Ladies and gentlemen, thank you for standing by. I'm Poppy, your Chorus Call operator. Welcome, and thank you for joining the Erdemir conference call and live webcast to present and discuss the second quarter of 2023 financial results. All participants will be in a listen-only mode, and the conference is being recorded. The presentation will be followed by a question-and-answer session. Should anyone need assistance during the conference call, you may signal an operator by pressing star and zero on your telephone. Please note, Ereğli Demir ve Çelik Fabrikaları T.A.Ş. Erdemir may, when necessary, make written or verbal announcements about forward-looking information, expectation, estimates, targets, assessments, and opinions. Erdemir has made the necessary arrangements about the amounts and results of such information through its disclosure policy and has shared such polices, policy with the public through the Erdemir website, in accordance with the Capital Markets Board regulations. As stated in related policy, information contained in forward-looking statements, whether verbal or written, should not include unrealistic, unrealistic assumptions or forecasts. It should be noted that actual results could materially differ from estimates, taking into account the fact that they are not based on historical facts, but are driven from expectations, beliefs, plans, targets, and other factors, which are beyond the control of our company. As a result, forward-looking statements should not be fully trusted or taken as granted. Forward-looking statements should be considered valid only considering the conditions prevailing at the time of the announcement. In cases where it is understood that forward-looking statements are no longer achievable, such matter will be announced to the public, and the statements will be revised. However, the decision to make a revision is a result of a subjective evaluation. Therefore, it should be noted that when a party is coming to a judgment based on estimates and forward-looking statements, our company may not have made a revision at that particular time. Our company makes no commitment to make regular revisions, which would fully cover changes in every parameter. New factors may arise in the future, which may not be possible to foresee at this moment in time. At this time, I would like to turn the conference over to Miss Idil Onay Ergin, Investor Relations Director. Ms. Ergin, you may now proceed. Thank you very much, Poppy. Good afternoon, everyone. Welcome to our conference call and webcast of Erdemir for the second quarter of 2023. Today, our CFO, Mr. Serdar Basoglu, and our Financial Control and Reporting Director, Mr. Ulaş Yirmibeş, are also joining the webcast. First of all, I will go through our master presentation, which you can find on our website, and you can also follow it through the webcast. At the end of this presentation, there is going to be a Q&A session, as usual. Before starting the presentation, I will hand over to our CFO, Mr. Serdar Başoğlu. The line is yours. Thank you, Idil. Good afternoon, everyone. Welcome to our second quarter conference call. Thank you for joining us today. Our last call was before the earthquake disaster. In the meantime, we experienced a very rapid recovery with the extraordinary efforts of our İsdemir team members. We were able to bring the facility back to pre-earthquake levels in a short period of time. While the earthquake disaster in February caused a two-month effect on our operational results in the first quarter, this effect was limited to one month in the second quarter, with the facilities commissioning at the end of April. From the third quarter, our production and sales figures will return to normal levels, hopefully. After the operational data, I would like to touch the financial statements. The material change in our second quarter PNL was in the deferred tax item. While the exchange rate rise in the first quarter was only 2%, the rate increase in the second quarter was 25%. Since our functional currency is US dollar, the depreciation of Turkish lira leads to an increase in deferred tax liability. As you all know, deferred tax item that has a negative effect on net profit in the second quarter is a market item. We continue our CapEx program at full speed. The second long-term investment in Erdemir is planned to be launched in the second half of this year, hopefully the last quarter. We already spent $434 million for CapEx in the first half, and our CapEx will accelerate in the coming quarters. I think our CapEx will reach up to $1 billion in 2023, with maintenance and other ongoing investments. As you all know, recently, a change in tax regulation has also been made in Turkey. The corporate tax rate has been increased to 25% from to 20% for corporate earnings, actually for all of 2023 and subsequent taxation periods. Since this regulation announced after 30 June, it was reported as a subsequent event in the financial statements. However, the corporate tax increase will be reflected from the third quarter financial results. On the other hand, when we look at the Turkish steel market, Asian countries such as China, India, South Korea, and Indonesia, whose competitiveness was increased due to falling energy costs and low inflation. Actually, they gradually increased their shares in Turkey's export markets, especially in Europe. While this situation caused a decrease in Turkish steel exports, it also caused an increase