Q2 2024 ArcelorMittal SA Earnings Call

As normal, Genuino will make some opening remarks before moving directly to the Q&A session. So if you would like to ask a question, then please do press star 1 1 on your telephone keypad to join the queue, and if you want to exit the queue, just repeat that step, star 1 1.

Operator: So if you would like to ask a question, then please do press star 1 1 on your telephone keypad to join the queue. And if you want to exit the queue, just repeat that step.

Unknown Executive: So if you would like to ask a question, then please do press star one on your telephone keypad to join the queue, and if you want to exit the queue, just repeat that step, star one one.

Unknown Executive: Over to you, Gemina. Across ArcelorMittal, our people are galvanized to improve safety and achieve our goals of being a fatality-free organization as quickly as we can. Combined with the considerable efforts already underway, this will enable us to deliver the safe results we are striving for. We have faced our challenges, both macro and. Our resilient financial performance and strong balance sheet enable us to be fully focused on strategic execution. The new assets we have acquired in recent periods continue to perform well. We expect to conclude the acquisition of our 28% stake in Valorec very soon. Despite the challenging macroclimate, this means that we will enjoy the benefits of Ibiza on top of any cyclical recovery.

Daniel Fairclough: Thanks, Daniel, and welcome everyone. I will, as usual, keep my remarks brief and focus on the theme of the strategic progress. Beginning first, with safety, across ArcelorMittal, our people are galvanized to improve safety and achieve all goals of being a fatality-free organization as quickly as we can.

Daniel Fairclough: The third part, safety audit, which started at the end of December, is on schedule to be finalized this quarter. All the groundwork has been completed, and DSS Plus are now developing their actions and recommendations. Combined with the considerable efforts already underway, this will enable us to deliver the safe results we are striving for.

Daniel Fairclough: Moving to our financial performance, we have faced our challenges, both macro and micro, during the first half of 2024. But our results have shown good resilience and continue to reflect the positive actions we have taken to optimize our business and high grade our asset portfolio. A bit of a ton of $140 in the first half of 2024 compares well with our long-term history. Our operating results for the second quarter were broadly stable with the first quarter, despite the challenges faced in certain segments. This really highlights the benefits of our details by exposure. Pre-cash flow during the quarter was slightly positive, but let me remind you that this is after investment in our strategic growth projects.

Speaker Change: Moving to our financial performance.

Speaker Change: and Mikro during the first half of 2024. But our results have shown good resilience and continue to reflect the positive actions we have taken to optimize our business and high-grade our asset portfolio.

Speaker Change: Pre-cash flow during the quarter was slightly positive, but let me remind you that this is after investment in our strategic growth projects. Stripping that out, the annualized run rate investable cash flow was about $1.7 billion.

Daniel Fairclough: Stripping that out, the annualized run rate investible cash flow was about 1.7 billion.

Daniel Fairclough: Our resilience financial performance and strong balance sheet enables to be fully focused on the strategic education. And by strategic education, I mean delivering on our growth projects, realizing the potential of acquired assets, and consistently returning capital to shareholders. Over the past three and a half years, we have invested almost 3 billion in our strategic growth projects. We are developing our upstream resources, including metallics, renewables. We are adding capacity to high growth markets, including India. And we are developing our capabilities to produce higher margin products and solutions. We recently completed the new code, new complex at Vega, in Brazil and began commissioning our one gig of what renewables project in India.

Speaker Change: Our resilient financial performance and strong balance sheet enable us to be fully focused on strategic execution.

Speaker Change: Over the past three and a half years, we have invested almost $3 billion in our strategic growth projects. We are developing our upstream resources, including metallics, renewables. We are adding capacity in high-growth markets, including India.

and we are developing our capabilities to produce higher margin products and solutions.

We recently completed the new CodeMU complex at Vega in Brazil and began commissioning our 1 gigawatt renewables project in India.

Daniel Fairclough: Our organic growth has good momentum, with many projects should be commissioned in becoming periods. The new assets we have acquired in recent periods continue to perform well. We expect to conclude the acquisition of our 28% stake in Valera very soon. We have added it all penalty to support the growth of our construction business within sustainable solutions. The fact that we have been able to maintain our growth strategy, despite the challenging macro climate, means that we will enjoy the benefits to the bitter on top of any cyclical recovery.

The new assets we have acquired in recent periods continue to perform well. We expect to conclude the acquisition of our 28% stake in Valorec very soon. We have added Itaupaneli to support the growth of our construction business within Sustainable Solutions.

Speaker Change: The fact that we have been able to maintain our growth strategy

Despite the challenging macroclimate, it means that we will enjoy the benefits to ebitda on top of any cyclical recovery.

Daniel Fairclough: Finally, I want to highlight once again our consistent return to shareholders. Over the first half of 2024, we have returned 1.1 billion through buybacks and dividends. This is over 6% of our current market cap. We have now bought back 36% of our equity in last and four years. Given valuation, disconnect, our shares remain the best opportunities in the market, so buybacks will continue.

Unknown Executive: Finally, I want to highlight once again our consistent return to shareholders. Over the first half of 2024, we have returned $1.1 billion through buybacks and dividends. This is over 6% of our current market cap. We have now bought back 36% of our equity in less than four years. And the benefits to our shareholders have been compounded by our continued share buy-in. Thank you. To ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced.

Finally, I want to highlight once again our consistent return to shareholders. Over the first half of 2024, we have returned $1.1 billion through buybacks,

brought back 36% of our equity in less than four years.

Speaker Change: Given valuation disconnects, our shares remain the best opportunity in the market, so buybacks will continue.

Daniel Fairclough: To conclude my opening remarks, we are delivering a Brazilian result, and our performance continues to provide evidence that ArcelorMittal can deliver to tell you through all aspects of this ill cycle. We are maintaining a very strong balance sheet. Our strategic growth projects have good momentum and will provide significant structural upsides to a better and cash flows on top of any cyclical recovery. And the benefits to our shareholders have been compounded by our continued share buybacks.

To conclude my opening remarks, we are delivering resilient results and our performance continues to provide evidence.

And the benefits to our shareholders have been compounded by our continued shared buybacks.

Unknown Executive: With that, we are ready now to go to the Q&A. Thank you.

With that, Daniel, we are ready now to go to the Q&A.

Unknown Executive: To ask a question, you need to press star 1 and 1 on your telephone and wait for your name to be announced. To answer your question, please press star 1 and 1 again.

Daniel: Thank you. To ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again.

Unknown Executive: Thank you, Sean. So we do have a queue of questions already jumping out. So we will take them in the order that they have been added into the system.

Genuno: Great, thank you Sharon. So we do have a queue of questions already, Genuno, so we will take them in the order that they've been put into the system. So the first we will take from Alain and Morgan Stanley .

Alan Gabriel: So the first we will take from Alan at Morgan Stanley. Hi, Alan. How are you? Hi, thank you for taking my question. Firstly, on the outlook, Daniel or Janina, some of your peers have been profit-warning over the last two weeks in Europe. In that context, how do you see the business developing for your Europe division over the next quarter? And in the US, I'll say it's the inverse; your competitors have been increasing prices. Do you see this as a genuine inflection? And what does that mean for your Q3? That's my first question. Thanks.

Operator: To withdraw your question, please press star 1 and 1 again. Great, thank you, Sharon. So we do have a queue of questions already, Genuno, so we will take them in the order that they've been put into the system. So the first question we will take from Alain at Morgan Stanley. Hi everyone, how are you?

Speaker Change: Hi everyone, how are you?

Alain: Hi, hi, thank you for taking my question. Firstly, on the outlook,

Daniel Fairclough: Sure, Alan. Thank you. And thank you for the question.

Speaker Change: That's my first question, thanks.

Daniel Fairclough: So let me start first with Europe. As we all know, the market backdrop in Europe is challenging. As we anticipate, at the very beginning of the year, we are seeing declining real demand. But we are not changing; even though we have revised downwards our parents' new consumption forecast for Europe for 2024, we are still seeing a parents' new consumption to be at least flat or, if not, a small positive. So when we look at our order books or support quarter three, we do see no more seasonality. We are not really seeing something that is more extraordinary than that.

Unknown Executive: Let me start first with Europe, as we all know that the market backdrop in Europe is challenging. And I think it's also important to note that we don't expect the same level of this talk that we saw in 2023. And then, of course, as we know, in the U.S. Yeah, sure. Thanks, Gemmina.

Speaker Change: Sure, Alain, thank you. Thank you for the question.

Speaker Change: Let me start first with Europe . As we all know, the market backdrop in Europe is challenging.

Speaker Change: As we anticipate at the very beginning of the year, we are seeing declining real demand.

Speaker Change: So, when we look at our order books also for Quarter 3, we do see no more seasonality. We are not really seeing something that is more extraordinary than that.

Daniel Fairclough: And I think it's also important to know that we don't expect the same level of destruct that we saw in 2023. So we do believe that the appearance to consumption in the second half compared to the second half of last year should be slightly better this year. So, and then of course we, as we know in the US right now prices have come down significantly, prices below IPP, which is something unusual. We would expect that to rebalance, so we'll see how we develop.

Speaker Change: And I think it's also important to note that we don't expect the same level of this talk that we saw in 2023.

Speaker Change: So, we do believe that the apparent steel consumption in the second half compared to the second half of last year should be slightly better this year.

Daniel: And then, of course, as we know, in the U.S.

Daniel Fairclough: Thank you, and what does that mean for the moving part for your business in Europe and in the US for two three.

Speaker Change: Thank you. And what does that mean for the moving part for your business in Europe and in the U.S., 4Q3?

Daniel Fairclough: So I will ask, then, is one or two talk about the moving parts of all the segments, not only US in Europe, so for the benefit of everyone. Yeah, sure, thanks. So I think, as Alain talked about, I think the main moving parts that we're going to see in Q3 relative to Q2 will be the seasonally lower volume in Europe and the lag defect of lower spot prices in NAFTA.

Daniel: So I will ask Blenny if you want to talk about the moving parts of all the segments, not only US and Europe , so for the benefit of everyone.

Unknown Executive: So I think, as Alain talked about, I think the main moving parts that we're going to see in Q3 relative to Q2 will be the seasonally lower volumes in Europe and the lagged effect of lower spot prices in NAFTA, but to provide a little bit more detail and context, I will go through the various different segments starting first with North America. So, yes, we will see lower spot prices in Q3 relative to Q2.

Genuino: Yeah, sure. Thanks, Gemma.

Daniel: So, I think, as Alain talked about, I think the...

Speaker Change: The main moving parts that we're going to see in Q3 relative to Q2 will be the seasonally lower volumes in Europe and the lagged effect of lower spot prices in NAFTA.

Daniel Fairclough: And, but to provide a little bit more detail and context that will go through the various different segments, starting first with North America. And so yes, we will see lower spot prices in Q3 relative to Q2 volumes. They'll be stable to marginally lower quarter on quarter, and of course the impact of Mexico in Q3 is expected to be the same as it was in Q2. In terms of the Brazil segments, look there; we're not anticipating any major movement, so we would expect similar volume and overall pricing to be broadly stable in the Q3 relative to Q2.

Speaker Change: But to provide a little bit more detail and context, I'll go through the various different segments, starting first with North America.

