SSAB AB (publ)

to this presentation of the SSABQ3 report. My name is Per Hillström. I'm responsible for investor relations. And presenting today, we have our president and CEO, Jonny Sjöström, and our CFO, Lena Kraelius. And as you might notice, we have no video today. We are in a temporary office, so we don't have the normal studio. But again, that will be as usual. Jonny will start with the quarter. And then a deep dive into the financials with Lena. And then Johnny comes back with outlook and a summary. And there will be time also, of course, for questions at the end. So by that, please, Johnny, begin.

Good morning also from me. Start by summarizing the highlights from the Q3 report. I would like to emphasize the safety performance that we have within SSAB and also the safety culture that we've implemented. We continue to reduce the number of lost time injuries in the company in our journey to become the safest steel company in the world. I'm very proud of the level we are right now and we have ambitions to continue this development. Now, moving over to our operating results, I think the Q3 came out on a quite stable level. It has been a challenging market, not only geopolitically, but also the market conditions in Europe have been quite challenging. And even so, we still performed according to the expectations. And that's something that I think that we should take some pride of. I think the differences compared to last year was that the Americas contributed with a higher profitability compared to Q3 2024. Now, looking at the cash flow improvement, we can see that the Q3 this year was a stable quarter also from a cash flow perspective, came in on a decent level. If you can see the picture to the right, you see a shovel with two signatures on it. One is my signature, the other is from one of our ministers. Deputy Prime Minister of Sweden, Ebba Busch, when we had the groundbreaking ceremony in Luleå. That was quite a successful event. Also bringing all the stakeholders together, so that's a starting point for the investment in Luleå. Then moving over to our divisions and having a look at our Special Steel Division. The shipments came out slightly lower than we expected. But even so, I think that the prices maintained or remained on a good level. And the operating margin came out on a stable and decent level, 22%. And looking at the financial performance, even though the shipments were slightly lower, the financial result of roughly 1.4 billion shows resilience in a very challenging market. Looking at SSAB Europe, I have to remind you that we had a maintenance outage in major parts of the organization in Europe. Hence, pushing the profitability down, also the shipments were slightly lower, mainly due to the fact that we did have the outage. But even though I would say that comparably it was a decent quarter and came out on expectations, Like I said, the situation would have been better if it wasn't for the outage. I think the positive is that we maintain prices slightly better than Q2. And if we can continue to do that, I think that's a very good performance by the SSAB Europe organization. Looking at SSAB Americas, shipments here also came out on a slightly lower level. There has been some uncertainties now regarding the tariffs and what's going on in the USA market. I have to remind you that we are one of the largest plate producers on the US market. And the tariffs would limit the competition. But we can also have a negative impact on the demand side. Having said that, I have to say that the operating result for Q3 from our American division came out on a sort of expected level, where also here the prices were maintained on a stable level. I also have to remind you that if you compare to Q3 last year, we had a maintenance outage in Montpelier Q3 last year that brought down the financial performance. Having said that, I still think that the Q3 performance this year was stable and according to expectations. If we look at the two subsidiaries that we have, starting with Tibnor, I know that the market conditions in the Nordics are quite challenging. We haven't really seen the pickup as we were hoping for. The construction segment has maintained or remained on a lower level. We have seen some signals that the market might improve, the construction segment. But that would more likely be in next year. So as you can see, the ship mass came out lower than we expected and also lower than Q3 last year. The operating result also came out on a sort of a a lower level. Of course, the shipments had a big impact on the operating result. Looking at rookie construction, the revenue were slightly higher than they were Q2 2025. And the operating results came out also on a sort of an expected level of roughly 80 million Swedish kronor for the quarter of Q3. Yes, another update I'd like to do. I think the picture you can see to the right is from Oxosun. Here we can see how the electric arc furnace, this is the building, how that's progressing. And the progress is really good. It's progressing according to our plan. Having said that, I just want to also highlight that the production startup will be in Q1, early Q1 2027, which is a slight delay compared to what we have communicated in the past. That is only related to the power line and the power grid. So it has nothing to do with our own performance. It's more an external factor that we cannot impact. One of the highlights regarding transformation, also going in this green transformation journey, we became, our SSA, we became the first state in the world to meet an international energy agency threshold for near-zero emissions. and the first Mover Coalition's criteria. So this SSAB Zero product that we have actually met these criteria way before everyone actually could think it was possible. I think that's a good prestige for us. And these products were made partly by hydrogen reduced sponge iron. and also using scrap and also using the hybrid technology in the sponge iron that we produced. This product will be used in Givernova's onshore wind turbine towers. And last but not least also the luteum in mill project is proceeding according to plan and I already mentioned so the groundbreaking ceremony. That was it from me, now moving over to you, Lena.

