Outokumpu Aktie

Welcome to Outokumpu's results webcast. I'm Johan responsible for Investor Relations. We will start with the presentation by our CEO, Kati ter Horst; and our CFO, Marc-Simon Schaar. After the presentation, you have the opportunity to ask questions over the lines.

And with that, Kati, I hand over to you.

Thank you, Johan. So let's start then, and also from my side, very, very welcome to our results call today. A couple of words just to kind of say, how do we look at the Q1? I would start by saying that we clearly saw more favorable market dynamics and that also underpinned the higher adjusted EBITDA that you saw in our results. So our adjusted EBITDA increased to EUR 65 million, of course, from a very low level than in Q4 last year. So we've seen that the stainless steel market activity has improved, and it has been driven by seasonal factors, but also CBAM-related factors in Europe. And ferrochrome market remained very balanced and also favoring our Outokumpu's very low emission European offering.

And then we are continuing the implementation of our EUR 100 million restructuring program. And as we said before, we expect about half or a little bit more of the savings to be booked in 2026. And our EVOLVE growth strategy is progressing. So we are constructing currently the pilot plant in the U.S.A. with our priority technology, and that is going on time and on budget. And then we, at the same time, are now developing new specialty ferrochrome products that also bring us to new customer segments. And a little bit more about that in a while.

If we then look at the import figures, both in North America and Europe, I especially want to highlight the left side when we talk about Europe and compare the import share now in Q1 based on January, February to '25. And here, you can really see that what the impact of CBAM has been. So we now have a clear carbon price on European border, and that has half the share of imports coming to Europe, which is really supporting then demand for the scrap-based lower carbon footprint European supply.

If we then look at the market sentiment, I would say there's more activity. The market sentiment has improved both in U.S. or, let's say, North America and Europe, but the end-use demand is largely still unchanged. We don't see kind of a big change in end-use demand. There are some pockets of growth and more activity. And if I would mention one, that would be the data centers and energy-related demand related to data centers, both in Europe and Americas.

Then the biggest actually lever for us has been now in Q1, really the higher deliveries. So on a group level, our deliveries were 27% higher. And if you look at here the business area, then in stainless steel, of course, the key contributor here was Europe with 46% higher deliveries. And then also in ferrochrome, following the seasonality, we had 17% higher deliveries than in Q4. Americas also somewhat higher deliveries, but clearly, the higher deliveries in stainless steel coming from Europe, also from a low base in Q4.

Then on sustainability. So if we first start with safety, our safety performance was at the level of 1.8, measured by total recordable incident frequency rate. Our target is 1.5. There's still work to be done. But I would say same level as last year currently and development is going to the right direction. So I'm confident that we will be more in our target level very soon.

And then if you look at our recycled material content, again, staying high, more than 95% and we are doing and continuing with the progress towards our science-based target for 2030. We again are recognized for our sustainability leadership. This time, it's been the Clean 200 ranking by the Corporate Knights. And if we look at the circular economy around our Annual General Meeting in March, we launched an initiative regarding our Kemi mine to support the utilization of the mining side streams and resource efficiency, and we see already a lot of interest for these programs, and we'll communicate them more what that will bring as we go forward.

What I wanted to highlight today is one example of our EVOLVE growth strategy. We said already about a year ago in the Capital Markets Day that we want to develop our ferrochrome business and want to really give the -- see the full potential of this business and give ferrochrome the possibility to be unrestricted market player. And this is exactly where we are progressing now. So ferrochrome business is expanding its portfolio towards higher-margin ferrochrome products. And at the same time, then you are also expanding to different customer segments. So not only stainless steel, but also some special steel producers, foundries.

And this gives us also the opportunity to utilize the ferrochrome production capacity we have, which is above 500,000 tonnes and improve the earnings as the business has higher margins and then also more resilience to lower cyclicality. And here in the meanwhile, when we're developing these products, then we are, of course, creating the pathway then to our technology-enabled step, which would then be able to bring us really to chromium metal if we succeed with the technology that we are building in the pilot plant in the U.S.

And maybe just as a reminder, our Kemi mine, we have invested a lot in the mine in the past years. And today, we can say that it has mineral resources at least until the 2050s without any bigger investment. So that's an important backbone for us to develop the ferrochrome business.

And with that, then I hand over, Marc-Simon, to you to talk in more detail about our results and financial performance.

Thank you, Kati. Good morning, good afternoon to everyone joining us today. In the first quarter, a more supportive market environment, combined with continued capital discipline allowed us to further strengthen our financial position. This provides a solid foundation as we continue executing our EVOLVE growth strategy. In line with our guidance, our group adjusted EBITDA increased to EUR 65 million in the first quarter, mainly driven by higher deliveries in Business Area Europe and improved pricing in Business Area Americas.

Order intake and the order book both strengthened significantly across Europe and the Americas, reflecting the improving market environment. Compared with the previous quarter, profitability improved notably, led primarily by Business Area Europe, while both Americas and ferrochrome also delivered strong performances. In ferrochrome, however, earnings were negatively affected by the discontinuation of the electrification aid and the increase in Finnish mining tax from the beginning of the first quarter.

Turning to cash generation. I'm very pleased to report that our operating cash flow improved further compared to the fourth quarter, reaching EUR 85 million. As a result, our free cash flow was positive at EUR 34 million in the first quarter, enabling us to reduce our net debt to a level of EUR 241 million. Our liquidity position also remains very strong with total liquidity reserves of EUR 1.2 billion.

Let us now take a closer look at the performance of our business areas, starting with Business Area Europe. We entered 2026 with a slightly improving market momentum as European manufacturing PMI moved from contraction in quarter 4 last year back to modest expansion in the first quarter of 2026. However, this momentum faded during the quarter as increased geopolitical uncertainty, particularly around the developments in the Middle East, reduced confidence across the market slowed the industrial recovery in Europe.

As a result, underlying end-user demand remains unchanged. And at the same time, however, regulatory measures such as CBAM, together with the anticipation of the upcoming renewed European safeguard measures are expected to provide continued support for our business going forward. Against this backdrop, Business Area Europe delivered a substantial profitability increase in the first quarter. Deliveries rose by 46% quarter-on-quarter, mainly supported by normal seasonality and CBAM-related effects, while lower raw material costs, which we secured in Q4 last year also contributed positively.

Nevertheless, we were not yet able to fully capture the earnings potential from the stronger market environment. As previously communicated, this was due to a higher share of low-margin backlog deliveries carried over from quarter 4, reflecting the temporary supply chain planning solution challenges during the ERP rollout. We have now made significant progress in overcoming these challenges and expect to work through the remaining backlog during the second quarter.

Order intake in the first quarter was robust, and we continued to see positive pricing momentum. At the same time, strong demand for scrap, combined with limited supply, led to higher scrap prices, while the ongoing conflict in the Middle East started to put pressure on transportation and energy costs. In this context, we are very well positioned to benefit from the upcoming or the up cycle emerging through CBAM, while renewed safeguard measures will provide additional support, particularly in the second half of the year. At the same time, we remain mindful of the broader market risk related to the current geopolitical environment.

With that, let me now move to business area Americas. Business Area Americas once again delivered an excellent result in the first quarter, supported by several factors. First, we saw the usual seasonal increase in business activity at the beginning of the year. Second, selective distributor restocking was driven by demand from the data center and energy sector, which Kati laid out before. And third, we saw early signs of a gradual recovery in the Mexican market.

While there has not yet been any meaningful update regarding the USMCA negotiations, the Mexican government continues to strengthen measures aimed at protecting domestic industry, particularly the steel sector from low-cost Asian imports. We learned that President Sheinbaum recently announced that the federal infrastructure and public projects will prioritize Mexican-made steel. And together with the broader tariff expansion and antidumping measures, these actions are expected to strengthen local supply chains, support domestic manufacturing and reduce dependence on imports.

Financially, the strong performance in Business Area Americas was primarily driven by improved pricing. The price increases, which were implemented during the second half of last year, remained stable and were now fully reflected in the first quarter profitability. This positive effect was partly offset by higher raw material costs linked to commodity price developments. And in addition, seasonally stronger volumes, together with a positive timing and hedging effect provided further support. Variable and fixed cost of goods sold increased in line with higher deliveries, while overall cost efficiency remained stable.

With that, let me now turn to business area ferrochrome. In ferrochrome, earnings performance remained solid during the first quarter. Supply uncertainties persisted during the quarter with continued production curtailments in South Africa. Together with a robust demand in our key markets in Europe and in the U.S., the demand for our low-emission European ferrochrome offering remained strong during the first quarter. This was further underpinned by a higher share of long-term contracts, while the start of CBAM in Europe also provided additional support.

As a result, profitability in ferrochrome business -- in our ferrochrome business benefited from both higher deliveries and improved sales pricing. Compared with the previous quarter, adjusted EBITDA was nevertheless impacted by the discontinuation of electrification aid and the increase in the Finnish mining tax. Looking ahead, we continue to see ferrochrome as very well positioned for the future, supported by the ongoing expansion of our product portfolio into higher-margin ferrochrome products as well as the strong strategic positioning as highlighted by Kati earlier.

With that, let me conclude with some final remarks on the group's financial position. Supported by stronger profitability and continued working capital release, our operating cash flow increased by EUR 21 million quarter-on-quarter to a level of EUR 85 million. I am particularly pleased that despite higher business activity levels, we were able to reduce working capital in the first quarter. This underlines our continued focus on capital discipline and efficient capital allocation. And with a free cash flow of EUR 34 million, our net debt decreased to EUR 241 million, resulting in a leverage ratio of 1.3x at the end of the quarter.

Now looking ahead, we remain firmly committed to maintaining strong capital discipline. Our CapEx guidance for 2026 remains unchanged at a level of EUR 200 million, of which approximately half relates to maintenance investments.

And with that, I will hand it over back to you, Kati.

Thank you, Marc-Simon. Okay. Then we have the outlook still ahead of us and the guidance as well as some key notes or key messages in the end. So if we look at the outlook, Outokumpu's adjusted EBITDA improvement in the second quarter of '26 is expected to benefit mainly from the increasing stainless steel delivery volumes, which are forecast to rise by 0% to 10% from the first quarter of '26. And then with the current raw material prices, raw material-related inventory and metal derivative gains, they are forecasted to be realized in the second quarter. So our guidance for second quarter of '26 is that our adjusted EBITDA is expected to be higher compared to the first quarter of '26.

Then a couple of key messages to capture today's call. So as we have commented, the year started with clearly more favorable market dynamics, but the uncertainty, of course, increased due to conflict in the Middle East. Outokumpu has not been very much impacted by the conflict in Middle East so far in our results. But of course, we all understand that if the situation continues, it creates uncertainty. And at a certain point of time, we will see it as inflation in prices and transportation costs, which has already started. Q1 '26 adjusted EBITDA increased to EUR 65 million, and this positive development is expected to continue in the second quarter of 2026.

And our financial position remained very strong, as Marc-Simon just told you, which is very important in these market conditions. And we have seen CBAM very much supporting the scrap-based European stainless steel production as it was also meant to be. And as you know, EU is implementing now the more effective safeguards as of 1st of July, which should give further support to European market. And then on the EVOLVE growth strategy, we are progressing now with the ferrochrome product portfolio expansion and our pilot plant for our proprietary technology in U.S. is progressing on budget and on time plan.

So I think with that, we will then open for the questions.

[Operator Instructions]

The next question comes from Tristan Gresser from BNP Paribas.

The first one is on the guidance. I would have expected stainless prices to be more of a driver into the Q2 guide, especially given the increase in stainless prices we've seen in Europe since the start of the year. Could you help us understand a little bit about the bridge from Q1 to Q2 in terms of volumes, prices and also cost, I think you flagged energy and transportation costs. I would start there.

Yes, maybe I'll take that. Thank you, Tristan, for the question. In terms of prices, we apparently do not guide on prices itself. However, yes, what we have seen in our Q1 order intake is that prices have improved. There's also an improvement in our spread, so prices minus raw material costs. However, the increase is limited because at the same time, when you see sales prices improving, we also need to see that scrap prices have increased as well. Then there are a couple of other items here, which are basically offsetting the positive effect on the cost side as well, be it higher electricity or transportation freight costs as a result of the Middle East and then other items in here.

So thinking from a guidance perspective is what really matters here is our higher volume guidance on the one hand side and then as well as the net of timing and hedging impact in here. And maybe how to think about the magnitude here, I think both are equally important in order -- to take into consideration when you think about the first quarter -- sorry, the second quarter.

Okay. That's helpful. And just going back to that to the timing and hedging, I feel we've discussed this many times, but given some of your peers have guided for inventory losses into Q2, I just wanted to make sure I understood correctly on how you calculate those timing and hedging effects. And I think also why there was such a divergence in Q1, Europe versus Americas? And in terms of scale, I understand it's higher than what we've seen in Q1. But given the moves, I mean, it's a hard item to calibrate. Are we talking about mid-double digit, low double digit? Any sort of scale you can give us would be also appreciated.

Yes, absolutely. Certainly, if we come back to the first part, Tristan, in terms of net of timing and hedging in the first quarter of the year, we saw a negative impact for Europe, a positive impact for the Americas. Americas being positive in here as they have seen, and we have seen a higher commodity price level and through their pricing, predominantly base plus alloy surcharge, also these positive impacts on pricing realized earlier than they do in BA Europe. So there is a bit of a time difference between both business areas. But it's also important to assess then the performance of Business Area Europe in the first quarter.

Certainly, also the backlog recovery and still providing and selling material out of the fourth quarter in the first quarter also accelerated this impact. I hope that this gives a bit of an explanation now going forward. And then with current market prices, which we see, we do see then also an improved pricing level and timing gain and going forward, this is then how we guide on net of timing and then the hedging element to it.

Any chance on the scale of that? Because I understand this can be...

Before we -- I think we guided always between -- or if I look back the last couple of years, we had an impact of EUR 0 to EUR 10 million, and we guided for some gains or some losses. Now, the impact is more meaningful. We have been guiding, as I think, important, what I mentioned before, both the volume side and the net of timing and hedging impact, the positive impact here are equally important in terms of size and magnitude.

The next question comes from Adahna Ekoku from Morgan Stanley.

My first one is just on Europe. Could you help us quantify at all what kind of headwind in Q2 we should consider for the order backlog of this lower margin material from Q4?

Maybe if I start on that, I would say that our biggest impact, of course, on that has been in Q4 and now still impacting Q1. The last backlog that we have that we said we will be working through in Q2. So the impact will be lower, clearly in Q2 than it was in Q1.

Okay. That's helpful. And maybe just a question on the ferrochrome market. Could you discuss in a bit more detail how much of the impact of CBAM do you think you've seen already in Q1. There was a kind of strong volume performance there. Is there scope for volumes to be driven higher again for the rest of the year from the CBAM demand effect?

Yes, I would say that the CBAM has not had as big of an impact on ferrochrome as it has had on stainless steel in Europe. So stainless steel, the carbon border mechanism really puts a clear price on imported stainless steel. CBAM, the difference is smaller because we don't have the Scope 2 in CBAM. That's where the difference would really come if you, for instance, compare to African suppliers. But where the higher demand for ferrochrome comes is, one is seasonality. We, of course, deliver mainly to stainless steel. And the second thing is, of course, that the uncertainty continues on the production of ferrochrome in Zimbabwe and in South Africa. So there is more demand for the reliable supplier in the Western world which is Outokumpu. And we are in the Western world the biggest ferrochrome producer.

So would an interpretation of kind of stable volumes from here, all else unchanged to be kind of fast for the ferrochrome business?

I would say, robust demand for our ferrochrome continues. And at the same time, we are developing new products that will bring us also to other customer segments.

The next question comes from Bastian Synagowitz from Deutsche Bank.

My first one is just on the Americas and the dynamics you're seeing there. I guess the first quarter was really quite strong. And I think you hinted that the Mexican markets saw an uptick, which mostly starts towards the end of the quarter. So would it be fair to assume that we have not yet seen the full degree of the strength that the business will continue to do well into the second quarter? That is my first question.

Well, on U.S., on American side, I would say that I think what we see now in Q1, we have the full impact of the price increases in and volumes have also improved. Seasonality-wise, it's a season, of course, where we should book better results, and we expect that to continue. And then on Mexico, there was a price increase in the beginning of the year that seems to stick because of also some higher tariffs for Asian imports. And now we just have to see how this new rule that the President put on the market that the public procurement basically would need to prefer domestic steel even it's more expensive than the Asian imports. So that impact we have not seen yet. So hopefully, it will support the Mexican market.

Maybe a bit too early to really quantify. It's early signs, as we said. And then in terms of how to think about the Americas as well also here, and I think I mentioned it in some of my comments earlier that there is an increase also in raw material costs and prices, and that is also what we see in the U.S. So that is something we need to take into consideration plus some other inflationary topics in the U.S.

Understood. Great. And my second question is coming back on the European business, maybe also to Adahna's question earlier. So I wanted to check with you, first of all, what exactly has happened? Was it a situation where basically your commercial team allowed customers to come into the order book too early basically and hence, not captured basically the magnitude of the price increase where maybe raw material costs have gone up already?

And then also maybe in terms of the quantification, I don't know if you could give us maybe a bit more detail here, either in terms of what the earnings impact has been or maybe how far in the first quarter, you still had a certain percentage of your overall volumes, which were basically tied to these less favorable pricing contracts? That's my second one.

I think it's important to notice that we have, Bastian, a backlog which was created in the fourth quarter, which is then going and swapping into the first quarter and further on into the second quarter here as well. So this is not really much on -- from that perspective, immediately in the first quarter on limiting. But overall, if I may describe the impact in here is you do have a higher share of old orders with lower pricing with lower margins in the first quarter. That is one impact.

Then, of course, in overcoming the challenges, we have somewhat more manning and advisory costs in here. But then also there is a certain element of lost market opportunities here as well, particularly with the decrease in the Asian imports from that market. But as I said, we overcome most of the challenges, made significant progress and are now working through the backlog basically in the second quarter.

Great. Then my last question is just on cash flow and working capital. And I thought your performance here was quite impressive indeed. And now metal and stainless price obviously picking up. So I just wanted to get an update on what we can pencil in for working capital for the full year. Do you expect to be able to retain, I guess, the current levels? Will there maybe be some increase later on or not? Any help on that would be great.

We're not giving exactly a full year guidance yet on working capital. But what I can say definitely is that we will continue our efforts to improve our working capital efficiency. Yes, you're absolutely right, we have seen an increase not only in commodity prices, also business activities now into the fourth -- sorry, second quarter. We aim to reduce our inventories in order -- and improve our efficiency in order to compensate for the pricing impact coming from higher commodity prices.

The next question comes from Dominic O'Kane from JPMorgan.

I have 3 questions. First, just in the context of your comments around Europe and the dynamics that you've talked to here, including to Bastian's previous question, is it reasonable to assume that Europe will be EBITDA positive in the second quarter? My second question is, can you just maybe provide some comments on how you see the inventory positions in both Europe and the U.S.? And then I have one final question.

So maybe if I can take. We're not guiding on business areas specifically, but what I can say is here to help around this is that most of the EBITDA improvement, which we guide for from Q1 into Q2 is related to Business Area Europe, both on the volume side and also on the net of timing and hedging. So that answers number one. And then the second one was on, you said...

Inventory position.

Inventory position. I think, well, inventory position you mean from our internal inventories or...

Just broadly in terms of how you see the inventory volumes held in Europe and in the U.S. at a market level.

Okay. You mean our distributors or customers in itself. Yes, maybe on the European side, I can say that the inventory levels are on a low level here right now, but also in terms of days, rather on a lower level, given also the weak demand, which we currently face in the European market over here. What we have seen in the U.S. is that there is an improvement, quite a substantial improvement, also in the manufacturing PMI data, which we have seen going above 50, 52, 53 in the first quarter, and there is an increase in business activities, and I would say that inventory levels are more or less on a more moderate level in the U.S. compared to Europe.

Some selected restocking in the U.S., more in U.S. than in Europe.

My final question is, I wondered if -- it's maybe too early, but yesterday, there was the announcement about the European Commission's change to the ETS variables, including the benchmarks. I just wondered if you have any observations on those changes and how it may affect the European stainless steel market, including the confirmation that ferroalloys -- sorry, ferrochrome will be a mandatory inclusion within CBAM.

Yes, I have to be honest, I have missed that message from yesterday. So I don't know exactly what it's been saying, but I can give a bit like what is the Outokumpu's stand on certain things. So for instance, if you look at ferroalloys, what we would find very important on regarding CBAM is that ferrochrome the Scope 2, which is what you -- the purchase electricity that you have, what you purchase from the market that, that would be included because that makes a big difference indeed between, for instance, Africa and Europe. And if the African production will be now clearly subsidized by the country, then we maybe have also an antidumping case here, at least what we could look at it from a European perspective. But I don't know exactly what you refer to because I have not seen the message.

And then on ETS, I would say Outokumpu is clearly a supporter of the ETS system. Since 2005, the whole ETS system has brought investments of about EUR 110 billion to Europe to clean transition. We are some of the first movers, I think a lot of Scandinavian companies have been. There's now a clear price on European border for carbon. And it's really important that we maintain the ETS system because it makes Europe more competitive and it ensures that there continues to be a carbon price.

I understand that there is some discussion whether some of the free allowances schedule could be slowed down to help the current industrial situation. But I think Europe's energy problems and energy price problems are not coming from the ETS system. They're coming from the fact that we are still dependent on fossils and too much in Europe, and we don't have that supply from Europe. So that's the Outokumpu standpoint. But unfortunately, I don't know exactly what message you refer to. So that we will need to check.

The next question comes from Maxime Kogge from ODDO BHF.

So my first question would refer to a comment made by one of your competitors regarding Europe. They said that they were able now, thanks to the improved market momentum, to switch back to transaction prices. I mean, from no transaction pricing, which was the norm to recently, back to base price plus alloy surcharge, a bit like in the U.S. where it's still the dominant mechanism. Are you seeing the same phenomenon at play? I think you said previously that the proportion of base price was just 30% of your European activity. Has this ratio evolved recently? And do you expect it to increase?

Right now, and given what we see in our order intake and order book is not reflecting that one yet. But there are, indeed, opportunities and discussions here to look forward into this pricing opportunity.

Okay. And yes, likewise, considering the improved market momentum, are you reactivating your plans potentially to build a new annealing and pickling line in Finland? This was the plan announced last year, and it has been shared in the meantime. Same question on the high-performance alloy investment that you were also contemplating last year, which has not yet been announced. Your main competitor in Europe actually announced significant investment plans recently to fully capture the benefits from the improved trade defense framework in Europe. So what are your thoughts on that?

So maybe starting with the annealing and pickling line, possible investment in Tornio. So it is purely a cost competitiveness investment, how we are looking at it. So the purpose is not to increase the overall capacity, but to increase capabilities. And then if capacity increases in our biggest integrate, then we would take capacity down somewhere else. So it's a cost competence investment.

And now that we got in Finland now higher mining tax, the removal of the electrification aid and also for the mines and higher electricity kind of tariff, all these impacts are about EUR 30 million on an annual basis. So we are looking at the investment case again. It's still under review. So we have not, therefore, made a decision, but it's a cost competence investment.

Then regarding the potential investment in Avesta melt shop to arrive at high nickel alloys, it is very much valid and very much alive. Again, we are still reviewing the investment case, and we are also looking at other opportunities on the market. So we'll come back on those when the time is ready for that.

Okay. That's clear. And just the last one is on the scrap market because as you said, yes, stainless steel prices are increasing, but scrap prices also, so the net impact on margins is perhaps not that big. And starting the 1st of July, we should be held for perhaps up to 10% increase in volumes for stainless steel. Do you think that the scrap market in Europe can absorb that? Isn't there the risk of a structural tightness? And I was curious to know if your partnership with CRONIMET was allowing you already to somehow manage this situation?

So I think important here to highlight is that we don't have any issues in terms of availability and access to scrap. The price increases, which I highlighted before, are fully reflected also in our guidance now going forward for the second quarter. I think what it requires also on the scrap market is that industrial activities do pick up and therefore, also increasing the supply of scrap over here. Yes, as I said before, I don't see any shortage for us. And as I said, everything what we do see right now is being properly reflected then also in the guidance which we gave today.

Okay. And regarding the partnership with CRONIMET, was it helpful?