Genuino: So, yes, we will see lower spot prices in Q3 relative to Q2. Volumes, they'll be stable to marginally lower quarter-on-quarter, and of course the impact of Mexico in Q3 is expected to be the same as it was in Q2. In terms of the Brazil segment, look there, we're not anticipating any major movements, so we would expect similar volume and overall pricing to be broadly stable.

Unknown Executive: Volumes, they'll be stable to marginally lower quarter-on-quarter, and of course, the impact of Mexico in Q3 is expected to be the same as it was in Q2. In terms of the Brazil segment, look there; we're not anticipating any major movements, so we would expect similar volume and overall pricing to be broadly stable in Q3 relative to Q2. In Europe, I am reiterating again that volumes will be lower, but following the normal seasonal pattern, so nothing more exaggerated than our normal seasonal volume pattern in Europe, and yes, we will see the lagged impact of lower prices, but we will also see the impact of lower raw material costs coming through as well.

Daniel Fairclough: In Europe, reiterating again that volumes will be lower but following the normal seasonal pattern, so nothing more exaggerated than our normal seasonal volume pattern in Europe, and that applies to both flat and long products. And yes, we will see the lacked impact of lower prices, but of course we will also see the impact of lower raw material cost coming through as well.

Genuino: in the Q3 relative to Q2.

Genuino: In Europe , reiterating again that volumes will be lowered but following the normal seasonal pattern, so nothing more exaggerated than our normal seasonal volume pattern in Europe , and that applies to both flat and long products.

Speaker Change: And yes, we will see the lagged impact of lower prices, but of course we will also see the impact of lower raw material costs coming through as well.

Daniel Fairclough: On the India and JVs, I think you will see in Q3 improvements in volumes, so we have some maintenance in Q2 and so volume should improve in Q3, and then because of those recent high levels of imports, I think we should probably assume that prices will be slightly lower quarter on quarter. And then in mining, of course, it's difficult to say with accuracy at this point what prices will be quarter on quarter, but in terms of volumes, I think we can confidently expect that they will improve relative to the second quarter.

Unknown Executive: On the India and JVs, I think you will see an improvement in volumes in Q3. We had some maintenance in Q2, and so volumes should improve in Q3. And then, because of those recent higher levels of imports, I think we should probably assume that prices will be slightly lower quarter on quarter.

Speaker Change: So we had some maintenance in Q2 and so volume should improve in Q3 and then because of those recent higher levels of imports I think we should probably assume that prices will be slightly lower quarter-on-quarter.

Unknown Executive: And then in mining, of course, it's difficult to say with accuracy at this point what prices will be quarter on quarter, but in terms of volumes, I think we can confidently expect that they will improve relative to the second quarter. And I'm sure we will be in a position to talk more about potential synergies that, as we know, being a minority shareholder of this business, will need to be a win-win for both companies. And that's what we're going to do, for sure; we will explore possibilities with them. Thank you.

Speaker Change: And then in mining, of course, it's difficult to say with accuracy at this point what prices will be quarter on quarter, but in terms of volumes, I think we can confidently expect that they will improve relative to the second quarter.

Alain Gabriel: Thanks, thanks, and my second question is on Valorak. So, you expect the deal to close in Q3. When should we expect an update on the synergies so that we better understand the value that this investment brings to you in addition to the sample consolidation of the additional earnings stream from Valorak? Yeah, Alain, you're right. So, our expectation is that the deal should close very soon. It should close now in Q3. And then I tried that from that point on. Once, of course, we're going to be present also at the board of Alurex. We're going to be our main focus, of course, is to try and support that business.

Speaker Change: And then from that point onwards, of course, we're going to be present also at the board of LREC. So we're going to be, our main focus, of course, is to try and support that business. As we said before, we believe that management has been doing a great job. So we want to contribute to that.

Daniel Fairclough: As we said before, we believe that management has been doing great jobs, so we want to contribute to that.

Daniel Fairclough: And I'm sure we will be in a position to talk more about potential synergies that, as we know, being a minority shareholder of this business, it will need to be a win-win for both companies, and that's what we're going to, for sure, we will explore possibilities with them.

Speaker Change: And I'm sure we will be in a position to talk more about potential synergies that, as we know, being a minority shareholder of this business, it will need to be a win-win for both companies. And that's what we're going to, for sure, we'll explore possibilities with them.

Unknown Executive: Thank you.

Unknown Executive: Great. Thanks very much, Alan.

Unknown Executive: Great. Thanks very much, Alan. So we'll move now to the next question, which we will be taking from Tristan. Please go ahead, Tristan, and also regarding the other division, which includes Ukraine and South Africa, and I think there were expectations of further improvement in the second half. So how should we think about that business, because I believe there's still a lot of tons associated with that EBITDA line. And lastly, on Europe, if real demand is down and you expect apparent consumption to be flat to up, does that mean that you expect some level of restocking already in September? Yeah, Tristan, so let me take the first part of your question. So in Mexico, you specifically ask about the blast furnace.

Tristan Gresser: So, we'll move now to the next question, which we will be taking from Tristan.

Speaker Change: Thank you.

Speaker Change: Great, thanks very much, Alan. So we'll move now to the next question, which we will be taking from Tristan. Please go ahead, Tristan.

Tristan Gresser: Please go ahead, Tristan. Yes, I thank you for taking my question. Just a few follow-ups on the Q3 guidance. In North America, you can feel how much time it would take, really, to restart the blast furnace. And also regarding the other division, which includes Ukraine and South Africa, and I think there were expectations of further improvement in the second half. So how should we think about that business? Because I believe there's still a lot of tons associated with that, a bit the line. And lastly, to the guidance, sorry, on Europe, if real demand is down and you expect apparent consumption to be flat to up, does that mean that you expect some level of restocking already in September?

Tristan: Yes, I thank you for taking my questions. Just a few follow-ups on the Q3 guidance. In North America, can you confirm how much time it would take really to restart the blast furnace?

Speaker Change: Ukraine and South Africa and I think there were expectation of further improvement in second half.

Speaker Change: Bye.

Speaker Change: If real demand is down and you expect apparent consumption to be flat to up, does that mean that you expect some level of restocking already in September ?

Daniel Fairclough: Yeah, Tristan, so let me take the first part of your question. So, in Mexico, so you talk specifically about the blast furnace. I think it's important, as you know, in Mexico, we have two businesses, most important, one, of course, being the client operations. And that part of the business is up and running, right? So we have, after the end of the blockade, we have started operations already. Of course, we will see an impact as we highlight it in our release in quarter three as well, but that business is up and running. Then we have the blast furnace, which is dedicated to the long business.

Unknown Executive: I think it's important, as you know, in Mexico, we have two businesses, the most important one, of course, being the plant operations. And that part of the business is up and running, right? So at the end of the blockade, we have started operations already. Of course, we will see an impact, as we highlighted in our release in quarter three as well. But that business is up and running.

Speaker Change: Yeah, Tristan, so let me take the first part of your question. So in Mexico, so you specifically ask about the blast furnace. I think it's important, as you know, in Mexico we have two businesses, the most important one of course being the plant operations.

Unknown Executive: Then we have the blast furnace, which is dedicated to the long business. That part of the business will take a little bit longer to restart. But we should be restarting it.

Daniel Fairclough: That part of the business will take a little bit longer to restart. We should be restarting it. It should take us about two months to be able to restart that part of the business. Then, so the other divisions, so specifically about Ukraine, I think Ukraine did well, given the circumstances in the second quarter. As we highlighted before, we brought back one additional furnace, so they run with two furnaces for both of the quarter; that was helpful. We saw a significant increase in terms of production, shipments; as a result, they were a bit positive in quarter two.

Unknown Executive: It should take us about two months to be able to restart that part of the business. Then, as for the order divisions, so specifically about Ukraine, I think Ukraine did well, given the circumstances in the second quarter. As we highlighted before, we brought back one additional furnace, so they ran with two furnaces for most of the quarter. That was helpful. We saw a significant increase in terms of production shipments, and as a result, they were a bit positive in quarter two.

Speaker Change: did well, given the circumstances in the second quarter, as we highlighted before.

Unknown Executive: So that's reassuring. Of course, challenges remain, as we know: power, availability of power, logistics. So we continue to face a number of challenges, but I think quarter two was a good performance. And then, in Europe, yes, our guidance, of course, assumes that we will see a bit of restocking overall for the year. I cannot be precise if we're going to start to see it already in September, but for the year, for sure, our expectation is that we will see some restocking after coming from years in which we were destocking. So that's... Now, let's show you. Thank you for listening. Okay, that's helpful. And another question, Ben on CBAM.

Daniel Fairclough: So that's reassuring. Of course, challenges remain, as we know, power, a bit of power, logistics. So we continue to face a number of challenges, but in quarter two was a good performance. And then in Europe, yes, our guidance, of course, assumes that we will see a bit of restocking overall for the year. I cannot decide if we're going to start to see it already in September, but for the year, for sure, our expectation is that we will see some restocking after coming from years in which we were dissocking.

Speaker Change: there were a bit of positives in quarter two. So that's reassuring. Of course challenges remain as we know power, availability of power.

Speaker Change: And then, in Europe , yes, our guidance, of course, assumes that we will see a bit of restocking overall for the year.

Speaker Change: We're going to start to see it already in September , but for the year for sure our expectation is that we will see some restocking after coming from years in which we were destocking. So that's...

Patrick Mann: So that's No, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no no, no, no, no, no, no, no, no, no no, no, no, no, no, no, no, no, no, no, no, no, no no, no, no, no, no, no, no, no, no, no no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no Two questions I wanted to ask.

Speaker Change: Now let's show...

Unknown Executive: I think you mentioned that you remain optimistic about the Commission strengthening the measures. Is there an ongoing dialogue at this stage or given the election or changes there? Is it being discussed at the moment?

Unknown Executive: And what specifically are you pushing for? And do you think there is a possibility to extend the 2034 deadline for free allocation? Yeah, well, Tristan, as we know, SIBAN is extremely important for the industry in Europe, right? So at the moment, as we all know, the industry is paying for the high cost of CO2 emissions that nobody else is paying. We still have high energy costs in Europe. So at this point in time, the competition is not very fair, right? So that's why SIBAN is so, so critical.

Speaker Change: We still have high energy costs in Europe . So at this point in time, the competition is not very fair, right? So that's why SIBAN is so, so critical. We have been advocating for it for quite some time.

Unknown Executive: We have been advocating for it for quite some time, and we know that we need improvements in the way it is designed today. And the key points are, first, to make sure that Europe can be competitive in the export market, so that we have a sort of rebate when we export. Second, we need to make sure that we avoid circumvention, that there is leakage, and that producers outside of Europe pick and choose the materials that they will send to Europe.

Speaker Change: And, but we know that we need improvements in the way it is designed today. And the key point, first, is to make sure that Europe can be competitive in the export markets.

Speaker Change: Second, we need to make sure that we avoid circumvention.

Speaker Change: That is Leakage.

Speaker Change: that produces, outside of Europe , pick-and-choose.

Unknown Executive: Also, we need to make it broader, because of course, there are products coming to Europe that today are not covered by CYBAN or Finnish products. So there are a number of points that we believe need to be improved so that SIGBAN can be effective and then support the industry and the development of the industry going forward. And then specifically in terms of, um, Great, thanks Tristan. So we'll move down to the next question. Hello, thank you very much for the call. I have two questions I wanted to ask.