in steel imports from Asia with dumped prices. The Turkish steel industry experienced a negative two-way effect due to this situation. Well, I can say despite the squeeze in the domestic steel market due to Asian countries, we foresee a recovery in operational data in the second half of 2023, with the disappearance of the earthquake effects. We also expect an improvement in EBITDA per ton in the coming quarters. I will be with you at the end of the presentation. Now I would like to hand over the mic to our IR director, Idil. Idil, the line is yours. Thank you, Mr. Basoglu. Our presentation consists two sections, as you already know. The first one is the market overview and then the financial results. Let's start with the commodity prices. In page 3, you will see the prices of steel-related commodities and HRC. Let's take a look at coking coal, iron ore, scrap, and HRC prices. Price level of coking coal was around 295%, $5 per ton at the beginning of the year, and it's gradually decreased to $245 per ton in spot markets as of today. Prices have fallen on weak Asian demand, with customers delaying purchases in anticipation of further price declines, while supply has improved, with shipments from Australia exceeding 2022 levels since March. A sharp decline is not expected in the short term for coking coal prices. Iron ore price was around $117 per ton at the beginning of the year, and the current price has dropped to $104 per ton. We expect that iron ore prices will stay between $100 and $110 in the second half of the year, as we anticipate steel production to moderate in China, in line with the government policy and iron ore supply to rebound. After reaching its highest level in 12 years, since 2010, with $665 per ton in March last year, the current scrap price has dropped to $360 per ton. On the bottom line, bottom right, we show HRC prices in Black Sea, China and South Europe. HRC prices, which peaked in March 2022 due to the Russia-Ukraine war, are already normalized, and again, we do not expect a sharp movement in the short term. On page 4, you will see the production, consumption, exports, and imports figures of Turkish steel markets for the 6 months of 2023. While steel production decreased around 8%, steel consumption increased around 16% compared to the same period of the last year. Despite the 1% decrease in world crude steel production, Turkish crude steel production decreased by 16% and negatively differentiated from the world steel industry. While exports decreased by 46% in the first half of this year, the increase in imports by 23% caused the export-import coverage ratio, which was 97% in the first half of last year, to fall to 48% in the first half of this year. Let's take a look at the financial results and the operational metrics. On page 6, you will see the brief summary of our 6-month results. Despite the earthquake disaster, we achieved $2.9 billion revenue, and we generated $232 million EBITDA. On page 7, you will see the operational indicators of our company. As you all know, due to the earthquake that occurred on February 6, the production at the Iskenderun plant was suspended until the end of April. We lost approximately 3 months production and 600,000 tons of sales due to the earthquake. All the decreases you see on this page are related with this situation, actually. From the third quarter, starting from the third quarter, our production and sales figures will return to its normal levels. Let's take a look at the segmental breakdown of domestic sales and export volumes in page 8. As you can see from the pie chart, there has been a change between sectors due to the effect of market and demand conditions, when we compare to last year's breakdown. There has been a transition from the pipe and profile, and also industry to distribution chains. The similar situation applies to the long products. There has been a transition to industries that use value-added products and have higher profitability margins. As I mentioned in the previous slide, the unusual decline in exports is mainly caused by the earthquake. On page 9, you can find breakdown of revenue for domestic and export sales. 88% of the revenue comes from domestic sales, in line with the domestic volume. The decline in sales revenue is mainly caused by the earthquake, as I mentioned earlier. The decline in EBITDA per ton, due to the earthquake, recovered very quickly, even exceeding the last 2 quarters of 2022, and we expect to see even better figures in the coming quarters. The main item affecting the financial results of this quarter is mainly deferred tax liability. Since our functional currency is US dollar, the depreciation of Turkish lira leads to an increase in deferred tax liability. As Mr. Basoglu mentioned, deferred tax expenses are non-cash item. On page 10, you can see how we reached to net profit from EBITDA. The largest item was tax expenses, which was $238 million in 6 months. The other major item is, in this chart, was financial expenses, which are high due to the operational foreign exchange loss. Depreciation was $103 million. Also, within the expenses from investment activities, there are assets that will be out of use at İsdemir. After other expenses, net loss was $178 million. In the graph below, you can see EBITDA to change in cash bridge. There is a release of $88 million in working capital. Also, we spent around $566 million to capital expenditures in 6 months. This amount also includes advances