven into Q3?

No, I think the only, compared to previous year, is the difference with the Americas maintenance being more extensive. Also in case of Europe, of course, there will be more cost related and it will take longer time and then inventories will reduce during Q3. So there are these elements of the negative impact, but as I said, we don't give a guidance on the EBIT.

All right, I'll leave it there. Thank you.

Thank you. Your next question comes from the line of Dominic O'Kane from JP Morgan. Please go ahead.

Morning, guys. If I could just maybe dig into one of the previous questions. So as you said, the outlook for plate, US plate, may be improving into Q4 and you've accelerated maintenance in Q3 to position you for any cyclical upturn there for Q4. But we also note that you are you're running quite significantly higher capacity utilization in the US. So just thinking about your capacity utilization into Q4. At what point would we need to see a recovery in Q3 when you when you will start to bring back your utilization late Q3 or, or can you late? Can you wait until the start of Q4? If you could maybe just give us some sense on some capacity utilization trends Q3 versus Q4, that would be really helpful.

Oh, but you read the base plan is to do ramp start up the mill in Montpellier when the maintenance period is over, as we always do. And we typically if you compare us and maybe other producers, we typically run on a high and stable capacity utilization level.

Okay, so, okay, okay. Thank you. Thank you.

We will now take the next question. And the next question comes from one of the best answers in a go. It's from Deutsche Bank. Please go ahead.

Yeah, hey, good morning, everyone. I've got, I've got a few questions left and the system is just following up on the market and how you plan to navigate it. As we said, you're not planning to take out any blast furnace capacity as of yet. But I guess still from your comments, you seem to suggest that the market is all obviously very weak in many of the segments you're operating in. So do you plan to extend the maintenance breaks actually versus what your original plans were?

Well, I mean, that, of course, depends on the market development. But as I said, we don't if you look at the last couple of years, we have not been taking out any big production capacity. But you need to remember that we have one blast furnace either the Nookse de Zoon since many, many years. We don't plan to start that one either. So that is that one is will continue to be idle and then we'll see where the market takes us. But if you look at the pattern from previous from twenty three and twenty two, you see that there will there was capacity closures in in in Europe. And but we did not have to take down any blast furnaces. And in the current plans, we are not planning to do that either.

OK, understood. OK. And then my second question is just on your margin trajectory, actually, particularly in special steel, I guess margins have been coming down. But if we look at them on a long term comparison, they still remain very strong about like three to four times, literally versus pre covid levels, which is obviously very, very impressive. Martin, do you expect to to keep that mean reversion trend over the next three quarters, i.e. are these margins still probably a little bit higher versus maybe where they should be at this point of the cycle, i.e. there's still a certain lagging effect of them maybe going a little bit back to where they previously were. Or do you think that you can pretty much preserve them right here where they are just now?

I must say that Johnny and his team, especially if they have done a very good job in keeping prices stable and rather than maybe sacrifice some volumes in the swings. But they have also been quite good at continuing to develop new products, new steel grades. And if you take some of the products that are now growing on the market with interesting, I would say possibilities both volume wise and profit wise. So it is about continue to run the operations and the division as they have been doing with focus on price stability or margin stability, but also continue to grow the new products. And there is a difference. I mean, it's easy to think that special steel is a set of products, but there is definitely mixed possibilities and mixed improvements being done day by day in special steel. So if you take the most quality advanced products and compare it within special steels with the products that are at least compared to the most advanced ones, less advanced, there is also a huge difference. So it's a combination of price management, volume management and mixed improvement that should give this stability and have the possibility to continue to have better and better stability. So we are focusing and we have talked about it a lot before. We are focusing a lot on what we call low point profit so that we come out of the trough of the cycle with better profitability than the previous trough. And of course, it's always nice to earn money on the top of the cycle, but the focus internally is to low point profitability and that we try to manage with things that we can control ourselves. Mixed improvements both in special steels, of course, and in Europe, but also in America's flexibility when it comes to costs and some other measures. And that should improve then the stability over time. And that is a very strong focus area. And then, of course, on top of that, continuous improvements day by day, week by week, month by month.

