Thank you, Miss Schenker. Good morning, ladies and gentlemen.

Welcome to Salzgitter AG's conference call for the first half 2026. Joining me today, you just have heard it, our CEO Gunnar Groebler and our CFO Birgit Potrafki.

Following a short presentation of our results and current business development, we will open the floor for your questions. Before we begin, please note this call is intended for the capital market.

We kindly ask members from the media to contact our communications team directly. With this, I hand over to Gunnar.

Markus, thank you very much. Good morning from our side.

Very happy to be with you today and guide you through our first half of 2026, which has been, bottom line, a positive first half of this year. We will show this in the upcoming minutes in the presentation.

Let me quickly go through some of the facts, and then followed by Birgit on the financials. Clicker doesn't work, but we'll fix that in a second.

We are always starting with health and safety. As we have a clear health and safety strategy, and we have a clear health and safety target.

Unfortunately, primarily due to harsh weather conditions in the start of 2026, our numbers for the first half are not looking as we want them to be and as we expect them to be. You see we have set a target just shy of 6.6 on the LTIF.

We're way above that. We have intensified the work on group-wide trainings, on preventative health measures to improve second half and still reach our target for the full year 2026.

Some way to go. We're happy with the development over the last years, however this year needs further improvement, and we're working on that.

It has been a very intense year and a challenging half-year. This clicker is doing what the clicker wants to do, but not what I want to do.

Let me check that. Challenging market conditions in the first half-year.

Geopolitical, better than again we do how the environment looks right now, and it will remain, and this is our view at least, highly volatile, intense also for the remainder of this year. ETS reform, there has been a lot of discussion and outreach on the ETS reform.

We have seen the first proposal from the Commission, a first proposal, I think that is very important to understand, of that Commission. This balancing between CO2 prices and investment certainty is certainly something that needs further discussion and also lobbying through the remainder of this year.

The results will only be available first half of 2027. Big step for us, we have acquired 100% of the HKM.

We'll go through that in a second. Also as said, encouraging first half-year, also in the numbers.

That's certainly something we will talk you through. Volatility, geopolitical tension.

This is somehow close cover. I'm the problem today.

Here we are. Geopolitical tension will remain.

You see the map of Europe. Unfortunately, the color coding for the Strait of Hormuz is not perfect.

Certainly something where quite some uncertainty comes from these days, and this will also remain. As a result of that, at least partially, the GDP remains weak, and also the steel demand in Europe remains weak.

Regulatory tailwinds is something that we have seen, and I just mentioned and we'll go through that now in more detail. What has happened on the EU trade policy is that it has been very active in terms of decision making and also implementing of new tools.

The Carbon Border Adjustment Mechanism has started in 1st of 1st. We have seen already positive impact of the CBAM on the price side and also on the reduction of imports.

The new steel safeguard measure has taken effect 1st of July this year. Also here significant reduction in imports.

Yes, we have seen an impact of prices already, plus €30 if you look at ex-works Italy for hot-rolled coil. This is a bit annoying now with the clicker.

Apologies for that technically. We can improve.

The intended effect are already visible. I think what we need to state, and we've said that before, the new steel safeguard, we have seen market participants acting proactively on the implementation of the new safeguard measures by importing prior to 1st of July.

This material needs to be worked through the value chain prior to seeing the full effect of that. What happens now for 26 on top of those is trade defense measures, anti-dumping measures on the cold-rolled steel and further anti-dumping measure especially when it comes to hot-rolled coil coming out of Turkey.

There EU is still active, and I think what we have seen with the Steel and Metals Action Plan last year comes now more and more into effect. From our perspective, a good development.

I mentioned ETS before. As said, we have seen the first proposal of the EU Commission.

My read of that is, given that it has been a very sort of cautious proposal, bit testing the water, testing how the reactions are, and then now we will see a refinement, a readjustment of the proposal as well as positioning from both the member states as well as parliament. What is good from our perspective is that the EU ETS as a system remains essentially unchanged.

We see that EU believes in ETS the way it is designed. However, we also see that the current draft proposal is not, as they promised actually, is not putting first movers at an advantage or at least at par with those that have not moved so far.

Here certainly we need further alignment with the Commission and further explanation to the Commission, and we have started that process already. We shouldn't sort of overvalue this first proposal.

It's a starting point of a trilogue between Commission, the member states, and the parliament, as well as accompanied by industry and other stakeholders in here. ETS is only one thing.

We should always keep in mind that that has to be sort of accompanied by compensatory measures outside ETS. Let me point out two things here: the lead markets for CO2-reduced products made in EU.

Lead markets is a concept that has been widely discussed also in the member states, and we see more and more positive connotations to the concept of lead markets also from industry, also from our customers, like, for example, the automotive industry. The second measure we still have to work on, especially in Germany, is energy prices.

We need to get energy prices on internationally competitive levels. That is a no-brainer, and why that is, I'll show you in a sec.

Also here, we have had good and intense discussions also with German policy makers. Katharina Reiche visited our site in Salzgitter just a week ago, and rest assured energy and energy prices has been one of the key topics that we have addressed.

Looking at raw material and energy prices, as we just talked energy prices, let me start with the right-hand side. You see the electricity and natural gas has jumped upwards as a result of the Middle East conflict.

The current peak in electricity on top of that is weather related. You all have followed that we have seen shutdowns of nuclear power plants in France, in the eastern part of Europe due to low water levels in rivers and also temperature levels there.

On top, we have seen a lot of solar radiation in Europe, which sort of, on average, increases electricity prices due to the fluctuating infeed that we have seen there. Raw materials on our side.

Freight is one issue for the iron ore again, and something that is connected to the Middle East conflict. Coal has been higher on a temporary level, which was primarily due to weather impacts in the mining regions, but coming back now, as you can see, as those weather impacts have been removed.

