Good morning, everybody, welcome to the Acerinox Earnings Conference Call for the second quarter, 2023. My name is Carlos Lora-T amayo, and I am the Chief Investor Relations and Communication Officer of the group. First of all, we hope that you and your families are okay. As you can see, today, the presentation will be led by our CEO, Bernardo Velázquez, our COO, Hans Helmrich, and our CFO, Miguel Ferrandis. They will start with a short presentation and then continue with the Q&A session. Before getting started, let me remind you that this conference call is being broadcast on our webcast at acerinox.com, where you can find also the financial statements and the management report for the first half of the year. Without any further ado, I would like to give the floor to our CEO. Please, Bernardo, go ahead. Thank you, Carlos. Good afternoon, good morning for the Americans, thank you for attending this event. We are presenting a strong set of results, particularly good for the times being, for the environment that where we are, for the geopolitical and economical situation, and for the restocking process that has pushed apparent consumptions down by 30% in both USA and Europe. We believe that we are confirming, with our results, our new level of competitiveness that we are reaching, and we are basing on our excellence and continuous improvement in our operations, success of our strategy of growth and focused in HPA, in high-performance alloys and in United States, and the regionalization of the globalization process, that is, in both, with that we are perceiving in both the USA and Europe, and that we will benefit for the local, our local mills in our four continents of this advantages of the regionalization process and approaching the supply to the mills. We can do that because of our geographical diversification. We continue focusing our strategy that we are basing, sorry, in four pillars: the added value, with the success of VDM integration, the excellence that we have achieved, and that is providing us a new, higher level of competitiveness, our traditional strong financial balance sheet, and sustainability in an area that we are particularly working hard to improve and to participate in the green transition. We are sure that with our recyclable product, our focus on the circular economy and our production process, we will contribute to make our world better. Hans, I will pass you the floor to develop the sustainability process. Thank you, Bernardo. We continue to progress towards our 2030 ESG targets. Given the lower volumes this year, some of our key performance indicators are behind, but we remain committed on delivering towards our goals and targets that we have set. Acerinox continues to be a strong contributor to the circular economy. As you remember, we had set six sustainability targets for the 2030, connected with our 360 Positive Impact plan that we had set at that time. We continued to reduce our water consumption and waste to landfill. In both cases, we are already very close to our goals, and all our factories around the world are doing an outstanding job on these initiatives. Energy efficiency and greenhouse emissions are the ones impacted the most by our lower volumes. We have set specific actions in place, which, once volumes come back to our normal situation, will allow us to achieve our targets. Worth mentioning in regard to this year, that we have achieved 33% electricity supply by green energy sources. On the first half of the year, we have had many ESG initiatives, of which I would like to remark: our new whistleblowing channel in the group, our safety week held in April, where we implemented our corporate cardinal rules, and the launch of the Acerinox EcoACX, a rebranded sustainable steel product line, which we're the first ones two years ago to present in the industry. This product line is getting customer attention. I will present this in more detail to you very soon. Finally, I would like to bring your attention to the improvement realized by our plants when it comes to safety. A 13% reduction year-over-year in lost time incidents is not easy, even more after three years of great results and record results in our factories. If we move on to our ESG ratings and achievements, Acerinox continued to drive those throughout the whole company, and we participate in the most relevant ESG assessment processes in the industry. In the first half of the year, in 2023, we have received several recognitions, of which I would like to mention our EcoVadis Platinum rating, where Acerinox is the only among our peers to hold the Platinum level. The Haz Award for transparency in tax reporting and governance. This year, we have been recognized again for our tax transparency as well by ICAP, which is the International Compliance Assurance Programme. The World Stainless Association recognized Acerinox group in three main categories. First, the market development for the creation of new ideas and applications for the industry. Second, sustainability, connected to my previous comments around the reuse of water in our factory in Spain, where, as you know, water is scarce. The one I feel most proud of is the global recognition of how we improve safety at the workplace, a project which was done in collaboration of all our plants around the world. In the second quarter of this year, we have had a challenging environment, as Bernardo Velázquez was mentioning. In the stainless steel business, in quarter two in North America, market remained in a good condition, with prices at reasonable levels. Stock levels have stabilized in all markets. Apparent demand is decreased year-over-year by 29% in the United States and 31% in Europe. A positive end, imports have come down by 44% in the United States and 62% in Europe. The other hand, our high-performance alloys business, the market maintained its strength and good prospects. We keep having a strong order book today. Worth mentioning is especially the strength of the quarter in the aerospace industry, oil and gas, and petrochemical industries. Moving to talk a bit about the financials. First of all, I want to state as normally, that the management report, as well as the financial statements revised by auditors, are available on the webpage. We are just giving now some bullet points, but you have a very pack of detailed information fully available. Just giving some bullet points on the, on the Q2, what we must remark, you can see main parameters indicated in the slide, is that there are no surprises. When we explain the results of the first quarter, the outlook we provide was that the second quarter should be slightly better. We have been there, and we have been there even though some decline in sales. As you can see, the sales have been 2% lower than the previous quarter. Even though that, the EBITDA has improved 5% compared with the first quarter and reaching an EBITDA margin of 14%, which in the actual circumstances is no doubt a very remarkable figure. When we talk about the cash flow, we shall talk later about it. There are several issues to explain