Speaker Change: materials that they will send to Europe . Also, we need to make it broader because, of course, there are products coming to Europe that today are not covered by Sibano or Finnish products.

Speaker Change: So, there are a number of points that we believe need to be improved so that SIBAN can be effective and then can support the industry and the development of the industry going forward.

Speaker Change: and then specifically in terms of emissions

Speaker Change: or certificates, reduction of the certificates. I think this is a dialogue that is ongoing but at this point in time we don't really have any specifics to share with you.

Speaker Change: Thank you very much.

Speaker Change: Great, thanks Tristan. So we'll move down to the next question.

Speaker Change: which we'll take from Patrick at Bank of America. Hi Patrick.

Unknown Executive: The first one is just on the buyback. So, I mean, you're about three quarters of the way through the share buyback program. And, you know, that's running ahead of schedule, or, you know, I think you're about 60% of the way through. So, Regarding the first part of your question, that's easy. So we do have more today's authorization that we got from our last AGM, so we could potentially increase the size of the buyback. Right now, as you know, we are still at the end of the second quarter.

Patrick Mann: And the first one is just on the buyback. So I mean, you're about three quarters of the way through the share buyback program, and you know, that's running ahead of schedule or, you know, I think you're about 60% of the time way through. So if it continues at the kind of the same pace, would you wait until May 2025, the next shareholder AGM, or is it reasonably easy to reload if you find yourself running up against that 10% authorization? And then maybe linked to that, or second part of that question, how responsive are you to the share price levels?

Patrick: Hello, thank you very much for the call. Two questions I wanted to ask. The first one is just on the buyback. You're about three quarters of the way through the share buyback program and that's running ahead of schedule. I think you're about 60% of the time way through.

Speaker Change: If it continues at the kind of the same pace...

Speaker Change: Would you wait until May 2025 the next shareholder AGM, or is it reasonably easy to reload if you find yourself?

Speaker Change: running up against that 10% authorization and.

Speaker Change: And then maybe linked to that, or a second part of that question...

Patrick Mann: I mean, do you see the stock in the 20s and the low 20s and you think, okay, you know, this is a good opportunity to sort of accelerate the buyback, or do you try and do it fairly mechanically where you just say, this is free cash flow, this is allocation, and we, you know, we're just going to spread it out.

Speaker Change: How responsive are you to the share price levels? I mean, do you see the stock in the 20s, in the low 20s, and you think, okay, you know, this is a good opportunity to sort of accelerate the buyback? Or do you try and do it fairly mechanically, where you just say, this is a free cash flow, this is allocation, and we're just going to spread it out?

Patrick Mann: That's the first question. Thanks.

Daniel Fairclough: Yeah, Patrick, so regarding the first part of the question, that's easy. So we do have more today authorization that we got from our last H&M, so we could potentially increase the size of the buy-back. Right now, as you know, we still have, so at the end of second quarter, we still had about 24 million shares to be bought, so it's still a sizable chunk of shares that we need to buy, and we'll see that when we cross that, we will decide then the next steps.

Speaker Change: That's the first question. Thanks.

Patrick: Yeah, Patrick, so...

Speaker Change: Regarding the first part of your question, that's easy, so we do have more today authorization that we got from our last AGM, so we could potentially increase the size of the buyback.

Speaker Change: Right now, as you know, we still have, at the end of the second quarter, we still had about 24 million shares to be bought.

Unknown Executive: We still had about 24 million shares that should have been bought. So it's still a sizable chunk of shares that we need to buy. And we'll see as and when we cross that; then we will decide the next steps. I think the message is the same as what we have been discussing, that the policy is not changing, right? So the moment we complete the program, we will, of course, based on our policy, make sure that a minimum of 50% of the pre-cash is distributed to shareholders.

Speaker Change: So, it's still a sizable chunk of shares that we need to buy, and we'll see as and when we cross that, we will decide then the next steps.

Daniel Fairclough: I think that the message is the scene that what we have been discussing, that the policy is not changing, right? So the moment we complete the program, we will, of course, based on our policy, make sure that a minimal of 50% of the pre-cash is distributed to shareholders. Regarding the pace, we are not really trying to time the market. I think the objective, the main objective, is to return cash to shareholders, and that's what we have been doing consistently. And regarding the valuation, it was low before; it's even lower today, right? So we feel that it is a good investment, even though now the share price is even lower, but we believe that when the market conditions improve, and it will eventually, we will look back and see that the share buy-backs really create a lot of value as well as shareholders.

Speaker Change: I think that the message is the same that what we have been discussing, that the policy is not changing, right? So the moment we complete the program, we will, of course, based on our policy, make sure that minimum of 50% of the free cash is distributed to shareholders.

Unknown Executive: Regarding the pace, we are not really trying to time the market. I think the objective, the main objective is, to return cash to shareholders, and that's what we have been doing consistently. And regarding valuation, it was low before, and it's even lower today, right? So we feel that... Okay, thank you very much.

Speaker Change: Regarding the pace, we are not really trying to time the market, I think the objective, the main objective is...

Speaker Change: It is a good investment, even though now the share price is even lower, but we believe that when the market conditions improve and it will eventually, we will look back and see that the share buybacks really create a lot of value to our shareholders.

Patrick Mann: Okay, thank you very much, and then the second question I wanted to ask was just on the, you know, there's a section in there where you talk about discipline, capital investment, and I suppose requiring returns on any decarbonisation, capex that you spend.

Unknown Executive: And then the second question I wanted to ask was just on the discipline, you know, there's a section in there where we talk about disciplined capital investment and, I suppose, requiring returns on any decarbonization CapEx that you spend that are not going to make the hurdle rates for decarbonization unless you get substantial government support. So, I mean, is it not fair to say that you could end up in a situation where you're stuck, you can't get a return on your investment to decarbonize them, and you're not getting the funding? And so in that situation, what happens?

Speaker Change: Okay thank you very much and then the second question I wanted to ask was just on the

Speaker Change: There's a section in there where you talk about disciplined capital investment and I suppose requiring returns on any decarbonization capex that you spend.

Patrick Mann: I mean, I would think that potentially a quite likely outcome of that approach is that there are going to be plants that are not going to make the hurdle rate for decarbonisation unless you get substantial government support.

Speaker Change: I mean I would think that potentially a quite likely outcome of that approach is that there are going to be plants

Speaker Change: that are not going to make the hurdle rates.

Speaker Change: for decarbonization unless you get substantial government support. So, I mean, is it not fair to say that you could end up in a situation where you're stuck and that you can't get a return to decarbonize them, you're not getting the funding?

Patrick Mann: So, I mean, is it not fair to say that you could end up in a situation where you're stuck in that, you can't get a return to decarbonise them, you're not getting the funding, and so in that situation, what happens? Do you just run the plants with no reinvestment until the carbon costs are too high, and it becomes an economic and you close it, or you know, if you stick to that completely, then surely that is quite a high likelihood that at least some plants, this is what the ultimate outcome is going to be. Well, yeah, I think we can talk about that trick.

Unknown Executive: Do you just run the plant with no reinvestment until the carbon costs are too high and it becomes? uh, uneconomic, and you close it, or, You know, if you stick to that completely, then, you know, surely that is quite a high likelihood that at least some plants will end up this way. Well, yeah, I think I can talk about that, Patrick.

Speaker Change: And so in that situation, what happens? Do you just run the plant with no reinvestment until the carbon costs are too high and it becomes...

Speaker Change: Uneconomic, can you close it or?

Speaker Change: you know if you if you stick to that completely then you know surely that is quite a high likelihood that at least some plants this is what the ultimate outcome is going to be

Unknown Executive: So I think we have also been very clear that we will invest when it makes economic sense, right? So it's very important that we achieve decent levels of economic return to justify the investment. I think that's something that we owe to our shareholders, right? And as I talked a little bit earlier, in Europe, we are in a kind of transition phase where CIBAN is not yet effective.

Daniel Fairclough: So, I think we have also been very clear that we will invest in when it makes economic sense, right? So, it's very important that we achieve decent levels of economic return to just finding investment. I think that's something that we pulled to our shareholders, right? So, and as I talked a little bit earlier, in Europe we are in kind of a transition phase, where Syban is not yet affected. Policies, I'm sure they will continue to evolve. We just heard from our president of the Commission, Madeline, also showing more support, of course, for the European industry.

Speaker Change: Well, yeah, I think we can talk about that, Patrick. So I think we have also been very clear that we will invest when it makes economic sense.

Patrick: It's very important that we achieve

Speaker Change: our recent levels of economic return to justified investment. I think that's something that we brought to our

Speaker Change: to our shareholders, right? So, and as I talked a little bit earlier, in Europe , we are in a kind of a transition phase where SIBAN is not yet effective.

Unknown Executive: Policies, I'm sure they will continue to evolve. We just heard from our President of the Commission, Van der Leyen, also showing more support, of course, for the European industry. Of course, we have to see that supported by more actions, right? But I think we should see those moving parts before we can go ahead and commit all the investments. And we'll see, I mean, as we know in Europe today, some of the plants, not us, I think the group is in good shape, we are doing well. But if you look around, you're going to see plants struggling.

Speaker Change: policies. I'm sure they will continue to evolve.

Speaker Change: We just heard...

Speaker Change: from our

Speaker Change: President of the Commission Van der Leyen also showing more support, of course, for the European industry. Of course, we have to see that supported by more actions.

Daniel Fairclough: Of course, we have to see that supported by more actions, right?

Daniel Fairclough: But I think we should see those moving parts before we can go ahead, commit all the investments. And we will see. I mean, as we know in Europe today, some plants, not us, I think the group is in good shape; we are doing well. But if you look around, you're going to see plants struggling, and that's why in Europe, the industry needs more protection, needs support to develop, as we saw in the US at Section 232, as an example.

Speaker Change: But I think we should see those moving parts before we can go ahead, commit all the investments.

Operator: And that's why, in Europe, the industry needs more protection, needs support to develop, as we saw in the US, at Section 232, as an example. So we'll now move to the next question, which we will take from Cole, Geoffrey. Go ahead, Cole, if you can hear us.

Speaker Change: And we'll see, I mean, as we know in Europe today, some plants...

Speaker Change: I think the group is in good shape, we're doing well, but if you look around you're going to see plants struggling. And that's why in Europe the industry needs more protection, needs support to develop as we saw in the US.

Speaker Change: at Section 232 as an example.

Patrick Mann: Okay, thank you.

Cole Hathorn: Thanks, Patrick. So, we'll now move to the next question, which we will take from Cole, Jeffrey. Go ahead, Cole, if you can have us. Good afternoon, thanks for taking the question. I just like to hear your thoughts on some of the new trade barriers that you're seeing in Brazil and how that's impacting your business there or supporting it. And then you made a preamble on how you've improved the eapodapa ton of the business.

Speaker Change: Okay, thank you.

Speaker Change: Thanks Patrick. So we'll now move to the next question which we will take from Cole at Geoffrey. Go ahead Cole if you can hear us.

Unknown Executive: Good afternoon, thanks for taking the question, some of the new trade barriers that you're seeing in Brazil and how that's impacting your business there or supporting it. And then... a preamble on how you've improved the EBITDA per tonne of the business. Would you mind just recapping, you know, what are the bigger moving parts of what businesses you've sold and the investments that have improved that EBITDA per tonne? This is the bottom of the site.

