Welcome to ArcelorMittal's Q1 2022 Analysts and Investor Call. This is Daniel Fairclough from the ArcelorMittal Investor Relations team. I'm joined on this call today by our CFO, Genuino Christino. Genuino and I are here to answer your questions on the Q1 results, which we published this morning alongside the presentation with detailed speaker notes on our website. Today's call, which is being recorded, is scheduled to last up to 45 minutes. If you would like to ask a question, then please do press star one on your telephone keypad, and as usual, we will, of course, answer the questions in the order that they're received. Before we begin the Q&A session, I'd like to hand over to Genuino for some brief opening remarks. Thank you, Daniel, and good morning and good afternoon to everyone on the call. I will spend this minute or so with some very brief opening remarks. I will let our numbers do the talking mostly. We are consistently posting strong operating results. This is the fourth successive quarter with EBITDA over $5 billion, demonstrating the strength of the business in our diversification. Yet again, an excellent contribution from JV and Associates, contributing 14% of net income. Book value per share is the book value of the JVs reaching $12 billion. These are very material business that represent important cornerstones of our global business. Strong net income, $4.1 billion, with EPS of $4.28. Here I would also highlight that this is the highest EPS in more than a decade. Clearly the benefits of our share buyback starts to become very visible on our reported numbers. Value creation, book value is up again to $57 per share with trailing ROE of 36%. Equally important, a strong free cash flow generation, so the company delivered $1.5 billion of free cash flow in Q1, and this is despite a $2 billion investment in working capital. We continue to bring down our net debt, despite investments in working capital and despite returning cash to shareholders. That's a record low. Our confidence in our outlook allows for the announcement of an additional $1 billion buyback, bringing the total up to now to $2 billion. If we look back a little bit, if we go back to September 2020, and by the time we complete this extra $1 billion, we will have distributed $9.5 billion to our shareholders. We are focused on the consistent execution of our strategy, and I think today's results and update is a clear illustration of the progress we are making on all fronts. Now, Daniel, I believe we can go straight to the questions. Yes. Thanks, Genuino. We'll take the first question, please, from Alain at Morgan Stanley. Please go ahead. Yes. Thank you, gentlemen. Two questions from my side. Firstly is on capital allocation. The $1 billion buyback that you've announced appears to have been predicated on your expectations of a certain full year free cash flow and not necessarily on formula linked to your Q1 cash flows. If that is the case, then should we expect a same order of magnitude buyback during Q2, or would your buyback program be more or less linked to your Q2 free cash flows? That's the first one. Alain, I would say that the capital allocation policy is not really changed, right? I think our commitment is very clear. We want to distribute 50% of our free cash after paying the base dividend that we're gonna be doing now in June, as you know, $0.38. Fifty percent of that will go to our shareholders. Of course, when we look at our liquidity today, we look at the Q1 results and we look forward also to Q2 and even beyond. We feel very comfortable actually to talk about the buyback as we are doing. We look at the share price as well, right? It seems like a very good timing and opportunity to be buying back shares. We don't want to wait to progress on that. That's basically it. There is no change in the capital allocation policy here. Thank you. The second part of my question is on the other 50% of your free cash flow that you had stated you're willing to spend on renewables or decarbonization investments. While these investments would future-proof your business in the long run, returns are likely to be very low and the market might not be willing to reward you for making these investments initially. How do you balance out the need to make these investments versus how the market rates, re-rates your stock? Yeah, Alain, I think for us it's all about reaching a good balance, right? I think our returns have been very high as I just highlighted in my opening remarks, $9.5 billion since September 2020. That's quite a lot, right? For us, it's about getting this to the right balance. It's returning cash flow to shareholders, but it's also developing the business. I think what we have demonstrated up to now, if you look at what we announced in India, our Greenko project, that's a very good example of that, right? It's. We would consider that to be a high return project for ArcelorMittal. I mean, we have disclosed that for this investment of about $600 million, we expect to get more than $70 million in EBITDA straight away, and then more benefits at the level of the JV as well. You can see that the returns are good. We will basically get back our investments in a couple of years, when the assets will continue to generate value for many more years, right? Also the strategic importance of being integrated to renewables. We do believe that over time this will prove to be important, and