regarding the cash flow evolution in this year. We are committed with the cash flow. We are not concerned by a temporary increase in the working capital. This has been necessary and easy to explain in the first semester. We shall talk about it later. It's true that the working capital has been increasing, EUR 151,000,000 in this quarter, as well as it's true that it shall be reverted in the third quarter. During the second semester, we shall see a relevant reduction compared with the operating working capital that has been increased in the first semester of the year, and especially in the second quarter. Any case, having said that, with a level of debt, of net debt appearing in our balance sheet of EUR 721,000,000 at the end of June, our net debt to EBITDA ratio is strongly very low for what's the standards in our sector, as well as our ROCE obtained in the year is in the level of 21%, which also, in the actual circumstances, is remarkable. If we go to analyze more the figures of the whole semester. First of all, the first message is to talk about the consistency. Consistency, quarter after quarter, EUR 226,000,000 first quarter, EUR 236,000,000 second quarter. This is a clear demonstration of what we are working since several years ago in trying to make as much as possible flat, a flattening of the cycles and exposure to our cycles in our industry. It's clear that we are a cyclical business. Having said that, all our efforts in the last years and all our strategy is moving to flattening these cycles through the diversification. The diversification that we did, moving to the high-performance alloys is a clear indicator. We are experiencing a very good momentum in the high-performance alloys in a time in which the stainless market mostly in Europe is in poor condition. This contributes to this stability in the results, and also the diversification in our group has obviously the best position among the industry because we are more than any other regional, we are North Americans. The best performer market in these days, especially on comparable basis, is the North American market. We are improving margins and having excellent results in the weak stainless time in the North American market, as well as we are having excellent margins in the high-performance alloys. Those facts are to be always kept on the memory for understanding these figures. We have done, at the end of June, a inventory adjustment of EUR 96,000,000. This is a clear consequence of the momentum that is experiencing the European market. The prices are substantially affected in the last months. Instead of a recovery, we are seeing that we are entering in the seasonal slowdown with a lower base prices ever achieved in Europe. This is facing, at the same time, that we are still having very high energy prices. The consequence of this is no doubt a fact that affects our profitability, mostly in Europe. As a consequence of that, what we have done in our inventory is an adjustment for putting all our stock and net realizable value. This, at the end of June, has been EUR 96,000,000 affecting the EBITDA. We have been explaining the results of the first quarter in the last months, we always stated that we knew it were going to be better, the Q2 compared with the Q1, but it should depend on how we reach in Europe the summer season for realizing how much necessity was of making huge inventory adjustment, as has been the case. Even though that, we have obtained this EBITDA figure of EUR 236 for the quarter. This slide is very representative to illustrate what I mentioned at the beginning of the presentation. In 2021 and 2022, we reached historical records. It is even more remarkable that, with a tough correction in the market of more than 30%, we are well above the average EBITDA of the last decade of EUR 89,000,000. This is thanks to the excellence in our operations. By the way, I would like to announce that we are working in the new excellence plans that we will deliver at the beginning of next year. This is thanks to our product and geographical diversification, betting on high added-value products and the American market, where I remember that we have decided to invest $244,000,000 in the expansion plan of North American Stainless. That will increase capacity by 20%. As we mentioned before, the advantages to be local in four continents in this deglobalization process. It is very representative, and I think that we will change the scale of our EBITDA in the coming quarters. This is what we expect. This is what we are remarking in most of our presentations. Miguel, if you want to add anything? I think we can go directly to the explanation of both sectors, stainless steel and the high-performance alloys. Starting for the stainless steel, I think basically, what's more relevant is that in a sector as the stainless, that it's performing weakly all around the world, the apparent consumption has declined in the States at 29% in the 1st semester. The figure is around 31% in Europe. In a very, very difficult time for the stainless industry, we have obtained a EBITDA margin of 13%, or 14% on our stainless division. This is a very, very strong fact to realize, especially the circumstance and the advantages of our presence in the North American market, which has proven to be the most resilient market in these days. It's extremely resilient. It's resilient because the balance between demand and supply is very tight, and no doubt that for the local players, this is an advantage. It's also resilient because the stability in prices, This is very relevant in our sector. Base prices in America have remained stable during most of 2022 and the first semester of 2023. This is an advantage for the market, not only for producers, also for customers, or final customers, also for distributors. It provide a clear view and understanding and stability for making business. The situation in Europe is just the opposite. We saw in 2022, in the first semester, the maximum levels of base price ever achieved in history, Also we saw in the second semester, the lowest level of base price ever achieved in history. At the end, this affects the market, obviously affect the performance of distributors and customers, has its relevance in terms of imports. At the end, this is the fact that for us, we consider, and we always have been proud, that one of our main assets was a strong and relevant position in the best performing market, which is the North American one. As a consequence of this, mostly, we have obtained this EBITDA margin of 14%, as well as we have had an operating cash flow in the semester of EUR 70,000,000. If we move to the high-performance alloys, in difference with the stainless market, what we must clearly state is the strong momentum that this sector is experiencing. Several sectors, high value-added sectors among the high-performance alloys, such as the chemical, the petrochemical, the aerospace, those sectors are very, very relevant and very consistent in terms of their profitability for our business. These sectors are doing extraordinarily well. Our order