Looking at steel prices, basically click, bitte, a good development. Since July last year, hot-rolled coil ex-Ruhrgebiet has improved.

We're now seeing €715 per ton, so that's a good development. You also see the recent increase based on the regulatory development that I just mentioned, also compared to China and the US respectively.

I think also here, again, in the middle and with a stable and good developments. We see no signs despite the low consumer market, we see no signs for this to change in the second half.

Now looking at Salzgitter and looking at our key figures for the first half, as said, it's a positive development. Yes, we see improvements in all segments.

In all segments, we have seen a stronger first half '26 than we have seen first half '25. This is a mixture of basically two things.

One is the sort of development of market prices versus raw material prices, widening of the margin, but even more so, we have seen that also our own work that we have done in terms of restructuring, in terms of cost reduction, pays off, and this is what you see in the results. If you look at Trading, with a positive result of almost 30 of almost €40 million first half of this year, is clearly a result of the heavy restructuring we have undertaken last year.

We have already reported to you guys, but just as a reminder, roughly 30% of the jobs have been cut on the trading side. Steel Production predominantly P28, our performance program, roughly €50 million alone from Salzgitter Flachstahl contribution here.

Seeing it is really improving through the entire company, including also Aurubis. Also here, we have seen a stronger first half compared to last year.

Good development here, and certainly something we will continue to work on that we also can see that next year. Now looking at two major projects we have been through or that we are carrying through, one is SALCOS, of course.

We had a rough start into the year, and mentioned weather that has of course also impacted the construction site, but we've been able to catch up given that weather is not really an issue these days. The Halten tower is now fully assembled, 120 m, second largest tower that we have now on site next to the DRI.

Large components have been installed, and especially on the power supply system, utility and power supply system, we are well on schedule here with the development. Commissioning in the late summer 2027 is our plan, and there's no sign that there will be a delay on that.

Just also to remind you, this is only the first phase of SALCOS. We have at least two more phases to go.

Here we are using the modularity of SALCOS to really find the sweet spot in the decision making for the next phase, which would be an electric arc furnace. The investment decision has been paused.

We have reported on that. Rest assured, the preparation for this second step is well underway, we're doing the engineering, we're doing sort of the business case modeling for that so that we are able to execute as soon as we deem this being the right time.

Second big step of the first half of this year is, of course, the acquisition of the HKM. We have been able to strike a deal with the two co-owners, thyssenkrupp Steel and Vallourec.

We're now since 1st of July, 100% owner of HKM. We have bought into HKM with a clear target to decarbonize also this site.

The EAF has been contracted already in July this year. Also here, we're ramping up our project work to deliver green steel out of HKM as of late 2029.

90% CO2 reduction is the target we're looking at. Yes, this comes with heavy restructuring in HKM, and we have been very clear about this the entire time.

We're looking at roughly 3,000 people employed in HKM today, and we will reduce that by 2029 to roughly 1,000. This has been discussed and negotiated with works council and with the unions and is signed, we have certainty on the numbers and certainty also on the cost impact of that.

This has been part of our business case all the way through together with the investment, and you will, Birgit, you will sort of show us some more numbers on the HKM later in this presentation. Let me finish with an outlook for 2026.

The regulatory measures that I mentioned will certainly also help us through the second half of this year. We have seen improved demand in terms of production from European steelmakers, European producers.

The German association Wirtschaftsvereinigung Stahl showed a 9% increase first half '26 compared to first half 2025, so that is certainly positive. However, fundamental demand needs to further pick up, and we also expect the special funds on infrastructure and defense to be more visible late this year and predominantly in 2027, so that will also then certainly help especially us in our product mix going forward.

I think we should also mention that especially for the steel processing side, given that this is predominantly project business, we also need those impulses from special funds and other sort of projects to remain on the good level that we have seen in the first half. As said, market is stabilizing at lower level.

We have been sort of through the worst in '25, we're now picking up. We said in March, back in black.

I think we underpin that we are clearly in black, and we remain in black in '26 with a good recovery and a good result we're going to foresee for 2026. With that, I hand over to you, Birgit, to guide us through the financials.

Thank you. A warm welcome also from me to you.

Happy to have you here, and please excuse us for struggling with the technology here. It seems like we are always jumping to the end of the presentation if we do not keep a certain time frame.

Let's try to deal with that challenge. I hope it keeps everybody's attention high.

As Gunnar has just said, yeah, the economic environment is not yet providing meaningful support, reached somehow a bottom, but not yet really meaningful support that we can see here. What is helping us, and also Gunnar has talked about this, are the EU trade defense measures, which are having or will be having a positive impact on price levels.

Despite the absence of the economic tailwinds, we achieved a significant year-on-year earnings improvement. Gunnar has shown that, and I'm really happy to see that we could reach that in all segments.

All teams really did a great job here, I have to say. We expect this positive trend to continue also in the second half of the year, albeit at a somewhat slower pace than what we have seen in the first half.

I will also spend some words later on that, because I know you may have some different expectations here. Our performance, that makes me especially happy, continues to deliver really, really strong results.

After half of the year, we have almost reached the full year's target. As Gunnar has laid out, from July onwards, HKM will also contribute positively both to revenue and to earnings, all this of course before purchase price allocation effects.

I can say this, we do not expect any significant net cash outflow from the consolidation. If we look at the first half of the year, our net financial position is exactly where it was one year ago.

The difference is just €4 million, quite stable year-over-year. Including the HKM consolidation, our outlook for the net financial position for the total year remains broadly stable.

I can say with confidence that the business is now increasingly well-positioned to benefit from any future improvement in economic conditions. Looking at the half-year's numbers, we see on the left upper side our sales revenues amounting up to €4.6 billion, which is 1.6% below previous year's level and driven by trade only, we have to say.

