SSAB Ab

Good morning and welcome to this presentation of the SSAB report for the first quarter of 2025. My name is Per Hillström. I'm head of investor relations at SSAB. And presenting today, we have our president and CEO, Jonny Sjöström, and also our CFO, Lena Krejelius. And if we go to the agenda... Could we, I'm just asking now the operator to please, if we can have the slides. Yes, thank you. And again, that for today, Jonny will start with the first quarter in brief. Lena then presents more details on the financials. And then Jonny comes back at the end with the outlook and the summary. And after that, we will open up for questions. So please, Jonny, the floor is yours.

Thank you very much, Per, and good morning to all of you. I will start by going into the highlights of Q1. And within SSAB, safety is a priority, hence the reason why we always start with safety. Looking at our safety performance, it is on a good level, touch wood, and it continues to be a high focus area for all our employees. So that's a very strong highlight for the quarter. Now looking at the financial performance, looking at the operating results, we ended up on an expected level of 1.3 billion roughly. I think one of those highlights is actually Special Steel's performance. They bounce back when it comes to volumes, but at the same time, they're able to maintain prices all the way through Q4 last year, but also Q1 this year. We've also seen sort of a recovery on the American market, and I will get back to that later on in the presentation. The topic on everyone's lips right now is the tariffs. I think it's important for us to try to explain our production footprint. And we have roughly 2.4 million metric tons of production capacity in the United States. And we are a market leader when it comes to plate deliveries, which means that we're not importing as much into united states or exporting from the nordics that gives us flexibility and i think that's important to highlight um however of course tariffs is not something that we'd like to see we're very dependent on exports uh we're dependent on free trade and fair trade uh so for us it is a worrying sign of course and long term we don't know what the consequences will be but short term we have the flexibility to do production locally in the United States. I started off talking about one of the highlights for the quarter was Special Steel's performance. We increased our sales in Q1 to roughly 336,000 tons. It is a fairly good performance, also in line with our expectations. And the financial performance was roughly 1.4 billion. So in line with our expectations, but it shows the unique customer value that specialties are able to supply into the market and that the market is willing to pay a premium for these kind of products. One of the things that I also want to highlight is that a decision was made by the board to continue the transformation of the mobile production facility into a more special steel production facility. So an investment of a tempering furnace was approved, which is very important for us in order to produce the most advanced grades we have within special steel. One of those grades are Hardox 500 Tough, that we see a very high demand for. Looking at SSAB Europe, I think that the volume output for Q1 was fairly good, also an increase compared to Q4. We have seen that the market is stabilizing somewhat in Europe, coming from a lower position. but it's sort of in line with our expectations. And the operating result ended up at 33 million, which is maybe a little bit in line with what we expected, but also one of the things I want to point out that there was a strike in Finland that ended up at the cost of roughly 120 million. So the financial performance could have been better if it wasn't for that strike. Now, if you look at SSAB Americas, we had a positive delivery month. I think one of the most important things is that we had a very good order intake in the quarter Q1, and we could also see prices improve on the market. So the way it works for us is that we have quarterly, we have half-year contracts, and we have some spot market sales, but the the price increase will come gradually for SSAB Americas going forward. And that can also be reflected in the Q1 operating result for Americas that we haven't seen much of the price increase yet, but we're expecting that to come in Q2 and Q3 going forward. Then for the two subsidiaries, our two subsidiaries are seasonally low. It's always been like that. They don't sell as much during the winter season, but we're expecting that to improve. Even so, I think that they came up on a fairly good level. The operating result for Team Nord was roughly 35 million, so that's good. And now looking at rookie construction... had a better q125 compared to q124 and they've done a lot of activities to improve their cost structure so i'm optimistic for the future in that regard And also short transformation update. So we're finalizing sort of the agreement on the cold meal complex together with SMS. The cold meal complex includes continuous galvanizing line, a pickling line, and also continuous annealing line. This is extremely important for SSAB, especially to provide the market with unique grades that primarily will go into the automotive industry. There is a big demand for these kind of products, hence this will be extremely important for us going forward to reposition SSAB Europe to be more of a premium supplier into the market. We also have some new partners when it comes to fossil-free, Toyota Material Handling, Fastly and Putzmeister. I'm very happy to see that there is still a big demand for these kind of products and a big interest from the market and our progression when it comes to this transformation project. And then finally, at the end, we also secured a financing package of 2.3 billion. A job well done by the team. And with that, I'll leave it over to you, Lena.