Cole: Good afternoon, thanks for taking the question. I'd just like to hear your thoughts on some of the new trade barriers that you're seeing in Brazil and how that's impacting your business there or supporting it.

Speaker Change: You made a...

Daniel Fairclough: Would you mind just recapping, you know, what are the bigger moving parts of what businesses you've sold and the investments that have improved that eapodapa ton if this is the part of the cycle. Thank you. Yeah, sure, Cole. In Brazil, I mean, we had the new quotas, and the entire is above the quotas. Of course, it's an important development. So, we have about 11 products. So, most of the products are black products. So, it should provide some support. We will see in the second half. It's not visible, really, yet in the second quarter. In the second quarter, we have not seen it, and though we saw a nice improvement in the official consumption in the second quarter, but in poor levels or markets from imports, we may relatively stable at high levels.

Cole: A preamble on how you've improved the EBITDA per tonne of the business. Would you mind just recapping, you know, what are the bigger moving parts of what businesses you've sold and the investments that have improved that EBITDA per tonne if this is the bottom of the cycle? Thank you.

Speaker Change: In Brazil, we have the new quotas and the entire is above the quotas. Of course, it's an important development. We have about 11 products, so most of the products are flat products.

Speaker Change: So, it should provide some support, we will see in the second half, it's not visible really yet in the second quarter.

Speaker Change: In the second quarter, we have not seen, even though we saw a nice improvement in the apparence to consumption in the second quarter, but import levels or market share from imports remain relatively stable at high levels.

Daniel Fairclough: So, we have to see, but clearly, I think, more needs to be done. So, in this environment where you have China exporting so much, the regions are being impacted directly or indirectly. So, that's why it's so important that we have this trade so that the local industry that is doing the right things, just in production, whenever it needs to demand, they don't suffer because one player is not behaving economically, right?

Speaker Change: So we will have to see, but clearly I think more needs to be done. So in this environment where you have China exporting so much...

Unknown Executive: The regions are being impacted directly or indirectly, so that's why it's so important that we have this trade so that the local industry that is doing the right things, adjusting production whenever it needs to meet demand, they don't suffer because one player is not behaving economically. So, and then in terms of the Abitur Patron, there's quite a lot, and thank you for the question, because... Right, and that's, that's, that's why it's visible now.

Speaker Change: The regions are being impacted directly or indirectly, so that's why it's so important that

Speaker Change: We have this trade so that the local industry that is doing the right things, adjusting production whenever it needs to demand, they don't suffer because one player is not behaving economically, right?

Daniel Fairclough: So, and then, in terms of a bit of a tone, that's quite a lot, and thank you for the question, because this is something that we tried to convey. This message that the group has changed. Over the last many years, we have exited a number of businesses that we felt. Either we were not the right owners, or could not be competitive, and just give a couple of examples. We existed a lot of commodity business in Europe, so investments of Australia, of Galati. We diversed also rebars in Europe. So, we invested more in rails. Of course, we had the acquisitions of what are in China and Brazil.

Speaker Change: So and then in terms of the Abitur Patron, there's quite a lot and thank you for the question because

Speaker Change: This is something that we...

Speaker Change: We tried to convey this message that the group has changed over the last many years, we have exited a number of businesses that we felt

Speaker Change: Either we were not the right owners, or could not be competitive.

Speaker Change: And just to give a couple of examples, we visited a lot of commodity business in Europe , so investments of Ostrava, Galati.

Speaker Change: We divested also rebars in Europe , so we invested more in rails, of course we had the acquisitions of...

Daniel Fairclough: We have very high levels of profitability. We invested in in the same in Brazil, also covered a number of added value projects that are automotive, also done. So, we have really been working very extensively on the footprint, right? And that's why it's visible now.

Speaker Change: of Votorantim in Brazil with very high levels of profitability. We invested in...

Speaker Change: in Brazil, also Calvert, a number of added value projects that Automotive also done. So we have really been working very extensively on the footprint.

Unknown Executive: And when you combine that with the balance sheet and the low level of debt that we have today, that's why we feel so comfortable that, even in this challenging macro environment, we can continue to push forward with our strategy, our investments, and our return to shareholders. And then, just as a follow-up, there's been some, obviously, political commentary around Mexico and shipments coming across the border into the U.S. Would you mind giving your thoughts on ArcelorMittal's Mexico business and the melt and pour kind of caveat?

Daniel Fairclough: And when you combine that with the balance sheet, with the low level of debt that we have today, that's why we feel so comfortable to, even in this challenging macro, we can continue to push forward with our strategy on investments. I will return to your show. Corners.

Speaker Change: And that's why it's visible now. And when you combine that with the balance sheet, with the low level of that that we have today, that's why we feel so comfortable to, even in this...

Speaker Change: challenging macro. We can continue to push forward with our strategy, our investments, our return to shareholders.

Daniel Fairclough: And then just as a follow-up, there's been some obviously political commentary around Mexico and chipmunks coming across the border into the US. Would you just mind giving your thoughts on Osop Mittal's Mexico business and kind of the melt and pour kind of caveat that they were talking about? Thank you. Yeah. Well, as another principle, I mean, any agreement, as we had an agreement between the US and the Mexican government, with the view to prevent circumvention, we will support that, right? Coming to our business, Mexico is an important part of our business. We have invested heavily in the last couple of years.

Speaker Change: And then, just as a follow-up, there's been some, obviously, political commentary around Mexico and shipments coming across the border into the U.S.

Speaker Change: Would you just mind giving your thoughts on ArcelorMittal's Mexico business and kind of the melt and pour kind of caveat that they were talking about? Thank you.

Unknown Executive: that we're talking about. Yeah, well, as a matter of principle, I mean, any agreement, as we have had an agreement between the US and the Mexican government, with the view to prevent circumvention, we will support that, right? Coming to our business... We have this brand new Hot Strip Mute that is performing well.

Speaker Change: Well, as a matter of principle, any agreement, as we had an agreement between the U.S. and the Mexican government with the view to prevent circumvention, we will support that, right? Coming to our business...

Unknown Executive: And all of our steel in Mexico is melted in Mexico, debate because all of our steel is melted and poor and in Mexico. Great, thanks, Cole. So we'll move to the next question, which we will be taking from Tom at Barclays, so please go ahead, Tom, if you can hear us. So I think one important trigger could be that improvement in confidence and really just the sense that things are brightening and that the outlook is increasingly positive. Triggers for that could be the interest rate cutting cycle as one obvious point. The second trigger can really also be just this sense that things can't go any lower.

Speaker Change: Mexico is an important part of our business. We have invested heavily in the last couple of years.

Daniel Fairclough: We have this brand new hot strip, new that is performing well. And all of our steel in Mexico is melted in the pool in Mexico, right? So we are not really part of this debate, because all of our steel is melted and poured in Mexico. Very clear.

Speaker Change: We have this brand new Hot Strip Mule that is performing well. And all of our steel in Mexico is melted in Mexico.

Speaker Change: And so we are not really part of this.

Speaker Change: debate, because all of our steel is melted and poor and inescapable.

Unknown Executive: Thank you. Great.

Speaker Change: Very clear, thank you.

Unknown Executive: Thanks, Cole.

Tom Zhang: So we'll move to the next question, which we will be taking from Tom at Barclays. So please go ahead, Tom, if you can hear us. Yeah. Good afternoon. Thanks for taking our questions. Just two for me. The first one, you know, you talked a little bit about how unsustainable steel spreads and steel prices are eating it for the cost curves. Maybe you can just give us some thoughts on what needs to happen as a sort of catalyst to actually get that to change. You mentioned sort of swift and effective responses to unfair trade. Have the policies that we've already seen?

Speaker Change: Great, thanks Cole. So we'll move to the next question.

Speaker Change: which we will be taking from Tom at Barclays. So please go ahead, Tom, if you can hear us.

Tom: Yeah, good afternoon. Thanks for taking our questions. Just two for me. The first one, you know, you talked a little bit about how unsustainable steel spreads and steel prices are easing into the cost curve.

Speaker Change: Maybe you can just give us some thoughts on what needs to happen as a sort of catalyst to actually get that to change.

Speaker Change: You mentioned sort of swift and effective responses to unfair trade. Have the policies we've already seen, is that going to be enough? Do you need more capacity being taken out? Do you need demand really just to improve? Just curious on, yeah, what stops it being unsustainable? Thanks.

Daniel Fairclough: Is that going to be enough? Do you need more capacity being taken out? Do you need demand? Really just to improve? Just curious on what stops it being unsustainable? Thanks.

Daniel Fairclough: Do you want to start, Daniel? Provide your thoughts, and then I add? Thank you, Jeremy. So, yeah, I think there are perhaps several potential triggers. But clearly, the best trigger would be an improvement in apparent demand, and that would be triggered really by confidence. So once the market participants become more confident that the real demand recovery is something that they can look forward to, then they're going to start thinking about replenishing their inventories and also the raw materials required to produce their inventories. So I think one important trigger could be that improvement in confidence and really just a sense that things are brightening and that the outlook is increasingly positive.

Speaker Change: Do you want to start, Daniel? Provide your thoughts and then I end.

Daniel: Thank you, Germaine. So, yeah, I think there are perhaps several potential triggers.

Daniel: But clearly the best figure would be an improvement in apparent demand, and that would be triggered really by confidence.

Daniel: So, once the market participants...

Daniel: become more confident that the real demand recovery

Speaker Change: is something that they can look forward to. Then they're going to start thinking about replenishing their inventories and also the raw materials required to produce their inventories.

Daniel: So I think one important trigger could be that improvement in confidence and really just the sense that

Daniel: and that term...

Daniel: that things are brightening and that the outlook is increasingly positive. Triggers for that could be the interest rate cutting cycle, as one obvious example.

Daniel Fairclough: Triggers for that could be the interest rate cutting cycle as one obvious point. The second trigger can really also be just the sense that things can't go any lower. So often what we see is that when steel prices have negative momentum, where possible, market participants will be destocking; they'll be sitting on their hands, taking a wait-and-see attitude. But when they believe that the risk to the downside is extremely limited, then they can be that kind of sense that I want to get a little bit more onto the front foot and start thinking about building some inventory before steel prices start to move in the opposite direction, and that in itself can act as a trigger.

Daniel: point

Daniel: The second trigger can really also be just this sense that things can't go any lower. So often what we see is that when steel prices have negative momentum, where possible, market participants will be de-stocking, they'll be sitting on their hands, taking a wait-and-see attitude. But when they believe that

Unknown Executive: So often, what we see is that when steel prices have negative momentum, where possible, market participants will be de-stocking. They'll be sitting on their hands, taking a wait and see attitude. But when they believe that the risk to the downside is extremely limited, then there can be that kind of sense that I want to get a little bit more on the front foot and start thinking about building some inventory before steel prices start to move in the opposite direction. And that, in itself, can act as a trigger.

Daniel: The risk to the downside is extremely limited, then there can be that kind of sense that I want to get a little bit more onto the front foot and start thinking about building some inventory before steel prices start to move in the opposite direction.

Unknown Executive: And then the third trigger would be on the supply side. So either you see the high-cost producers having to really cut production, or we see a better domestic market share, i.e., less import penetration. So those would be the three catalysts, and we'll see which of those is ultimately the trigger to start moving prices higher from the current level. Got it. Thank you. And then just some very quick clarification questions, please.