Here we also see economy doesn't really help, and all the other segments are stable or slightly increasing, however only negative the revenues compared to previous year in the trade business unit. The EBITDA and the EBT are significantly above previous year in all segments, and main contributions of course coming from Aurubis, but also a very strong contributions from steel producing as well, and as I mentioned before, all the others also contributing in a good way.

Here you see a little bit grayish the figures that are not the adjusted result figures, and here you see that even the EBT, including the evaluation effects of the exchangeable bond, here we are also clearly positive. If we look at the right side, working capital, we see an increased working capital of €2.6 billion, mainly coming from accounts receivable, and this is increased compared to one year before, and all of this is resulting then also in our operating profit, which reaches €59 million in the first 6 months, and this has an impact on our net financial position, as I mentioned before, very stable compared to one year before.

If we look at our income statement, and Gunnar has mentioned already and I have mentioned already the P28 contributions that are, of course, spread all over the or most of the items in the profit and loss statement, but let me show you the structure of the profit and loss statement where we have the biggest contributions. Here I would like to mention two major how to say, categories that lead to the fact that we have reached such a good result.

One is, if we look at our cost of materials, we see in the box below a significant improvement compared to the year before of €122 million, and to give you also a relation, this cost of materials represents 61% of our sales revenue, whilst one year before, we were still spending 65% of our sales revenues for cost of materials. The other nice big green figure, you see more on the right side, the plus €113 million, mainly driven by the nice performance of our Aurubis participation here, also having a nice major impact on our profit and loss.

All of this resulting in the €258 million EBT, and with including the evaluation of the exchangeable bond, also positive, 76, and then after taxes, we come to a result all in of €43 million. Looking at our balance sheet, and here starting with the asset side, we see an increase in our assets of €374 million, driven mainly by three impacts.

First impact, if we look at the non-current assets, of course here we see the impact of the Aurubis evaluation, and this is partially compensated in a negative way because the fundings we received, they decreased the investments we have done, because the fundings were also related to former spendings. We see cash and securities have been increased also due to inflow of fundings, and the other current assets are mainly accounts receivable.

If we look at the equity and liability side, here are two things to be mentioned. First, our equity ratio is stable with 42%, and second, we have a switch between long-term and current liabilities, and this is due to the remaining maturity of some of the financial instruments we are using.

Coming to the cash flow statement, starting with the left side of the operating cash flow, I have mentioned the €59 million already we have received in the first half of the year. One year before, we could manage to receive €81 million, and the difference is mainly driven by different way of the development of the working capital, which increased whilst in the second quarter last year, we could significantly decrease.

If we look at the right side at the cash flow statement, we see that we could increase our cash up to €1.2 billion, and what is really nice is that we see that in all categories, we have a plus, even in the cash flow from investments and also in the cash flow from financing, at least a smaller amount here. Far for the cash flow statement.

Investments and depreciation. We have quite an overseable number in the first half of the year amounting up to €88 million when we look at our investments, also strongly influenced of course by the fundings we received worth €290 million, and for the total year, we are looking at investments of €650 million, and included in this a €100 million investments in HKM.

You see that the majority of the investments goes into all the business that is not SALCOS related, because the SALCOS portion also for the total year will be profiting from the funds that we have received and that we still will receive in the upcoming months. Very happy to talk about the performance program P28, because as I have mentioned before, on the right side is here the target, €122 million, and next to that, you see what we have effectively achieved after 6 months, not 9 months, €97 million, which is already 80% of the total year's target.

As you may remember, we have overachieved our target that we have set for last year significantly, we are quite confident that we will not only reach our target for 2026, but that we will also be able to again overachieve our target. Gunnar has also mentioned the major contributor.

Here you see with above €50 million is the Steel Production area, followed by Steel Processing and Technology. Again, I would like to mention that restructuring effects are not represented in this program.

This is why the nice restructuring effects we have seen in Trading are accounted for in a different category, not in P28. Gunnar has shown it, we have lost quite significant sales in the trade area, and we could improve the profit, and that is also strongly influenced, of course, by the effects that we realized due to our restructuring activities.

HKM, of high interest, I know. Results, positive contribution we will see in the second half of 2026 when we will consolidate HKM, and of course this before the purchase price allocation effects.

I have mentioned that already before. We will complete that by the end of this year.

Of course the results, we will see positive impact on the revenue side, and if you ask how much, you can look at how much we have shifted our guidance, and the major portion of course coming from HKM. Looking at the profit side, and of course you will ask that question, how much is the profit going to be that you will have in addition, I can say as much as this is a mid-size double-digit million value.

If we look at the balance sheet's effect, of course the consolidation of HKM will prolong our balance sheet, however it will not change the structure as it is. We will have one positive implication though, and this is concerning the leverage, because HKM is coming with almost no debts and bringing additional EBITDA to the table.

Cash impact on Salzgitter, I know that this is the figure of most interest to you. A lot of questions are asked and will be asked, of course, about single views, like restructuring or investment and transformation.

However, I have to really stress that we have to look at HKM as a whole. We have money that comes from operating activities of HKM, we have the contributions from the former shareholders, and we will receive fundings for the transformation, and that money, of course, will be used to transform the company, to do the restructuring, and also to do the investments.

What is the figure that is for me the most important one to look at is, if we look at Salzgitter as a whole, including HKM, how much additional cash overall will be required due to the fact that we now own HKM? I can disclose the figure that is mentioned here, which is within the next 3 years, the net additional cash over all of these items that I have mentioned just right now, we will need a €100 million over the next 3 years.

I think that's quite an overseable amount. Of course, since we talk a lot about SALCOS, and since you are all very familiar with the SALCOS figures, it's just logic that we also talk about the investments for the transformation at HKM.

Here we are talking about round about €900 million, and we will receive €200 million fundings. As I mentioned before, there is no need to be, how to say, concerned, because the overall holistic view shows in the next 3 years, it's around €100 million net additional cash that this will require.

