Hello all and welcome to Outokumpu's Q1 2024 pre-silent 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 give you a short update and after that we're happy to take your questions. Now without any further comments I would like to hand over to our CFO. Thank you, Linda, and ladies and gentlemen, dear friends. I do hope you are all keeping well today. We sit with Linda here in Helsinki, and it's another week of political strikes, and even though those strikes are really some kind of protest against the government and against some changes in policies, they are impacting companies a lot. And particularly for Outokumpu, we have been out with several releases just to really explain the situation. And as we speak now, in the fourth week of the strikes, we have estimated that the total negative impact for us is around EUR 80 million, of which we will see about EUR 30 million—that's an approximate number, but about EUR 30 million impacting the first quarter. And then of course with impacts into the second quarter as well. I guess everyone is now waiting for news what will happen next. Will further strikes be announced? But as we are speaking right now, we do not have other official information than that the fourth week of strikes was announced last week. So that's really where we are in terms of the strikes. I will still make normal comments both about the markets and about our operations. Nonetheless, in Europe right now, these strikes are for sure shadowing sort of any current improvements that we have seen in the market. But let me first just start from the markets perspective. I think it's always good to reiterate also for those of you on the line who we might not have been in contact with since our last release. So I'll start with Americas from the market perspective and just say if you listen to us end of last year's development was a bit slowing down and the market was showing some signs of weakening. And certainly when we look backwards that also had an impact on price levels that were somewhat lower. And if we now think about the first quarter we have seen a typical seasonal pickup for sure. I think there's a lot of market comments about some more optimistic outlook and a bit more positivity as well. But I'll just make the typical CFO's reminder here that you know any improvements that we see in the market right now we will see in our invoicing more towards the later quarters of the year. Certainly the first quarter in itself has still been impacted by the let's say slower market sentiment that was prevailing at the end of last year. So that's really where we are. I do think we are observing the seasonal pickup and we are also observing you know somewhat gradually more positive market sentiment. And I also had a look at the distributor inventories and still we haven't seen any let's say major restocking. So we are definitely still at like low levels here in terms of the inventories. Then let me move to another let's say fairly positive area in Europe and that's the more specialized grades within for example the Prodec family or also these select higher alloys that we are making. And here I think as well really in the same fashion as we have been speaking earlier this year we do see projects going forward. They could be in energy. They could still also be in green transition. And I think the sort of sentiment is improving. It's positive and it's improving. But definitely also there from a level that was slower end of last year. So somehow we are gaining some momentum. And I think that's certainly at least for me is a positive sign given that interest rates are still high. But if we come to the commodity side here of course our order intake sort of looking at the first quarter was following the pattern that we had initially forecasted where we were also foreseeing the typical seasonal pickup. And I think that the markets were gradually improving aligned with that. However now with the strike situation of course as per our separate announcement that has definitely had a negative impact on us both in the first quarter as the strike started in March and also then towards the second quarter. But market itself also on the more commodity or standard side I think has followed the pattern that we have talked about that there are some improvements. We see, let's say, step-by-step improvements. And one statistic maybe still to share is that from a German distributor side we actually did see a bit of restocking actually some even increases in the inventory levels. But they are still on low levels. But let's say some pickup was visible there. So, I think all in all, if it wasn't for the strike, I guess our market comments would be exactly following what we have been talking about since the Q4 release. With the strike, of course, Outokumpu has some negative impacts there. Maybe there is then just one more perspective on stainless steel, and this is sort of a bit of a strike impact that probably will be more visible also in the second quarter. But we had some deliveries planned from our Tornio operations also into BA Americas. And of course with the strikes, those will not materialize. So some negative downstream impacts could also be in BA Americas. So not all negative impacts are in BA Europe. But let me then say just a few words on some other important aspects from Outokumpu perspective. Ferrochrome production running was running at 80% before the strikes. The strikes are also impacting the ferrochrome production levels. But you may recall that we had some somewhat higher