Partnershp with CRONIMET is working well and also with all our other scrap suppliers, which we have, and basically through this very strong partnerships, which we have, allows us also to have this access to the scrap, which I just mentioned before.

[Operator Instructions] Next question comes from Tristan Gresser from BNP Paribas.

Just 2 quick follow-ups. The first one is on the Americas. I think you mentioned that for your Q2 guidance, most of the volume kind of tailwind will take place in Europe, so maybe a little bit less in the U.S. I was wondering why we're not seeing a better volume performance in Americas. I think volumes are down year-on-year. I think your commentary on the demands were pretty positive, on the imports as well. So what is holding back a bit on the volume performance there? Is it more regional, Mexico, U.S.? Any color there? And then I have another question on Europe.

Maybe one comment there. What is good to understand is that in the past, when we didn't have the tariffs in the same way between U.S. and Mexico and when the tariffs on ports were still kind of applied. We, of course, could use much more the Mexican capacity also for the benefit of the U.S. market. So we don't have that lever at the moment. So we are somewhat restricted also in the capacity we can bring to the U.S. market. Yes, our volumes are not on the top currently. I would also say that our operational performance could have been better in Q1. That's what we're very much working to be able to max our volumes in the U.S. Order books are strong and delivery time is quite long right now.

Okay. That's clear. And then if we look back a bit further up down the year, let's say, end of this year, when you have the implementation of the fully -- well, the CBAM, the quotas, you have some volume increase. Let's see what the spreads end up, maybe you get back to this dual pricing system for more orders in Europe. Is the target to go back to some sort of historical margin level in Europe? Or can you aim even to go above that historical average level?

Well, what I can say is that certainly, all the aspects which you just mentioned are favorable in a way that the market environment is improving for local producers in Europe through CBAM safeguards coming up, et cetera, as well. And then certainly also given that there is then also a certain assumption that also margins do improve. However, in order to recover to historical levels, what we also need to see in Europe is a recovery in the underlying end user demand really.

There are no more questions at this time. So I hand the conference back to the speakers for any closing comments.

So thank you, everyone, on behalf of me and Marc-Simon today for participating in our Q1 results call. We're working towards a better result in Q2, and we'll then talk more about that when it's time for that to present the Q2 results. Thank you for being us here today. Thank you for good questions, and see you then soon when we talk about Q2.

Thank you.

Good afternoon, and welcome to Outokumpu's Fourth Quarter Results Webcast. I'm Johan, responsible for Investor Relations. We will begin with the presentation from our CEO, Kati ter Horst; and our CFO, Marc-Simon Schaar. After the presentation, you are welcome to ask questions over the line.

With that, I'm pleased to hand over to you, Kati.

Thank you very much, Johan, and also very, very welcome from my side. We are here today in the studio in a very snowy beautiful Helsinki. So let's go then directly to the business and talk about the fourth quarter and also some comments, key comments on the full year.

So if we look at the whole year as such, I think the comment there is that the stainless steel market did remain weak and was very much pressured by the uncertainty we saw in the markets and also the especially low-priced Asian imports coming to Europe. So our full year adjusted EBITDA then decreased to EUR 167 million, and the profitability improved very clearly in BA Americas and in Ferrochrome, but then they declined in business area Europe, if you compare year-on-year from 2024.

Then the Q4 '25 profitability was impacted both by market weakness, but also the temporary challenges we've been having with the supply chain planning solution in the ERP rollout in business area Europe. We do expect more favorable market dynamics going forward, and I'll come back to that in a little while. Also I would like to remind you that we are advancing our EVOLVE growth strategy by investing in the pilot plant in the U.S., to develop this proprietary technology we've been talking about, which is aimed at producing low CO2 metals and first focus being on ferrochrome and high chromium content metal.

CBAM and tariffs are now the 2 elements that we see changing the import picture both in North America and Europe. So on the left side, you see Europe. The Q4 figures include October and November. And you can see that the imports have come down. Same has happened in North America because of the tariffs. And this is something, especially now in Europe, that we do expect to continue this quarter.

I wanted to give also a bit of a sense from the Q4 of the sentiment in different customer segments. So you basically see here our key customer segments and the colors are giving a bit of the sentiment. And you can see that the sentiment has been quite subdued. So either no change or even a little bit slightly negative on the automotive and heavy industry side. But now that we come to the beginning of '26, I think it is changing a little bit.

So first, I would like to comment on Europe that we clearly see that CBAM and the expectation of the coming safeguards are supporting demand for European suppliers. It's not necessarily helping to increase the end customer use demand. And there, we don't see really clear signs of recovery yet. But demand for European producers, we do see supported by the policy instruments.

Then on the Americas side, I would say that we now see some first signs on a market recovery or economic recovery, however you want to call it. And that was also reflected a bit in the clearly better PMI index that was published in January. It basically jumping to 52.6 points. And I think that is also what we see in our order books and the sentiment that we see being somewhat more positive than before in the Americas.

There's one customer case here I wanted to share with you because it is basically an example of one of the product developments in Outokumpu that highlights how our innovative material development. In this case, the Lean Duplex Forta provides a solution for very challenging customer needs in the real life, and it also helps to support the energy transformation and sustainable products and minerals and metals. So the customer here is Metso, very much in the space of mining and minerals and metals.

Then moving forward, commenting then a bit on the Q4 result more. So we have clearly here a situation where Europe was weak also for the whole year and where BA Americas and Ferrochrome had a very solid performance. The European weak financial performance very much based on the market weakness and the sustained pressure from the imports. And then as I said earlier, also in the Q4, some temporary challenges that we've been having with our supply chain solution in this ERP implementation.

We have had significant improvement profitability in BA Americas. That has been driven very much by the higher volumes and lower cost. And then really in BA Ferrochrome, we've actually seen a third consecutive year of improvement. And we also do see the robust demand continuing for our low emission European Ferrochrome.

And then maybe on the own measures, I could comment that we had the target to have EUR 60 million savings in short-term cost-saving measures. So we have reached EUR 63 million by the end of the year. We have also reached the targeted level of EUR 350 million on this 3-year run rate program that we've been running by the end of '25. And therefore, also that program is now closed.

Then moving to sustainability and commenting on some of the key items there. So our solid sustainability performance continued in Q4. We were also present in the COP30 and had some really good interactions with some of our customers, but also different politicians, talking about energy, talking about carbon capture, and other important topics.

On safety, we are on a world-class level in the process industry. We had a challenging Q3. And I was very happy to see that now in Q4, we are really back on track in our safety performance with a total recordable incident frequency rate of 1.4.

If we then look at the recycled material content, actually, all the quarters in 2025 we were at the record high level of 97% of recycled material content. And of course, together with the actions we've taken in energy efficiency and optimizing our processes, this has really delivered continued emission reductions for Outokumpu.

And this becomes a more important topic going forward. So the low EU ETS emission intensity that we have, coupled with the free allowances that we have going forward, is really supporting our competitiveness, and I come a bit back to that a little bit later.

Our sustainability leadership was also recognized externally. Earlier in the year, in '25, we got again the EcoVadis Platinum. And then towards the end of the year, the CDP's A rating for the climate was received.

Then a couple of words about how CBAM and the phaseout of the free allowances under the EU ETS are expected to impact our business. So when you look at the left side, CBAM basically impacts the top line, while then the discussion of the free allowances is a cost question to the industry and for the players. So both in stainless steel and in CBAM or both in stainless steel and ferrochrome, so the key importers to Europe have carbon intensity default values that are clearly higher than the European benchmark. And this is clearly expected then to shift demand more towards the European suppliers. So you can see here in the left and in the middle the black bar presenting the imports and then the green bar representing the European reference values.

Further then, I would like to point out that Outokumpu has been one of the early movers in smart decarbonization, and that has now resulted in a very competitive position under the EU ETS. So we basically have available free allowances covering our needs until 2030.

I have here then another example on how we can reduce carbon emissions through partnerships that actually create win-win business concepts in the ecosystem. So this is a partnership that we have announced as an MAU with Norsk e-Fuel where basically the concept is that the side stream of our ferrochrome production, the CO gas, we can deliver that to Norsk e-Fuel for the production of sustainable aviation fuel. The beef here for us is that we are really -- by selling the CO gas, we are really reducing quite substantially our emissions. And for them, it's a very cost-effective and good raw material for producing sustainable aviation fuel. So here, let's see how this continues going forward, but these are continuously the type of opportunities we are looking in partnerships.

And then now I think I would like to hand over to Marc-Simon to talk more details about our financial position and the results.

Thank you, Kati. Good morning, good afternoon, everyone, and thank you for joining us today. Despite the challenging market environment, our solid financial foundation positions us well for future growth. Let's take a closer look at our financials at the end of the year.

During the fourth quarter, our strong liquidity increased to EUR 1.2 billion. With positive free cash flow and the dividend payment in October, our net debt increased slightly -- only slightly during the quarter. At the same time, we secured a new unsecured EUR 800 million sustainably linked RCF with a 4-year maturity and an option to extend until 2032. The new facility replaced 2 previous RCFs of the same amount, but with improved and more flexible terms. This once again demonstrates the strong and continued support from our lending partners.

Now let's take a look at our fourth quarter profitability. Our fourth quarter group profitability of EUR 10 million was mainly impacted by lower deliveries and a lower pricing level in Europe. The decrease in stainless steel deliveries to 365,000 tonnes was driven by continued market weakness and challenges related to the new supply chain planning solution, as mentioned earlier. These negative impacts were partly offset by improved cost performance and higher electrification aid.

Let's now take a closer look at the performance of our business areas in the fourth quarter, starting with business area Europe. Overall, the market conditions in Europe remained weak during the quarter. This was evident in manufacturing activity as the euro area PMI remained below 50 much for the second half of the year, indicating continued contraction in the sector. Against this backdrop, volumes were lower during the quarter. This reflected both the ongoing market weakness and a temporary impact from the implementation of the ERP rollout, which we expect to normalize going forward. The weaker pricing environment also weighed on spreads, namely our price net of raw material costs. And this impact was partly offset by improved cost performance, supported by higher fixed cost absorption as production activity increased.

In response to the prolonged market weakness, we continued to take decisive restructuring actions to safeguard our cost competitiveness. These actions form part of the EUR 100 million restructuring program announced in connection of our Q2 2025 results, which runs through the end of 2027. As part of this program, we expect to realize cost savings of EUR 50 million this year with a primary focus on business area Europe and group functions. Looking ahead, we also expect demand for domestic producers in Europe to be supported by the introduction of CBAM from the beginning of this year.

With that, let me now turn to business area Americas. Despite seasonally lower deliveries, business area Americas delivered another strong performance in the fourth quarter. Improved product mix and lower variable costs more than offset higher fixed costs related to the annual maintenance shutdown in the U.S. as well as lower gains from timing and hedging effects and the usual seasonal decline in deliveries in the Americas market.

During the quarter, demand in the U.S. continued to shift from imports towards domestic producers following the tariffs imposed by the U.S. administration in July last year. However, underlying end-user demand remained weak. Similar to Europe, manufacturing activity was contracting with PMI levels below 50 throughout the quarter.

On a more positive note, we have recently seen early signs of improving market activity in the U.S. In addition, the Mexican government implemented tariffs on Asian imports, supporting domestic producers such as ourselves in Mexico. Looking ahead, our focus in business area Americas remains on strengthening operational excellence to fully unlock the potential of our asset base while advancing our commercial strategy through an expanded product portfolio and a more differentiated go-to-market approach.

With that, let's have a look to business area ferrochrome. We are very pleased that the strong financial and operational performance in business area ferrochrome continued during the quarter. Against the backdrop of ongoing supply constraints in Southern Africa and continued geopolitical tensions, demand for our low-emission European ferrochrome offering remained strong throughout the quarter. While total deliveries declined due to lower internal demand, external deliveries increased, underlying our strong market position. With the introduction of CBAM from the beginning of this year, we expect this positive trend in external demand to continue. Profitability in the fourth quarter benefited from higher prices, lower variable costs supported by the electrification aid and improved fixed cost absorption driven by higher production levels.

Looking ahead, despite the termination of electrification aid and the increase in mining tax in Finland from the beginning of this year, we see our ferrochrome business as very well positioned for the future. Our strong strategic setup, the continued expansion of our product portfolio into higher-margin ferrochrome as part of our EVOLVE strategy, and improving mining efficiency through the expansion of the sub-level caving concept will support further value creation in the business.

Examples of our product portfolio expansion include our move into medium and high-carbon ferrochrome as well as low titanium products during 2025 already. In addition, recent underground drilling confirms that our mineral reserves and resources provide sufficient ore availability well into the 2050s, offering long-term visibility without the need for any major additional investments.

With that, let me turn to some final remarks on the group's overall financial position. Despite the low profitability in the fourth quarter, our free cash flow improved significantly compared to the third quarter, driven by a strong release in working capital. Our ability to release additional working capital was limited by temporary challenges related to the implementation of the ERP system. As a result of the dividend payment of EUR 61 million during the fourth quarter, net debt increased slightly to EUR 265 million. Given the current market environment, our primary financial focus remains on maintaining strong capital discipline with a particular emphasis on working capital efficiency.

Now with that, I will hand it back over to you, Kati.

Thank you, Marc-Simon. So going forward, based on our EVOLVE growth strategy, our focus is clearly on cost competitiveness in our foundational sustainable stainless steel business, while we are then targeting transformative growth in Advanced Materials and low-carbon metals through the technology development.

And on the next slide, just as a reminder, as communicated last summer during our Capital Markets Day, here you see the pillars of our EVOLVE growth strategy. So it's maximizing the value from sustainable stainless steel, both in Europe, Americas, growing profitably in Advanced Materials and alloys, then working on technology to create innovative materials and low carbon, of low CO2 metals. And this is exactly the USD 45 million investments we've done on the pilot line in the U.S., which is proceeding well. And then, of course, we continue to focus on total shareholder returns as well and keeping our balance sheet healthy at the same time that we want to keep the possibilities open to invest in growth.

Then we would be moving here now to the dividend proposal from the Board of Directors. And the proposal is EUR 0.13 per share for the year 2025 and to be paid in 2 installments. And I think it's important to mention this is very much according to our dividend policy where we also say that we need to look at the company's financial performance in the cyclical market conditions while we maintain the financial flexibility to invest in transformative growth. You see here our dividend per share and earnings per share. And then if you look at over the 5 years and you include this proposal of EUR 0.13, we have actually paid over the 5 last years, about EUR 0.5 billion of dividends to our shareholders.

Then we move to the outlook for the first quarter of 2026. And in the first quarter of 2026, the adjusted EBITDA improvement is expected to benefit mainly from the recovering stainless steel deliveries, the volumes, which are forecast to be 20% to 30% higher compared to the fourth quarter in 2025. And the change in deliveries mainly reflects the normal seasonality that we have in the market, but also the exceptionally low level of business in business area Europe in the comparative period, so fourth quarter, which was then impacted also by the challenges related to the supply chain planning tool in the ERP rollout during the fourth quarter.

And then with the current raw material prices, some raw material related inventory and metal derivative gains are forecast to be realized in the first quarter. And then our outlook for Q4 2026. So our adjusted EBITDA is -- in the first quarter of '26 is expected to be higher compared to the fourth quarter of 2025.

Then I would like to summarize a bit with this slide, some of the key messages from today. And I would start by saying that we do expect more favorable market dynamics going forward in 2026. So in Europe, this culminates very much currently to CBAM and the proposed safeguards as they are supporting demand for low emission stainless steel and ferrochrome, supporting European suppliers. In the Americas, we see a positive outcome of the -- potential positive outcome of USMCA negotiation would really support our business in Mexico and also create more capacity for us eventually to sell in the U.S. And like I said earlier, we see also first signs of economic and end-user demand recovery in the Americas. So being clearly more positive than in Q4.

And then we expect this robust demand for our ferrochrome to continue also supported by the continued uncertainty on supply on the market. And if I look at all the business areas, we are very much working on the commercial strategies and the product portfolios, and I see that we have a lot of opportunities in that side. Ferrochrome is already now bringing 3 new products to the market. So this is the way to continue. And on the EVOLVE strategy, I mentioned the technology development. It is very important for us, and we will tell you more about that as we go forward. So I'm very optimistic about our future, our possibility to grow and improve our financial performance and resilience.

And then I think this takes us to the Q&A that we are now ready for. So please, happy to hear your questions.

[Operator Instructions] The next question comes from Tristan Gresser from BNP Paribas Exane.

The first one, I just wanted to ask about Americas. There was a strong performance in Q4. Any one-off tailwind that was in there that will not repeat into Q1? Or is the type of margins on EBITDA per ton that you've seen and done in Q4? Is that kind of a normalized level that you see for the coming quarters? Is there more of the price increase to flow through in Q1? Or that's all in the results we've seen in Q4? And now with the visibility you have and you flagged a bit of improvement as well on the demand side, do you think you can reach your EBITDA target for the division of EUR 150 million, EUR 200 million in 2026? And if not, if you can tell us why?

Maybe I can start with taking your first part of your question, Tristan, on the performance and if there are any extraordinary items within the result. The answer is clear, no, and we can expect then this result to be an underlying result then also going forward plus then the market dynamics which we see now. We expect a seasonal uptick in demand over here. And while we're not giving any price outlook, I think given the current situation and then referring also maybe to the early signs of a market recovery explains, I think, a bit about how we think about the overall market and the dynamics coming with that one.

And regarding the EBITDA target of EUR 150 million to EUR 200 million, is that achievable for 2026?

Well, I would say, if the market recovery continues, then I think there are possibilities to go towards that, yes.

All right. That's clear. And then kind of a similar question around Europe. I mean, it's always a market that is a bit difficult to calibrate. How do you think about the margin improvement for 2026? I mean you went from negative EBITDA adjusted EBITDA in Q4. The market was tough. There was a bit of one-offs. But consensus has EBITDA per tonne for the Europe division going above EUR 150 per tonne by Q4 this year. Do you think that's feasible? And if you can talk a little bit about the market environment as well. We've seen prices going up. I guess, margins are going up at the moment as well. If you can discuss a bit your order books and the impact of CBAM, that will also be helpful.

Yes. So maybe if I start and then Kati can chip in and add. I think in the fourth quarter, we have seen the lowest volumes driven by the weak market. Yes, we also had here the implementation of the supply chain solution, which I mentioned before. But what we do see and from preliminary data also in January is that CBAM is somehow supportive, as I mentioned before, expecting also a shift towards domestic producers in the European market over here. And as such, also seeing then a margin -- relative margin improvement here in Europe as well.

And let's just say, command, that needs to also happen. If you look at the overall volumes, demand in Europe and the price level. So yes, volumes need to increase and deliveries need to increase and prices need to increase.

Okay. That's clear. But you're confirming that margin improving at the moment. And just the CBAM and the safeguards, is that enough for you to go back to historical margin levels? Or do you think absent a more pronounced demand recovery that on the end user side that you're not necessarily seeing at the moment, it will be difficult to reach, let's say, historical margin level already this year without the demand?

I think that certainly CBAM and then safeguards are supporting us here and what you just described. At the same time, yes, we see increased activities, but this is not coming really from an underlying demand in the end user segments. And to be clear, in order to get back to historical levels, we also need further demand from the market side as well, given also the capacity utilization we are currently running still being on the low side.

The next question comes from Tom Zhang from Barclays.

Two as well for me, please. So yes, maybe just on ferrochrome. I know a lot of the quarter-on-quarter improvement was from these electrification aid. But I think underlying, you also talked quite positively about the ferrochrome market, which I was a little bit surprised by because stainless volumes have not been very strong. There was still a lot of stainless imports and CBAM, I guess, will help, but it's only just coming in from January. Is there much of a step-up again into Q1 for the underlying ferrochrome business? And so as I kind of look at Q1, even without the power subsidies, do you think it's possible that ferrochrome earnings can remain fairly stable?

I think maybe if I can take that. When it comes to Q4, yes, there was a positive element of then the electrification aid, as we mentioned before. What we have seen as an increase from the third quarter to the fourth quarter, I would say, approximately half or a bit more half of that improvement is coming from that electrification aid. And the rest is real underlying improvement, stronger performance.

Coming to the market side, yes, stainless steel demand is lower, is weak. However, we're constantly also reporting that the demand for, again, our European low-emission ferrochrome is very solid. And as such, we saw an increase, not in internal demand, but in external demand. We're also expanding our product portfolio, as I mentioned before, so these are areas and topics together then also with improving our cost performance in ferrochrome with this new or continued expansion of our mining method, sublevel caving, that's all contributing positively.

Now if we think about then Q1, certainly, the impact, which I mentioned to you before the electrification aid, but then also the impact from the mining tax in Finland then will have a negative impact in the fourth quarter compared to -- in the first quarter compared to the fourth quarter. However, we continue to improve on the mix side and also on the cost performance. So I would only bake half of the impact of electrification and mining tax into the forecast.

And maybe to add to that a bit that just as a reminder, so we're delivering now internally, externally about 400,000 tonnes of ferrochrome. We have a capacity of 500,000 tonnes. So we have capacity to increase also external deliveries. And maybe another aspect just to add that this portfolio development in ferrochrome, low titanium ferrochrome, medium carbon ferrochrome and now our latest test based on concentrate, more than 60% chrome content ferrochrome, they bring us also to other customer segments. So it's not only then stainless steel anymore being the customer, but there are other segments. So we see the outlook for ferrochrome quite positive.

Okay. Okay. That make sense. I think in -- sorry, just following on from me quickly. I think in Q2, you guys had talked about a mining tax could be a sort of EUR 50 million hit. Is that still the right number to think about?

No, it's -- so I can be a bit more specific on that. So the mining tax increase now for this year. So last year, we paid about EUR 8 million. This year, we are paying EUR 21 million based on the current premises and volume estimates. So it's a EUR 13 million increase in mining tax. And what does continue in Finland, the parliament has asked the government to look at also at the hybrid model, which would be partly based on royalty and partly then based on the actual result. So that discussion should continue this year.

And then the other item there was the electrification aid. So Outokumpu has been getting in total about EUR 20 million in the electrification aid. So if you put those together, then the impact, I think, right now is about EUR 30 million, EUR 35 million.

Very clear. And then the second question was basically around, there's been a lot of headlines around ETS reform or potential extension of free allowances. As I understand, that would potentially mean CBAM also needs to be drawn out to adhere to WTO. Given your emissions are already well below international levels, you're covered for allowances out to 2030. Do you see the extension of free allowances as a bit of a risk for stainless? Or do you think it's kind of not too material?

No, I don't -- at least from our perspective, I don't see that as a big risk. Of course, there's a lot of discussions going on. If my understanding is correct, there will be some kind of a review now in the summer of the EU ETS system. But I think that's also about should it be extended to some other sectors where it's not now yet. So we will definitely hear more about the review and what is being reviewed in the summer. But I think it is -- I think European Commission is still quite determined to their emission reduction targets. And of course, EU ETS system also goes a bit hand-in-hand with CBAM. So we need to see also the effect in the CBAM going forward. But I think it's definitely a competitive advantage to have been an early mover in this area in the case of Outokumpu.

And maybe to add also with smart decarbonization here as well. And I think Kati has mentioned one example, how we think about ecosystems and partnering and making the reduction in emissions as economically feasible.

The next question comes from Anssi Raussi from SEB.

I have a couple of questions left. First about CBAM and safeguards in Europe, like how do you see the situation if you think about scrap value chain, like if the end user demand is declining due to these new regulations, even though it would be positive for your stainless side. But do you think that scrap suppliers would face some problems, for example?

Well, Anssi, if I can take that question, then I think that -- well, overall, there is then a stronger demand for stainless steel scrap. And this is what we do see then in the market as well. But overall from -- I can only speak from an Outokumpu point of view that through our partnerships with our suppliers being very well covered and also going forward.

Okay. That's clear. And then about BA Europe, like what kind of delivery times you have right now? Because I think your contracts are so-called all-in price-based contracts. So how long it takes before we see this positive changes in market environment in your P&L?

Maybe to start with, not all of our business is on effective pricing. So I would say around 30% of our business in Europe is based -- still based on base plus alloy surcharge and our U.S. business is completely on base plus alloy surcharge. Certainly, we have around 1/3 of our annual expected volumes under contract. These contracts being concluded by mid to end of last year. And as such, there is naturally a certain delay in here. But we should see a gradual improvement here from the first quarter in business area Europe.

