Good day, and thank you for standing by. Welcome to Outokumpu's Q1 2025 Good day, and thank you for standing by. Welcome to Outokumpu's Q1 2025 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 today's conference is being recorded. I'd now like to hand the conference over to your first speaker today, Linda Häkkilä. Please go ahead. Thank you, Operator. Hello all, and welcome to Outokumpu's Q1 2025 Pre-Silent 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, Marc-Simon Schaar. As per usual, we will first give you a short update, and then we are happy to answer your questions. Now, without any further comments, I would like to hand over to our CFO. Thank you, Linda, and thank you, everyone, for dialing into our Pre-Silent Call today, and a warm welcome also from my side. In this call, I would like to summarize the main points of the first quarter before we step into our silent period. Always good to remember, when we gave our guidance for the first quarter, we expected our group stainless steel deliveries to increase by 10-20% compared to the fourth quarter, while pressure on realized stainless steel prices was expected to continue. This is still valid, and I would like to inform that we see higher volumes for both business areas, Europe and Americas. However, our deliveries on a group level are expected to be closer to the lower end of the given range, and the pressure on realized stainless steel prices continued in line with our guidance. The operating environment in the first quarter has been impacted by economic and political uncertainty, mainly driven by the announcement and actions by the new US administration. In this context, or in this current geopolitical situation, I'm very pleased that we have geographically diversified assets and strong positions in both Europe and the U.S. Maybe first, a few comments on our business area Europe. Given the current market situation, we have seen some tentative signs of economic recovery in Europe, but overall, end-user demand remained soft. The manufacturing and construction sectors show signs of improvement, which is reflected in rising PMIs and better sentiment data. However, the European Union consumer confidence, which impacts our consumer goods sector, remained largely flat in the first quarter. Looking at distributors, we have seen some restocking activities in line with our earlier communication during our webcast in February, but inventories remain slightly below the average levels. However, given the relatively low demand situation, their days of inventory are considered rather high. Looking at imports into Europe, they increased in the beginning of the first quarter, particularly in January, and here, in particular, Taiwan's quota for cold-rolled flat stainless steel was fully booked immediately during the month of January. Overall, we can say that imports are expected to remain relatively stable in the first quarter compared to quarter four of last year. Next, a few words about the labor union strikes, which have taken place that impacted us in January. Due to the strike, our operations in Finland were down for one week, as communicated earlier, and as we stated in our Q1 guidance, the impact on our adjusted EBITDA was approximately EUR 15 million negative. In this context, I am pleased to share that we quickly reached an agreement with the labor unions, avoiding any additional weeks of strikes affecting Outokumpu. I also want to highlight that this agreement has now a term of three years, which ensures operational stability moving forward. Far on the Europe, if we now move on to business area Americas, regarding the tariff policies, we are well positioned, as mentioned earlier, as the second-largest domestic stainless steel producer in the U.S. Our imports from our Mexican mill to the U.S. are minimal, so the recent tariffs have had no significant impact on us, as we also mentioned earlier. Additionally, our customers have confirmed their willingness to continue buying from us even if tariffs do apply. In general, tariffs on imported goods benefit us, as the large volumes of low-priced stainless steel imports from Asia and other regions into the U.S. have negatively affected our business. Where appropriate, we will continue advocating for stronger trade protection measures to ensure a level playing field going forward. As U.S. trade policy evolves, we are closely monitoring the situation both domestically and globally to assess potential impacts and determine necessary actions going forward. Overall, we can say that uncertainty prevails in the North American market, with consumer confidence falling, as we have seen in the first quarter, driven by fears over tariff-driven inflation. The demand in business area Americas has remained relatively soft, and distributor inventories are below average, but given the low demand, their days of inventory are still relatively high, similar to Europe. Meanwhile, import penetration from Asia into the North American market has somewhat reduced towards the end of the quarter, given the discussion