inventories. And thanks to those we have still been able to serve the critical customers as well as any such internal demand where we are still producing stainless for example in Avesta or in the US. When we look at the maintenance costs they will be a little bit lower in the first quarter compared with the fourth quarter. That's a typical seasonal impact and I think we can reconfirm that. And then we also have the timing and hedging impacts where you might say hey you know there was actually a bit of a peak here in nickel prices. You know, shouldn't that somehow be visible and have some, you know, different outcome in timing and hedging? But I think we are, let's say, full circle back to those levels prevailing more or less at the start of the year. So I think we can just reconfirm what we said earlier about timing and hedging that there's probably gonna be a small negative number. I mean, that's really gonna be a small number. I doubt even double digit, but a small negative number nonetheless. And then finally just looking at the ferrochrome market itself, I think here again the same pattern with some improvements. You know, if we really look at the global market, if we look, for example, at China, we can just see some small pickup in terms of demand. That's also visible in those prices that are being quoted. But of course, as those of you who know Outokumpu well, you know that this market for us is not; we are not delivering to Asia. But this is maybe more than sharing the global sentiment of the market. Also, the US is somehow picking up, whereas Europe still remains fairly subdued. But I think, with that said, I would complete my opening here and would now be ready to move to the Q&A. Thank you. 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. Thank you. We will now take our first question. Your first question today is from the line of Ioannis Masvoulas from Morgan Stanley. Please go ahead. Yes, thanks very much for the call, Pia, and for taking my questions. A couple from my side. The first one again on the strike in Finland. The extent of the profit downgrade seemed quite sizable. Could you perhaps elaborate on the moving parts in terms of product flows that have been impacted across, for example, the U.S. and Germany? And related to that, how long would the inventories last before you have to announce some profit or, let's say, a force majeure across some of the specific product flows that you may be running low on material? Thank you. Mm-hmm. Ioannis, Ioannis, thanks very much. And first I think it's maybe easier just to try to put things into perspective when it comes to kind of the importance of Tornio site in our operational system. It is our biggest melt shop. So you know under any circumstances that is where of course we are producing all the way to cold-rolled also in Tornio. So some direct customer deliveries are impacted. But we also typically have downstream the deliveries particularly to Germany for example to our sites of Krefeld and Dillenburg. And also some select deliveries both into Mexico and U.S. And I think what we are seeing now is really the same pattern kind of being happening in front of our eyes. So the deliveries into U.S. are what I would call select. So they refer always to some special grades or some specific cases that we would typically deliver that way. So they are a very small part of this overall impact. But nonetheless I mean we are talking about millions. So we wanted to mention it in terms of financial impact. Then all of the other impacts are within business area Europe. And I think with a big emphasis on the more commoditized grades and with some impacts through the Dillenburg channel then into the more special grades. But here again a bigger part of the impact going through the more commoditized grades which is typical for the deliveries from for example then Tornio into Krefeld. And this is following kind of you know our normal pattern. Therefore I think in terms of the financial impacts I mean assessing what our result should be in these market conditions from Tornio and from our system in Europe. You know I think this is the result that we will see. And certainly we had some inventories and we have some very low level of production that is done for safety reasons. So maybe some very critical deliveries can be taken care of. But it's really restricted at the moment. So definitely this is the thing that kind of keeps our team who those who are working they are really working day and night now to try to figure out how to solve for things. That's really all I can let's say. That's all the detail I would have at this point Ioannis. Understood, Pia. Thank you very much for that. One more follow-up from my side. On working capital given that you have been destocking material throughout Q1 how should we think about working capital flows? Is there any release coming up for Q1 or not not necessarily? I think there will be a bit of a release into Q1 for sure. Because what is happening right now is that inventories are running low. And this will probably continue also into Q2. We also have then of course both you know lower invoicing but also lower sourcing volumes. So, let's say my assessment with what I know today is that we will go to a very low point in working capital here. You know, maybe not only the week when the strikes ends but this will keep on impacting for a bit after that because we will really we will be at low levels. And then we will have to you know come back to normal levels again. So depending on the timing