book remains solid. As a consequence of that, we have obtained an EBITDA figure for the semester of EUR 76,000,000. Since we acquired VDM, we were explaining that our projections and our figures were that this acquisition should provide us a contribution of EUR 80,000,000 -EUR 90,000,000 per annum. In this year, only in the first semester, we have achieved an EBITDA of EUR 76,000,000 and improving quarter-on-quarter. It was EUR 29,000,000 first quarter, it has been EUR 47,000,000 in the second quarter. The momentum of the high-performance alloys is very strong, and the performance of VDM in this good momentum also has been remarkable. In addition, we are moving better than expected even, and obtaining higher synergies than the one we designed for this period. We have obtained around EUR 47,000,000 in synergies in the integration of VDM with our Stainless division in this first semester. We have reached to 126 new customers. This is something also to put on value, that our strategy of moving forward to the high-performance alloys division has been extraordinarily successful. This sector is the one that has, as a consequence, mostly of the good momentum that is actually experiencing, has been accompanied by a strong increase in the working capital in terms of EUR 202,000,000. As we normally say, we are cyclicals. We need to allocate the capital in the best way for our business, and sometimes, the good momentum needs to be making strong investments in working capital, as has been the case in VDM. It shall be probably better understood in the next slide, that is the one in which we want to explain the capital allocation. You have the bridge from, for reaching from a EBITDA to the net debt figure in the left side of the slide, but let's concentrate on clarifying basis on the right side of the slide. The net debt increase in the semester has been of EUR 281,000,000. Let's talk about the items which clearly has been appearing as cash out. The cash out on the, on this period, mostly has been related to tax payments, EUR 152,000,000. We are also sustainable in paying taxes in the communities where we are based, and contributing through our profits to the region of these areas. After two consecutive periods of high profitability, as was the 2022, but also the first half of 2023, we have paid a big amount of taxes, EUR 152,000,000 only in this period. In addition, we are growing. We are committed to increase, as you say, as we always have been explaining, with further investments. Now the CapExes expected for this year were around EUR 200,000,000. More or less, EUR 97,000,000 of payments for these CapExes has been taking place in the first semester, as well as the dividend. You remember that it was decided to increase the dividend at 20% for this 2023, and split it into two dividends, one interim dividend that took place in the first semester. Another one has been already paid, shall appear in the figures of the third quarter and the second semester. This EUR 324,000,000 has been cashed out for the group in the first semester, and this must be also combined for understanding the level of debt with the operating working capital increase. This has been remarkable. This has been EUR 304,000,000. Where has been taking place this increase in working capital? Mostly in the division that actually is performing better and is in a better cycle and better momentum, which is the high-performance alloys. We have an increase in working capital for accompanying this good time for the high-performance alloys, and this is shown in a strong increase in inventories. Why increase in inventories? First of all, because of the higher activity, because of the strong order book, because of we are more or less having stocks of high-value material, which obviously, a high cost involve on it. In addition, because the circumstances also have changed. Previously, VDM was mostly supplied from Russian nickel. We now have moved to obtain nickel from overseas, but we need to develop a buffer stock for keeping nickel in place, and this obviously is included in our inventories. As we have explained before, we are making strong synergies. Part of the synergies comes as an utilization of other plans for the group, for making control for a High-Performance Alloys Division. This also is included in the inventory figures. At the end, this is consequence not only of the good circumstance of the market in the high-performance alloys, but also of the improvements and the synergies that the group is obtaining with this integration. This is partially one of the reasons of this increase in inventories. The strong change has taken place in the second semester. This figure should be softening in the second semester. Obviously, most of this big big rally has been more or less appearing and shown in these increased inventories in the first semester. As well as there is a big relevance of the creditors figure in the case of VDM. This is mostly related by the replacement of Russian nickel from nickel from other sources. As was explained in detail during last year, most of the nickel of VDM came from Russia, now comes from other sources. The terms in which was established that procurement of Russian nickel was favorable for the company. We need to find other sources, and in the first semester of this year, most of these other sources having experiencing payment terms of 45 days, compared with the historical 90 days. This is appearing in this figure and this reduction of the creditor figures and obviously affecting the working capital. Fortunately, we are now normalizing this. For the second semester, we should move this more to the standard 90 days, as a consequence of that, also, we shall see some relaxation of the working capital for the second semester. In addition, also, the conditions of the contracts that VDM had with the Russian nickel allow VDM to make certain trading on the nickel that obviously was favorable for financing that working capital. Now this is not in place, we are adjusting our procurement of nickel to our necessities. Having said that, this is a figure that also should reduce substantially for the second semester. Most of our working capital increase has been in the division that is performing strongly in these times, as we have explained. In the second quarter, especially in the first quarter, in the stainless, we were flat. In the second quarter, the changing conditions, and especially the lower production expected for the third quarter, is reflecting some increase in the working capital for the second quarter. In the third quarter, no doubt, the figure of creditors shall increase and contribute to an improvement of the working capital, as well as the collection from the debtors. Most of these third quarter, sorry, second quarter increase in working capital in the quarter shall be reverted in the third one, which shall be a stronger generation quarter also in the stainless business. As I said before, we are no doubt committed to the cash generation of the group. We are committed to keeping the working capital as low as