Daniel Fairclough: And then the third trigger would be on the supply side. So either you see that the high cost producers having to really cut production, or we see a better domestic market share; would be less import penetration. So those would be the three catalysts, and we'll see which of those is ultimately the trigger to start moving pricing higher from the current level.

Matt: and Matt in itself.

Daniel: can act as a trigger.

Speaker Change: And then the third trigger would be on the supply side, so either you see the high-cost

Speaker Change: producers having to really cut production, or we see a better domestic market share, i.e. less import penetration. So those would be the three catalysts.

Speaker Change: and we'll see which of those is ultimately the trigger to start moving pricing higher from the current levels.

Unknown Executive: Got it, thank you. And then just some very quick clarification questions, please.

Unknown Executive: So earlier, you mentioned, Daniel, the Mexico strike impact. Do you think it would be the same in Q3? Could I just clarify if that was earnings, volumes, or both? And then also in the release, you guys talked about reversing 1.6 billion of the networking capital bill that you had in H1. Is that? Unknown Executive, Cole Hathorn, Ephrem Ravi, Genuino Christino, ArcelorMittal, Alain Gabriel, Yeah, just any color that would be helpful.

Speaker Change: Got it, thank you. And then just some very quick clarification questions please. So earlier you mentioned Daniel, Mexico strike impact, you think it'll be the same in Q3, could I just clarify if that was earnings, volumes or both?

Daniel Fairclough: So earlier you mentioned Daniel Mexico strike impact, you think it'll be the same in Q3 could they just clarify if that was earnings volumes or both.

Daniel Fairclough: And then also when the release you guys talked about reversing 1.6 billion of network and capsule build that you had in H1, is that a sort of firm target, is that like a minimum release that was sort of expected. But yeah, just any color that would be helpful. Thank you.

Speaker Change: And then also in the release you guys talked about reversing 1.6 billion of networking capital bill that you had in H1. Is that a sort of firm target? Is that like a minimum release that we're sort of expecting?

Unknown Executive: So I'll take the second one, and then you can comment on the impacts of the blockade in Mexico. Clearly, we believe that we will see a reversal of the investments that we made in the second half. As we know, we're still carrying in our inventories because of the weighted average impact, so high-cost materials coming from Q4, Q1 of last year, so we'll see that; we'll work through that. And the instruction to the units is that we should just have the right level of working capital to what we believe we're going to need looking at the demand that we have in front of us.

Daniel Fairclough: So I'll take the second one.

Speaker Change: But yeah, just any colour that would be helpful. Thank you.

Daniel Fairclough: Daniel can comment on the impacts of the blockaded in Mexico. Clearly, we believe that we will see a reversal of the investment that we made in the second half. As we know, you're still carrying. I know inventory is because of the weighted average impact, you know, high cost materials coming from Q4 to one of last year. So we'll see that we'll work through that. But I think the message to the businesses that, and giving everything that we have just discussed, that we remain hopeful that we will see a better 2025 in terms of the demand.

Speaker Change: But I think the message to the business is that, and given everything that we have just discussed, that we remain hopeful that we will see a better 2025 in terms of real demand. I think it's very important that we are ready for that.

Daniel Fairclough: I think it's very important that we are ready for that. And the instruction to the units is that we should just have the right level of work in capital to what we believe we're going to need, looking at the demand that we have in front of us. So I would not jump to conclusions that we can see even more. I think I will be happy to see that reversing as we have guided. And also there is some it's challenging to predict so precisely the evolution of work in capital, but the 1.6 with the profitable.

Unknown Executive: So I would not jump to conclusions that we can see even more. I think I will be happy to see that reversed as we have planned. And then we will see, of course, where we landed at the end of the year. As we all know, also, that it's challenging to predict so precisely the evolution of working capital. But 1.6. We feel comfortable. Daniel. Thank you. Can you hear me?

Speaker Change: I think I will be happy to see that reversing as we have guided.

Speaker Change: And then we will see, of course, where we landed at the end of the year. As we all know, also, it's challenging to predict so precisely the evolution of working capital, but the 1.6 we feel comfortable.

Daniel Fairclough: Daniel.

Daniel Fairclough: Yes, sorry, Jim, we know. So then, on Mexico, Tom, I can, yes, I can confirm that. So, in terms of the volume, we would expect a similar impact in Q3 and Q2 from the blockades of about 400,000 tons. And therefore, the same profitability impact at about 1 billion dollars.

Speaker Change: Yeah, sorry, Genuino. So then on...

Speaker Change: Mexico. Tom, yes, I can confirm that. So in terms of the volume, we would expect a similar impact in Q3 and Q2 from the blockade to about 400,000 tonnes, and therefore the same profitability impact of about $0.1 billion.

Daniel Fairclough: No, no, no, no, no, down to quarter and quarter. Okay, honestly, so there's no sort of like catch up with the sort of bonus payments and back pay that's not going to have a sort of incremental impact in Q3. It's all sort of beaten. So no, so yes, you should just assume no, no, don't that from that specific effect Q3 versus Q2. Got it.

Speaker Change: So no downside quarter-on-quarter. Okay, so there's no sort of like catch-up with the sort of bonus payments and back pay that's not going to have a sort of incremental impact since Q3? It's all sort of bait and...

Unknown Executive: Thank you.

Unknown Executive: Perfect. Thanks, Tom.

Ephrem Ravi: So we will take the next question from Ephraim at City Group. So please go ahead, Ephraim, if you can air us. Thank you. Can you hear me? Yes, we can. Thanks, Ephraim.

Speaker Change: Perfect, thanks Tom. So we will take the next question.

Daniel Fairclough: Yeah, so three tiny clarification questions. Firstly, the doubling of the sustainable solutions by 2028, is that just the impact from it all panel and India renewables, correct? I mean, it does not include the impact of future acquisitions and things like Valorak, which I assume will be put under Sustainable Solutions. The reason is maybe the roughly 100 million incremental from India renewables and 150 million from Valorak plus some from it all panel and you're pretty much there for your 2028. So, I think Valorak, as you know, will be part of our JVs, right? So, it's an equity stake, 28%.

Speaker Change: Yeah, so three tiny clarification questions. Firstly, the doubling of the EBITDA in the sustainable solutions by 2028, is that just the impact from Ital, Panelli, and India Renewables, correct? I mean, it does not include

Unknown Executive: So I do not know. I think Valorec, as you know, will be part of our JVs, right? So it's an equity stake, 28%.

Daniel Fairclough: So, we will be reported as part of JVs. It outpannally and the renewable project in India, it will be part of the tangible solutions.

Unknown Executive: So we will be reported as part of the JVs. Itaupaneli and the Renewable Project in India, yes, it will be part of Sustainable Solutions. But look, I mean, we have high ambitions for this part of the business. So the renewable project in India and at the top of our end will not take us to the targets.

Daniel Fairclough: Malok, I mean, we have high ambitions for this part of the business. So, the renewable project in India, and it will not take us to the target. So, if you have work to do and we're excited to see that through. So, we have a number of nice projects in front of us that we feel that we want to be able to add a lot of value.

Unknown Executive: So we still have work to do, and we're excited to see that through. We have a number of nice projects in front of us that we feel that we're going to be able to add a lot of value. Look, to be honest, it's because if you look at the shipments in our long business in Africa, you're going to see that there is actually a bit of an increase, right? So we were able to mitigate some of the blockade impacts by, in the case of logs, because we have different locations, we were able to continue to ship those materials, right? And there are, of course, some raw materials that cannot be transformed.

Unknown Executive: Thank you.

Daniel Fairclough: Second, how much of the working capital build was due to Mexico, if you can quantify that, just to get comfort around the 1.6 billion release, because that's an easy one. Look, to be honest, it's because if you look at the shipments in our long business, you're not going to see that there is actually a bit of an increase. Right. So, we were able to mitigate some of the blockade impacts by in case of longs because we have different locations; we were able to continue to ship that materials. Right. And that is, of course, some raw materials that could not be transformed.

Speaker Change: Look, to be honest, it's...

Unknown Executive: But we are not quantifying that, but again, I think you can assume that we feel at this point, seeing what we have in front of us, we feel good about the release in the second half. Thank you. More so, I would say, more so in Q4 than in Q3, right, as it is typically the pattern. Yeah, I think that's a fair assumption, Ephrem, and also, I would just add to what Daniel said that we're going to be able to keep the flexibility. Thank you.

Speaker Change: And there is, of course, some raw materials that could not be transformed.

Daniel Fairclough: But we are not going to find that happen, but again, I think you can assume that we feel at this point, seeing what we have in front of us. We feel good about the release in the second half.

Speaker Change: But we are not quantifying that attempt, but again, I think you can assume that we feel at this point, seeing what we have in front of us, we feel good about the release in the second half.

Daniel Fairclough: Thank you. Also, I would say, more so in Q4 than in Q3, right, as typical as the button. Yeah.

Speaker Change: More so in Q4 than in Q3, as it is typically the pattern.

Daniel Fairclough: Thank you.

Daniel Fairclough: And the third question, the DR pellet projects, the 5 million tons from Blasphonus to DR pellets. And can you give us a sense as to the capex that's involved in that because the DR pellet premium over Blasphonus pellet has been, you know, $56 per ton on average. So just want to sense kind of how much incremental return if the spot premiums hold. Obviously, if the premiums go up in the future, it goes up. Yeah.

Speaker Change: Can you give us a sense as to the CAPEX that's involved in that, because the DR pellet premium over blast furnace pellet has been, you know, five, six dollars per ton on average. So just want to sense kind of how much

Daniel Fairclough: Did any of you want to talk about it? Yeah, sure. So we have announced 200 million was the capex on that project. In terms of the premium, I think this past quarter has been about $8 per ton, but of course, I think the important thing is we move forward. Is that we know we're going to need more of this type of material. As we look to expand our DRI capacity, we have the Texas project under consideration. And that, you know, there's an appealing opportunity there to double our capacity of DRI in Texas. So we're going to need more feedstock for that type of project.

Speaker Change: Did any of you want to talk about that?

Daniel Fairclough: So, would it be fair to say that most of that incremental 5 million tons would be going internally to other ArcelorMittal plants? Yeah, I think that's a fair solution, Ephrem, and also we're just adding to what Daniel said, and that we're going to be able to keep this flexibility. Right, so we're going to be able to have our eye-bellied, so we're not giving up the flexibility.

Unknown Executive: Thank you, that's funny.

Dominic Tick: Okay, thanks, Ephrem, and so we will give to the next question, which we will take from Dominic Tick Morgan. Please go ahead, Dominic. Hi guys, just two quick questions for me, just on one on clarification, so again looking into H2 and on CAPEX, so there's a little bit of a step up to the top end for guidance for CAPEX in H2. Is there a risk of an underspend on CAPEX, or you're very, very confident that you'll come in sort of within that range?

Daniel Fairclough: And then second question, we hear the commentary, we sort of see the numbers on inventories for US-Europe, but just when you could push you a little bit further on what you see in terms of lead times for US and Europe, and the extent to which we could see those markets tightening quite rapidly as we move into an interest rate cutting cycle. Yeah, so the CAPEX, I think we are not changing our guidance, so we will see retaining our guidance of 4.5 and 2.5. In the H1, I believe it worked about 2.2, so slightly, if you analyze that a little bit lower than the bottom end of the range, but at this point if you comfortable that it's just timing, so we should be within our range.