that's exactly what we are doing. For now, of course, any excess for now has been used for the leverage, and you see that this quarter. That's really where we are today. Thank you. Thanks, Alain. We'll move now to Seth at Exane. Please go ahead. Good afternoon. Thanks for taking our questions today. I have a couple of questions regards to demand outlook and shipment expectations. Obviously, this morning you significantly trimmed your demand forecast for the year. Can you give us a bit more color on what drives confidence that shipments can still grow on a year-over-year basis? To what extent is that predicated on expected share gain versus imports? A second question, if I may. On a short-term view, obviously in the course of Q1, we saw steel prices surge. We heard about widespread panic buying. However, that appears to be reversing course at present in certain regions. What are you currently hearing from customers, and what's the state of order intake and price negotiations? Thank you. Okay, Seth. What gives us confidence that our shipments will be higher? I think it's important just to call attention to a couple of points, right? I think it's important to take note that in Q1 of last year, we still had Ilva being consolidated at least until April, right? We need to adjust for that. And also of course, we are saying that this will be the case once we adjust for Kryvyi Rih. And then if you do that, if you were to normalize our shipments in quarter one for these two scope changes. One scope change and one as a result of the conflict in Russia-Ukraine, you see that our shipments are actually rising. Our expectation is that that should also be the case for full year. You're right. I think what we saw last year was in key parts of our business in regions a surge of imports, and that was true in most of the regions, right? Because of the extended lead times, high pricing environment. We saw an increase in imports that we expect will come down this year. Our expectation we start to see that actually. If we look at our business in Brazil, we see that the market share of imports, our expectation is that it has come down already in Q1. We see the same in Europe. Our expectation is that imports will come down. We will take some domestic players in general will take some market share of imports this year. Then on the order intake, I think it's good. It remains quite good. Of course, we have very good visibility now if we talk about Europe, that goes to mid-summer, I would say. The order intake continues to be good, and the order book is healthy at this point. Thank you. Outside of Europe, can you provide any additional color, perhaps from the North American region as well? Sorry, Seth, can you repeat your question? Sorry. Can you provide a bit more color on the other regions beyond Europe, specifically on North America and where you see buyer behavior, please? In North America, as you saw, I mean, we have not really changed our forecast, right? We believe that we had a bit of a slow start Q1, but then it actually improved. We did quite well, I think in terms of shipments, as you can see in quarter one. Our forecasts for U.S. are not really changing. It's. I would say we actually saw PMIs in April actually continue to rise, right? It continues to be quite high. We see demand at very good levels in Latin America. Okay. Thank you very much. Thanks, Seth. We'll move now to Patrick at Bank of America. Hi, Patrick. Thanks very much. I had two questions. One was just on the shipments in Europe. I understand year-on-year you've deconsolidated Ilva, but pretty much flat on the Q4, and the Q1 is usually quite a good shipment quarter. How should we think about it going forward? Do you know it's usually strongest in the first half, weaker in the second half. Is there any recovery into 2Q versus the Q1, or why is it not up by more, let's say, quarter-on-quarter? Then the second question is just on decarbonization in Europe and these plans. You know, they kind of depend on natural gas in the intermediate phase and then also electricity in terms of electric arc furnaces. I mean, are you starting to be concerned around decarbonization strategy in Europe, given Russia and given natural gas and electricity prices? Okay. Thank you. Thank you, Patrick. First, on your question in Europe, this is something that we discussed before, Patrick. What happened really was that Q4 was particularly strong because in Q3 we had several issues with logistics. We had shipments that moved from Q3 to Q4, right? Q4 was, I would say, higher than it would have been if we had managed to ship our Q3 production. That's why you don't really see an improvement now, so much. You're right. Typically, seasonally, we would see Q1 being better than Q4, but that's the reason. On the decarb question, I think it's a very good question, and it's something that, of course, we have been debating quite a lot internally as well. But I would say that at this point, we don't believe that what we are seeing is we can still conclude that it's something structural. Right? I think governments in Europe, they understand the importance of bringing costs of gas, power to more normal levels. Actually, when you look at the forward curves, if you go out and look at the prices in, you know, 2, 3 years from now, you actually see that prices are kind of coming back to normal levels. The market still believes that it should be something temporary. Of course, it's very difficult to predict how long, but we don't see that as being structural. For us, of course, it's going to be very important to make sure that we have competitive gas and power prices to execute these plans. Got it. Thank you very much. Thanks, Patrick. We'll move now to Carsten at Credit Suisse. Thank you very much. Two questions also from my side, and one has to probably start with the impact from the Ukraine conflict. My question here is not only can you give us some kind of indications on the operations in Kryvyi Rih, but also the Kazakhstan operations? 