of the strikes we can then expect a normalization once the strikes are over and we've had some time to recover all the way from sort of sourcing. Our typical DIO is 90 days. So we are of course still sort of you know having some of the earlier inventory in the pipeline to benefit from at this point in time. Very clear. Thank you very much. Thanks. Thank you. We'll now take our next question. This is from the line of Tristan Gresser from BNP Paribas Exane. Please go ahead. Yes, I thank you for taking my questions. I have two. The first one is on the strike. What's your understanding of the situation in Finland? And you know, any reason there to be optimistic at this stage? Or is there a good chance that this would continue for the four months of April? Yeah, just trying to get your sense of the situation there. Thank you Tristan. It is really for us right now the sort of through not only thousand dollar but million dollar question that what will happen next. And I can try to give some color to it for what it's worth. But I think you know taking a step back when the question is about the labor unions being upset with the government about changes in policies that's a very let's say difficult situation for companies to be in because we are not a negotiation party. So it also means that there's a number of nuances where you know our impact is not direct. Looking at the headlines in the Finnish newspapers right now, I think the sentiment is still one where the labor unions get some understanding for why they are, you know, doing what they are doing. There's also, you know, things very easily get mixed up in such difficult situations. What are really the proposed changes versus what do people perceive to be the proposed changes right now? I think that the sentiment is still one of pretty, you know, that there's these topics seem to stand or these opinions seem to stand very far from each other as far as I can judge right now. But there are also some, you know, of course there are some examples about the discussions. There are some examples about you know maybe the sort of general public being a little bit more hesitant to you know is this reasonable to have this level of strikes, this level of impact for you know what is sort of the cause that is being announced for these strikes. So I think there are a bit more that kind of headlines right now that maybe the support for the strikes is somewhat reducing. But nonetheless a political strike is maybe the most difficult one because if it was something that we could directly impact we could weigh the pros and cons and make decisions. Yeah. Yeah, no, that's. It's a difficult question. So I appreciate the color there. And maybe my second question on the U.S. I think your comments were all fairly positive. Is it fair to say that on the pricing side we've seen the worst behind us? And when you look at Q2, do you believe there could be some restocking? So, first, the question on pricing, I can only comment sort of backward looking and you know things that we have already observed. And I think you know that would indicate that a low point you know was reached. But then compared with what is of course the question. But if you just look, let's say, sequentially on the changes, I think that backward looking data would point in that sort of conclusion or towards that conclusion. But we will see of course going forward. When I think about you know stock levels, at least our understanding and thesis has been that the high interest level is still prohibitive for many participants in the market for many distributors to really consider you know restocking at some sort of big volumes. Or, let's put it this way, it's a higher risk than it was a couple of years back to stock a lot because you will pay a lot of interest if, for some reason, you cannot sort of turn it around quickly. So, I think with the higher interest levels still prevailing, probably that's putting a bit of a damper on sort of a big scale restocking. But, other than that, there are some positive signs in the market. Okay. That's very helpful. Thank you a lot. Thanks a lot. Thanks Tristan. Thank you. We'll now take our next question. This is from the line of Bastian Synagowitz from Deutsche Bank. Please go ahead. Yeah, good afternoon all. I've got one question on shipments on the European side actually. So here I'm wondering basically how much of the effect you have basically already seen on the shipment side or maybe you can even give us a bit more color. What was broad shipment trend you were expecting for Europe in Q1 where we would be broadly checking out now post the production cuts given that you're still able to compensate some of the trends obviously from inventory. And then basically how many tons as of today do you basically expect to lose for the second quarter shipment run rates? So we will lose definitely some volume also for first quarter because typically we would also have direct deliveries from Tornio. And I think that's where we are already you know losing deliveries in the first quarter. So you know initially we were expecting volumes to increase quarter-on-quarter 5%-15% into Q1. And I think that was kind of fairly evenly distributed through you know throughout the main markets even though we didn't specify that hey you know exactly the same amount in BA Europe and in BA Americas. But we did see this seasonal uptick over both BAs. And now with the announcements of the strikes we have also changed the guidance for the volumes to be even a tad lower compared with