Q1 2025 ArcelorMittal SA Earnings Call
Daniel Fairclough: Good afternoon, everyone. This is Daniel Fairclough from the ArcelorMittal Inverted Relations team. Thank you for joining this call to discuss ArcelorMittal's performance and progress during the first quarter 2025.
Good afternoon, everyone. This is Daniel <unk> from the ASO Mitchell Investor Relations team. Thank.
Thank you for joining this call to discuss the Asa Mitchell's performance and progress during the first quarter 2025.
Daniel Fairclough: Leading today's call will be our Group CFO, Mr. Genuino Christino. Before we begin, I would like to mention a few housekeeping items. As usual, we will not be going through the results presentation, which was published this morning on our website. However, I would like to draw your attention to the disclaimers on slide number 19 of that presentation.
Speaker Change: Leading today's call will be our group CFO, Mr. Jimmy No Kristina.
Speaker Change: Before we begin I would like to mention a few housekeeping items as usual, we will not be going through the results presentation, which was published this morning on our website.
Speaker Change: I would like to draw your attention to the disclaimers on slide number 19 of that presentation.
Daniel Fairclough: As normal, Shemrina will make some opening remarks before we move directly to the Q&A session. So the idea is that the call will last 40-45 minutes. So if you would like to join the queue to ask a question, please do press star 11 on your telephone keypad.
Speaker Change: Normal seven Mena will make some opening remarks before we move directly to the Q&A session. So the idea is that the call will last $40 45 minutes.
Speaker Change: So if you would like to join the queue to ask a question. Please press star one on your telephone keypad.
Genuino Christino: Over to you, Genuino. Thanks, Daniel, and welcome, everyone, and thanks for joining today's call. As usual, I will keep my remarks brief.
Speaker Change: Uhm Arena.
Arena: Thanks, Paul and welcome everyone and thanks for joining today's call.
Speaker Change: I will keep my remarks brief.
Genuino Christino: I want to focus this part on three key points. beginning with safety, which remains fundamental for our company. We are now in the implementation phase of the recommendations of the SAIT audit we completed last year, and early progress has been encouraged. We anticipate that our journey to zero could take three years. The first year will be about setting the foundations for transformational change across the whole group. Years two and three will be about embedding this change and ensure consistency, discipline and results in every region. I can say with confidence that everyone across the company is working to become a fatality-free and zero serious injuries company as quickly as possible.
Speaker Change: Want to focus this quarter on three key points.
Speaker Change: Beginning with safety, which remains Paramount for our company.
Speaker Change: We are now in the implementation phase of the recommendation of the safety audits, we completed last year and.
Speaker Change: Early progress has been encouraging.
Speaker Change: We anticipate that our journey to zero could take three years. The first year will be about setting the foundation for transformational change across the whole group year.
Speaker Change: Years, two and three will be about embedding this jeans and ensure consistency.
Speaker Change: And results in every region.
Speaker Change: I can't say with confidence that everyone across the company is working to become fatality free and zero serious injuries company as quickly as possible.
Genuino Christino: Moving now to the financial performance, I want to highlight our strong operational performance and cash Our operations are performing well and they are performing consistently. The standout this quarter was our mining segment. Liberia achieved records for both production and shipment. And this is before the ramp up of new capacity. In Europe, our mills are operating consistently across the cycle, and this is supporting good cost performance. In North America, having resolved the issues that impacted production last year in Mexico, the segment is now back to normalized operating levels. Our consistent operational performance has supported also resilient financial performance in a low cycle price environment.
Speaker Change: Moving now to the financial performance I want to highlight our strong operational performance and cash flows.
Speaker Change: Our operations are performing well.
Speaker Change: And they are performing consistently.
Speaker Change: The standout this quarter once all of the mining segment, Liberia achieved records for both production and shipments.
And this is before the ramp up of new capacity.
Speaker Change: In Europe, our near Sao operating consistently across the cycle and this is supporting good cost performance.
Speaker Change: In North America, having resolved the issues that impacted production in Chile, and Mexico the.
Speaker Change: This segment is now back to normalized operating levels.
Speaker Change: Our consistent operational performance has supported also resilient financial performance in a low cycle price environment.
Genuino Christino: A bit per ton of 116 in the quarter is double the level compared to previous cyclical loads.
Speaker Change: EBITDA per ton of 116 in the quarter is double the level compared to previous cyclical lows.
Genuino Christino: As we have alluded to multiple times in the recent years, ArcelorMittal is a transformed company. We have high graded our asset portfolio by divesting higher cost assets and acquired new assets that are well positioned to create value in all market environments. This has been well demonstrated over the recent quarters with structurally higher margins and greater earnings resilience.
Speaker Change: As we have alluded to multiple times in the recent years. So let me it's always the asphalt company.
Speaker Change: Have high graded our asset portfolio by divesting higher cost assets and acquired new assets.
Speaker Change: Well positioned to create value in all market environments.
Speaker Change: It has been well.
Speaker Change: Demonstrated over the recent quarters with the structurally higher margins and greater earnings resilience moves.
Genuino Christino: Moving to cash flows. The first quarter always sees investments in working capital, and this year has been no different.
Speaker Change: Moving to cash flows.
Speaker Change: The first quarter always six investments in working capital and this year is no different.
Genuino Christino: but excluding the seasonal working capital investment in our discretionary growth cutback. The underlying free cash flow for the quarter was around $700 million. This shows that even at the bottom of the cycle, we are generating good levels of cash flow. that give us confidence to invest, to support our strategic priorities as well as consistently return capital to shareholders.
Speaker Change: But excluding the seasonal working capital investment in our discretionary growth Capex.
Speaker Change: Underlying free cash flow for the quarter was around $700 million.
Speaker Change: This shows that even at the bottom of the cycle, we are generating good levels of cash flows.
Speaker Change: That give us confidence to invest to support our strategic priorities as well as consistently return capital to shareholders.
Genuino Christino: Lastly, I will touch on TARIFS and the Outlook. We are supportive of our efforts to address the excess capacity in the global steel industry and the unfair trade practices that result from As we said last quarter, we expect the impacts of Section 232 tariffs on our North American business. to be largely new. But on the positive side, we have seen other regions respond also. Europe has strengthened its safeguards. India has introduced new safeguards.
Speaker Change: Lastly, I will touch on tariffs and the outlook.
Speaker Change: We are supportive of all airports to address the excess capacity in the global steel industry and the unfair trade practices that result from it.
Speaker Change: As we said last quarter.
Speaker Change: Specced impact subsection shortage with tariffs on our north American business to be largely neutral.
Speaker Change: But on the positive side, we have seen other regions respond also Europe has strengthened and feed costs.
Speaker Change: India has introduced new safeguards.
Genuino Christino: Ultimately, ArcelorMittal is well positioned to benefit from the continued push to create a level playing field in terms of trade. On the outlook, we said last quarter that the impact of Section 232 tariffs on our North American business should be broadly neutral. and including the benefits of higher prices to our culverts or inventions. This remains our spectrum. Encouragingly, EU spreads have recovered from unsustainably low levels. and this will be a strong support for results near term. As a result, Q2 EBITDA should be clearly better than the first quarter.
Speaker Change: Monthly Arcelor Mittal is well positioned to benefit from the continued push to create a level playing field in terms of trade.
Speaker Change: On the outlook, we said last quarter that the impact of section 332.
Speaker Change: <unk> on our North American business should be broadly neutral.
Speaker Change: And including the benefits of higher prices to our caliber talent bench and this remains our expectation.
Speaker Change: Encouragingly.
Speaker Change: <unk> spreads have recovered from unsustainably low levels.
Speaker Change: And this will be a strong support for results near term.
Speaker Change: As a result, Q2, EBITDA should be clearly better than the first quarter.
Genuino Christino: What is more uncertainty is the impact that tariffs will have on demand. Customers clearly are asking themselves the same question. What I can say today is that our order book remains healthy. But this is a risk that we are monitoring very closely and our business are prepared to adapt as necessary.
Speaker Change: But it's more uncertainty is the impact of tariffs we will have on demand customers clearly are asking themselves. The same question. What I can say today is that our order book remains healthy.
Speaker Change: But this is a risk that we are monitoring very closely and our business are prepared to adapt as necessary.
Genuino Christino: So to conclude my opening remarks, ArcelorMittal is in a strong position both operationally and financially. Despite the macro uncertainties, we will be maintaining our strategic course, delivering our strategic growth agenda, while simultaneously returning capital to our shareholders. Our growth projects have good momentum. The investments we have made, we have been making for the past three years will contribute to a structurally higher EBITDA. 1.2 billion of which is expected to be captured over the next few years. The Liberia expansion project is on track and on budget. The commissioning of the new state of the art EIF at Calvert is underway and the development of our unique exposure to India is progressing to schedule with the phase one expansion at Hazira on schedule.
Speaker Change: So to conclude my opening remarks.
Speaker Change: It always in a strong position, both operationally and financially.
Speaker Change: Despite the macro uncertainty, we will be maintaining our strategic course, delivering our strategic growth agenda, while simultaneously returning capital to our shareholders.
Speaker Change: Our growth projects have good momentum.
Speaker Change: The investments we have made we have been making for the past three years, we will contribute to a structurally higher EBITDA.
Speaker Change: $1 2 billion of which is expected to be captured over the next few years.
Speaker Change: <unk> expansion project is on track and on budget the commissioning of the new state of the art, Yes at Calvert is underway.
Speaker Change: And the development of our unique exposure to leisure is progressing to schedule.
Speaker Change: <unk> expansion is zero on schedule.
Genuino Christino: I'll clearly define capital return policies working well and will continue. We have initiated a new long-term share buyback program through 2030.
Speaker Change: Our clearly defined capital return policy is working well and we will continue we have initiated a new long term share buyback program through 2013.
Genuino Christino: Returning capital to shareholders at the bottom of the cycle while continuing to invest in growth is clear evidence of the progress ArcelorMittal has made and demonstrates that our company can deliver value through all aspects For more information visit www.arcelormittal.com of the Steel Cycle.
Speaker Change: Returning capital to shareholders at the bottom of the cycle, while continuing to invest in growth is clear evidence of the progress on some of them Minto has me and.