possible, but we need also to take advantage of the good momentum and accompany that with the proper allocation and working capital. We know your worries about our working capital increase, and as Miguel mentioned, we are busy working on this. We are not worried. As Miguel mentioned, this is just a summary to explain that we are totally committed to our main principle that we have repeated many times in previous presentation, is that cash is king. Now, this is our principle of our activity. Cash, we will generate cash enough to grow, to improve our shareholders' return, and also we will keep loyal to our basement, one of the pillars of the strategy that is our traditional strong balance sheet. We can say today that we are committed to develop, you know, and release a lot of, or an important portion of our working capital during the second half of the year. Finally, to finish this presentation, I would like to summarize that. And I would like to remark that this set of results is strong for the times being, considering a 30% correction in the main markets. We have explained in detail that the circumstances that made us to increase our working capital and that we are committed to correct, that the market remains weak, but with normalized stocks, that situation will help us to improve our order book. You know, customers will stop reducing their stocks, will keeping a normal level of stocks. They will come back to the market, they will start buying again, and that is not going to to move us to a building stocks up situation, but will increase our order book, or will improve our order book. Of course, that the VDM is helping us to flatten our cycles and increasing our profits, and contributing to this new level of competitiveness, this new level of EBITDA that we would consider for the future. Under these conditions, we are going to release in quarter three, a good results, but not as good as the well of the preceding quarters. With this slide, Carlos, I think that we are coming to the end of the presentations, and we will be open to the Q&A session. Yes, thank you, Bernardo, Hans, and Miguel, for the explanation, and give us more color in the different markets, the numbers, sustainability, strategy, and so on. Now we can move to the Q&A session, please. Thank you. If you would like to ask a question, please press star followed by 1 on your telephone keypad. We recommend joining from a landline for the best audio quality. If you choose to withdraw your question, please press star followed by 2. When preparing to ask your question, please ensure your phone is unmuted locally. Please note, we will not be taking any follow-ups. If you wish to ask another question, please rejoin the queue. Our first question today goes to Tom Zhang of Barclays. Tom, please go ahead. Your line is open. Hi, good, thanks for taking our questions. I've got two, if that's okay. Maybe first, just a little bit of help on the guidance. You've said, you know, Q3 is going to be good, not as good as Q2. You've given a slide where you say, you know, your Q2 number is still well above the 2010-2020 average of EUR 89,000,000. It doesn't feel like we're going to back to EUR 89,000,000 EBITDA, but maybe, you know, if you go halfway there, you're sort of EUR 160,000,000, EUR 170,000,000 EBITDA. Is that a number you'd feel comfortable with? Then the second one, just on Europe, it sounds very bad. Destocking, yeah, I hear you, destocking look to mostly be over. Imports have fallen, otherwise, you know, especially on the demand side, you paint a fairly cautious picture. Just wondering if you see any green shoots at all, any kind of sectors or products where you do see ether demand in European stainless? I'll leave it there. Thank you. Thanks, Tom. For the first question, we cannot give you a further guidance. I mean, we will never give a clear forecast. What we have already explained is the only thing that we can mention. We will not give a number. We have our numbers, and we are comfortable with the situation. We will not provide a further guidance. Sectors in the European stainless. I think the European stainless is mainly suffering a stock crisis, no? Well, of course, you know, with the economic and geopolitical situation, the economy in general is not in the best shape. We are growing, I think that most of the institutions are giving a better forecast for the second half of the year, but the steel is weak for the stainless steel consumption, you know? In one hand, having the distributors reach a normal level of stocks, they will start buying again. With today's prices and with the delivery time of imported material, they will buy most of their necessities locally, that will increase our order book. On the other hand, in the end user sectors, the consumer goods are not in the best shape. White goods or automotive or everything related with constructions or sinks or white goods again, or chimneys, no, are not in the best momentum. On the other hand, many projects that were postponed the previous years because of the energy cost and as well as the cost of stainless steel, and were postponed, and now they are coming back. No? The project sector is performing better. In, you know, where the stainless steel is present, like can be a catering industry, food processing industry. It's also a chemical industry, and it's also the oil and wine industry. The projects are performing better than consumer goods today. Thank you. The next question goes to Ioannis Masvoulas of Morgan Stanley. Ioannis, please go ahead. Your line is open. Thank you very much for the presentation. Two questions from my side. The first, again, on Europe, talking about pricing, which has been extremely depressed in recent months, partly due to weak underlying activity, partly due to destocking. Where do you see base prices currently in Europe? Are there any signs of recovery near term, or are we probably gonna stay at low levels throughout the rest of summer? The second question, going back to the working capital topic, where you did spend quite a bit of time explaining the moving parts, but could you perhaps quantify the release you expect in the second half out of the EUR 300,000,000 you built in H1? The reason I'm asking is there is clearly an element of structural build due to HBA and the new sourcing of nickel. Thank you. If you want, I can take the first part of the question, I leave Miguel on the second one. On the pricing, evidently, you know that we don't disclose any prices, but well, evidently, the prices that we have reached are probably the lowest that we can expect. We are working, and we have hoped that those prices will go up, but at this point in time, we are not sure about what is gonna happen in the marketplace. Then, Ioannis, your assumption was absolutely adequate. Most of the release of working capital, obviously, the majority shall be concentrated where has been the high increase, which is in the alloys division. Part of the one that has been shown in the figures of the first semester, as you are mentioning, is structural because of the change in the