Q4. And we can really call that all the strike that's really the direct strike's impact. So that's really direct impacts for the BA Europe because those were those kind of lost deliveries to customers during the first quarter. And now the downstream impacts will be sort of more visible during the second quarter. But we will also have some direct impacts as we are still in strike. I mean it's of course second of April today. We at the moment only are aware that strikes would continue this week. But we await further announcements or clarifications. So depending a bit also kind of how those continue. If it would only be this one week of strike in April then I think that we could somehow rationally say that yes now it's gonna be the downstream impacts in this quarter. So that's, I think it definitely has an indirect impact on our volumes both in Q1 and Q2. Pia, are you currently bringing over volumes from the U.S.? I mean, like, do you like is this the situation on Europe? But But then you can actually compensate maybe most of it with what you're bringing over from the U.S.? From my knowledge, we are not currently delivering from U.S. into Europe. But that's maybe something I still need to check. But to my knowledge, we are really feeding the European system from within Europe. Okay. And even though you're obviously currently not producing given that you're on strike but what is your latest view on the scrap market? Has this situation with say two out of four big players being on strike now has this started to ease the tensions and the tight situation on the scrap markets? Or hasn't really the situation been changing so far? Well, obviously with lower volumes we are also less active. But I would be surprised if there was no impact on that in the market at least over time. Okay. And then maybe moving over to ferrochrome obviously where your operations are affected as well. But then also yeah obviously had cut part of the capacity utilization earlier because of the depressed situation with chrome prices being on the way back up. Now in a normal scenario where demand is basically coming back to maybe where you expected where you were expecting it to at that price level would you basically be inclined to bring back the chrome capacity already? Or is that price increase not yet enough for that? I think we would first. I mean, we had the main sort of driver for this curtailment was also the very low demand on stainless side. And you know that we have 75% on average over the years of the ferrochrome capacity used for internal deliveries. So of course we have some flex in our typical external deliveries. But the more important question for this is really that what are the production levels on our own stainless sides? And you know what's then the reasonable, let's say, response also to that? So I think we need a combination of several things. So obviously the price level could impact, let's say, where it makes sense to turn something on even though demand internally wouldn't really yet have fully recovered. But I certainly don't think kind of given the big weight of the internal deliveries that we would yet have been reaching such a point. Mm-hmm. Okay. Great. Thank you thank you. Thank you Tristan. Yeah. Thank you. Bastian, sorry. We'll now take our next question. This is from the line of Moses Ola from J.P. Morgan. Please go ahead. Hi there. Thank you very much for taking my question. So a couple of questions from my end. Firstly, just on the ongoing guidance for the strike. Just wanted to clarify. So of the EUR 80 million, it's EUR 30 million in Q1. And then the ongoing run rate—should we assume is EUR 15 million per week as per the last guidance? Thank you, Moses. Hi, yeah, so looking at the impact in Q1 that will be around EUR 30 million. That's as per our announcements. And then you know now our sort of weekly estimates have varied between EUR 15 million and EUR 25 million. So of course that gives an average of EUR 20 million. But I don't wanna give let's say forward-looking announcements. I think if there are more strike announcements we will try to make as good you know as accurate estimates as we have information and then also openly share that. But the weekly amounts have varied between EUR 15 million and EUR 25 million. Thanks. Can you confirm if there's any impact to CapEx from the strikes as well? Is the EUR 200 million run rate for this year still valid? I think it's a very reasonable question. And given how disciplined we have been with capital so far given now that our cash flows are lower in this situation it's definitely something that we will need to consider. But so far we have not taken decisions to cut back. Anyhow given you know the list of projects within this EUR 200 million is fairly sizable because there is not let's say one or two really big projects. There is rather a longer list of medium size or small projects. I think it gives us flexibility. So should we decide to do so we would definitely still have the let's say reasonable ways to do that towards the end of the year. Definitely something we would consider, but have to come back to when we have really formally decided on that. Okay. Thank you. And then finally from my end just on inventory revaluation impacts we've seen higher raw material prices recently especially on the nickel side guidance you can give versus what you previously expected in Q4 for Q1. And then also into Q2 current expectations on raw material revaluation impact. Yeah. It's a really good question. But let's say given that we