Okay. I mean, of course, I do believe that like you have done a lot of structural changes there. I guess just it's more the magnitude I'm wondering about, which is like still pretty much close to peak levels, 6,000 sec per ton every day. So it's a very impressive number. And so here I'm just wondering, is this really the right new normal to think about or how to likely... If

you look at the product portfolio today and compare it to, call it then pre-COVID, because COVID was a number of years back now, there is a different product portfolio. And the question then is, are we done? Of course not. This is a daily work, weekly work, monthly work. So there is still more room for improvement. So I would expect to see stability, better stability than we have seen historically.

Okay. Okay. And then my last question is probably one for Lina. You mentioned working capital that you probably have stocked a little bit ahead of the maintenance breaks. So any color you could give us maybe on the magnitude of the working capital release in the third quarter, which we should expect?

Well, I don't have a figure to give, but of course, everybody understands that when the production is lower and then we continue, of course, with the shipments still during Q3, there will be a negative impact from the inventories at least. At the same time during Q3, we also start some of the winter stocking activities. So you will see movement in the AP also on the other direction, but inventories should then come down with the maintenance allergies ongoing.

Do you think the net effect on working capital will still be a positive cash inflow in the third quarter?

That will be a challenge. Let's see.

Okay. All right. Thank you.

Thank you. Your next question comes from the line of Tommaso Costello from Jeffreys. Please go ahead.

Yes. Good morning and thanks for taking my question. I actually have two. The first one is more a clarifying question, and it's about your advanced high strength steel products. Which I thought were falling under the special steel division, but then in your commentary, I see that they appear within the European division. Could you just like give me a brief explanation on why is that, whether we should consider it belonging to the European division rather than the special steel one?

Then I apologize for us having been unclear. The automotive grades, which is typically cold rolled grades, have always been within the SSAB Europe division. Some of the products, if you take the cold rolled martensitic steels up to 2000 megapascal, I would say that we are very, very unique globally in those martensitic steel grades for cold forming. But they have always been within SSAB Europe. So special steels, they have, call it then, within brackets, hot rolls above 700 megapascal. But these products are cold rolled and they are run mainly in the continuous annealing line in Borlänge and sold globally by SSAB Europe. Has always been and are still today.

Okay, thanks. That's very clear now. And then maybe, and I'm sorry if you've already touched on that, but speaking of your maintenance, the brink four of your maintenance, should we think of it more as an economic downturn, downtime or a reduced production to align with demand?

No, unfortunately, we, as everyone else, have to take annual maintenance outages. Before we had to schedule it more than a year in advance and then stick to the plan. We have been working a lot with improving flexibility so we can manage on the margin given the business cycle. So sometimes we expect Q4 to be slower than Q3, then we try to push as much as possible into Q4 and vice versa. Like this year, we expect Q3 to be a bit slower than Q4 with the possibility of a rebound. Then we push it into Q3. Having said that, I mean, what limits us in flexibility is, of course, the climate in the northern Sweden and northern Finland. So we can't typically stand still in December when it could be very, very cold. So then we need to do it in earlier in Q4 or during Q3. But historically, we have always done it in Q3. But now we have the possibility, we have improved the flexibility, so we have the possibility to do it in Q3, Q4. And in America, where we expect a slower Q3 than in Q2, we pushed it into fully into Q3. So we start earlier.

That's great, thanks and have a nice day. Thank you.

Thank you. As a reminder, if you would like to ask a question, please press star 1 and 1 on your telephone. We will now go to the next question. And your next question comes from the line of Maxime Cogge from OdoBHF. Please go ahead.

Yeah, good morning. Also, my first question is on the auto market. I mean, production forecasts have been significantly lowered over the past few months, especially in Europe, which is now seen down around 5% versus, yeah, broadly flat at the beginning of the year. So is this something you are also witnessing, I mean, strong deterioration in the auto market over the recent months, or are you, I mean, given your client mix, you're not that much affected?