Thank you, Jonny. Let us start by looking at the steel shipments first. That's on the graph on the top right-hand side. The outcome Q3 was 1,466 kilotons, and compared to Q2, that is a reduction of 14%. But then compared to previous year, third quarter, shipments were fairly stable, some nine kilotons higher this year compared to last year. And as the graph is illustrating, Q3 and Q4 tend to be lower. seasonally than the first and the second quarter. If we do a quick comparison versus the outlook we gave, special steel shipments we were indicating to be lower, which means 5-10% lower, and the outcome was just below that with 11%. Europe division, we were indicating to be significantly lower, and that's meaning over 10%, and the outcome was in line with 18% lower shipments. And then Americas, we were indicating to be somewhat lower, which means up to 5% reduction, and the outcome was below that with 10%. and to keep in mind that we did have the maintenance outages in the Nordic mills during the quarter. If we then move to revenue graph, you can see that the outcome Q3 was just below 23 billion. Compared to previous quarter, the reduction is 2.7 billion, and compared to previous year Q3, the reduction is 1.4 billion. And a similar comparison with the prices outlook we gave. We were indicating Special Steel Division and Europe Division to be stable in prices, and they were actually slightly better, 1-2% higher compared to previous quarter. And then in Americas, we were guiding higher prices, 5% to 10%, and the outcome was below that with only 1% increase. And as Jonny already mentioned, the market conditions having impact on that. EBITDA performance Q3 at 2.9 billion, reduction versus previous quarter of 3.2 billion, but improvement compared to previous year Q3, which was 2.3. And in relative terms, if we do the comparison of Q3 versus previous year, last year the margin was 9.5%, while this year it was better on a level of 12.6%. So, improvement. And if we continue with more detailed analysis of the quarters. Firstly, we compare the operating result, Q3 versus previous quarter. Outcome in Q3 was 1.9 billion. The second quarter was 2.1, and here we have a positive and negative impact, if we start analysing the prices. Biggest contribution coming from Europe division, 570 million, followed by Special Steel division, 110 million. Both of these were supported with the good premium mix. And then America's also positive impact of 85 million. So the total impact of prices to the result is this 765. To mention, Tipnu and Rukki construction prices were flat quarter on quarter. If we then continue to analyze the volume impact, total impact was this 915 million SEK. I already mentioned the shipments were lower, 14% lower, quarter on quarter. Biggest contribution here coming from Europe division, where volumes were 158 kilotons lower. America's 47 and Special Steel's 36 kilotons lower. And already shown previously in the graphs, rookie construction had seasonally higher sales volumes. and Tipno had lower sales volumes. Then if we have a look at the variable cost, the net impact on the result was negative 305. We know that the raw material cost did come down in iron ore, coking coal and scrap, But this is also including the change in inventory impact. And previous quarter, we had higher positive impact than this quarter. Thus, the BRITS analysis shows a negative trend here. Fixed cost. In the fixed cost, we were lower. This is typical seasonally lower fixed cost due to summer period, but we also had some saving activities taking place during the quarter. Capacity utilization, negative impact of 390. And the majority of this is related to the maintenance outages during Q3. We didn't have any during Q2. If we do the comparison now against the previous year quarter, outcome last year being 1.2 compared to 1.9 this year. Starting with prices, the total negative net impact 790. Prices were on average 7% lower than last year. Both Special Steel and Europe division having a negative impact. Special Steel division with 490. Europe division 470, while Americas had a positive impact here around 200 million. To point out that here we have a rather large impact of the FX, total negative impact of 560 million. So the currency definitely had an impact in this analysis. However, that is compensated almost fully by the lower variable cost, and the FX impact there is a positive around half a billion. On top of that, we have lower raw material cost, and if we split this variable cost positive impact per division, Special Steel Division is contributing most with 645 million, Europe 510, and America's 490. But majority of this 490 is actually related to the maintenance cost that took place last year that we didn't have during this year. Fixed cost slightly higher than last year. To mention that last year we had the full profit sharing provision reversal done during Q3, which we didn't have this year. We only took part of that reversal this year. And then the capacity utilization. We have a positive impact of 105. Last year, we had more maintenance outages. We had outages in Montpellier mill, and also Luuleo had more extensive maintenance outages last year. If we then continue to look at the cash flow, Already mentioned that we had a positive operating cash flow as well as net cash flow. Quarterly comparison year over year, EBITDA on a higher level. Change in working capital both quarters this year and last year having a positive impact. Maintenance expenditures a bit higher than last year. And to remind that the other line here is related to the CO2 emission swap transactions. We had also these transactions during third quarter as we did last year. And then if we look further down at the investments when it comes to strategic projects, we can see that a bit more than one billion increase compared to last year. And majority of this is related to Luleå Minimill. And as Jonny mentioned, the construction phase has now started. And this is leading to net cash position of 10.8 billion. This is very stable compared to previous quarter, which was 10.9 billion, and thus the net gearing on exactly the same level last quarter as end of Q3, being within our financial targets, and the outcome was minus 16%. Raw material prices, as the graph is illustrating, have come down compared to last year. Iron ore reduction quarter over quarter was 10% and even a bit more compared to previous year. While the coking coal prices have been a bit more stable quarter on quarter, but when comparing last year level, it's more than 20% reduction in the prices. Scrap prices in the US have been more stable than the other raw materials, quarter on quarter rather stable, but slightly below previous year level. And the outlook is that the Nordic mills will still get some benefit from the lower raw material consumption cost during Q4. And we expect that the scrap prices would remain rather stable also during the coming quarter. Maintenance table. This we have updated slightly since last time we showed this. Last time it was 1,570 million, while now it's 1,530 million. And as the table is illustrating, Q3, we had the maintenance impacting our production volumes and the cost, and even more so during Q4, when we have more maintenance taking place during the quarter. And the CAPEX guidance, we have not changed. We still plan to spend 10 billion during the year, three of that related to maintenance CAPEX and seven related to the strategic CAPEX. And with this, I give it back to Jonny.

