Good afternoon and welcome to Outokumpu's second quarter results presentation. I'm Johan, responsible for investor relations.

We will start with a presentation from our CEO, Kati ter Horst, and our CFO, Marc-Simon Schaar. After the presentation, you have the opportunity to ask questions over the lines.

With that, Kati, I hand over to you.

Thank you so much, Johan. Welcome also from my side, and we will first with Marc-Simon cover the Q2 results, and then I will comment a little bit more in detail our very recent investment decision today.

If we start now with the results on Q2, profitability improved to €100 million from €65 million in Q1, and this improvement was mainly driven by the improvement in business area Europe. Business area Americas continued its strong performance, and we also saw ferrochrome results further improve in the second quarter.

Of course, in Europe it's clearly that it's the regional measures in Europe, mainly CBAM and then also the steel safeguard measures, that have supported the market. While we can say that in US the market has been, and the demand on the market has been, more robust, especially on the industrial segments.

For ferrochrome, especially our low emission ferrochrome from Europe, in this geopolitical situation, the demand has been at a good level. We are today talking about our Evolve strategy, two important steps as milestones to proceed and progress with our strategy.

One is the investment in high nickel alloys, and the second one is really the publication of our first patent applications, and I come back to that a little bit later. We usually always look at what do the imports look like.

I think the main message here is that the imports in Europe have clearly stayed at a lower level. They were a bit higher in Q2, 17% compared to Q1 at 15%.

I think this is also a little bit being up front of the steel safeguards that came actually in force in 1st of July. Americas, if we look at US only, the import level has stayed very stable at 20%, and there was a bit of increase in whole Americas because of Mexico.

Then if I would comment a little bit that did we see anything change in the underlying demand or the sentiment when we look at Q2 versus Q1, I would maybe highlight some of the positive things we've seen. Basically, data centers both in Europe and Americas have driven some demand, and I think then addition to that, basically the heating and ventilation, air conditioning segment has done well, and then we see energy area being one.

Those are the highlights we would have. On consumer side, transportation side, automotive, both continents, the demand has been sluggish.

On deliveries, I think it's really important to comment here now a little bit. Our deliveries in Europe in the quarter two, they were the highest in three years, which brings the group deliveries also to the highest in three years.

I also would like to highlight ferrochrome. Also in ferrochrome, we had a four-year high in the deliveries.

Where you don't see maybe Americas moving that much is maybe what we have to remember that we have 250,000 tonnes of our cold rolling capacity in Mexico, which we cannot currently use really to the full benefit of Americas due to the 50% tariffs from Mexico to US. Volumes played a big role in Q2.

Then on sustainability, I'm very happy to say that our safety performance further improved from Q1, we arrived on total recordable incident frequency rate at 1.4, which is kind of better than our target level 1.5. The whole half year was now 1.6, this is a work that continues, but I would say that we are very much on a leading level here, but work continues.

Again, we also had a very high recycled content percentage, and then if we look at external recognition, I think it's important to say that being recognized by both the Financial Times as one of Europe's climate leaders for the third time now in a row, and also by Time among the world's most sustainable companies, it really matters because it provides independent validation that the sustainability leadership is real. It's measurable and internationally recognized.

These rankings assess not only the climate commitments, but also demonstrate progress, transparency, and business performance. Such recognition reinforces our position as the sustainability leader in stainless steel and really supports our strategy of creating competitive advantage through decarbonization and circularity.

With this, I will hand over to Marc-Simon to go more in detail in the results.

Thanks, Kati. Good morning, good afternoon, also from my side.

In the second quarter, stronger profitability combined with continued capital discipline enabled us to further strengthen our financial position. This gives us a solid foundation as we keep executing our Evolve growth strategy.

In line with our guidance, group adjusted EBITDA increased from €65 million in the first quarter to €100 million in quarter two. While the net of timing and hedging impact in the quarter was less favorable than we had expected, our underlying operating performance was actually even stronger, driven primarily by higher margins in business area Europe.

Speaking of Europe, I am pleased to report that the business area has returned to positive EBITDA. Our operating cash flow remained solid at €85 million, allowing us to bring net debt down to €224 million while preserving our strong liquidity position.