No, but I mean, we see that on the overall market. I mean, as you know, the two big segments for steel in Europe is construction and automotive. And construction is very weak and automotive, we see those signals. But we only sell or mainly sell these advanced high strength steel, so the ultra high strength steels into the automotive market. So we are given the product properties with up to 2000 megapascal cold forming steel and also ramping up on new platforms in advance of being able to start to ship the bigger volumes of fossil free steel. So we are in those segments with those products, definitely taking market shares.

And yes, the question is on the import pressure in the US. Some of your competitors have flagged the, I mean, higher import pressure through Mexico, through Canada. Is that something that is also much more present in 2024 than it was for plates and also for special steels in the US?

For plates, I mean, we are the leading standard plate producers. Of course, we see exactly what the others see on the US plate market. For special steels and for especially hardox, I mean, many of our products are quite unique. So even if you can see some competitors producing quench and temper, they are different products. Maybe 400 megapascal Brinell or maybe up to 450, but not 500 and above. So we don't see for special steels a huge difference.

Okay. And the last one, more generally speaking, with a slightly higher capex budget this year, a weaker economic environment, is it fair to say that the possibility of share buybacks has slightly or somewhat slided versus the situation a few months ago? No,

but as Lena pointed out, we have our financial targets and we expect to stick with them within them. Of the Q2, we were slightly above or had a slightly stronger balance sheet than the financial target. But so, I mean, we'll see what the future brings, but we are committed to stay within our financial targets.

Okay. Thank you.

Thank you. Your next question comes from the line of Mavis Lu from BNP Paribas. Please go ahead.

Yes, sorry. It's still Tristan Gresh from BNP Buybacks. A quick follow up on SSAB0. I think you did 40,000 ton in Q2. That's almost double the number you had in Q1 and you had a target for 100,000 ton for the year. So, are you seeing momentum building up there and there's upside risk to that target? And if you could remind us where those SSAB cells are made, where is the most interest and if you can confirm also that the premium you previously communicated for those type of product is still valid?

Yeah, I think Tristan, you were asking about SSAB0 and the target of 100,000 where we are. Are we a bit above that? And also the premium. Do we still harvest the 300 euro premium? Yes,

we do. And I don't know exactly how we are right now against the target, but the target is still there and I'm convinced that we will meet it for this year.

So, you would expect a slowdown in the run rate from the Q2 run rate in H2?

Yeah, the production will differ a bit between quarters due to the way we have to set up the production. So, yes, it can vary a bit.

Okay, that's clear. And lastly, just a quick one. In the US, are you still engaging with the DOE regarding the funding for potential DRI HPI plan?

Any update

there? As

I said last time, very positive things. So, we are in those discussions and we see a big interest for our types of steel in the future and a lot of US customers focusing on more environmental friendly products. So, nothing has changed. Okay,

thank you.

Thank you. Your next question comes from the line of Dominic O'Kane from JP Morgan. Please go ahead.

Good morning guys. Just two follow up questions. On CAPEX, will the power line at Oxelosund fall into 2025 or is there potential that it might fall within 2024? And then just a comment on the US steel plate market given your leading position. Could you give us some sense of what you're hearing or seeing on downstream demand against a backdrop of rising risks of offshore wind cancellations under a Trump administration? Thank you very much.

What's the first question?

The first question was, CAPEX, as we haven't really talked so much about the power line, could the CAPEX for that one start already this year or is it next year? I think very

limited if it would be landing for this year. Mostly for next year probably. More in future. The

second one was on the US plate market and the risks of cancellations and offshore wind. What could that mean for overall demand?

That remains to be seen, but we see a huge interest from on and offshore winds and especially with the combination as said with SAB0. It makes a lot of sense for these, the investors or the ones building these wind farms to use SAB0. So we see a strong interest. Then if that will be delayed or not in the future, we'll have to see them. But so far there is a lot of projects out there or being planned for. So we are quite optimistic. Okay, thank you.

Thank you. There are currently no further questions. I will hand the call back to the room.

Okay, thank you very much. Thank you, Martin, Elena. Thank you all participants. We can then conclude the conference for today and wish you a nice

day. And a nice summer. Thank you.

Thank you. Bye bye.