'Cause as far as I understood is you previously sourced some raw materials from Russia for Kazakhstan and also had some sales from Kazakhstan over to Russia. Did those stop? And are you able to redirect those volumes? That's the first one. The second one is on Liberia. We have recently seen the news that the Liberian government will review the concession agreements for your mining operations again. Could you give us an update what that will mean for your 10 million tons expansion program there? Thank you. Yeah. Thank you, Carsten. Just a quick overview of where we are in Ukraine today. I mean, I'm sure you have been following us and so we have restarted one of the three blast furnaces that we have. That's the smallest blast furnace. We are today running at about 20% of our hot metal capacity. It's not much, but it's a start. I think we see a lot of motivation from our employees to be back and to be helping bringing back some economic activity. We are supporting that. The mines that were running at levels close to 35%, we have actually increased production. We are running at about 60% now, right? The idea is to produce at the steel mill to be producing basically pig iron. The blast furnace is basically producing pig iron. The activities are going to be quite limited, I would say, for some time. That's our expectation. In Temirtau, you're right. We were selling a significant part of our production into Russia. That has stopped since the beginning of the conflict. The team has a challenge in front of them, which is, of course, to find alternative markets for these products. So far, they are doing a great job, I would say. Looking in both directions, east and west. There will be some implications for profitability as in all likelihood, we're gonna be spending a bit more on logistics. You can expect that going forward, there will be some impact, but not much. I think the team has demonstrated in the past, probably you remember, we had similar issues with Iran, and the team did a good job in finding alternative places for selling the materials. In Temirtau, we are self-sufficient, as you know, in coal. We have also our own iron ore mines. There is not a lot of dependence on Russian raw materials. We don't see that as a problem. This is actually more of a problem for Ukraine because Ukraine was also buying more coal from Russia. That's one of the constraints to that the industry in Ukraine will need to find a solution. We don't believe that it should be a problem, provided that you have the logistics to get the materials in and out. Just a quick follow-up before you go on Liberia. The pig iron volumes, I would guess they go out of the country, and sold somewhere. Could you say where it goes? I assume it goes out via train and not ship. Yeah, that's correct, Carsten. It goes by train. Okay. Thank you. Basically, it goes to Poland and then Liberia. I think it's very important to understand that we have an MDA that it's valid, right? That doesn't expire until 2030. It's a valid MDA. It's an MDA that gives us also the ability to extend the concession also for another 25 years. The amendments that we are discussing with the government right now, we believe that it's in the interest of everybody. It basically provides some more information on utilization of the infrastructure assets, the rail and the port. We are in dialogue with the government. As you know, these amendments they were approved by the government. They were sent to the parliament for validation. It was approved by the Senate, but the lower house asked for some change. I think we are in the process of waiting for the outcome of this discussion. We don't believe that it will have an impact on our project, so we continue to move forward there. Perfect. Thank you very much for the update, Genuino Christino. Pleasure. Thanks, Carsten. We'll take the next question, please, from Alan at Jefferies. Go ahead, Alan. Thanks and good afternoon. Two from my side. The first one is on the announced HBI acquisition, and I appreciate the deal isn't done yet. Can you just speak and give us most of what you can say about how you see the potential returns from that investment, even in the context of your general hurdle rates you think about for projects? Yeah, Alan, sure. First of all, I think we are very, very happy with this move. As you said, it's early days, so we have not yet completed the acquisition. We have done extensive due diligence. Very happy with the quality of the asset. I think investments were made to address environmental byproducts, so some more investments were made. We feel that we have potential. We can, with our know-how, our experience in running similar plants, add value to this plant and improve the results. We feel that it's, of course, a great opportunity to integrate with our existing