Acerinox, S.A.

Good morning, everyone, and welcome to our second quarter 2025 results presentation. The call will be hosted today by Bernardo Velazquez, our CEO, together with Miguel Ferrandis, CCO; and Esther Camós, CFO of the group.

As you all know, this has been a challenging second quarter and first half of the year, marked by significant geopolitical uncertainties, regional conflicts and of course, the tariff war. With no doubt, all of this have impacted the global landscape.

During this call, we look forward to discussing the progress we have made in navigating this complex situation. But before getting started, let me remind you that this conference call is being broadcast on our website at acerinox.com, where you can also find the financial statements and the management report for the first half of the year.

With that, I'll now give the floor to our CEO. Bernardo, please go ahead.

Thank you, Carlos. Good morning, everyone, and thank you for attending this presentation, and thank you, Carlos, for the introduction.

. It has really been an uncertain year.

We expected the recovery for 2025. Remember, after 2 consecutive years with the PMI below 50 in the United States, we expected the situation to improve, and that's really improved in January and February, but then in March, we again went back to below 50, with all the uncertainties that are affecting all the markets all around the world.

And basically, we have a lot of uncertainties in our lives. But in this case, I think the tariff war is affecting strongly to our business.

Imagine how difficult it is to organize your strategy if you don't know if your customers are going to grow or not based on the different tariffs, you don't know how your supplies are going to be affected by the tariffs, you don't know how your competitors and import competitors will be able to compete or will be feasible to sell in the market. So all this situation is -- what is finally happening is that everybody is in the situation of wait and see; even in United States.

It looks like the situation in the United States is better and it is. But all these uncertainties are also affecting this market.

Nobody is buying more than what is really needed, as we're seeing the market is from hand to mouth. We don't buy more than what is really needed, and many projects are being postponed.

So the situation is also affecting to HPA. So this is basically the general situation, and this is basically what has affected our results.

We expected a better behavior in the year and a better behavior in Q2. But still, we haven't defined what is going to be the new rules of the game.

Still, we are waiting for negotiations between the different countries. We expect some agreement between United States and Europe, but still the situation is not coming.

And this is what we are putting in our numbers and in our forecast. We are not predicting anything that cannot be predicted today.

We are based on today information, this is what we expect for Q3, where it's not bad taking into consideration that we are in the summer period and normally a slowdown of our markets. Fortunately, U.S.A.

is our major market. And also, we have been diversifying in the last years with VDM and Haynes in HPA and this diversification allow us to have a more standard results.

Remember that one of the reasons to enter in HPA was because trying to avoid or trying to reduce the volatility and the cyclical condition of our business. And this is really, really happening today.

We believe that once the situation clarifies and once we have a clear picture of what are going to be the tariffs, the Section 232 tariffs, the reciprocal tariffs and all these things, market will find a way to work with the new rules of the game and the situation will come back to normal. It is important to explain the situation, particularly of Acerinox Europe.

In the last 6 years, we have lived and expected a different crisis. Remember, 2020, COVID; '21 and '22, we had a tremendous energy crisis in Spain and that our energy prices multiplied by time 4; '23 apparent consumption in United States and Europe went down by 20%; '24, we suffered a 5-month strike in Spain; and '25, we have this tariff crisis.

Five totally different origins. But at the end, we are living for 6 consecutive years in a low scenario.

And according to the Spanish accounting principles, we have to consider crisis as the new normal. And in this situation, we have made an impairment on the tax credits in Spain that is affecting our results.

It's no cash related and is reversible, but we have to follow the accounting principles and trying to be prudent with our accounting numbers. Having said this, this is -- we're not entering the number because the later Esther and Miguel will explain in detail, just to consider the strong effect of the U.S.

depreciation in our numbers. And of course, again, insisting our geographical and product diversification is putting Acerinox in the best position, in the full position for the new economy and the new situation once the -- all these uncertainties clarifies.

And with this, I will pass the floor to Miguel.

Thank you. The positive -- the next slide, sorry, is called More than Resilient.

At the end of performance clearly, in the first semester has been much more than resilient. Resilience was probably one of the most used words in the COVID year in the previous low part of the cycle.

The word probably defines better the actual scenario is uncertainty. We have uncertainty everywhere, uncertainties not only in our sector, but uncertainties is also driving our customers.

Nobody regarding the tariffs, nobody still knows in every of our sectors. Any of our customers has yet a clear view of what's going to take place in terms of tariffs when they are going to be finally fully implemented, where -- who is going to be affected, how much is going to be.

So as has been explained by Bernardo, no one is taking any specific position. Everyone -- all of our customers is in a wait-and-see.

So we need to face that in addition to 3 tragic wars in different parts of the world. So Europe is affected.

This is clearly having its consequences in Europe. We have also the wars in the Middle East, which also provide uncertainties regarding oil and so on.

So this is the year we are facing fully uncertain. In that basis, we have proven to be more than resilient.

We have increased our sales compared with the previous first year semester at 10%. We have achieved improvement, 10% improvement in the Q2 compared with the Q1 and we have obtained our first half semester EBITDA of EUR 214 million.