supplier, or at least structural of the actual circumstances affecting the supply of nickel. Consequently, shall we revert the whole working capital in the second semester? I don't think so. I think that the final figure for December 2023 should be some increase in working capital, not relevant, but consequently, mostly of the circumstances. I don't think that the EUR 300 shall be fully reverted, but a strong part of this, yes. The final figure for the year should see some increase in the working capital. Thank you. The next question goes to Krishan Agarwal of Citi. Krishan, please go ahead. Your line is open. Hi. Thanks a lot for taking my question. I mean, if I look at the second quarter number, you know, excluding the inventory write down, I mean, we are looking at underlying number of EUR 300,000,000 plus. Now, in that context, you are saying that, you know, third quarter will be lower, can you help me understand as in how weak Europe is going to be? Is it going to be a profitable, you know, quarter for Europe standalone, or are we looking some kind of negative numbers for Europe? In Europe, as has been stated up to now, we have the summer seasonal slowdown in Europe, combined with the level of base prices that Hans has mentioned, that are on historical minimums, and the energy still is very high. At the end, the equation makes that it's very difficult to be profit-making in Europe on the actual circumstances. Maybe for later on, with more normalization of activity for the fourth quarter, could be, but in principle, the third quarter in Europe should be, in Europe and in stainless, should be weak. ... I think if you follow the prices that you can read in the, in the publications like CRU or Metal Bulletin, you can understand that the current level of prices is unsustainable. The situation can only improve. Thank you. The next question goes to Alberto Espelosín of JB Capital. Alberto, please go ahead. Your line is open. Yeah, good morning. Thank you for taking my questions. I have just one follow-up. It seems you are not concerned on working capital, and that you should continue your generating free cash flow, as you said. Looking to your strong financial position, what should we expect on capital allocation? Are you looking for any M&A? If not, could you improve shareholder returns? Would you think of a share buyback current market prices? Thank you. Thank you, Alberto. I think that our strategy in capital allocation is very clear. We have certain necessities of CapEx, including the new expansion plan in North American Stainless. We have to generate enough cash to pay this EUR 0.6 per share. We have to generate enough cash to pay our CapEx, if the situation is good and we have an excess, we will continue with the buybacks programs. As we mentioned in previous presentations, we don't have a date to do this to apply this buyback of shares. Expansion, as we always mention, with a 0.7 ratio in debt EBITDA, I think that we can be comfortable that if we find an interesting project, we will have enough funds to achieve it. I think this is what we normally disclose, no? It's cash enough to pay our dividends and CapEx. The excess of this cash will be for share buybacks, and in case of any acquisition, any new interesting project, we will find the funds to do it with a very comfortable debt situation. Thank you. The next question goes to Patrick Mann of Bank of America. Patrick, please go ahead. Your line is open. Thank you very much for the call. Just wanted to ask on your outlook for inventory adjustments. I mean, your results were really strong considering where apparent demand is, where volumes are, and, you know, if we add back the inventory adjustments, they're even stronger. I'm just trying to think about if raw material and alloy prices stay where they are today, what would you expect for the third quarter for inventory adjustments? Do you think there's still more downside to inventory levels? Yep. Thanks very much. You know what happen normally with the filling of stock levels, no? Normally distributors are acting like not with the today's necessity, but considering what they will need in a couple of months, no? They always have to program in advance of the real necessities. Every time for a normal stock level, what was. Now, last year in May, what was not enough for the necessities in April was too much in May. That will depend very much on the feeling of the economical situation or the feeling on the future. In volumes, in terms of stock in the main markets that we are following, in the United States and in Germany, the stocks are more or less on the historical average. Of course, you know, as normally distributors are calculating the stock levels in days of stock, so based on dividing by deliveries of the month, if deliveries are short, then the days of stocks are much higher, so they will continue with the feeling of reducing the stocks. That can change very, very easily if they come back to purchase again, and of course, if the situation is improves, no? We'll have to wait until the after summer to feel how the market is gonna perform for the second half. It's not a year to expect a, you know, a big recovery. Under this situation with the low base prices in the European market, plus the raw material prices and these things, normally, we'll be able to deliver or to release some provisions at the end of the year. This is something that we cannot predict today. Thank you. The next question goes to Maxime Kogge of Oddo BHF. Maxime, please go ahead. Your line is open. Yeah, good afternoon. Could you give us a bit of flavor on how each region performed within the stainless steel division in Q2? I mean, is it fair to assume that the US was the essential contributor to profitability with Europe, Asia, and Africa barely profitable or perhaps even loss-making? That would be my first question. Second question is on the European market: Do you see there a path to becoming profitable again in the near or even distant future? There are some import from pressures. There are also apparently a lot of overcapacity possibly some anti-dumping behavior by some competitors. is it, I mean, is there a point when you will be able to be profitable again in Europe? If that's not the case, do you envisage disposing, the Europe stainless activity? Thank you, Maxime. Per division, you know that we don't give results, we don't split our results in the different divisions. What I can mention is that, you know, today, United States is the place to stay. We have a very strong position in United States, and we are benefiting of the better conditions of the American market and the American e-economy. You mentioned also South Africa, in South Africa we are doing something that is very interesting, that is that we are developing new products just to be less dependent on exports. South Africa, or Columbus Stainless, Emil will depend less in exports to other regions, as we have developed not only stainless steel, but also carbon steel and some high alloys stainless. In the case of Europe, we cannot take conclusions today