paid for the CapEx as well, and that you will see the difference between the CapEx page in page 13 and this one. $413 million credits was mainly used for net working capital. Also, $27 million was spent for share buybacks in April and May in 2023. On page 11, you will see the historical trend of financial borrowings and net debts. When we look at the first half of 2023, our net working capital remained almost stable compared to the end of last year. Although there was a decrease in inventories and trade receivables due to the earthquake in the first quarter, net working capital remained stable due to the increase in these items in the second quarter. Our net position was $1.3 billion at the end of June 2023. Due to the non-operational costs incurred in the first six months due to the earthquake, low EBITDA was realized, and the Net Debt/EBITDA ratio was 2.3x. We expect that the EBITDA will increase and net debt will remain stable for the rest of the year, and Net Debt/EBITDA ratio will decrease below 2x again. Slide 12 represents our cost of sales breakdown. Due to the increase in production after the earthquake in the second quarter, our raw material usage increased. Therefore, our ratios in cost of goods sold have changed on a percentage basis. The decrease in energy prices compared to the first quarter led to a decrease in the percentage. Page 13 represents the historical CapEx spendings. Total CapEx spending, excluding advances payments, is $434 million in six months. Our ongoing projects, such as new coke batteries, are on progress. İsdemir's number three coke battery modernization was commissioned last year in May. In addition, the second blast furnace investment in Erdemir is planned to be commissioned in the second half of this year. Our capital expenditures will accelerate in the coming quarters. On page 14, you can find our value generation approach, which stands on three pillars of sustainable growth, responsible production, and putting people at the heart of what we do, play a major role in our operations. Now, we may continue with the Q&A session. We will be delighted to answer your questions with Mr. Serdar Basoğlu. Thank you for listening. Ladies and gentlemen, at this time, we will begin the question and answer session. Anyone who wishes to ask a question may press star, followed by one on their telephone. If you wish to remove yourself from the question queue, then you may press star and two. Please use your handset when asking your question for better quality. Anyone who has a question may press star and one at this time. One moment for the first question, please. The first question comes from the line of Krishan Agarwal with Citibank. Please go ahead. Hi. Can you hear me? Yes, we can hear you, Krishan. Hi, thanks a lot for taking my question. Can you, can you please discuss your plans for the medium-term CapEx, especially when you guided for a $1 billion CapEx this year? I'm curious to understand, I mean, when do you expect the basic oxygen furnace plans to get approved after this commissioning of the blast furnaces? And what sort of capacities we should expect you to operate in the next 2-3 years once the basic oxygen furnace plants also come through? Hello again. Yes, we already spent $434 million in six months, and you may assume that CapEx will reach up to $1 billion in 2023, which included maintenance and other ongoing investments. We are planning to, I mean, the, the, the second blast furnace investment in Erdemir is planned to be commissioned in the second half of this year, most probably in the fourth quarter. I think you remember, you will remember that these investments are not for the capacity increase, actually. These are the efficiency and cost reduction investments. At the end of these investments, we, we are not expecting to see any kind of capacity increase in the final products. Yes, understand. The follow-up on that is that, is the $1 billion expected to remain stable, for example, for 2024, or expecting to go down, and if go down to what levels? actually, we expect to see similar level in 2024. We included, by the way, most probably we will start pelletizing plant at the end of this year, you should also add $550 million come from pelletizing plant. just as a reminder, this plant will take 3 years to 3.5 years to finish. we will spend $550 million in 3 years or 3.5 years. Understand. A very near-term question: What is your expectation for the raw material cost for, third quarter? Also, do you expect the prices to remain stable or go down in the third quarter? Well, actually, let me just give you some brief information for the Turkish market because actually, currently our order book is full for 2 months, and we don't expect to see a lower level than this. Unless there is a sharp decrease in raw materials, HRC Turkey price is expected to remain between $600-$700 levels.. Of course, there is a lag difference. Raw material prices are reflected in the financial statements approximately after 4 months, but sales prices 2 months later. As a summary, actually, the raw materials prices is expected to stay stable or maybe just slight decrease. Also there might be, again, slight decrease in sales prices, but we expect to see higher premium in the next quarters. When we said we expect to see better, EBITDA per ton, it was because our sales and production figures will be back to normal levels after the earthquake. The other indicator was we expect to see higher premium