facilities. Calvert is the most obvious one. We have here, which is quite interesting also, for the future. There is you have enough space land that can potentially also. It creates optionality for the future for the group in terms of increasing capacity of this DRI plant. I would also highlight that if we do that in the future, and then ArcelorMittal would own 100%. Those will keep 20% only of this existing asset. I would also say that we believe that we have done this acquisition for a price that is below replacement cost. Right? I've seen in the press very high multiples. I don't believe that that's probably the right way to look at it. We believe that profitability of this site will be better. Of course, the security, the integration to high-quality metallics, is going to be quite important, especially in EAF. It paves the way for its very strong footprint in EAF. Thanks. Can you remind us what some of your, you know, hurdle rates are? What do you think about investments for IRR? I understand you can't tell us specifically about this project, but what is kind of the minimum level you would think about? Alan, our projects, we will also have a rate of about 15%, right? That's what we try to achieve in most of our investments. Here, as I said, I think probably the right way to look at this is what is the replacement cost, right? What is the potential of this site? What it does, right? Once you integrate that into Calvert, you have a very low carbon footprint. Calvert will have secured its supply of metallics, high quality metallics at competitive costs. Of course, this is a facility that is in Texas, so you have the lowest cost of gas in the world. It's a state that also has a lot of potential for renewable power. You have also to think about the other benefits of this acquisition. That's why we feel we're very excited about this opportunity. Okay. Last one from me. You highlighted in your opening remarks. I think it was the $12 billion in the book value of the JVs, but I think realistically it's hard to say that would be reflected in the share price today. What are the options or what are you considering to crystallize some of that value, perhaps? Well, that's a good question because I think it's not only the JVs, I think we have discussed that in the past, right? Look at the valuation of ArcelorMittal, right? It's so low. Look at the multiples. We're talking about multiples. Look at the multiples of ArcelorMittal, right? I think our focus there is really to continue to develop the JVs, and I think we are doing a fantastic job in India, so making good progress there. Tremendous asset. Look at Calvert, also tremendous potential and doing quite well. It's not only the two JVs. I mean, all of our JVs have been performing quite well, our Chinese JVs, European JVs. I think the only thing we can do right now is to keep showing the benefits of these JVs, their performance. We have to hope that at some point, the market will realize that they have in front of them a very high quality company asset base that is extremely good, delivering very strong results. That's all we can hope at this point. Thank you. Yeah. Just to add to that as well, Gen, you know, I think there's probably more that we can do on the investor education side, particularly to help the market appreciate the quality of the assets in India, the quality of the management team there, the specifics around the plans for growth. I think it's certainly our plan later this year to invite analysts and investors down to India to see firsthand the work that's underway, the success that's already been achieved, and why we're so passionate about the growth potential of that business. Hopefully that can also be one of the catalysts for a greater appreciation by the market for the value of not just that asset, but the broader portfolio of JV and associates. We will move now to the next question from Andrew at UBS. Hi, gents. Yeah, a few of my questions have been answered, but just a couple more. First of all, just on the two key outlook by division, can you just give us an idea for how you're thinking about volumes and spreads in each of the major divisions and how we should sort of think about that? Then just secondly, big picture, I mean, as a bit of a follow-up to some of these questions around the M&A and use of cash. Aside from the 50% of the residual free cash flow going to buybacks, what are the main priorities, you know, on a big picture basis for the remainder of that? I mean, is it, you know, is it renewables? Is it mining integration? Is it, you know, excess, you know, balance. excess cash from a parent company going into places like India? You know, what are the main priorities that you think about in, you know, in broad strokes? Thanks a lot. Yeah, Andrew. Let me start with the Q2. Clearly, as we all know, we would expect prices based on what happened since, especially since you know, beginning of March, we would expect our prices overall to rise, right? The realized prices should be stronger in the Q2. Volumes, our expectation is for volumes should be stable, slightly up. We hope that we can do better than Q1, but I would say stable to marginally higher. We should not forget that costs will continue to rise as well, right? We have not yet seen the full extent of the cost increases as we in Q1 we of course benefited from the weighted average cost of inventories. You should also