This is a first half EBITDA in this environment. Just analyzing it is you realize that not many years ago, this was our, even above our EBITDA through the cycle.

So clearly, all the efforts done in the last years have proven to be effective. And once again, and this is relevant in our sector with a strong operating cash flow.

In this environment, even we have been able to obtain EUR 148 million of operating cash flow. So we are more than resilient to the actual uncertainty era, but in addition, we are keeping our program, we are keeping our strategy.

We have devoted EUR 125 million to CapEx in the first half. The -- gradually, this shall have more relevance in the second half of the year because we are keeping our organic growth, we are developing our strong programs of investments in our Kentucky plant for stainless in NAS as well as we are doing our investment programs in VDM and in Haynes.

So this is clearly our focus. We are in position of keeping that.

And we are obviously increasing our value added, not only in the plant of Spain, but also we are through this diversification, we go to the high part of the pyramid, as you know, of the added value contribution. And this is clearly appreciated first with the acquisition of VDM and later on more recently with Haynes.

In addition, we keep with our homework for improving all our operating expenses and we shall talk later on about our beyond excellence. I'm not forgetting any case because it's also part of our DIN sustainability.

We have launched -- we shall talk later on. We have launched the new Eco at Acerinox.

We have more than 6 types developing in this EcoStainless. We keep being organized -- in terms of our sustainability merits, we keep the gold award by EcoVadis.

We should have been in the platinum again if we're not by the social conflict we experienced last year. So this move down our platinum to gold and with a normalization coming for the next year, we are pretty confident that we shall be back again in the platinum.

And in health and safety also, we have obtained an improvement of 8% in addition to filling more or less all our targets in terms of carbon emission reduction. So we must be proud about keeping selling on the actual circumstances with a strong profitability being able to give our strategy and also maintaining our focus on sustainability.

Let me give you some highlights of how is the market today. The general explanation is what I already said, we were in the situation of wait-and-see.

Nobody is investing, is postponing investments. This is affecting all the markets, and we -- all the markets are depressed.

The different conditions of the different markets show as I was going to mention, a big difference in results in the 2 groups. In the stainless steel, in the U.S.A., the situation is pretty much the same than in Europe.

But with the low demand, remember that demand went down 21% in '23, was flat in '24, it's flat in '25 now. But with the protection of Section 232, we can keep our prices stable in the area.

Now with the new 232 that is not only going to 50% of tariffs, but also is protecting our biggest customers, protecting the customer like appliances, sinks, tubes and other products that we where stainless steel is a big portion of the cost. Of course, we think that the demand finally will grow once we have more visibility and the situation stabilized, the demand will grow.

If you add that the situation in the stock levels is low, we are now 18% below historical average. That means that once we have a more clear picture, the situation for sure will improve and United States is going to be the best market, it's the place to be.

In Europe, the market situation is more or less the same, but with a low demand and low prices, imports have been growing close to 75% in the year. And with this import growth, this material is going to stocks.

Stocks are increasing. So basically, we have a lot of pressure in the market with low demand, high inventories, so prices are going down.

The same conditions, same market conditions, different situations and different behaviors of our companies in Spain and United States. So I would like to remember that we are waiting for the post safeguard measures and I hope that finally, the European Commission will take the necessary measures to protect the European market if we want to have our strategic autonomy.

In High Performance Alloys, it is pretty much the same. Oil and gas is projects, projects have been postponed.

Chemical process industry is more of the same. Electronics and automotive are stable.

And thanks to our last investment in Haynes, we are in aerospace. And aerospace is the best sector today in the economy.

Having said this, Miguel, could you explain our profit and loss account?

Yes. Let's go to the group figures.

Later on, our CFO shall speak in detail by our business segments. In any case, relevant facts for the group.

First of all, is we -- as we anticipated in our first quarter presentation, the result of the Q2 were going to be higher as they have been. They have been a 10% higher than that of the first quarter.

It could even have been bigger if the dollar-euro should maintain stable, so because of the dollar weakness which, for us, obviously, is a relevant fact, we have experienced an effect of around EUR 10 million. So it could have 20% improvement in a more stable scenario.

And also in addition, at the quarter end, what we have done is an inventory adjustment of EUR 28 million due to the absolutely poor situation of the European market. Still the prices has been talked by Bernardo, the prices are going down.

There is -- the demand is extremely weak. -- increased imports of 80% are going through our distribution.

So in that basis, it has been appeared very prudent to make such inventory adjustment for preparing ourselves to the third quarter. So this has been at the end of the quarter in terms of this EUR 28 million.

When we compare with the first semester last year, there are 2 circumstances. One, obviously, is at that time, we have the strike in Spain.

So most of the contribution was coming from our most profitable business. But also when we take our most profitable business, which is North America, we must keep in mind the product/mix, especially in the stainless steel.

We are more or less running clearly our mill, but in these uncertainty days, there are sectors which for us are high-margin sectors that are less active. So for example, in the long products or in the whole material, which for us are better margin sectors, there is no activity, there is no investment.

