Good day, and thank you for standing by. Welcome to the Outokumpu's Q2 2024 pre-silent call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one and one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one and one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Linda Häkkilä. Please go ahead. Thank you, operator. Welcome to Outokumpu's Q2 2024 pre-silent call. My name is Linda Häkkilä, and I'm the Head of Investor Relations here at Outokumpu. As our main speaker today, we have our new CFO, Marc-Simon Schaar, and as per usual, we will first start with a short introduction from our CFO, and after that, we are happy to take your questions. Please note that we have reserved 30 minutes for this call. Due to the time limitations, I would kindly ask you to limit your questions to a maximum of 3. But now, without any further comments, I would like to hand over to our CFO. Thank you, Linda, and good afternoon, dear ladies and gentlemen, and a warm welcome also on my behalf to our Q2 pre-silent call. Well, let me start by saying a few words about the current market situation. We see that the gradual market recovery has continued in Europe and as we communicated earlier, the lowest point in the cycle was actually in the third quarter of last year, and since then, we have been slowly recovering. This slow recovery is expected to be then also reflected in our profitability of our European business. When I look back to the beginning of this year, we actually started off quite well, and our order intake was good. However, the political strike in Finland impacted us negatively and burdened our results significantly in the first half of this year. As we all know, the political strike mainly occurred during the first quarter, but was extended by one week into April, so the strike had both a direct and an indirect impact on Outokumpu, also in our second quarter. As stated in our Q2 guidance, which we gave in early May, the negative financial impact in Q2 is approximately EUR 30 million, EUR 30 million and, as such, on the same level as in Q1. While in Q1, a clear majority of the negative financial impact hit our business area, Europe, in the second quarter, also our business area, Americas, was impacted through internal material flows, and, here, I would say almost as much as our business area Europe. Now, when I look at the overall stainless steel demand, we haven't yet seen any clear uptick, and from a sector perspective, I would like to mention that a subdued real demand remained for the construction, automotive, but also white goods sector. The positive trend which we have seen in the renewables area, including also hydrogen business, has continued positively. Now, in order to have a higher uptick in the overall demand, this requires another catalyst here, really, and from our perspective, the catalyst is then. One of the catalysts is then in relation to falling interest rates against the current environment, whenever they come. Given the current market environment, our order book, however, remains on an okay level. That is what I would like to mention here. If we then move on from the sectors to more from a distributor business perspective, here we see that inventories remain at a low level, as we can all see from public data being available. In Europe, the recent strikes we have seen have led to shortages in stainless steel supplies, on the one hand side, and extended lead times, and therefore, distributor inventories in April were at their lowest levels since the end of last year. Maybe let's spend a few words now on impacts, or the import situation. During the second quarter, imports into Europe, according to third-party sources, clearly increased and returned to more normal levels from the exceptional low levels, which we have seen in quarter four of last year, as well as the first quarter of this year. Moving over to the Americas, key market indicators over there seem to be a bit mixed, and looking at the distributor side, inventories have still remained at a low level. So no major changes over there. Also, no major changes in import statistics as far as we can see from publicly available information. Looking at our guidance for the second quarter, we stated that we expect our stainless steel deliveries to increase by 5%-15% compared to the first quarter. As we have not yet closed our books for June, of course, we do not have the final information yet, however, we expect to be closer to the lower end of this range. And in this context, I want to remind us on our earlier communication in our Q1 results, that we were talking about having some temporary operational challenges and clearly more maintenance work in our business area, Americas. I think here it is good to keep in mind that the work in the Americas on these topics was still ongoing during April, and as such, naturally impacted our volumes and the Q2 results in the Americas. On the scrap market, the scrap market continued to remain tight, as we indicated earlier. In this context, I think I would like to emphasize again that we, from an Outokumpu specific perspective, we have sufficient scrap available, and particularly due to the good relationship with our suppliers over here. However, as we already indicated earlier, the scrap market tightness is primarily driven by