expect that costs will rise. There will be some higher energy costs as well in Europe. Clearly, when you look at just current spreads, prices are offsetting that. Net net, you're talking about, you know, some small expansion in spread in addition to stable slash slightly higher volumes. Yes, Andrew, I'm not really suggesting that. I'm saying that we are clearly expecting a strong Q2, right? I think that's quite clear from all our guidance. I'm not suggesting that it's high or low. I'm just giving you the components here. Higher prices, stable to higher shipments, and higher costs. Of course, I think you should also expect that when I talk about higher shipments, you have to take into account the situation in Ukraine. Right? The fact that in Q1 we still had at least almost two months of kind of normal operations there. You have to take that into account. Those are the high-level moving parts, Andrew. In terms of your M&A question, I think this is something that we have discussed quite extensively also last quarter. I think we don't want, of course, to compromise on our balance sheet. I think we have a very balanced capital allocation policy. I think the focus is on decarbonization, right? You have seen the announcement regarding Texas. You have Greenko in India. Even though technically it's not an M&A, it will show in our capex, but that's the kind of things that we have been focused on. You probably saw also a small acquisition of a scrap company in UK. It's small, but it shows how we see the importance of trying to improve our vertical integration to renewables and into metallics. Okay. Makes sense. Thank you. Thanks, Andrew. We'll move now to Bastian at Deutsche Bank. Yeah, thanks. Thanks, and good afternoon. I have one question on your other non-core holdings there. I think you still have your stake in Dillinger, and the business obviously struggled over the last couple of years. Now obviously we've got this massive rally in play, and there's probably also much improved prospects in end markets such as energy and defense, both of which Dillinger is quite exposed to. It's probably fair to say that the value which is tied up there has increased. What are you looking to do here? Because this may be an evolving opportunity window for you to realize value in an asset which is probably non-core if you manage to sort out the very complex governance structure. I would be very interested in your perspective here. Yeah. Well, Bastian, I think that's a good point, and you're right. As you know, in the past, we actually took some impairment there. The performance was for some time not great, but it has changed a lot as you rightly pointed out. And I think the potential, it's good, given the transition to more renewables, the demand for plates. I think that it's good. At this point in time, I don't think we are looking at anything else. We're happy with holding the asset and we are in constant dialogue with the management team there. Yeah. There is no change in the strategic direction right now. Okay. Thanks. Understood. Just one question actually. Is this company and entity also under your scope of decarbonization targets? No. It's a company that we don't have control over this company, right? We have a significant stake, but it's not controlled by us at the moment. Okay. Understood. Thank you. Thanks, Bastian. We'll take the next question from Grant at Bloomberg Intelligence. Good afternoon. Thanks for taking my questions. Two specific questions on decarbonization. The first one is on your latest announcement in France, where you've increased or accelerated the investment in decarbonization there. I'm just curious to know, I think initially you said at Dunkirk you were gonna save about 2.8 million tons of CO2, and that's jumped to 7.8, and it seems to be for a fairly marginal additional investment. I'm just keen to understand the dynamics there and how that's, you know, how that's increased quite so significantly. That would be my first question. Just a point of clarity on the decarbonization. Your initial $10 billion estimate, I take it... Can you just remind me, that was exclusive of any government funding that you would have got towards that? It's $10 billion and any government funding would reduce that total amount. Just as a point of clarity, please. Thank you. Yeah. So Grant, let me take the second part of your question. Maybe you can try to find the reconciliation of the CO2 targets for France, but I can also talk about it. $10 billion, Grant, that's what we have announced for this decade, right? This is what we believe we're gonna be spending from now till 2030. And we believe that we're gonna be spending about 35% of this money in the next five years. This is a gross number. Our expectation is to get from governments here funding in the range of 50%, right? Up to now we have announced, including all these projects, we have announced projects in France, in Spain, and in Belgium, and also in Canada, where I think we are ahead now because we have confirmation from the investments from the Canadian government. We have secured investments in the range of CAD 900 million, so that is about 50% of the announced investment there. I think we have a very good dialogue with the member states, and the process now is in the hands of the commission. We expect to hear back from them relatively soon. That's on second part of your question. Do you have any of