That is the number I ask you to keep in mind. Bringing all of this together, looking at our guidance, of course you have seen that our sales amounts now up to €10 billion, EBITDA between 725 and 825, a pretax result between 325 and 425, and a return on capital employed marginally above the previous year's figures.

I also know that you are challenging us again on whether we keep to be too prudent rather than being too bold, looking at where we are after the first half of the year and comparing that to our guidance. I can tell you we feel quite confident with our guidance.

I would also like to already give you some informations here why is this the case. We will have seasonal effects, as we always do have, coming from the summer period and coming from the Christmas period.

We will have downtimes for maintenance, of course influencing the business. We had one-time effect in the first half of the year, not sustainable effects worth around about €20 million, and taking all this into account, we think that we will still continue the nice path we have seen in the first half of the year.

However, as I have mentioned in my introduction, a little bit very slightly more moderate. With this, I think we are starting now the Q&A sessions, and are getting ready or are ready to receive your questions.

Yeah.

Prior to that, again, an apology for the mess-up with technology. Hope that you still were able to follow.

Please be reminded the presentation is available on the internet, if there's anything you want to sort of get to through the Q&A, please do. Apologies.

It's not our standard, and we certainly do better next time.

At least I hope the audience appreciate that I had a more active role in the presentation than

normal.

Definitely. Let's start with the presentation.

Now with the questions.

know. Please.

Yeah.

Yes, please.

Hi there, Gunnar and Birgit. Thank you very much for your time.

Maybe just first a question on market conditions. The recent price increases that we've been seeing in HRC, do you think any of that has been driven by the European water levels, whether that be sort of steepening of the cost curve or impacting supply?

Thank you, Reinhardt, for the question. Of course, we are monitoring water levels, especially on the river Rhine, very very thoroughly given that this has of course an impact on HKM.

Far, we have not been impacted by low water levels as Salzgitter, but your question was more general. I think it's too early really to see price increases through weather conditions like the low water levels on the rivers, but certainly if that continues to be the case, and if water levels further drop, then you might see sort of shortages there, and then it might have an impact on price.

Far, I would say we haven't seen that. At least I'm not aware of any price increases due to restrictions on production.

That's very clear. Thank you, Gunnar.

Maybe just, I guess, a follow-up question on the market conditions. We've heard some sort of mixed comments from your peers about what volumes could look like in 3Q, some saying it'll be up, some saying it'll be down.

In your business, are you expecting usual kind of Q3 seasonality in volumes, or do you think the TRQ is maybe already going to deliver some volume benefits?

I think in Q3 we're going to see the effects of the TRQ starting. As I mentioned, some of the traders have reacted proactively.

They have proactively sort of bought material and shipped to Europe prior to the TRQ kicking in, so that we will see needs to work through the value chain. I would assume that some of the TRQ effects will be visible already in Q3.

However, when it comes to flat, I would say stable development going forward, especially plate and large diameter tubes, which are more project-related businesses. Certainly we need to see a pickup here, and as Birgit mentioned, those market has been relatively silent last quarter, we certainly need a pickup after the summer break.

Certainly something we're working hard on different projects, but also need to bring them home here. Then again, as soon as it is international project, we also need to look at the trade developments, especially with the US.

Understood. Thank you, Gunnar.

Thank you, Birgit. I'll pass it over.

Thank you, Reinhardt.

Thank you, Reinhardt.

Yes, hi. Thank you for taking my questions.

The first one is on the cash needs you mentioned for HKM. It's a very large EAF, and I think you need to build all the additional infrastructure investment around it.

So €900 million for the full thing on the gross basis seems a bit low, but do you have built some contingency, or are you really confident that that's the highest point you'll have to spend? Then if you can help us also understand the restructuring cost, maybe the cadence of it and the total amount.

I will have a follow-up on that, but I'll start there.

Cash needs, yes, we're confident with the €900 million. HKM has, and we have reviewed that, done a quite thorough project work on it, and with our experience from SALCOS, we of course have sort of critically reviewed that, and we're confident that those €900 million are sufficient.

Yes, we have contingencies in that budget, there's a bit of headroom also here. We shouldn't forget that HKM is in a pretty lucky position given that great infrastructure is already there.

Unlike our project here in Salzgitter, no great infrastructure needs to be built, and also space is available there, they are in a relatively favorable sort of environment for a project like this. That's one element.

Restructuring costs basically was predominantly the reduction of personnel. As said, this has been negotiated, we have certainty on that.

The main element of the personnel reduction will only come late in the process, because this is when we stop the second blast furnace, and with that, the coking unit, the sinter plant, and also parts of the power plant, potentially. That's when the larger head count reductions will actually appear.

That it is. We have not disclosed the total amount of the cost, but it is well in line or I would say slightly below what you have seen in other restructuring processes in the German steel industry lately.

That's clear. That's going to come more in 2029 if I'm correct, that's when you plan to shut down the second BF?

Correct, correct. What I forgot to mention, of course, with the shutdown of the first BF, we have already a significant impact already this year.

You're right, the larger portion then comes in '29, yes.

There is some restructuring cost impacting 2026 due to the shutdown of the first blast furnace, is that correct?

Yes, exactly.

Okay. That's included in the guidance you provided for the consolidation of HKM.

That is absolutely included, yeah. Sort of rule of thumb is 1/4 of the cost in '26 and 3/4 in '29, just to give you a bit of a ballpark.

Okay. That's clear.

Just on the €100 million for the next 3 years for HKM, you also have, I think, included in your CapEx guidance update, €100 million from HKM for just those two quarters. What is this €100 million?

I guess it's not maintenance, but yeah, just trying to reconcile those two figures if we need to factor in some additional maintenance for HKM in the coming years as well.