because the situation of the European market is very weak. I think that under normal circumstances, with all the many reasons. When we speak about the globalization, we have to speak about transport costs or transport emissions. That is also important, because if we add these transport emissions to the scope three of the products, then it's going to be a disadvantage. That's something that will also contribute to the regionalization process. Plus, of course, you know, all these disruptions in the supply chains that have made the purchasing managers to take decisions to concentrate a big portion of the necessities in a close area. Finally, as you mentioned also, there's the fair competition rules, no? I think that's something that we are promoting, participating in all the associations in the countries where we are present, that, during many times, you know, subsidies in different parts of the world have helped, you know, to develop a very strong stainless steel industry, that now, with the overcapacity that they have to export to other areas, and Europe is the biggest open market. That's why we are trying to compensate with the safer measures, but also with trying to complain and to and looking for competing in a fair way with some of the Asian producers. We are developing this case of anti-dumping and anti-subsidies that we have in the case of China or Indonesia mainly. This is the... What is changing the world, or at least the stainless steel world, is that, you know, the world is becoming more local, more regional, and this is what we expect for the future. We will develop our mills, as we always mentioned, that we have to be local in for a global company. We are locals in South Africa, we are locals in Europe, and we are locals in United States. This is the situation that we think is gonna benefit us in the coming years. Thank you. The next question goes to Moses Ola of JP Morgan. Moses, please go ahead. Your line is open. Hi there. Thank you very much for taking my question. Two from me. The first one is on VDM, and on that annual EBITDA run rate target of EUR 80,000,000 -EUR 90,000,000. If we look at the different components versus last year, you had EUR 47,000,000 in synergies this first half versus EUR 25,000,000 for the whole of 2022. 226 new customers versus 122 in 2022. Is there a justification for that EBITDA run rate target to also double, given the fact that those synergies and the customer base has doubled in, into a weak stainless steel market as well? You know, do you see potential for greater synergies as the market recovers? Also, on the U.S., are you actually seeing any evidence yet of restocking? If we look at the macro data, when we look at orders to inventories and PMIs, it's actually ticked up in July. Are you seeing that same level of restocking appetite as well? Okay. well, Moses, in regard of the VDM, as we are said, we are concentrating in the specific sectors, which no doubt are high-margin sectors. At the end, we think that VDM is well diversified in covering several sectors. Its contribution on the previous year, for example, when there was the separation of projects in the wars of the COVID correction, at the end, it's true that VDM had a strong performance, mostly related to electronics. This contribute to VDM kept its level of activity and also proper profits. When we have moving the actual scenario to the sectors we are talking about, those sectors are substantially higher-margin sectors, and this is more or less what it's appreciated. As we mentioned before, it's substantially above the projections we had when we made a deal, and this is no doubt a satisfaction. It was also a satisfaction, the EUR 120,000,000 achieved in the previous year, which is the new level of contribution coming from VDM. It's still for us is an issue which is not so clear. We cannot assume that this reference of this semester that has been extremely strong for VDM is the new average. I should never say that. The momentum is fine, and we are taking advantage of that. If any of these sectors experience a time correction, maybe we can compensate with others. In the actual basis, we are taking advantage, and this is appearing in this contribution. If I can take the second one, Miguel, on the restocking process in the United States. We don't believe so yet. Evidently, there are some customers, some distributors that had less of a exposure last year on overstocking, and they might be restocking part of it. In general terms, there is no restocking process yet in the United States neither. Thank you. The next question goes to Bastian Synagowitz of Deutsche Bank. Bastian, please go ahead. Your line is open. Yes, good afternoon, all. I have two quick questions left, please. Firstly, could you please give us some color on the level of utilization rate you're currently running at in Europe, Columbus, and also in NAS? That would be my first question. A probably technical one on taxes, so probably one for Miguel. I guess, tax payments are up by 60%, so obviously, EBITDA more than halving because the fact they are probably a spill-over effects from last year, which I think you also have been indicating. I'm wondering, could you please quantify that effect of effects from last year, which you would expect for this full year in 2023, and if there's still some residual part of it, flowing through your numbers and cash flow in the second half of this year? Thank you. I can take the first one. We don't provide details factor by factor, but in general, I can tell you approximately, Bastian, we are around 70% utilization of our facilities this morning time. Yeah, regarding the taxes, Bastian, the figure of the first semester, probably, as I tried to explain before, shall be higher than the corresponding to the second semester. The reason is that in the first semester, we are making the complementary tax payment regarding the 2022 profits, as well as the interim payments corresponding to the high profit of this first semester. As a consequence of that, it's clear that the last year was fabulous in terms of profits, and obviously, this is most reflected in the first semester figure. Maybe for the second semester, should be in the range of maybe two-thirds of what has been this EUR 150,000,000. Still is not a fixed figure, but at the end, this figure shall be lower, for the second semester. Thank you. The next question go to Tristan Gresser of BNP Paribas Exane. Tristan, please go ahead. Your line is open. Yes. Hi, thank you for taking my questions. I was dropped from the call, so I'm not sure if it has been asked already, so apology. In the interim report, you mentioned that EBITDA may fall in Q3. In the presentation, you were more affirmative that EBITDA will decline in Q3. Is it fair to assume a moderate decline rather than a more pronounced drop? When I look at consensus, it's down 25%-30% quarter-on-quarter. That's my first question. The second question is also a bit around the language. For the U.S. base price, you mentioned that they're a reasonable level and that stability has also helped