Thank you very much, Lena. So looking forward a little bit, the outlook, If we have a segment approach to this, and we start by looking at heavy transport, the situation is still on a lower level, but it's planned to maintain neutral on a lower level. We've heard announcements from several large heavy truck producers in Europe. They claim that it's slowing down, but on the other side, we also see that segments such as shipbuilding is strengthening, not only in Europe, but also in the United States, and also rail transport. That's compensating a little bit for the lower demand for heavy trucks. Looking at automotive, there are mixed signals. We have seen Volkswagen announced that their sales have dropped the United States and then China. But on the other hand, it's increased by 9% in Europe. So that is sort of a signal that Europe might be sort of have hit the lowest and now it's on its way up. So that's what we're hoping for going forward. Looking at construction machinery, there's a soft demand in Europe. And I think that for Q4 is probably going to maintain soft according to the forecast that we have. Look at material handling, which is very much related to the mining industry, has been sort of on a higher level now driven by high gold prices. New mines are opening up, etc. We see more activity in the mining, but for Q4 we believe it's going to maintain stable on a high level. Energy, we see that there's still a good demand for energy transmission. I would say that both in Europe and United States. We've had a lot of activities in the oil and gas in the United States, so we believe that's going to be between strong and neutral for the energy segment. Construction segment still is on a low level of activity. There are some signs and signals that things might change, but it's too early to say. But we're hoping that that will be the case. And then service centers, depending on where you are geographically, but in Europe, we believe that service centers are beginning to buy a little bit more. um especially now be trying to be one step ahead of what's going to happen to see them and and another protective mechanism that's going to happen in europe while we see on the other hand in in the united states it's actually more or less the other way around The outlook that we have communicated is that the ship mass of special steel is going to be slightly lower. That's typically seasonal effect, but prices are going to remain the same. If you look at SSAB Europe now, considering that they did have a maintenance outage in Q3, we believe that the volumes are going to be higher. We also have a maintenance outage in special steel, which is also consequently will give a negative impact on the shipments. And then for SSAB Americas, we also foresee that's going to be somewhat lower shipments as well as prices. So to summarize, I think that we had a better result in cash flow compared to last year. We have a very strong focus on safety and that consequently have also given us a better loss time injury frequency. Stable earnings on a good level for special steels, which is very important for us and the journey that we have going into more special products. And the transformation projects are progressing according to plan. And also that we have planned maintenance both in North America as well as in Europe in Q4. That's going to have a negative impact on our financial performance for Q4. I think that was it, Per. So maybe I'll leave it over to you then.