What is part of the €100 million is, of course, the update of the remaining blast furnace is one part, a major part. Then what you need to keep HKM up and running every year, no major other, how to say, bigger investments included here.

If your question is on what do we have to expect in the upcoming years as investments that are not really related to the transformation towards the electric arc furnace, you can count between €50 and €100 million investments.

For HKM?

For HKM, yes.

The cash impact over the next 3 years, that's excluding maintenance?

No, thanks for putting that question again. The €100 million I have mentioned, that is the amount that you need looking at HKM in total, taking into consideration all needs for restructuring, for investments, be it the gray route, be it already investments for the green route, and all this funded by the shareholders' contribution, funded by the activities that HKM is organizing, and by public funding.

The total picture, including also the investments I have just mentioned, including also the investments for the electric arc furnace, this figure is including all of this.

Including the maintenance, but also including the cash generation of the company. All.

Yes.

Absolutely.

Yes.

No, that's clear. Maybe last question, can you help us a bit understand what we should expect in terms of investment, cash needs for next year?

I think you still need to receive €200 million in funding, what's the timing of that? Maintenance for next year as well, and what's remaining on SALCOS so we can calibrate a bit better the investment for the coming quarters and especially next year.

That would be great. Thank you.

For the coming quarters For the coming quarters, I have talked about that in one of my slides. We have spent €88 million in the first half of the year.

The figure was especially low due to the funding that we received worth €290 million. We expect, including HKM, to spend in the total year €650 million, without HKM €550 million.

As I mentioned, for HKM, you can count in for each year between €50 and €100 million, depending on the topics that need to be invested. For SALCOS for next year, you may count for round about something around half a billion euro investments for 2027.

Okay. The funding, the €200 million that you need to receive, is that going to be H2 or next year, and maintenance for the rest?

No, the €200 million funding will spread along the total investment of the €900 million, because what is happening in the procedure is that once you have paid the machinery provider, we are able, once we have paid them, we are able to ask for the reimbursement to the states and to the German Republic, and then they are quite quick in paying that. This goes along with the investment that is really, how to say, done, where you really had the cash outflow, yeah?

Sorry, I meant the funding for SALCOS Phase 1.

Sorry, I was thinking you're still stuck with HKM, but you're now talking about SALCOS fundings?

Yes, SALCOS. I think you got 1.1, you need to get 1.3, there's €200 million extra,

is

that coming in H2 or next year? Absolutely right.

Half-half, ballpark, half-half.

Yeah.

Thank you.

Good morning, all. First question, I'm staying on HKM.

You mentioned the mid-double-digit impact on EBITDA in H2. Is that purely an accounting impact, or is that a reflection of the underlying contribution of HKM?

Can we perhaps annualize that to about €100 million to get a sense of its recurring contribution?

Maxime, I I cannot tell you what what you can model in your in your models, and you're right, it's the mid-million double-digit amount I have mentioned for half for the second half of 2026. As you are very well aware, not only concerning HKM, but concerning all other entities as well, at this point in time, we are not disclosing any expectations for next year since we are still in the process of putting our planning together.

I'm also not going to disclose any expectations for HKM results for 2027 right now.

Is that purely accounting, or it's really the underlying contribution there in H2?

I don't get the question, to be very honest.

Is that I mean is that is that

is that purely

Maxime, it's a mixture of both, right? There's an element of underlying business, and there's an element of sort of accounting in there.

At this stage, you don't want to split the two, yeah?

No.

No,

and also

as we have said, Maxime, what's important also to keep in mind is that effects from the purchase price allocations are not yet included into this figure, yeah?

All right. I would have thought that the financial contribution of Vallourec and thyssenkrupp would already be recognized in the balance sheet at the onset of the acquisition, but I guess this will also flow progressively over the next 3 years now as restructuring needs and CapEx needs also increase.

Am I right to understand that?

Absolutely right, Maxime, yes.

Okay. All right.

Thank you. Now if I switch to the Q2 results, Trading division had very good result once again, and this time it was not driven by exceptionals, but I imagine there is some valuation adjustments included into that.

Can you perhaps give us some sense of the underlying result for Trading versus valuation adjustment contribution there?

I can give you one reason why the result was so nice. You're right.

In the first quarter, we had not-sustainable one-time effect of €10 million or €11 million, to be more precise, which we did not see in the second quarter. The good result in the trade was also driven by a very favorable combination of material cost basis and price basis, because our colleagues from the trade segment, they had some stock built up making use of very good material cost, and then being able to transform that into business.

For your next question, how do they look at the second half of the year, they're a lot more prudent when they look at the second half of the year, also because the geopolitical tensions are putting pressure on international trade, and here we all deal with quite a high degree of uncertainty.

Yeah. Now that's clear, yeah.

Just the last one, yeah, it's on your tax position, because as far as I understand, precisely it's not recognized on your balance sheet, but you have €4 billion of tax loss carryforwards accumulated over the past years, and so far you hadn't recognized anything of that or very limited amounts because you had limited profit generation ability. Now that things are improving a lot, that you're returning to healthy profit generation ability, should we expect that to be recognized on the balance sheet, perhaps not at the 30th of September, but at the 31st and further beyond this time frame?

Of course, we will make use of that as soon as we can. That's very clear.

You are absolutely right. Since our business results were not in the range that we could make use of these losses carried forward, we just simply didn't, and some of the positive results we achieved were mainly organized abroad, we also couldn't in some parts, but of course, as soon as we can, we will make use of that.

That's absolutely clear. Yeah.

Okay. We should therefore expect that tax outlays will remain minimal over the last few over the past next years, yeah, over the next years, sorry, because you have so so many tax loss carryforwards?

As long as these results are able to be accounted against the losses brought forward, yes.

All right, no, thanks. I'll stop there.

Yes, good morning. Thanks for taking my questions as well, and I've got a few more follow-ups on HKM if that's okay.