the I don't have the- The first part of the question? Ed, on the reconciliation to the $7.8, I can confirm the $7.8, but I don't have a bridge from the original number to that. If it's okay, Grant, I'll follow up with you after the call, having spoken to the team. That's brilliant. Thank you. Just not to be too pedantic, in terms of your acquisitions, for instance, in the HBI plant, that's not included in the $10 billion you guided to. That $10 billion is exclusively for your own investments, as it were. That's correct, Grant. Thank you. Thanks very much. Thanks. We'll move to Luke now at JP Morgan. Go ahead, Luke. Hi, Genuino and Daniel. Thanks for taking my question. Two from me. Firstly, just to follow up on the calls or the questions on sort of excess capital and specifically on M&A. And your comment earlier just around Mittal being cheap. I think we can all see it. The forward multiples, free cash flow yields are all very cheap. I mean, investors are nervous about M&A. It comes up in pretty much all conversations I have about the investment thesis. If I was being critical, you've done Corpus Christi, which for what it's worth, I think is a good acquisition. We're seeing renewables M&A pop up for India. The scrap company you mentioned in U.K. It doesn't necessarily appear that there's a sort of a clear strategy on where or what is being spent on M&A. Can you maybe just clear up what the priorities are here from an M&A front? I suppose while I have that question on the floor, Vale is potentially selling an asset or a slab mill in Brazil. Is that something that could potentially be an asset of interest or not? Look, maybe I would just say that I think we have been giving this message very consistently that we don't want to compromise what we have achieved, right? We will continue to be very diligent, focusing on making sure that the balance sheet continues to be strong. As you know, we have net debt limits as well that we have imposed on ourselves. I think you can see the level of returns that we are, you know, returning to shareholders. I think that is. We believe that it's unprecedented really in the industry, right? Not $9.5 billion. For us it's all about, again, reaching the right balance where we develop the business, where we return cash to shareholders. We have been very clear as well that improving or accelerating our decarbonization is strategic. We have said also that achieving this level of vertical integration with renewables, metallics, is something that we believe in the future will pay off nicely. We actually have seen that when we did this move to a bit more integrated to iron ore, right? I think the strategy from our standpoint it's clear. I hope it helps, Luke. Yeah. No, that's helpful. Just the last part of my question was the potential asset in slab mill in Brazil. Some press articles have suggested Mittal might be interested in that. Can you comment within the realms of what you can say about that? No comments on that, Luke. Okay, no problem. Second question is just on the buyback, sort of three smaller sections of parts of the question. Firstly, can you confirm the Mittal family are not participating in the buyback? Secondly, given the quantum of free cash flow and your capital allocation process around returns, is there some form or do we reach some form of technical effect that will cap out the share buyback level in future periods in terms of potential ownership from the family or in terms of index weighting? Thirdly, your approval yesterday for the buyback, I think is 10% amortization of the share balance, which is likely significantly lower than what the shareholder returns could be this year. I'm just trying to think about how we should be framing additional returns if you don't have approval for the buyback. Yeah. The first part of the question, I think that's in our press release. The Mittal family has decided not to tender and not to participate in the share buyback, similarly to what they decided to do with the previous one, right? I'm not aware, Luke, that we may hit any limitations here for them. I don't believe that's an issue. The 10% I think is just important. That's very standard in Europe, right? That's what normally you get proxy advisors also to support. In 2021, we did more because of course we had the divestments as well to return. The first $1 billion that we did, and that we completed in April, that was still part of the old authorization, right? The 10% that we have now, it's all available. I think that's important. We should not read too much into that. I mean, that's, as I said, it's just very standard percentage. If we get to the conclusion that, okay, that's not enough, and we can always go back and ask for more authorization. You probably saw as well that we have asked for authorization to cancel shares, and which has been, of course, the whole point here, that we are buying and canceling. Okay. Sorry, just quickly on that last point. If with the mandatory, how would that be treated? Does that sort of form part of the amortization of shares? Well, I mean, if you look at our presentation, there is one bridge showing the evolution of our share count. That includes the MCB as well, right? As you know, we have bought partially already the MCB on two occasions a part of the MCB. We see the MCB, any buyback of the MCB, very similar to a share buyback. Although the focus right now has been on the