lower industrial activities. As part of our guidance, we are also commenting on our raw material-related inventory and metal derivative impact, which we also refer sometimes to as net of timing and hedging impact. And, in our guidance, we stated that assuming the current raw material prices that were prevailing back at the time, we expect to realize some losses in the second quarter. That comment remains valid, but of course, also here, we have not closed the books as of now for this quarter. Now, maybe a few words on our ferrochrome business. Here, we do not have any major news. As announced earlier, one of our ferrochrome furnaces remains closed until autumn due to the current demand situation in the stainless steel industry. Then maybe moving on to working capital, net working capital. We have seen some small build-up as we communicated earlier in our Q1 result, and that's mainly due to increased raw material prices, and on the one hand side and also increased, I would say, activities after the political strike here in Finland. Of course, we aim to manage our net working capital efficiently, but at the same time, we also want to remain flexible going forward in order to adjust to any and be prepared for any potential uptick in the market whenever that is going to happen. Our strong balance sheet, which we have, also allows us to do so. So to summarize, and as far as we can see it as of today, we expect our Adjusted EBITDA in the second quarter to be at a similar or higher level compared to the first quarter. And as such, being in line with our earlier communication in connection with our Q1 result, which we announced in early May. Good. With these words, I would like to close my short introduction and start the Q&A session. Thank you. Thank you. As a reminder, if you wish to ask a question, you will need to press star one and one on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again... We will take our first question. The first question comes from the line of Tristan Gresser from BNP Paribas Exane. Please go ahead. Your line is open. Yes, hi, good afternoon, and thank you for taking my questions. I have two, please. The first one is on the guidance. Given we're at the end of June, and you're still offering us two possibilities with stable or higher on the EBITDA, what really would push you more towards a stable quarter-on-quarter? From what you've said on the volume side, that might be a bit softer than the midpoint of the guidance, the range, the raw inventory losses are still there. So I'm just trying to think of, you know, why we couldn't see a more clear increase quarter-on-quarter. That's my first question. Yes. Thank you. Okay. Hi, Tristan, and thank you very much. Yes, I would say definitely one impact in here is on the volume side. Really, as we communicated earlier, that we see the gradual improvement in Europe over here. And that of course these volumes and the volumes impact was somewhat impacted by the strike which we have seen predominantly Q1, but also impacting in Q2. Yes, in order then to position in here, that is where we see at the moment our guidance of similar or higher over there. Then, of course, we also had the maintenance break in the Americas. If I combine all of that, that is then basically leading to the guidance which we have provided now, at this point in time. We will come back then, of course, with more information in our Q2 release. Okay, that's very clear. Thank you. And just a quick one on the maintenance break, whether on the volume impact or the EBITDA impact, are you able to quantify it? No, I'm not in a position. We haven't really been able to give any specific impact and volume guidance and so forth. That is then something where we haven't been. I mean, what we have seen is certainly in the business area Americas the maintenance work, and we also have seen some pickup in the maintenance costs in the second quarter, compared to the first quarter. But mainly due to having more maintenance work in the business area Americas. But however, we are still talking here only about a single-digit increase. Okay. That's, that's clear. And maybe a last question, on- Mm-hmm. Raw material. We've seen some reports of European stainless steel makers importing some semi-finished product and NPI from Asia. Is that something you could have done or that you have done? And more broadly, I think back in Q1 and still today, you talk about the tightness in the scrap market. If we look at recent- Mm. Scrap prices, it seems we're starting to see some loosening and prices coming off a bit. So would it be fair to have a bit more of a constructive outlook regarding the scrap market into the coming months? Thank you. Yes, of course. So first of all, I'm not in a position to comment on what other parties in the industries are doing. I can only speak from an Outokumpu perspective and given our sustainability strategy and our vision around this topic, we are not buying any such raw materials, such as you mentioned, Tristan, nickel pig iron over here. That is what I can exclude. However, of course, we look into other, more sustainable improvement measures going forward. Sorry, and then the scrap you- And then you touched on the scrap market. I think I referenced to the current tightness in the market, and I