around potential tariffs. Looking at the segments, there has been no increase in underlying demand being observed across the border. Only oil and gas is running better, as already indicated earlier. After discussing the development in business area Europe and Americas, I would like to briefly touch on our ferrochrome segment. We delivered strong results in the fourth quarter, and demand for our low-emission European ferrochrome remains solid, so we are confident on the further progress and development of our ferrochrome business. This is probably as much as I would like to comment on the different business areas. Coming back to our Q1 guidance, we also stated that our maintenance costs are forecasted to decrease by approximately EUR 10 million in the first quarter compared to the fourth quarter, when we had a significant maintenance break in Tornio at the end of last year. This commentary is still valid. Now, turning to our financial position and cash flow, as mentioned in February, we anticipate a seasonal net working capital build-up due to increased activity leading to a somewhat higher net debt. However, I want to emphasize that our liquidity position remains strong, and it is expected to stay that way going forward. While we are still in a relatively weak phase of the stainless steel cycle, we are well positioned to capitalize when the market rebounds. As mentioned in our Q4 results commentary, we have implemented strict measures to strengthen our cost competitiveness in the current market environment. We also said that we aim to achieve an additional EUR 50 million in cost savings by the end of this year. I can confirm today that we are making strong progress according to plan. With that, I would like to conclude my update and open the floor for any questions. Thank you. If you would like to ask a question, you'll need to press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again. Once again, if you would like to ask a question, please press star 1 and 1 on your keypad. Thank you. We'll now take our first question. This is from the line of Adanha Ekoku from Morgan Stanley. Please go ahead. Good afternoon, both, and thank you very much for the update. I have two questions. Just first, on the shipment guidance, could you share any more color as to how we should think about the quarter-over-quarter uplift in terms of Europe versus the U.S.? Yes. Hey, good afternoon, Adanha. On the shipment side, as said, we guided for 10-20, and now the update is that we are more towards the lower end of the guidance, and it is both driven by Europe. I would say Europe and the U.S. here as well. Both. Maybe to give a bit more color, this is not market-driven as such. In the U.S., for example, we have faced some supply chain disruptions from weather conditions, and this is more a shift from Q1 into Q2. This is as much I can say right now. Okay. No, that's helpful. Thank you. In terms of European imports, the European Commission recently came out with the safeguard review, but there were quite limited changes to the safeguards, to sustain the safeguards. Do you expect any more assertive measures to come from the Commission, perhaps when the mechanism to replace the safeguards is introduced? Yes, you are right. The revision was limited in terms of any changes. The relaxation rate has been taken down from 1% to 0.1% and some further countries to be included to name the main changes over here. Overall, while certainly we need more measures, definitely, I think the outcome itself should not be too surprising for us, given the relative short period and also the period being analyzed in here, meaning the second half of 2023, first half of 2024, and not taking the significant increase which we have seen towards the end of 2024 into account. Having said that, and also referencing to the European Steel Action Plan, which has been announced, definitely I do see that there is an understanding about the critical role of the steel industry for Europe and the understanding for appropriate measures to be taken. Okay. Thank you very much, Marc-Simon. I'll leave it there. Thank you, Adanha. Thank you. We will now take our next question. This is from Bastian Synagowitz from Deutsche Bank. Please go ahead. Yeah. Hi. Good afternoon all. I have a question also maybe starting on volumes. Just, I guess, from what you're saying, it works pretty well for your, I guess, order book also for Americas in the second quarter. Now, what have been the dynamics which you've been seeing throughout the quarter with regards to the European business, i.e., is your March order book for Europe also indicating the same seasonal upswing for the second quarter? How have volumes basically evolved throughout the quarter? That's my first question. I mean, I'm not in a position, as you know, Bastian, to already give guidance on the second quarter. Right now, we need to wait until the beginning of May when we give our new guidance. Probably I would like to continue on what we have been guiding for the first quarter. Here is that we have seen an uptake