for the next quarter. understood. Thanks a lot. That's it from my side. You're welcome. The next question comes from the line of Andrew Jones with UBS. Please go ahead. Hi, Idil. Thanks for the call. I, I've just got questions on this CapEx, because every, you know, in last year, we were talking about maybe $550 million-$600 million or something in that ballpark per year for this, spending on the current ongoings or blast furnaces and so forth. I'm trying to understand how we've gone up to, you know, $1 billion this year, and, you know, also next year. I mean, we're saying that this pelletizing plant comes in, that's $550 million spread over 3 years, so it shouldn't be that much. How is it how is CapEx gonna be $1 billion again next year? Now, I don't understand what has changed. Maybe it's the fact that we haven't had calls in the last 2 quarters, but could you explain what has changed in the last 6 months? This is a huge increase compared to what we were talking about, you know, this time last year. Okay. Hi, Andrew. Yes, you are right. Last year, we said that the CapEx spending will be $550 million-$600 million for next... Last year, sorry, for 2022. There are some changes in the situation. For example, we spent some money on earthquake impact in Iskenderun plant, which was included in CapEx in 6 months, and also inflation. This is one of the reasons that we have higher budgets when you compare with last year. How much was the earthquake impact in the first half? Hello? It's around $100 million in 6 months. Okay. The increase next year. I mean, most of these blast furnaces, coke batteries, et cetera, should largely be done by then, or at least I thought they would be. You know, how, what's the breakup of that $1 billion next year? It's such a long detail, but I can just give you the names of the CapEx. I'm sure you will remember. 2 blast furnaces, one of them is planned to be finished this year, and so we will finish Iskenderun blast furnace, 1 sinter plant, sorry, 2 sinter plants and 1 coke battery in Erdemir. Also, that can be degassing plant, and you need to add pelletizing plants, as I mentioned earlier. These are the investments that we will finish. We plan to finish excess pelletizing plants until the end of 2024. Next year will be such a, you know, tight schedule for investments. That's why we keep the same budget for next year. This year, as I mentioned, we are gonna spend, almost $1 billion for CapEx, and again, for next year, you can assume a similar number as a CapEx budget. Okay. Well, that's, I mean, that's incredible inflation compared to, you know, the 5, you were guiding last year, well, not just last year, you were guiding for $550, $600. You were saying that that would be the level for the next few years. Okay, if we add in $100 million for earthquake, you know, issues, I still don't get how you get to that sort of number. I mean, what, is there any other color you can add or give some examples as to what is inflated that much? Because it's, I mean, that's insane. Well, actually, everything. When Turkish lira devaluates, it affects everything, we spend on. I mean, most of the vendors are foreigners and, we also, get some services from outside for, our investments. Everything gets just, you know, higher with higher prices. These are dollar figures, right? These are not, you know, Turkish lira numbers. These are, you know, hard dollar figures. Yes, correct. We, we pay both in Turkish lira and US dollar for investments, and everything gets more expensive. The Turkish lira stuff should have gone down, should it not? Given, you know, the, it's, it's, yeah, I mean, labor and things, but what go into some of these large projects should have decreased. I mean, it... There must be something else at play here other than just inflation, because it's, it's, it's a huge increase. Well, inflation is getting higher, more than the evaluation in Turkish lira in Turkey. That's the reason actually. I can just give you the answer for your question. Mm. Okay. There is someone else, but maybe you can follow up offline. Thanks. As a reminder, if you would like to ask a question, please press star and one on your telephone. We have a follow-up question from the line of Andrew Jones with UBS. Please go ahead. Okay, as no one else is asking, just to clarify on the second quarter. You're expecting prices to be stable, raw material prices to go down, I guess, and volumes to increase. Overall, we're expecting an improvement in EBITDA in 3Q. Are you able to quantify any of that? For a previous question, I said we are expecting to see stable or slightly lower prices, both in raw materials and sales prices, and yes, higher, number of production and sales figures. So yes, we are expecting to see better, EBITDA total numbers for the next quarter. Mm. Can you give us some guidance around the volume that you're expecting? For a year, we expect to see higher than 7.5 million tons as a sales number. Higher than 7.5 million tons. Okay. That's a, that's a large step up. Okay, and just generally, you know, any other one-offs we should consider, and what about working capital? I mean, that's obviously built in this quarter. Can you just give us some steer on how working capital will evolve in the second half? Actually, considering almost stable commodity prices, we expect to see a stable position, in net working capital in Q3. Stable in Q3. Okay. Do you expect any release in four Q? No, Andy, we do not. Mm. Okay, cool. Well, okay, just