With that financial overview, let me turn to the performance of our business areas, starting with the business area Europe. The market environment in Europe was largely unchanged from the end of the first quarter.

European producers continued to benefit from supportive regulatory measures, though end-use demand remained subdued. A meaningful recovery in demand will require a clear improvement in business confidence, which continues to be weighed down by geopolitical uncertainty, particularly around the ongoing conflict in the Middle East.

That said, volumes in business area Europe increased by 5% in the second quarter. Beyond the volume growth, profitability in business area Europe was further supported by higher realized prices and lower fixed costs of sales in the second quarter, following the backlog-related pressure we felt in Q1 from the supply chain planning solution challenges we had.

With that, let's move on to business area Americas. Business area Americas continued to deliver a strong financial performance, underpinned by growth in some segments showing improved demand, such as data centers and related investments into infrastructure, energy, as well as heating, ventilation, and air conditioning.

The Mexican market also continued to show early signs of recovery, with the manufacturing PMI moving above 50 in June for the first time in a year, and its strongest reading since March 2024. In addition to the 4% higher volumes, profitability in Americas benefited from higher selling prices, driven by an increase in the alloy surcharge, supported by increase in commodity prices.

These positive factors were partly offset by higher costs, mainly related to freight and non-conforming material. Now with that, let's move on to business area Ferrochrome.

Business area Ferrochrome was able to increase its adjusted EBITDA in the second quarter versus the first quarter, supported by the solid demand for our low emission European offering, as well as higher selling prices. Overall, the demand remained healthy across all regions, with North America continuing to be the strongest market.

On the supply side, production curtailments in South Africa remained in place for most of the quarter, although electricity support measures have initiated production ramp-up. Export volumes remained historically low, the impact on the market prices during the quarter remained limited.

We also continued with our expansion into higher margin ferrochrome products, and compared with the charge chrome market, the high carbon and high chromium ferrochrome, as well as other special product segments, are expected to be less exposed to the anticipated increase in South African production. Now combined with CBAM, we do see that this is reinforcing the strategic value of our portfolio expansion.

Now with that, let me close with a few remarks on cash flow and leverage. Supported by the improvement in profitability, our operating cash flow remained solid in the second quarter.

Together with some release in working capital and capital expenditures of €34 million, our free cash flow improved to €51 million compared to 34 in the first quarter. The working capital release came despite higher business activity and rising commodity prices during the quarter, once again demonstrating our continued focus on capital discipline.

The stronger free cash flow enabled us to further reduce net debt to €224 million, as mentioned earlier, despite of the first dividend installment we paid in April this year. Finally, with both profitability up, net debt down, our leverage ratio declined from 1.3 to 1.1 in line with our financial policy.

With that, back to you, Kati.

Thank you, Marc-Simon. I think then we come to actually our outlook and guidance, let's take that next.

For the outlook, we say that the group stainless steel deliveries in the third quarter are expected to decrease by 0% to 10% compared to the second quarter, and this is due to the seasonality in business area Europe. Based on our current order book, the net impact of realized prices and raw material costs is expected to be positive.

With the current raw material prices, some raw material-related inventory and metal derivative gains are forecasted for the third quarter. Therefore, our guidance is that the EBITDA in the third quarter of 2026 is expected to be at a similar level compared to the second quarter of 2026.

Then we can move to some more exciting topics here. I'm personally very excited to announce that we are now starting the investment program into high nickel alloys.

It's important to understand that with this investment program being executed, we will really become one of the key global players in high nickel alloys for flat products. During the past year, we have run several trials at our Avesta plant in Sweden to test the capabilities at our melt shop, hot rolling, and cold rolling assets.

We have, for instance, been able to roll alloy 625 into a width of 1,800 millimeters, which nobody else is currently able to do in the market. We will be bringing, actually, a differentiated value proposition to our customers.

Then based on this trial experience and to accelerate the time to market, we have now decided to do the investment in two phases. In the first phase, we will actually invest in electroslag remelting at the current melt shop, and we will also invest a bit in a process optimization, and we will complete the detailed engineering study for phase two to confirm the total CapEx, which we still estimate to be about €150 million.