The next question comes from Dominic O'Kane from JPMorgan.

I have 2 questions. So first, could you maybe provide us with an update on your current thinking for Tornio? And then second question is a related question. If we think about cash flow, you've had 2 successive years of negative calendar year free cash flow. You've done a good job on working capital management, but it may be that is going to be difficult to continue and replicate going forward. And so if I think about what you said at the Capital Markets Day, you didn't provide us with any forward-looking guidance for 2026 CapEx. So I just wonder if you could maybe just help us with those building blocks. Are you able to maybe give us an update on 2026 CapEx? And how should we think about the free cash flow potential in 2026?

So if I leave the cash flow question to Marc-Simon, I could maybe comment on Tornio. So you're referring to this potential investment in the annealing and pickling line in Tornio. We said in the fall when we were discussing the mining tax topic that is currently on hold. So now we know what the impact on the whole Kemi Tornio setup is cost-wise without this electrification aid and the mining tax. So what we are doing currently, we're updating the investment case and also, of course, looking at is there is there other ways? Are there other items we can take in so that this investment case basically reaches our hurdle of 15% of ARR for foundational investments. So the investment case is still valid and it's being reviewed now with new assumptions as some of the cost assumptions have changed, and we also have some other ideas what more we could do. So it's under review currently.

Yes. And if I then continue on the cash flow question, first of all, during fourth quarter, as mentioned earlier, our ability to reduce working capital was. if I think about the first quarter, yes, business activities do increase, as we mentioned before, our volumes. Then we have also seen the nickel price increase, but expectation at the moment is that working capital will only increase moderately into the first quarter of this year. We do think then for the entire year, I mean, that pretty much depends also on how business activities and prices further develop that we, as a management team, are very committed in focusing on improving our working capital and particularly inventory efficiency now during this year and have dedicated programs in place.

Coming back to your particular question around CapEx guidance for this year is around EUR 200 million. And then if we think about financial expenses, pretty much in line with what we have seen this year around, I would say, EUR 50 million. In terms of taxes, I would add or take similar levels as we had a cash out in this year according to our plan. And then we do have restructuring provisions here as well, which we should take into account and which we have been reporting earlier as well.

Could I just ask on the EUR 200 million CapEx, does that include anything for Tornio?

No. So if we look at like a bigger investment on the AP line or we would look at more transformative investment in Avesta, no, it does not include that. And maybe as a reminder, we capped our CapEx this year also because of the financial performance cash flow to EUR 160 million -- and I think we arrived at EUR 145 million. So that was also how we were managing the cash. So I think EUR 200 million is more going on the ongoing initiatives, what we have, normal maintenance that we have. And then potentially other investments, they would probably not start in '26 yet impacting our CapEx, but later.

But the announcement on the CapEx in the U.S. with new proprietary technology, the USD 45 million, that's being part of the EUR 200 million as well.

Correct.

The next question comes from Maxime Kogge from ODDO BHF.

So my first question is on dividend because there have been some expectations on our side, on the sell side, that you would at least roll over the existing payout and you have cut it by half. So it's fair considering the other constraints you mentioned. But going forward, how should we think about your dividend payment ability? Is it fair to assume that as long as you have not been back to this ratio of net debt to EBITDA of 1, which is your long-term target, dividends are going to stay quite limited?

Well, I think our kind of target in the dividend area is, of course, to continue to deliver stable and growing dividend over time. We just have to maybe remember in what kind of cycle we have been and what kind of financial performance we have had -- so that consideration is there. And then the other consideration is, of course, the financial health. So our balance sheet and then also keeping this room for potential investments in transformative growth. So those are the aspects that we are considering in the dividend policy, and that's why the proposal now of the EUR 0.13 dividend per share.

All right. Second question is on the nickel price. So price of nickel has surged by 20% over the last 2 months. So when we ask a question to your main competitor, they were relatively dismissive of any impact since they procure most of the nickel needs from scrap. That's the same for you. But still, would you believe that there could be a positive price volume impact associated with higher nickel price in the sense that distributors in such phases of higher nickel prices tend to rush to buy material. And yes, would it apply in particular in the U.S. where the market is more geared towards distributors, plus you have this pass-through mechanism of the base plus alloy surcharge, which is working quite well unlike in Europe?

Yes. To answer your question directly, with the higher nickel price, also we expect an improvement here on the price level and also within our margins.

Okay. But you don't see any volume impact associated with that, do you?

We do need to see here really a recovery in the underlying demand, certainly with CBAM, as mentioned earlier, and then let's see safeguards coming in that there is a shift in -- from imports to domestic producers, but we definitely need to see how the economic activities are recovering.

Okay. Fair enough. And just last one is on your long-term EBITDA target. That's also in light of comments made by your main competitor around its own long-term target of EBITDA that it dropped from EUR 800 million to EUR 700 million to EUR 800 million, and that was despite a big acquisition made in between. As far as you're concerned, you have a very ambitious and very high long-term EBITDA target at EUR 750 million to EUR 850 million. That's an improvement over the existing EUR 500 million, EUR 600 million. I understand this target is based on the quite high base prices, plus you have the benefit of this new investment. So how comfortable are you with this target given the fact that prices remain quite depressed at this stage, plus consensus has expectations at a much lower level, including for '26 and '27?

I think you mentioned yourself here the pricing environment right now, and this is -- and also the long-term target here as well. And this is how we should look at this as well. We also said this is then the target looking through the cycle here as well and having the improvements as we communicated during the Capital Markets Day through investments in the foundational business here, which is then building up here the improvements. And yes, we're still comfortable around this level.

The next question comes from Bastian Synagowitz from Deutsche Bank.

I have 2 quick ones left as well, please. Maybe firstly, on Americas where you've been doing quite well. You mentioned the U.S. MCA agreement. I guess we don't know what the outcome will be, but could you briefly remind us on the sensitivity to your numbers in the current price and margin environment should the U.S. tariffs be dropped completely? That is my first question.

Yes. Maybe I'll start with that. I'm not so much talking about the whole USMCA for instance, with Canada, but more referring to the negotiations and the sentiment we have from the negotiations between Mexico and the U.S. So I think they've been constructive, quite positive. Of course, we don't know the outcome. But what was done in Mexico now as well, Mexico imposed 50% tariff for Asian imports as of beginning of the year. That is, I think, something what you have been also asking for. So that has happened. That gave us some opportunities for price increases. And it could also support then demand to a domestic supplier in Mexico, which we are the only one. But of course, there is a tariff now between U.S. -- from Mexico to U.S. of 50% for steel. And it doesn't take into account whether the steel has been melted in America or not.

So that is, of course, an upside for us if we can also use the Mexican capacity for the needs of the U.S. market because the Mexican market currently is very weak. It can recover with some of the measures somewhat, but we would very much in this situation, want to use the capacity more for the U.S. demand as well. So therefore, if this tariff would become lower or disappear, of course, that would support our business clearly.

And could you maybe just give us like a quick understanding on what the sensitivity is if that 50% tariff would be dropped, just looking at the cross shipments from the U.S. into Mexico and vice versa?

Well, I think in the past, the shipments have not been so very high because the Mexican market was also doing well. So probably 10,000, 15,000 tonnes. But we have, of course, more capacity in Mexico. So should the Mexican market stay weak, which I, of course, don't hope and the tariff would not be there, it would give us opportunities to bring even bigger volumes to U.S.

Okay. Understood. Okay. Great. And could you just clarify the Mexican tariff, does that also cover at least part of your client sectors as well on the downstream side?

So yes, so there's a derivative list, and there are certain products then on the derivative list where there is no tariff that are made out of steel. I think refrigerators happens to be one of them. But it's a bit of -- it depends what is on the derivative list and what's not on the derivative list. But everything that's in the form of raw material as steel is tariff by 50%.

Okay. Got you. Thanks, Kati. Then lastly, are there any big items for us to keep in mind for 2026 on the maintenance side? I guess there's probably the usual, but I don't know, is there anything extraordinary here? And then also anything similar, any one-offs like the ERP, which you had last year, which we should just factor in?

No. No, nothing major.

The next question comes from Igor Tubic from DNB Carnegie.

I just have 2 follow-ups. You mentioned that the mix in Americas improved. I just wonder what we should expect in terms of Q1 for 2026, both for Americas and for Europe? And then also if you can comment anything about in what segments you saw an improvement, so to say, in the mix in Americas?

Well, I guess, we have to start by saying we don't guide on the PA level for the Q1, but you saw our guidance of improving volumes in stainless steel between 20% to 30%, so that goes both -- it's combined Europe and Americas. I think that is an answer on there.

And then if we look at the -- I could maybe generally answer that if you look at the end user segments that are booming in Americas, data centers is one, electrification goes forward. But I think this is also very much about our own work. So we are digging deeper to different customer segments where we see opportunities for our product portfolio. So we are becoming more of a market maker in the segments where we want to grow. So this work, I'm also expecting to bring some results in the coming quarters.

And maybe to come back a bit more on the first quarter, I think the best way really to look at our first quarter and the guidance is, as we said and stated in the guidance, it's the volume recovery. There are, of course, a couple of offsetting effects left and right that the major driver is really the volume recovery in the first quarter.

The next question comes from Joni Sandvall from Nordea.

One quick left from me. Could you give -- I think this is a bit of -- you answered partly, but could you give any indication how your lead times have developed now under the CBAM game effective 1st of January. So have you seen increasing order books for yourself? And any indication of how lead times have developed after this?

Yes. Lead times have developed. Lead times have improved. And right now, we're middle of February, and we have already started booking into the second quarter, April into May.

Okay. And maybe a quick one also just to confirm, was the ERP rollout completed already during the Q4?

Well, it is a huge project in itself. We talked about the difficulty and the implications from the supply chain solution as part of the ERP program. And the aftercare will still continue into the first quarter of this year. But yes, we expect then by the end of the first quarter to have then a stable situation going forward. So being temporary.

There are no more questions at this time. So I hand the conference back to the speakers.

Thank you very much for your active participation today. And I think this, in principle, concludes our session today. Like I said a while ago, I think we are really confident about our future going forward. So we will look at growing this company. We will gain the resilience, and we will work hard to improve our financial performance. So thank you very much for being with us today and talk to you then again in our -- when we talk about the Q1 results in the spring. Thank you very much.

Thank you.

Good afternoon, everyone. Welcome to Outokumpu's Third Quarter 2025 Results Webcast. My name is Ulla Paajanen, and I'm currently in charge of Outokumpu's Investor Relations.

Our speakers today are CEO, Kati ter Horst; and CFO, Marc-Simon Schaar. Kati will explain us about the highlights of the quarter, progress of our EVOLVE strategy, as well as the fourth quarter outlook. Marc-Simon will concentrate on business areas and financials.

Before handing it over to Kati, let me remind you about our disclaimer since we might make forward-looking statements during the presentation. Kati, please go ahead.

Thank you, Ulla, and warmly welcome also from my side to our Q3 results call. So today, we'll be talking about the Q3 results and the outlook for Q4 as usually, but I'll be also making some comments on how are we moving forward with our EVOLVE strategy with an important step.

But let's start then with the Q3 results. So our adjusted EBITDA amounted to EUR 34 million during the quarter, and this was very much reflecting the weakness in the European market. If we look at the highlights of the quarter, I could also say that we are really very much now focusing on cost competence on one side and then the transformation on the other side.

If we start with the stainless steel deliveries, they decreased by 11% and mainly due to the very continued subdued demand in Europe. If we look at Europe alone, deliveries decreased by 12% and then the decrease in Americas in stainless steel market for our deliveries was 6%, so half of the Europe.

Then if we look at our short-term cost-saving measures, we are very well on track. So year-to-date, Q3 end, we have now reached EUR 42 million of savings and will reach the promised EUR 60 million by end of the year.

We are also proceeding with our planned restructuring plan for EUR 100 million before the end of 2027. So we have started now collective negotiations in all our key production countries in Europe and are proceeding with those. Hopefully, everything being clear then by the end of the year.

And then the exciting news of today, we are investing about USD 45 million in a new pilot plant in the U.S. to scale up our proprietary technology for low-carbon metals, and I will come back to that a bit later.

If we look at the market conditions now in Europe and Americas, especially through the lens of imports, you can see here that in quarter 3, in Europe, the imports increased to 29%. And this is very much what we've been commenting in the past quarters as well that the tariffs in the U.S. will put more pressure on the European market, and we will see more Asian imports coming in. And this is exactly what you see on the left side of the chart.

Regarding then the Americas imports, we currently don't have the Q3 figures because of the government shutdown. So the only weaker figure from Q3 we have is July, which shows here now an increase to 33%. I would think that the imports probably are bit a similar level in Americas in Q3 as Q2 once we get the numbers.

Then commenting on a group level, the overall picture, you can see that our deliveries were at a low level in Q3. This comes really from the weak market conditions in Europe. We have not lost market share. It is really the weakness in the market.

And then if you look at what is the bridge from our Q2 result to Q3, you can see that it's very much about deliveries, getting some help from raw material costs. And then in Ferrochrome side, we had a bit higher deliveries, but when you translate the U.S. dollar euro rate, then that was now hitting us on the pricing side. And then we had also maintenance stops in the quarter, which impacted the result.

We comment every quarter now on the EBITDA run rate improvement. This is an initiative that started in '23 and we will end the program by the end of '25. So currently, we are at EUR 336 million of cumulative savings and improvements and will reach the EUR 350 million as targeted. Many of these improvements are something that you only will see really coming through in our books when the market conditions improve.

But to highlight a bit what did we -- for instance, what kind of improvements we had in Q3, it's very much about Circle Green -- bigger volumes for Circle Green, where we have a clear premium, and then also some good impacts from district heating solutions. And then in Americas, we had further savings through process optimization in Calvert.

Then to the more exciting news. So you know that in Capital Markets Day in June, we talked about our new technology, and we said that we are looking at the next phase and the investment for that. So now we have made that decision, and we'll be investing in a new pilot plant in New Hampshire in the U.S. to scale up the technology from this daily 1 kilogram production level to 1 tonne.

And here, we are concentrating in the first instance on chromium. So we would be producing enriched Ferrochrome and also chromium metal. And these new production pathways we're looking at for high-purity metals are very much applicable to high-value markets like aerospace, defense and energy sectors. And in the future, then we can also look at other metals, like we said before, for instance, nickel. But now we concentrate with the scale-up on chromium.

And then if we look at a bit what we communicated before, what is the phase we're talking about here. So the lab scale, we spent about 4 years to really arrive at the technology. And now we will want to show that we scale it up for industrial feasibility and then also so that we have a competitive production cost with this process.

And once we have achieved this, the idea is that this plant would be operational during the first half of '27, then we are in the next step looking at industrialization, probably with a commercial plant with a capacity of about 10,000 tonnes in the first instance and then really taking advantage of the technology in the next step for bigger scale up.

But this is the phase where we are. And now it's time to show that this technology can be scaled up and it's feasible in industrial production with a cost competitiveness. So that's our focus right now in the next phase. So very excited about that.

Then a couple of comments on sustainability and starting with safety. So the news that I'm not so happy about is our safety performance during the Q3. We were fully on track with our safety targets by the -- until the end of August, but we had a disappointing month of September with 6 incidents that involved 9 people, both our own people and contractors. And now our -- very much our target is to get back on track.

So our target level on total recordable incident frequency rate is 1.5, and now year-to-date, we are at 1.9 after the disappointing September, and we have all hands on deck to get back to the performance we are used to.

On the positive side then, we continue to have a very high recycled material content, now 3 quarters in a row at a record high level of 97%. This talks to a very high scrap use and also some other raw materials, which is also good for our sustainability result. And we are also continuously progressing towards our SBTi climate target.

And then the last item here is, we're developing our portfolio for Circle Green. We're getting more customers for that. And I'm very happy to announce that we now have a collaboration with Parcisa. And Parcisa is a leader in design and manufacture of tankers for liquid transport. So very nice to have new customers for Circle Green.

And now I will then hand over to Marc-Simon to go more in detail in our business area results and the finance in overall. So Marc-Simon, the floor is yours.

Thank you, Kati. Good afternoon, good morning, everyone, and thank you for joining us today. It is clear that given the current market environment, maintaining strong capital discipline remains one of our key financial priorities.

Let's start by taking a closer look at our financial position at the end of the third quarter. During the third quarter, our net debt increased to EUR 230 million. And despite the increase, we maintained our strong liquidity of EUR 1.1 billion, supported by a new 3-year term loan. This clearly demonstrates the continued strong support from our lending partners. And in light of the weak market conditions, we are continuing to emphasize capital discipline, particularly through tight working capital management.

With that, let's move on and look at the performance of our business areas during the third quarter, starting with BA Europe. In Europe, the demand from end users remained soft across key sectors, especially in construction and domestic appliances with no real signs yet of any immediate recovery. The European manufacturing PMI showed some improvements in August, but soon fell back to below 50, indicating contraction. The construction PMI dropped even further to around 46.

Distributor inventories declined somewhat, particularly in Germany, but still remain at medium to high levels given the weak demand. Added to that, and despite being positive, ongoing uncertainty around the CBAM mechanism, as well as timing and the final definition of the new safeguard measures has created additional caution among buyers. As a result and combined with a typical seasonal slowdown, volumes in business area Europe fell by 12% quarter-on-quarter.

The higher share of Asian imports now around 29%, also continued to put pressure on sales prices. According to CRU, standard 304 prices in Europe fell sharply by more than EUR 150 per tonne compared to the previous quarter.

The negative volume and price impact was partly offset by lower raw material costs and ongoing cost-saving measures, as well as higher fixed cost absorption due to increased production ahead of the annual maintenance shutdown and the ERP rollout. However, as guided earlier, the planned maintenance activities in business area Europe had a negative impact on our profitability.

Let's now move across the Atlantic and take a look at business area Americas. Also in the U.S. and in Mexico, the manufacturing sector remained in contraction during the third quarter with only a slight improvement visible in Mexico. The increase in U.S. tariffs on steel and aluminum imports from 25% to 50% in early June this year continued to support domestic producers.

However, underlying demand across North America remained subdued. Only the oil and gas sector is holding up somewhat due to the higher energy demand from the increase in data centers and activities from reshoring manufacturing into the U.S. are not yet visible.

With the weak demand, distributor inventory days increased further and above year-to-date averages. Overall, deliveries in business area Americas declined by around 6% quarter-on-quarter, while average prices improved, supported by the tariff changes, as mentioned earlier.

The benefit from higher prices was partly offset by increased raw material costs and lower fixed cost absorption due to reduced production, a deliberate move to balance working capital in a weak market.

Then next, let's look at the performance of our business area Ferrochrome. Globally, Ferrochrome producers in Southern Africa continued to face capacity shutdowns driven by high electricity costs. This led to higher chrome ore export, especially to Asia, where margins are more favorable. In the U.S., new tariffs on the Brazilian imports strengthened the demand for our Ferrochrome products, which are not subject to U.S. tariffs.

In Europe, we have also seen an increasing interest as steel mills are looking for European low-emission alternatives for raw materials, which are subject to CBAM regulation. So the demand for our low-emission Ferrochrome remained solid throughout the quarter with deliveries up by 3% despite the usual seasonal slowdown.

On the other hand, sales prices declined, largely due to a weaker U.S. dollar. Our profitability was also affected by timing differences between foreign exchange derivatives and the realization of the weaker U.S. dollar in sales, as well as higher energy costs and lower fixed cost absorption linked to the seasonal lower production.

With that, let's turn to the group's overall financial position and working capital development. As mentioned earlier, net debt increased to EUR 230 million during the quarter, mainly reflecting lower profitability in a weak market, a few one-off items and our annual insurance premium payments.

Now the one-off items include costs related to the U.S. wage class action settlement as well as foreign exchange impacts from the weaker U.S. dollar. Those stemming from internal currency swaps we use to optimize our cash across the group.

Normally, in a soft market, we would expect a reduction in working capital. However, this quarter reductions were limited as we prepared for our annual maintenance shutdown as well as the ERP system and supply chain solution rollout in business area Europe. Nevertheless, we continue to focus on tight working capital management and preserving our strong liquidity position going forward.

With that, I will now hand it back to you, Kati.

Thank you, Marc-Simon. So let's then move to look at our outlook and guidance for the Q4.

So on the outlook, we said that the group stainless steel deliveries in the fourth quarter are expected to decrease by 5% to 15% compared to the third quarter and mainly due to the market weakness in business area Europe, and the seasonal slowdown in business area Americas that happens in the fourth quarter. Asian imports to Europe still remain high compared to the low demand in the stainless steel market.

Then we have maintenance breaks in business area Europe and Americas as well as the rollout of the new ERP system and supply chain solution in business area Europe. And those impacts are expected to have about -- are expected to have an impact of about minus EUR 20 million on our adjusted EBITDA in the fourth quarter compared to the third quarter.

And then with the current raw material prices, no major raw material-related inventory or metal derivative gains or losses are forecasted to be realized in the fourth quarter. And therefore, our guidance for Q4 2025 is that the adjusted EBITDA in the fourth quarter of '25 is expected to be lower compared to the third quarter.

Moving then forward to discuss and summarize a little bit, what I really want to emphasize that, despite the current challenging market conditions we are now having in Europe and that heavily impact our performance, I'm very confident about our future direction. With the EVOLVE strategy, we take clear steps towards the higher resilience and better performance through cost restructuring and investments in profitable growth that support diversifying both our offering and geographical footprint.

And as you know, today, we announced that we are now investing for growth through the pilot plant for innovative proprietary technology in the U.S. So that's the transformative part. And then on improving our competitiveness, we are trying to implement as quickly as we can this EUR 100 million restructuring program to get the structural savings in and to help our competitiveness, especially in Europe.

Then in Americas, we see Americas as an interesting growth market, but rather beyond standard stainless steel. And the change I have made in Americas' management is that we have Johann Steiner, who has been also leading our strategy work at Outokumpu now appointed as President in BA Americas, and he will be an excellent support to the team there to work further on the Americas strategy. And our recruitment for Johann's successor is ongoing in final stages.

Then there are also some positive news from the market, I would say, a bit of light in the end of the tunnel when you look at the European market. We are very happy and very supportive of the strong proposal that European Commission has made for more effective safeguards. And I think the important items there are that the quotas are halved by nearly half. That the tariffs then on top of the quotas will propose to be in the rates of 50%. And then the principle of melted and poured is planned to be introduced and then we would get these new safeguards latest by the end of -- or by the mid-'26.

So I think the package as such is very strong. Now of course, we are very much hoping and supporting decisions on this still this year, and -- so we get clarity on, is it going to be mid next year or is it going to be, hopefully, also a little bit earlier that we get these safeguards in.

And then the other item that is important for Outokumpu because we are clearly the sustainability leader in the industry, both in Ferrochrome and stainless steel, that we do get a Carbon Border Adjustment Mechanism in place in Europe to ensure that the green transition in Europe can continue the investments that are needed for that. And those who have invested in that finally start getting some benefit out of that, and we can keep this industry in Europe.

So I think own actions, very important, cost competitiveness, investments in growth, and next to that then some of the positive things that we see next year with the safeguards and with the CBAM being implemented.

So I will end the presentation there. And I think then it's time for us to move to the questions and answers.

[Operator Instructions] The next question comes from Tristan Gresser from BNP Paribas Exane.

First, maybe on the quotas. Can you share a little bit more your view on the implementation of those new quotas as they are? And also, are you optimistic about the new quota that could be implemented before July next year? And on their own, are those quotas enough? I mean it seems to me that the issue is more about the prices than volumes. In the past, we've seen imports falling and plunging a lot, but not really helping the market. So would love to have your view there.

So maybe I'll start, and if Marc-Simon you have something to add then you can do that. I think the total package not only that the quota levels will be halved, but then also the tariffs above the quotas, the melted and poured principle, that the measures don't have a definite deadline but will be reviewed. I think the whole package as such, and you cannot move quarterly quota from one quarter to another. There are like many elements in this proposal that I think altogether support and give an impression of clearly stronger safeguards. So therefore, I'm quite positive about the proposal.

And then if you look at the Asian import level is now almost 30% in Europe, this quotas would have that import level to about 15%. And I think that is what we need in Europe to create a level playing field for European producers so we can utilize the capacity enough, otherwise it's going to be closed. So if we want to keep a steel industry in Europe, it's important that these measures are now taken.