had some improvements in nickel price but it sort of went up and then it came down again. I think the way sort of the main mechanism still work you know how the contracts work the periodization the inventory evaluation we still stick to our earlier assessment that in Q1 there will be a very slight negative impact from raw material related you know inventory evaluations and hedging. So I think you know definitely you know minus 10 would already be a big figure. So we are not talking about a big figure here. And that's also really in line with what we said before this spike in price because it came back down again. Then going into Q2 with the information that I have right now, I wouldn't expect anything major. That's something where we will kind of rerun all our calculations and then come back when we give Q2 guidance. Okay. So just when you say anything major do you mean a major loss or a major gain on either side? I mean both. I mean it's a figure fairly close to zero probably. I think a bit on the negative side but not a big one. Okay. Thank you very much. Yeah thanks. Thank you. As a reminder, if you would like to ask a question, please press star one and one on your telephone and wait for your name to be announced. We will now take our next question. This is from the line of Maxime Kogge from ODDO BHF. Please go ahead. Yeah, good afternoon. First question: could you talk to us a little bit about the import pressure, especially in Europe where it had become very very low in Q4, just around 10%? Do you see a pickup there? And in the U.S., it seems on the contrary to have slightly strengthened in Q4. And where do things stand there, at least for Q1? Right. Thank you, Maxime. So the import pressure in Europe remains low. What we have just seen from realized imports and all of the statistics show that we are still on low figures. I think the Q4 figure was probably 10%. I think now we are 10%, 11%, 12% you know these are the levels that we have been seeing reported right now. So still as we speak from what has arrived in Europe levels have stayed low. Then you know what we can expect going forward I would expect that normal market dynamics will play a role here. Certainly there have been some improvements in the price levels in Europe. So of course this could trigger higher import levels in the future you know or more maybe sort of typical import levels. But from what we have seen, realized have remained low. And I would just maybe really shortly comment on America. So I think it's there seems to be, let's say, a certain level of imports also all through last year also during the weaker sort of market periods there. And that seems to continue. So no major change in the U.S. either. Okay, thank you. And a second question about the demand in Europe. Yeah, you seem to be quite constructive in your previous comments on the upturn in Europe. But yet, well, I mean, if we look at prices, they remain very much depressed. So do you see? I mean, you seem to point to slightly higher restocking activity, but do you also see better activity on the end demand? Yeah, that is my second question. Yeah, I think it's always, you know, what I've—I think what is clear that there are signs of better sentiment, you know. There are some areas that are stronger, I mean, aligned also with our previous comments on some projects on energy on some green transition projects, etcetera, where the more specialized demand is. It really seems that those projects continue to realize and we can also see them in our order intake. I think on the commodity side it's just that, you know, demand has been low and we see some improvements. But that doesn't mean that demand has risen to, let's say, a strong level. I think it just means that the direction again is towards stronger. And I think that's then visible in this slight uptick in German distributor inventories. You know some slight restocking probably took place. But again the scale probably doesn't yet you know bring kind of big big increases in in any direction. These these are rather like small movements still as we speak. Okay, thank you. And just the last one, perhaps a bit theoretical, but if the strike went on again, would you consider sourcing slabs on the open market? I would assume that a lot is available from Asia, or doesn't it make sense given that transformation margins are too low to make it really interesting from a financial point of view? Yeah. I think it's a really tricky question. I mean, to really factor in costs, delivery times—delivery time is also always a super important aspect, you know. Could we really have goods when we need them? Would it really make sense from a CO2 perspective? I think there are, let's say, so many dimensions of such a dilemma that it's just I simply cannot answer it with sort of one easy answer. This is what we would do. But obviously, the longer the strike goes, the more we need to sort of consider every alternative. And I do think our team is being extremely active in trying to make things work also from the perspective of our customers. I certainly don't wanna rule anything out, but I don't think that there are like easy solutions that can be implemented off the shelf. Okay, that's helpful. Good luck for the coming weeks. Well thank you. Thank you. There are no further questions at this time so I will now hand back to the speakers. Thank you. 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 April 7th and continue until our Q1 results are published on May 7th. Thank you once again and have a great week.