Speaker Change: And demonstrates that our company can deliver value through all aspects.
Speaker Change: Of the steel cycle.
Daniel Fairclough: With that, Daniel, I believe we can go to Q&A. Great. Thank you, Genuino.
Speaker Change: With that I believe we can go to Q&A.
Speaker Change: Great. Thank you Jeremy.
Daniel Fairclough: We have a queue developing already, but just let me reiterate those instructions. If you'd like to ask a question, please do press star 11 on your telephone keypad.
Speaker Change: A key developing already but just let me reiterate those instructions if you'd like to ask a question. Please press star one.
Speaker Change: On your telephone keypad.
Alain Gabriel: So we will take the first question from Alain at Morgan's Dummy. Thanks everyone. Hi. Thank you.
Speaker Change: So we will take the first question from Alain at Morgan Stanley.
Alain: Hi, Thanks, everyone.
Speaker Change: Hi, Hi, Hi, Thank you a couple of questions firstly on the.
Alain Gabriel: A couple of questions. Firstly, Genuino, on the 2Q25, you said you expect it, but that would be clearly higher QonQ. Do you mind giving us the usual building blocks by division for the second quarter? Have you seen the full benefit of falling MedCorp prices, or do lags suggest that we have to wait until Q3 before seeing the full benefit? That's my first question. Thanks.
Speaker Change: The <unk> 25, you said you expect EBITDA to be clearly higher Q on Q do you mind, giving us the usual building blocks by division for the second quarter have you seen the full benefit of falling met coal prices.
Speaker Change: <unk> suggests that we have to wait until Q3 before seeing the full benefit that's my first question. Thanks.
Genuino Christino: Yeah, hi, so yeah, so I believe that in Q2, as I said, what is really encouraging is what we saw developing during the first quarter, right? So we saw trade actions in Europe, we saw spreads recovering nicely, I would say, and as we were saying, the level of spreads in Europe were extremely weak in the second half of last year, beginning of this year, recovering nicely during the quarter. So that will provide strong support to our results in Q2.
Speaker Change: Yes islands, so yeah, so I believe that.
Speaker Change: In Q2 as I said.
Speaker Change: What is really encouraging is what we saw during developing during the first quarter right. So we saw trade action in Europe, we saw strength recovering nicely I would say.
Speaker Change: We were.
The level of spreads in Europe were extremely weak in the second half of last year beginning of this year with ordinary nicely during the quarter. So that will be will provide strong support to our results.
Daniel Fairclough: I will let Daniel to walk you through the moving parts that we usually do. But that's going to be a strong support.
Speaker Change: And quite a chore.
Speaker Change: <unk> walk you through the moving parts that we use it usually do.
Speaker Change: But that's that's that's going to be a strong support and in terms of <unk> I mean, there's going to be.
Genuino Christino: And in terms of coal, I mean, as you know, because of the weighted average cost that we have, we are still working through the high cost that we had, still at the beginning of beginning of 2020-2040, first half of 2024. So we are still, there are still some of that that we are working through. So we'll continue to see some support, some core support, but I would say that is more moderate.
Speaker Change: The weighted average cost that we have.
Speaker Change: We are still working through the high cost that we had.
Speaker Change: At the beginning.
Speaker Change: Uh huh.
Speaker Change: Beginning of 2000 22000 for the first half of China portion guys steel skew some of that debt.
Speaker Change: We are.
Working through so we will continue to see some support some cost support but.
Speaker Change: I'd say that is more modest.
Daniel Fairclough: So Daniel, do you wanna go over the moving parts? Yeah, sure, Gemmina. I think to focus your attention on the key themes for the second quarter, but as Gemmina said, we'll support the results in the second quarter relative to the first quarter. And so I think the key themes will be higher volumes, and there I'm specifically talking about a seasonal recovery in Brazil and also higher volumes in Ukraine, and then a positive price-cost effect. And you'll really see that coming through in Europe given the dynamics that Gemmina just talked about. So we've had some good momentum within Europe.
Speaker Change: So then how do you want to cover the moving to US Yes, sure Jeremy I think to focus your attention on the key themes for the second quarter.
Speaker Change: <unk> will support.
Speaker Change: Results in the second quarter relative to the first quarter and so I think the key themes will be higher volumes and there are specific we talking about a seasonal recovery in Brazil, and also our high volumes in Ukraine.
Speaker Change: And then a positive price cost effect.
Really see that coming through.
Speaker Change: Europe.
Given the.
Jim: Dynamics that Jim just talked about so we've had some good momentum in Europe, we've had that new safeguards and Thats really helped too.
Daniel Fairclough: We've had the new safeguards. That's really helped to improve market sentiment and spreads have benefited from that sentiment. and so we'll see a positive price cost effect in Europe and you should also expect some improved results in the India and JV section.
Speaker Change: Improved market sentiment and spreads have had benefited from that sentiment.
Speaker Change: So we will see a positive price cost effect in Europe and you should also expect some improved results.
Speaker Change: India and JV section.
Daniel Fairclough: Thank you. Thank you, Daniel.
Speaker Change: Thank you. Thank you Daniela My second question is on North America do you know if the new automotive component exemptions that have been recently announced.
Alain Gabriel: My second question is on North America. Do you know if the the new automotive component exemptions that have been recently announced from from auto tariffs are applicable to steel? And on that on that question as well on the tariff absorption in the US, do you absorb the tariff costs at the group level? Or is it at the Calvert level? Thank you.
Speaker Change: From promoter tariffs are applicable to Steve.
Speaker Change: And on that on that question as well on the tariff absorption and the USTR absorb the tariff costs at the <unk>.
Speaker Change: Level or is it that they call first level. Thank you.
Genuino Christino: Yeah, let me. So in North America, as we said last quarter, and I was covering my opening remarks, so we still believe that the impact of Section 232 tariffs will be largely neutral, right? And the way for you to see that really will be to combine the results that you're going to see now in North America segment, plus the results of COVID that we disclose separately, right?
Speaker Change: Yes.
Speaker Change: So.
Speaker Change: North America, as we said last quarter.
Speaker Change: Hey.
Speaker Change: I was.
Speaker Change: In my opening remarks, so we still believe that after the impact of section two thirds recoveries will be largely neutral.
Speaker Change: Brian.
Speaker Change: The way for you to see that really will be to combine the results that youre going to see our North America segment, plus the results of Covid that we.
Speaker Change: We disclose that we disclose separately right.
Genuino Christino: Regarding the tariffs on auto parts, I mean, our understanding is that there is no stacking. So that's our understanding.
Speaker Change: Regarding the <unk> on our two parts I mean now understand is that there is noise stephane.
Speaker Change: So that's that's our understanding there is still some clarification.
Genuino Christino: There is still some clarification that needs to happen when it comes to derivative products. I think there is still some work that needs to be done there to clarify what is really covered by that. But that's how we are seeing right now.
Speaker Change: <unk> that needs to happen when it comes to derivative products I think there is still some some work that needs to be done that's required.
Speaker Change: What is really covered by that.
Speaker Change: But that's.
Speaker Change: That's how we are seeing right now.
Alain Gabriel: Thank you. Thank you very much.
Speaker Change: Thank you. Thank you very much.
Daniel Fairclough: Great, thanks Alain.
Speaker Change: Great. Thanks, Alan So we'll move to the next question from <unk> at Citigroup.
Ephrem Ravi: So we'll move to the next question from Ephrem at Citigroup. Hi Ephrem, can you hear us? Yes, I can.
Speaker Change: Hi can you hear us.
Speaker Change: Yes again, so the question is on sort of the new green tea and steel plant.
Ephrem Ravi: So the question is on sort of the new Greenfields, Steel Blunt in India, in the East Coast, in the Shaukpatnam. The Indian press is quoting a timeline of 2029 for phase one and 2033 for phase two. Appreciate its early days with land acquisition being started, etc. But would those timelines quoted be realistic in our view, given the challenges with Greenfields in India? And related to that, anything special from the government either in terms of, you know, facilitating against bottlenecks like land acquisition? And again, any special fiscal terms? And is the decision on the site kind of really driven by the fact that it's the end of the iron ore slurry pipeline?
Speaker Change: In India in the East coast conditions Putnam.
Speaker Change: The Indian versus closing timeline of 2029 for phase one and 2000 22033 phase two appreciate it's early days with land acquisition being started et cetera, but those timelines cortex be realistic cannot deal given the challenges with clean because in India and related to that.
Speaker Change: Especially from the government data.
Speaker Change: In terms of.
Speaker Change: Consolidating.
Speaker Change: Against bottleneck flight land acquisition.
Speaker Change: Again, any especially in this difficult times.
Speaker Change: And is the decision on the side kind of really driven by the fact that it's the end of the eye.
Speaker Change: <unk> pipeline.
Ephrem Ravi: Or, or is there anything else there? Thank you.
Is there anything else there. Thank you.
Genuino Christino: Yeah, hi, Ephrem. So this is, of course, a very exciting development for us, for the company. It opens really a new avenue for growth in India. So we're excited about that. But of course, it's the early days. So we've been working very closely with the government to have access to this piece of land. As you know, in India, this is extremely difficult. So it's, it's It's a significant piece of land with access to the sea front. So it's really ideal. We have, we are going to be also closer to the, to the customers in that part of the country.
Speaker Change: Yes, hi.
Speaker Change: So this is south parcel.
Speaker Change: Second development for us at the company it opens a new Avenue for growth in India.
Speaker Change: So we're excited about that but of course, it's still early days.
Speaker Change: We've been working very closely with the government have access to these estrogen knowing this is extremely difficult so.
Speaker Change: It is.
Speaker Change: It's a significant piece of land with access to the seed corn.
Speaker Change: Its really ideal we have we are going to be also close it should be.
Speaker Change: To the customers.
Speaker Change: Is that part of the country access to iron ore.
Genuino Christino: Access to iron ore. As you said, we have the, our pipelines there, slurry pipelines. So I think the setup is very good. So, but, and we, where we are now at this stage is, so we're going to be working now also to obtain the environmental licenses. And then of course, after that follows the normal engineering work. And I'm sure we're going to have the opportunity to update you more as we progress.