Everyone is waiting for taking a specific decision. We are concentrating our production more in the ferritic types, in the appliances and all these other sectors, which, at the end, the margin contribution is lower.

This combined with the effect of a lower extra create this effect of the lower contribution and very good margins but lower contribution than the previous year by North American standards. This is something that gradually as soon as more or less there is more visibility, the market normalizes, shall be improving.

But this is also something that has been taking place during this first semester. We have made the noncash tax impairment that Bernardo mentioned.

So because of that, at the bottom of the P&L, it appeared some loss, which at the end is not a cash out, it's just a clear over prudent scenario for assuming difficult circumstances in Europe and also following the loss for being not only more than prudent, but also having a limit on all the recovery of the tax credits that can be done on an annual basis. This obviously is an adjustment that should be reversed as soon as the conditions improve.

We reached a net financial debt. You know that this for us is really not a headache when you compare at the bottom of the second file last -- 1 year ago, our net debt was EUR 191 million.

We should be probably on cash if we should have not decided to make the strategic investment of Haynes. As a consequence of that, we are showing this net debt of EUR 1,222 million.

Obviously, it's also affected by the depreciation of the dollar against the euro, which has had around EUR 120 million impact. It's something that does not concern us.

As you know, we have no any structural problem regarding debt, regarding covenants. All our debt is covenant-free in terms of profitability.

It's just more or less showing that at the end, we are in a position of making aggressive strategic investments and acquisitions in the low part of the cycle because of that, the debt appears to be high. But as I expressed before, this is not an issue.

And we understand that with a normalization of the market and a higher contribution of the EBITDA, gradually, we shall be able, obviously, to reduce as a schedule.

Going to divisions, okay? If we focus on stainless, we are presenting a better EBITDA -- 20% better EBITDA than in first quarter, okay?

And it would have been even better if we take out the effects of the conversion to the U.S. dollar and the depreciation of the conversion of our U.S.

dollars into euros. We continue with the comparison between quarters.

We see that with similar production volumes, we are just reducing by 2%, we are getting these better margins. We are growing in margins from 6% to 7%.

And this is basically due to the higher contribution from our U.S. markets.

And we are progressively increasing the margins in United States. Regarding Europe, the market situation, as they have explained, is weak.

But the main effect in this quarter is the pressure of the imports. The pressure of imports in this quarter is affecting not only the volumes, but also the prices, okay?

There is a strong price pressure in Europe, which is negatively contributing to our results. In terms of operating cash flow, we remain with our program of reducing working capital.

And we are maintaining an operating cash flow of -- on line of the EUR 40 million, same as we achieved in quarter 1 despite this challenging momentum. In the -- when comparing with the figures with 2024, we cannot forget the effects of the strike.

It is important to take into consideration that because of the strike in 2024, we were selling more in those markets with higher margins. That's the explanation of the reduction of margins compared to 2024.

But as I said, we are increasing margins from first quarter to second quarter, and we expect to continue on that line. And regarding cash flow, there is also an effect when comparing to 2024, and it is also caused by the strike because we were reducing inventories and selling from inventories because of the non-production in Europe.

If we go to high-performance alloys, in this section and in this division, the operating EBITDA really has been flat, okay? It's true that the reporting, we have EUR 3 million less compared to first quarter, but this is purely an accounting effect.

We -- because of the purchase price allocation when acquiring NAS, we did a revaluation of inventories to fair value and now we are releasing that revaluation and it has affected in EUR 3 million. So if we take out that effect, the result would have in the EBITDA would have been exactly the same as for first quarter.

I think that it is important to remark the strategy. I think our strategy of diversification and growing in new markets and new sectors is -- with the acquisition of Haynes is really allowing us to compensating negative with positive effects.

On one side, we have the slowdown on oil and gas and chemicals, but in the other side, we can compensate that with the progressively growth on the aerospace. And the aerospace and the gas tubing, which is where we are more exposed now with -- in the United States.

So this is really -- we are really proud of our strategy and how we are able to compensate. Another effect to take into consideration, and that's especially when comparing to 2025 is the effect of the nickel.

We cannot forget the nickel has strong impacts in these high-performance alloys for 2 reasons. One is the content of nickel of the material that we produce; and the second is the higher level of inventories.

And in that sense, we were still positively affected last year by the nickel tailwinds, while in this year, we are slightly on a headwind, so that's also a factor to take into consideration. And lastly, on the operating cash flow, which has been reduced in this division from quarter 1.

This is mainly impacted by the payment of taxes. We have had a payment of EUR 37 million of taxes in the second quarter and that relates to results that we had in 2023.

So really was the best year in history of VDM and that is what is causing the cash flow in the second quarter to get up. And now going into the capital allocation and our cash flow.

We have generating an operating cash flow in this quarter of EUR 48 million. Starting with the EBITDA, we had an EBITDA, as mentioned, of EUR 112 million in this quarter.

We are continuing, as mentioned, with our plans to reduce working capital, and this has had a positive effect in this quarter of EUR 73 million. It is true that this EUR 73 million are also impacted by the depreciation of the U.S.

dollar, which is what you see on the column Other. Out of this, EUR 77 million, EUR 52 million is the conversion differences of the working capital, but still reducing our working capital in the quarter.