Thank you, Jonny. Let's start by looking at the steel shipment volumes. Q1 shipments were 1,676, which was then increased compared to previous quarter of 16%. As already Jonny mentioned, this is typical seasonal impact as well. And to bear in mind that in Q4, we do have the annual maintenance outages that took place in Oksalosun and Raahe last year. And if we compare to previous year, quarter one performance, the increase in shipments was 6%. And then referring to the guidance we gave during Q4, we were indicating significantly higher volumes in special steels and Europe division, and we were actually spot on. As you already saw, special steels deliveries were 29% higher and Europe 18% higher. And we were guiding somewhat higher volumes in Americas, and the outcome was the 4%, so that was also well in line with the outlook we gave. If we then continue to revenue performance, Q1 revenue was 25.5 billion. Compared to previous quarter, the increase is 8%. And while the shipments went up 16% and revenue only 8%, it is indicating that the prices were lower in Q1 compared to Q4. And then compared to previous year Q1, the drop in revenue was actually 6%. And while the shipments went up the 6%, this is also telling the same story about the price development, that the prices are clearly lower during this year compared to previous year. EBITDA performance Q1 2.4, which is an increase versus Q4 1.6, but a drop compared to previous year quarter one performance of 4.1. But let us dive into more detailed analysis. Firstly, we are comparing the operating result of Q1-25 with the Q4. The operating result in Q1 was this rounded up to 1.4 perhaps. And then compared to Q4, the performance was 487 million. Difference is up and down, but as the graph is illustrating, the volumes were compensating for the price reduction. All the steel divisions were contributing with the negative impact on EBIT with prices, and perhaps to point out that we also have an FX impact in the prices, giving a bit more negative twist there. Volumes, as already said, increasing compared to Q4. all the divisions contributing, mostly now Special Steel and Europe division. Variable cost had a negative impact, and this is coming through Special Steel and Europe division. On the other hand, fixed costs were lower. As I already mentioned, during Q4, we do have the maintenance audits, that we didn't have any maintenance outages during Q1. Thus, the fixed cost is also on a lower level, and this is coming through mainly with special steels and Europe division. As is the capacity utilization also higher with no maintenance outages during Q1. So most of this is related to special steels and Europe division. And a minor FX impact with revaluation of balance sheet items. Then if we compare the operating result Q1 with the previous year, Last year, Q1 performance was 3.2 billion. And as the graph is illustrating, clearly the biggest impact is coming through with lower prices. And the biggest portion here is coming through America's division, where the prices were 25% lower. Thus, 1.5 billion of this is coming through America's. Special steel division prices were 5% lower, so much more resilient, and Europe division was 7% lower. Volumes higher than last year. Here all the steel divisions have a positive impact, but as also Jonny mentioned, ruukki construction volumes were higher than last year. Variable costs, here we have a positive impact with lower raw material costs that I will cover shortly. Fixed cost higher than last year, and this is related to somewhat higher FTEs and personal related costs. We have the salary index increase impact here. And the capacity utilization compared to last year, slightly better. And I would say that one issue here to take into account is the political strike we had last year in Finland. We had strike also, unfortunately, this year, but the strike was shorter in time, thus having less impact in the production volumes. And a minor positive impact with the FX. If we then walk through the cash flow generation performance during Q1, as we can see, the net cash flow difference compared to last year is 1.2 billion lower. Clearly, the biggest deviation compared to last year is with the earnings level being 1.8 billion lower. Change in working capital, as we were guiding or indicating during the previous webcast, that the change in working capital will behave negatively, as it did. Inventories actually came slightly down. Accounts receivable in line with the sales went up. But the biggest drop actually took place in accounts payable. As we were mentioning, the large raw material invoices being paid out during Q1. and the deviation compared to previous year is exactly in the accounts payable. Some lower maintenance capex during this year compared to previous year, but on the other hand, the strategic investments were slightly higher than last year. The acquisition of operations, this is now related to the acquisition done in US, the plastic operations. And the divestment of operation is related to Vilsbo entity sale. And both of these transactions took place in special steel division. A brief reminder of last year's share buyback program that was still ongoing during Q1. This year, we have not had the share buyback program ongoing. Then this is leading to net cash position, end of Q1, 14.4 billion. A drop compared to end of last year, level of 17.8. 2 billion difference is coming through the cash flow performance as illustrated in the previous graph. And then on top of this, we need to mention this 1.4 billion revaluation of balance sheet items and the stronger Swedish crown impact on the mainly US dollar cash items. This is leading to net cash ratio 21, which is exceeding slightly our financial targets, plus minus 20%. And as already mentioned, we were extremely pleased that we were finalizing the financing package for Luleå Minimill project. I must mention that the package is extremely flexible of nature, thus allowing us to optimize our own cash utilization, but also securing the smooth flow. project implementation. And perhaps a special thank you for the Credit Agricole and CASIP team working with us. They have been truly supportive in this process. So thank you for that. CAPEX outlook unchanged. This is exactly the same that we presented last time. We are still planning to spend 10 billion during this year, three for the maintenance and seven for the strategic CAPEX. If we split this seven to pro-techs, slightly above two billion is related to Oxelösund, just below four, planned for Luleå investment. And then, as Jonny already mentioned, we have other smaller strategic investments, so one billion from this is reserved for that. And the estimated peak in CAPEX outlook expected still to take place 26 and 27. Then briefly looking at the raw materials, iron ore, coking coal, both have developed downwards compared to previous year, as the graph is illustrating. If we compare quarter on quarter during Q4 and Q1, on average level, iron ore has been rather stable, coking coal coming slightly down. So if we estimate the raw material consumption cost for our Nordic mills, those are expected to be relatively stable. As you can see, the graph illustrating the scrap price in the US, the price went up during Q1 compared to Q4 level. That was squeezing the margins in the US mills, but the expectation is hopefully it will remain more stable going forward, and we saw already some downward trend in April. Maintenance cost table, this we have only slightly adjusted since last time we illustrated. Nor will we have during Q2. We will have some in Q3, but the majority of the maintenance is happening during Q4. With that, I let Jonny to continue with the outlook.