Good day, and thank you for standing by. Welcome to the Outokumpu's Q4 2023 pre-silent call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a Q&A session. To ask a question during the session, you'll 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, today's conference is being recorded. I would now like to hand the conference over to our first speaker today, Linda Häkkilä, Head of IR. Please go ahead. Thank you, operator. Hello, all, and welcome to Outokumpu's Q4 2023 pre-silence Conference Call. My name is Linda Häkkilä, and I'm the head of Investor Relations here at Outokumpu. With me today, as our main speaker, we have our CFO, Pia Aaltonen-Forsell. As per usual, we will first start with a short update, and after that, we are happy to answer your questions. Now, without any further comments, I would like to hand over to our CFO. So hello, good morning, and good afternoon, and I do wish you all are safe and well, and wish you also a happy new year, 2024. So let me get down to a few comments relating to the current current market and then current situation. And maybe let me just start first by a few comments on volumes and delivery volumes. Our week, our guidance for the for the Q4 was to have an increase between 0% and 10%. And I think sort of based on where we are about to end the year, of course, books are still being closed as we speak. I think we are more close to this lower boundary of this range, so we are within the range, but closer to the low end. And I think that is a bit reflective also of somehow the general sentiment. If I reflect a bit more on what we see in the current market today, well, we actually don't see that much change, not really. People, customers are still very much in that sort of waiting mode, a bit on the fences, waiting for the trigger to do better. And we have, of course, discussed also earlier that, you know, we are not seeing the trigger yet, and and I can confirm this is still at the moment the situation. So somehow we are more in a kind of rollover mode, almost, when it comes to the market sentiment. There are a few changes that I think are worth commenting in the last couple of days and weeks, and one of them relates to imports to Europe. I mean, imports to Europe are at a very low level and have been so for a period of time, naturally, as also demand is very low. So there is a linkage here. Now, what we have then seen, of course, through the news is a lot of disturbances in the Red Sea, potentially in the future, then causing more disturbances to the logistic flow between Asia and Europe. Obviously, you know, from history, we know that that can get very congested and very troubled, with all of the traffic now then being circumvented, with a long, much longer route. So we will see. I mean, this is nothing where we would have yet seen, the impact. If there will be impact from that further, I guess, those we will see a little bit later during the Q1, but that may be something, to keep an eye on. So market environment in Europe has remained challenging. We still confirm what we, what we said earlier, that, the past quarter, I mean, Q3 was really the bottom, and that's where we also saw the lowest prices, as was then also reflected, in our Q4 guidance. Market recovery in Europe is still expected to take some time, won't happen overnight. We still have, as before, relatively short order books in February, into February at this point in time in Europe. So then, maybe just a final comment on Europe. We've had a lot of actions when it comes to profitability improvements and, and, making sure that we can come into black numbers for the Q4. I can confirm that those actions have proceeded as we planned and, and, and have been successful, to the extent that they can then help to mitigate the difficult market conditions. Then let me comment Americas with a few words, and there, I have to say, in America, market sentiment has been weakening, at least to the extent that, when we look at the CRU figures, I think you have all observed that, prices have also been somewhat declining in the last weeks. I think we have seen indeed very high import levels, particularly from Europe into Americas, and certainly that has an impact, to some extent on the market, on the market balance right now. And I think Q4, per se, obviously, that's also seasonally a weaker quarter. Nothing sort of surprising there. Now just sort of observing the current market sentiment, we do see some signs of weakening as we speak, and just kind of following what has happened in the last weeks here. So not very positive news, even from that side of the Atlantic at this point in time. Then on Ferrochrome, we did release a few days ago, the information about the planned production curtailments there. And again, that is a reflection of the weaker market sentiment that we are observing. So we are planning to curtail production permanently to about 80% of capacity until end of the summer or late summer of 2024. From Ferrochrome, otherwise, we had a successful maintenance break as planned in the Q4, and the impacts of that are as per the plans and the earlier announcements. And then I think we talked a bit about the net of timing and hedging impact being slightly negative