and a stronger order, an uptake in our order intake in our order book, and that is still valid over here, and that is what we have observed right now. Overall, it's important, as I said earlier, to understand that there is not a fundamental improvement in the underlying demand from the end-user side. Here, still in line with our earlier comment, that has been something we, given all the different dynamics which we see on the geopolitical side, on the market side, the different infrastructure programs, more to see towards the end of this year, so second half. Okay. Understood. Okay. Just briefly following up just on the metal effects, apologies if I missed that, but could you quantify maybe the broad impact of possible metal effects versus the EUR 4 million gain which you, I guess, booked in the fourth quarter? I think relatively small here on that one. We have stated some losses in our guidance for Q1, but those are really single-digit numbers. Okay. Okay. That's good here. Now, with the uptake in volumes, I guess you have the strike which goes against you on the other side, a little bit of relief at least on the, I guess, on the maintenance side. Do you think there is a chance that Europe could come back to break even in the first quarter on EBITDA level? Yes. Okay. Great. That is all of my questions for now. Thanks so much. Thank you. Thank you. We'll now take our next question. This is from Maxime Kogge from ODDO BHF. Please go ahead. Hello all. Just two questions on my side. The first, I was a bit surprised when you said earlier that you now purchased limited amounts of slabs in Mexico from US mills. Does it mean that you are sourcing them from the market, I mean, from Asia in particular in Mexico? Hey, good afternoon. Sorry, there might have been a misunderstanding. I'm not saying that we are purchasing less or differently feedstock for our Mexican mill. It's just that a minimal amount, and I think last time I mentioned around 10-20 kilotons maximum, is going back from the Mexican production site into the U.S. market, and that is what I was referring to. Okay. We are not sourcing slabs externally or abroad. Okay. No, no. That's clear. The second one is on the imports. Yes, blanket tariffs have applied since the 12th of March in the U.S. at least. Have you seen some deflection of imports from the U.S. to Europe? Is that a risk according to you, or is the European system sufficiently defensive and protective to prevent that? Yeah. Yeah. No, we haven't seen any imports from the U.S. into Europe or see this as a critical element here. Certainly, we need to observe. I really want to highlight and to make clear that we still live in uncertainties. While a lot of comments being made maybe on it or even on a daily basis, we are not yet in a position to have a very clear picture of what tariffs will look like and to what products they apply, for what regions they apply, and so forth. I think what we need to do is to observe the situation daily. At the same time, what is clear is that the European Union, the European Commission, needs to react if we do see circumvention or redirected volumes from Asian material not entering into the U.S. market, but then maybe being circumvented into Europe. Coming back to your question on the U.S., Europe, no. However, what we have seen is probably some more activities around the inquiries around material which are melted and poured in the U.S., given all the announcement of potential tariffs. Okay. Thank you. Thank you. Thank you. As a reminder, if there are any further questions, please press star one and one on your keypad and wait for your name to be announced. That's star one one to ask a question. We'll now take our next question. This is from Tommaso Castello from Jefferies. Please go ahead. Good afternoon, Maxime and Linda. Thanks for taking my question. I only have one, which relates to the German funding, the announcement of EUR 500 billion for infrastructure and military spending. Could you help us understand a little bit better what kind of exposure Outokumpu has and which kind of positive impact we could expect from that? Thank you. Yeah. First of all, good afternoon, Tommaso. Of course, I think as much as we can say, overall, the announcement of the infrastructure program and the associated investment is expected to increase industrial activities in Europe, which we have been suffering for quite a longer period of time, particularly by a weak German economy. As such, be it on construction, be it on projects in various areas, but new investments also in areas such as appliances, I think we have a good opportunity to benefit from those programs. On the defense side, certainly as well, main components are being produced out of carbon steel, but there are opportunities also and benefits for using stainless steel, but that is activity ongoing. Overall, I would expect here a positive impact for the economy in general and stainless steel benefiting given the wide range of applications for which you can use stainless steel. Thank you. Thank you. Thank you. We'll