Speaker Change: <unk> said, we have to be.
Speaker Change: Pipeline there ancillary pipelines.
Speaker Change: I think the setup is very good so but and.
Speaker Change: We.
Speaker Change: Where we are now at the stage is so we're going to be working also to obtained the environmental licenses and then of course after that follows the normal engineering work.
Speaker Change: I'm sure we're going to have the opportunity to update you more as we progress I think it's early days, but I think what is fair.
Genuino Christino: I think it's early days, but I think what is very good and is the fact that we could obtain.
Speaker Change: Very good and.
Speaker Change: The fact that we could think.
Speaker Change: Thanks, Brian.
Ephrem Ravi: If I can have a quick follow up question, I mean, you've taken the impairment on Mon Levade expansion, and you announced that not just you have not stopped the plant, but you've kind of cancelled the project, the expansion project. Can you give us some background as to why you've kind of cancelled the project after being probably what 20% through the project? Yeah, well, I think what we are trying to do there is really we believe that So that project was on hold for a number of years. And as we embarked again on the engineering work, we thought that the costs would be too high, would be prohibitive.
Speaker Change: If I can have a quick follow up question.
Speaker Change: Taken impairment on Mon lavage.
Speaker Change: Expansion.
Speaker Change: And you announced that not just you have not stopped the plant, but you've kind of canceled.
Speaker Change: Project. The expansion project can you give us some background as to why.
Speaker Change: Cancel the project after being probably about 20% through the project.
Speaker Change: Yeah.
Speaker Change: Well I think what you are trying to do.
Speaker Change: He is really we believe that.
Speaker Change: So that project was on hold for a number of years.
Speaker Change: And as we embarked again on the engineering work.
Speaker Change: We saw the courses would be too high and would be prohibitive.
Genuino Christino: And the teams are doing a good job exploring different optionalities, options to continue to develop the business in Brazil. So which should be more cost effective. So that's why I think it was a combination of the high cost and the possibility that we have with the footprint that we have to come up with options that might be more cost efficient.
Speaker Change: And the teams are doing a good job exploring different optionality as options to continue to develop the business in Brazil.
Speaker Change: So which should be more cost effective.
Speaker Change: So thats why I think it was a combination of high costs and the possibility that we have with the footprint that we have.
Speaker Change: To come up with options that might be more cost.
Speaker Change: <unk>.
Genuino Christino: And just to confirm that...
Speaker Change: And just to confirm that.
Speaker Change: Yes.
Speaker Change: Sure.
Speaker Change: Jimmy Choo, Jimmy no sorry.
Genuino Christino: And just to remind everybody that that was a decision taken last quarter, so that wasn't a new event for this first quarter, it was a decision taken in Q4 and the impairment was taken in Q4.
Speaker Change: And just to remind everybody that that was a decision taken last quarter. So that was a new event.
Speaker Change: For this first quarter. It was a decision taken in Q4 and the impairment was taken in Q4.
Speaker Change: Yes. Thank you.
Tom Zhang: Great, so we'll move to the next question from Tom at Barclays. Hi Tom, please go ahead. Hi, thanks for taking our questions.
Speaker Change: Great.
Speaker Change: Our next question from Tom at Barclays.
Speaker Change: Hi, Tom Please go ahead.
Tom: Hi, Thanks for taking my questions two from.
Tom Zhang: Two from me as well please, the first one just on North America.
Speaker Change: For me as well please the first one just on North America.
Tom Zhang: In your conversation, Jeremy, I was the first one in the side of the car. It was so forgiving. Ok.
Tom: You.
Tom: You didn't talk too much about it around volumes with price cost I know theres, a lot of moving parts around tariffs, but.
Genuino Christino: Are you still a little bit more contingent on the friendship between adversaries then impose the singlebrand or the compartirions that you had. I would say that isn't a gold standard but it's the fact that we are working as a You know, when you say the impact of Section 232 is going to be largely neutral to you, is that a guide or is that a comment towards earnings being quite stable in North America into Q2 or are there other moving parts like Mexico domestic pricing, Canada domestic pricing, volumes, any sort of main comments around those? Yeah, so maybe I can, in touch on that, Daniel can complement, but I think what we are seeing is that in terms of volumes, when we look at our order book, it remains quite healthy, right?
Tom: When you say the impact of section 232 is going to be largely neutral to you is that our guide or is that a comment towards earnings being quite stable in North America, It's Q2 or are there other moving parts like.
Tom: Mexico domestic pricing kind of domestic pricing volumes.
Tom: Any sort of the main main comments around those would be interesting.
Tom: Yeah, So maybe I can touch on that dental can complement but.
Tom: I think what we are seeing is that in terms of volumes when we look at our order book.
Tom: It remains quite healthy right.
Genuino Christino: And that is across all our customers in North America. So order books are healthy. So our expectation is to see our average price is what you see reported also to move slightly up. Not as much as you would expect for a pure U.S. company, because of course we also have operations in Canada and Mexico where prices have not really gone to the same levels as what we can see today in the U.S., right? So we are waiting for volumes in North America to be stable, prices to be stable. large to be slightly up. But then you're going to see, of course, the impact of tariffs, right, so it's not so much in quarter one, but then we will have the full impact of the tariffs in our results in quarter two, but then again, you will see offset, an offset at the level of cover that's why we are guiding for you to really look at the business on a combined basis, look at NAFTA, but look also at GAU.
Tom: And that is across.
Tom: All of our customers in North America, So order books that helps.
Tom: Our expectation is to see our average price is what you see.
Tom: Reported also to move to move slightly up.
Tom: Not as much as you would expect for Q.
Tom: U S company because of course, we also have operations in Canada, and Mexico, where prices have not really gone to the same level.
Tom: What we can see today.
Tom: The U S right. So we have.
Tom: I think for volumes North America to be stable prices should be.
Tom: Lastly to be slightly up.
Tom: But then you're going to see of course, the impact of cards right. So it is not.
Tom: So last year in quarter, one, but then we will have the full impact of the <unk>.
Tom: Public tariffs now.
Tom: Results in quarter, two but then again you will see offsets an offset at the level of call. It that's why we are.
Tom: Guiding for you to really look at the business on a combined basis look at NAFTA, but look also at college.
Genuino Christino: Okay, so I think that was very comprehensive, Jeremy, and so the only thing I would just reiterate is that the overall message here has not changed. So same message that we gave last quarter. Understood, thank you.
Jeremy: Okay. So I think that was very comprehensive Jeremy so the only thing I would just reiterate is that the overall message here was not changed.
Tom: So same message that we gave last quarter.
Speaker Change: Understood. Thank you and then the other question just on <unk>.
Genuino Christino: And then the other question just on Europe, let's see, there was a... Can I just ask how this could potentially change your footprint? Is that all going to be finishing downstream? And does that mean anything for your upstream footprint in Europe? You've had a furnace basically idle for quite a while now in France, you've been juggling a little bit with maintenance, but it's clearly not been running at full utilization.
Tom: Europe, let's see that was purchased.
Tom: 600, Yale cuts in France in 2500 total in Europe can.
Tom: Can I just ask how this could potentially change youll footprint is that all going to be finishing downstream.
Tom: And does that mean anything for your upstream footprint in Europe.
Tom: You've had a photo basically idle for quite a while now in France, you've been juggling, a little bit with maintenance, but it's clearly not running at full utilization.
Genuino Christino: Do we expect a permanent idling and are these cuts kind of linked at all to European policy right around energy provision and effective seabound trade defences that I think you mentioned in the press release. Yeah, these job cuts rule. Yeah, well, I would say that what we have seen this quarter, it's quite encouraging in terms of the new steel action plan. So all the points that have been addressed, at least conceptually, by the Commission, it's all very, very positive, I would say, the message on CBOM, trade, access to energy. So and then, of course, when you combine that with the actions that are already impacting us today, which is the strengthening of safeguard, the more positive than it was a couple of months ago.
Tom: Can we expect a permanent idling and all this all these costs kind of linked at all too.
Tom: European policy right around energy provision affect seaborne trade defenses that I think you mentioned in the press release.
Tom: Yes, these job cuts at all linked to that.
Tom: Yeah.
Tom: I would say that what we have seen this quarter, it's quite encouraging in terms of the new few.
Tom: External plan so all of the points that are being addressed.
Tom: At least conceptually.
Tom: By the commission itself.
Tom: So very very positive I would say.
Tom: Message on seaborne trade.
Tom: Access to energy So and then of course, when you combine that with the actions that are already impacting us today with the strengthening of faith.
Tom: The antidumping on.
Tom: Some.
Tom: Export is good news right. So now I think we are in a stage, where we have to see the concrete actions.
Tom: <unk> and execution of these steel action plan. So we have no plans here.
Tom: <unk> change we are not looking at change our footprint in Europe. So it all remains.
Tom: And I think the moment the momentum in Europe, I would say it's.
Tom: More positive advantage was a couple of months ago.
Genuino Christino: Okay, see you.
Tom: Okay. Thank you.
Speaker Change: Great. Thanks, Tom So we will move now to a question from Mark at Goldman Sachs. Please go ahead ma'am.
Myles Allsop: So we'll move now to a question from Matt at Goldman's.
Myles Allsop: Please go ahead, Myles. Hey, good afternoon guys. So just another one on Canada and Mexico and the auto tons heading into the US. You mentioned your order book is fine, but can you just confirm you've actually been able to move higher priced volumes into the US? And then just, you know, that fully captured the duty and just on the Trump tariff relief for auto, the auto industry, what are you hearing from your customers?
Speaker Change: Hey, good afternoon, guys. So just another one on Canada, or Mexico, and the all touch on heading into the U S. You mentioned your order book is.
Mark: But can you just confirm you've actually been able to move high price volumes into the U S. And then just does that fully capture the GC and.
Speaker Change: And just on the Trump tariff relief auto.
Speaker Change: The auto industry. What are you hearing from your from your customers kind of follow up with another question. Thanks.
Myles Allsop: And I'll follow up with another question. Thanks.
Genuino Christino: Yeah, I would just say, Matt, that outflows, they have not changed, they continue to be exactly the same. And, and each contract, it's They have their own clauses and conditions. So what I would say to you is that we are, of course, honoring all these constructs.