on, on the market maybe, I mean, what are you seeing in terms of demand in the near term? I mean, obviously, there's probably some earthquake related, roof demand boost to come through at some stage. I mean, are you seeing any impact yet? What's your expectation for maybe Turkish steel demand over the next sort of several quarters or into next year and year after? Like, what's your, what's your take on the demand situation? Well, for our company, we don't see any problem because as I mentioned, we already have two months full order book, and we don't expect to see any lower than this level until the end of this year. Yes, in Turkish steel market, of course, as Mr. Basoglu mentioned, there is some kind of pressure from the Asian countries, China, India, South Korea, Indonesia, both of them, all of them. They most go to the export markets that we already, you know, in, in, in these markets, for example, European countries, and also, they reduce the prices because they have some kind of advantage for the cost advantage, of course, following energy costs. They, they don't surprise us. Of course, there will be some kind of negative effect in Turkish steel market. So far, we haven't seen any impact in, in our order books, and we do not expect to see any kind of decrease in our order book. Okay. On the situation with regard, you know, regard to, say, like Russian imports and so forth, I mean, how much do you expect to see any sort of pricing pressure coming from that? It seems like, you know, that's been one big source of replacement tons for the lost production at the start of the year. Is that a, you know, a short-term effect because of low domestic production, or do you think that there's gonna be continued pressure from, you know, imports coming in from Russia? Well, Russia and Asian countries, yes, they come, they sell, their imports is, you know, getting higher. We are very used to working in this, these kind of environments, so Turkey was always an open market. Our duty taxes are not very high. I mean, as a, as a 50 years, more than 50 years working in Turkish steel market as a steel integrated steel producer, we are very used to working in this kind of environment, and I can easily say that we have a very strong communication with our customers, et cetera. And also the quality of our production. There are many metrics that customer choose us. Not only price, but there are some other indicators that they, they, you know, put before the prices. Again, we do not expect to see any decrease in our order book, although there is some kind of pressure from the import side. Okay, interesting. Okay, that's it for me. Thank you. You're welcome. The final question comes from the line of Cemal Demirtaş with Ata Invest. Please go ahead. Thank you for the presentation. My question is again about the investment side. You just said a bit about the investment cycle, and I see that over the last two and a half years, you already spent $1.5 billion. In the previous questions, you had partially answered, but we understand that the total investment amount for this year could reach around $1 billion for the full year. I also wonder your potential in our investment CapEx in 2024. What might be the in terms of timing, you know, when do you think all these investments will be completed? The, the big investments I'm talking about, you know, you by when possibly in 2024, at the beginning or at the middle, I would like to understand at least a rough, you know, the, the direction on that front. The other question is, as you mentioned, you know, there's a pressure price pressure from the global markets, but many markets are protecting their markets, you know, their governments are protecting their markets to some extent. I don't know if the, the, you know, Turkish Steel Producers Association have any attempts to just go to the government and ask for some action, as the, you know, this situation is highly having a negative impact, maybe not on you, but others. Just, you know, the way the color on that front. Thank you. Hi, Cemal. Let me start with your first question. Yes, you remember it right, our budget for CapEx for the full year is $1 billion. We already spent $434 million. Yes, the same number we expect to see next year as a CapEx. Until the end of 2024, we aim to finish all of the big, let's say, let's call it big, investments, included 2 blast furnaces, 2 coke batteries, 2 sinter plants, 1 vacuum degassing. Actually, 1 of the blast furnaces will be finished until the end of this year, and the rest of them will be finished next year. Thank you. Yeah, you're welcome. Your second question, I mean, I am not responsible with the, you know, dialog, dialogue with Turkish Steel Producers Association, but I'm pretty sure they have, you know, ongoing dialogues with the government. I mean, so far, we haven't heard any change, any regulation change or taxation change for import, but I am sure, there is some kind of dialogue between them. Thank you. You're welcome. Ladies and gentlemen, there are no further questions at this time. I will now turn the conference over to Mr. Basoglu and Mr. Ergin for any closing comments. Thank you. Thank you, all of you for joining us today. I hope to see you all at next quarter's call, and I wish you all a healthy day. Thank you very much. Ladies and gentlemen, the conference is now concluded, and you may disconnect your telephone. Thank you for calling, and have a good afternoon.