We have paid taxes. And if you compare to last -- to the half, all of the taxes are paid in this quarter.

We are paying EUR 47 million of taxes. And with all that, our operating cash flow of EUR 48 million in the quarter, EUR 148 million in the semester.

Going into CapEx. We are growing in CapEx.

We have mentioned that we are in a strong year of CapEx, and it will be increasing along the year. This -- in this quarter, we have had EUR 68 million, which is compensated with the EUR 68 million that we have received from the sale of Veru.

Remember that we had a delayed payment in this quarter, and this has been received. So mostly, it is compensated.

That is why our free cash flow is EUR 49 million, which is the same as the operating. And then it comes the effect of the depreciation of the U.S.

dollar. Because of our strong position in cash in U.S.

dollar, which remains solid, remains strong, we have an effect when converting into euros, and that's the EUR 76 million that we are showing in the last column and which makes our debt to be increasing EUR 27 million in the quarter and achieved a figure of EUR 1.2 billion. If we go to the half of the year, the effect is even stronger.

We have had a negative effect on the debt of EUR 116 million because of that conversion factor and that has been EUR 116 million, okay? So out of the EUR 102 million of increase of net financial debt, EUR 116 million is cost because of this conversion difference.

In sustainability. Once again, we are proud about our safety improvement of 8%.

Remember, last year, we committed that reducing all those minor injuries that were taking place as a consequence of the continuous interruption in production, we have achieved that. In terms of our targets on waste reduction, we are fully committed to the circular economy, and we are getting close to our target of valorization of 90% of our waste.

We are already almost in 80%. So we still have more 5 years for filling that target.

So we are sure we are going to be there earlier than expected. In terms of the emissions, we have reduced 25% intensity of our reduction from the base year of 2021.

And also in terms of water footprint, we have overperformed our aggressive initial targets. And this motivates us to establish even more ambitious targets.

And now we are making in terms of water footprint specific targets for each of the plants according to the local circumstances. So this is a program that we are actually developing and shall be in place in the second semester of the year.

At the end also, we are proud about the great success of the EcoAcerinox. We have gone through more than 6 types of stainless now done in this basis with 100% renewable energy use and with more than 90% recycled material from its source.

So with this, we are able to commit and verify and certify to our customers also a 50% reduction in the CO2 intensity. So it has been a great success.

We are developing. It's getting well introduced to our customers, and this is something that clearly deserves our recognition to our team for developing and putting it in place.

Going to the Beyond Excellent plan. It's important to say that despite all the organic growth that we are facing and despite of all the new investments, we know very clearly how important is to keep our cost under control in our business.

And this is the origin of the Beyond Excellence plan. In this case, we predicted EUR 100 million saving starting in '24 and '26.

The target for '25 is EUR 45 million. And in the first half of the year, we have achieved EUR 23 million, that is 50% of the target.

Just to remember with this how are we following this plan? This is based on individual projects in all the mills.

All these projects are not repeated between the mills because when we succeed in one of the mills is extended to the rest of the units and is based in 6 pillars: Efficiency, that is basically optimization of raw materials and consumables, trying to find all the time the cheapest raw material for our basket to produce stainless steel and high-performance alloys; productivity, that is basically working time, and we are playing the new maintenance technologies; customer centric, there's quality and service adapted to customers; and R&D, there is new grades that we are developing adapted to the necessities of the market; supply chain, that is purchasing and store optimization and decarbonization that is the way that we are following our targets in decarbonization with the improvement of our efficiencies, reducing energy consumption, gas and electricity to reduce our CO2 footprint. Of course, all these things is not only based on our experience and our benchmark between the units as we did in the past.

We are applying all our knowledge, and we are playing all the new technologies in digitalization, artificial intelligence to take the right decision, anticipate problems to have the kind of predictive maintenance, but also predictive quality control. And we are happy to say that this new methodology for our residence plans is performing really well.

And it's a way to implement a culture of continuous improvement in the company, and I will keep on reporting what is happening in this field.

In regarding of the controllables, we have demonstrated that we are properly selling in these troubled waters of the uncertainties in this year. But in addition, we are clearly focusing on our strategy.

And then when you see the main chapters, it's easy to understand. If we go to the upper line, we are investing and we are making relevant investments in that part of the business where we are obtaining higher results, higher margins.

And consequently, where the return is warranted to be achieved quickly. This is in the case of North American stainless, we are increasing production capacity by 20%, probably starting from the end of this year.

So in an excellent time according to the expected conditions on the American market, especially with more visibility that is gradually coming during the second semester. So the timing is adequate for NAS.

In addition, we are also expanding and investing in VDM Metals, as has been announced, increasing its capacity almost for 10%. So we are concentrating our relevant CapEx in these areas with highest warranty returns.

In the areas which are facing more difficult conditions and more market uncertainties, we are making virtue out of necessity. In the case of Acerinox Europe, as you know, we have been developing a new business model in which with no huge investments, we are able to increase the value added of our production approach directly more final customers and so on.