in our guidance. As per all information I have today, I can confirm that nothing special new to say on that topic either. So I think that summarizes the more important sort of points of view and perspectives that relates to Q4 and the current market sentiment. Obviously, maybe on an accounting detail, just a reminder for the Q4 that as we were releasing the information about the continued hot rolling agreement, tolling agreement for the U.S., we also informed about an impairment booking of about $280 million for the Q4. So that's still valid as per earlier information. And then finally, the share buyback has continued as planned, and the full impact of the share buyback commitment will be visible in net debt figure. Of course, a part of that has already been paid, but then a part will still be seen as a debt at the year-end, year-end figures. And that's sort of a similar accounting procedure as we had with the previous previous program as well. I think working capital has been as also planned. There's been seasonally more inflows, so some positive impact from that. And in the cash flow, we also had some tens of millions of positive impacts from some repayments of earlier paid cash taxes for the year. So there were some outflows in Q3 that we actually then got back in Q4 for some tens of millions. So all of that has strengthened the cash flow in Q4, so that I'm sort of satisfied that we will show a strong balance sheet at the end of the quarter. So I think with that said, I would like to complete my presentation and open up for Q&A. Thank you. As a reminder, if you would like to ask a question, you will need to press star one and one on your telephone and wait for your name to be announced. And to withdraw your question, you can press star one and one again. Thank you. We'll now go ahead with the first question. Please stand by. First question is from the line of Anssi Raussi from SEB. Please go ahead. Thank you, and thanks, Pia, for the presentation again. Actually, I have three questions, and I go one by one, but I start with the Ferrochrome. So how much of, let's say, excess inventories you have at this point? And what is the current capacity utilization rate if we compare to the full production capacity? And is it so that you expect 80% of capacity to be enough for 2024? Are you or are you just, you know, pushing down your own Ferrochrome inventory levels? That's the first one. Thanks. Yeah. Thanks, Anssi. And you know, your questions are a ctually, it's a little bit complicated to answer to them in some sort of short and snappy way, because I do feel that we have a bit of excess inventory, but that is not as significant. I mean, that is not the only driver for the changes that you know why we are also planning now to really curtail production. But obviously, being able to lower inventory levels is also something we are targeting. When I think about Ferrochrome inventory levels, I think that it's important that we have, let's say, the needs, the commitments that we have. This is very typically annual contracts, by the way, that we have them secured, and that we also have a bit of a safety buffer just in case of any disturbances in the chain. You know, when I combine those two, then I think that the really excess inventory is not that significant. But admittedly, there is something that we could drive down. I don't want to leave that kind of top of the list. I think more important is that we have a weak market sentiment and lower volumes and demand in stainless broadly. For the customers of Ferrochrome, there is clearly lower demand, and we need to adjust to that. As we have demonstrated during the electricity crisis, that obviously has nothing to do with the current situation, directly, but we are able as well to adjust or optimize our production, even on a daily basis, if necessary. But of course, the fact that we are taking, planning to take one furnace out of production, we have three furnaces, and it's one of the smaller ones that we are taking, planning to take out of production. It is more talking about this weaker market sentiment and adjusting to that. So we are already now at a lower capacity utilization. I'm sorry that I don't have a number to give to you straight away right now. But we have, you know, we are also able to adapt, even on a daily basis, if necessary. This is reflective of a more sort of view into the summertime. Okay, thanks. And now, as you mentioned, stainless capacity, how do you see your own stainless capacity right now, compared to the market demand? So do you have or are you able to limit your capacity right now, or how do you see the situation? I mean, the most important is, of course, to optimize the systems that we have so that we kind of continue producing at high enough capacity utilization levels. Particularly, Tornio has remained at very good levels, which is important because that way we also drive the appropriate cost structure, and then we will take necessary, you know, short-term work or other arrangements. They are, unfortunately, fairly broadly used, sort of through our production system at this point in time. But we have still been able, I would say, to operate Tornio at an appropriate level. However, in