also said the main driver being the industrial activities, and that is then some of the main drivers which probably would then also change that situation going forward. Okay. Thank you very much. Thank you. Thank you. We will take our next question. Your next question comes from the line of Tom Zhang from Barclays. Please go ahead. Your line is open. Yeah. Hi, afternoon. Thanks for taking our questions. A few from me. The first one, just on maybe just latest pricing updates. I mean, you mentioned in Europe, you're seeing a bit of an uptick in import pressure. Some of the distributor inventories have been drawn down by the strike action that we've seen in Q1, but obviously you guys are back online. We've seen one of your peers in Spain come back online in the last few days. So just wondering, some of the base price hikes that we've seen in Europe, do you think these levels are sustainable, or is there a risk already that, you know, you're starting to see European prices roll back over, that's what next? Thank you. Thank you very much, Tom, for your question. Unfortunately, I'm not in a position to comment, particularly on forward-looking prices. But maybe to give some color to your question in order to help to give you an understanding, I think in the past, we have been talking about a gradual improvement in the environment in here in BA Europe. On the one hand side, I think it's also important to remind us that we also have a certain share of annual contracts on the one hand side, but it's not only some annual contracts. We also have half-year contracts as well, which we have already concluded. So, maybe that can give you, give you some color around this topic. But, I'm unfortunately not in a position to provide, more information on this. Got it. Thank you. Got it. No worries. No worries. Yeah, and the second question, just on ferrochrome, I guess, since Merafe has stopped sort of publishing the quarterly benchmark price- Mm-hmm. Maybe just what that means for the markets, how you price any of your products? Is there any sort of change that we should be expecting, do things go to spot? And does that create any kind of opportunity for you to, you know, possibly restart that furnace, the idle furnace earlier, and start selling more to European peers? Just any sort of comments on that would be interesting. Thanks. Yeah, yeah. I think when it comes to ferrochrome, and also in line with what we communicated earlier, the closure of one of our furnaces was not predominantly driven by price, by the price situation, but more about the weak demand situation in stainless steel, which I was reporting earlier as well. On the one hand side, and also here, when it comes to pricing, again, we're limited, we have a policy that we're not commenting on any prices. However, again, maybe in to give you some color in here, I think it would also good to look at our historical sales and volumes. In this context also of the fact that there are various indices reflecting the ferrochrome price other than the benchmark. That will provide you then with an opportunity or some color around this topic. But again, unfortunately, the same restrictions apply then to your second question. Okay. Yep, no worries. Yeah, that's fine. I'll turn it back. Thank you. Thank you very much, Tom. Thank you. We will take our next question. Your next question comes from the line of Anssi Raussi from SEB. Please go ahead. Your line is open. Yes, hi, all, and thank you for the update, Marc-Simon. First question about your volume trend, and appreciate that you gave some color about the development during this quarter, but if you could provide some more information about, you know, sequential trend during the quarter. So, like, what kind of market environment we are seeing entering into Q3 right now? Well, yes, first of all, hi, Anssi, and, in order to answer your question, I think, we have been saying that we saw gradual improvement in the market, but, nevertheless, I think we all are very painfully aware of the difficult market environment we are operating in, which I would still consider to be weak, particularly comparing to the prior years. But, I think it's important, we will definitely come back to this topic, then also in our second quarter release and give you some color on this topic going forward. Okay, thank you. And, my second question is about your ferrochrome production. So, I understand that you haven't changed your plan, at least yet in public, to launch or start your third furnace, during, maybe Q3, but, could you comment that, is stainless, stainless steel market developing like you have expected? Or do you think that it's maybe a bit weaker than you initially thought that it would be at this point? I would say yes. I mean, I see two questions here from you, Anssi. Yes, I confirm to the first part, we have not resumed product production in this one particular furnace, and coming back to your second one, I, as far as I see the situation at the moment, I wouldn't see any major changes in here. Okay. Thank you. Thank you, Anssi. Thank you. We will take our next question. Your next question comes from the line of Ioannis Masvoulas from Morgan Stanley. Please go ahead. Your line is open. ... Hello, Marc-Simon. Thank you very much for the call. Just a couple of follow-ups