The estimate and the CapEx for the first part of this investment in a current melt shop is estimated to be about €30 million. Once the first phase is expected to be operational in Q1 2028.

The second phase then is about the new melt shop. That's about a vertical caster, it's about vacuum induction degassing, VDI, and potentially a second ESR.

This investment is planned to be operational in the end of 2029. Then moving a bit to the right side to talk about the proprietary technology development in the US.

Building of the pilot plant is proceeding on schedule, and our first five patent applications covering the key process elements have now been published, which marks an important milestone in the technology development. It's also important to mention that this technology has wider application possibilities for metals, we are really exploring here a number of options for future growth based on the technology development.

With that, I come to some of the key messages from today. EBITDA improved to €100 million, supported by market fundamentals across all the business areas, and our adjusted EBITDA in Q3 then is expected to be in a same level despite the seasonality that we have in Europe.

Financial position remains strong, and the net debt decreased, and we are making really a progress in our Evolve growth strategy. With that, I will open for the Q&A.

hi. Thank you for the to the point presentation.

That's really appreciated. I have two questions.

The first one is on the metal spread guidance that is positive into Q3. Could you give us some indication how it's going to differ region by region?

I guess we should expect a stable development in the US and improvement in Europe. I'll start there.

Absolutely. On the net of timing and hedging, what we say is that we expect some gains in this area, and I would quantify this as a higher single-digit number compared to the 11 million.

I think in terms of business areas, why we don't give guidance over here, certainly the Americas business is still on base plus alloy surcharge, and we see a bit of lower nickel price environment here in the US, so that's impacting then on the US side, and mostly then of the other result is being related to business area Europe.

Okay. Just a quick follow-up on Americas, given you have base plus surcharge, if surcharge is going down, that shouldn't impact your spreads, right?

The second question is also follow-up when I look at slide 22, which is the bridge Q1 to Q2 EBITDA Europe. The red column that is pricing, mix, raw material costs, if I understand correctly the guidance, this should turn into a big green column for Q3, right?

Yes, I think we guided for on the one hand side lower volumes, and those being offset by then the net impact of realized prices and raw material costs, and you're referring to this item. Yes, this is a positive element and being offset by the volumes, and therefore we guide on similar level.

What we're referring to mostly is in relation to business area Europe.

I guess it's correct to mention as well that we could have had better mix in Q2, we do expect the mix in Europe especially to improve in Q3.

Yes.

Okay. Last question, just does this guidance of better spreads, stainless metal spreads, include the recent drop in stainless scrap prices or is that going to be more of an impact for your Q4 results?

I think this is more going out further into the later part of this year.

All right. Thank you.

Welcome.

Yes, good afternoon. Thanks for taking my questions.

My first one is just a quick follow-up on the Americas and the moving parts there into the next quarter. I guess the impact here from the metal and hedging gain in the second quarter was already quite meaningful.

I guess usually in the US you still see probably further positive tailwind from seasonality I guess in the third quarter. Just want to check whether you would expect an all-in performance run rate which remained pretty similar also here to the second quarter or will this be in the mix a slightly larger deviation here between Europe and Americas?

That's my first question.

I think as I mentioned earlier that we have had expected a higher impact, a positive impact from net of timing and hedging in the first quarter. Reason why that has not been materialized is basically the increase in commodity prices, which we have seen in the second quarter, and then together with a different melting pattern which we delivered to the market, a younger melting pattern which we delivered to the market with higher raw material costs.

That was the reason here. Fortunately, we could offset this and stay fully within our guidance, which we gave for the second quarter.

Now, as this is a shift from the second to the third quarter on the European side, on the other side if we think about Americas, then here what I also mentioned earlier before is that given current raw material prices, they're expected to be or commodity prices, somewhat lower than in the second quarter. Americas is on a alloy surcharge basis, so that is having a certain impact here.

From the volume side, we should further consider a robust market in the Americas for the third quarter.

Okay. Understood.

Secondly, maybe zooming in quickly on the ferrochrome business, which did very well. You indicated here the potential effect from I guess the electricity regulations in South Africa.

Is this something you see impacting the market already, i.e., what are the current pricing dynamics you're perceiving? Is pricing pretty stable, is you see it coming under pressure already?