Speaker Change: Yeah, I would just say net outflows have not changed maybe continues to be exactly the same.
Speaker Change: And.
Speaker Change: And <unk>.
Speaker Change: Each contract.
Speaker Change: Uh huh.
Speaker Change: They have their own.
Speaker Change: Pauses and condition. So I, what I would say to you is the cost honoring always concerts assignment that in some cases.
Genuino Christino: So in some case. We are the import of records, we will pay the tariffs, in some other cases it's our customers, so it really varies. So, but I think what is important is that given the quality of the assets we have in Canada, Mexico, U.S. So we are able to keep supplying the OEMs, so we are not seeing any change there, right? And as I said, the order book remains good, healthy, and it's probably early days, right? But we... So what we are seeing right now, it's, I would say, stable.
Speaker Change: We are the important records will pay the salaries in some other cases customers.
Speaker Change: So it's.
Speaker Change: You've made it varies.
Speaker Change: So, but I think what is important is that given the quality of the assets we have.
Speaker Change: Ananda massive for U S.
Speaker Change: So we are able to keep supplying the Oems and we are not seeing any change there right and as I said the order book remains healthy.
Speaker Change:
Speaker Change: And it's probably early days right, but we.
Speaker Change: So what we are seeing right now.
Speaker Change: It's I would say stable.
Genuino Christino: That's great, thanks Genuino.
Speaker Change: That's great. Thanks.
Genuino Christino: And then just on MECL, obviously you've touched on that this is helping on spreads, but we're seeing some miners get into a bit of distress.
Speaker Change: And then just on met coal.
Speaker Change: You've touched on this this is helping on spreads, but we're seeing some minus again to a bit of distress.
Genuino Christino: Would ArcelorMittal be open to acquiring high quality steel making coal production for future supply security?
Speaker Change: I would also Mattel will be open to acquiring high quality steelmaking coal production for <unk>.
Speaker Change: Supply security.
Genuino Christino: Ned, it's not something that is, as you know, we don't really comment on M&A and it's not something that is high on our agenda at this point. That's all for me, thank you.
Speaker Change: Never thought something that as you know, we don't really comment on MMA and thought something that is high on our agenda at this point.
Speaker Change: Okay. That's all from me thank you.
Matt: Great. Thanks, Matt.
Patrick Mann: So we'll take the next question from Patrick at Bank of America. Please go ahead, Patrick. Thanks very much. Good day, Genuno, Daniel.
Speaker Change: So taking the next question from Patrick at Bank of America. Please go.
Matt: Patrick.
Patrick: Thanks very much.
Patrick Mann: Maybe the first question, I just, can you just talk us through the sort of the change in the technical aspects of the share buyback? So I appreciate there's no change to the capital allocation policy. But you know, the previous one was was 85 million shares over two years. And now it's, you know, authorization for 85 million shares, but this 10 million shares tranche. Can you just talk us through kind of the thinking, how and why it's changed effectively? Thanks.
Matt: Good day.
Matt: Daniel.
Matt: Maybe the first question I just can you just talk us through the sort of the change in the technical aspects of the share buyback. So I. Appreciate there's no change to the capital allocation policy, but the previous one was 85 million shares over two years I know its authorization for 85 million shares, but this does $10 million.
Matt: She is tranche.
Matt: Just talk us through kind of the thinking.
Matt: Why it's changed effectively thanks.
Genuino Christino: That's the first question. Do you want to talk about it? Yeah, yeah, sure, Chairman. So I think, look, the fact is, we've done nine separate share buybacks since we started the buyback programs in September of 2020. So it's clear that our policy, you know, our policy is clear. And the application of our policy is also very clear. So we're extremely happy with what we've been able to achieve. We've been able to buy back 38% of the company at obviously attractive points of the cycle and at a good average price level. So, like you say in your question, the policy is unchanged.
Matt: That's the first question.
Matt: Do you want to talk about.
Yeah sure Jeremy I think.
Matt: Ken.
Speaker Change: The fact is we've done at nine separate share buybacks since we.
Speaker Change: Started the buyback programs in September of 2020.
Speaker Change: So the the.
Speaker Change: So it's clear that.
Speaker Change: Paul.
Speaker Change: Our policy is clear.
Speaker Change: The application of our policy.
Speaker Change: Also very cleared so.
We're extremely happy with what we've been able to achieve.
Speaker Change: We've been able to buyback 38% of the company.
Speaker Change: It obviously.
Speaker Change: Attractive points of the cycle and at a good average price level.
Speaker Change: So like you said in your question.
Speaker Change: <unk>.
Speaker Change: The policy is unchanged, we will continue to return.
Genuino Christino: We will continue to return a minimum 50% of post dividend cash flow to shareholders through the buybacks. But the idea is that, you know, we've now made this announcement. It's through 2030. We will execute the first tranche of 10 million shares and then we'll start the next tranche of 10 million shares straight after that. So you can kind of forget about that side of things and just look at the policy, look at your expectations for the business, the cash flow that we're going to generate. And that should then form your expectations for how many shares we're going to be buying back.
Speaker Change: Yes.
Speaker Change: A minimum 50%.
Speaker Change: Post dividend cash flow to shareholders through buybacks, but the idea is that.
Speaker Change: <unk>.
Speaker Change: We've now made this announcement is through 2017.
Speaker Change: We will execute the first tranche of 10 million chats and then we will start the next tranche of 10 million shares straight after that so you can kind of forget about that side of things.
Speaker Change: And just looking at the policy.
Speaker Change: At your expectations for the business the cash flow that we're going to generate and that should that inform your expectations for <unk>.
Speaker Change: Sure.
Speaker Change: We're going to be buying back.
Patrick Mann: Hopefully that's clear. Yeah, that is.
Speaker Change: Hopefully that's clear yes.
Patrick Mann: Thanks very much.
Speaker Change: That is thanks very much and then the second question I wanted to ask.
Patrick Mann: And then the second question, I wanted to ask a little bit on the Liberia iron ore expansion. I mean, I think last year you shipped three and a half million tons from and obviously it's picking up to 10 and then, you know, going to capacity of 20. I mean, does that really only add 450 million additional EBITDA? I mean, if I look at the long term margins of the mining division, it's sort of closer to 50 percent on EBITDA. And so, you know, sort of additional 16 and a half million tons, it kind of implying that current price is only about a 25, 26 percent margin.
Speaker Change: But on the Liberia iron ore expansion I mean, I think last year, you shipped three and a half million tons from from and obviously, it's picking up to 10 and then.
Speaker Change: The capacity of <unk>.
Speaker Change: I mean does that really only had 450 million.
Speaker Change: Additional EBITDA if I look at the long term margins of the mining division, it's sort of closer to 50% on EBITDA.
Speaker Change: And so.
Speaker Change: Additional $16 5 million tonnes.
Speaker Change: It kind of implying that current prices only about 25% to 26% margin.
Patrick Mann: So, yeah, I mean, are you being conservative around pricing? Is it higher cost because of the concentrating or because of additional? Is there anything, any reason why it should be lower margin than the balance of your mining division effectively?
Speaker Change: Yes, I mean are you being conservative around pricing is at a higher cost because of the concentrator where because of additional.
Speaker Change: Is there anything.
Speaker Change: Any reason why it should be lower margin than the balance of your mining division effectivity. Thanks.
Genuino Christino: Thanks.
Genuino Christino: Yeah, so. So, first of all, I think the project is going extremely well, as we alluded to at the beginning in our opening remarks.
Speaker Change: Yeah. So.
Speaker Change: So first of all I think the project is going extremely well.
Speaker Change: We alluded to at the beginning.
Speaker Change: And now opening remarks, so we are actually a balance you really start the first line, which is also quite exciting.
Genuino Christino: So, we are actually about to really start the first slide, which is also quite exciting. And we are talking about here very high-quality material, Patrick. So the $450 million that we have been quoting, that's really based on long-term prices, right? And that's, as we know, lower than what we have been enjoying in recent quarters, so in this $100 range. So the 450 is based on the long-term prices, which is much lower. So to the extent that, of course, prices remain where they are, then we should be able to print higher results from Liberia, but there is no reason to assume that the quality of the material will be inferior.
Speaker Change: And we are talking about a very high quality material.
Speaker Change: Patrick.
Speaker Change: So the $450 million that we have been quoting and Thats really based on long term prices right.
Speaker Change: No lower than what we have been enjoying.
Speaker Change: <unk> quarter.
Speaker Change: Hundred dollars range, so what it is.
Speaker Change: On the long term prices, which is much lower so to the extent that oil prices remain where they are.
Speaker Change: Dan.
Speaker Change: We should be able to.
Speaker Change: Print higher higher results from from Iberia.
Speaker Change: But there is no reason to assume that the quality of the material we will be in theory.
Genuino Christino: On the contrary, we believe that it's going to be a very high quality product. So we, it's very excited about that.
Speaker Change: On the contrary, we believe that it's going to be a very high quality product.
Speaker Change: No.
Speaker Change: We're excited about that.
Genuino Christino: Yes, it's quite transformational. You get the economies of scale of a much bigger operation, and that largely neutralizes the cost of concentration. And then we get a richer product and we'll be able to capture a richer price for that material in the market. So just at capacity, that's very conservative. It's based on conservative long run pricing. But even based on that, you can see the very attractive economics of the project and the good returns on the investment that we're making. But should prices hold anything like where they are today, then there would be quite significant upside to that $450 million number.
Speaker Change: Yes, it's quite transformational as the chairman just so you get the.
Speaker Change: The economies of scale at a much bigger operation.
Speaker Change: Largely neutralizes the.
Speaker Change: The cost of concentration and then we get a rich products and we will be able to.
Speaker Change: Capture.
Speaker Change: Rich price for that material in the market. So just to confirm what you were saying.
Speaker Change: The.
Speaker Change: The guidance that we've given for this project to $450 million.
Speaker Change: Capacity Thats very conservative it's based on conservative long run pricing.
Speaker Change: But even based on that and you can see the very attractive economics at the project.
Speaker Change: And the.