So sorry, we can just remind on the Capital Markets Day on the 4th of November. It's not too late to register. So you're much welcome to join. full day in oxen and you will find more more details in the registration form there so by that we can move into the q a and before we open up for question just in order now to let as many as possible to ask a question we can limit the number of questions to two in the first round And as usual, please state your questions one at a time to make the process run smoother. So by that, operator, please present the instructions for the Q&A.

Thank you, Per. To ask a 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 our first question. One moment, please. And your first question today comes from the line of Caleb Solomon from SEB. Please go ahead.

Hi, thank you. To start off, maybe regarding the two billion of capex related to the power line, I know you've mentioned before that there will be cost that sort of comes on top of the 6 billion for the electric arc furnace. But I think this is the first time you put the figure on it. So could you just give us some color on how much of that 2 billion is already baked into the CapEx figure for 2025? And how much of it will we see next year?

I can comment on how much of that is now in the figures of 2025. So far, we have paid around 700 million of that total. And the rest, of course, remains to be paid during coming years.

Okay, thank you. That's clear. And on SAB Europe, can you maybe give us a rough figure of how much the sort of staffing and production related cost measures contributed to Q3 results and what sort of measures or impact, if any, should we expect in Q4?

We have started in Europe division so-called flexible saving actions. We have had this time banks in use both in Sweden and Finland. And to give a rough estimate, I would say that during Q3, there was around 100 million SEK of savings.

And will that be similar in Q4 or...

During Q4, of course, we are monitoring the market situation. And of course, we continue with these flexible man-hour activities if needed. However, we do have also a lot of maintenance activities that we need to implement. So difficult to give a figure for the saving targets. But the good thing is that we have the flexibility that we can utilize when we need it.

Okay, that was two questions, so I'll get back in line. Thank you.

Thank you. Thank you. Your next question today comes from the line of Anders Akerblom from Nordea. Please go ahead.

Thank you, Jonny, Lena, Per. Good morning. So firstly, just wondering about shipment growth in Europe now in Q4. I mean, obviously, this kind of breaks from the past few years' sequential trend. So I guess, should one interpret this as you becoming incrementally more positive also for 2026 with regards to these recent regulations? And it would be interesting to hear how you view this, particularly from the perspective of prices as well, what your current kind of view and assessment is.

So good morning, Anders. This is Jono. Yes. Europe has been under pressure with low imports for quite some time. We see some signals now that the C-band will have an impact. We've also heard the European Commission communicating safeguards. I think the analysts are forecasting that this will have a positive impact on the utilization of the European mills. It will most likely also have a positive impact on the prices. But that's pretty much all I can say for the time being.

Yeah, fair enough. I appreciate that it's difficult to assess today. Thank you. And second question, just, I mean, with regards to one of your competitors in green steel, kind of looking to become insolvent in the coming months, if one is to trust the media reports, at least. Do you see this presenting any interesting opportunities for SSAB in any regard?

I think our focus is mainly on our transformation that we're doing in Luleå and Oxelösund. That is where our main focus is. We're going to make sure that we will have added capacity to produce the unique products that we are really good at and continue our position on the market. And what's happening to Stegra is remaining to see. So that's all I can comment for the time being.

All right. Thank you, Jonny. I'll leave it back. Have a good day. Thank you.

Likewise.

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

Yes, morning, thanks very much for taking your questions, two from me as well. First one, just on the European pricing guide, I mean, you know, I recognize there's sort of lags in the contracts and spot pricing was weak through, you know, May to June, but I guess spot pricing has come up since then. Could you maybe give us a bit of color on why the guide is for lower pricing? I mean, is there much mixed impact that's being baked in there? Yeah, any color around that would be helpful, please.

So in this case, we're guiding for Q4. And most of the orders for Q4 we've already taken. And you're right, there is a mix effect. Yes, that's all I can say about it.

Okay, fair enough. And maybe just to follow up very quickly on that mix effect, I mean, is that a sort of Q4 specific thing? Is this just a normalization in mix? How do we think about that mix impact kind of going into 2026? Is Q4 sort of one-off?

Yeah, I think that Q4 maybe is a little bit of a one-off, just like you said. But I think on the positive side, we have not taken any spot business this year or we are in a much more stable position than we have been in the past. We are optimistic for Q1. A lot of, you know, wins are going in our direction. So I think... And that goes for the whole steel industry. They're quite positive for Q1. So then you could draw your own conclusions.