It has taken a bit more time than expected. And obviously, we need to pass through the strike last year in order for having the implementation in the wage agreement of all the measures that were necessary, finally the other.

And in the case of Columbus also what we have been is focusing our strategy on diversifying its range of products and making it the most flexible plants in the group and mainly in the world for creating not only stainless, but also creating carbon steel, producing also electrical steel and now covering the whole range, which is probably the best position for Columbus for not being exposed to exports and also being focusing on covering the necessities on different type of steels at the local market. And then in addition, at the same time, we are doing that, we are clearly excited and extremely satisfied of the integration process of Haynes.

There is a great success on the 22 work streams that have been around the whole group working together in that integration. We have confirmed that more or less even the initial synergies figure established at 71 probably can be -- and were recognized in the last results presentation that we are now focusing on 75 and maybe it shall be more and they are actually in place.

We have been very agile also in the allocations of the investments to be done, and most of the equipments already are in the final process or already have been allocated and in that regard has been very satisfactory working together on integration of the local team at Haynes with the expertise in expansions and investments of our people in Kentucky in NAS with -- obviously, with the know-how and expertise in that segment by the VDM team in Germany. So the combination and the integration is running fabulously, and consequently, we are going to be broadly obtaining earlier success even than expected.

In addition, an area that is obviously our key focus, as we assume the level where we are, the debt that we have incurred for making this strategic approach, and we are focusing in controlling the working capital, which is in our sector and especially for the cash generation is one of our drivers. And as has been appeared in the slides, we are also, in the circumstances, obtaining a great cash flow generation.

Coming to the end, just to remark that we insist that we are controlling the controllables, are going ahead with our strategy. Under this situation, I think the results that we are delivering the best that we can do and that will improve because we are doing our homework.

I think this is -- having been in this position as CEO of Acerinox for the last 15 years, together with this team, I think that we have already demonstrated that we know how to surf in these waves. It's not the first time that we have to go back to our tranches and try to control -- our working capital delivered a good cost reduction and at the same time, trying to improve and do our best to take advantage of our diversification, our localizations and what is happening in the new economy, adapting to the cycles and adapting to the new economy.

And in this sense, the expansion in the United States with organic growth in NAS and with HPA in Haynes, is really -- was a really good decision and we are proud to -- of our strategy. Of course, this is something that we cannot do, if we don't have our traditional financial strength.

And it's also, I think, very important to say that we are investing in the low part of the cycle. And so in the low part of the cycle, with the lowest results, we are capable to afford all these shareholder remuneration and all the CapEx that we have mentioned before.

So we think that we are in a very good situation. We're in the pull position for the new good cycle.

And in stainless steel, we are sure that, of course, the conditions in the American market are going to mitigate our exposure to the European market, but also will improve. In HPA, we have a weak order book, especially in Europe, but we are compensated with a better situation in aerospace.

With this low visibility, with this all these uncertainties and trying to considering the facts that we can -- we have today, and we are calculating our forecast. We don't have a crystal ball, but according to today's conditions, we expect Q3 to be in line with the EBITDA of Q2 despite the seasonability of this period.

Of course, the situation changes, the situation improves, we believe that once the tariff situation is stabilized. And once we have a clear picture of what are going to be the new rules of the game, the markets will restart again and the situation is going to be better.

And in this sense, with being in the United States, being in Europe, being South Africa, our 3 strong markets and also being diversified in HPA and all the sectors of HPA from chemical to aerospace, we are in the best position. I think our strategy is the best in the market, and we have a more clear future.

So thank you very much.

Okay. Thank you Esther, Bernardo, Miguel, for the presentation.

So let's move now to the Q&A session. So please, operator, go ahead.

Just on the guidance, as you mentioned at the end, could you help us with the building blocks? Are you assuming kind of broadly stable volumes and prices across Europe and the U.S.?

Or is there any kind of price recovery assumed in the U.S. and maybe some lower volumes given seasonality?

We are forecasting a stable situation for Q3. Prices in Europe are low.

We don't expect a recovery or I cannot go down more in Europe during the summer season. United States, we are trying to increase our prices, but it's not easy under the current circumstances, but we are working on that, but also considering a stable scenario, more or less considering the seasonability of our business more in July in the United States, more in August in South of Europe.

We are considering a stable market, and that's why we are forecasting that Q3 is going to be very much in line with Q2.

Two questions from me, please. So the first one, just a follow-up around the U.S.

So we understand you've been trying to push price increases. We've seen some pretty hefty attempted hikes, I think, north of $300 a tonne on base price.

I guess, just any color around how much of that you're baking in into your Q3 guidance? I mean are you being still quite prudent or -- yes, just sort of any color around what we could see in Q3?

And then the other question, just around a potential U.S. listing, I mean, you've been probably a little bit more open about talking around looking at options for the first time.

Could you just talk about how far along you are in terms of those considerations? And controlling the controllables, how high a U.S.

listing might rank in your list of priorities, please?