And then maybe on the timing, you asked about the timing of the quota here as well. So as Kati was mentioning earlier, the latest being mid of 2026 just before then the current safeguards expire. Now it's very difficult to speculate, and we don't want to speculate really on the timing of it.

I think we have seen a very good proposal by the Commission and now we are waiting here, the discussions also within the member states of the -- of Europe and also within the parliament and then seeing whether we have then also the support from the member states basically.

Okay. No, that's clear and helpful. My second question is on CBAM. What would you need to see in the text of CBAM, whether provisional or final, to really make a difference for your European business next year, given that most of the carbon intensity differential is on Scope 3 with Asia, how optimistic are you that it's going to be implemented?

And also just following up on CBAM, you said that uncertainty around CBAM is putting order activity a bit behind. But what we've seen for carbon steel makers is that CBAM uncertainty is actually pushing more buyers towards domestic producers because of that uncertainty. So I'm just trying to square that out and why this uncertainty that is placed on importers should not benefit you near term?

Yes. I would say -- so first of all, I think it's quite clear, at least from the discussions that we have recently had with the Commission that CBAM will be implemented as of January. What we are, of course, hoping is clarification before the end of the year, what are the reference values and how will it exactly work? What scopes are included. So there are, of course, question marks still, and I think it's also not good this uncertainty for our customers, both on Ferrochrome and stainless steel that there's not more clarity right now.

But CBAM will come. And whatever form it comes, I think it will be supportive. But of course, from our perspective, having all the scopes in it would be helpful for us and even better. But I think even a form that is not perfect is better than nothing. That's how I would see it.

And then if we look at our customer industries, we have, of course, discussed a lot with our customers as well. There is a discussion with the Commission also that how would you compensate them for export business, if I look at our customer side. But I would also say that we have many customer sectors that also support CBAM and actually would want to be included under CBAM as steel-intensive users, so that for instance, in appliances, you don't then get a situation that products are brought to Europe with a much higher carbon footprint and then they have to face that.

So there's definitely still work to be done to make CBAM an effective system. But I think starting it with now is the first step that has to happen in January.

The next question comes from Adahna Ekoku from Morgan Stanley.

I've got 2 questions from my side. So first, just on business area Ferrochrome. Could you help us a little bit here with the outlook into Q4? So we saw higher volumes quarter-over-quarter, but then this was partly offset by the dollar and higher electricity costs. So how are you expecting these factors to trend looking into the next quarter?

So you know that we don't guide the business area. So I will not be very specific. But I think in general, I would say that we see our Ferrochrome business being in a good place and continuing to deliver good result. So quite confident of Q4 on Ferrochrome.

Maybe if I can just add 2 further points to it. Certainly, we see a weak market environment and demand situation from the stainless steel sector. But as we pointed out earlier as well, the demand for our Ferrochrome is solid. So while you see some negative impacts on the one hand side in terms of volume, then the offsetting on the other side here as well.

But then -- yes, then going forward as well, I mentioned earlier, and that is valid for the group, that we are having strong focus on tighter working capital management that will also impact our production then in the fourth quarter and something to be taken into consideration as well.

Okay. That's clear. And maybe looking to 2026 and on CapEx and whether you could provide any kind of early steer here. At the CMD, you outlined the higher maintenance needs. So I was wondering, is there any flexibility here? And any indication as to how much growth CapEx will be allocated to next year given the kind of continued weak backdrop?

Yes. Good question. I think in the Capital Markets Day, I mentioned indeed that our maintenance CapEx going forward at a level of EUR 100 million with some backlog recovery for next year, bringing it to EUR 200 million. But at the same time, also clearly stated that we are observing the market environment, the market situation as well. And we are clearly observing the situation and making the plan for next year.

Right now, as we are, certainly, we will adjust our CapEx, what we have communicated to the Capital Markets Day, taking the weak market situation into account, but we'll come back with further guidance then in our next report.

The next question comes from Anssi Raussi from SEB.

I have a couple of questions left, and I start with your guidance. So you mentioned that you expect some negative impact on your EBITDA for Q4 quarter-over-quarter due to maintenance break. But I think you guided EUR 10 million negative impacts also for Q2 and Q3, so what's the net impact now? And have you ramped up your maintenance activity all the time during this year? Or how should we think about this?

Anssi, good afternoon. We do have had maintenance work in the second quarter, yes, and in line with our guidance. But this maintenance work was towards the end of the quarter. It will also -- or has continued into the fourth quarter as well, number one.

We also see maintenance break in the Americas with our annual maintenance shutdown on our melt shop and other assets in the U.S., which having an impact. And I think in our guidance, we were also talking about our rollout of our ERP system and supply chain solution here as well, which will have an impact on volume on the one hand side, which is already covered on the volume side, but certainly also on our production and the cost level. And these both together is then what makes then the EUR 20 million impact quarter-on-quarter.

And just to clarify that we are talking about net impact quarter-over-quarter.

Yes. So this is a bridge impact, so quarter-on-quarter.

Okay. And maybe my second question on these tariffs in the U.S. So if you look at your deliveries in the business area Americas, I guess it's clear that your average selling price has increased less than the so-called list price if we look at the price data from CRU. So what's the mechanism here like? Does it take longer to see the full impact? Or how does it work?

Yes. Maybe if I comment on that, I think the full impact will be seen more in Q4, I would say. But then we need to also take into account that the Americas market as demand as such is not very strong. There's also new capacity coming to the market, and there's also a mix impact always when you look at the pricing. But prices have increased in Q3, and I think the full impact will be visible in Q4.

Indeed, the full impact is in Q4, but quarter-on-quarter I would not take any significant improvements into account here just to be more cautious and realistic. And then maybe just to add, when it comes to CRU data, I think also here we need to see what is the -- where is the timing difference between order intake and then also the realization of prices as well.

The next question comes from Dominic O'Kane from JPMorgan.

So I have 2 questions. My first question actually follows on from your last comment. I note you, obviously, practice is not to comment on specific business areas. But given the Q4 guidance for shipments and given the pricing outlook, I think it's reasonable to assume we'll see another negative EBITDA quarter for Europe. So I'm just wondering if you could just help us contextualize maybe what you're seeing in terms of pricing currently for Europe.

You've talked to the Q3 CRU comment, which is obviously backward-looking. But have you seen any discernible change in your customer behavior or order book following on from the European Commission safeguarding proposal earlier this month? Has there been any indication that customers are looking to acquire metal sooner than that framework comes into existence? That's my first question.

Maybe if I can start and then you can add, if needed. While we're not in a position to guide on prices here, particularly going forward, I think in our outlook for the fourth quarter, we're talking about a volume decrease quarter-on-quarter in the range of 5% to 15%. And I think the split between Europe and Americas is almost 50-50 here to say.

And we also talked about the maintenance costs and impact from our ERP rollout here as well. As well, we also mentioned that Asian imports are still on a high level. They actually have increased towards the end of the third quarter. And of course, that is also impacting then our business. This is probably as much I or we can say here on the current situation and outlook.

And in line with what we mentioned also earlier is that, yet we do see a wait-and-see attitude still in the market with customers or the industry being cautious around the definition and the mechanism on CBAM and the safeguards here as well in terms of timing. So that needs to be taken into consideration as well, as such no clear signs yet of any improvements, as I mentioned in my part of the presentation.

That's clear. And then my second question, just on net debt stepping into Q4 and the working capital bridge. Given the maintenance, is it reasonable to assume that we would expect to see a higher net debt at the end of Q4 versus Q3?

While we're not giving specific guidance on our net debt going forward, there are a couple of elements we need to take into consideration. On the one hand side, we have paid our second tranche of the dividend in October. I think it was the 22nd of October with a cash out of EUR 61 million.

And in my part, I also clearly stated that we continue to focus on tight working capital management, and this is what we will have in focus in the fourth quarter. I also mentioned the impact on our profitability as a result thereof. And having said that, so with the current assumptions, we don't expect a major increase in net debt in the fourth quarter.

The next question comes from Joni Sandvall from Nordea.

Maybe a bit of follow-up on the quotas that we have been speaking already. I know it's a bit early looking into '26, but is there -- do you see any risks of import surging ahead of potential implementation of these quotas?

Maybe if I answer that. There can be some, but let's remember as well that the delivery times are still quite long also from Asia. I think the most important thing now is that the decision comes this year and the timing is communicated and the decision comes. And I think that will then already be helpful earlier than when actually the quotas come in place. Because you need to take into account then what's the moment that your deliveries would actually be on the European border. So there can be some surge in the Q1 or something, but I would think the most important thing is now we get the decision and clarity and then that will start impacting markets.

I think most important is really lead times.

Yes.

On the one hand side we do have a quota system still in place. It's not sufficient, I know, I understand, and that's what we are reporting for many quarters and years right now. But the window of opportunity is rather short.

Okay. That's clear. Then a question related to the pilot that you announced today. You are speaking already towards end of this century the 10-kilotonne industrial size production. So could you give any indication of what kind of CapEx we could be looking for this kind of industrial facility?

It is very, very premature. Also depends where the investment would be. So no, I cannot give a figure. I can say that it's more than EUR 45 million that I can say for the next phase. But I'm sorry, I can't give a better number right now. So that we will need to really look at then more detailed, because we also learn now in this process about what would that kind of investment look like when it comes to machinery and setup. And where we would invest, would it become kind of being part of our Ferrochrome plant or somewhere else has also influenced. So it's too premature, unfortunately, to comment on that.

Yes. That's clear. And then lastly from me, the ERP rollout that you have been mentioned many times and the supply side solutions. So could you give any indication, have you completed this? Or have you faced any interruptions on that front?

Well, it's quite a sizable project, I must say, with -- we started basically a couple of years back in Germany and also in Sweden. And now we have our largest site in Tornio, Finland. And with that rollout, we're closing the loop, so to say, and have all of our assets or the majority of our assets on the same platform, which provides certain opportunities and advantage for us.

Having said that, we are -- we have started the rollout at the beginning of the quarter, and it has been going in the size and magnitude of these kind of projects relatively well, and we're still in the process of rolling it out.

Okay. And lastly, maybe a quick question on the Ferrochrome and the FX impact on the profitability. Now here in Q3 you were speaking about timing impacts there, but could you give any indication how much that was?

Yes. I think the impact is around EUR 8 million quarter-on-quarter. So you have a positive impact in the second quarter of EUR 4 million from the derivative and then the realization in the sales price, then the negative EUR 4 million impact in Q3. So the delta is around EUR 8 million.

The next question comes from Maxime Kogge from ODDO BHF.

My first question is on Ferrochrome. So we have seen actually quite significant cutbacks in South Africa. I think Merafe talked about a 50% decrease in the own production year-on-year in 2025. So I guess that opens some volume opportunities for you. Do you expect to benefit from that perhaps not in Q4, but further ahead? And do you see room to get back to nameplate capacity in Ferrochrome because you're currently running at below 80% there?

So maybe I start by saying, yes, we do see that we do benefit from that situation. And I think the way it shows currently is that we are getting new customers. We have more trial orders. And even though there may be -- there have been some rumors on the market one of the producers probably coming on stream in February, at least for a short time, I think the customers maybe are not trusting that fully. So I think going forward, we see strong demand for our Ferrochrome. And as you know, there is still capacity to be utilized. So we are somewhat flexible in that, and we'll follow how the market develops.

Now Q4, our focus is to make sure that we prioritize cash. So we will also make sure that our inventories come down also in Ferrochrome. But we have opportunities to increase the production when the market needs that.

Okay. Second question is on your chrome investment. I was curious to understand why you had chosen the U.S. for this investment actually because the raw material will come from Europe. So isn't there the risk of tariff impact associated with this decision?

So here, we are still in the pilot phase what we are talking about now for the coming 2 years. We are still talking about scaling up the technology. And our scientists that have been working on the technology for 4 years in our lab close to Boston, that's where they are. And in this phase it doesn't really matter to be close to the metal where that comes from. In the next phase that would be different depending on what metal you use. So in this phase, I think it's more important that we can use the capabilities and the knowledge to build the Phase 2 plant, and it's handy for us to have it close to the lab in the U.S. So that's the main reason it's in U.S.

Okay. Makes sense. And just the last one is on your U.S. strategy. So you seem to be considering rather the high-end segment of the market and try to get away from the mass market. But I found that curious given that one of your competitors is precisely investing in that segment, plus given the lower import pressure that also opens some opportunities there for lower-end products, yes. So any light on that would be helpful.

No, I think we've been just kind of clarifying it that we are not necessarily looking at increasing our capacity in standard stainless steel in U.S., but looking at how we can develop our portfolio, for instance, in Calvert to the higher-end products or do investments or acquisitions that support our strategy to more -- to advanced materials. So our feasibility study on high-nickel alloys in Avesta is still ongoing and progressing well. And if you, in general, look at that kind of products, they travel quite well in the world.

Of course, there are tariffs now in the U.S. Will they be there forever? It's a global market for that kind of product, so I think we definitely have interest for that kind of markets also in the U.S. And then developing our technology, there are probably different paths that could be for Europe, could be for U.S. So we definitely continue exploring the U.S. market and continue with our strategy work.

But I think one thing we have defined if we just add capacity in the standard stainless steel, we are not transforming this company. So that's, I think, is a clear sign that we are looking at different kind of products.

The next question comes from Meet Mehta from Barclays.

So I have one question. So in the presentation on Slide #23 for BA Europe, you are saying that there was a positive raw materials impact. But if I look at your press release, it is saying that there was a raw material related inventory losses of EUR 4 million. So what am I missing here?

The raw material impact is -- our raw material costs, the EUR 4 million, EUR 5 million impact, I guess you're referring to is the net of timing and hedging effect of buying alloys basically. So the difference between when you buy and when you sell. This is the timing impact and then netted by your hedging activities.

So that you are considering under this line item, right, the net timing of hedging, right?

This is under net of timing and hedging, yes.

Yes. And I've -- a second question is on net debt. So I mean, this, I mean, as you have said, right, this was a sudden increase and even if you try for this type raw material -- so is there a chance that we might see a decrease on the net debt side? Or should we consider that it will remain in line with EUR 230 million?

I think the latter one, as I was mentioning earlier before. So remaining around the current level.

The next question comes from Bastian Synagowitz from Deutsche Bank.

My first one is actually also a quick follow-up on the situation around the, I guess, the ERP and the maintenance costs. So do you expect that to possibly drag into the first quarter as there are any other maintenance break coming up? I guess, you had a very high intensity of maintenance costs this year. And clearly, it makes a lot of sense to do those when the market is weak to be ready whenever the market does come back.

But I guess, just for our purpose, wherever you've got the visibility, if you could, I think it would be very helpful for you to flag these things a little bit earlier. I guess, the ERP side, at least, would generally have caught you by surprise. But first of all maybe if there anything which comes and drags on into the first quarter, if you could share that with us, that will be great.

Sure. Right now, as far as we can see, it does not drag into the third quarter, to answer your question. And then maybe on the ERP rollout, this is also something which I mentioned in the last interim or webcast here as well as part of our working capital development.

But now going forward, with maintenance and then also being in the U.S. and Europe and the ERP rollout all in one quarter, clearly know the impact in Q1. So these are really one-off items, so to say, if you compare quarters with each other.

Okay. Very clear. The second one is on CapEx. So I guess in the release, I guess you stated that the EUR 200 million investment into the annealing line is under review. Now from my understanding, a very large part of the targeted EUR 100 million cost savings was actually tagged to that. So what does this mean for the cost savings? Do you think that you can fully compensate for that somehow and find different areas of savings even if that investment does not happen? Could you maybe just talk about that? And also maybe if you have any visibility already on how much cost savings contribution we can pencil in for 2026?

Yes. So the -- Bastian, the EUR 100 million does not include -- is not depending on the AP 1 investment, so the annealing and pickling line investment in Tornio. So that is not included. The EUR 100 million are coming from other measures such as streamlining, delayering layoffs, reduction in positions, other quality and efficiency improvements.

Got you. Okay. So that stands totally separate and the EUR 100 million target basically is still fully intact.

Yes.

Absolutely. Absolutely.

Perfect. And then just also coming back to, I guess, the most cryptic part here, which is around CBAM. And of course, it does seem like the situation is still vague with regards to the benchmarks, et cetera. But I guess, we're just a couple of weeks away really from, I guess, when it starts. And I guess, you must already be discussing the current order book.

So I'm wondering, how do real-life discussions on that front really look like at the moment? So do you start to reflect this in Q1 already with customers? As Tristan said earlier, in carbon steel, we can see that happening. And if the -- if whatever impact comes and even we don't know how much it is, but there will be something, I guess, there must be some increment also on the pricing side. So even without going into any details, I mean, could you just say that you're basically looking a little bit more confident here into Q1 pricing? I guess, you've been always a bit more confident on Ferrochrome than stainless actually. So maybe you can start with Ferrochrome first here.

So maybe I can come back on your question on CBAM and maybe repeat a little bit what I said. So I think there's a lot of confusion and uncertainty among our customers, whether it's Ferrochrome or stainless steel, what it actually means. And what we are missing, we are missing the clear message on the reference values. And that's why we are really hoping that we would get more information now before the end of the year. And based on our latest discussions with the commissioner, for instance, that we are expecting that there would be more information before the end of the year.

So I think that would clarify more the situation to our customers. Of course, we try to educate our customers, how does this kind of situation work, but we don't have the reference values from a Commission yet. So that is the uncertainty on the market. I think there's no uncertainty that CBAM wouldn't come, but it's just what does it exactly mean in different products and what scopes are included, so that is still the uncertainty.

But we have not seen -- and I think because of this uncertainty, we have not really seen it yet influence buying behavior, for instance, now in the end of the year. And maybe that's also reflected with a weak market, our customers also doing their cash management. But of course, it should support pricing going forward.

Yes. Pricing and lead times are very short right now with a weak market environment.

Okay. So it's not yet in that sense reflected. But how do you -- how will you treat this from your end at the moment, given the uncertainty? Do you just -- would you just, for example, would you just put in the flexible component there in your pricing discussions, whatever the outcome is in the course of the fourth quarter?

I don't think we are in -- we want to discuss our pricing strategy at this moment. So sorry, I can't answer that.

The next question comes from Tristan Gresser from BNP Paribas Exane.

Just on the downstream project in Tornio that's been put on hold. Just wanted to confirm with you the status of the 2 lines in Krefeld, they're shut or not.

And also in Q2 already, you shared some estimates on the negative impact on the mining tax in Finland and the removal of the state aid on energy. Can you now confirm those negative headwinds for next year?

No, we cannot confirm them yet. The discussion is ongoing. That's a proposal based on which we have commented. And we are, of course, discussing with different instances in Finland. The proposal is now in the parliament, and it's a big issue for the whole mining industry in Finland, not only for Outokumpu.

And why the AP 1 investment is on hold is that if this tax impact and electrification removal comes, all that together, of course, impacts also our mining cost, Ferrochrome cost and therefore, also then the stainless steel cost. And then our calculations for the AP 1 investment, comparing it also with Krefeld and the cost position will need to be looked at again. But we don't have clarity yet whether this proposal will hold or not. So that's why the investment decision is on hold.

Krefeld

Yes, Krefeld, of course, we have -- it's linked to the investment decision. So we will wait with the investment decision to see what happens.

Yes. But again, I think very important to clarify that those -- the impact or the improvements from such investments are not included in the EUR 100 million restructuring measures, which we have. They still hold, and we are very confident to get those also, as communicated earlier.

Okay. So the government can still change course and it's still in parliament. And for the stated, on energy, how much of a benefit was it last year, or even this year? Usually, do you receive in Q4, Q1? What was the number? And is it in Europe EBITDA, Ferrochrome EBITDA? How does it work?

In Finland, it's about EUR 20 million, which is divided between Ferrochrome and stainless steel. But on Finland level, on group level, it's about EUR 20 million annual.

Yes, from a cash impact and half of that with a P&L impact and the other one then requires investments into decarbonization.

Okay, that's very clear. And maybe last question, the Avesta melt shop, is the decision to be made still before year-end? Or can it be pushed to early 2026?

Well, we have progressed really well with our feasibility study. So that starts to be ready. But I think we still are looking at different options. So let's see what it looks like. I would think more probably next year's topic also given the current market environment.

Tristan, I need to qualify, I think, not 100% sure in which way I said it. But the P&L impact is EUR 20 million, the cash EUR 10 million because you need to invest into decarbonization, just to make that sure, clear that we're on the same page.

There are no more questions at this time. So I hand the conference back to the speakers for any closing comments.

So thank you very much for joining our Q3 call, and thank you for being so active with very, very good questions.

So market conditions in Europe continue to be challenging. That's something we have to deal with. That's why we are driving our cost restructuring plan to improve our competitiveness. At the same time, we are also taking steps with our EVOLVE strategy and investing in the pilot plant in the U.S. to develop our technology in enriched Ferrochrome and chromium metal.

So thank you very much for joining and then talk to you again when we have the Q4 result ready. Thank you very much.

Thank you.

Good afternoon. Welcome to Outokumpu's Second Quarter 2025 Results Webcast. My name is Ulla Paajanen, and I'm currently in charge of Outokumpu's Investor Relations. With me today are our speakers, CEO, Kati ter Horst; and CFO, Marc-Simon Schaar. Kati will tell us about the highlights of the quarter, our strategy development and the outlook. Marc-Simon will concentrate on financials and business areas.

Before handing it over to Kati, please let me remind you about our disclaimer since we might make forward-looking statements during the presentation. Please, Kati, the floor is yours.

Thank you, Ulla. So hello, everyone, and welcome also from my behalf on our Q2 results call. Before I go forward and dive into the results of the Q2, I would like to give a couple of comments on the current trade environment and how it impacts Outokumpu. So if we start with the U.S., EU trade agreement, on stainless steel and what does it actually really mean for us? So first of all, I would like to start by saying that if you look at our European deliveries, only about 2% of our European deliveries have traditionally been exported to the U.S. So from that perspective, directly to Outokumpu, it's not such a big issue.

Then on the other hand, we are a local player in the Americas and the tariffs protect our business in Americas. But then if you look at it from an European perspective, what the indirect impact is in this very weak demand environment, then when we couple that with low-priced Asian imports that have increased and then the European steel industry can't export the way it used to export, then of course, that has put pressure on Europe and it puts really pressure on the capacity utilization what we're having. So the indirect impact is bigger.

Then it's still now uncertain what the future exactly will be. We currently, after the trade agreement, have 50% tariffs still on steel and aluminum. There are different voices, maybe a quota system underway, but I have at least not heard that being confirmed from the U.S. side. So we need to follow them and see what happens. Then on Mexico and the U.S., we are expecting announcement on the deal agreement at some point of time. As you have seen in the press, now almost daily, there are announcements of different agreements between U.S. and different countries. So I would think that Mexico U.S. agreement also comes in the coming weeks.

And there, we are, of course, hoping that the tariffs for steel would be lower or then at least that the [ melt it and pour ] principle would somehow be applied. And then, of course, what we, in the end hope is that actually the tariffs would come on USMCA borders and not between the countries in North America. Then maybe still commenting also what's going on in Europe, what is EU Commission doing as part of the Steel and Metals action plan. There, I think the most important thing right now ongoing is that we are looking at the new safeguard measures that would replace the old ones that expire in anyway, end of June '26. And that consultation process now is ongoing with a deadline of 18th of August.

And then I think the expectation is that at least latest somewhere in September, as the commission has promised at least, we would hear what the new trade measures would be. At the same time, the commission is looking at CBAM. There are some discussions if we could include some steel-intensive customer segments in the CBAM and then how do we work with the possible loopholes. And there, we should also hear something before CBAM carbon border adjustment mechanism comes in force in January '26.

And then the third one, I think, where we're also actively participating is creating lead markets in Europe for sustainable steel, environmentally green steel, and that's about defining the environmental criteria that would be used for carbon and stainless steel and the thresholds. So there's a lot of important topics on the table, but the outcomes and the timings are uncertain. And therefore, we can not just wait and kind of see when these measures come in place, but we need to really take our own action in this difficult market environment in Europe.

If we then turn to our results and commenting on that. So our result improved to EUR 75 million during the second quarter, and the stainless steel deliveries increased by 3% on a group level, 2% in Europe and 7% in Americas. As I said, the uncertainty of tariffs, geopolitical tensions actually caused additional uncertainty during the quarter, and we saw this also in the way our customers were reacting to the market conditions. What I'm very happy about our safety result improved to 1.2 TRIFR rate and our recycled material content was very high, remaining at 97%.