Maybe you can bring us up to speed there, but what has been the recent production levels in 2025 at HKM level, and how exactly does the planned blast furnace setup look like from here onwards? I understood that one of the two blast furnaces is currently being relined, but will that even come back?

That's my first question.

Let me answer the blast furnace question. The reason for taking this blast furnace out of operation is, as you said, the relining and basically upgrade the blast furnace to then go back into operation in August and then carry HKM through the upcoming 3 years.

You might recall that the whole concept is based on us reducing capacity in HKM already this year. We have an installed capacity of roughly 5 million tons, we'll reduce it to 2.5, meaning one blast furnace.

That's exactly the blast furnace that is relined right now. As soon as that one is operational again and stable, we will take out the other blast furnace and close that one down.

That is then the first part of what we discussed with Tristan also when it comes to the restructuring, reducing the workforce, roughly 1/4. That will certainly happen.

Production levels for the two blast furnaces in 2025 have been good. The sort of the whole structure of HKM has been that HKM basically produce on an optimal level to support the three shareholders.

Production levels in 2025 have been on a very good level.

What does that mean? Is it 4 million tons or?

I don't have the output number top of my head for the total HKM, because I only looked at our share. Has not been published, okay.

Unfortunately cannot deliver that number, has not been published, given that it has gone through three different shareholders.

Fair enough. Then as the one blast furnace which is currently being relined as it's coming back, when will the second one leave?

What's the broad timing for that? Is it going to be early next year?

No. As soon as the relined blast furnace is operational and stable, we will take that one out, it's going to happen in Q3, certainly.

Very very quickly after the relined one is back in operation.

Okay. Basically, if we look at it high level, even with you not, I guess, disclosing the 2025 numbers, basically what's happening here is that we go from a two-blast furnace operation back in 2025 to basically an exit run rate using just one blast furnace at the end of this year.

Absolutely, yes.

It's a net-net cut. Very clear.

Then just getting back on the CapEx guidance which you guided for with €50 to €100 million maintenance, Birgit, that's a pretty broad range. Is this referring to just a one-blast furnace operation, or is the upper end of that still based on two blast furnaces?

It's for what we expect for this year and the next years, yeah. It's a range.

It's for the one blast furnace. You're right, if you see that we have run two blast furnaces this year for half of the year, or HKM did, and then we will have one, then of course you can assume where you maybe find yourself back between the 50 and the 100, yeah?

I'm not going to give a more precise figure because, as I have said, we are still now in the process of putting our mid-term plans together, it would just not be fair to give any more precise figure, because it's simply not there right now,

yeah? Fair enough.

Maybe on to next year, and I totally appreciate you can't really say too much given we don't know that much about the market yet and can only take assumptions here, but I guess what we do know is I guess you have a maintenance CapEx guidance for €50 to €100 million, and the upper end certainly looks relatively high. There's quite a bit of restructuring coming already next year from what you say.

I guess if you cut 500 people, that's giving you a decent mid-double-digit cost saving amount already. I guess it would be quite surprising if you would be taking this on without at least covering the full amount of the maintenance CapEx, right?

I guess whatever you would expect as an earnings contribution must probably fully cover that. Is that a fair assumption?

Fully cover the restructuring cost, you mean?

Fully cover at least probably the maintenance CapEx plus premium.

Yeah. As I said before, looking at it as a whole, we have, as we have talked about, that HKM is organizing some result from business activities, we have the contributions from the shareholders, and the funding is of course 100% related to the electric arc furnace, but all of this funding plus €100 million spread, as I have mentioned before, is enough to pay for CapEx, for restructuring, and for the transformation.

We shouldn't forget that part of the takeover of HKM was also a delivery contract that we have signed with thyssenkrupp Steel. For the year 2026, 2027, and 2028, we'll deliver slabs to thyssenkrupp out of HKM with the biggest portion being in 2027.

From an operational business, we should also expect good results from HKM in that year. Basically, the short answer to your question is yes.

Thank you. Then last question, is there any early color on the PPA effects from HKM which we may see?

Will they be positive, will they be negative, any quantification if broad?

No, it's too early. Please understand that it's really too early to color that figure already as of today.

Our teams are really busy dealing with that right now. Fair enough.

Sounds good. Thanks so much for taking my questions.

Thank you, Bastian.

Thank you, Bastian.

Hi. Can you hear me well?

Very well. Hi, Boris.

Hi, Boris.

Hi, everybody. I'll stay on HKM.

I get it that it's a net €100 million cash that you need to cover the needs for HKM, but I'm curious to know whether there is a specific sequencing across those coming 3 years. I would guess some cash drain at the start and then things getting better at the end of the period, because you only get €200 million public funding to cover the cost of the new EAF to be built over 3 years.

Also wondering if there is any additional public funding you would expect from the European level, maybe in connection with the ETS reform, be interested in getting that point. Thank you.

Thank you, Boris. Let me start, and then I hand over to you.

With the additional public funding, there's no additional public funding in our business plan. If there would be an opportunity, of course, we would try to grasp that, but there is no expectation on additional public funding in the business plan.

Secondly, Boris, we shouldn't forget that also the two shareholders that left HKM deliver substantial contribution to the whole financing of HKM restructuring plus the investment. It's not only the public funding, but also money coming from the two shareholders that we will use and make use for the upcoming work that we have with HKM.

For the spread of the €100 million, the question, right? I can tell you that the majority is not going to hit this year, it's quite evenly spread, I would say, over the years.

No significant impact already this year.

Thank you. Maybe a thought on the contribution from thyssenkrupp and Vallourec, is it fair to assume something like half a billion euros total?

We have agreed not to disclose the numbers on those contributions, Boris. Sorry that we can't comment on that.

I guess we'll have to wait for the publication of their provision.

Maybe a possible way.

Yeah. Thank you.