Speaker Change: The good returns on the investment that we're making but.
Speaker Change: Should prices hold anything like where they are today.
Speaker Change: Then there would be quite significant upside to that 450 million.
Speaker Change: $1 million number.
Speaker Change: Great. Thank you very much.
Speaker Change: Great. Thank you so.
Cole Hathorn: So we will move to the next question, which should be from Cole at Geoffrey. Hi Cole, please go ahead. Afternoon, thanks for taking the question. I'd just like some color on how you're seeing the European market developing here. I mean, margins are looking a lot better into the second quarter. We've got a lot of safeguards. How are you looking at your mill system to either increase volumes if your order books remain healthy? And secondly, how do you think some of the players that have idle capacity or have some challenges at the moment might react to the more favorable spreads into the second quarter?
Speaker Change: We'll move to the next question, which should be from coal at Jefferies.
Speaker Change: Please go ahead.
Speaker Change: Thanks for taking the question.
Speaker Change: Some color on how you're seeing.
Speaker Change: The European markets developing yes, I mean margins are looking a lot better into the second quarter, we've got a lot of safeguards.
Speaker Change: Do you have.
Speaker Change: How are you looking at your mill system to either increase volumes. If you order books remain healthy and secondly, how do you think some of the players that have idled capacity or.
Speaker Change: <unk> had some challenges at the moment, Mike to react to the more favor.
Speaker Change: Favorable spreads into the second quarter. Thank you.
Cole Hathorn: Thank you.
Genuino Christino: Yeah, so what I would say. Is that I think in terms of demand in Europe, as we have been discussing, and you have our forecast for this year, which remains unchanged, and we have a forecast of about neutral to about 2% increase. I think what is really helping and supporting the demand right now is the change that we talked about in terms of trade. So we started to see some reduction of imports, which is extremely positive. We will not see the full impact of the new trade access until Q3, because that is how there is a bit of a transition there.
Speaker Change: So what I would say.
Speaker Change: Is that.
Speaker Change: I think so.
Speaker Change: Demand in Europe.
Speaker Change: As we have been discussing.
Speaker Change: And.
Speaker Change: And you have our forecast for this year, which remains unchanged.
Speaker Change: And we have a forecast.
Speaker Change: About neutral to about 2% increase.
Speaker Change: What is really helping and supporting the demand right now is the change that we talked about in terms of trains so.
Speaker Change: So we started to see some reduction of imports which is extremely positive.
Speaker Change: We will not see the full impact.
Speaker Change: The new trade actions until quarter, three because thats, how that is a bit of a transition there.
Genuino Christino: So our expectation is that imports will continue to trend down, to be seen. That's our expectation, allowing then domestic players to regain some market share that was lost with search of exports from China and other countries. So that's very good. So we retain, of course, as part of our operations, the ability to regain market share, so we are not constrained there.
Speaker Change: So our expectation is that in.
Speaker Change: <unk> will continue to trend down.
Speaker Change: To be seen but that's our expectation, allowing then.
Speaker Change: <unk> plans to regain some market share.
Speaker Change: Was lost.
Speaker Change: With such exports from China and other countries. So that's that's very good. So we retained of course as part of our operations ability to regain market share. So we are not constrained.
Genuino Christino: And regarding capacity that is idle, I would just say that giving DTS system in Europe, it's not so easy for people to bring back capacity because then they will incur very high CO2 costs as well. So that's just something to keep in the back of your mind. But of course, we cannot comment on what others will do. But I would say that what we can see right now is quite positive.
Speaker Change: And regarding capacity that is idle I would just say that giving dcs system in Europe, it's not so easy for people to bring back capacity because now.
We will incur very high.
Speaker Change: Future costs as well, so thats just something to keep in back of your mind.
Speaker Change: But of course, we cannot.
Speaker Change: Comment on.
Speaker Change: Others will do but I would say that why do we can see right now it's quite positive.
Genuino Christino: Thank you. And then, you know, maybe just following on that last point around the cost for CO2 to restart idle capacity. Have you heard anecdotally, how competitors might be facing in kind of high yield debt markets, just considering they're a little bit more challenging, relating to potentially starting up some of that capacity? Will it be more challenging for them to get the financing and start up some of the capacity in your view? Well, I'm not going to comment, we just say that there is a lot of volatility in the market, right? So the markets were kind of closed for high youth.
Speaker Change: Thank you and then.
Speaker Change: Maybe just following on that last point around the.
Speaker Change: The cost for you to restart idled capacity have you heard anecdotally how.
Speaker Change: How competitors might be facing in kind of high yield debt markets, just considering they're a little bit more challenging.
Speaker Change: <unk> to potentially starting up some of that capacity will it be more challenging for them to get the financing in startup.
Speaker Change: Some of the capacity in your view.
Speaker Change: Well I'm not going to comment with those kind of things I don't have volatility in the market right. So the markets what kind of clothes for high yield, but I think that's just temporary of course, so I think thats.
Genuino Christino: But I think that's just temporary, of course.
Genuino Christino: So I think that's, it's a question that I'm afraid you're gonna, you're gonna need to ask Behold I come. Thank you, I understand.
Speaker Change: Just a question I'm afraid I'm going to I'm going to need to ask.
Speaker Change:
Speaker Change: The auto companies.
Speaker Change: Okay, I understand and then.
Genuino Christino: And then just following up on the comment around India and JV sequentially improving into the second quarter, the U.S. market is clear considering the price dynamics with Calvert, but would you mind just giving some color on the dynamics impacting the India-JV with The Safeguard Actions for India. Thank you. Yeah, well, India is, I think the story there is really intact, right? We continue to see good growth. So appearance to consumption forecasts remain the same. So we still expect the growth of about 7% this year. So that's, that's extremely good. And as we discussed, so we have the safeguards now in place from the beginning of April, which is supporting prices, we have already seen price recovery from low levels that we, we had in quarter one.
Speaker Change: Just following up on the comment around.
Speaker Change: India and JV sequentially improving into.
Speaker Change: The second quarter.
Speaker Change: The U S market is clear concerning the price dynamics with Calvert, but would you mind, just giving some color on that.
Speaker Change: Dynamics impacting the India JV with.
Speaker Change: The safeguard actions for India. Thank you.
Speaker Change: Yeah well.
Speaker Change: I think the story there is really intact right. We continue to see good growth so apparent steel consumption forecast.
Speaker Change: <unk> remains the same so we don't expect it.
Speaker Change: Growth of about 7% this year.
Speaker Change: Thank God.
Speaker Change: And as we discussed so we have the safeguards in place from April which is supporting prices, we have already seen prices.
Speaker Change: Recovery from low levels that we had in quarter, one so that should support.
Genuino Christino: So that should support the results of our JV going into the second quarter. And as we have also pointed to you in our release, so Q1, we had some maintenance work, which has, which is now completed. So we're going to be back to full operations. So that should support costs as well. So we are looking for an improvement in terms of profitability in India in quarter two. And more importantly, as we have been discussing is the progress on the projects going well on track. which is also quite encouraging. So that's the dynamics in India that we are seeing right now.
Speaker Change: The results of our JV ing.
Speaker Change: Going into the second quarter and as we have also pointed to you in our release.
Speaker Change: So Q Q1, we had some maintenance work, which is now completed.
Speaker Change: So we're going to be back to full operations that should support costs as well.
Speaker Change: So we are looking for an improvement in terms of profitability.
Speaker Change: In quarter two and.
Speaker Change: And more important to us as we have been discussing the progress on the project, scoring well on track.
Speaker Change: Which is also quite encouraging.
Speaker Change: So thats the dynamics in.
Speaker Change: You can get ethylene ethylene glycol.
Speaker Change: Thank you.
Speaker Change: Great. Thanks Carl.
Boris Bourdet: So we will move to the next question now, which will take from Boris at Capra Sugaro. Hi Boris, please go ahead. Hello, can you hear me? Yes, we can. Yeah, perfect. Thank you for taking my question. The first one is on the free cash flow. So the press release reads that you remain positive for free cash flow with a stable capex envelope, the incremental contribution from the strategic project and some working capital optimization. Can you bring some details on working cap just to help us in the modeling part?
Speaker Change: So we will move to the next question now which will take from Boris.
Boris: Sure Hi.
Speaker Change: Please go ahead.
Speaker Change: Hello can you hear me.
Speaker Change: Yes, we can yes.
Speaker Change: Yes perfect.
Speaker Change: Thank you for taking my questions. The first one is on the free cash flow.
Speaker Change: The press release.
Speaker Change: You have been positive for free cash flow.
Speaker Change: The stable Capex envelope.
Speaker Change: Contribution from the strategic projects and some working capital condition can you can you.
Speaker Change: Bring some details on working cap just to help us.
Speaker Change: Remember that in bulk.
Boris Bourdet: And the second question is on China. China has been under pressure for some time now. What do you expect? Do you see, do you have any good reasons to expect some stimulus? What's your view on the market where we have heard about potential?
Speaker Change: And second question is on China.
Speaker Change: China has been under pressure for some time now.
Speaker Change: What do you expect to your Cvs in the acreage reasons to expect subsidiaries.
Speaker Change: Whats your view on the markets, where we have heard about potential production cuts.
Genuino Christino: Yeah, so Boris, in terms of the working capital, we are keeping our message of the previous quarter as well, no change there. I mean, of course, the investment that you see in quarter one is seasonal. I mean, it happens every year. And our expectation is that hopefully we should still see the moving parts, but we should still see some release.
Speaker Change: Yes.
Speaker Change: In terms of the working capital.
Speaker Change: We are keeping all our message.
Speaker Change: The previous quarter as well no change there.
Speaker Change: Of course, the investment that you see in quarter, one is seasonal I mean, it happens every year.
Speaker Change: And our expectation is that portfolio, we should still see the moving parts, but we should.
Speaker Change: See some release.
Genuino Christino: but it's always difficult to be precise because there are of course many moving parts and a lot will depend on what happens really in the last couple of months of the year but because of actions like we will have a reline of opponents in in France in the second quarter with beauty slabs for that Thank you all for joining us today and we hope that you will be working through that. As we also discussed at the very beginning of the call, there are still some high costs coming from the first half of 2024 because of the weighted average cost.