You know that price is a very sensitive issue, and we cannot speak in general about prices. The concept of market price is something that I always insist that doesn't exist.

I mean prices are negotiated customer by customer, grade by grade, other by other. And in this sense, we see the good condition, we will try to push prices up also defending our customers.

We cannot abuse of our customers, but we are trying to always to get the better price for the condition in which we are working. We are now trying to -- if we identify that there's an opportunity in the United States to increase some prices, not all the market, and we are working on that.

But this is basically what I can say about this. Regarding the U.S.

listing, of course, we have to study every possibility if that is creating value for our shareholders. In this case, now we are involved in the Haynes integration.

It's our most important topic. And hence, it must be integrated and the best way to have a good integration processes when you own 100% of the company.

In this sense, we have the next 2 years, 3 years, there will be focused and 100% focused in the integration of Haynes. Once we finish with this integration, maybe we can consider the possibility to be listed in the United States.

We don't trust very much in the dual-listing. So we are thinking maybe in listing some of our business -- part of our business, especially the American part in the United States, but this is something that still we don't have on the table.

I have 2 as well. The first one, maybe if you can discuss a little bit the free cash flow outlook, if you can confirm if there's been any change to the CapEx for the year what would you expect in terms of working capital into Q3 or Q4?

And I think previously, you had expected to decrease net debt by year-end. Is it still the plan?

Or are you going to be able to bring it down on a year-on-year basis? And the second question is just going back to the U.S.

I was wondering, I think one of your competitor in Ohio was ramping up a bright annealing line, notably targeting the appliance market. So I was wondering if you're seeing any impact of that, what are your expectations around that?

And regarding the tariffs, more generally speaking, on the downstream products, we've seen some reshoring announcement as well. So I'm just wondering if you could comment a little bit on the demand picture there and the potential impact on reshoring?

Okay. Thank you, Tristan.

Regarding free cash flow and net financial debt, okay? As we announced and we continue with -- on that line, we are on an expansion phase, and we think that our CapEx is going to grow also in the second half.

We expect in the year to be in the range of the EUR 300 million, which is what we have several -- we have announced over the quarters. We are almost closing and some of them has already been closed the contracts for the investments in Haynes.

And that will be payments that will be raised in the second half of the year. So we continue with our expansion in the CapEx and increasing from in the second half probably more than in the first half.

So about net financial debt, we do not expect many changes on the debt. We will try to keep on with similar levels as where we are now and using our working capital to really compensate those increases on the CapEx.

And for the second half, we also expect higher tax payments. We had some postponements on the tax on the U.S.

So because of the flows in Kentucky state, so most of the tax payment will come also on the second half of the year. So in the end, of course, we have factors that we cannot control, which is the U.S.

dollars and things like that. But at similar levels of U.S.

dollars, what we are now, we expect to keep the net financial debt in the level where we are now.

Regarding your question about the competition in bright annealed material in the United States. What I can say is that BA in the United States is a good business.

That's why we invested in BA line there. We came first.

But it's a good moment. I think there's room for the 2 of us.

Appliances is a sector that is growing in United States. With the current tariffs to appliances with the different countries, plus being included appliances in Section 232, it is normal to think that imports will go down in the future and that the American consumption will increase.

So in this sense, most probably, Cleveland Cliffs, they will take a portion of imports of BA material and there's room for everybody. We are fully booked in BA material and probably market needs some more American production.

One question on Europe. So the markets have been weaker and the prices have been lower.

So can you confirm as in what level of profitability the Europe is operating? Is it breaking even or is it loss-making at current price cost spread dynamics?

And then are you looking for any kind of a cost optimization into the second half, particularly in Europe?

Thank you, Krishan. I'm sorry, but I can't speak about prices and also, we do not disclose the profitability per company.

So we cannot answer the first 2 question. Cost optimization, of course, we have a very strong program of cost optimization in Europe, in Acerinox Europe.

And not only cost reduction, but also increasing in the top of the profit balance accounting, improving and increasing our sales or our turnover, looking for more end users, looking for more difficult sector, looking for new stainless steel grades and special stainless steel that can give us with high added value and a better margin. We are working hard on this.

And this is what I can say.

I've got 2 questions. If I could ask the previous question in a slightly different way, are you considering capacity curtailments or closures in Europe at the moment?

And then my second question, if I just go back to recent comments and the comments you made on the U.S. listing.

If I understand correctly, are you also considering rather than a straight change of the primary listing an option to demerge your U.S. steel assets, so a separation and the demerger of the U.S.

assets only?

No, asking the second question. Still, we are not considering anything.

Still, we are busy with the integration of Haynes. If there's different possibilities to be listed in the United States and that can give us more value for our shareholders, we will think in the different possibilities.

Remember that multiples in the past were more or less the same in Europe and the United States is since 2018 when multiples started to grow in United States and to go down in Europe. I remember that traditionally, our EBITDA multiple of Acerinox was 8x or 9x.

Now we are probably in 5x and some of our American competitors are above 10x. But this is something that came after 2018.

Who knows in a couple of years, how it's going to be the situation. There are different possibilities.