Fair enough. And the second one, maybe, because it's just on the U.S. plate market. I guess you've got it at a slightly lower pricing, again, from a sort of lag impact. I guess my question is really, what has the market reaction been to the price hikes that you and some of your peers have tried to push into November? Has there been enough import supply and domestic capacity reduction to get that through? Or is this really more a sort of stabilization in spot prices that we should be expecting? Thank you.

Yes, we have a very strong position on the US plate market and as you said we communicated the price increase and that was also then followed by one of our larger competitors just after we announced it. I think some of it was actually absorbed and accepted by the market. I think in recent weeks we've seen demand go down on the U.S. market. There are concerns about the U.S. economy. There are concerns about banks failing, overinvested market. They're concerned about inflations because of tariffs. This is pushing the demand back. And this has been seen in the consumer steel business for quite some time. I'm referring to automotive, I'm referring to housing and things like that. But now we can also see some other projects, industry related projects being postponed. And that's something which is quite new. So hence we are a little bit cautious regarding the pricing in Q4.

Okay, that's clear. Thank you. I'll turn it back.

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

Yes, hi. Thank you for taking my question. So I have to, if I can ask a little bit more about the steel action plan, if you can share your view about the new quarters announced by the Commission. More specifically, do you see any risk of dilution of the policy And do you think the policy will only be implemented by July next year, or it could come sooner? And if that does create some risk?

First of all, I think this policy is really important for the European steel industry. Without it, there's going to be a lot of capacity closed down and a lot of job opportunities that will disappear. I think it's necessary in the market conditions that we have, where we have some actors not... trading according to the World Trade Organization that doesn't have the fair trade policy, that we have countries subsidizing the steel production and having a massive overcapacity. I think that Europe needs to take action in order to sort of protect our interests. The suggestion that's been put on the table by the European Commission is a suggestion that was worked out primarily by Eurofair. And I think it's based on the import levels that we had 2013, where we're targeting to get down to a 15% level for flat products. I think that's important. When the timing will be is hard to say, but it's not likely that it's going to happen in the beginning of Q1. I think it's more likely that it's going to take more time than that. So we'll see.

All right, that's clear. And just the potential direct impact for you. I mean, usually import penetration is a bit lower in the Nordics. So if you can confirm what pressure you're facing from imports in the regions you operate. And we've seen some price ticking higher in Europe of late. So do you believe you're already seeing more buyers turning to domestic producer? And lastly, in Europe, how much spare capacity do you have? I think if you could comment on your utilization level at the moment and how much could you go further up?

Those were a lot of questions at the same time, but I'm trying to summarize a little bit what you were asking for. We know that the imports have a very big impact on the price level. The imports that we get from China and Asia are on such a low level that it doesn't even cover contribution level or cover variable costs. When the imports are reduced only with 5% prices goes up. We have seen that historically. And we believe that the safeguards would have a healthy impact of the pricing in Europe. So also going to have a healthy impact on the utilization. When it comes to SSAB, I think that we are in a better position than a lot of our competitors. Our utilization level has been quite good, quite decent. But I think the impact will be from the pricing. We haven't too much spare capacity in that regard, but we would hopefully see a price increase in the market going forward.

Okay. No, that's good. And maybe if I can squeeze just a quick follow up on that. Some steelmakers in Europe are pushing for a pushback of the free allocation phase out. Are you pushing with them? And if not, can you explain why?

No, we're not pushing with them. We're actually working against them. I think that if the European Union has set up a policy or even a law regarding the ETS, we need to follow it. We can't just change our mind from one day to another. If I listen to what some of the people in Brussels are saying, they are supporting the concept that we're going to continue with the plan of the free allocations according to what we had before. It's remaining to be seen, the impact. I think that from our perspective, the journey that we have and the investments we're making is based on other financial reasonings than only the green transformation. We are well equipped for whatever changes that will happen. We've done a lot of sensitivity analysis in that regard to be on the safe side. And one of your questions before, I think that was related to if we see if the market is picking up now because of the potential CBAM and also the safeguards. And there are such signals on the market. So the answer is yes.

All right. Thank you. That's very clear.

Thank you. Your next question comes from the line of Alain Gabriel from Morgan Stanley. Please go ahead.

Yes, good morning and thank you for taking my questions. I've got two. The first one is on Oxelos. Do you mind reminding us if you need to apply for new product certifications given the change in production route? And if there's a quote-unquote race against time to get these certifications in time for the plan to start production? That's my first question.