As I mentioned in my part of the presentation on the ferrochrome side, we haven't seen any impact on the pricing, and as well as driven by the fact that we haven't seen export volumes to pick up here. I think we mentioned that ramp-up in production has started.

We are not in a position and cannot guide on prices going forward, and therefore would rather leave it here with the important notion that we're going to develop our product portfolio into higher margin business and which should give us then an opportunity to decouple to a certain degree from pure charge chrome market.

Okay. Understood.

Then last, one quick question also on I guess your maintenance schedule. Usually there are always some bigger maintenance breaks in either ferrochrome or the European operations.

There isn't any in the third quarter. Is there anything we should have on the radar with regards to this for the fourth quarter?

I guess it would be quite helpful to have a bit of steer on that just ahead of time to avoid any negative surprises.

Indeed, we do have our annual plant maintenance shutdown in both in Europe and in the Americas towards the end of Q3 and beginning of Q4 over here. We do some small increase in maintenance costs in the third quarter, but I don't see any significant deviation from that third quarter level going into the fourth quarter.

Ferrochrome actually, the biggest maintenance shutdown for SAF2 actually took place already in Q2, so that's done.

Is there any cost impact still to come, though, from these in the fourth quarter? Any major items at least, even if it's just a ballpark at this point?

Not,

Bastian, not major items. There is a small increase in here, as I mentioned, but important is really to look at our guidance, what we have been saying, that most important to understand the volume impact, then also the net impact from the realized prices and the raw material costs, and we do guide for similar.

That, I think, is the most important key part. Then you have different items, different dynamics.

I mentioned on the maintenance break, nothing major, but in order to understand the guidance for the second quarter, I think we gave the elements in our guidance.

Thank you.

Thank you.

Thanks for the presentation. It's Joni from Nordea.

Maybe starting off with the variable cost outlook, I think you mentioned the freight costs have increased, but could you give any indication of H2 outlook regarding freight costs and also energy?

Yes. On the freight costs, transportation costs, fuel costs, and related to the Middle East, we have seen an increase in our variable costs in the second quarter.

Given of what we see right now and the situation which can evolve as we know and change every minute, we do not expect a significant deviation from what we have seen in the second quarter.

That's clear. Then maybe on the ferrochrome follow-up, does this development of your portfolio require some investments and if so, when are you expecting to be ready with this?

Actually, this part of the portfolio development doesn't require such a big investments. We also use the ferrochrome converter that we already have at the plant.

Then, of course, when we want to use the technology we are developing to further go to 90% chromium metal, then we talk about an investment. We are not in that stage yet that we can discuss that.

Okay. All right, that's clear.

Then lastly on the pilot plant startup and timetable here, when should we expect more information around the patents and maybe the startup timetable for the pilot factory? Look,

we today said that our first five patents are public, the patent applications are public, you can see what the base technology is and what is the process technology we have made the applications for. We have other patents in this journey that will be public then later, and the timeline is today what we have said from the beginning, that the furnaces at the pilot plant should be operational in the first half of next year, meaning that by summer '27, we can then confirm that the technology would be scalable.

We are on schedule, in budget, and on time schedule with the pilot plant.

Thank you. That's all for me.

Thank you.

Did you, Tristan, still have a question?

Yes, sorry, I was on mute. Thank you for taking the follow-up.

Just on Avesta, the phase two, it's a bit of a delay on the decision for this, and now given you have more visibility on your CapEx, should we expect the CapEx to decline quite a bit next year? Second question on working capital, it's pretty unusual to have Q1, Q2 release.

It's been pretty strong. What do you think about H2 or the full year for working capital?

That would be helpful. Thank you.

If I take Avesta and CapEx, and Marc-Simon can comment then on the working capital. Remind me still the Avesta question was exactly about

I think initially you were thinking to decide on the melt shop earlier,

and

now it's in a year. Yeah.

Yes. Look, we have learned a lot, let's put it like that.

We have done a lot of trials in Avesta, both basically doing our own melting and running it through, but also getting slabs in on alloy 600, 625, 825, which we already produce ourselves, and tested the downstream assets as well. We have also learned that we actually can use the current melt shop for these three alloys, and the only thing we would need to add there is an ESR, which increases the purity of the metal, what you need for this kind of metals for quite a few customers.