Speaker Change: But it's always difficult to be precise because there are many moving parts.
Speaker Change: And a lot will depend on what happens really in the last couple of months.
Speaker Change: But because the actions.
Speaker Change: We will have a relying on the financing and costs in the second quarter, we building slabs for that so well.
Speaker Change: We are working through that and as we also discussed at the very beginning of the call you still have some high cost coming from the first half of 2020 core because of the weighted average cost.
Genuino Christino: So, we still believe that, all in all, we will be in a position to release Working Capital this year, which is, of course, supported for free cash flows. We should not forget that Liberia, the expansion, is a second half, primarily, right? Even though the performance in Quarter 1 was really outstanding, but it's a second half event, so we'll support results in the second half. So, that's why we feel comfortable and confident that the group will be generating free cash.
Speaker Change: So we still believe that the all in all we will be in a position to release working capital this year.
Speaker Change: This of course supports it for free cash flows should not forget that Liberia.
Speaker Change: Liberia expansion.
Speaker Change: In the second half.
Speaker Change: Primarily right, even though the performance in quarter, one was really outstanding.
Speaker Change: But.
Speaker Change: Second half events are all support results in the second half.
Speaker Change: So that's why we feel.
Speaker Change: Comfortable and confident that the group will be generating free cash.
Speaker Change: Yep.
Speaker Change: Yeah.
Genuino Christino: Perhaps I can take the question on China. So the, you know, clearly the, the demand situation in China continues to be challenging. And we continue to see very weak spreads and elevated from China. So there is a lot of talk of incremental stimulus in reaction to everything that's going on at the moment. And hopefully that will come. Hopefully that will be oriented towards more steel intensive parts of the economy so that it can have the maximum impact on steel consumption. But, you know, that's all uncertain.
Speaker Change: Perhaps I can take that.
Speaker Change: Question I'm trying to say.
Speaker Change: <unk>.
Speaker Change: Clearly the.
Speaker Change: The demand situation in China continues to be challenging.
Speaker Change: And we continue to see very weak.
Speaker Change: Reds and elevated.
Speaker Change: From China, So and there was a lot of talk of incremental stimulus.
Speaker Change: Our reaction to to everything that's going on at the moment.
Speaker Change: Hopefully that will come hopefully that will be oriented towards more steel intensive parts of the economy.
Speaker Change: That it can have the maximum impact on them.
Speaker Change: On steel consumption.
Ted: But Ted.
Genuino Christino: And that's why we continue to our strong efforts and lobbying efforts within all of the countries that we are operating to make sure that our businesses and our industries are appropriately protected from those risks of excess capacity in China.
Speaker Change: So.
Speaker Change: Uncertain and Thats why we continue to.
Speaker Change: Strong assets and.
Speaker Change: Lobbying efforts within all of the countries that we are operating to make sure.
Speaker Change: Businesses in our industries.
Speaker Change: Appropriately protected.
Speaker Change: From those risks of excess capacity in China.
Genuino Christino: This is a follow-up on that.
Speaker Change: So as a follow up on that do you expect what kind of further measures can we expect in Europe.
Genuino Christino: Do you expect, what kind of further measures can we expect? Well, I think as we discussed, I think that it's a lot of good news in Europe. We've still.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: Well I think as.
Speaker Change: We discussed I think there is a lot of wouldn't use in Europe.
Speaker Change: Steel.
Genuino Christino: plan just announced. I think there is a lot that will be announced as we move forward. I think what's going to be very important for us is the new trade actions, because as we know, the safeguards come to an end next year. So this is an important piece of the whole puzzle. So this is coming in summer. I think there is a lot that will be worked out in Europe in the second part of the year. I think what is really encouraging is that now it's clear that there is a good understanding of the challenges that we face in Europe, that the only speaking the same language, we all understand the issues, and we can work together to resolve them.
Speaker Change: Fan just announced I think that is a lot of that will be.
Speaker Change: Now as we move forward I think what's going to be very important for us.
Speaker Change: The new trade actions because it's been noticed safeguards comes to an end next year. So.
Speaker Change: This is an important piece of the whole puzzle also.
Speaker Change: This coming summer.
Speaker Change: I think there is a lot that will be.
Speaker Change: Worked out in Europe.
Speaker Change: And the second part of the second part of the year.
Speaker Change: But it's really encouraging is that now.
Speaker Change: Now it's clear that that is the <unk>.
Speaker Change: Understanding of the challenges that we.
Speaker Change: We face in Europe that the industry is facing.
Speaker Change: And that's always very critical so once we all speaking the same language and we all understand the issues and we can work together to resolve them.
Genuino Christino: And so I think that's what is encouraging about everything that has been published.
Speaker Change: What is encouraging about everything.
Genuino Christino: And as I said, I think now we want to see the detailed plans and implementation.
Speaker Change: And as I said I think now.
Speaker Change: We want to see the detailed plans and an implementation.
Boris Bourdet: Great. Thanks, Boris.
Speaker Change: Great.
Bastian Synagowitz: So we'll move to the next question, which we will take from Bastian at Deutsche Bank.
Boris: Thanks, Boris So we'll move to the next question.
Boris: Which we will take from Bastian at Deutsche Bank. So Hi, Bastian. Please go ahead.
Bastian Synagowitz: So hi, Bastian, please go ahead. Yeah, good afternoon. Thanks for taking my questions. I've got two questions left, actually.
Bastian: Yeah. Good afternoon. Thanks for taking my questions I've got two questions left the first one is just on the JV business and if he called it specifically and you see on the startup of the new way.
Bastian Synagowitz: The first one is just on the JVs business and actually, Karl, but specifically, initially, on the startup of the new EAF. From what I understand, I think you will start actual production shortly. Is there a broad volume target or production target you could maybe share with us for this year?
Boris: From what I understand I think you will start production shortly.
Boris: The broad volume target or protection targets, you could maybe share with us for this year.
Bastian Synagowitz: And then secondly, you spent a lot of time talking about the tariff impact on NAFTA, but I think there's another 1.5 to 2 million tons of slab supply from Brazil into Calvert as well. I think you did around half a million tons of shipments in the first quarter. So, will the cost for the tariffs on these, will that be taken in Calvert or in the Brazilian segment? And also, have you been able to build any slab inventory ahead of the tariffs?
Boris: And then secondly, you spent a lot of time talking about the tariff impact on NAFTA, but I think that's another one five to 2 million tons of slipped supply from Brazil into Calvert as well I think you did around half a million tons of shipments in the first quarter. So will the cost towards the east.
Boris: The tariffs on these will be taken whether it be taken can calvert.
Brazilian segment and also have you been able to build any slip inventory head of the terrorists. Maybe you can help us on the current inventory runway and Calvert close all my questions.
Bastian Synagowitz: So, maybe you can help us on the current inventory runway there in Calvert. Those are my questions.
Genuino Christino: Yeah, so we are not giving, you're right, so that we are now in the process of commissioning the AF, which is also extremely important for our business in North America, particularly now everything that we just talked about, trade, so that's very timely. We're not giving a target for this in terms of production. What I would say is that our expectation is that it should take us about 12 months to be at a full run rate. So I would expect that by the end of the year, we should be at a very high level of run rate already.
Boris: Yeah. So we are not giving you right now.
Now in the process of commissioning.
Boris: Which is also extremely important for our business.
Boris: In North America, particularly now.
Boris: Everything that we just talked about trade.
Boris: Timely.
Boris: We're not giving a target for this in terms of production and what I would say is that we.
Boris: Our expectation is that it should take us about <unk>.
Boris: 12 months.
Boris: At full.
Boris: Full run rate.
Boris: So I would expect that by the end of the year, we should be at the very high level.
Boris: Run rate already.
Genuino Christino: And then of course, in parallel, we start the certification, the homologation process with customers. So this is a process that we will be running in parallel. And regarding these labs, you're right. So of course we are importing these labs into the United States for Calvert. But I would point to two points. So one is... And we have seen a decline in slab prices. So. So Calvert will be, of course, paying the cost of the tariffs for the imported slabs. So you're going to see that as part of the Calvert performance, not in Brazil, Calvert. But despite that, given how quickly price is moving, Inaugural speaker.
Boris: And then of course in parallel we thought.
Boris: Densification obligation process.
Boris: Yes.
Boris: So this is a process that we will be running in parallel and regarding these slabs youre right. So of course, we are importing slabs into the United States for comment.
Boris: But I would point to two points. So one is.
Boris: Now we have seen.
Boris: Declining slab prices.
Boris: So.
Boris:
Boris: So call that will be.
Boris: <unk>.
Boris: The cost of the salaries for the imported slabs, so you're going to see that as part of the Calvert.
Boris: <unk>.
Boris: Northern Brazil Albert.
Boris: But despite that.
Boris: How quickly prices moved.
Boris: In the United States.
Boris: It will be it will more than offset that it will help also to offset.
Boris: Some of the costs that we talked about we will incur in Canada.
Bastian Synagowitz: Understood.
Bastian Synagowitz: So basically, bottom line, no real impact on the Brazilian business itself from that, from what you say. No, that's right.
Speaker Change: Understood. So basically bottom line no real impact on the Brazilian business itself from that from what you see.
Boris: No that's right.
Genuino Christino: Okay, and then maybe just coming back to the EF startup, just checking in, I mean, is the startup of the EF itself, is it going, is that going according to plan and timeline? I think you started to ramp it up late last year. So, but I guess the 12 months you're referring to, I guess, is probably starting basically with the first melding process. Is that correct? I, like, whenever you start the melding, it's basically 12 months from then. Yeah, I think that's a good reference, Bastian. So right now we are going through testing all the equipment, right?
Boris: Understood. Okay, and then maybe just coming back to the startup just kicking in.
Boris: The startup of the Es itself is it going.
Boris: Is that going according to plan and timeline as well I think you started to ramp it up late last year, so, but I guess, the 12 month, you're referring to I guess, it's probably starting basically with the first smelting process is that correct I E. Like whenever you stopped the melting typically 12 month from them.
Boris: Yes.
Boris: It's a good reference.
Boris: Bastian So right now we are going through testing all the equipment right and then you put it all together you have the bus.