customers. I think in the past, you were expecting some price weakness in the U.S. Am I right to imply that the tone now is a bit more positive, and do you still expect some pricing weakness in U.S.? Thank you. Sorry, Tristan, but I cannot answer your questions. First one is related to the guidance, and we don't release a clear forecast, so you will have to interpret what we are saying. Unfortunately, the second one, if I tell you that price in United States is going up or it is going down, that can be considered that I'm guiding the market to a certain way, you know, and that is not legal, so we cannot give you any answer. Thank you. Our next question go to Robert Jackson of Banco Santander. Robert, please go ahead. Your line is open. Hi. Good, good afternoon, gentlemen. Just one question. Basically, bearing in mind the importance of the Russian nickel supply and the special needs for VDM to use nickel rather than versus scrap, what is Acerinox doing to reduce the risks of nickel supply more longer term, and also, bearing in mind that some working capital volatility will persist, considering the strong activity in VDM over the next quarters and probably next couple of years? That would be my question. Thank you very much. Robert, the nickel supply is not in question. What we made is replace full nickel supply coming from Russia to a diversified nickel supply from three other sources. There is no shortage on that. We are assuming a new scenario for the nickel. This is. The increase and the evolution of the nickel cost is conveyed also through our customers. In this basis, this is not affecting also the profitability of VDM, and we are passing that nickel and the maybe higher premiums compared with the traditional Russian nickel. This is not in question that we are able to pass it through. The issue arising in the nickel is that the change on the market has especially is especially affecting this period, because is when we saw in the cash flow generation that we must cover the new circumstances. It shall be normalized. Gradually, these big changes that has been taking place in the first semester shall not be repeated. As we said before, we shall normalize part of it. We shall normalize the payment terms. Just moving from 45 to 90 days, this shall begin to be appreciated. We shall normalize maybe gradually also for our comfort, the levels of buffer stock. There are areas to improve, and we shall go on that. Still, there are some facts that probably structurally shall be different to replace. This shall mean that we shall probably keep on a constant basis, higher level of inventories, but the effect in the changes in working capital is taking place now. Maybe we shall stabilize in higher levels, not only from these circumstances that we are mentioning, the characteristics of being through supplied by 3 sources, but also in addition, because each day shall take more relevance that we shall need also to finance in our inventories, the material that shall be flowing among the group from one plants to others, for being through internally. This shall be part of the synergies that we are achieving. This is something that, as I say, shall be reflected in higher inventories as a normal level. The effect on this, and the distortions on the, on the cash generation, where are more appreciated, is in this semester, because it has been the semester of the change. They shall be normalizing these levels. Robert, I think this situation is a clear demonstration of what we have always mentioned, that VDM and Acerinox are better together. No. In this case, VDM is benefiting of the Acerinox situation because we have provided financial support for all these changes in the nickel acquisition process. On the other hand, because we are using the purchasing power of the Acerinox Group, you know, to negotiate with all the nickel suppliers that were before suppliers of the Group. VDM was mainly concentrated in Russian nickel from Norilsk. We are since last year, since we decided to limit our operations in Russia, we have already closed our office in Russia. Not because of the sanctions, but because we believe that we have to support, you know, a different way of doing things. Then we decided to stop buying nickel from Russia, and we decided, no, that we didn't want to be dependent on the Russian nickel, and we started splitting the nickel purchasing between the rest of the suppliers of the group. You know, what, there are certain countries, not only Russia, that are, they're producing pure nickel, that this was VDM needs for these applications. We can buy nickel in Colombia, we can buy nickel in Canada, we can buy nickel in Australia. Those are different countries that can give us this pure nickel. The problem is that all of them are far farther than Russia for us. With the longer supply chains, we need to have a bigger security stocks. This is what is also contributing to this increase in working capital. We fully believe that we are doing the right things, not changing the origin of our nickel. Thank you. We have a follow-up from Tom Zhang of Barclays. Tom, please go ahead. Your line is open. Hi, thanks for taking the call. Just one, you mentioned you've taken some temporary labor reduction measures in Gibraltar and enrolled them through the last quarter. Just wondering if, one, you could help quantify what kind of fixed cost savings that has generated, and two, if there's any reason that shouldn't, you know, there shouldn't be more short-term working in Q3 and Q4, either legally or otherwise. Thanks. Let me take this one. We are not doing temporary labor reductions. What we're doing is a short-term work activities in the plant of Algeciras. This is a way that we have in our hands to flex on the situation in the market. For one side, evidently, the high energy costs and consumables, the volume, all those things which are taking place in the market, and that's the way we do it. We do these activities in all our factories as we see that volumes move. It's our obligation to flexing costs and try to be adapting to the market situation. I should read that as, it will continue in Q3 and Q4, right? There's no sort of... the thing I'm sort of mentioning is, in your report, you talk about temporary labor force adjustment plan, which, yeah, that's the short-term work, right? We will do so if the volumes continue to be at the levels they are, and we will continue to flex in those going forward. Thank you. The next question is a follow-up from Ioannis Masvoulas of Morgan Stanley. Ioannis, please go ahead. Your line is open. Great. Thank you for taking the follow-up. It's on the high-performance alloys division. First, on the synergies, when you bought the asset, you started off talking about EUR 40,000,000 of synergies, now we're at EUR 45,000,000. First thing here is this an annualized number or is it the H1 realized? How is that split across the two divisions? Does it sit with HPA exclusively, or is it part of the stainless EBITDA, including that? If you can talk about the inventory adjustment, how much of that is baked into the