Speaker Change: Just wondering if we could push you a little bit further on kind of what you see and what you see in terms of lead times for US and Europe and the extent to which we could see those markets tightening quite rapidly as we move into an interest rate cutting cycle.

Unknown Executive: That's it for now. Yeah, so, so, the CapEx. Yeah, I think we are not changing our guidance. So we're still retaining our guidance of 4.5 to 5. And then, in terms of inventories, I think lead times are short. Dominic.

Daniel Fairclough: And then in terms of inventories, I think lead times are short. Dominic would say both in, and that's typically the case, right when the man is relatively weak. So lead times remain at, I would say, at the low end of the range. And in the moment again, the moment we see a rebound in terms of the demand, real demand, we see some pick up in inventories; that is typically when you see that lead times becoming longer and then tends to drive very quickly, can drive very quickly prices up.

Unknown Executive: I would say both in, and that's typically the case, right, when demand is relatively weak. So lead times remain at, I would say, the low end of the range. Great, thank you. So in that case, we will move to our next question, which we will take from Matt at Goldman Sachs. So please go ahead, Matt. Well, I think the whole industry in India is, of course, concerned about the level of imports coming from China. Is there any other region in the world?

Speaker Change: Dominic, I would say both in and that's typically the case right when demand is relatively weak so lead times remain at I would say at the low end of the range.

Speaker Change: That is typically when you see the lead times becoming longer, and that then tends to drive very quickly, can drive very quickly prices up.

Unknown Executive: Great, thanks Dominic. I'm not sure if you have a follow-up. That's all good, thanks.

Unknown Executive: Great, thank you.

Maxime Kogge: So, in that case, we will move to our next question, which we will take from Matt, Robin Sachs. So please go ahead, Matt. Hi, good afternoon. Just a quick question on India. You and your peers have described these low cost imports from China as a predatory pricing strategy, and I guess we've seen the rest of the world move quite quickly to protect domestic markets. So my question is, has the Indian government been receptive to your concerns? And to the extent you can, please comment on Mattel's stance and the level of protection measures you'd like to see introduced.

Speaker Change: That's all, guys. Thanks.

Daniel Fairclough: Well, I think the whole industry in India is, of course, concerned about the level of imports coming from China. Is any other region in the world, Matt? There is, of course, dialogue; I think the government understands the challenge, and I think there is a lot of focus from the involvement to make sure that the industry can continue to develop. The focus is that we have for parents to consumption in India, it will grow so much in the next 12 years, then it's absolutely critical that the industry can can develop, right, and of course the involvement doesn't want to be dependent on materials coming from China, so I think it's a matter of time.

Unknown Executive: There is, of course, dialogue. I think the government understands the challenge. And I think there is a lot of focus from the Indian government to make sure that the industry can continue to develop, right? I mean, when you look at our materials, look at the forecasts that we have for burnt steel consumption in India, it will grow so much in the next 10, 12 years. But I guess if we see EBITDA per tonne at current levels continuing, can this JV continue to self-fund the Phase 1a growth plan?

Speaker Change: then it's absolutely critical that the industry can develop, right? And of course the Indian government doesn't want to be dependent on materials coming from China.

Daniel Fairclough: So if China doesn't correct courts, then I think it's just a matter of time to see more protection, as we saw back in 1516. So that's when a lot of three reactions started, and we are again starting to see that Mexico, Brazil, South Africa, different parts of the world are also starting to respond to that, and for sure that should also happen there against China.

Speaker Change: So I think it's a matter of time.

Speaker Change: So if China doesn't correct course, then I think it's just a matter of time to see

Speaker Change: and more protection as we saw back in 15-16.

Daniel Fairclough: That's helpful, thank you, and I guess just following on from that, with the JV, you've long said that you expected to remain self-funded, but I guess if we see EBITDA at current levels continuing, can this JV continue to self-fund the Phase 1A growth fund? Yeah, we feel very, very comfortable about that. As a matter of fact, if you look at even in this challenging market conditions and we had maintenance in our JV in the second quarter, and if you look at the profitability there, still recent, we have very low cash need. So the normal business in terms of maintenance curve, interest costs extremely low, so this business generates good level of pre cash, but more importantly, of course, we have already signed credit lines that will allow us to complete this, this was expansion for 15 million tons.

Speaker Change: That's helpful, thank you. And I guess just following on from that, with the JV, you've long said that you expect it to remain self-funded. But I guess if we see EBITDA per tonne at current levels continuing, can this JV continue to self-fund the Phase 1a growth plan?

Unknown Executive: Yeah, we feel very, very comfortable about that. As a matter of fact, even in these challenging market conditions, and we had maintenance in our JV in the second quarter, and if you look at the profitability there, still decent, we have very low cash needs.

Unknown Executive: So the normal business, in terms of maintenance, capex, and interest costs, is extremely low. This generates a good level of pre-cash. But more importantly, of course, credit lines that will allow us to complete this first expansion to 15 million tons, and that's transformational, right? So when you do that, and you achieve this 15 million tons, and you start to deliver on the EBITDA, and then the free cash follows, it makes it much easier then to continue the process.

Speaker Change: We have already signed...

Speaker Change: credit lines that will allow us to complete this project.

Daniel Fairclough: And that's transformational, right? So when you do that and you achieve this 15 million tons and you start to deliver on the EBITDA and then the free cash, all those, it makes it much easier than to continue the process, the expansion. I think the challenge that we have in India is to make sure that we can keep pace with the market and make sure that we can not only retain but increase our markets and the market.

Speaker Change: and that's transformational right so when you do that and you achieve this 15 million tons and you

Unknown Executive: I think the challenge that we have in India is to make sure that we can keep pace with the market and make sure that we can not only retain but increase our market share in that market.

Matt: That's great, thanks, Jim, and if I could just ask a quick clarification question, at a group level, you're expecting about a 10 million ton increase in iron ore into 2025. Can you please give a breakdown on the components coming from Liberian and Sarah and Zill, just given that both are finishing in the second half and we'll be ramping up next year. Thanks.

Speaker Change: That's great. Thanks Genuino. And if I could just ask a quick clarification question at a group level You're expecting about a 10 million ton increase in iron ore into 2025 Can you can you please give a breakdown on the components coming from Liberia and Sarazel just given that Both are finishing in the second half and will be ramping up next year. Thanks

Daniel Fairclough: Okay, can you, you want to provide that? Yeah, thank you, Jim. You know, so I think when we look at our bridge from first half, 24 to that 50 million ton number in 2025. First of all, I think we would be expecting a better volume performance in the second half. Obviously, the Q2 numbers were held back by maintenance in Canada and also the impact of those wildfires. So second half volumes should already be better than the first half run rate. And then the key doubters in 2025 versus 2024, it really will be Liberia. So we're on course to have the first concentrate available at the end of the year, and then that will continue to ramp up as we move through 2024.

Daniel: Okay, Daniel, do you want to provide that?

Daniel: 24 to that 50 million 10 number in 2025.

Speaker Change: And then the key Deltas in 2025 versus 2024, it really will be Liberia. So we're on course to have the first concentrate.

Daniel: available at the at the end of the year and then that will continue to ramp up as we move through 2024 so at this stage we would be expecting at least a 10 million tonne

Daniel Fairclough: So, at this stage, we would be expecting at least a 10 million ton volume performance from Liberia in 2025. So a significant step up from the 2024 level. And then, yes, you mentioned the so that will that that's really the other main delta. when we look at 2025 versus 2024. Hopefully that works for you, Matt.

Speaker Change: performance from from Liberia in 2025, so a significant step up from the 2024 level. And then, yes, you mentioned the Serozole, so that will, that's really the other main delta.

Unknown Executive: Yeah, yeah, thanks, Daniel, please.

Andrew Jones: Okay, thank you. So we will move to the next question, which we will take from Andrew at UBS. So please go ahead, Andrew, if you can arrow. Okay, I can hear me. Yes, we found. Thank you. Excellent. Cool.

Unknown Executive: [inaudible] Great, thank you. So we will move to the next question, which we will take from Andrew at UBS. Please go ahead, Andrew, if you can hear us. Okay, can you hear me?

Operator: Yes, we can, thank you. Excellent, cool. So just on the follow-up to one of your previous questions about, you know, what is driving the market in Europe, I mean, you obviously talked about potential for restocking, demand picking up, interest rates falling, etc. You know, on the demand side, all that was on the demand side, then you just mentioned some of the potential high-cost blast furnace closures in your shipment levels at the moment, which are running pretty high.

Daniel Fairclough: So just on the follow-up to one of your previous questions about, you know, what turns market Europe? I mean, you obviously talked about potential for restocking demand, picking up interest rates for pulling, et cetera, you know, the demand, all that was on the demand side. Then you just mentioned some of the potential high-cost blast furnace closures. In your shipment levels at the moment of, you know, running pretty high and in the past, you've been one of the leaders in taking out capacity on those down cycles. I'm curious to see, you know, in the coming months, what planned, you know, normal maintenance is for some of which blast furnaces potentially will be down.

Speaker Change: Okay, can you hear me? Yes, we can. Thank you.

Speaker Change: Excellent, cool. So just on the, a follow-up to one of your previous questions about you know what turns market in Europe, I mean you obviously talked about potential for restocking, demand picking up, interest rates falling etc, you know on the demand, all that was on the demand side, then you just mentioned some of the potential

Speaker Change: High Cost Bluffs for Disclosures

Speaker Change: Your shipment levels at the moment are running pretty high, and in the past you've been one of the leaders in taking out capacity on those down cycles. I'm curious to see, in the coming months, what planned normal maintenance is for over the summer, which blast furnaces potentially will be down? And then,

Operator: And in the past, you've been one of the leaders in taking out capacity on those down cycles. So I'm curious to see, you know, in the coming months, what planned, you know, normal maintenance is for over the summer, which blast furnaces potentially will be down.

Daniel Fairclough: And then how much worse do things have to get for you to start actually closing last furnace capacity? Or, you know, is it just a case of your very confident, the demand will turn and therefore you don't feel this time round. You need to do much. Yeah, and well, so you're right. So we are running today all of our furnaces, with the exception of one furnace in pause, as we talked about before. And I think, as I said at the beginning or so, when look at our order books, we feel okay. So we will have the normal seasonality.

Unknown Executive: And then how much worse do things have to get for you to start actually closing blast furnace capacity? Or, you know, is it just a case of you're very confident that demand will turn and, therefore, you don't feel this time around you need to do much? Yeah, Andrew.

Unknown Executive: Well, So you're right. So we are running today all of our funders, with the exception of one furnace in force, as we talked about before. And I think, as I said at the beginning also, so when we look at our order books, we feel okay, so we will have the normal seasonality, we don't really have, in the second half, any major maintenance foreseen for the furnaces, as you know, we did a lot of work on that last year, and we will sell, we will produce what we can sell, Andrew, so to the extent, and that's the beauty of the ArcelorMittal footprint, right?

Speaker Change: So, you're right. So, we are running today all of our finances.

Daniel Fairclough: We will we are not we don't really have in the second half any major maintenance for scene for the finances. As you know, we have we did a lot of work on that last year. And, and we will sell; we will produce what we can sell. So, to the extent that's the beauty of the arsenal of middle footprint. Right. So if we feel that we don't have enough demand in front of us, we have the options to reduce capacity to bring down one furnace. So we can't adjust the capacity of different furnaces. And we will, and if we get to that point, we will take that call, but right now we don't, we don't see the need.