Genuino Christino: And then you put it all together, you have the first slab, which we are anticipating by the end of second quarter. And then from there, you start counting the ramp up that's That's how it works. that here. Okay, thank you.
Boris: <unk>, which we are anticipating by the end of second quarter and then from there.
Boris: Start counting.
Boris: The ramp up.
Boris: Uh huh.
Boris: That's how it works.
Boris: Got you okay. Thank you.
Speaker Change: Great. Thanks, Bastian and so I think we're going to have time for just a few more question Jeremy So the first of those that we will take from Max.
Daniel Fairclough: So I think we're going to have time for just a few more questions, Genuino, so the first of those we will take from Max at Odo.
Boris: Right.
Daniel Fairclough: Oh, actually, I'm mistaken. Sorry, looking at my screen.
Speaker Change: Oh absolutely.
Mistaken sorry, looking at my screen, So it's actually sorry Tristan.
Tristan Gresser: So it's actually, sorry, Tristan at BNP Paribas Exxon. Hi, Tristan, please go ahead. Hey, hi, thank you. Thanks for taking my question. So first on the CAPEX, you mentioned that any DECARB investment would fit within your 4.5, 5 billion CAPEX envelope. But if you move forward with all your projects, your IEF projects in Europe, in France, Spain, Germany, Belgium, it really feels difficult to see how it would fit and you wouldn't go above 5 billion. So I was just wondering how we should look at this, you know, 5 billion. Is that a hard target? Is it a bit like your 50% post-dividend free cash flow target?
Speaker Change: BNP powered by Exxon Hi, Tristan. Please go ahead.
Tristan: Hey, Hi, Thank you. Thanks for taking my questions first on the Capex, you mentioned that energy carbon investment, which fits within your 455 billion Capex envelope.
Tristan: But if you move forward with all your projects year Ies projects in Europe, and France, Spain, Germany, Belgium trio.
Tristan: It's difficult to see how it would fit and you wouldn't go above $5 billion. So just wondering how we should look at this.
Tristan: $5 billion is that a hard target is it a bit like you're 50%.
Tristan Gresser: Is that the way to think about it?
Tristan: Post dividend free cash flow target is that the way to think about it.
Genuino Christino: Tristan, as you can imagine, I mean, these are very large projects, right? And we're not going to do it all at the same time. So this will happen gradually. We should not forget that the transformation to this new green steel is going to take decades. And so you should expect that once we can see that we have the right conditions, the right policies that we have been talking about and we have been very vocal about it. Once we have that in place, so then we're going to be in a position then to start investments, but that should happen gradually.
Tristan: Please go ahead.
Tristan: As you can imagine I mean.
Tristan: Any large projects right so.
Tristan: And we're not going to do it all at the same time.
Tristan: So this will happen gradually we should not forget that.
Tristan: Transformation to this new.
Tristan: Green steel, it's going to take the case.
Tristan: Right.
Tristan: So you should expect that this will be once we can see that we have the right conditions. The right policies as we have been talking about and we have been very vocal about it.
Tristan: Once we have that in place. So then we wound up being a position then to start investments, but that should happen gradually and thats why we feel confident we should be able to accommodate that within <unk>.
Genuino Christino: And that's why we feel confident that we should be able to accommodate that within the existing envelopes that we have been using now for a couple of years. All right.
Tristan: The existing envelope that we have been.
Using now for <unk>.
Tristan: Couple of years.
Genuino Christino: And could there be upside as well to subsidies? I think the C-ACTION plan also refers to additional help. Is that something you can expect? Well, I think that's going to be part of the dialogue with the government. I think, as I said, the fact that there is a good understanding of some of the issues that we are facing in Europe, so we are encouraged by that, and this will be part of the dialogue. But at this point in time, I really don't have any more news on that front to share with you. Okay, that's clear.
Tristan: Alright, and could there be upside as well to subsidies I think the key action plans also refers to two additional help is it something you can.
Tristan: We expect.
Tristan: Well I think that's going to be part of the dialogue with the government I think as I said, the fact that that is a good understand of some of these shows.
Tristan: We are facing in Europe. So we are encouraged by that and this will be part of the dialogue, but at this point in time I really don't have any more news on that front to share with you.
Speaker Change: Okay, that's clear and a quick question just on wholesale and Cadbury. There is a news feed is a process ongoing regarding the acquisition of use scale by Nippon steel if the new U S administration.
Tristan Gresser: And a quick question just also on Calvert.
Genuino Christino: There is a new process ongoing regarding the acquisition of USTL by Nip and Steele. If the new US administration clears the deal on national security grounds but does not see an antitrust issue, could Nip and Steele walk back from the agreement of selling the 50% stake to you? I'm just trying to understand if this is kind of a black or white scenario, or if there is some gray as well.
Speaker Change: Here's the deal National security rounds, but does not see an antitrust issue.
Speaker Change: Lipinski of walk back from the agreement of selling the 50% stake to you in just trying to understand if this is kind of a black or white scenario, where if there is some some gray as well.
Genuino Christino: Tristan, I will not speculate on that. I think let's wait and see what finally happens with that deal. So let us see, I don't think we have much to add to that. You know the terms that have been agreed. So let's just wait and see what. What is the final conclusion of the review by CFIUS? There is a new review ongoing and that's at least my understanding reading the news. So we'll wait to see what happens then.
Speaker Change: Tristan I will not speculate on that I think let's wait and see what finally happens with that deal.
Speaker Change: Uh huh.
Speaker Change: Let us see I don't think we have much to add to that.
Speaker Change: The terms have been agreed.
Speaker Change: So, let's just wait and see what.
Speaker Change: What is the final conclusion of the review by features such as a new review ongoing that's minus my understand reading the news.
Speaker Change: So we will.
Speaker Change: Wait to see what happens there.
Tristan Gresser: All right, thank you.
Speaker Change: Alright, thank you.
Daniel Fairclough: Great. Thank you, Tristan.
Speaker Change: Great. Thank you so we will have.
Maxime Kogge: So we will have the next question will be from Max at Otto.
Speaker Change: The next question will be from Max <unk>.
Maxime Kogge: So hi, Max, please go ahead. Yeah, good afternoon, both of you. Yes. So my first question is on defense, because this is a theme that has grown in importance for the investors in recent weeks, in recent months. And could you talk us through your own defense exposure? My understanding is that you sell some heavy plates through industrial. Is it the only segment where you are active? Or is there anything else we should be aware of?
Max: Hi, Max Please go ahead.
Max: Yes, good afternoon, and both of you. Yes. So my first question is on defense. Because this is a theme that has grown in importance for fall 14 vessels in recent weeks in recent months and could you talk us through your own defense exposure. My understanding is that you said some heavy plates to win this deal.
Max: Only segment, where you at <unk> or is there anything else, we should be aware of.
Daniel Fairclough: want to talk about it, Daniel? Yeah, sure. So I think we have touched on this a little bit in a lot of recent meetings. So yes, industrial is the sort of focus point of our defense exposure. They do have leading market positions. I think when we think about defense, it isn't a big steel consumer. So when you compare the focus on defense versus the German infrastructure bill, then clearly the German infrastructure bill will much more impactful for steel demand over the medium to long term. However, I think the focus on defense is indicative of this sort of renewed focus at Europe and at the Commission level, and that we need to be able to defend ourselves.
Max: You want to talk about it now yes sure.
Max: I think we.
Max: I've touched on this.
Max: A little bit and a lot of recent meetings.
Max: And yes, <unk> is the sort of focus points.
Max: Defense exposure.
Max: They do have leading market positions.
Max: I think when we think about defense it isn't a big steel consumer.
Max: So.
Max: When we when.
Max: When you compare the.
Max: The focus on.
Max: Defense versus the German infrastructure built then clearly the German infrastructure Bill will be much more impact.
Max: So for <unk>.
Max: <unk> demand integrity.
Max: <unk> two to long term. However, I think the focus on defense is indicative of this sort of renewed.
Max: Focus.
Max: Europe and at the commission level and that we need.
Max: Need to be.
Daniel Fairclough: And in order to be able to defend ourselves, we need to have strong, healthy steel industries to be able to supply that material. So I think for us, that would be the biggest takeaway, that it's just indicative of this broader move at Europe and at the Commission level to think more strategically about domestic industries.
Max: And.
Max: Able to defend ourselves in order to be able to defend ourselves we need to have a strong healthy steel industries to be able to supply that that materials.
Max: And I think for us that would be the biggest takeaway that it's just indicative of.
Max: This broad and move.
Max: Europe and at the commission level to think more strategically about.
Max: About domestic industries.
Max: Okay, Okay clear answer.
Genuino Christino: The second question is on the decarbonization agenda. You've highlighted a number of positive changes in Europe over recent months, and yet you haven't reactivated your plans to decarbonize in Europe. What would be really the major triggers for you to envisage to really reactivate these plans? Would it be a much higher energy cost? Would it be confirmation that the safeguard system will be replaced by a new one that is at least as effective? Is it the introduction of the melt and pour rule? What steps do you see as critical for you to resume this investment?
Max: One question is on yet.
Max: In addition, the agenda so you've highlighted a number of positive changes in Europe over recent months.
Max: And yet you haven't reactivated your plans to Decarbonize in Europe, So what would be relieved.
Max: The major triggers for you to <unk>, two really reactivate these plans would it be a much higher energy costs.
Max: Would it be confirmation that the <unk> system will be replaced by a new one that is at least as effective is it the introduction of the <unk> port rule.
Max: What steps do you see as critical for you to to resiliency investments.
Genuino Christino: I must say maybe I'll take this one. I think it's kind of all of the above. Right, so you touched on a number of very important points on the safeguards.
Max: I must say maybe I'll take this one I think it's all kind of all of the above.
Max: Right. So you touched on a number of important points.
Max: The safe.
Genuino Christino: So our hope is that the Commission will go even a step further. As you know, domestic meals lost a lot of market share to import. And we would really welcome measures that would take us or take the market share of imports back to prior levels. So it's a long way to go there. Then CBOM, of course, it's quite important, right? And then access to energy, competitive energy as well. So I would, for now, just list these three. And melted imports, as we know, it's also quite effective. It's also something that we would welcome, because then you can really make sure that you are avoiding circumventions.