now take our next question. This is from Igor Tubic from Carnegie. Please go ahead. Thank you. Thank you for taking my question. I just have one question in terms of the ferrochrome business. You said that the demand for certain products remains solid. I just wonder if you can say anything also about should we expect that the prices are also fairly stable, or how should we think about that? Thank you. Yes. Thank you, Igor. Unfortunately, I'm not in a position to talk about prices in here. However, let me comment as follows. With our product, on the one hand side, a product being produced in Europe and having the only Western chromite ore mine, and on top of that, with a very low CO2 footprint, one of the lowest globally, that basically distinguishes our ferrochrome product pretty much from the rest of the world, which then also leads in our ability to have a, so to say, green premium for this product here on top. Okay. Great. Thank you. Just to follow up also quickly, I just wonder in terms of CapEx and how we should think about 2026, 2027 going forward. Should we expect that you will comment anything about that once this CapEx program is coming to an end in Q2 already, or will this come later on this year? This will come during our Capital Markets Day on the 11th of June, where we give more color then also on our next part of our strategy. Great. That's all for me. Thank you very much. Thank you, Igor. Thank you. Next question is from the line of Krishan Agarwal from Citigroup. Please go ahead. Krishan Agarwal from Citi. Your line is open. Please go ahead. Checking, Christian, is your line on mute? We can't hear you. We'll move on to the next question. Please stand by. Next question from the line of Tom Zhang from Barclays. Please go ahead. Hi. Afternoon. Thanks for taking the questions too for me, please. First one, maybe just some color around US pricing. You spoke a little bit already about EU pricing, but I guess the dynamics here are slightly lower import pressure versus still a lot of tariff uncertainty. Can you just give us a little bit of color around how US pricing has moved and how you're looking at that going into Q2, please? Tom, sorry, but I can't talk about prices, but I think you captured the points very well. I would please ask you to draw your conclusions from there. Okay. Fair enough. Worth a try. The second one, just it's not discussed a great deal, but around ferrosilicon and ferromanganese, I guess it's not a huge part of your cost base, but just called this in. There is an anti-dumping investigation now into those materials. Do you source any of that outside of Europe? Is any of that a potential cost risk that we should be thinking about for this year? No. I can clearly answer with no. Cool. Thank you. Good question, good point, but no. All right. I'll turn it back. Thanks. Thank you. Thank you. We have a question from Bastian Synagowitz from Deutsche Bank. Please go ahead. Yeah. Thanks for taking my follow-up. Just want to get back briefly on the scrap market. I guess when we look at European scrap price, it seems like we've seen actually a little bit of an easing here, which obviously is a relief for you and goes in your favor. The recent, I think, U.S. prices, from what I understood until end last year, have still remained reasonably stable on the scrap side. Can you maybe just update us on the recent dynamics on the U.S. scrap market? Has it started to ease a little bit towards the beginning of this year? Yeah, if you could maybe comment on that, that would be great. We have not seen any changes here at the beginning of the year, really, on the situation. That is then also reflected on the pricing level as well. As you know, Bastian, as well, we need to see what is going to happen then also on the 2nd of April with new announcement around the tariffs, what is included, what is excluded, and so forth, and then also how that might impact then the scrap movements within the North American market. As said, that needs to be seen then when we have more clarity around this topic. I think we are very well positioned, and the team is doing a fantastic job with our suppliers over there in the U.S. Maybe just for our understanding, is the U.S. a net exporter of stainless scrap as well as it is on the carbon steel side, or is it a net importer? No. I would say rather net importing than exporting. Understood. Okay. Great. Lastly, I think on the last conference call, you mentioned that the Mexican government may be looking into possible tariffs as well. From my understanding, it is still a slightly more open market at this point. What is the situation here? Has anything changed? Is there any anti-dumping process or trade mechanism which is currently being discussed or even formally even considered? What is the situation on the Mexican market? Yet, we have not heard any definite announcements on those, but certainly, we are in the discussion with the Mexican government here as well. The only thing I can say is that Ms. Sheinbaum is handling the situation very well, being very