And then if we look at our short-term cost saving measures, we are very well on track with that. So after the first half of the year, we delivered now EUR 29 million when the target has been until now EUR 50 million, and we are increasing it to EUR 60 million. Then we also, during Q2, launched our new growth focused strategy EVOLVE, and I will come back to some comments on that a bit later.

As you can see from these pictures, the U.S. steel tariffs have lowered the share of imports to the U.S. And at the same time, especially Asian producers have increased their share in Europe. And this is exactly what we said earlier that would happen with this 50% tariffs. And in addition to this, then we have a lot of Indonesian slabs coming to Europe, I think the highest volumes probably being now exactly in Q2. So this just underlines the importance of having and creating a level playing field for European producers in the steel markets.

If we then move forward, I would like to comment a bit on the EBITDA bridge from Q1 to Q2. So we went from EUR 49 million to EUR 75 million. And the key contributors here were the higher deliveries and lower raw material costs. We also had some positive impacts from the net of timing and hedging as well as our cost serving measures -- cost saving measures that we've been executing all the time. Then a comment on ferrochrome. Ferrochrome continues to have a robust result, I would say. But in Q2, the result was driven by somewhat weaker U.S. dollar, as we all know, and then higher maintenance cost.

Then you know we've been running this EBITDA run rate improvement program with a target to achieve EUR 350 million by the year-end this year. This program was started in the beginning of the Phase 2 strategy and now then comes in the end of this year. And if we look at where are we now after Q2, so cumulatively, we have delivered EUR 328 million of run rate improvements. So we are well on track to reach this EUR 350 million target by the end of the year. And especially then commenting on what did we deliver during the Q2, we delivered EUR 50 million on this program in Q2, and the impact was mainly coming from 2 businesses, Americas when it has to do with optimizing our route to the market and yield improvements. And then in Europe, it was about our product portfolio optimization so that we could efficiently use our scrap.

And then let's look at the safety and our safety performance -- safety and environmental performance. So I'm very, very happy that we are back on track on our safety performance after a bit more difficult Q1. I would say that this cumulative result where we are now at the first half of the year, TRIFR, so total recordable incident frequency rate of 1.5, it is really world-class level in process industry. Of course, the ultimate target is 0. Every incident is one too much, but I have to say I'm happy about this performance.

Then also, as commented earlier, our high raw material -- recycled raw material content at 97% is really helping us also to work towards our SBTi targets, and it's also a good thing from a cost perspective. Then we also -- during the Q2, we got the reward of being in the 25th place in the Corporate Knights' Top 50 list in Europe. And we are advancing very well towards the carbon neutrality regarding our Kemi mine by the end of this year. Commenting then a bit of Circle Green, our very green steel product with more than 90% lower emissions. We have now announced a new partnership with Alstom. And there, we are delivering our low emission Circle Green for their newest range of metro cars. And this is actually one of -- this is our biggest Circle Green deal in the mobility segment. It's a nice way to highlight as well that this is a good area, for instance, trains where the Europe could really develop the lead markets for green steel, for instance, through public procurement.

Then before I hand over to Marc-Simon, I'd like to very shortly revisit the key messages from our new EVOLVE strategy that we presented during our Capital Markets Day on 11th of June. So as part of the new strategy, we are really targeting on increasing the value of Outokumpu by driving the cost competence in standard stainless steel, and that goes both for Europe and Americas, our current business. And then we are looking for profitable growth in areas where there's a higher growth percentage, where the margins are higher and there's less cyclicality. And that is very much then also about advanced materials and alloys. And then we have talked about our new technology that absolutely can revolutionize the way we think about metals and how we could produce green metals. And there, we are also taking steps forward.

Important from a shareholder perspective, we are committed to hold our strong balance sheet. And next to that, we are also focused on the shareholder returns. Maybe one comment on capital allocation. So we have classified our businesses either to foundational or transformative, and this guides our capital allocation. So in our foundational business, standard stainless steel, we are not looking for growth. We are looking for investments that improve our cost competitiveness, which you can also see it's very needed in the European environment. And then the transformative investments are for growth.

And if we look at then the key initiatives we have announced in the EVOLVE strategy, we're proceeding well with those. And just as a reminder, on foundational business than stainless steel, it's about the Tornio investment, where we are looking at the new annealing and pickling line. It would bring profit improvements in Europe through efficiency, lower energy cost in the North, and then we would take 2 lines down in Krefeld in Germany. Then we are ongoing Avesta a feasibility study where we're looking at high-nickel alloys and investment in the melt shop. So that's ongoing. And we are preparing in U.S. for the pilot line regarding our new technology and next step in developing it. And then on Americas growth, I would say it's these 2 areas, Advanced Materials and alloys as well as the new technology where Americas growth would also be based on going forward when it's beyond the stainless steel.

And then I think it's time to discuss the financial position and more details of our different businesses. And Marc-Simon, the floor is yours.

Thank you, Kati. Good morning, good afternoon, everyone, and thank you for joining us today. Given the times of uncertainty, financial resilience continues to remain our top priority. As such, I'm happy to report that our balance sheet strengthened with our leverage ratio improving to 0.8 from the first quarter. Our net debt improved despite the dividend payment, thanks to the conversion of our convertible bond and a reduction in working capital, supporting a positive cash flow during the second quarter. Our liquidity remained on a strong level of EUR 1.1 million and our capital -- our CapEx estimate for the full year of EUR 160 million, as communicated earlier, still remains valid. Now going forward, we will continue with our focus on capital discipline given the weak market environment we're currently operating in.

Let's now have a look at the performance of our business areas. The demand from end users in Europe remained weak across key sectors with no signs of immediate recovery. The manufacturing PMI improved somewhat in Europe, but still being below 50%. Now when we're looking at the different segments, first, starting with the construction, be it private infrastructure or industrial projects, it is a still weak environment despite lower interest rate levels and improvements in that sector are still to come. Also, the demand in oil and gas and process industry, especially on the chemical industry is weak due to the uncertainty and outlook as well as the cyclicality, especially in the oil and gas sector. The demand for automotive and appliances was stable during the second quarter, but still on a low level. And in appliances, we saw some demand increase 3, 4 months ago, but that was not sustainable.

On a more positive note, the demand related to the energy transition is stronger, same for aerospace, defense and nuclear projects on a global level. Distributor stock levels have increased and combined with rising uncertainties, the demand remained low and only limited to immediate needs. At the same time, imports increased, as Kati pointed out, and are on a high level, especially compared to the European demand situation. The low demand and high level of Asian imports have put pressure on prices, which have been notably lower compared to the prior periods. The improved profitability in BA Europe was supported by lower costs and here, especially from the raw material side.

Now let's move on to business area Americas. Like in Europe, the U.S. manufacturing PMI remained below 50, indicating a recessionary industrial environment. However, there had been a trending shift in procurement from imports to domestic producers in the U.S. But as Kati also pointed out, imports into the North American market remains still on a high level and particularly driven by the Mexican market. Of course, going forward, current travelers might further support local producers in the U.S. If we then look at the Mexican market, here, the weakness -- the relative weakness still remains and current tariffs limit its ability to support the U.S. domestic demand. However, a potential trade agreement between the U.S. and the Mexican could present an upside opportunity for our Mexican operations.

From a market perspective and compared to prior months, distributor inventory levels increased in June, above year-to-date average levels, especially due to continued weak demand in the U.S., as I pointed out earlier. If we then look at the different segments, we saw that pipe and tube being stronger, supported by infrastructure investments on the one hand side and also by the oil and gas industry and projects over there, which is then being supported by the U.S. administration. On the other side, weaker sectors include appliances and automotive, primarily driven by lower consumer confidence, higher interest rates and inflation and therefore, less demand. However, given the shift towards domestic producers, especially the demand for appliances remained on a stable level for us in our business. In addition to higher volumes, our business area Americas profitability was further supported by lower raw material costs, which were partly offset by lower fixed cost absorption due to the working capital reduction.

Now let's move on to business area Ferrochrome. The demand for our low-emission European ferrochrome remains solid. In addition, we learned that producers in Southern Africa continue to report further capacity reductions, which are supporting the overall global supply-demand balance. In total, approximately 3 million tonnes of capacity now being taken out. In the second quarter, our ferrochrome deliveries increased by 6% quarter-on-quarter. And in line with our guidance, the profitability of BA Ferrochrome was impacted by higher costs due to the planned maintenance and as well as lower sales prices due to the weaker U.S. dollar.

At the same time, and due to the price volatility in the Finnish electricity market, we continue to benefit from the electricity usage optimization. Usually, electricity prices are more stable during the summer months, but due to the various geopolitical events, volatility remained high during the second quarter than we originally expected. As a critical raw material, ferrochrome is still excluded from the current U.S. tariffs. I think that's very important to note. And yes, with that one, let's turn now to a few final remarks on the group's overall financial position.

As you can see, we continued our capital discipline during the second quarter and reduced our net debt position by EUR 83 million to a level of EUR 169 million. The reduction was supported by the conversion of our convertible bond and our active working capital management during the quarter. These positive drivers were partly offset by the first dividend payment, which we made in April and with a total cash out of EUR 55 million.

With that, I will now hand it over back to you, Kati.

Thank you, Marc-Simon. So going forward then -- there we go. Thank you, Marc-Simon. So although we expect the planned measures in the European steel and metals action plan at some point to give more support to the European producers and create that level playing field that we are looking for, as Outokumpu, we cannot rely on it, and therefore, we can also not kind of wait. But we need to take our own actions and make sure we are improving our cost competence in this weak environment. So then a couple of comments on that. So we have before announced the EUR 50 million short-term cost saving measures that will come in this year and reported just on the progress on that. So that target is now increased to EUR 60 million.

And next to that, we also need to take structural measures. So we are now in the planning process to come at EUR 100 million of cost savings that are structural on an annual basis, and that would be in our result latest by the end of '27. And of course, given the current challenging market environment, especially in Europe, we are going forward with that then as quickly as we can once we take the steps and negotiations take place. And then indeed, focus, it's covering the whole Outokumpu, but focus clearly is on BA Europe and then the group functions.

And then this takes me to our outlook and guidance for Q3. So the group stainless steel deliveries in the third quarter are expected to decrease by 5% to 15% compared to the second quarter, mainly in business area Europe due to the seasonality and then the market weakness. Meanwhile, the pressure on realized stainless steel prices is expected to continue in Europe during the third quarter. And Asian imports to Europe remain high compared to the low demand in the stainless steel market. While in the U.S., we do not see signs of demand recovery yet, the current tariffs are supporting more favorable market conditions for local producers like us.

And then the maintenance breaks in business area Europe are expected to have an impact of up to EUR 10 million on adjusted -- negative impact on adjusted EBITDA in the third quarter compared to the second quarter. And with the current raw material prices, some raw material-related inventory and metal derivative losses are forecasted to be realized during the third quarter. And therefore, our guidance for the Q3 2025 is that the adjusted EBITDA in the third quarter of '25 is expected to be lower compared to the second quarter.

Then I would say that despite the current challenges, we have a strong foundation for the future. So we continue to benefit from being in both U.S. and Europe, definitely in this current tariff environment and geopolitical situation. We have the strongest balance sheet in the industry, and that gives us resilience in these market conditions. And as I said earlier, at some point, the EU Steel and Metals Action plan has to start providing also some support for European producers. And mainly, we're talking here about the improved safeguard measures, then we're talking about CBAM and creating the lead markets for European green steel. And of course, what we are doing ourselves, cost measures you heard about, and we're continuing forward with full speed with our EVOLVE strategy.

So now we have basically covered our Q2 results presentation. And I would say we are ready to start the Q&A session. So operator, please let's go ahead.

[Operator Instructions] The next question comes from Tristan Gresser from BNP Paribas Exane.

I have 2. The first one is on Europe. Just looking at the group volume guidance for the group, I mean, it would imply that Europe could see volume fall more than 15% in Q3, which could put the volumes actually at a record low level. In that environment, and if I understood correctly, pricing pressure continuing into Q3, is it possible to see the European division going back into negative EBITDA territory?

Thank you, Tristan. As you know, we don't guide on business area level, but the main reason for the guidance and the deliveries going down is European weakness so that I can confirm.

Is there any type of -- putting aside the maintenance cost, is there any other element on the bridge into Q3 regarding the cost side?

I think maybe I can take that, Tristan. Yes, so just to repeat the element, we talked about the volumes. And as Kati mentioned, predominantly Europe, then we do see the price pressure in the realized prices. The maintenance is related to our Tornio operations, where we also have an ERP rollout in the third quarter and beginning of the fourth quarter. And then we have talked about the net of timing and hedging elements here as well. We do see further progress on our short-term cost savings and also on other elements and other cost items in here to a certain degree.

All right. All right. That's helpful. And then my second question would be on Americas. Well, then -- there you have the highest shipments figures in a couple of years. You flagged that ASP has moved higher, that you've seen higher demand for domestically produced stainless steel. But also you said you don't expect a recovery in H2. So I'm trying to put all that together. Were there any tailwinds that you saw in Q2? And I know there were some raw material gains that are now weakening or are you seeing a softening from Q2 to Q3 in the U.S. and why we shouldn't expect given all those elements, some better guidance for the business into Q3?

Maybe you can add, Marc something. But I would say that basically, we see our U.S. business as being robust. And of course, the 50% tariffs are supporting that as well. But what we meant with the comment is that it's not really like you can say that the Americas market and demand on Americas is really in steel picking up. So that we don't see. So industrial production is still quite low figures. Consumer confidence may be a little bit improved, but we don't really see the biggest sign of picking up the overall demand in the market.

But then, of course, from that whole take, local producers now get a bigger share, I would say. So that's kind of supporting our business. And then our limitation is a bit to do much more is, of course, we can't get that Mexican capacity now to be used for the benefit of U.S. market with a 50% tariff. So that's the upside that Marc-Simon was referring to if the tariffs between the 2 countries would change.

But what we have seen, maybe if I can add here, Tristan, to it is that in our realized prices, we have seen some increase in the second quarter and then impacting apparently also the third quarter.

All right. That's clear. And maybe just a quick follow-up. Have you -- were there any tariff cost in Q2? And should you expect those tariff costs to increase into Q3?

So our tariff cost, no. Sorry, Tristan, just can you rephrase so I understand your question?

So for instance, the material you sent from Europe to the U.S. or the material you sent from Mexico to the U.S. if you were paying the tariff, what would have been the amount that you paid in Q2? And given the change starting June of the tariff level in the U.S., if you have any expectation of what that amount could be in Q3?

I think I would answer like that, that basically it's the customers who pay the tariff. And with a 50% tariff, basically, we are not really bringing volumes from Mexico to U.S. and the volumes from Europe also very low with these tariffs.

And as we already mentioned in some of the calls also earlier that we do not send material volumes from Europe into the U.S. nor from Mexico at the moment.

The next question comes from Anssi Raussi from SEB.

A few questions left from me. First about your adjusted EBITDA in Q2. So EBITDA was -- for these other operating items, it was clearly less negative than in the recent quarter. So what was the driver here? And how should we think about this segment in the latter half of this year?

Are you -- which segment are you referring to, Anssi?

Other items, which I think was like minus EUR 3 million, and it was minus EUR 11 million in Q1, if I remember correctly.

Okay. Yes. That relates to our sales activities and our intercompany profit elimination, especially when it comes to the -- our ferrochrome business in here. And that's why we had less intercompany eliminations in the second quarter compared to the first quarter.

And can you give us any indication about the level in the coming quarters? How should we think about it?

Yes, I would say somewhere in the middle of the 2 quarters what you have seen so far. I think it is a good proxy.

And maybe -- yes, the next question about this mining mineral tax and proposed increase in this tax in Finland. So based on your latest discussions with the decision-makers, like how likely you see this tax hike will be implemented? Or do you feel that politicians have heard your thoughts regarding this matter? And also maybe the same question regarding the planned cutoff date for electrification in Finland, how do you see this topic?

Yes. Thank you, Anssi, for the question. I think I'm not going to speculate on the outcome because it's a very political question right now also in Finland. But what I can say what it's about, and we are, of course, discussing this not only us as Outokumpu, but the whole mining industry in Finland, as increasing tax for mining kind of a royalty type of tax is, of course, a bit strange in a situation where Finland has a mineral strategy. EU has a mineral strategy, and we have the only chromium mine in the whole EU, which is also very important for Europe, the defense industry, energy industry and then, of course, for steel.

So very -- so I think this comes from the Finnish government having to find sources of tax. There's not been any kind of evaluation what it would mean. And that's why all of us in the industry are now making the point why the mining industry in Finland cannot carry this kind of tax increase because it would be increasing the tax from 0.6% to 2.5%, which is 4x basically. And then in our perspective, also the question is what is the tax based on. And currently, the tax in our case is based on -- basically on ferrochrome type of a trade and an index, while mining tax should be based then on the ore itself and the ore price. And there's a big kind of -- yes, that's kind of, I would say, even a mistake. So those are the topics we are discussing, and we are doing everything we can to influence that decision-making and bring actually the facts to the table. So hopefully, that will have a good end.

Then the other thing that you mentioned, the electrification aid that Finnish industry, let's say, electricity-intensive industry been getting. The whole idea there has been that with the aid that you get to electrify, you also reduce your emissions. So half of the money that you get should go for green transition. You need to show that you invest it in something that takes your emissions down and improves your carbon footprint. And that's exactly what Outokumpu is doing. So Outokumpu's level, that is also EUR 20 million a year. So it's sizable. And the mining tax increase could be like EUR 30 million a year. So we talk about EUR 50 million. So I'm hopeful that we can still influence this. And the mining tax actually, we have been asked also to give our opinion and arguments, and that's exactly what we are doing. But I don't go into speculating what the outcome is, but I'm hopeful that we get some sense in this discussion.

Yes. And I understand your point of view on this one. Maybe last question regarding your cash flow. So Marc-Simon mentioned already a couple of things, but if you would summarize like underlying elements going into H2 this year, how should we think about this and possible drivers behind your cash flow?

Yes. While we're not guiding or commenting on our future cash flow or net debt position, Anssi, I think fair to say we talked about the maintenance break, which we have in the third quarter of this year and the ERP rollout. This is one element which we should take into consideration when we think about the third quarter. In terms of inventories, we do have a couple of one type of cash out elements from the restructuring programs of the European competitiveness in relation to our new strategy. Here, that is some single-digit million number over here. Then we have a legal case in the U.S. for which we have also a labor case build a provision in our balance sheet. And here, cash out in the third quarter to be expected in, I would say, lower double-digit number.

We gave further confirmation on the CapEx side. And I think these are the main and most important building blocks together also with the comment I made earlier that we remain very disciplined on our financial position basically going forward and then towards the end of the year and going forward.

The next question comes from Maxime Kogge from ODDO BHF.

So 2 questions from my side on America and 1 on Europe. So the first on America is regarding the CapEx at [ Cleveland-Cliffs ] recently inaugurated in the U.S. for a [indiscernible], which will allow them to produce some finished stainless steel and in their comments, actually, they made reference to Outokumpu quite clearly saying that this line would be used to replace some finished material that is being circumvented to Mexico. So I would like to have your view on that and perhaps to give us more color on the extent of this business for Outokumpu right now? And what could be the impacts of this new line for activity in North America?

Maybe I'll start by saying that, that comment was wrong because we are not bringing from Finland or Tornio any material to do what they say. They're referring actually to our Mexican operations where we have [indiscernible] and where we have been bringing certain volumes to our U.S. customers. And like I said now, of course, that business is on a lower level because of the 50% tariff. So their commenting has not been correct.

Okay. A second one on America is you have a long-term guidance of EBITDA for the region of $170 million. And I was wondering whether we would have a bit of upside now with the price hikes that we've seen on the American marketplace recently. Would it be possible, I mean, when the tariff uncertainty is over to possibly increase that guidance or do you have to pass through some of the price hikes to your partner, ArcelorMittal, and therefore, this guidance is set to remain at this level or not meaningfully move.

Maybe I'll say one comment and then Marc-Simon can continue. I think what like to have really upside to our kind of long-term result level, what we think we can have in Americas, I think the market demand has to increase in general in Americas. So economic activity, investment, industrial production has to pick up. So I think that's a perquisite for that. And then I hand over to you, Marc-Simon to comment.

I would, right now, at the moment, remain on this $175 million, what we communicated earlier, given also the inflationary pressure, which we see in the U.S. market here as well.

Okay. That's clear. And just the last one is on CBAM in Europe. So the process appears to be completely started and there are growing doubts whether CBAM can effectively kick in next January. What's your view on that? And do you think it's still possible to imagine Scope 3 being included in CBAM and that as early as next January 2026?

Yes. I don't dare to speculate what's possible now to be included. I think EU and the commission has been quite busy with the agreement with the U.S. until now. And hopefully, now the business turns towards the steel and metals action plan and these items with the trade measures being the most important. But at least with several commission members, we have discussed the elements we would like to be included in CBAM, but that would be important. So and also ensuring that there are no loop holes kind of circumvention to circumvent CBAM with resource shuffling and that kind of thing.

So I think we feel like we've been hurt. What is the outcome? I think we need to wait now a little bit. But I think it's good that CBAM comes. I would like to see some of our customer segments coming in. I think that would be very good.

The next question comes from Joni Sandvall from Nordea.

A couple of questions from my side. I try to figure out the ferrochrome underlying profitability levels here. You mentioned that you had some over optimization gains there. And if we are now adjusting for the higher maintenance, it appears that you were pretty much in line with Q1. So could you give any quantification on this electric gains, what you gained in Q2?

Yes, certainly, we -- I would say it's a single -- mid-single-digit number over here, which we have seen. But at the same time, as Kati also pointed out earlier is that we also saw on the sales price certain pressure from the U.S. dollar deterioration or weakness in the U.S.

But I think going forward, indeed, important to highlight that there is 3 million capacity out of the market now at the moment, and that puts the demand-supply balance in the Western world in a good place for ferrochrome.

From Q4?

Yes, sure.

Yes. Okay. Okay. Then maybe second question on this -- what you are now planning this EUR 100 million structural improvement. Could you give any -- I know it's early stage now, but can you give any indication would this require some investments or how you aim to achieve this EUR 100 million cost savings?

I would say we can't comment too much because it's, of course, very sensitive as we just now announced it, and we need to take step-by-step our negotiations and then come with the final decisions. But maybe I can say it's not really something we need to do a lot of investments. That's how I would say it. So it's really organizational structures, delayering, looking for the efficiency in our operations. So not really requiring investments. That's what I would say.

Okay. Okay. And maybe lastly, still on the maybe cost levels going forward. The end demand is still sluggish. So how is the scrap market looking from your perspective currently?

Yes. I mean, I think we commented on our Q2 results that we saw support from decrease in raw material prices. And given the demand situation, which we outlined already earlier, also here, we see further pressure then on the raw material cost side. But at the same time, looking at what price levels we are currently very close to what we have seen during COVID times, I think that there is a certain bottom of it as well to be reached.

The next question comes from Bastian Synagowitz from Deutsche Bank.

A couple of quick questions, please. Just to double check on the cost cutting, so the EUR 100 million cost improvement target which you put out today, does this include any of the EUR 70 million for the footprint, which you announced at the CMD?

What it includes is what we are already implementing, and it's about EUR 20 million in our Krefeld plant, but that's the only part.

Okay. So basically EUR 80 million is in effect...

The reason is also that if we do the Tornio investment, that would only come after '27, the full impact, the rest of it. So that's why it's not included in this EUR 100 million plan that we need to deliver before end of '27.

Understood. Then just following up on ferrochrome. You've been, I guess, describing a pretty supportive environment here driven by these capacity cuts in Africa, which I think are indeed very helpful. What do you expect for the next 2 quarters out there? Do you think that, that will -- those dynamics will last? Do you think there will be maybe a bit more headwind towards the end of the year as maybe some of that capacity comes back into the market? What's your view on the ferrochrome market? If you could share that, please?