Q4, obviously, we had some maintenance breaks also in Tornio that were planned also during November. So this is, I would say, you know, broadly speaking, a very sort of low capacity utilization period. Within our system, we try to optimize so that we use the capacity that then delivers the best efficiency. Okay, thanks. And the last one from me is about the scrap prices. So what kind of realized prices you saw in Q4 or... And is there anything else on the maybe cost side in Q-on-Q basis to mention, like energy, for example? Yeah. On energy, I would say the direction is sort of slowly but surely lower. And why I'm saying slowly is that we have a hedging ratio that is above 80%, was in Q4 and is also for Q1. So there's a number of contracts that were locked in already, you know, quite a long time ago. So with that said, the fact that the spot prices keeps on going very low but also very high some days, it's not really impacting us that much. So sort of steadily downwards, but no like abrupt or quick or sudden changes there. I think on the raw material side, there has been some pressure in the market, and I don't really have, let's say, any sort of easy or quick explanation to just say this is exactly what has happened. But when I look at the scrap, I'm still broadly very satisfied, and I think that we have had access to all the scraps that we have needed at the point in time where we have needed it, and still also to an appropriate pricing, given that the market circumstances for us are challenging. Great. Thank you. Thanks, Anssi. Thank you. We'll now take our next question. This is from the line of Ioannis Masvoulas from Morgan Stanley. Please go ahead. Hello, and Happy New Year. Thank you very much for the, for the call. A couple of questions from my side. First of all, you previously indicated the modest rebound in European spot prices for stainless, which would benefit to some extent Q4. Do you expect this to be a tailwind into Q1 2024, or is this fading now, given that the spot prices haven't really maintained that positive momentum? Ioannis, thank you, and Happy New Year. I think, I mean, what we previously said on Q4, I think is still relevant and correct because we still have, you know, somewhat of a delay between the order intake and the actual deliveries. So, I think it followed pretty much the pattern that we had foreseen. And now, if we sort of consider and just look at where spot prices have moved, then there's been more of a sort of stabilizing than continued upward curve. So I think in combination with the fact that we have a reset of annual contracts, and obviously, also for annual contract, there's been some convergence towards the spot prices prevailing in Q4. So, I think with that said, there's probably still, you know, there could be a little bit of momentum, but it's definitely not significant into Q1. I mean, just based on what we see historically now happening during Q4. That's, that's very clear. Thank you. And second question, you mentioned a strong balance sheet at the end of the year. Do you expect to be on a slight net cash position or maybe a small net debt position? If you can give us a bit of visibility on that, that'd be very useful. Yeah, yeah. Thanks. I think given the strong working capital performance, I mean, aligned with my sort of the initial view that we had, and then as well, some of these positives, I really think that this strong balance sheet means that we could even have a bit of a cash position. But, I mean, this is still to be confirmed then when we have the accounts closed. Thank you. And last one from me, just going back to Ferrochrome. Last time you had a curtailment, you took more, let's say, conservative approach, and you waited to see how things will develop to decide how long the curtailment will last. Mm-hmm. This time you're talking about the curtailment through to the end of summer. Is that because you need to work through the inventories, or is it because you're a bit more pessimistic on the stainless demand outlook in Europe? Well, it's a combination of both, I would say. I mean, the inventory is placed in there, but it's not the main, you know, it's not the main driver. But of course, with some inventory that we could reduce in connection with what we currently see in the market, those two led us to that conclusion. Okay, great. Thanks so much. Thank you. Thank you. We'll now take our next question. This is from the line of Krishan Agarwal from Citigroup. Please go ahead. Hi, Pia. Can you hear me? Hi, yes. I can hear you very well. Yes, yes, yes. Thanks a lot. Happy New Year to everyone. I have two questions. I mean, following up on Ioannis' question on sort of the uptick for the Q4 pricing, how should we think about the price cost spread? Because earlier you alluded that there was a little bit of raw material cost pressure. So do we still is it fair to assume that the next, uh, negative EBITDA situation of the Q3 has sort of now been one-off in the Q3, and Q4 probably will see better or positive EBITDA, at least for Europe? Yeah, yeah. I thank you very much. And obviously, you know, it's a really important question, and when I now look more into, like, Q4, I think that the topics that we have