Speaker Change: We don't really have, in the second half, any major maintenance foreseen for the finances. As you know, we did a lot of work on that last year.

Andrew: And we will sell, we will produce what we can sell, Andrew, so to the extent, and that's the beauty of the ArcelorMittal footprint, right?

Unknown Executive: So if we feel that we don't have enough demand in front of us, we have the options to reduce capacity to bring down one furnace, or we can adjust the capacity of different furnaces. And if we get to that point, as we did in the past, we will take that call.

Speaker Change: So if we feel that we don't have enough demand in front of us, we have the options to reduce capacity, to bring down one furnace, or we can adjust the capacity of different furnaces.

Unknown Executive: But right now, we don't see the need, so we continue to move forward. Great, thanks, Andrew. So we will now move to our next question, which we're going to take from Max at Otto. So go ahead, Max, if you can hear us. Yeah, good afternoon.

Daniel Fairclough: So we continue to move forward. Okay. Now that's clear. Okay.

Unknown Executive: Thank you. Great.

Maxime Kogge: Thanks, Andrew. So we will now move to our next question, which we're going to take from Max at Auto. So go ahead, Max. If you can hear us. Yeah, good afternoon. We have just following on mining. I mean, one of your competitors had to, I mean, one of the other producers of iron ore in the region had to shut down operations because of the white fire. Is that something that you roll out on your side? Given that this white fire is still raging at the moment. And in Liberia, you had some difficulties with the well way or the now solved.

Unknown Executive: We are just following on from mining. Yeah, which could perhaps, um, uh, Yeah, so first, on Canada, the fires. You're absolutely right. So we also suffered the impacts of the fire.

Speaker Change: Yeah, good afternoon. Just following on on mining, I mean one of your competitors had to, I mean one of the other producers of iron ore in the region had to shut down operations because of the white fire. Is that something that you rule out on your side, given that this white fire is still raging at the moment?

Daniel Fairclough: We're hearing some people wanting to access this line. And then. Yeah, which could perhaps reduce your own shipments, so can you comment on that too?

Speaker Change: reduce your own shipments so can you can you comment on that too?

Daniel Fairclough: Yeah, so first on Canada, the fire is absolutely right. So we also suffered the impacts of the fire for a couple of weeks. And if you look at the production, now what we publish, you can see that there is a lower production part of it because of maintenance, but also because of the impacts of the fire. It's largely resolved now; that's why we feel that I've sent the repeat of the maintenance work. We will see nevertheless an improvement in shipments and production in shipments in May and Canada in quarter-thread. And like birria, we have basically resolved now the issues with the rail.

Speaker Change: Yeah, so first, on Canada, the fires, you're absolutely right, so we also suffer the impacts of the fire.

Speaker Change: And if you look at the production now, what we publish, you can see that there is a lower production part of it because of maintenance, but also because of the impacts of the fire. Slightly resolved now.

Speaker Change: That's why we feel that, absent the repeat of the maintenance work, we will see, nevertheless, an improvement in shipments, in production and shipments in Mines Canada in Q3.

Speaker Change: And Liberia, we have basically resolved now the issues with the rail.

Daniel Fairclough: Q2 was still impacted, and that's why then it was also saying that we expect to hire high numbers in the second half. We'll see the capacity in like Birria coming back to normal levels in quarter-thread. And look, we have an agreement with the government that is valid, so we have, of course, dialogue with the government, different parties, but we are the operators of the rail; we have the concession. And as we have been discussing, we have ambitious plans for Birria. We see the potential of the mine; we have plans to take it through time, and that's what we intend to do.

Speaker Change: Eye numbers in the second half, we will see.

Speaker Change: the capacity in Liberia coming back to normal levels in quarter three.

Speaker Change: And look, we have an agreement with the government that is signed, that is valid, so we have of course dialogue with the government, with different parties.

Speaker Change: But we are the operators of the rail, we have the concession, and as we have been discussing, we have very ambitious plans for Liberia. We see the potential of the mine. We have plans to take it to 30 million tons.

Unknown Executive: And that's what we intend to... transformation, I'll call it. But to the extent that the government can succeed in bringing stability, reducing the level of inflation, then that should be temporary, and we should start to see Argentina contributing more to our results again.

Unknown Executive: Okay, okay, that's clear.

Maxime Kogge: And just the last one, it's on Argentina. This is a country that has been dragging down the Brazilian segment over the two or three quarters, but now it seems that it's turning the corner. The economy climate is a lot more constructive, so do you think it will now be quite neutral and could it even become bigger in the driver for a sort of metal given that you are by far the largest producer in the country? Well, it's not yet the case in quarter two, and you write, so in quarter two it was very challenging, but have for Argentina, right?

Speaker Change: and that's what we intend to do.

Speaker Change: Well, it's not yet the case in Quarter 2, and you're right, so in Quarter 2 it was very challenging for us here for Argentina, right? Of course, we are, Argentina is going through, is going through a major, um...

Daniel Fairclough: Of course, Argentina is going to do, it's going to do a major transformation, call it, the new government taking very hard measures to try to fix the economy, to reduce the inflation. But as a result, a number of projects were cut, so the demand in Argentina in the first half was extremely weak. But to the extent that the government can succeed in bringing stability, reducing the level of inflation, then that should be temporary and we should start to see again Argentina contributing more to our results. So I think we are optimistic, but we have of course waiting 30 days. But this year so far we are going through this challenges.

Speaker Change: Transformation, call it.

Speaker Change: the new government taking very hard measures to try to fix the economy to reduce the inflation and as but as a result a number of projects were cut so the demand in Argentina in the first half was extremely weak

Unknown Executive: So I think we are optimistic, but we have, of course, to wait and see how it is, but this year so far, we are going through this. Great, thanks Max. So we will move to our next question. Okay, thanks Daniel. And just as a quick follow-up, so this year, so I think you're aiming to spend 300 to 400 million next year. It's going to be the same level. Is that a gross number, or is that already net of any government basically share of the CapEx wallet for which you're budgeting for?

Speaker Change: So, I think we are optimistic, but we have, of course, to wait and see how it is. But this year so far, we are going through this.

Unknown Executive: Thank you. Thanks, Max.

Speaker Change: Challenges

Speaker Change: Okay, now that's clear. Thank you.

Bastian Synagowitz: So, we will move to our next question, which we will take from Bastian, Deutsche Bank.

Daniel Fairclough: Hi, Bastian, please go ahead. Yeah, Daniel, good afternoon all, and thanks for taking my question. I, if you only have a quick one left on decolonization, I think you've been moving a bit more mindful here, which clearly has been proving the right to approach so far, just given a very slow momentum in terms of the European infrastructure, I think it's like hydrogen, and I guess also the other components on the policy side, which you mentioned earlier. I guess yet we are getting to the point where the project pays will have to speed up, and I think most of your peers have seen a significant step up on decolonization CAPEX already, or we'll see that next year.

Daniel: Hi Daniel, good afternoon all and thanks for taking my question. I actually only have a quick one left on decarbonisation. I think you've been moving a bit more mindful here, which clearly has been proving the right approach so far, just given the very slow momentum in terms of the European infrastructure for things like hydrogen and I guess also the other components on the policy side, which you mentioned earlier. I guess yet we're getting to the point where...

Speaker Change: The project pace will have to speed up and I think most of you peers have seen a significant step up on decarbonization CapEx already or will see that next year. And by now we should have pretty good visibility on what is coming at least in 2025. So could you please give us maybe some early gauge on what to assume for CapEx on decarbonization for 2025, i.e. will that be more like a 500 to 1 billion ballpark number or will it be possibly above 1 billion? Maybe just anything on that front, that would be great.

Bastian Synagowitz: And by now, we should have pretty good visibility on what is coming, at least in 25. So, could you please give us maybe some early gauge on what to assume for CAPEX on decolonization for 2025, i.e. will that be more like a 500 to 1 billion ballpark number, or will it be possibly above 1 billion, maybe just anything on that front that will be greater?

Daniel Fairclough: You want to talk about it, then?

Daniel Fairclough: Yeah, and so, thanks. Let me know. So, I think, yeah, look, the focus of our work on decarbit and moment is, as we've been consistently talking about, is engineering. So, completing the engineering of the various different projects and studies that we have under way to, on top of that, we've been making progress with the various different governments to make sure that they're obviously supporting these projects, and that's not just on the CAPEX side, but very importantly to make sure that we have the right impact factors, to make sure that at the end of the day, these projects can be sustainable and cost-competitive.

Daniel: Do you want to talk about it, Daniel?

Daniel: So, thanks Sharmina. So, I think, look, the focus of our work on DCARB at the moment, as we've been consistently talking about, is engineering. So, completing the engineering of the various different projects and studies that we have underway to...

Speaker Change: On top of that, we've been making progress with the various different governments to make sure that they're obviously supporting these projects.

Daniel Fairclough: So then, looking into 2025, relative to this year, I don't think we will see a material step up in CAPEX related to our decar projects. So, that would be my expectation rather than the numbers that you were talking about in your question.

Daniel: So then, looking into 2025, relative to this year, I don't think we will see a material step up.

Daniel: in CAPEX related to our GCAR projects, so that would be my expectation rather than the numbers that you were talking about in your question.

Daniel Fairclough: Okay, thanks, then, and just a quick follow-up. So, this year, I think you're aiming to spend 300 to 400 million. Next year's going to be the same level. Is that a gross number, or is it already net of any government, basically, share of the CAPEX wallet, basically, which you're budgeting for? Yes, so most of that is, as I say, it's supporting the engineering studies, etc. So, we've not yet been able to offset the benefits of the government support. Understood that. That will help to reduce the impact as we move forward to certain projects start to accelerate.

Daniel: Okay, thanks Daniel. And just as a quick follow-up, so this year, so I think you are aiming to spend 300 to 400 million, next year it's going to be the same level. Is that a gross number or is that already net of any government basically share of the CapEx wallet basically which you're budgeting for?

Speaker Change: Yeah, so most of that is, as I say, it's supporting the engineering studies, etc, so we've not yet been able to offset the benefits of the government's support.

Speaker Change: So that will help to reduce the sort of the impact as we move forward as certain projects start to accelerate.

Unknown Executive: Understood.

Unknown Executive: Okay, perfect. Thank you.

Speaker Change: Understood. Okay, perfect. Thank you.

Unknown Executive: Super. Thanks, Bastian. So we have a couple of questions left. One of them is a follow-up, but we'll take the next question from Alain at Blutenberg Intelligence. So please go ahead, Alain, if you can hear us, you in the second half. The ability of adding $285 million to EBITDA. Could you just remind us what the profile of that looks like? Unknown Executive, Cole Hathorn, Andrew Jones, Alain Gabriel, Bastian Synagowitz, Aditya, Perfect, thanks.

Unknown Executive: Thanks, Bastian. So we have a couple of questions left. So one of them is a follow-up that will take the next question from Alain at the Burger Intelligence. So please go ahead, Alain, if you can have us. Yeah, hi. Thanks. Thanks for taking my question. Most of them have been answered. I just had a clarification question. I'm your strategic project.

Speaker Change: Super, thanks Bastian. So we have a couple of questions left so one of them is a follow-up but we'll take the the next question from Alain at Lutenberg Intelligence so please go ahead Alain if you can hear us.