If I say kind of high level a bit the expectation, I think in general, there are some stocks, of course, and inventories also with the South African and Zimbabwean producers. But if we look at the demand supply balance going forward and if this capacity is not coming back on stream, then I think we have a shortage of ferrochrome for the Western world in -- by the end of the year or, let's say, going forward at the beginning of next year. So -- and we see requests coming to our direction. So I think the situation towards our order book is quite good. Then Q3, we need to, of course, remember that ferrochrome is delivered, especially for stainless steel production. So weakness in the stainless steel is also impacting than ferrochrome.

In the third quarter, but then probably seeing some support then from the fourth quarter going forward. And then combined then also with CBAM, that could be another important data point or trigger point for our demand of ferrochrome.

There's a bit of expectation because of CBAM as well that Q4, there might be more purchases done in Q4 before CBAM comes in place in January.

And are you generally more confident on the CBAM impact with regards to ferrochrome rather than stainless itself? Or what's your view on that?

Well, at least in the sense that we are the only producer in Europe. So the comparison is to us. And our carbon footprint is 67% lower than the industry average. So yes.

Okay. And very last on the strategic process. I guess at the CMD you talked about a lot of ideas for growth. Are any of these projects already getting closer? And is there any [indiscernible] for CapEx next year in 2026? I guess the European market has clearly come under more pressure. And I guess at the moment, at least you're not really generating much cash. So I'm just wondering whether you would lean to risk adjust your growth a little bit for the moment and possibly push them out in this uncertain environment or whether you'd rather go and take your balance sheet and push ahead?

I would first say, let's go step by step. So we don't have the outcome of the August feasibility study yet. So I think we need to have that outcome first. And then the second question is what is the timing? What would be -- if outcome is positive, what would be the timing of the investment? And -- and also regarding Tornio, the annealing and pickling line, we are looking at different options to execute that and can we get more cost savings than we have even thought about even in. So we are pushing the organization in all areas to look for more savings. So that, I think, is one. And we will protect also our balance sheet. Then when it comes to the technology and taking the next step in having our pilot line, that's not a big investment. So there, we definitely will proceed as quickly as we can when we are ready.

The next question comes from Adahna Ekoku from Morgan Stanley.

I've just got a follow-up on the Americas market and on the price hikes that were announced in July. So it seems these will have a kind of minimal impact in Q3. I appreciate the uncertainty going into the end of the year. But is it possible these could have an impact in Q4? Or is really just a larger demand recovery required first?

Yes. Maybe just to qualify my comment on prices were on realized prices and more to the second quarter. Given that we do not and cannot give price outlook going forward. The only thing is what I wanted to say is then that we do see, based on the realized prices, also a positive impact in the third quarter.

Okay. So that's kind of -- in the third quarter and then could trend up in Q4, but clearly a bit early to say?

Yes. But once again, Q2 was a smaller impact and then the full impact then in Q3 going forward.

The next question comes from Tristan Gresser from BNP Paribas.

Maybe on the safeguards, do you think a 40% cut in the quota is being realistic given your recent conversation with the commission? And also when we look at the import situation that you flagged and it's pretty damaging at the moment, what are the loopholes of the safeguards at the moment? Because Indonesia has some tariffs, the quotas, they have capped by country. So is it really about volumes or it's like regardless of how much you cut this quarter, you're still going to see costs coming from Asia below $2,000 per ton. So I'd like to have your thoughts on the safeguards and what could happen in mid-September?

Yes. I'm not going to speculate what could happen, but I maybe take 2 points. So one is, of course, that the current quotas are too high compared to the demand that we have in Europe. And those quotas were set at the time where the demand was much higher. And I think if I now talk with the mouth of Eurofer, our industry organization, what we've been discussing with the Commission and proposing is that we should look at the quotas in a way that the import share would not be higher than 15% to ensure that there is a level playing field in Europe and that there's enough capacity utilization because Europe does need its local steel production as well going forward.

So that is one item. And what is the circumvention problem is indeed the fact that the -- everything starts with slab production in China and Indonesia and then cold rolling, hot rolling, whatever happening in very, many different countries. And Europe Commission has not been able to kind of stay ahead of that, the different routes, how the cold-rolled material or even hot-rolled material comes to Europe. So somehow, one would like to have something like melted and board principle that where it's been melted, it's really what's tackled, but that's not the case right now. So these are actually the key areas, I think, from our point of view to tackle the circumvention.

Okay. That's clear. And the last one is I think earlier this month, the European Commission said it was experiencing a decline in metal scrap availability and starting to do some monitoring. And that could clearly lead to some sort of scrap export restrictions maybe later this year. So what is your position on the topic? And let's say, tomorrow, there is a scrap export ban or some restriction put in place, what would be the impact for your business?

So we have been asked also as Outokumpu, what do we think about that? So at least personally, as Outokumpu, we have not been a big promoter of restrictions on trade on scrap. I think the key thing to keep scrap in Europe is to continue melting in Europe to have the demand for the scrap in Europe. And then if we have weaker environments where there is not enough demand for the European scrap, then I would allow the players to also export so that we can keep that business and scrap handling business healthy in Europe because that's also important. If you take that scrap yards out and the handling capacity out, then when the demand goes up, you don't have it anymore. And then we don't have enough scrap processing in Europe. So I think that's also important.

I think with commission is doing that, it's about scrap, but it's also about other recycled metals and materials that they want -- that we utilize more in Europe as there is scarcity on metals in general, looking at where you can buy them. And then there are certain countries that have actually export restrictions, and they are probably looking at also that maybe there could be then some export restrictions out of Europe to those countries who don't also allow to be exported to Europe. So those are some of the discussions we've heard. But no idea if there would be any outcome of that before the end of the year, but monitoring takes place now.

But it would be positive if it happens, more scrap stays at home, still on scrap prices fall, you use 80%, 90% of that for your raw material mix. What would be the potential negative of such policy?

No, we have not had problems getting to that, so that's what I'm trying to say. I don't know.

Yes, indeed, absolutely. So we don't see any scarcity right now at the moment. We don't have any problems to procure scrap. And therefore, we don't see that.

The next question comes from Igor Tubic from DNB Carnegie.

I just had 2 follow-ups here. The first one, maybe we can start with. I just wonder, can you comment anything about what you expect in terms of the mix for BA Americas and Europe in Q3 versus Q2? Yes, we can maybe start there.

Yes. Maybe I can take that. We expect the mix to be on a similar level as in Q2.

And then the second question, maybe hard for you to say anything about. But have you seen anything that the imports here in July has started to ease from Asia? Or have you started to see any sort of signs either in a positive or negative direction?

No, we haven't seen any signs of a decrease in imports quite the other way around. We have seen now an increase in imports from a level of 23% into Europe to 27% in the second quarter of this year. And we were highlighting, I think, in guiding also on the volume side. So that is what still continues right now.

There are no more questions at this time. So I hand the conference back to the speakers.

Thank you, everyone, for your active participation and good questions. Hopefully, we were able to -- with Marc-Simon to clarify at least some of them. I think as a concluding note, I think in these market conditions, we delivered a reasonably good Q2, but the market is weak. We have also seasonality, and that's why the guidance of lower for Q3. We do believe in sustainable stainless steel. We do believe in our EVOLVE strategy, and we are going forward with that at the same time, making sure that we keep our European business competitive and therefore, the restructuring plan, what we announced today.

But I would like to very much thank you all for participating on the sunny day here in Helsinki. And if you still have some vacations left, also wishing you still good vacations. And talk to you next time in our Q3 call. Thank you.

Thank you.

Hello all, and welcome to Outokumpu's Capital Markets Day 2025. My name is Linda Hakkila, and I'm the Head of Investor Relations here at Outokumpu, and I will be hosting today's event. First of all, it is so great to see so many of you joining our event here physically in Helsinki. And I also want to warmly welcome all of you following our event virtually. The big theme for today is our new strategy, Evolve. We have an exciting agenda ahead of us.

Our main speakers today are our President and CEO, Kati ter Horst; our Chief Technology Officer, Stefan Erdmann; and our Chief Financial Officer, Marc-Simon Schaar. Today, we will be having 2 Q&A sessions, 1 short Q&A session before the coffee break and 1 full Q&A session at the end of the event. During the short session, we will be taking questions from the live audience and via chat function. And at the end, in the full Q&A session, we will be also opening the conference call lines. Please note that questions can be posted via chat function throughout the event. Please note the disclaimer, as we might be making forward-looking statements.

But now before our President and CEO, Kati ter Horst, starts with her presentation, let's watch a video showing what our new strategy Evolve is all about.

[Presentation]

Dear ladies and gentlemen, a very warm welcome to our Capital Markets Day 2025 also on my behalf.

We will be talking today about our new strategy Evolve, and I'm super excited to share more details about that with you. So our strategy is twofold. We have classified our businesses to foundational and transformational. And we have done this to create more focus to really clarify the strategic role of each business and to guide our capital allocation. While we see extremely interesting potential in our transformative initiatives, we will keep our feet on the ground. We will proceed step-by-step towards the transformative areas where we can find higher growth, higher margins and less cyclicality.

At the same time, our foundational business will concentrate on cash generation, cost competitiveness, leverage the sustainability position we have and ensure the access to critical raw materials. And this foundational business will deliver EUR 250 million of EBITDA improvement over the strategy period by 2030. In this geopolitical situation, in these uncertain times, we will also make sure we keep our balance sheet healthy, and we ensure competitive shareholder returns.

Before I move forward to talk about the details of the strategy, there's a couple of words I would like to say about the name of our strategy, Evolve. Outokumpu has been evolving for more than 110 years from copper to nickel to zinc to cobalt and Outokumpu has been developing technology knowledge, processes in the mining, but also in metal processing technology. And then when in 1959 in Kemi, just 1.5 hours below the Arctic circle, the big chromium deposit was found that was actually expanding Outokumpu's horizons to ferrochrome and then in the end to stainless steel.

And Outokumpu was actually a pioneer in integrated vertical production. So coming from that heritage, we now continue to evolve, and we're evolving to pioneer the materials and technologies that power tomorrow. Today, you will hear about our innovative breakthrough technology that will revolutionize how we think about metals, how you can produce low CO2 metals. But before we go there, I think it's also good to talk a bit about what's happening around us in the world and what is the basis we are starting from. And I really want to highlight that the base we start from is stronger than ever to invest in transformative growth.

We have considerably improved our profitability over the cycle. And in the last period of 2020 to '24, our average adjusted EBITDA was EUR 640 million. In the same period, we returned EUR 531 million to our shareholders and deleveraged the company. I'm also extremely, extremely proud of our world-class safety performance and our sustainability leadership has been confirmed by the many, many recognitions that we've been getting during the years. And one of the latest one being our 25th position in the Corporate Knights list of the most sustainable companies in Europe.

As we move forward, geopolitics and megatrends are actually driving demand for Outokumpu's products. So let's look at some of the areas where our demand is increasing. And I'll give you a couple of examples. If we, for instance, look at hydrogen storage and transportation, hydrogen when it's liquefied, it requires very low temperatures, going down to minus 250 Celsius or if it's compressed as a gas, it requires very high pressure. And then very often the storage tanks of hydrogen are on the coastal area when they have salt all around them, which puts a lot of emphasis on corrosion resistance. And we have a fantastic product range, Supra that has high performance in these applications and also offers very good total cost of ownership.

Defense industry has been a lot in the media lately. And as probably many of you know, the carbon steel industry is the traditional supplier to defense industry. But times are changing. Now that there are more investments going to the defense industry, we need new suppliers, and we need new product development. Outokumpu is already supplying stainless steel to protective areas in helicopters, in submarines, and we are very actively innovating in this area. The benefits of stainless steel in this area are many. For instance, when you use the seeds of stainless steel, you can bend them without welding and welding is always a risk.

Also, the stainless steel is very strong, but at the same time, it's very light, and that's good for the vehicles. Also stainless steel has a low carbon footprint, and it has a very low maintenance. So we see demand growing also in the defense sector for Outokumpu. We then move forward. I come back to the 2 businesses, our foundational business and transformative business. And I would like to comment a little bit by what is the definition that we are having for these 2 words.

So the foundational business for us concentrates on cash generation and cost competitiveness. And foundational business is not an area of growth for Outokumpu, but it does help us to finance growth in the transformative areas. And in this foundational part, we will be having -- or we will discipline ourselves to basically mandatory and maintenance investments that we need to do, and we will then also invest in cost competitiveness and smart decarbonization. And there, our requirement is that the internal rate of return for those investments needs to be a minimum of 15%.

If we then move to the transformational area, that is where we are looking for growth, higher margins and less cyclicality in the markets where we want to grow. We also want to have a good strategic fit and be able to create unique positions for Outokumpu. And here, we are looking growth both through organic and inorganic investments and the hurdle rate is 20% for our own investments. Then I think it's interesting to discuss what are the foundational businesses and what are the transformative businesses that we see. So next slide is very important.

Let's start from the foundation. So basically, our sustainable stainless steel business, both in Europe and in Americas is our foundation. That's our biggest foundational business. And this business concentrates on cost competitiveness, leveraging the sustainability leadership what we have and then ensuring the access to critical raw materials. We currently have also in our portfolio, Advanced Materials. And Advanced Materials in the current business is doing value creation by transformational program to look at new customer segments and develop the product portfolio.

On the Ferrochrome side, our current business is actually moving from being a mainly internal supplier to our stainless steel business to unrestricted market player, and I come back to that. But these 2 areas, Advanced Materials and Ferrochrome with our Kemi mine behind the ferrochrome actually create platforms to transform. So from Advanced Materials, our current business, we can move to advanced materials and alloys, and I will be talking today, for instance, about high nickel alloys. High nickel alloy is not the metal anymore. It's an alloy. So it's not any more stainless steel because the nickel content is more than 30%. So I'll come back to that.

Then for ferrochrome and our chromium mine with the new technology that Stefan will be talking about more in detail and what it can do, we -- it enables us to climb up the chromium value ladder, and we come back on that as well. So it creates 2 transformative businesses from our foundation. If we then talk about Americas, in Americas, we are looking for transformative growth beyond stainless steel because we still see Americas market geographically very exciting and important for us longer term. But it's, of course, also so that when we go to high nickel alloys and we start applying our new revolutionary technology, it creates also growth opportunities in Americas.

I then start discussing a bit more the foundational business going forward, and we first start with Europe. So if we look at 2024, 2024 saw actually the lowest stainless steel demand in 9 years in Europe. So the growth percentage you see here as an estimate from a market intelligence that the growth would be 3.3% per year going to '29 comes actually from the fact that we come from a very, very low demand from '24. And here, the other area is our Circle Green. So our volumes in Circle Green are increasing, and I think we will get more and more benefit from our sustainability performance also in standard steel going forward.

What we have announced today, you know that we have been mentioning European competitiveness before, even before I joined Outokumpu as the CEO. So here, we now have an example, what are we doing for European competitiveness. So we are planning to invest in the new annealing and pickling line in Tornio. Tornio is our lowest cost, most integrated, efficient asset base. And Tornio, we can also benefit from the renewable and cost competitive energy that we have in Finland. So moving volumes to this setup with new machinery improves our cost base and also increases some of the capabilities we can have in Tornio.

But we are not doing this investment for growth. We are doing this investment for cost competitiveness. And therefore, we are also closing 2 older, less competitive lines, actually not older, but less competitive lines in -- at our site in Krefeld, Germany. And this will result this new setup, once the new line is operational in Tornio, into annual about EUR 70 million EBITDA improvement over the cycle.

If we then talk a little bit about Americas. In Americas, the demand didn't drop as much as in Europe. And therefore, the growth percentage going forward, what you see is somewhat lower than in Europe. In the Americas, we also concentrate on cost competitiveness. We have still an opportunity to improve our operational efficiency through some of the processes and also some of the cap investments that we might be doing going forward. We are also working with our Americas team on our new commercial strategy. So looking at our go-to-market, looking at new customer segments, seeing where Outokumpu could through innovation, really bring some new products and develop certain segments, so that work is also ongoing.

And as I said, we are then looking for transformative growth beyond the standard stainless steel. But it's not only cost competitiveness, what's important in our foundational business. It's also very much about smart decarbonization and I like to always say that sustainability is also a good business. And what I mean is that, and I like the word smart decarbonization because if you do decarbonization right, you are not only avoiding cost, but you are creating new profitable business opportunities. Because, in fact, the more that we carbonize our product -- decarbonize our production, the more valuable our side streams become.

And just to give you an example of that, today, in ferrochrome, we produce CO gas. We very much burn that CO gas than in our stainless steel production. And when that CO gas with biocoke becomes biogenic, it becomes much more valuable and very interesting raw material for chemical industry and, for instance, for production of aviation fuels. European Commission is also now pushing for creating lead markets for green steel. We are in that discussion. And CBAM when it starts in 2026, should really support Outokumpu's business, both in ferrochrome and stainless steel because our carbon footprint in ferrochrome is 67% lower than the industry average, and we are the only producer in the EU area.

And then in stainless steel, our carbon footprint is 70% lower than the industry average. One area that actually contributes a lot to the decarbonization and carbon footprint is the raw materials we use. And that brings me to our critical raw materials to make stainless steel. As you know, scrap is our main raw material and the high percentage of scrap that we have is the key contributor to the 95% of recycled material that we have. It's also the key contributor to our low carbon emissions. Then the ferrochrome on the right side, that is what we have in our own hands. We are the ferrochrome producer.

And as we have invested in the past in our Kemi mine, we now have mineral reserves that are well invested until 2050, so we don't need new investments in the mine currently. And of course, deposits, they are even bigger than that. It gets more challenging when we talk about nickel and molybdenum sourcing them. And the reason is, for instance, in nickel that if you look at the global nickel resources in the world, they are actually -- up to 80% of them is in controlled or in the hands of Russia and China. And that is why we have invested in a junior nickel mine in Canada.

That is why we have made a 10-year offtake agreement with Greenland Resources molybdenum to ensure our access to critical raw materials. This basically completes the foundational part of the business. And just to summarize, it's about cash generation, cost competitiveness, leveraging our sustainability position and ensuring the access to these critical minerals materials that we need to produce stainless steel. And before I move to the transformational area and switch gears a bit, I want to highlight that we have worked hard to ensure that we have a clear value creation criteria for the investments we would do in transformative growth.

We have the hurdle rate of 20% to start with, but this is criteria what these investments need to kind of address. So they need to create new growth. They need to create higher margins, less cyclicality. They need to be able to leverage an Outokumpu capabilities, competitive advantage. They need to create unique positions and if possible, hopefully also optionality. So you create a platform that you have different possibilities to go to different directions from that. And that is actually what our technology is doing.

Avesta is one of the sites in Advanced Materials that's had a very, very long heritage in innovation. So I start from there. So in our current Advanced Materials business, like I said, we are developing our portfolio. We are looking at new customer segments. So we are accelerating the commercial transformation. We have recently brought nickel alloy 825 to the market, so it's expanding our specialty range. And now we are exploring the opportunities in high nickel alloys. So why are high nickel alloys interesting? First reason is that they are much higher growth area than standard stainless steel or our current advanced materials business.

So the average growth rate in high nickel alloys is more than 5%, but then there are many pockets and many applications where the growth rate is 2 digit, clearly above 10%. So there's high growth. That makes it interesting. Then the premiums that you get in the price are clearly higher compared even to our current advanced materials business. That makes it interesting. And then there are very limited number of players. So why would Outokumpu then be in position to go to this area? Why would we have a unique capability? It starts from our asset base.

So in Sweden, we have a unique asset base that is integrated and we have a competence in Sweden over time. And that's why we are looking now in the feasibility study at an investment in our Avesta melt shop. We have a very powerful hot rolling equipment in Avesta. It's probably one of the most powerful in the whole advanced materials business globally. And why is that important? Because nickel and the kind of alloys are hard, so you need power in that hot rolling to be able to roll it. And we have that already. So we don't need to invest in that, and that's a clear advantage. If you would need to invest in that, it would be EUR 1 billion investment. We don't need to.

Next to that, we have certain capabilities that combining that with high nickel alloys would make us the only player in the market being able to do that. And here, I refer to the fact that we can make heavy and white coils up to 2 meters and we can make also thick and white plates. Let's look at then a bit the application area segments where you find high nickel alloys. But basically, as you saw in the film, you could say that these are really high nickel alloys are going to applications where very high performance is required and where you have indeed the toughest conditions on earth.

If I take a couple of areas as -- which are also high pocket growth areas, as an example. So if we look at reactors in the Energy segment, today's reactors need to get bigger and bigger because there's a higher efficiency requirement. Reactors are usually made of plates, standard stainless steel plate or stainless steel plates. And when reactors get bigger, the temperatures go higher and there's more pressure. And therefore, the wall thickness in these reactors need to become higher. And this is now exactly what we can do in Avesta thick plates. If we then look at the oil and gas and you use the tubes to pump the oil up from the trail, the deeper you go in the ocean, the more pressure you will get and the lower the temperature will go.

So here, again, typical application for high nickel alloys. And in this case, A lot of these tubes are made of seeds today. But when you do that, then you need to weld a lot to create the long pipe. But when we have our white coils now, we can make actually bigger tubes without that welding need going forward. It saves time and it brings safety into the system. So again, a unique opportunity for Outokumpu. Then I would move to discuss our ferrochrome business as the other platform to transform. So the demand for our very sustainable and geopolitically reliable ferrochrome is increasing.

Other reasons supporting that is that there are capacity reductions now in Africa, in South Africa and Zimbabwe because of the high electricity cost, logistic issues that they are having. Also, there is no ferrochrome production in the U.S. or in Canada. So there are also no tariffs for ferrochrome. And then we happen to have this fantastic asset as Kemi Mine. And I want to say a couple of words about Kemi Mine because there's so much negative talk about mining. And I think you need to understand what Kemi Mine is about. It's the world's most modern mine. It's very automated. All the mining is happening underground.

We are steering the operations more and more from distance and soon they all will be above the ground where people are and where we steer the operations. Kemi Mine is -- will be carbon neutral as the first mine in the world by the end of the year. And our mining method is based on gravity. We are not using any chemicals to mine in the Kemi Mine. So now using this great asset we have that actually cannot be copied because the chromium is nowhere else in the EU area. We -- with the new technology that Stefan will be talking about in more detail, that's where we can now really start climbing up the chromium value chain.

And in this geopolitical situation, you probably can recognize that from everything that you read, it feels like the world has really woken up to understand the importance of critical metals and critical earth minerals. And the supply constraints are coming bigger and bigger to get to that. So we do need new sources for metals. We do need new extraction methods because the old ones are not really anymore fit to purpose. And it's exactly here where we have the answer with our new breakthrough technology. And we will be testing it first with our own chromium, but it is scalable to other metals, and we have proven that already.

So to summarize my part, First of all, our foundational business, stainless steel, we are going to be maximizing our result from that. That business concentrates on cash generation, cost competitiveness, leverages our sustainable position and secures the access to our critical raw materials. It's also the business that during the strategy period will deliver the most cash to help us to transform to higher growth areas, and it will deliver EUR 250 million EBITDA improvement over that cycle. And then we are transforming to 2 areas. We are transforming to advanced materials and alloys. And here, I talked about the feasibility study in Avesta going to high nickel alloys.

And then we are talking about these materials and technologies where the basis is our ferrochrome, current ferrochrome business, current Kemi Mine. But when you combine it with our technology, we can make higher chromium content ferrochrome products, and we can go up the chromium ladder, and that's a big step. And we can also go to other metals. So when we are increasing the value of Outokumpu, we also support our strong balance sheet, and we support the returns to our shareholders. And this brings me to introduce to you our financial targets and dividend policy very briefly. So we will concentrate on cash generation.

We will keep our balance sheet healthy with a targeted leverage ratio of 1. Foundational business will provide a step change in our EBITDA profitability over that strategy period, EUR 250 million. We have clear criteria for investments, hurdle rate being 15% for foundational investments and 20% for transformative investments. And we continue to take care of our shareholders aiming at a stable and growing dividend over time.

And then before I -- before we move forward and Stefan will talk about the technology, I would like to show you a short video that connects to our heritage, but also works a bit to introduce the technology that Stefan will be talking about. Enjoy.

[Presentation]

Ladies and gentlemen, it's a great honor to be here. It's a great honor. And I think after 4 years of extensive research, this is the day. This is the day on which Outokumpu decided to announce a new technology, a technology that we developed over years. And you know what, the timing could not be better. It's a time where countries are looking for secure sources for metals, for materials, for scarce materials and for pure materials. Materials like this.