described before as part of our EBITDA guidance are still relevant. And that leads me to the conclusion that, you know, this spread development has still been positive for Europe. Because we were unfortunately negative in the Q3, and we were foreseeing black numbers in the Q4. So obviously, that talks about a positive development. And I also opened this call by sharing some more negative sentiment about the market in Americas, but that is more what we see here and now. So also relating that to Q4, I don't have any sort of additional information compared with what we said before. I understand. The second question on Ferrochrome. So, I mean, is it fair to say that the ramp up after the previous slowdown in the Ferrochrome has been fast, faster than the market recovery into the, you know, European stainless, and hence you are doing this, you know, curtailment? Or is it a reflection on the significant slowdown on the stainless steel market itself in Europe? I think it's, you know, we had a good ramp up after the maintenance, if that is what you are referring to, so it was successful. However, I mean, this is a testimony of the market sentiment and then also our willingness to, you know, cut costs as quick as we can, or at least plan to do that as quick as we can. I understand. Okay, thanks a lot. Thank you so much, guys. Thank you. Thank you. As a reminder, if you would like to ask a question, you can press star one and one on your telephone and wait for your name to be announced. And to withdraw your question, you can press star one and one again. I'll now take our next question. This is from the line of Maxime Kogge from Oddo BHF. Please go ahead. Good afternoon, and a Happy New Year on my side, too. So first, a general question on the market. On paper, you have, I mean, a pretty nice situation because you have much lower input pressure, at least in Europe for a few weeks. Nickel prices are stabilizing. There are prospects of rate cuts in both Europe and the U.S., and still the underlying volumes seem to be quite weak. So what do you think the market needs to really be buying back again, stainless steel? So that would be my first question. Yeah. If we talk about the European markets, you are absolutely right. I mean, import pressure has been low for a period of time already. Now, nickel prices have been stabilizing. So there are y ou know, these are of course kind of, you know, these are good and sort of positive remarks. However, really the underlying demand is suffering from, I would say, this overall macro negative sentiment, disease, if I would call it that way. So, I mean, it's really a matter of, yes, interest rates could be going down, but they are still high. And this is putting a lid on companies, on consumers, and through that also, of course, on companies, on projects, et cetera. So, I think that there are some signals that, you know, things in the future might be going to the better, but they are not realizing yet. Of course, you know, even though interest rates would go down, you know, the first step or the first steps will still only bring them down to a more reasonable level. I mean, it's probably gonna take a little bit of time, is my assumption. Then obviously, you are right, that this nickel price plays a role a lot. And if there is an expectation of a downward pressure, that could still have people hold back and wait to see what happens. So maybe that is a stabilizing factor. But I do think that the underlying demand is weak, and it's driven by macro circumstances. And we will have to see the whole kind of macro pickup in Europe and, you know, Germany being, for example, one very important market there. Mm-hmm. Mm-hmm. Okay, clear. Second question is on, w e've seen actually quite extreme weather conditions in Scandinavia over the past. Oh, yes. Days with, I think, temperatures at the lowest for 25 years. Does it, I mean, I guess you are quite used to low temperatures in Finland and Sweden, but do you still see an impact on cost, logistics, et cetera, in Q4, in Q1? Yeah, so far I have nothing to report, but I can absolutely testify to the, you know, just making everyday life a bit more difficult for sure. I have to take care not to freeze yourself. But one thing, of course, is that spot prices of energy, for example, are certainly climbing in such a situation, but our hedging ratio is high. It's well above 80%, for the Q1, and in Finland, I think it's even higher than that. So not quite 90%, but still clearly above 80%. So we are well covered, and we also have practices to optimize, so you know, to cut energy consumption if we really would have some really peak prices, which absolutely could happen in this kind of weather conditions. So that's, that's one thing. There, I think we are better prepared after this energy crisis. And then, yes, eventually we could have impacts on deliveries, et cetera, but I'm not aware of anything of, of that kind at this point in time, so traffic is still running. Okay, good to, good to hear that. That's all for me. Thank you. Thank you very much. Thank you. We'll now take our next question. This is from the line of Anssi Raussi from SEB. Please go ahead. Thank you. Just one follow-up. Could you maybe comment