We think that for the size of the market, and this is just first impression because we haven't analyzed and studied this issue in depth. But having a dual listing for a medium company as Acerinox is, I think we can lose the liquidity.

Moving to United States is a difficult operation, but we can be -- we can make an IPO of the American assets in United States, probably this will be easier, but still it's very preliminary. Still there's nothing decided, and we are not studying seriously this issue.

I forgot to answer the first question is capacity in Europe. The situation in Europe is not of capacity.

Of course, if the imports are not limited and doesn't change, we have to establish some capacity reductions or some consolidation, I don't know, but until now have this possibility has not been considered in the European Commission. And remember that the last time that one of the European player wanted to acquire another one, it was not allowed -- or they were forced to as a remedy to sell one of the assets.

This is not easy. I think what we have to -- Europe is a good market and Europe has a good stainless steel producers.

We don't have a clear overcapacity in the business. What we have is an excess of low price imports in the area.

Maybe as a follow-up to last -- to Bernardo's last comment on imports. I was wondering whether like from a macro standpoint, I mean, in carbon steel, we are hearing about rumors regarding China cutting overcapacity by, I don't know, like 50 million tons potentially towards the end of the year.

Is there any similar discussion happening for stainless as well? And if you could again give some color on where are like imports mostly coming from?

I remember that it was more than 10 years ago when the WTO implemented the group to discuss the excess of capacity, the overcapacity in the steel sector. Since that time, China started promising to reduce capacity.

They are closing some of the old plants but they are building new plants. So what I think is that we have to consider that we have to protect our markets.

China in case of stainless steel China plus the Chinese players in Indonesia are now responsible of 72% of the production of our sector. So somebody has to put a limit if China doesn't want to tackle this point, I think that with the markets, the different markets we have to protect.

I don't believe that there's a serious discussion in carbon. And I hope that it really happens, but still is not a reality, and I don't think that is going to happen in stainless yet.

What I expect is a reaction in the European Union, strengthening conditions for -- to try to import unfair competition from imports. The main source is basically today is basically Indonesian material that is rolled in other areas as can be Vietnam or basically Taiwan.

But this is Chinese or Indonesian materials and origin. That's why we also want to change the rules of origin in Europe and moving to this met and p because if you produce slabs in Indonesia and China and you hot roll these slabs in other country, the origin changes to the new country.

So we cannot control the anti-subsidies that were implemented in the EU against Indonesia, for example.

So 2 questions on my side. So the first is regarding the new cold rolling mill in the U.S.

So you have hit certain milestones and the start-up is getting there. So I was wondering if you could speak about the ramp-up profile of this new unit.

Do you need to go through some certification process with the clients? Or I mean, can it be relatively fast?

And can we bank on the something like 20% increase in cold-rolled output already next year? And the second is -- question is about the tariffs in the U.S.

So it seems that the activity is held back by the fact that everyone is counting on the tariffs to go down possibly to 25% What's your view on that? Do you think that the government will stay firm in maintaining this 50% of tariffs?

Or will it make some concessions like it has already done with the U.K.?

Okay. The -- so we are going ahead with our CapEx in the United States.

We are now -- we finished the foundations of the new cold- rolling mill, and we expect that we'll start the first coil in December at the end of the year. When we made our plan for this CapEx, we are considering a normal growth of the American market of around 2% that basically will -- with this new cold-rolling mill, so we will keep our market share.

So this is going ahead. Not really -- we don't really need special certifications for the new material.

Most of the customers has already certify the plant in all the assets and the new cold-rolling mill, in this case, maybe some of the very special end users would like to have a special certification, but it's something that is not going to take a long time to be done. And regarding tariff in the United States, what I can tell you is that this is totally -- today it is totally unpredictable.

So I cannot say what's going to happen. I know that the negotiations -- apparently negotiations between European Commission and United States are very close.

Apparently, they are going to put a general 15% tariff for all the European goods. No idea how can this affect to Section 232.

What we think is that it's important that we don't have any exemption into 32 and we don't have quotas. So only with these 2 things, it's going to -- the American market is going to be very well protected.

50% is already too much for the Europeans to pay in the United States. So I don't mind if it's 25%, 40% or it's 50%.

We are happy the way it is. For the rest of the items, of course, if we protect the rest of the industry, we will protect our customers.

So there's no way that we have a protection in the steel industry and then our customers cannot compete with imports of their products. So in this sense, I think that the United States is moving in the right direction.

Just my first one is coming back on your guidance actually for the third quarter and the building blocks there. And again, just focusing on the, I guess, the EUR 28 million negative impact from metal charges in the second quarter.

And then I guess also the very big price increases, which you have announced in the U.S., those are two pretty big tailwinds in theory, at least, assuming that those are unwinding and please correct me if the assumption is no longer valid. But from memory, I think you have like 1/3 of your U.S.

business in spot and then another 30% in quarterly contracts. So principally, you should get pretty decent translation from the higher prices as long as these are at least being accepted.

So just from your guidance for flat EBITDA in the third quarter, can we assume that your base case basically assumes that the EUR 28 million metal headwind will pretty much continue in the third quarter and that the U.S. prices are not really sticking or impacting in the third quarter?