moderate, not immediately going into any trade war with the U.S. I think from that perspective, I think this is a good sign that we need to see how things are developing. To my understanding, Ms. Sheinbaum also mentioned that she will announce something new in the area of tariffs and also the relation with the U.S. during this week, but it remains to be seen. Okay. Understood. Last question. I guess from the picture you're currently drawing, you're seeing obviously that you're taking back market share from imports on the U.S. market, probably together with your second local peer, which generally sets you up pretty well there. Do you think that there is a risk that some of the other stainless steel assets, which are I think currently basically not operating in the market because they've left the market some time ago, may possibly come back? Do you see any hurdles or thresholds for those assets to come back? Maybe they need some investment. They've not been running for some time. Maybe you could just share your view on this. Yeah. Certainly, it's difficult for me to speculate on someone else's movements in the market, but maybe as a good reference, when we have seen the introduction of Section 232, even in that time back in 2017, those assets had been idle back at the time. We have seen how the market has developed, and those assets kept being idle. Maybe that is as much as I can say and probably also would then try to think about going forward. Okay. Fair enough. Maybe, without you giving obviously any comment on what your actual commercial strategy looks like, you are taking back market shares, so you are clearly gaining on volumes. I guess your second peer does so as well. You are protected incrementally more and better on tariffs, wire tariffs. We are seeing the same picture in a much more fragmented US market for carbon steel, and prices have obviously gone up significantly. When we look at the stainless side, at the moment, it seems to be mostly a market share game, not so much a pricing game. What do you think is needed for prices actually to move up as well? Why do you think they do not in contrast to the carbon steel market, which I guess generally from a market structure is probably not as well set up as your stainless? Again, on pricing, very difficult for me to comment, but if we look back again after Section 232, I think we have seen price increases, but not drastic price increases. If you have drastic price increases, then this would then also attract, again, imports here into the market because there might be no margin erosion for those imports coming in. I guess it's more on the capacity utilization side. Probably that is as much as I can. Perfect. Maybe briefly, as long as you have any insights into that, I guess there are only a couple of layers on how you may benefit from the current U.S. trade policy. Pricing would be one, market share, direct market share is another. What do you see currently in terms of your, I guess, your indirect market share? Do you already see any impacts within your customer universe, i.e., I guess we have seen obviously reasonably significant increase of white goods imports throughout the last couple of years? Now, given that obviously there is an approach which is not only tackling your direct business, but also your customers' business, do you already see that basically your domestic customers are basically taking market share back from imports as well? That actually is reflected in the current order activity as well because I guess you were referencing to not see any real demand improvement. Maybe real demand does not improve, but if your customers basically gain back market share from imports, that obviously could be positive for you as well. How do you see that situation? What you mentioned is probably one element. The other element is then certainly the demand for melt and poured in the U.S. If you think about Section 232, right, at the moment, and the exclusion which is in there is that any material which includes melted import in the U.S. as being exempted, that might give you another element in here in what we should consider. As I said, this call here is a pre-silent call around the Q1, and we need to wait until the webcast in May when we then also give our guidance and more color on the way going forward. Okay. Understood. Thank you. Thank you. Thank you. Take our next question. This is from Krishan Agarwal from Citigroup. Please go ahead. Hello. Krishan Agarwal from Citigroup. Your line is open. Please go ahead with your question. Seems the question is not coming through. In this case, this concludes the question and answer session. I would like to hand the call back over to Linda Häkkilä for any closing comments. Thank you, operator. Thank you, everyone, 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, April 8, and continue until our Q1 results are published on Thursday, May 8. Thank you once again, and have a great week. Thank you. Thank you. This concludes today's conference. Thank you for participating, and you may now disconnect.