Thank you, Boris.

Hi, can you hear me okay? Yeah.

Ja. Cool.

We've had lots of questions on HKM, I must admit I'm still slightly confused. Just to keep it simple, if you're talking about your net CapEx, net of any subsidies or contributions from thyssen or Vallourec, broadly, how should we look at the CapEx schedule over the next few years?

You're saying 650 this year. I think you were saying the gross SALCOS should be 500 next year.

What was the net number, and what's the likely total for CapEx next year? Can you give us a ballpark for '28?

You are talking about SALCOS Phase 1 this year and next year. I have shown that this year the CapEx will be quite overseable in our graph, you have seen that, due to the nice high public funding we have received.

We have talked about that there are around about €200 million open of public funding for SALCOS Phase 1, and that they will be more or less evenly spread over this year and next year. Next year, we will see quite a high SALCOS spending year, as I have mentioned, round about half a billion euro after funding, it's a net figure.

That's a net figure, okay. If we're talking about net figures, HKM shouldn't be adding much to that, and if we add in sort of maintenance of what's a fair number for maintenance these days?

All in, if we say 500 plus I don't know, 50 for HKM plus I don't know, we add 250 as that there sort of numbers, maybe we get up to about 800. Is that a reasonable ballpark?

You're trying to build up the CapEx for 2027,

is that

what you're trying to do?

Exactly.

I think 800 would most likely be too prudent, because you have, as I said, half a billion euro for SALCOS, you have between €50 and €100 million for HKM, not green route, you will have the first payments for the electric arc furnace at HKM already this year and further payments already next year also for the electric arc furnace at HKM, and then we have investments round about 300 between €300 and €400 million for everything that is not related to the green transformation. The number 800, I would rather see it as the lower number, yeah, rather above that.

Okay. After that, SALCOS stops and then it's just HKM plus maintenance, it should be going down to somewhere closer to about, sort of, 500 million figure, right?

Most likely, yeah. Sounds good.

I think, Andrew, what we shouldn't forget here is that we have seen also in the past delays, right? The cash-out profile has always been sort of pushed out in time.

Even though big numbers, yes, but when things are getting paid normally drags out a bit in time. That is certainly an effect that we have seen in the past also with SALCOS, yeah, let's be sure about that, and I also expect that to happen for next year and the years to come.

Okay. Then just on the operating costs of the new EAF and also the new SALCOS production routes, if we compare it to the existing production route, how do you expect OpEx to actually sort of trend?

As we go into SALCOS Phase 1 at the main site, and then when you start up the EAF at HKM compared to the existing blast furnace setup, how do you expect costs to trend in a sort of stable CO2 price environment?

I think there are a couple of very important assumptions that we have to look at, right? If you say stable CO2 prices is certainly not what all the CO2 prices that are publicly available look at, right?

They look at a clear CO2 cost increase. Even with the ETS reform here, the signal that we get from everybody in policy making side is that the price signal and the increase of CO2 prices will remain.

The question is how fast. That's a difficult question to answer right now, but of course if you expect regulatory developments as they have been planned so far, I think it was BCG who put out a study that the electric arc furnace with DRI would cross the cost curve of a BOF in the early 2030s.

That's when we also expect that by then electric arc furnace DRI is more cost-competitive than a blast furnace due to the input cost that you would have there. Of course, we're looking at brand new electric arc furnaces both in Salzgitter and in HKM, and I expect them to outperform on the cost side any other EAF that we have in Europe.

That's clear. Just one other follow-up, the closure of the blast furnace at HKM, I guess there's kind of a natural life to most of these blast furnaces, but clearly the European market will be tightening up as we see the imports drop off in the second half.

Would it not be, I guess, beneficial to keep that blast furnace running to take advantage of some of that additional volume or demand for European steel in the market once imports drop out?

Of course, we have analyzed that, and we're closely monitoring how market is developing. Far, our strategy for HKM remains as just described, because you shouldn't forget we would need an offtake of roughly 2, 2.5 million tons of slabs into the European market just from HKM, and that comes also then of course with quite some uncertainty on the market side, whether the market is prepared short term to digest another 2, 2.5 million tons.

We are in talks, but for now, I would say the main scenario is that we're going to close down the blast furnace. If there are opportunities, of course, we're happy to evaluate those, but we need to be relatively fast with that, because once the coking unit and the blast furnace is switched off, it's impossible to switch them on again.

That would be a decisive point in time where we can't go back.

Yeah. Do you think there's a possibility that with these imports dropping out in line with the quota cuts, do you think that we'll need an imported ton paying the 50% tariff to balance the market, or do you think the domestic capacity is capable of stepping up to meet that additional demand?

Now question what you're talking about, right? If you're talking slabs, as of now, slabs are not part of the TRQ, so that's certainly

Oh, no, I'm talking

that is still to be sort of negotiated and included. From that end, I don't see a big change through regulatory developments.

I think the dropping out of Russian slabs will certainly have an impact on the European market, and either through additional imports or then through us with HKM, as an example, we can certainly serve that market, and that's also the idea post 2028 when we have free capacity with that one blast furnace/EAF certainly to address that market. That's part of the business plan.

No, I was talking predominantly about the actual finished steel market. If we lose 14 million tons, is there 14 million tons of capacity that can actually restart in a timely manner from what you can see at the moment?

I can speak for ourselves. We shouldn't forget we have a blast furnace C that is not in operation right now, is planned to kick in in Q4.

We have at least from a Salzgitter perspective, we have the opportunity to increase our capacity if and when needed at short notice, so that doesn't take a lot of time.

Okay. Do you think with the issues at Ilva and I guess those Liberty assets, a lot of that doesn't look like it's coming back quickly, potentially your tons at HKM that might be needed, do you think the market can step up to meet that demand overall from what you can see from some of your competitors?