HPA EBITDA for the second quarter? Thank you. ...that we're giving for us as synergies is for the second half. We are adding the previous synergies that we got during the previous years, because this is something that is a recurrent saving or recurrent advantage for the group. I cannot split these synergies between the stainless steel division and the high-performance alloys division, but what I can tell you is that we are very happy because most of the synergies are coming from the top of the line. They're coming from the commercial side, and this is what we expected at the beginning. If you remember our presentations, when we acquired VDM, we mentioned something that we define as synergies beyond synergies. Not that we have we identified at that time certain synergies, very clear synergies, but that the best was what we couldn't predict at that time, and this is what is happening. Now, I think that VDM is contributing to the Acerinox group, not only with their own EBITDA or not only with their own activity, but also because we are going together to certain projects. We mentioned in one of the slides that we have 126 new customers that are new for VDM, are new for Acerinox, are new or are new for both. The efforts to go to the market with the two commercial teams together as a single working team is contributing to our position and is helping us in the strategy to develop higher added-value materials and go into sectors that are giving us a high, a higher value. That is the project sector. It's in general, I think it's good to say, you know, that the synergies are not coming from cost-cutting because VDM was a very good company when we acquired it. We didn't need to restructure the company, but they're coming from the commercial side. In this way, I think the synergies can be, let's say, unlimited, no? That it's too much, but, still, there's a long run to develop new synergies in the area. For inventory adjustments for this, for HPA. Well, the, you know, in regarding of the inventory adjustments, as you know, more or less what is contemplated according to a prudent accounting basis is specifically the items that at the end should be adjusted. There are still some, even though in the average of the business actually as appreciated in the results, there are more than profits and more profits to come. Still, there are some specific items in which some of the evolution of the components in the last months have been affected. Part of it, and mostly related to certain European sales, is also experiencing the adjustment inventories, but the huge amount is in the stainless division. In the stainless division, in the European market. Thank you. Our final question is a follow-up from Patrick Mann of Bank of America. Patrick, please go ahead. Your line is open. Thank you for taking the follow-up. I just wanted to make sure I'm understanding the inventory adjustment correctly. What was the impact on EBITDA in the current quarter from the inventory adjustment? Is that EUR 96,000,000, is that a cumulative balance sheet figure, or what went through the income statement or what's in your EBITDA this quarter? Alternatively, what is the impact of the inventory adjustment on EBITDA in this quarter? Thanks. Patrick, at the end of the first quarter, we made an inventory adjustment of around EUR 85,000,000 in order to put our stock on a realizable value on the circumstances on the second quarter. These already took place. When we have finished the second quarter, moving forward to the actual conditions expected for the summer and to the order book and the low prices for the summer, it has been needed another inventory adjustment, this one of EUR 97,000,000. More or less, the inventory that was adjusted in the month of March has been realized, and then what we are actually adjusting is the inventory, which actually is on hand. The other one was already sold. With the inventory actual on hand for the market evolution that is expected on the third quarter with such prices in Europe, we have done another adjustment, and the adjustment of this quarter is 97,000,000 EUR. On the basis of what has occurred in the second quarter, according to the other book, in the first quarter, that adjustment was of 85. This already, and this material left the company and was realized, and in the actual basis for the coming quarter, it has been 97. The effect of the inventory adjustment for the coming quarter has been 12,000,000 higher than that was needed to do in the first quarter. I don't think that you should add both, don't consider this an aggregation of 85 plus 97. That 85,000,000 EUR was of an inventory that already has been realized and has been sold. We are doing the necessary for the actual one. Thank you. We have no further questions. I'll now hand back to Carlos Lora-Tamayo, Head of Investor Relations, for any closing comments. Yes, thank you. We have a couple of questions from the website. The first one is coming from Francisco Riquel, Alantra, and it's as follows: Do you feel comfortable with consensus forecast at nearly EUR 800,000,000 at EBITDA level for the full year? Paco, it doesn't matter how you make the questions, we will not provide further guidance. Final question. Sorry, Paco, in the case, we are not making guidance, but keeping in mind, more or less in the actual circumstances, the consensus at the starting of the year was EUR 600,000,000. Nowadays, it appears to be EUR 800,000,000. What we are proud is that the consensus consider that this figure should be achievable, and it's a good demonstration of the valuation of our efficiency. Yeah. We would like to see this reflected in the value of our shares. The final question comes from Aninda Mohinta of ExodusPoint Capital, and it's a follow-up on buybacks as well, and it's as follows: What level of net debt would you like to see before considering further buybacks, especially given your depressed valuation? You're right, with the current valuation, buyback sales is interesting, but we are not going to increase our debt to buy our shares. I think this is key in the explanation that I gave about capital allocation. Now, if we have an excess of cash, we will dedicate it. We will decide in the board of directors to go to a new program of a share buyback. We are not going to ask for more loans, you know, to pay this share. Today, this is something that we cannot consider. First of all, we'll have to take our debt to lower levels. Okay. Thank you, Bernardo, Hans, and Miguel. Thank you, all of you for joining us on this call. Maybe just finish reminding you our next events in the second half of the year. On one hand, you know, we have the third quarter results presentations. That will be on the 3rd of November. On the other hand, we will resume our capital market day. In this case, will be in Germany, and we will do a site visit to one of our VDM plants. This will take place, as you may know, on November 29th on 13th. This is all from our side. Thank you very much again. We hope that you will enjoy your holidays. Thank you. Thank you very much for your participation.