So when it comes to the major part of special steels products, then there are no such sort of demands or requirements. However, if we are planning to supply the Borlänge mill with zero slabs or low emission slabs, then there will be a qualification needed. However, when we speak to the potential customer, they say that there will be a lighter version because the majority of the production line is already there. If the chemistry is right, then there will be just a lighter sort of certification period.

Thank you. And my second question is on the special steel division. I guess your profit margins for that division have remained very robust, beating all expectations for the last few quarters. I guess your volume targets, though, have fallen a little bit behind your 2023 CMD target for that division. Is that a conscious decision to go after value over volume, or are there any other underlying challenges preventing you from lifting your shipments in that division to meet the targets you've set a couple of years ago? Thanks.

First of all, value will always go over volume. That is our concept going forward. And I'm very happy with sort of the mixed development we've seen in special steel, working more with the strategic or the more advanced products within special steel. Products such as Hardox 500 Tough, products such as Hardox, HiAce, Aramox, etc. Those are grades which are very, very unique and there's a high demand for it. And we are investing to be able to produce more of this because they require different production process with tempering. We're investing more capacity in Mobile, Alabama, as we speak. We're looking into what we need in order to grow in Oxfam as well in that regard. So when it comes to the volumes, there has been a very challenging situation when it comes to geopolitical stability. There have been tariffs, there have been safeguards, there have been war, there are sanctions, even though if you look at just Russia and the sanctions to Russia, but there are There have been sanctions also on neighboring countries, etc. So that has, of course, impacted Special Steel and the volume growth as such. Having said that, I have to say that I'm really proud of the journey they've taken, upgrading customers to more of the advanced steels, generating more value for the company and also for Special Steel.

Thank you.

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

Hello. Again, thanks for taking my questions. I have two. You've given us the guidance for shipments and prices into Q4, but given the announcements over the last couple of weeks from the European Commission and as we creep towards CBAM, in Q1 2026. Have you seen any change in behavior among your customers or order books for how customers are kind of reacting to the situation in Q1 into Q2?

We've seen sort of a slight change in behavior. We I think the interpretation we've done so far is a lot of the European customers now is looking for European suppliers. I think that A lot of our customers are concerned about not only the safeguards, but also the CBAM to some extent, and the demonstration taken in order to apply for permit to export into Europe. Hence, there is an uptick in the order intake from the European customers. I think that's going to have a positive impact on our Q1 performance. I think in Q4 the order book is pretty much full. Then it will be more related to utilization of the mills. But most of the orders have already been set, also the prices.

That's really helpful. Thank you. And then my second question, just on US tariffs, the statement that you make, I think, slightly leaves the door open for the tariff impacts in the future. You've obviously stated for the last two, three quarters that you have local production. But could you maybe just give a sense about how your US and European supply chains maybe have changed at all since since the announcement of your tariffs and whether you think you can continue to be immune from tariffs in the next one, two quarters, based on how you've managed supply chains over the last six months.

Yeah, so you're right. We have a significant production in the United States that helps us, gives us comfort. We still have products that we export from the Nordic countries to the United States, especially the SSAB Europe with their automotive grades, Docall, going into side collision beams for cars. We have communicated with the customers that we cannot bear these tariffs on our own. We are sharing that cost. But we also know that long term some of our customers will look for domestic supplies instead. Not only for the cost issue, but also for political reasons. Up until now, we haven't been affected so much by it because it takes time to requalify a new supply. But long term, this, of course, will have a negative impact on our export from, let's say, Borlänge to the United States. Having said that, we also know that we are working on European customers that is more than willing to buy that capacity instead. We have been fully utilized in the continuous annealing line in Borlänge. We have chosen to sell it into the United States because that's where the margins of demand has been the highest. But as we see it right now, we can shift that capacity over to European customers instead.

I mean, are you able to quantify that bollinger impact on a long-term basis?

Not really, no. I mean, as it is right now, the impact has been really minor. I mean, hardly an impact at all. But if you talk long-term, it's also, I mean, can I say how much we export from Sweden to? Yeah, so I think we're exporting 120,000 tons of this year. special sea grays from ssab europe it's also stated in our interim reports actually how much europe sells to the us exactly and these are those products so you can follow it each quarter and it's been reduced maybe with 20 000 tons up until now so and long term I don't know, it's going to be similar size maybe. So it's not, I mean, we're making this maybe to a bigger thing than what it is. It's not even going to see it in our profit statement or income statement.

That's really helpful. Thank you.

Thank you. Your next question comes from the line of Cole Haythorn from Jefferies. Please go ahead.