If you look at the European market as a whole, I think, yes, the market should be able to step up to fill at least the vast majority of that demand, yes. If there's more, then certainly we will have to talk about imports and then at a different price point.

Okay.

Yeah?

Thanks.

Thank you.

Yes, hi. Thank you for taking the follow-up.

Just a quick one on the net CapEx guidance for 2027, and I understand it's not really a guidance, but if you have the first payment of HKM EAF next year with all the moving parts, is there actually a probability that CapEx goes above a billion?

Not that I could see that right now. Then again, let us put the numbers together now in fall, and certainly we will also adjust CapEx levels to something that is digestible for the company.

Above a billion, that would be very surprising.

That's clear. Maybe just on Q3 if I understand correctly, HKM will be consolidated in Steel Production, and within Steel Production, you'll have the reline of one blast furnace at HKM, you mentioned the restart of blast furnace C, but probably Q4.

How should we think about cost quarter-on-quarter for the Steel Production business, and also maybe if you can give us a sense of the spreads, margins that you would expect, some stability or maybe some contraction, anything would be helpful there. Thank you.

On the spread side, I would rather say stable with slight chance of contraction, but just looking at the two view, but that's how I would guide Q3. On the cost elements, the relining is basically done and that is then CapEx.

Certainly will help also to get the operational cost further down for the blast furnace. With a relined, you normally have a better opportunity to work on your cost levels than with the worn-out one.

That's certainly something where I would expect further improvements on the HKM side. For Salzgitter, I don't see a major change.

Okay. All right.

Maybe a last one, just on the treasury share program, do you any reason to believe that the pace that you had on the selling in Q2 would be any different in Q3?

I can take that question. As you have seen from our cash position, we have, how to say, no pressure.

We have quite some comfortable cash position, so as we have said, we will sell our own shares by doing it in a way that is, how to say it, friendly for the value of the stakes, right? This, most likely, of course, will remain also our strategy, since we are not depending on the cash inflow right now coming from that sale.

We will observe the market and act according to market development.

Yep.

All right. Perfect.

Thank you for answering all the questions. Appreciate it.

No problem.

Thank you, Tristan.

We cannot see it here right now.

No, we can't see it here. If you could read it, please, then we can continue.

As said, we're looking at Q4 for the restart of blast furnace C. We can do this at relatively short notice, we will certainly observe market and market conditions, but the way we read the market right now is that we restart it in Q4.

We don't see any impact on production yet with regard to the lower water levels. If you look at Salzgitter, our main harbor is the Hamburg harbor, which is not impacted by the low water levels, there's no change there.

When it comes to HKM, we have taken precautionary measures to deal with the low water levels on the river Rhine. We have also now transported coal via train from Rotterdam to HKM, and we have also increased stock at HKM level to be able to run at a production as planned, and so far no indication that we would have to change that going forward.

For Duisburg, water levels are still okay to be reached via vessel and deliver coal and ore. Of course, we have to sort of make use of more vessels, given that we can't load them fully, but that is something that our colleagues in Duisburg are very not only aware of, but also trained in, no impact on production.

Yes, of course, for HKM, this means impact on logistics costs, but this is something we can also transfer to the customers of HKM, which is only partly Salzgitter, as I mentioned, we also have contracts with, for example, thyssenkrupp Steel, those logistic costs will end up there.

Thank you, Dirk, for that question. Finally, we get Technology to be mentioned, that's very nice.

No, look, of course, there are some seasonal effects in there when it comes to the last quarter, and also some projects that were, as you mentioned in your questions, that were available in Q1, Q2 last year. It's rather project nature than structure nature that we see here.

We're still, I would say, from our perspective, well on track when it comes to KHS.

I think I mentioned all the points. The total investment is roughly €900 million gross.

If you take the €200 million public funding, it's €700 million net. Hold on.

Second, the phasing of the cost is, as usually, rather to the end of a project, and when it comes to additional grants and subsidies, I also said that we have not planned for additional subsidies. Of course, if they are opportunities through programs on EU level or national level, we'll certainly look into that.

Alain, we have talked about those issues. We will not disclose the contributions, and on the restructuring cost, predominantly it is a personnel restructuring cost.

As said, 3,000 employees today, 1,000 then end of 2029, and the cost that we have basically agreed upon with IG Metall and unions and works council is in the same ballpark than other restructuring efforts we have seen in the steel industry. I would say rather slightly below that, but compare that to recent restructuring, and you get a good picture of that.

Then

Now I need to understand. Q3 last year, you mean?

If you look at this year, in first half of this year, you had roughly €10 million positive one-off effect, right, in the results, those were certainly not sustainable through the year.

No, I can also say that Q3 last year was not especially strong.

I think he means Q2.

Q2.

We had quite a strong development in Q2.

Q2 this year. Then I have talked about this strong contribution Q2 this year, which was that our colleagues from the trade segment, yes, right.

They pre-purchased quite some material. They were making use of the good material prices, which they could transform into revenues, especially also in the second quarter.

'Can

I think, Birgit, you mentioned that already, how the strategy looks like when it comes to the treasury shares, I think that's answered.

What we see on the flat side is a stable positive development on the order intake also for Q3 and the remainder of this year so far. We don't see any major changes to what we have seen in Q2, I would say.

Slightly different on steel processing, as said, much more project-related business, there certainly we are further working on securing projects there. On the flat side, relatively stable development.

Thank you for your questions and the discussion we had. Appreciate your interest into Salzgitter and into sort of how we perform to date, but also what the plans are going forward.

Hope we could clarify most of your questions and concerns. I understand that there were some concerning questions when it comes to HKM.

I hope we could give you a bit of relief when it comes also to the cash-out profile here. Again, thank you for your interest and see you soon again.

Yes, thank you also from my side.

Thank you. Bye.

Take care. Bye-bye.

Stay safe.