outstanding shares. That remains, I mean, as we have done already two times, that remains another option, although the amounts now are much smaller, right? Okay. Understood. Thanks a lot for that. Great. Thanks. We'll now move to Rochus at Kepler. Go ahead, Rochus. Yes. Hi, thanks for taking my question. I have two parts. The one is on scrap. I guess you flagged a small acquisition before. Can you give us a bit of a sense what are, you know, the kind of longer-term ambitions there? You know, it's the first small step, and I think it's pretty small compared to your backward integration into iron ore, for example. I would be also interested to see what the relative appeal is of buying external scrap companies versus, for example, pushing the circular economy model by, you know, brokering deals with customers indirectly getting back prime scrap. That would be first question. Yeah. Rochus, we do that as well, right? We have a number of contracts to get back scrap, and this is something that we have been doing for quite some time. Of course, normally it's high quality scrap that we can use in our flat business. That is not changing. I think it's small. I mean, this acquisition is small. The market in Europe, as you know, it's very polarized. I mean, with very few exceptions. For us, we also learning here, Rochus, with this acquisition. We want to. I think it will also improve our know-how here, what we can do, what we cannot do, learning from this, the management teams. I think at this stage, it's probably very early to set targets for this initiative. Understood. Then the second part is on HBI, again on the deal in Texas. I guess, Tinu, you mentioned that one direction of the output will be towards Calvert. I guess this will be kind of a hot charging of HBI into the EAF in Calvert, which is probably not the same model you are doing at your other DRI plants, but maybe correct me if I'm wrong. What would be the kind of thinking why it makes sense to cold charge HBI? And how shall we think about the further development of the Calvert site? Would you rather think about, you know, purely growing that metallics exposure? Or could it also mean that you could invest at the Corpus Christi site in different direction? Hello, Rochus. We look at all this, right? The hot charging or charging the cold, call it cold HBI. Of course, the hot DRI, so you do have some savings, right? If you have that proximity, if you can do that hot charging, that's normally good. It doesn't change the economics so much, the economics for us here, right? This is a great opportunity to do the integration. Yeah, I think that's how we are seeing it. It does change a bit, but it doesn't fundamentally change it. We're not change the decisions here. Then I think we have the optionality as I discussed at the beginning. We have acquired these assets. We have a great strategic advantage I would say. We talked about the gas. We have the port, which is nearby. You can very easily transport materials either to Calvert, to Europe, at very competitive freight rates. We have the land. Yeah, we can, it creates a lot of optionality for the group. Okay. Very good. Then maybe finally, on your working capital, I guess you're saying your statement today that you expect a further working capital build. How should we think about the magnitude in the Q2 versus Q1 and probably any color on what might happen in the rest of the year? Well, as we discussed, we expect prices, steel prices should be generally higher, raw material prices should be higher. Expectation is for another investment in working capital. I would expect, Rochus, the number to be a little bit lower than what we spent in Q1. Not more, but less. Right? For full year, as you know, I mean, it's at this point, we are not providing that guidance. I would just say that all this money that we have been investing in working capital and almost all of it on account of prices sits on our balance sheet, right? You can see that. It really depends how you see the evolution of the EBITDA of the company in the second half, right? If you are more bearish, then you should also expect that there will be release of working capital. If you are more optimistic, then assuming that there can be some investments, it's also realistic. That's how I would encourage you to think about it. You should expect that there will be always a correlation between our EBITDA and the working capital, either investments or release. At this point in time, there is very significant amount of value that we have on the balance sheet on this. Of course. Okay. Thanks for clarifying that. Thanks, Rochus. We'll take the next question from Phil at KeyBanc. Yeah, thank you. I just wanted to confirm that the outlook for stable volumes excludes Ukraine. Phil, that's correct. I think that's what we are writing as well. You have to assume that because even the pig iron that we are producing right now, we don't really count that as shipments. It's a semi-finished product, not a steel product technically. We don't count that as part of our shipments. Of course, as we discussed, we are running at 20%, so you have to take that into account. That's correct. Okay. Then just to follow up, and I apologize if I missed it, but where are you all on the progress on the hot strip mill ramp in Mexico? Thank you. Yeah. Thank you. Thank you for the question, Phil. I think we're all very excited with the progress