from my side. The first on Europe, is it fair to assume that the recent price uptick that we've seen is reflected in your order book as you're going into Q3? And could the better ASP help offset the typical seasonal weakness? In terms of prices, again, I would need to step back here, but again, Ioannis, to say, we of course mentioned that we have seen gradual improvements, and those have also been reflected in our order book. But I'm not in a position to give any pricing guidance going forward. Having said that, but when it comes to the volume side, maybe what we should not forget also in here is that I mentioned that we actually started the year off quite well into this year, but then were negatively impacted by the strike, and we also mentioned the maintenance work and all of that. So, on the volume side, both Q1, Q2, negatively impacted. So, maybe that should give, give some color whether vis-a-vis then the second quarter, where we, we really see a seasonal impact or not. Very clear. That's useful. Thank you very much. Mm-hmm. Just a second question on the U.S. market. There has been some commentary on softer activity. Beyond the disruptions that you had, how do you see underlying demand shaping up in Q2 versus Q1, and potentially further into the second half, based on the visibility you have today? Yes. This is a very good point, and I can confirm what you have been saying here. And, in line with what I mentioned earlier, we don't see any significant changes in the U.S. I think we have reported that book volumes came down from last year into this year. And at the moment, what we see that distributor inventory levels remain on a low level. We don't see any major uptick in here as well. It's a bit of a mixed situation, and I... We don't see any significant change in that market at the moment. Well, it's very clear. Thanks again. Thank you, Ioannis. Thank you. We will take our next question. Your next question comes from the line of Moses Ola from J.P. Morgan. Please go ahead. Your line is open. Hello. Thank you very much for taking my question. So the first one, just wanted to clarify again on Europe. So just focusing on the supply here. So, of course, some of your peers intend to return to market following an idling period. Just on what you're seeing here in terms of real demand, do you view that real demand would be able to absorb additional supply here within the market? Are you seeing any potential change, changes in behavior in customers based on the expectations of more supply into the second half of the year? And could you clarify just where lead times are, maybe by weeks, if possible? Mm. Yes. Well, let me say first that, in terms of the return of some of the suppliers coming back from strike, yes, we heard the same. However, really when and how far after such a long maintenance break, that remains to be seen, really, and I'm not in a position to comment on and/or speculate on this one. So, but, again, trying to give a bit of color around this topic as well. Again, we have annual contracts. We also have semiannual contracts, which have been concluded over here. Therefore, at the moment, given the lack of information we're having, I can't see yet an impact immediately. We need to see then towards the end of the year, really, when we have further information, what that then really means. And then I think, what was your second part of your question, Moses, again? Sorry, just, yeah, just on lead times, are you able to give us a measure of what current lead times are? Ah, lead times. Okay. Yeah. Well, also here, as we mentioned before, we expect the slow market recovery in Europe to continue. And, as such, I wouldn't say that there are no significant changes compared to what we reported back in May. But of course, we will revert back to you then to this in line with our Q2 results. ... Okay, thank you. And then just finally, you talked about a working capital build in this quarter, but what would you say your expectations are for the full financial year? Would you still expect, obviously, given the weaker volume and pricing environment, to release working capital for the year? Yeah. I think this is something which I think there are many, many aspects to consider in here. I mean, on the one hand side, it's where our raw material prices are developing to, but then also in relation... I mentioned before that we want to remain flexible also to ensure that we can deliver to the market in case we see any uptick which is there. So, at this point in time, it is then I'm not in a position to give a firm and definite answer yet, at this point in time, over years. But of course, as having said that, we aim to be most efficient on working capital as we can, and that remains. Okay. Thank you very much. Thank you. Thank you. There are no further questions. I would like to turn the conference back to Linda Häkkilä for closing remarks. Thank you, operator, and thank you all for participating in our call today. Before we close the call, I would like to remind you that we will start our silent period on Tuesday, July ninth, and continue until our Q2 results are published on Thursday, August eighth. Thank you once again, and have a great day. This concludes today's conference call. Thank you for participating. You may now disconnect.