I will talk a little bit about that at a later point of time, but this is pure chrome that we are able to produce out of the chromite from Kemi. But first, I would like to give you a short background for this. Why did we come up with this? Why did we work for 4 years on this journey? Now you probably all remember that by 2021, we committed to the most stringent guidelines of decarbonization, the Science-Based Targets initiative for 1.5 degrees global warming. Now this is a journey. It's a journey towards carbon neutrality. We had to find out that most of our carbon emissions are generated in our ferrochrome operations.

As Kati said, we are producing a high amount of ferrochrome. And in this process, by design, and I will talk about that later, we are producing carbon monoxide that is later burned to carbon dioxide. So one way is to use biocarbon in the future and generate with smart decarbonization value. The other option is to look for a new process. That's what I will talk about. That's what you will hear more about, not using any more carbon for reduction to use a new technology. I will talk about not only decarbonization, I will talk about a platform technology that is enabling Outokumpu to go beyond the current commodity ferrochrome. We are producing in Tornio at the moment, 53% chromium containing ferrochrome, and we will be able to enrich this to higher level, whether it's 60%, whether it's 65, I will talk about that in the next slides.

But this is not what we will be doing alone. As I said before, we have also proven that we can do pure chrome, pure chrome metal. This is something extremely exciting. But not only that, think about the following, we will be able to use other raw materials than just the ore that we have currently in the mine. We will be able to use also side streams. We will be able to use waste in future and also lower chrome containing ferrochrome ore. And the last point that we are also looking into, which we were able to prove already in our facility is that we are able to produce these advanced materials, these alloys that Kati was talking about, 625, 825 and so on, purely from raw materials from ore. Not first generating metals, we can do this directly from the ore.

Now what did we do over the last years? You see here a picture, the larger picture is a photo of our newly opened facility. As I said, we worked since 4 years on this. And last year, we opened a new laboratory in the Northern Boston area. We were able in this facility to scale up the technology from 1 gram, typical laboratory scale to 1 kilogram. It's 1,000 times. Is it already a ton? No. It's 1 kilogram. We generated with the people in this, which are the world's leading scientists for metal extraction not only these kind of developments, we were also generating knowledge. I would call it Outokumpu technology because we generated over the last 12 months, more than 15 invention notices, which makes this an Outokumpu technology.

But this is not the product alone or the technology alone, we will be able to scale it to other materials as well. But let's come to the technology. And I would like to slowly take you through as a technologist, I might be sometimes a little bit fast, but I will try this very slowly so that it's hopefully understandable what we are doing. Now this is the traditional process. On the top, you see metal ore and coke going into a furnace. The furnace in Kemi or in Tornio, we are using submerged arc furnaces under high temperatures, more than 1,600 degrees Celsius, the coke and the metal ore are reacting. As we said before, carbon monoxide is generated, and this will be later becoming carbon dioxide, and we produce a ferroalloy, in this case, ferrochrome.

Important here to notice, and you should really take this out of this room if you listen to this presentation. At the moment, you see the symbol by the lock that is shown on the left side, there is a strict correlation between the metal ore quality and the product that comes out. For Kemi with a good quality of ore that we have over there and what we use in our furnace, we can go to 53% of chrome content in the final product. So our customers get 53% of chrome. The rest is mainly iron. In the new technology, as you see disappearing, we don't need coke anymore. Instead, we will not have the furnace, but we will create a reactor, which is then also utilizing a reductant. It's not coke, it's a different reductant.

We will not have any more carbon dioxide or carbon monoxide as an off-gas, as a side stream. We will have other side streams. This will make it a more climate -- lower climate technology. It will also make it economic or cost competitive because the side streams are having value. The side streams that we generate in this process are commodities that are utilized worldwide. The most interesting point now is coming with the unlocking. In this process, we are unlocking the strict linkage from the metal or quality to the final product. What does it mean? We can decide how we run the process, what kind of material we want to produce.

Do we want to produce 55%, 60% content of chrome? Or do we want to go beyond this up to chrome metal. It breaks the paradigm as we also heard in the movie between ore quality and the final quality of the product. It will give us the opportunity to unlock also the ingredients for this process. We do not need this high-quality ore. We can also utilize lower quality ore or side streams, and we will be able to scale this to other methods. Now I prepared here a couple of samples, which should illustrate a little bit what we do. So this, for example, and you can take a look in here at a later point of time also, this is our standard ferrochrome.

If you go closely, you can see it quite shiny, and this is the standard material. We produced in the lab already 65% containing, so enriched -- chrome-enriched ferrochrome. And as I showed before, it's quite heavy. We are -- also produced 99% chrome, pure chrome metal in our laboratory. So this is not anymore a grand scale. This is not a laboratory hobby that we do here. This is up for scale. Now you might ask yourself, what is this? This is nickel metal. We produced also nickel metal in our lab out of raw materials. I would like to explain a little bit more about the value of this and why we selected our unique opportunity inside Outokumpu with the ferrochrome business.

We have, in our opinion, the ideal launch pad, as Kati said. We have the ore, which is the most modern mine, the carbon neutral mine, the only carbon neutral mine in the world and the only chromium mine in the European Union. You see with number one with the dark blue, what this product would resemble on the value curve on the chromium value curve. Explaining the curve, you see on the X-axis, you see the chrome content. And on the Y-axis, you see the value of this final product. So you can imagine a commodity product is pretty low on the curve. Even lower would be the ore out of the mine. Then you see number one, which is the chromium-rich ferrochrome with 60% -- 65% in this case, which has not only low carbon content, which has also higher chrome value.

And then you see in number 3, we have to put it like this probably, the chromium -- pure chromium metal, which not only is higher value, which is not only carbon neutral, which is also solving what a lot of different companies are looking for, companies that are looking for secure sources of chromium metal. Chrome metal is used in aerospace, in defense, in highly complex applications, and it's very difficult to produce at the moment, and there's no integrated supply chain existing, which Outokumpu will generate as the only company. If we talk about customers, we have already the first customer contracted. We have an MOU with an American company, which is very much interested in chromium metal going forward. And we are developing collaboratively the supply of highly valuable chromium metal for this company.

Now you might ask the question, how will this continue? Where are we? What is the readiness of this technology? We are quite humble. We didn't talk about this for 4 years. Now we think it's the right time and we believe in the next 2 years, 2 to 3 years, we will be able to mature this to a ton scale, which means a ton per day is our target of making the next step, which is an important step in order to make sure that we have the right design for the industrialization. Remember what our heritage was. Outokumpu comes from designing technology, furnace technology, mining. We know what we are doing. So this will be the next step to industrialize then.

After we achieve that in 2027, we are looking into until 2030 for about a 10,000 ton scale of chromium metal and chromium-enriched chromium ferrochrome as a first implementation of industrial scale of this technology. Then after 2030, we believe we have to go to the full deployment of this unique technology, which is not only for chrome, which is including nickel, which is including molybdenum, which is including waste streams, side streams and other material sources that will become more and more valuable going forward with the right technology.

So I would like to end this presentation with a short summary about what we heard now over the last couple of minutes. First of all, I think, as I said in the beginning, this is a breakthrough extraction technology where we worked for multiple years now and which came to a maturity that is up for the next scale. We believe that the deployment has to be done based on our chrome asset because we have the access to chrome ore, which is the best economic, but also value perspective that we can give for our shareholders, for us going forward. We believe that it's scalable.

We will not only look at chromium, we will look at not only on enriched -- chromium-enriched ferrochrome, we will also -- and we have proven that for highly nickel alloys, but also for nickel itself. We will address with this step, with this technology, a global challenge, a global supply challenge, secure resources for, for example, chrome metal, which is, at the moment, not existing from a full supply chain perspective. And last but not least, this is a platform for growth. It's starting here with chromium-enriched ferrochrome going over chromium metal to other metals.

With that, I would like to thank you for your presentation and hand over to Linda.

Thank you, Stefan, and thank you, Kati, for your presentations. Now it's time for a short Q&A. So I would ask Kati to join us on stage. So in this short Q&A session, we will be taking questions from the live audience as well as from the chat function. So if you wish to ask a question I will kindly ask you to raise your hand and my colleague will bring you a microphone. Okay. Maybe we'll take first one from the second row.

Tom Zhang from Barclays. Maybe one for each of you, if that's okay. Kati, you talked quite a lot about nickel alloys. I guess it's an area that some of your competitors have also been making moves into probably more inorganically, I suppose. Do you think you can do this organically? Or do you think, I guess, some of your competitors have talked about difficulties with certification and breaking into new customers. Do you think you can do this organically? Or do you think inorganic is needed? And could you maybe expand a bit more on how you think the market dynamics will change because I guess some of your competitors are adding capacity, both in Europe and the U.S.

And then Stefan, I guess the pure chromium metal is something I'm still quite new to. Could you just talk a little bit about what the traditional process is today that other people can make pure chromium metal, how they do it, where it's kind of made? And maybe just some color on how much lower down the cost curve you think your process could be? Or do you think it's just environmental, health and safety concerns that sets you apart?

So if I start on the high nickel alloys, Yes, we have competitors have moved in that area, but inorganically and paid quite a high price getting there. So I think the difference here really is that with the asset base we have in Sweden and the competence that we have, we can, with a relatively small investment, now move to high nickel alloys and combine that with the capabilities we already have, like I said, white and heavy coils and thick and white plates.

And when you combine that with high nickel alloys, we would be the only one being able to do that. So that makes it interesting for us. We are also looking at possible inorganic possibilities in that area, but that could be an add-on or it could be something else. But let's see. We are now starting the feasibility study step by step, like I said, but at least it looks very interesting for us to do that organically. So hopefully, that answers a bit your question.

On my question that you posed to me. So there are 2 questions. First one on the process itself. The traditional process for producing chromium metal out of chromium ore is that you first create chrome oxide. That's the first step. In this process, and you are absolutely right with your question regarding environmental, you probably mentioned mainly CO2 emissions. That was -- that is not the most challenge why, for example, most likely no one in Europe could be implementing this facility because it's generating a lot of Hexavalent chrome, which is proven to be carcinogenic. So this is a very hazardous process, the first step to only produce chromium oxide.

In the second step then, you take the chromium oxide similar like in our ferrochrome furnace and you reduce the chromium oxide to chromium metal and further refine it afterwards. That's the traditional process today, which is done in different steps. Most of the chromium oxide is coming from Russia and Kazakhstan and China. And then big producers of chromium metal are, for example, there's one in France, there's some in the U.S. also getting established now. The big difference to our step is that we will not be needing to go through the chromium oxide while forming Hexavalent chrome.

That's the first environmental advantage. The second one is obviously the CO2 emission topic, which we can also prevent with using other reduction methodologies. So that's the question -- the first question that you asked. The second question on the cost competitiveness. At the moment, what we calculated so far, and I have to say it's based on smaller scale because we are not yet at the ton scale. So at the moment, we try to design the right equipment for that. But it's very much cost competitive. It's lower cost than the traditional process.

Thank you for the very extensive answers. Okay. We have some further questions in the audience. Please, Anssi.

Yes, Anssi Raussi from SEB. A couple of questions from me as well. So first about this new chromium technology. So just to double check that, is it fully your own technology? Or do you have partners in this area?

No, it's a full ownership. It's -- we have to go into the details. It's a base technology that is licensed, but it's circled with own technology so that it becomes our own technology.

Okay. And then you mentioned your future plans and maybe industrial sized plant at some point. So what kind of investments we are talking about here, just to get a grip of this potential?

It's a good question. At the moment, we are looking at the first scale up, as I said, to the ton scale. If we then go to the industrial scale, what you will most likely refer to, we are not talking about EUR 1 billion investment, we are talking about a lower 3-digit million number.

Thank you. Maybe here in between, I could take one question from the chat, which is related to the ferrochrome topic again. Can you talk about the current chrome content in your ferrochrome and your target to increase the chrome content? Can you help us understand your expectations on incremental pricing you would be able to secure for the new products versus the operating cost of such an upgrade?

Yes. Well, maybe I start a bit on that, and you can Stefan add something if you want. So currently, like Stefan said, without having this new technology yet, we are limited to the ore quality you have. And our ore quality is 53% chromium content in the ferrochrome. We can't go higher. But with the new technology, we can. So then we can choose what kind of chromium content we want to have in our ferrochrome. And our ferrochrome anyway is not sold as a standard market price because it has so much lower carbon footprint. Remember, 67% lower carbon footprint.

This new technology would make it almost a carbon-free ferrochrome. So it has an additional value from that. And then the ferrochrome production being in Finland in the EU area, geopolitically compliant source would give it another value. But like you could see in the chromium value ladder, when you start going to higher content of chrome, then actually the value goes up very steep. So we will be able to go to different markets, support our ferrochrome business with different chroming content, what we choose then to have, and we will be able to go also towards a pure chromium. So we will be balancing this. So this is optionality, what I mean. So we can go to different directions.

Thank you. Do we have any questions in the live audience? There is one. Go ahead, Adahna. You will receive a microphone soon.

Adahna from Morgan Stanley. On the demand for these products, could you kind of talk about the market size of your current ferrochrome products as compared to the higher chrome products and a bit more detail on the key drivers here?

Yes. To be honest, I don't have exactly the details. But like I said, we can a bit decide what areas we want to stay because we can actually choose and pick what we want from the ore with the new technology. So -- and then I think the -- when you go also to pure chromium, the size of the market doesn't become so important anymore because you have such a valuable product in your hands.

It's a bit same when you go to high nickel alloys. It's not this high-volume business. It's a business where you really have considerable premiums compared to anything else. And I think the chromium market with this kind of technology and the use of chromium will definitely increase because one constraint now is this very difficult process of coming from chromium oxide to chromium and where that chromium oxide comes from, Russia and Kazakhstan. So I'm not worried about the market size going forward.

Thank you, Kati. Then I think there was a question on the left-hand side of the audience, please.

Igor Tubic, DNB Carnegie. Just one question. I just wonder how much do you expect to sell to the open market of your total share of ferrochromium going forward? And how much are you planning to buy something from somewhere else or...?

Good question. Thank you. So currently, we sell about 1/3 of our ferrochrome production to the external market and 2/3 we use in our own stainless steel production. One thing is that maybe we didn't talk about yet today, we have additional ferrochrome capacity. We have just not been using it. So we don't, in the first instance, actually need to invest in anything to sell more to external market, and we can still supply internally.

And this is, of course, something we can then play with going forward depending on what the pricing is and how quickly we can develop external markets. And then, I think when you go to higher chromium content, then you are not anymore necessarily supplying to stainless steel, but then you also go to other areas. But we have a lot of optionality, let's say, potential to move in that area, and we have capacity.

If I may add a comment to that. What we should never underestimate if we, for example, create higher chromium-enriched ferrochrome, let's say, for example, 65%. For a lot of stainless steel player alone, this would make a huge sense because you can use more scraps. At the moment, you can just dilute and use ferrochrome because it's a limit of 53% charging chrome that you have.

If you have this valuable resource, it gets much more interesting for other players or including us to use more scrap, cheaper scrap in order to make the right -- the same products as today in stainless steel. So it's not only a new market. It's not only other applications of ferrochrome, which are using now higher chromium containing ferrochrome, it's an opportunity from also an operational improvement for existing stainless steel mills.

Thank you. Let's take some questions from the chat. So first of all, what is the time line for the feasibility study for a smelt shop in Avesta?

So we have started the feasibility study now. And I would think that during this year, we'll have an outcome of that feasibility study.

Thank you. Then regarding the new metal technology, where do you see the biggest growth potential outside the company?

You mean, of -- it's a good question of applying this technology or -- well, I really believe that, as I said, side streams are getting extremely interested for any business. If you have lower amount of metals in some waste streams, this might be interesting. I can name nickel batteries. I can name any other side stream that you can imagine. I can also imagine name here if you, for example, have a mine like ours and you have just instead of probably 32% of chrome content, 30% or 25% chrome content. This technology can extract metal independently of the content in the ore. That's the big change.

So basically, using ore quality that is not economic to be used today could be with this technology economically viable in the future.

Thank you. Before we have our short break, we will still have time for one question from the audience. So if you wish to ask a question, please raise your hand and my colleague will bring you the microphone.

Okay. Apparently, there are no questions from the live audience. So I will be taking one last question before the break from the chat. So this is more of a general question. What is your view on impact from tariffs on your Mexican suppliers -- supplies in the U.S. market?

Okay. So I don't know if you're aware of that, but there is actually currently a discussion ongoing between U.S. and Mexico of getting rid of the 50% tariff. I can't, of course, say if that will be a positive outcome. But we do very much believe that there is a path now to actually try to reestablish the USMCA, so the old NAFTA because -- and that would be, of course, the most positive outcome for us. So basically having steel and aluminum tariffs on the outside borders of USMCA, so Mexico and Canada being inside.

And that is at least my understanding that those are the discussions ongoing now between U.S. and Mexico. Also because that supply chain for Mexico from different car parts, different metal parts, it's so important for U.S. So that's what I'm expecting to come out. But as you know, this has been very uncertain, different tariffs, different things being set and other things being done. So we need to see what the outcome is the final outcome, but that's actually what I believe in currently.

Thank you, Kati, and thank you all for the great questions. Now we'll be having approximately 20-minute break. And after that, we will continue with our CFO's presentation and also the full Q&A session. So as said, we will continue the event at 2:30 Finnish time, 12:30 U.K. time. Thank you.

[Break]

Welcome back, and I hope you had a great break. Now it's time for the third presentation of today. And after that, we will be having the full Q&A session. I'm pleased to hand over to our CFO, Marc-Simon Schaar, to talk about our new strategy from the CFO's point of view.

Good morning, good afternoon. It's great to see you all and also a warm welcome from my side. Before we now dive into the financial part of today's presentation, let me briefly recap on the key messages, which we have heard so far.

Our new strategy, Evolve, illustrates and plans to show how we're going to invest into transformative areas targeting growth, higher margins and enhanced resilience. And all of that together to drive total shareholder returns. This transformation is based on and supported by our strong foundation and a clear commitment to unlock the full potential of our current existing assets and thereby driving sustainable EBITDA improvements. Now with that strategic direction in mind, I will present our financial framework, including our updated financial targets, our capital allocation and dividend policy, which -- that enables our new strategy going forward.

During the last 13 years, Outokumpu has significantly improved its through-the-cycle profitability. This improvement has enabled us to deleverage our company. And now we have the strongest balance sheet in the industry, which then serves as a very strong foundation and provides us with strategic flexibility to invest into growth and thereby providing competitive shareholder returns. And this is an important slide to illustrate how we have really transformed our business since 2012 with a significant improvement in our EBITDA performance over time. Our enhanced through-the-cycle profitability is the result of targeted cost and efficiency measures together as well as with broader operational improvements across the business.

What makes this progress even more notable is the demand development over the years. Especially post-COVID, global market weakness and the geopolitical tensions have put pressure on demand. And 2024 clearly marking the low cycle of -- the bottom of the cycle. Despite these external challenges, we were successful in maintaining our market share, demonstrating our strong competitive market position. While the analysis supports our current normalized EBITDA level of EUR 500 million to EUR 600 million, we still have to acknowledge that our bottom of the cycle EBITDA in the range of EUR 200 million to EUR 250 million, excluding the impacts from the strike remains below our expectations.

And that is precisely what we are addressing with our new strategy. Importantly, we do not start from scratch. Years of focus on restructuring and deleveraging have given us a strong platform with a solid foundation and that provides us now with a robust foundation to invest into growth and opportunity, which was only limited before. At the same time, we have returned to a dividend-paying company and taking good care of our shareholders. Now let's explore how we deliver value creation through our foundational and transformative investments.

To start, let's first look into our strategic objectives and investment criteria. So the role of the foundational business is to generate cash flow through cost and capital efficiency. The clear target of the foundational business is to sustain competitiveness and fund our transformation. Here, disciplined maintenance and mandatory CapEx as well as efficient working capital play an essential part of that journey. Investments beyond mandatory maintenance CapEx have a clear focus on improving competitiveness and smart decarbonization, as mentioned by Kati before.

As an investment criteria, those projects require a minimum internal rate of return of 15%. This is critical over short term, but at the same time -- or longer term, we clearly need to unlock high-value growth opportunities, and we are doing this through our transformative initiatives. Coupled with growth, our transformative investments target to reduce cyclicality and make the business more resilient. Besides growing into high nickel alloys, supported by our unique asset base in Sweden and exploring growth opportunities beyond stainless steel in the Americas, we have heard from Stefan today our focus on innovative materials and technology and particularly our chromite ore mine providing an ideal launchpad for that to start.

Transformative investments have an internal rate of return of at least, at least 20%, and they will be funded by cash generated from the foundational business together with a balanced leverage approach. We do have the financial strength to invest, while maintaining clear guardrails to ensure the continued health of our balance sheet. This strong position empowers us to execute our transformative strategy, driving growth, enhancing margins and building greater resilience and all of that in order to provide and deliver competitive shareholder returns.

As we have heard earlier, through our foundational initiatives, we are targeting an EBITDA run rate improvement of EUR 200 million to EUR 250 million by the end of 2013 through fixed cost savings, efficiency improvements as well as product development and customer mix improvements, targeting at a normalized EBITDA level of EUR 750 million to EUR 850 million.

Now let's have a closer look at the tangible actions enabling the achievement of these EBITDA run rate improvements. In the area of fixed cost savings, our plan to invest into a new annealing and pickling line in Tornio will allow us to close down 2 older annealing and picking lines in our Krefeld facilities. We further look into outsourcing and labor flexibilization in our Krefeld site to be able to adjust for the market cyclicality in the stainless steel industry and business.

And on top, we are focusing globally overall on a lean and agile organization with the support of process improvements and optimization.

If we then move on, on the efficiency improvements. Here, for example, we are evaluating the opportunity to invest into a ladle furnace in our Calvert melt shop and thereby improving our yield, energy as well as energy and raw material efficiency in our business area Americas. Also the targeted investment in our annealing and pickling line in Tornio, which is much larger and much more modern will provide efficiency improvements and on top, allows us for higher integration within our business area Europe as well as product flow optimization in that area as well.

Now on the product development side, those are based on new products and customer segments in advanced materials using our current asset base. And these are being rolled out globally, including also the American market. We are also reviewing our commercial strategy in business area Americas where in terms of customer segments, product portfolio and innovation opportunities, which are in the markets. In our ferrochrome business, we will expand our external customer portfolio. And based on the uniqueness of our product set up, given that we have the lowest CO2 emissions compared to industry average and then also the uniqueness of having the feedstock from the only chromite ore mine in the European Union. We also target to product -- our product portfolio in business area, ferrochrome, by adding low force and granulated ferrochrome products. And we already have an established market with higher margins in these areas here as well.

These initiatives are built from the bottom up, right? These initiatives, they are detailed. They are tangible plans behind. And that gives us strong confidence that in the credibility of the measures and in the achievability of our targeted EBITDA improvements until 2030 with a strong cash flow generation. And all of these measures are then being part of our annual target setting.

Let me now walk you through how we plan to manage our sources and uses of cash. Our investments will be primarily funded through cash flow from our foundational business, as mentioned earlier, supplemented by a balanced use of debt. The timing of these investments are -- or will be carefully aligned with the prevailing market conditions and to preserve a healthy balance sheet with a targeted leverage ratio of 1. For mandatory and maintenance CapEx, we follow a disciplined budget of EUR 100 million per year, adding an additional EUR 100 million will be allocated to that for next year to address the CapEx backlog, which we currently have due to the this year's temporary CapEx reduction. So overall, over that period of time, we talk about EUR 600 million. And the box on the slide gives us -- slightly indicates the size of this investment here as well.

Foundational investments, such as the investment in the annealing and pickling line in Tornio, are expected to generate the cash that helps to fund then the transformative investments here. And on the transformative investment side, as you can see, we do have the capability and space to look into different areas. At the moment, we have identified 2 initiatives, one being the potential to go into high nickel alloys and on the other side, then the new innovative materials and technology. And both of them have required relatively modest capital in the range of roughly EUR 150 million to EUR 200 million each.

Having said that, in addition, we look also into organic growth, and we retain the financial capacity to evaluate selective inorganic opportunities as part of our strategic toolbox but always with a disciplined and prudent approach, ensuring that there is a proper industrial and strategic fit on the one hand side, and also financial synergies, which we can explore and get out of Ponicil acquisition. Altogether, these investments are designed to provide profitable growth and resilience and forming a stronger foundation for delivering competitive shareholder returns.