Thanks for taking my question. I'd just like to follow up on the US plate market and the moving parts that you're seeing in that segment at the moment. You talked about some softer demand trends, but I'm just wondering how you're seeing imports into the US on the plate side. Have you seen a reduction from players like Algoma and on inventory levels in US plate? Have you seen that come down with those lower imports I'm just wondering what your outlook is a little bit further on, on the US plate segment. Thank you.

I think when this tariffs was announced and the 50% was announced, there were a few suppliers like Algoma that shipped through the tariffs, hoping and thinking that the tariffs between Canada and the United States would be taken away. So they continue to deliver through the tariffs into United States. As we have seen now during the fall, September, late September, that their exports into United States have dropped significantly. We also have seen... which has been public that they get a sort of loan from the Canadian government. Agoma is a little bit in the challenging situation. They can't afford to continue to take this cost. They can't continue to export into the United States. So that is sort of from our perspective, quite positive. We've also seen another competitor, closing down their mill. It's a 300,000 tons plate mill that has been closed down. Am I allowed to say what company it is? No. So the supply side is sort of shrinking in the US market. So that's on the positive side. I think, as I said before, the negative side, we see now all of a sudden that demand is slowing down. because of concerns what's happening in the market. I think in this case it's more the financial market that's bringing a lot of concerns. Everyone remembers what happened in 2008 in the Lehman Brothers. So I think they're now in a wait-and-see mode to see what's going to happen. But some of the larger projects have been put on hold. So we'll see what's going to happen to that going forward.

And then maybe just following up there on anything you can say on distributor inventory levels. So if demand was to come back, do you think the price reaction would be quite quick? Thank you.

So the inventory level is medium to medium high. So it's not, you can continue to fill it up a little bit, but they still have enough inventory to be able to not to buy anything for some time. So I would say medium, medium high.

you thank you your next question comes from the line of andrew jones from ubs please go ahead hi johnny um let's have a question on uh on special steel to start off with uh obviously the quota reductions are going to be massively supported for the european business if they come through as as planned but obviously given the special steel business is far more global I'm wondering how you see the moving parts and the potential benefits, which products in particular will actually be helped by these quota reductions. And maybe you can do something to quantify that. I'm also curious, secondly, about backlog and the impact of some of this higher defense spending. Are you seeing any of that in the backlog for special steel yet? Can you give us any steer as to the potential EBITDA benefits we might see from this higher defense spending we're seeing at the moment.

So first to the question of special steel and sort of the exports and your comments regarding the safeguards, if that could have a negative impact on special steel. I think one of the good things would... I don't mean a negative impact.

I mean, like all the products you're selling in Europe and special steel that are going to materially benefit or because it's global, should we expect pretty limited benefit from the quotas?

um yeah his question is basically are we seeing a lot of imports impacting special steels at the moment that might ease that might make a more attractive market than when the safeguard comes for special steel products that's right um i i think that what we sell in europe are quite unique and i i don't think that there's any you know

competition from outside Europe that's going to have a large impact. I think it's more important that the construction segment comes back. If it does, we see a tipper market, a dumper market, an excavator market come back, which are on a very low level. That has a bigger impact, I would say. There are business like the tooling business that is almost dead in Europe because of Chinese imports going through Italy. We have seen a lot of companies close down because of this. Now there is a likelihood that there will be a shortage of supply in Europe and the prices will become quite high. This is a very small part of our business. I'm just stating the fact that if it's one area, maybe, especially, it's only this area. And then to your sort of second question regarding protection. We know from history that every announced project takes time to get into the order books. There is a stable demand on a somewhat higher level than we've had before, but we haven't seen the boom yet.

And do you have any expectation for when we might see that step up, if the planned spending comes through as some of these announcements suggest?

So the planned spending has already, I mean, we know for a fact that the Hägglunds in Sweden, they tripled their capacity. They're fully booked for the next six, seven years. Same thing with Rheinmetall. They also tripled their capacity. They're fully booked for the next, I would say, even up to seven years. We see Patria in Finland, the same situation there. So all these defense companies, they can't produce more. I mean, if they could, they would produce more. That will eventually reach us, but there's a lead time before the orders will come to us. But we know it will.

But can you give us a timing on what that lag is and maybe something around whether you expect the margin in the special steel group to materially improve with the improving mix as that starts to come through and how we should think about that?

So the timing, I cannot comment on. That's only speculation. It's really hard to actually predict. If it grows, it's going to have a very positive impact on special steel, but that's all I can say.