there in Mexico. We are in Q2, we should be reaching about 40% in terms of run rate. In Q3, our expectation is that we should be moving to about 60%. We have already started, and we should be improving on that, the trials with industrial accounts, trying to get the certifications or homologations. We are very pleased with the progress so far. We have actually indicated in our release that we expect already a good contribution this year coming from the hot strip mill. We have indicated that it can be in the range of $100 million this year. Thank you. Thanks, Phil. Just on that, there is more detail on page 24 of the results deck. It has a couple of charts on the ramp up and also just the numbers that Genuino just confirmed. We will now move to the next question from Devesh at Goldman Sachs. Hi, Devesh. Devesh, you may go ahead now. Thank you. The first question is could you provide some more details on mill utilization across each division during the Q1? You know, how much impact did the high energy cost in Europe and the Russia-Ukraine crisis have on utilization? How do you expect utilization to evolve over the next quarter? Thank you. Yeah. Well, we don't disclose the capacity utilization, but what we have been saying and has not really changed. If you look at our flat business, across the board, we have been running full. That was also the case this quarter. Our longs business in Europe, we did announce that we were, because of the high energy costs, deciding to not operate the furnaces at certain point in time during the day, when prices are very high. That has not really had a material impact on our production overall. I think what we have seen in the longs business in Europe is that steel prices have also moved up to reflect the higher prices. I think we have not really seen a squeeze in terms of profitability in Q1 against Q4. I think we have also done a good job when managing the energy prices overall in Q1 against Q4. As we discussed in the previous call, because of our hedges, we did not really see a significant increase in costs in terms of gas in Europe. And when I think about quarter two, I think we will see some increases in costs coming from energy and including gas and power, but that should not really be so significant. That's how we are seeing it. Sure. Thank you. The second one is we noted that your capex forecasts have been maintained. Do you see any inflationary pressure affecting capex, or have you already factored in the margin of safety in your projections? Well, typically, we do have some contingencies embedded in our projects, right? I think it's a very good point and this is something that we have been monitoring very closely. So far so good. It's something to watch out. All the teams are aware of that. There are risks, of course. So far, I think the teams are doing a good job. We have also been active in projects where we are more exposed to currencies as an example. We have been also hedging that when we see opportunities to try to make sure that we deliver on the budget rates. We are taking actions wherever we can. There is always a risk that in this environment, you can have some overruns, even though today, that's not the case. Sure. Thank you. Great. Thanks. We're running up against time here, Genuino Christino, but I think we've got time for one last question from Alan from Oddo, and then any other followers will take offline after the call. Alan, sorry, go ahead. Yes. Sorry. Thanks for taking my questions. I guess, coming back to the valuation again, it seems like, despite all your efforts, the market is really not willing to recognize the value inside ArcelorMittal. I think the stock is trading at 2x EV to normalized EBITDA with just that. That just doesn't make any sense. My question may sound a bit provocative, but why not just take the company private? I think we share your views that the valuation is. It's really very, very low. This is not something that is being considered. Okay. Thank you. Yeah. Perhaps I can just compliment Genuino. Obviously, you know, it's a recurring theme. It is something that we're very conscious of, that management and the board are very conscious of as well. It's difficult to rationalize. It's clearly very frustrating. You know, I think what we can do to somewhat take advantage of that is to just continue with our capital returns, continue with our share buybacks. That is one way of sort of capitalizing on this very discounted valuation. I know when we looked at this last year, the amount of shares that we were able to repurchase and the impact that that then had on the book value per share, but also the intrinsic value on a per share basis was very significant and really demonstrated the sort of value creation that we can achieve through our share repurchases. If we can continue doing that, then at least we can take advantage of this discounted valuation whilst it's there, whilst of course making every effort to rectify and trade at more multiples, which would be better reflecting of the size, scale, diversity, leadership and qualities that ArcelorMittal has. That is the last of the questions that we have. There were a couple of follow-ups, but I think we will take those offline, Genuino Christino. I'll hand back to you for any closing comments. Thank you, Daniel, and thanks, everyone, for your interest, for your questions, and speak to you guys, soon. Thank you very much.