Or is there anything which goes meaningfully worse against you or which is basically absorbing these two effects, I guess you said that European prices are pretty much stable and I guess, with current low profitability, I don't think that the volume, which you're losing because of the third quarter seasonality in Europe can weigh that much, but it would be great to get a bit more color on that? That's my first question.

Thank you, Bastian. Obviously, the -- as we are saying, there are several uncertainties.

We are giving this guidance at the 24th of July. So there is not probably a big room to changes from the info we have today.

So as normally, let's say, in the summer season is normally not the common season for thinking on price increases. So in a business as usual or in a business as where usual, once upon a time in Europe, normally, the improvements in prices September.

So in the actual circumstances, it's very difficult to see. .

That is going to be a change in the filling and in the business climate to accelerate the reaction of our customers and accelerate the order improvement. So we are not considering relevant prices taking place during the third quarter.

As a consequence of that, we have made an inventory adjustment because we understand that with all the pressure on prices, the situation is not going to change. And because of that, we have made that inventory adjustment for putting our inventory in the realizable value at the actual basis.

And this covers probably the reality for August and September. At the end of September, we shall see.

If there is more visibility, you finally, if appears that this is an agreement between European and States. If there is more clarity of what takes place in the Russia and Ukrainian war, all these facts may contribute.

So maybe when we present the results of the third quarter, we can give some color for the fourth quarter in Europe. But on the actual basis, we cannot expect any changes.

If the market remains as it is, we are more or less to be considered to be in line. If the market shall improve, shall be for the fourth quarter.

And also, if still there is a huge deterioration of the circumstances in Europe, which we hope not to be the case, maybe we need to make another inventory adjustment at the end of September. But in principal with this, we are okay.

In regarding the States, at the end everything is as expressed consequence of the same. Still, we are lacking from our customers' visibility on investing on going through projects.

This sector is, as I said before, it is a high-margin sector. So we are running a mill with types, which at the end are enough for running a mill enough for having good profits.

And as has been indicated, the discussion on prices is customer per customer. We appreciate that we are well based in a market in which the local supply is appreciated.

So the Buy American works. And obviously, this is our advantage.

And fortunately, we do not need to compete with the commodities because this is the part that is covered by imports and also imports have raised in the states. So we have our niche, and we are running properly in our niche.

But actually, we think that more or less the discussion per customer that may be moving to move prices up shall be gradually during the second semester, but not necessarily for August or September being in changes. So on that basis, the most clear picture we can say is that the third quarter shall be in line with the second quarter.

We hope that in the results presentation of the third quarter, we can give a more positive color.

Just one quick one for me. So you're obviously putting a lot of CapEx now into the U.S., I guess, EUR 240 million or so into NAS and then the EUR 200 million into Haynes.

Do you know if any of that investment is eligible for 100% expensing or deductibility under the big beautiful bill? And could that be a sort of tax tailwind that we might see this year or next year?

Thank you, Tom. Yes, of course, we are searching for any tax benefit from those expenses.

And of course, most of them will qualify, okay? And this will help us just to make the 100% deductibility and extend the payments.

So for sure, a lot of it might qualify for the deduction.

Okay. Thank you.

We have one question from the webcast. The question is coming from Robert Jackson from Santander and it's as follows.

Could you give an overview of Columbus in the current environment? Once CapEx plans in VDM and U.S.

are coming to a completion, any plans for Columbus considering you invest in the low part of the cycle?

Columbus is following our strategy that is, in this case, focused on the African market and diversification. In this sense, this year, stainless steel market is not in the best situation as is happening in the rest of the world.

I think apparent consumption is down by 4%. And we are going ahead with our diversification plan.

So we are in carbon steel selling to some South African customers this year with some pressure coming from imports and trying to find to specialize in ferritics and other special grades. -- this is the idea to reduce the dependency on exports.

And in this sense, Columbus is more or less having a good margin and good profitability in South Africa and suffering a little bit because of the conditions of the European market and some other markets. But this is -- everything is going ahead and Columbus is in a good position.

I mean we have a very strong position in the African market and today it is not cash burning. I mean, it's okay.

Second question is CapEx plans. First of all, Robert, we have to finish our CapEx plans.

And every CapEx or every expansion of our plants is a project itself. So we need to -- we are used to have to be always successful with our investments, but every investment is a challenge, and we have to finish the CapEx -- the growing CapEx in VDM, the organic growth in the United States, the new investments in Haynes to modernize the plant to increase capacity and increase also the quality of the equipment and of the product.

We have to work with that to align with North American stainless to combine the assets of the 2 mills trying to enter in new products, trying to spread our portfolio. So we have many things to do.

Colombo, we have some plans. We have some CapEx that we are considering, but still this is not -- they are not mature enough to be announced.

Okay. Thank you, Bernardo, Miguel and Esther.

As there are no further questions, that concludes today's conference call. Thank you very much again for joining us.

And well, we hope that you enjoy your summer holidays, and have a nice day. Thank you.