Okay, thanks.

Thank you. We'll now go to the next question. And the question comes from the line of Bastian Zunigowicz from Deutsche Bank. Please go ahead.

Yeah, hi, good morning all, and thanks for taking my questions. My first one is just a very quick follow-up, actually, on the savings with regards to cost savings. And I think, Lina, you mentioned that you had 100 million cost saving in Q3. I wasn't sure, did this number refer to Europe only, or was that including Special Steel? And the reason I'm asking is that, from memory, the effect from overtime accounts was typically between 200 and 300 million in a normal third quarter across Special Steel's and Europe together. So if you could just clarify whether maybe 200 to 300 has been the total effect or whether it's been just 100 million this year. That's my first one.

The 100 million I was referring to Q3 and majority of that is related to Europe division where they have implemented these flexible working hours. So that's sort of to specify the cost savings.

And then if you include

special steel as well is the number higher and closer to the 200 to 300 million or will there be more in q4 as well this time while usually it's a bit more q3 yeah i said that we will of course monitor the market and and adjust then the the cost base accordingly a special steel division has hasn't done as much as europe division when it comes to these flexible cost savings

Okay, very clear. Thank you. Then my second one is actually on cash flow and probably one for you as well. With regards to working capital, I guess usually we should see a release here, particularly in this environment as well. We have volumes a week, so maybe can you please update us with a sharper numeric guidance for what you expect as a working capital release? in Q4 and whether you think that in combination with your, I guess, operational performance, you will be able to keep Net Depth more or less stable. I guess, what are your expectations for Net Depth ultimately?

Yes, you mentioned that Q4 tends to be the quarter when we see a positive working capital behavior. And of course, this year we target to have the same cash generation being in a strong focus all the time. And I would say that the net debt cash situation should be relatively similar during Q4 as it has been now during the past few quarters.

Understood. Okay, so basically stable versus Q3 is what you say?

Yes.

Got you. Okay, perfect. Those are my questions. Thanks for squeezing me in.

Thank you. We will now take our final question for today. And our final question comes from the line of Boris Bordet from Kepler Showroom. Please go ahead.

Hello. Good morning. I would have Just to follow up on the European trade action. So I would be interested in getting your view on this. This announcement is really the best case scenario for steelmakers. 50% cuts almost in quotas and 50% tariffs for out-of-quotas imports. What do you think are the chances for that to be adopted in these current states? I have the question because we hear some pushbacks from Germany. What is your scenario for next year? You said that lower imports might mean a high impact on pricing. What would be the attached pricing impact that you would expect from removing 60 million tons of imports from Europe?

First, regarding the safeguards, What was the question?

Do we believe that the suggestion in its current form will hold?

So we have, as a member of Eurofair, this is a very important question for us. We're pushing it. We have a close contact with all countries to make sure that they support us when it's going to be voted in the European Commission as well as when it's going through the European Parliament. There are a few actors on the market who is a little bit skeptical to this, and that's primarily the German automotive industry. We are in close connection with the MDs of these companies, having close discussions with them. Then, except for that, we also historically have seen Sweden and also Finland not really supporting initiatives like this, because for them it's been important with the free trade. But as far as we understand, fair trade is also very important to these countries. So we are, from a Eurofair perspective, optimistic. I guess that's all I can say for the time being. Did you have a second question?

Yeah, it was a question on pricing. You mentioned that a reduction of... I was wondering whether you had made some math on that and you could point to a number we could have in mind.

No, I'm sorry. I can't do that. Oh, okay.

Okay. Thank you very much. Thank you.

Thank you. Thank you. We do have one more question. And the question is a follow-up from Tristan Gresser from BNP Paribas. Please go ahead.

Yes, hi. Thanks for taking the follow-up. Just on CapEx, now that you have more visibility on XoXo, Lulia, the power lines, Would you be able to give us a rough sense of what you expect for next year? Would that be a focus of the CMD? And also, if you can just say a few words about the CMD, what would be the focus there and what could be the message you feel is important to pass on to investor? Thank you.

Good that you mentioned CMD, because there we will definitely give more transparency of the CAPEX plan for coming years. And of course, we will dive into also the division level strategies and strategy overall. So hope many of you will actually come and meet us there. So welcome.

All right. Perfect. Thank you.

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

Yes, thank you very much. Thank you for a lot of good questions. And this concludes basically today's conference. Thank you, Jonny. Thank you, Lena. And wish you a nice day.

Thank you very much. Thank you all.

Thank you.