Alon: Yeah, hi, thanks for taking my question. Most of them have been answered. I just had a clarification question on your strategic...

Alain Gabriel: You have three, which have been commissioned this year in a second half, which I think has the ability of adding $185 million to the EBITDA, which just remind us what the profile of that looks like. When that will start coming through, I think you're already alluded to. There are so many coming from 2020-25, but the other two that would be helpful. So hopefully I get the gist of your question here along, but I think we do have a very useful slide in our presentation back to show the decadence of the EBITDA that we anticipate on an annual basis from the organic investment.

Alon: project. You have three which are being commissioned this year in the second half which have the capability of adding 285 million dollars to EBITDA. Could you just remind us what the profile of that looks like?

Speaker Change: When that will start coming through, I think you've already alluded to Zara Azul mainly coming through in 2025, but the other two, that would be helpful.

Speaker Change: That's it. Hopefully I get the gist of your question here, Alain, but I think we do have a very useful slide in our presentation deck.

Speaker Change: to show the decadence of the EBITDA that we anticipate on an annual basis from the organic investment.

Daniel Fairclough: So if you do get a chance to look at slide line within the presentation deck, it's pretty neatly laid up, but just for everybody's benefit, we would expect some positive impact in the second half from the two projects that we've commissioned and begun commissioning over the end of Q2. So the Baker project in Brazil and the India renewables commissioning, but that will significantly accelerate in 2025. So for the four year of 2025, we're expecting a $500 million benefit from the incremental benefit from the strategic projects, and then, of course, on top of that, we should be seeing the EBITDA benefit from Valare, from the top finale.

Speaker Change: If you do get a chance to look at slide 9 within the presentation deck, it's pretty neatly laid out, but just for everybody's benefit, we would expect...

Speaker Change: and some positive impact in the second half from the two projects that we've commissioned and begun commissioning over the end of Q2, so the Vega project in Brazil and the India Renewables commissioning.

Speaker Change: But that will significantly accelerate in 2025. So for the full year of 2025, we're expecting a 500 million dollar benefit from the incremental benefit from the strategic project.

Speaker Change: And then, of course, on top of that, we should be seeing the EBITDA benefit from Valoec, from Hitam Finale. So year-on-year, next year's delta is $0.7 million, then into 2026.

Daniel Fairclough: So year on year, next year's delta is $0.7 million, then into 2026, there would be another $0.5 billion step up as more of the projects bed down, and then the remaining amount would be post 2026. So, in total, it's a $2 billion uplift, including the .3 we already have been benefiting from in Mexico, but this is going to be a very sort of significant but also unique driver of possible mental profitability relative to our peers as we go through the next two or three years, and would, of course, come on top of any cyclical recovery that we can anticipate.

Speaker Change: There would be another 0.5 billion dollar step up.

Speaker Change: as more of the projects bed down, and then the remaining amount would be post-2026.

Speaker Change: So, in total, it's a $2 billion uplift, including the $0.3 we already

Speaker Change: have been benefiting from in Mexico.

Speaker Change: But this is going to be a very sort of significant but also unique driver of Arsenal Mittal's profitability relative to our peers as we go through the next two or three years and would of course come on top of any cyclical recovery that we can anticipate.

Unknown Executive: Right, thanks. Thanks for that.

Daniel Fairclough: If I can just one additional question on net debt and how that evolves over 3Q and 4Q, it looks like it's got the Valoric payment in 3Q, so net debt climbs plus CapEx's obesity, some are second half weighted, but then we're capital release in Q4, which will bring net debt back down. Are there any other kind of major moving parts, and is that profile broadly correct? Well, I think you've got it right; those are the moving parts. So we do expect the company to be 3Q positive, and on top of that, we have the reversal of the working capital investments. So in Q4 to 3, we will see an increase because of the Valoric, but then we would expect net debt to come down again by the end of the year.

Speaker Change: Great, thanks for that. If I can, just one additional question on net debt and how that evolves over 3Q and 4Q.

Speaker Change: It looks like you've got the Valorant payment in 3Q, so net debt climbs, plus cap excess FSP, somewhat second half weighted, but then with capital release in Q4.

Speaker Change: which will bring net debt back down. Are there any other kind of major moving parts and is that profile broadly correct?

Speaker Change: Well, I think you got it right.

Speaker Change: Yeah, those are the moving parts, I would just say that we do expect the company to be free cash flow positive, right, and on top of that we will have the reversal of the

Speaker Change: working capital investments, you're right, so

Speaker Change: In Q3 we will see an increase because of Valorec, but then we would expect NetDebt to come down again by the end of the year.

Daniel Fairclough: And we should, of course, we will retain a very strong balance sheet law, absolute levels of net debt.

Speaker Change: We should, of course, we will retain a very strong balance sheet law, absolute levels of net debt.

Tristan Gresser: Perfect, thanks. So we will now move to our last question, actually. So it's a follow-up from Tristan at the MP exam, so go ahead, Tristan, if you can have it. Yes, thank you for the follow-up. Just on ex-carb, you mentioned that your European footprint has the capability to produce 8% of all grades and dimensions, so what is that percentage relative to your current product mix? So in other words, with ex-carb, which is scrap base, how much relief that makes, can you replicate? And if it is a good chunk of your portfolio ready, which it could be, does that mean that you don't necessarily need the 5, 6, DRI plans you have announced to be able to cross Europe?

Operator: So we will now move to our last question, actually. It's a follow-up from Tristan at BNP Expand. So go ahead, Tristan, if you can. So, in other words, with xCARB, which is the scrap base, how much relief that gives can you replicate? And if it is a good chunk of your portfolio already, which it could be, does that mean that you do not necessarily need the five, six DRI plans you have announced to build across Europe?

Speaker Change: Great, thank you.

Speaker Change: Perfect, thanks. So we will now move to our last question actually, so it's a follow-up from Tristan at BNP Expanse, so go ahead Tristan if you can hear us.

Tristan: Yes, thank you for the follow-up.

Tristan: Just on X-Carb, you mentioned that your European flat footprint

Tristan: has the capability to produce 80% of all grades and dimensions. So what is that percentage relative to your current product mix?

Speaker Change: So, in other words, with X-Carb, which is scrap base, how much relief that makes, can you replicate?

Speaker Change: And if it is a good chunk of your portfolio already, which it could be, does that mean that you don't necessarily need the five, six DRI plans you have announced to build across Europe?

Daniel Fairclough: Yeah, so as you know, we have the, in Europe, I think we are, when we talk about the car, and that is a lot, but we have, we are the only one that has today an electric arc fund that's already producing flat fuels. Right, that's our, the style plan, which we are in, ramping up, so and on top of that, of course, we have our facilities in, in, in the steel. We have about 50% of our long capacity to 60% is also less about base, and we continue to dedicate a lot of resources into R&D.

Speaker Change: Yeah, so, um...

Speaker Change: So, as you know, we have in Europe, I think, when we talk about Dikav and there is a lot

Speaker Change: but we have we are the only one that has today an electric arc furnace already producing flat fuels.

Speaker Change: Right, that's our sister plant.

Speaker Change: which we are then ramping up. So, and on top of that, of course, we have our facilities in the steel.

Speaker Change: We have about 50% of our loan capacity or 60% is also electric art based.

Daniel Fairclough: I mean, today we announced the new line of products under the ex-carb umbrella for the development of the hydrogen network in Europe. So we continue to make good progress there, but in terms of absolute volumes, as we know, we are doubling the volumes this year. We are expecting to complete this year with more than 400 KT. But of course, we have to decarbonize the footprint, right? So you should not read that because of that, we don't need to progress without the carbonization plan. All right, that's helpful, but of your current flat-roll product mix, is that 50% you could replicate with XCarb and scrap-based process, or is it closer to 80% with 80%, we are seeing 80% forward industry customers, right?

Operator: All right, that's helpful. But of your current flat roll product mix, is that 50% you could replicate with X-Carb and a scrub-based process? Or is it closer to 80%? It's 80% we are seeing 80% for industry. It's not a big number, Tristan. It's not a big number.

Speaker Change: Alright, that's helpful, but of your current flat roll product mix, is that 50% you could replicate with X-Carb and scrub-based process, or is it closer to 80%?

Speaker Change: It's 80%, we are saying 80% for industry customers, right? Industry customers. Industry customers.

Daniel Fairclough: So industry customers.

Daniel Fairclough: All right, that's clear, so it's much lower.

Daniel Fairclough: Okay, thank you, and maybe just a quick follow-up. Could you remind us the volume exporter you have, volumes coming from Europe to the US, in case we see tariffs returning on US borders? I do believe you had some special rail and other types of products that I don't remember the volume figure. It's not a big number, Tristan; it's not a big number. But you're right, we do have exports, some specialty skills that in any case, even when Europe was still being sectioned, that it's moving, we never stopped them. So these are products that are not available there in the US, so we're not expecting any implications, and second volume is not so similar.

Speaker Change: All right, that's clear.

Speaker Change: Okay, thank you. And maybe just a quick follow up. Could you remind us the volume exposure you have of volumes coming from Europe to the U.S.?

Speaker Change: in case we see tariffs returning on U.S. borders. I do believe you had some special rail and other types of product, but I don't remember the volume figure.

Speaker Change: It's not a big number, Tristan, it's not a big number.

Tristan: But you're right, we do have exports, some specialty steels.

Tristan: that in any case, even when...

Yoruba Wazupi: Yoruba Wazupi, Section 232, we never stopped them.

Speaker Change: These are products that are not available there in the U.S., so I would not expect any implications. And second, the volume is not so significant.

Daniel Fairclough: Okay, thank you very much.

Unknown Executive: Great, Tristan. So that was our last question, Gemina. So I hadn't back to you to complete the call.

Operator: Great. Thanks, Tristan. So that was our last question, Gemmina. So I hand it back to you to conclude.

Tristan: Okay, thank you very much.

Yoruba Wazupi: Great, thanks Justin. So that was our last question, Genuino, so I'll hand back to you to conclude the call.

Daniel Fairclough: So thank you everyone, and before we close, I want to reiterate my message from the beginning of the call. Firstly, the whole Asalamita organization is governised; we improve safety performance. Secondly, our resilient results in the face of challenging market continue to demonstrate the structural improvement. This resilience means that we have been able to focus on our growth agenda. Investments we have been making will provide significant structural website with data and cash flows on top of any SQL code we're covering. Our online buybacks are compounded by creating benefits to our shareholders, and if you need anything further, please reach out to Daniel and his team.

Genuino: So, thank you everyone, and before we close, I want to reiterate my message from the beginning of the call. Firstly, the whole AccelonMittal organization is galvanized to improve safety performance. Secondly, our resilient results in the face of challenging markets continue to demonstrate structural improvement.

Genuino: This resilience means that we have been able to focus on our growth agenda.

Genuino: investments we have been making will provide significant structural upside to EBITDA and cash flows on top of any cyclical recovery. Our ongoing buybacks, our compounded value creating, benefits to our shareholders and if you need anything further

Unknown Executive: I wish you all a good summer. Stay safe, and keep those around you safe as well.

Genuino: Please do reach out to Daniel and his team. I wish you all a good summer. Stay safe and keep those around you safe as well. Thank you very much.

Unknown Executive: Thank you very much.

Unknown Executive: Timna Tanners, Myles