Now so we will increase the value of Outokumpu up to 2023 through clearly defined financial targets and disciplined investment criteria to deliver competitive shareholder returns by aiming to pay a stable and growing dividend over time. We are combining targeted investments and targeted growth with a strong commitment to maintain a healthy balance sheet during that time.

Our EVOLVE strategy provides a clear and actionable road map for sustainable growth not only through 2030, but well beyond. So with our strong position, we are -- and strong foundation, we are well positioned to evolve and our strategy is to build -- is built to deliver.

With these final words, I would like to thank you for your attention and hand back over to you, Linda.

Thank you, Marc-Simon. Now is time for a full Q&A session. So I would kindly ask Kati and Stefan to join us on stage. And I would like to remind the audience that during this session, we'll be taking questions from the live audience via chat function and also we will be opening the conference call live. But maybe I will just start with a short question from the chat function related to defense.

The defense industry is booming within the European Commission, while they are looking for solutions with minimal environmental impact. How Outokumpu aims to harness this momentum?

Good question. I think I during the presentation a little bit covered that already. But like I said, these big investments coming in the defense industry require more suppliers to come into the pool of supplying and there's also product development needed. And we are actively developing new products in this area.

So we are mainly as Outokumpu with a stainless steel in protective materials. We do deliver already in helicopter, submarines and some other areas that I can't always say but I do see really potential for stainless steel because indeed, it's a strong but light material. It can be bent instead of welded and it offers a lower carbon print and low maintenance. So I'm sure there will be also demand coming to our direction, even though the carbon steel is the traditional bigger supplier to that segment.

Thank you, Kati, and you basically answered the next question already. So do we have any questions in the live audience? If yes, please raise your hand, and my colleague will bring you the microphone. Tom.

Probably both for you, Marc-Simon, just on that presentation. So the uses of cash charts I think was very interesting. If I back out what you were saying about EUR 600 million around maintenance CapEx and then scale that up for the remainder of those columns, you're spending about EUR 550 million a year. Consensus only has around EUR 200 million free cash flow. I mean is consensus just way too low? Or do you think you'll need to rely more on financing? And I suppose if you do, could you talk a little bit about your priorities between shareholder returns, transformative investments and then the foundational, I suppose?

Yes, indeed. So what I mentioned before is that most of the investments will be funded through our own cash generation. I cannot comment on the consensus and so forth, but I can only give the confidence that those are being funded through that one, and that we will maintain a balanced approach towards leveraging, which is also very clearly defined in our new financial target on the one hand side to say, the target is onetime, but also providing now a certain flexibility to invest into growth, while saying this, also very clearly indicating there is ceiling of that here as well. And that probably should give you a good indication of what we think about our cash generation is going forward.

Then you had a second question. That was on the priorities. Of course, we need to ensure that we maintain our assets healthy and therefore, mandatory and maintenance also the investments into our foundational part are critical here. As one example, and a very concrete example, we -- out of this foundational box, EUR 200 million goes into the new annealing and pickling line investment here and Business Area Europe to drive our EBITDA performance. And as such, those are very important also to be able to fund and financing.

At the same time, our dividend, our updated dividend policy says that we're aiming to pay a stable and growing dividend, and I don't see any reason why we should deviate from that one. But at the same time, of course, we need to acknowledge the cyclicality in the market and our investments. But I want to reconfirm that we aim to pay a stable and growing dividend.

Thank you, Marc-Simon. I also have a few CapEx-related questions coming through the chat function.

So what CapEx do you expect for year 2026 and years beyond? How much investment is required to unlock this EUR 250 million EBITDA uplift?

Sorry, what was the question again? .

So what kind of CapEx are you expecting for years, '26 and years beyond? And how much investment is required to unlock this EUR 250 million EBITDA uplift?

If I start a little bit, we will confirm our CapEx annually. So that will come more towards the end of this year that we will confirm what is our CapEx spend next year. What we have given now is the frame that we think we will need during the 5 years for mandatory and maintenance. But the CapEx will be confirmed yearly. We are not giving the full CapEx frame for the 5 years, that would be too difficult to do right now.

Yes. And then when we referred to the EUR 250 million EBITDA improvement, I have said that those are coming and being foundational in nature being supported by those investments, which we are planning to do. At the same time, I also gave guidance on how to think about the size of the boxes mandatory and maintenance is the EUR 600 million bucket. And then if you look at the slide, the foundational part is a bit shy, bit low, lower than that amount.

Then how much CapEx is then needed for the Avesta meltshop?

So we are now just starting the feasibility study. So it's a bit too early to confirm that. But -- just to give you the ballpark, like I said before, it's not this huge investment in hot-rolling equipment because we have it. But the meltshop investment, depending on what the design will be and how we look upon that would be somewhere around EUR 150 million, maybe a bit north of that.

I think I gave also a bit of guidance on these 2 transformational initiatives, which we have clearly identified and that range applies to both initiatives until 2030.

And then one more CapEx-related question. What is the CapEx timing and schedule for the Tornio EUR 200 million CapEx investment? Will there be any spend this year?

Well, like I said, we will still need to finalize the -- basically more detailed engineering. But I would think that the final decision on that, how we do it exactly will happen this year. I think the most part of the spend will be in '27, some of it in '26 and small -- a very small amount this year for the engineering study.

Thank you. So do we have any questions in the live audience? Yes, there's one on the third floor.

Antti Koskivuori from Danske. I would like to ask about the normalized mean EUR 750 million, EUR 850 million annually, very impressive number compared to historical Outokumpu's EBITDA. How should we think about it? I mean earlier, of course, we talked about a lot what is actually normalized EBITDA. And if I remember correctly, then it was about normalized or historical pricing levels close to EUR 1,000 per tonne as a base price. Now whereas now in Europe, I guess we are approximately half of that. What should we expect as a kind of a normalized market conditions at this point? What you're referring to?

Yes. So basically, what I -- Antti, very good point. And it's, of course, I acknowledge that it's difficult while we finalize 2024 with the EBITDA, which we said, and this is also why I said we have to acknowledge where we are coming from, definitely. Having said that, we consider also 2024 being the bottom of the cycle, first of all, also when it comes to demand, and we expect the market to recover. The market will remain volatile. I'm not saying that we expect those years of '21, '22 to recover, but equally as well the level of this EUR 200 million, EUR 250 million is not the new normal here as well.

So you do see a volume recovery. You see a certain price recovery. We will have a lot of discussions also with the European Commission and new discussions coming here, but also our ability to further leverage on our unique asset base and further improving the profitability with a very tangible investments we're having makes us very comfortable in these numbers going forward.

Sorry, if I may follow up on that. The AP investment in Tornio and the EUR 70 million EBITDA improvement. Is that EUR 70 million on current market conditions? Or is there an expectation of price improvement, for example?

It's a bit of a mid-cycle number. So because the fixed cost improvements are the same. It doesn't matter what the cycle is. But then there is, of course, we can go -- we can have an annual improvement that's higher than 70%, if we are in a high cycle, and it's a bit lower, maybe EUR 50 million if we are in a low cycle. So I think the EUR 70 million is over the time quite a good estimate, but it will bring annually.

Thank you. Any other questions from the live audience, please?

Joni Sandvall from Nordea. Maybe a question on the footprint optimization and also maybe related to customer segments, do you see any risks with this footprint optimization regarding your, let's say, servicing capabilities towards your customers?

No, not from that perspective. So basically, the key reasoning here is we are also adding 20,000 tons of capacity with the new annealing and pickling line. But that's not the reason of making the investment. The reason to make the investment is on one side, it's the fact that it's a 50-year line what we currently have in Tornio, and it's just time to replace it. But then before you do something like that, as we at the same time want to improve the competitiveness in Europe, we have looked at the kind of total footprint and said that, okay, what could we do if we do this investment? And this investment increases the capacity a bit, but it also increases the capability.

So we can do a broader product portfolio than in Tornio which is our lowest cost asset base, taking care of -- taking advantage of the full integration that we have in Tornio. And remember, also today, the energy cost is half of Germany. But again, to get the benefit out of that investment we take 2 less competitive lines down. And we are also next to that, but we didn't talk about much today. Marc-Simon mentioned very shortly, we are doing quite a big, we call it [indiscernible] Recharge operation, where we are outsourcing positions and where we are really putting efficiency in the organization.

And that's what you see in the kind of -- in the figures that we provided in the press release that we will take as a provision. So we are constantly in Europe. It doesn't matter whether it's Advanced Materials business line or Stainless Europe business line, we are constantly looking at how can we optimize our asset base and what's the capacity we should carry over the cycle because the more capacity you have, the higher result you can, of course, have in a high cycle, that you carry that cost through the low cycle. And I think we have to find the optimum to do that.

Okay. And maybe a quick question on the safeguard measures here in Europe, we see the, let's say, tariffs increasing into U.S. So is there risk of higher flows of low-cost Asian products to Europe?

There is definitely a risk of, if the 50% tariffs, they didn't move the needle, the 25% tariff for Asian importers to the U.S. didn't really move the needle. But if the tariffs in U.S. stay at 50% towards Asian importers as well, it will build pressure on Europe. And that is exactly the discussion we've been having and pushing European Commission really to understand how timely this discussion now is and that we can't really wait as an industry. So we are doing what we can to push for that.

But maybe just to add to that, that's a negative side, the trade issue and that we can clearly get better trade protection in Europe. But the positive side, what should come that I mentioned earlier is CBAM, that is coming 2026.

We don't know exactly how effective that system will be, but we have also discussed that with different cabinets in the commission to try to close the loophole that the system could have. But if you look at our carbon footprint in Outokumpu, 75% lower Stainless steel, 65% lower in ferrochrome. It has to thus supporting also our pricing and our business. So this is what we've been waiting for that we get this. And the Commission has promised to create lead markets in green steel with certain criteria that would, for instance, in public procurement than support buying European steel.

And I cannot imagine that defense industry was -- would cooperate in innovation with a Chinese steelmaker. So I think there are certain elements that also support the demand for European steel once the market also starts to recover and investments come in.

And based on what we all heard before, I think Outokumpu is very, very, very well positioned in that market space.

Thank you. We have received a few questions about the dividend policy via chat. So first of all, dividend policy, is it a progressive dividend policy? So specifically, is there an intention to grow the dividend each year?

Yes. I think very clearly stated that we are aiming to pay a stable and growing dividend over time. Of course, it provides also with the flexibility here as you can see from the dividend policy as well. But clearly, I think the importance is over time to progressively increase the dividend going forward.

And then another question on that. Stable and growing dividend over time, meaning starting from the current level or based on a new baseline to be defined?

Based on the current level.

Okay. Thank you. Do we have questions in the live audience? Yes. There.

Anssi Raussi from SEB again. One question and it's relating to your M&A ambitions. Last time, was it 3 years ago, you said that you have no ambitions regarding, for example, scrap related acquisitions. But has something changed? Or is it more about technologies in specialty grades? .

Well, we haven't changed our mindset here. We place a lot of value in our partnerships which we have with all our scrap suppliers. We have made a small acquisition in one of them, Cronimet here given the proximity to our sites, which we have in the North Eastern region but we are not intending and planning anything in that area. We are very happy with the current setup. And yes, those M&A considerations might then be there in our transformative initiatives, which we just mentioned before.

And basically no need to strengthen in other areas of supply of resources?

Well, I think we, as we said, are very well covered on all the initiatives which we have taken. And I think clearly, we are the ones who, given also our nature and unique asset base with our own chromite ore mine, we -- and together also with Stefan and the new technology, I think a real differentiator for us is that we are having a strong focus and angle on primary raw materials basically, which based on what and how we see are very crucial and important to be successful in that market and also in the markets in which we want to develop even further.

Thank you. Was there another question? Yes, please, Adahna?

So on the EUR 250 million EBITDA uplift, you've outlined EUR 70 million roughly from Tornio. Could you help us with the split for the rest of that across BA Europe, Americas and ferrochrome?

Yes, absolutely. I would say that roughly 50% of this EUR 250 million savings comes from Business Area Europe and around 25% or 1 quarter is from business area ferrochrome, and then the remainder is on Americas and also the corporate level.

Thank you. Then there was actually another question in the chat about this EBITDA run rate improvement. So what is the timing of this EUR 250 million gains over the couple next of years?

Well, I guess we're saying it's a run rate improvement. So it should be pretty much in towards the 2030. The investment then in AP line, for instance, with the EUR 70 million improvement on annual EBITDA. So once the line is running, then we're getting that out. And we are now waiting for the investment decisions to finalize the more detailed engineering study on it. And then I think building up the line is probably 2 years, and then we start reaping the benefits.

So the majority of the savings are expected to be kind of mid-cycle?

Yes. But for instance, what I said earlier, some of the outsourcing and flexiblizing initiatives we're taking in Krefeld, we start -- we have negotiated that, and we start implementing that now. So certain things starts right now.

Any questions from the live audience? Tom.

Sorry, just one quick follow-up. So the bridge right to EUR 750 million and EUR 850 million is just with the foundational investments.

That is correct.

For the transformational investments, do you have any sense of what that could add and timing-wise, when you might be able to communicate that? Because I guess there's -- you're sort of saying there's upside basically to the EUR 750 million to EUR 850 million number.

If you looked at a bit what Stefan was showing on the -- if we look at the technology. So the next step for us would be to establish pilot line, and we are planning to do that in the U.S. So by summer, I think '27, we would know that the technology really works in that 1 tonne scale. And then from there, we can go to industrialization. So there you can see that the benefits would come more towards the end of the strategy period, being somewhere maybe starting, what would you say, '29, something like that. And we have so many things still to confirm that although I'm very confident and I'm really excited about the new technology. I don't want to hype it too early. That's why I'm saying we're keeping our feet on ground and we go step by step.

And if we're just thinking about probably a potential value creation over here, Stefan has shown basically the value ladder a bit. And then you might think about, okay, what is the differential or increased contribution margin, which such a technology commonly can provide a lot of data from us, what are our capacity. You need to combine those a bit of what applications, what is the, for example, the chromium metal market capacity and the needs going forward. By the way, chromium metal is an important element of the jets of -- the engines of the fighter jets, that is one application. So you probably can grasp a bit of an idea.

So as I guess, that makes sense. You are saying that the sort of industrial scale will come probably next decade. But I think the high nickel alloys is also part of transformational. And there, it looks like feasibility study will be a bit quicker. As you say, the sort of capacity is in place. Any idea of what that might add if it's not already included in the EUR 250 million number?

I would prefer to come back on that once we made the investment decision. So we just started the feasibility study now. I see the potential in that. Let's confirm that what the timing is and when we expect what -- once we make that decision.

But I think we clearly identified also what we expect as a minimum internal rate of return.

Yes. Thank you. I will still take one question from the chat function. And after that, we'll open the conference call lines. So your net debt guidance and your CapEx guidance suggests that you have limited capital headroom for M&A. Is it correct to conclude from your presentation that you consider your organic options to be more value accretive than M&A, and M&A is not a strategic priority?

Well, I think it's important to really understand the -- again, sorry, I come always back to that point, the uniqueness of our asset base. When we think about high nickel alloys business, for example, then you might think about, oh, Jesus, that requires an investment of EUR 1 billion or EUR 2 billion or you name it but we already have a very strong asset base in place. And we're talking about, and we gave also a bit of a ballpark, what additional investments for capabilities and our meltshop, we need small amounts in order to invest or to enter into that market over here. I think that is important to understand why this is then also value accretive to us and maybe not for others, first of all.

But we are not, in a sense, limiting ourselves in saying that no, by no means we're not looking into M&A or what the other opportunities. Again, we are looking into it. We take a prudent approach. It needs to make strategic. We need to have a strategic industrial concept and fit to the company and also from a valuation point of view, we need to ensure that with our existing asset base that we can creep then also the financial synergies out of a potential equation.

And maybe add to that a bit like how I also look up on things. So we are looking now in feasibility study at this hours to investment. But of course, we compare that opportunity to would there be something on the market that would give us a faster path or would be better. So we do that comparison. But right now, I'm thinking that Avesta might be the better option but we do that comparison.

Thank you, Kati and Marc-Simon. Now let's open the conference call lines and see if we have any questions there. So please, operator.

[Operator Instructions] Next question comes from Bastian Synagowitz from Deutsche Bank.

My first one is -- just a quick follow-up actually on the Krefeld strategy and what you're doing there with the new annealing line. So I'm wondering what is the FTE reduction you're planning with this relocation of the annealing line? Is it fair to assume around 500 heads just looking at the restructuring provision and then also, is there an actual capacity reduction built in to adjust for the current conditions in the European market? That's my first question.

So I can maybe give some color on that. I talked about the outsourcing and streamlining organization in Krefeld, which we start implementing right now. that's not linked to the AP line in Tornio at all. So that will reduce about 100 positions in Krefeld mainly through the outsourcing and then when we have the new AP line in Tornio operational and take down the 2 less competitive lines in Krefeld, that will reduce about 50 persons in Krefeld at that point of time. So it's about 150 people that are impacted by these 2 actions.

Okay. And is there a net capacity reduction as well, which you're going for?

No, there's no net capacity reduction. Actually, the new AP line in Tornio will be clearly more efficient, have more capabilities. The capacity will be even a little bit higher. But like I said earlier, that's not the reason we are doing the investment.

Okay. Understood. Okay. And then my next question is on your growth strategy for the U.S. So what are the areas of growth you're aiming for here beyond stainless you're talking about?

We are still exploring what they could be beyond stainless steel. But like I said today, we absolutely also see that if we now move to high nickel alloys, we have opportunities in that area also in the Americas. And when we develop our new technology and move towards green metals, there are definitely opportunities in Americas on that as well. But we also continue to explore what else there could be and how can we leverage the #2 position we have in the U.S. But what is the new message maybe today is that, as in Europe, we are not planning to grow in standard stainless steel and the same goes for Americas.

Okay. Okay. Got you. And then maybe lastly, just coming back to a point, which was made earlier, if I may. I guess if we look at your mid-cycle numbers here, they do look very, very confident, obviously, just versus the recent and the current run rates, I guess, which you've been delivering and I guess that also in the context of the European market, which looks very, very challenging also looking throughout the entire peer landscape. So what drives the confidence? And are you looking for CBAM as a major step change catalyst to your numbers?

So if I start on that, I understand the question coming because we come from such a challenging market conditions and low point. But remember also that when this market starts moving, it moves fast up. And I talked a little bit about -- earlier about the mega trends and geopolitics that should be supporting our business going forward. It's not that we calculate it in our numbers. We get x million from CBAM but we should start seeing CBAM supporting us when there's a carbon border adjustment on the European border in 2026.

And I would also hope European Commission now developing these lead markets should drive demand for European steel. But it's not that we put a number in our estimates from that.

The next question comes from Maxime Kogge from ODDO BHF.

So 2 questions from my side. I will start with the first one, so it's on chrome ore. Can you provide a sense of the volumes that you will not be able to sell directly to customers? I know that in ferrochrome, you said approximately 2/3 -- no you said 1/3 externally and 2/3 go to the internal production then? Would it be the same proportion for chrome ore? And can you also remind us of the position of your chrome ore activity on the global cost curve. I think ferrochrome is on the first quartile. And is it fair to assume that it's the same for the chrome ore activity?

I think it was on the split on the supplies. Why do we...

Yes. Yes. I'm trying to maybe understand that I heard you right. Let's put it like that. So what's the first question about the split, what we sell internally, externally?

In terms of chrome ore not in terms of ferrochrome, it is in terms of chrome ore going forward.

Sorry, chrome ore, we don't sell.

No, it's ferrochrome. Chrome ore, we don't sell. So the question was, where do we deliver our ferrochrome? And there I said, currently, we deliver about 1/3 to the external markets and 2/3 of our ferrochrome production internally. Chrome ore, we don't sell.

Yes, I understand that. But from now on, you have said that you will become a direct partner of the ferrochrome industry. So you will now sell some ore directly, if I'm not wrong?

So that is not what we said then. No.

Okay. Okay. I had understood that you could change your strategy in terms of chrome ore.

No. What I was trying to say is that we have more capacity that we are not utilizing today in the ferrochrome production. And as the demand for our sustainable and geopolitically compliant ferrochrome increases, we can sell more ferrochrome to the external market. So we are developing our customer base on the external market and we don't need to invest in a capacity to be able to do that. So that was probably the key message from a current ferrochrome business.

And then I think Marc-Simon added that we have also opportunity from current base already to develop our product portfolio on ferrochrome. And then the big step changes with this new technology that we are not limited to the ore quality of 53% chromium content, but we can go basically to any chromium content that we choose depending on what -- which market and premium is the most interesting.

If we think about this 1/3 or just give a number, 150-kilo tonnes, right, which we currently sell to the external market, this is 53% chrome content, right? and then you need to or can then calculate if we were just going to nickel metal, which is then 100%, how much less in terms of tonnes you are basically able to produce when you enrich basically your chrome content in here.

Okay. Okay. Okay. Because in yesterday's press release, it was written that you were increasing value from the chrome mine and repositioning from an internal supplier to an unrestricted market player. So that led me to think that you were now targeting ore sales and not just ferrochrome sales to third parties, but that is not the case. Okay. That's fine.

And just a last question then on your Mexican asset. I was wondering what could be the strategic future of this asset within Outokumpu because we are now seeing a massive risk of the deflection of steel from U.S. and Europe to Mexico and other emerging countries with higher tariffs. Do you think that this asset still has a future and can earn its living profitably?

What was your last question, do you think that what has the future?

The Mexican asset, Mexinox.

Yes. So of course, it's to be seen, but we had also earlier here a bit of a discussion that my understanding of the current discussions now is that Mexico and U.S. are negotiating on the 50% steel tariffs on the border. And I kind of believe that this goes to the direction that it is the USMCA border that will be protected and that there would not be tariffs between Mexico and U.S. because it has such a big impact for the whole value chain to U.S., whether it's carbon steel or stainless steel. But this is to be seen, of course, and that would be the best solution for us because then we can also more flexibly use the Mexican cold rolling capacity, either for Mexican market or for the U.S. market.

Okay. It seems that we do not have any more questions through the conference call lines. So do we have anything in the live audience? Frankly not, so I will take 2 more questions from the chat, and then I think we'll be soon running out of time. So first of all, is there any share buyback program under discussion? And what would trigger higher capital returns? .

No, there are no discussions on share buybacks right now at the moment.

And then the other one, what would trigger higher capital returns?

Well, of course, on -- in terms of capital returns, I would assume that this is the shareholder value related question, right? And here, certainly, our way going forward with our improvements in our EBITDA coming and streaming from the foundational investments, but also entering now into the growth area and making, first of all, on the one hand side, investing into growth very clearly with higher margins but also clearly saying that we are working towards reducing our cyclicality or dependence on the cyclicality make us less cycle business going forward. More resilient.

And then as the last question, this is more of a general question. Could you please just give us an update on the ferrochrome market at the moment?

Maybe short update is that, like I said, demand for our ferrochrome is clearly increasing. And the announcements now from South Africa and Zimbabwe, that capacity is taken down, has increased already the demand for our ferrochrome. And so it looks relatively good at the moment. And this optionality, what we're creating, I think, should develop it further.

Thank you very much. As it seems that we do not have any more questions, I would like to thank you all for following our event today, and I would like to hand over to our President and CEO, Kati ter Horst for her closing remarks.

So I think you could see it also a little bit, but I'm extremely proud of the strategy that we have developed together with the whole Outokumpu leadership team. And we really own this strategy, and we are really going to deliver that as well. We're very committed to deliver on it. So you heard about our foundational business. That is the cash generator. That is the one that will help us to reach the stepwise change in our profitability improvement like we have done in the past, and it will deliver this EUR 250 million. And then we are looking at growth in the transformational areas when we discuss today, especially the Heineken alloys and then this new technology that opens a lot of floors for us.

So even though this transformational part is very exciting and has a lot of potential, I continue to repeat that we do stay with our feet on the ground, and we will go step by step. And of course, we will then inform the markets as we have more detail and give more details on that journey. But now I would really like to thank you all for being here with us today. I extremely appreciate your time and your interest in our new strategy, and Outokumpu will continue to evolve.

So I think this now concludes our today's webcast, and I look forward to talking to you then during our Q2 webcast, which will be in end of July. So see you then. And I would say bye for now.