Max: Our hope is that the commission will go even a step further.
Max: As you know domestic Musa lost a lot of market sentiment imports.
Max: And.
Max: And we would really welcome measures that would take us.
Max: The market share of imports back too.
Max: Prior levels.
Max: So it's still a long way to go there.
Max: Then <unk> of course, it's quite important rights and.
Max: Access to LNG competitive vantage as well so I would.
Max: For now just list is three.
Max: And mounted influenced as we know it's also quite effective.
Max: Also something that we would welcome.
Max: Because then you can really make sure that.
Max: Avoidance of conventions.
Genuino Christino: And that's quite good.
Max: That's quite good.
Genuino Christino: So I will leave it at that, back to you Daniel.
Max: So I'll leave at that.
Max: Back to you Daniel.
Daniel Fairclough: Great, thanks, Genuino.
Daniel: Great. Thanks, Jamie So we have time I think for.
Andrew Jones: So we have time, I think, for one last question, which we're going to take from Andrew at EBS. Andrew, please go ahead. Hi, can you hear me okay? Yes. Good, good. It's actually a follow-up to the last question, to some extent.
Andrew: One last question at which we're going to take from Andrew.
Andrea: UBS Andrea Please go ahead.
Speaker Change: Hi can you hear me okay.
Andrea: Yes.
Andrea: Good good.
Andrea: Actually a follow up to the last question because it makes sense I mean, one thing that.
Andrew Jones: I mean, one thing that I mean, I was encouraged by the Steel Action Plan, but one thing I'm less clear on is what can actually be done to address the biggest problem, which to me seems like it's the high energy cost issue in many of the countries around Europe. I mean, from your perspective, What can actually be achieved through the Steel Action Plan from changes in regulation that could actually make a difference to that? Because ultimately, if you're going to make these investments in green steel, that's a key building block. Do you see any material change that could come from this, which is going to impact upon your ability to make those investments?
Andrea: I mean I was encouraged by the steel action plan, but one thing I am less clear on it can actually be done to address the biggest problem, which to me seems like it's the high energy cost issue right now.
Andrea: Many of the countries around Europe, I mean from your perspective.
Andrea: What can actually be achieved.
Andrea: Through this deal action plan changed.
Andrea: Changes in regulation could actually make a difference to it.
Andrea: To that because ultimately if you're going to make these investments and green steel that's a key building block. So I mean do you see any.
Andrea: Material change.
Andrea: Come from this which is going to.
Andrea: Impact on yield.
Andrea: To make those investments.
Genuino Christino: Andrew, I think I'm not so sure that I follow 100% of your question and link. you were trying to establish. But I think, as we just discussed, I think the if, with the Steel Action Plan, we can address some of these fundamental issues. such as the very high level of imports and as we know it's just not the level of imports it's just that it's extremely unfair right with the domestic meals because Domestic mules are paying higher CO2 costs than nobody else is paying. Of course, we have also the situation in China with extremely low prices, that it's very hard to rationalize and to defend.
Andrea: Andrew I think.
Andrea: Not so sure that I follow 100% of your.
Speaker Change: A question and link.
Andrea: Trying to establish.
But I think as we just discussed I think the.
Andrea: With the action plan, we can address some of these fundamental issues such as the very high level of imports.
Andrea: As we know it's just not the level of imports is just that it's extremely unfair right.
Andrea: Domestic mills because.
Andrea: Domestic mills are painful, they're higher future losses, and nobody else's pain.
Andrea: Once we have also the situation in China with an extremely low price is that it's very hot shoe rationalized to the fan.
Genuino Christino: So the competition today for European mules clearly is extremely unfair. So to the extent that we can address that, that will really be extremely supportive, right? Even if demand remains where it is. If we can just allow the domestic news to recover some market share loss, that would be extremely positive. We should see that as an increase in apparent steel consumption for the domestic news, right? So that should be quite important.
Andrea: So it's really the key.
Andrea: Competition is today for the European Muse clearly.
Andrea: <unk>, yeah, so to the extent that we can address that.
Andrea: Really extremely supportive tried even if even if demand remains where it is.
Andrea: If we can just allow the domestic needless to recover some market share loss that will be extremely positive we should see that as an increase in apparent steel consumption for the domestic mills.
Andrea: It wouldn't be quite important and then of course, we have the energy discussion.
Genuino Christino: And then of course, we have the energy discussion. with selection plan that was announced. So, but again, as we discussed, the key point will really be now the details and the implementation.
Andrea: Which it continues to be an issue so.
Andrea: Power prices across Europe continue to remain elevated.
Andrea: And if you want to go through this transition and we want to have more eas.
Andrea: We would need to have better transmission lines, we will have we will need to have.
Andrea: Access to more competitive prices so.
Andrea: All of that is actually to stomach, it's corporate bye bye.
Andrea: Action plan that was announced so.
Andrea: But again as we discuss the key.
Andrea: Key points will really be now.
Andrea: Details and and implementation.
Genuino Christino: I guess just to follow up, I mean, my question was more on what can the action plan actually deliver in terms of tangible reductions in energy costs, because maybe some help on transmission might make a small change, but ultimately, does it make enough of a change and given your global footprint? does a model of maybe doing the iron making outside Europe where power costs are just naturally lower and importing in potentially make more sense? And how do you think about that? Yeah, I think you're right. So what governments can do, and this is also part of the plan is allowing, as an example, contracts for difference.
Andrea: I guess just to follow up so I mean, my question was more on well connection plan actually deliver in terms of tangible reductions in energy cost because maybe some help on transmission.
Andrea: Make a small change.
Andrea: Ultimately it doesn't make enough of a change on given your global footprint.
Andrea: Those are the model of maybe doing behind making outside Europe, where power cost so just naturally lower.
Andrea: Unimportant gain potentially make more sense and how do you think about that.
Andrea: Yes, I think you're right.
Andrea: What what governments can do with this is also part of it.
Andrea: Part of the plan is allowing us as an example.
Andrea: Contracts for defense.
Genuino Christino: which should then address some of the structural issues, right? So contracts for difference, facilitating access to PPAs. So there are measures that governments in Europe can take. today to provide the local mills competitive price, right? Your question is, do we do it in Europe? Do we do it outside of Europe? I think that is something to be seen, right? I think we have really to first see really what comes out concretely from the plan. And then we're going to be in a position to decide. I think ArcelorMittal is well positioned because we have, of course, our footprint in different locations.
Andrea: Which should then.
Andrea: Hi, Travis.
Speaker Change: Some of the structural issues right so contracts went to France.
Andrea: Facilitating access to Ppas.
Andrea: Measures that governments and you know can take.
Andrea: Sure.
Andrea: Provide.
Andrea: Local mills competitive price right.
Andrea: Your question is we do it in Europe do we do it outside of Europe, I think that is something to be seen right. I think we have we did show us really what comes out concretely strong from the plan and then we're going to be in a position to decide I think arcelormittal is well positioned because we have a.
Andrea: Of course, our footprint.
Andrea: In different locations.
Genuino Christino: Texas is a good example, right? So we have our DRI plan there. We have the possibility to expand. We have access then to gas. So we'll have the option. But at this point, I think it's early. So we just need to really understand concretely the change. And then we're going to be in a position to take a No, that's clear. Thank you very much.
Andrea: Texas is a good example, right. So we have all the right plan.
Andrea: We have the possibility to expand we have access to natural gas. So we'll have the auction so but at this point I think its early so we just need to really understand.
Andrea: Increasingly the change and then what we're going to be in a position to take that to take a call on it.
Andrea: No that's great.
Andrea: Thank you very much.
Andrea: Okay.
Daniel Fairclough: you're on mute Daniel Thank you. So that's our last question.
Andrea: Daniel.
Daniel: Thank you Jami. So that's our last question so with that I will hand back to you for closing remarks. Thank you.
Genuino Christino: So with that, I will hand back to you for closing remarks. Thank you, Daniel, and thank you, everyone. Before we close, I want to reiterate my messages from the beginning of the call. Firstly, I say with confidence that everyone across the company is working to become a fatality-free and zero-series injuries company as quickly as possible. Secondly, our operations are performing well consistently. Together with our high-graded portfolio, this is enabling our company to deliver resilient results in high margins. Underlying cash flow generation remains strong at all points of the cycle, demonstrating the material transformation of ArcelorMittal.
Jami: Thank you Daniel and thank you everyone before we close I want to reiterate my message is from the beginning of the call Firstly.
Jami: I'd say with confidence that everyone across the company is working to become a fatality three and zero serious injuries company as quickly as possible.
Jami: Secondly, our operations are performing well consistently.
Jami: There'll be more high graded portfolio. This is enabling our company to deliver resilient results in higher margins underlying cash flow generation remains strong at all points of the cycle.
Jami: Illustrating the material transformation of US along itself lastly, our business is well positioned both operationally and financially to navigate.
Genuino Christino: Lastly, our business is well-positioned, both operationally and financially, to navigate market uncertainties without changing strategic course. Our growth projects have good momentum and will provide unique upside to ArcelorMittal's EBITDA and cash flow. And our capital return policy that has enabled us to buy back 38% of the company over the last four and a half years and increase dividends per share by 85% over the same period is unchanged.
Market uncertainties without changing strategic course, our growth projects have good momentum and we will provide unique upside to us along with those EBITDA and cash flow.
Jami: And our capital return policy that has enabled us to buyback 38% of the company over the last four and a half yes.
Jami: And increase dividends per share by 85% over the same period is unchanged.
Genuino Christino: With that said, I will close today's call. If you need anything further, please do reach out to Daniel and his team. I look forward to speaking with you soon. Stay safe and keep those around you safe as well. Thank you. Thank you for watching!
Jami: With that said I will close today's call. If you need anything further please do reach out to Daniel and his team.
Jami: Look forward to speaking with you soon stay safe and keep those along youll safe as well. Thank you.
Jami: Okay.
Jami: [music].
Jami: Okay.
Jami: [music].
Jami: Yes.
Jami: [music].
Jami: Okay.
Jami: [music].