In that sense, we actually, when we first invest in a current melt shop, we are not delaying the whole project, but we are coming faster to the market with these three alloys. We probably are year and a half faster than we would have been otherwise.

Through the learning we had in Avesta, we have found capabilities in a current melt shop that we were not sure about before. Therefore, this investment case has improved with a phased approach.

We still think the total investment is about €150 million, but to be exactly sure of the second phase investment, we still want to complete our detailed engineering study, and that is exactly what we are doing. Then on the CapEx, we have said on maintenance CapEx that it's about €100 million a year.

That's where we are about this year as well. We have room for of course, strategic investments.

We will start this Avesta investment cycle now, some small CapEx probably spent this year, continues then next year. We have also other strategic initiatives on the table, I think more in the end of the year, beginning of next year is the right moment then to comment when eventual other decisions come, what does the strategic CapEx start looking like going forward.

Then

maybe I can then answer your question, Tristan, on working capital. For the third quarter, due to the plant maintenance which we have towards the end of the quarter, beginning of quarter four, we do see a certain inventory build up here, we expect working capital to go up here with current market prices here as well.

We also have some other one-off payments in the third quarter, such as related to our restructuring programs for which we provided the provisions already last year, beginning of this year. Having said that, as a result thereof, we expect our net debt to increase in the third quarter.

Then you mentioned maybe also a bit outlook into Q4. I think now if I look at the market and the dynamics, we need to see how the market is coming back from basically the vacation summer period, our customers being back, and how then the market develops and picks up here.

It's a bit too premature yet to give a reliable outlook over here.

All right. Thank you.

Good afternoon. I have a few questions on the nickel alloy project.

It's quite exciting one. Actually, the market is rather two-sided between, on the one hand, oil and gas and chemical processing, which show relatively weak, and on the other hand, aerospace or electronics that are fairly booming.

Do you have a view already of the market you would like to address? Plus, related to that, do you think you can really pretend to become a relevant US player given that the footprint will be in Europe?

Your peers have actually had to make some acquisitions there in the US to really position themselves as a US players. A view on the homologation timeline yet to be validated by clients yet would be helpful as well.

Maybe starting on the segments. I think you mentioned some of the important ones.

Even maybe the oil production is not increasing in barrels, we see increase in exploration, and the oil exploration is going deeper, more difficult places. It requires more pressure resistance and all that, we see that market.

Of course, Middle East now is a bit different, but, for instance, in Latin America proceeding quite well if you look at the plans. Power generation is one area, electronics is one area, specialty chemicals is one area, for sure, and these are global businesses.

When it then comes to US, well, I think our biggest volumes, what we plan here to have, are probably not for US, they're probably more for Europe and Asia, but they are also partly for US and for Latin America. Maybe one thing to remember that when steel products now have a 50% tariff being exported from Europe to US, high nickel alloys or nickel alloys have 15% tariff, the normal 15% tariff, it is product that travels.

Interesting. A second one, this is on commodity prices.

Nickel is now taking a bit of a hit, but molybdenum remains very strong, and I was wondering whether that was more of a challenge or an opportunity for you. Maybe if you could shed light on the development of the Greenland Resources project, which will allow you in the end to have your own capacity there.

First on the molybdenum price itself, yes, you're absolutely right. I think the market is, since a couple of years, in a structural deficit here.

We have seen molybdenum prices going up, which then also puts a certain pressure on the margin of these products here. That's so much from the commodity pricing side.

What was the second part? I didn't get it fully.

I didn't get it fully. It's on the Greenland Resources project.

Any color you could give on the development, on the timeline, and when it could be operational?

Yes, I think from what we understand also in the discussions here with our partner, I think the project is well on its way, and the exact date and time of when going operationally, that is still something which needs to be explored. We are very positive and looking forward for the mining project to become online.

Yet I'm not in a position to give any further details unfortunately, but I'm pretty sure that soon we will be in a position here during the second half of the year, and then give also a bit more color on that.

Thank you.

If there are no more questions, then I thank you all very much for your participation and good questions and see you next time then when we talk about the Q3. Thank you.

Thank you.