your mix in your order intake during Q4? And also, if we think about Q1, of course, I guess Europe should be stronger in terms of seasonality when we compare to Q4, and also Q4 should be quite weak in America due to seasonality. So, Yeah. Is there something we should be extremely worried about going into Q1? Thank you. Mm-hmm. Well, Anssi, thank you. And, first, to answer your question really about, about projects, et cetera, and particularly relating to mix, then I think there is quite, you know, there, there are quite big differences between different market segments. So we do see some market segments that continue, even strong, or at least, you know, robust in terms of, of, you know, continued business, hence, also order intake, for us, for projects or for more value-added, value-added projects. And those include, in particular, I would say, still some oil and gas, still some green transition and, and, and still also maybe some sort of, you know, general, general industrial, type, type of projects. So those are maybe a little bit, I don't want to call them anomalies, but I'm But just to say that in, you know, sort of weak market sentiment where especially consumer-driven demand is low, then I think that some of these value-added products sort of are showing still some robustness, but not all. And these higher interest rates are for sure also causing some, let's say, concern and some projects are being delayed. So I would still say, like, the holistic picture is that, as we see right now in the order intake, I mean, I at least feel satisfied that also this sort of value-added order intake is pretty much according to plan. I mean, this is what we would expect and would also expect that this picks up a little bit into the Q1. But I have to say that at your other question of, you know, what should we expect from Q4 to Q1? I don't have yet the final answer to that. I think we are still in this period right now where usually sort of in the second half of January when people really come back from holidays, that's probably the time to really observe, you know, will these logistical challenges in Suez Canal, will they have an impact somehow to behavior of customers in Europe? Will they feel an urge or a need, for example, to stock up? We don't know that yet. That remains to be seen. But, but in the market right now, we are not observing these kind of signals of, you know, strength and a sort of pickup. So I would kind of, at the moment, have to speak more of sort of a rollover mentality, where things just, you know, kind of continue on this fairly low and modest level in terms of what we see in market activity. We'll probably know better in a few weeks, and then when we give our Q1 guidance, we will talk more about this. Okay, great. Thank you. Thank you. And there are no further questions at this time, so I will now hand back to the speakers for any closing comments. Thank you. We have a question come through, if you would like to take it. Yes. Thank you, speakers. One moment, please. We have a question from the line of Bastian Synagowitz from Deutsche Bank. Please go ahead. Yeah, hey, and Happy New Year to all of you as well. Thanks for squeezing me in, at the end here. I just had one, a quick follow-up on, on the last question, actually, Pia. Just in terms of the volume trend, I guess usually, I guess usually the trend we see both, on both sides of the pond, i.e., U.S. and, and also Europe, is, is probably trend of, of, being up like roughly 15% to 20%, off the Q4 level. But I guess from what you're saying, we should be expecting, at a minimum, probably a, a much, much more flattish trend, i.e., very unlikely a double-digit growth, much more flattish versus, versus Q4. Would be, would you be comfortable to say that, or do you actually still see the, say, like, high teens in, I would say, within reach from, I guess, the comments you're trying to caution us a little bit on the volume and demand side? At least that's what I've been reading out of it, but maybe you can just help us on that please. Yeah. Thanks, Bastian, and Happy New Year. I would say, you know, having the kind of normal pattern with, you know, some drop with the volume pick up, that's not, I mean, the market currently more subdued than that. I will, however, need to come back to this when we give our Q1 guidance, because these first weeks of January are usually, you know, they will show some direction, once we get sort of past the sort of holiday period. So we will need to come back to that. I just wanted to share that the current market sentiment is not sort of, i t's not supportive of a strong pickup, at least from what we can see right now. Perfect. No, thanks for clarifying that. Yeah. Thank you, Bastian. Speakers, just checking, did you have any closing remarks before we close the call? Thank you, operator. Well, before we close the call, I would like to remind you all that we will start our silent period on Tuesday, January ninth, and we'll continue until our Q4 results are published on February 8th. Thank you once again for joining our call today, and have a great day. Thank you. This does conclude the conference for today. Thank you for participating, and you may now disconnect. Thank you.