Q2 2026 Salzgitter AG Earnings Call

August 11, 2026

Speaker #3: And welcome to the Analyst Conference for the Half-Year Results 2026 of Salzgitter AG. The conference will be recorded. At this time, all participants have been placed in listen-only mode.

Operator 4: Welcome to the analyst conference of the H1 result 2026 of Salzgitter AG. The conference will be recorded. At this time, all participants have been placed on a listen-only mode. The floor will be open for questions following the presentation. Let me now turn the floor over to Gunnar Groebler, CEO, Birgit Potrafki, CFO, and Markus Heidler, Head of Investor Relations.

Operator: Welcome to the analyst conference of the H1 result 2026 of Salzgitter AG. The conference will be recorded. At this time, all participants have been placed on a listen-only mode. The floor will be open for questions following the presentation. Let me now turn the floor over to Gunnar Groebler, CEO, Birgit Potrafki, CFO, and Markus Heidler, Head of Investor Relations.

Speaker #3: The floor will be open for questions following the presentation. Let me now turn the floor over to Gunnar Grübler, CEO; Birgit Potravsky, CFO; and Markus Heidler, Head of Investor Relations.

Speaker #4: Thank you, Ms. Schenke, and good morning, ladies and gentlemen. Welcome to Salzgitter AG's conference call for the first half of 2026. Joining me today—as you just heard—are our CEO, Gunnar Grübler, and our CFO, Birgit Potravsky.

Markus Heidler: Thank you, Ms. Schinke. Good morning, ladies and gentlemen. Welcome to Salzgitter AG's conference call for the H1 of 2026. Joining me today, you just heard our CEO, Gunnar Groebler, and our CFO, Birgit Potrafki. Following a short presentation of our results and current business development, we will open the floor for your questions. Before we begin, please know this call is intended for the capital market. We kindly ask members from the media to contact our communications team directly. With this, I hand over to you, Gunnar.

Speaker #4: Following a short presentation of our results and current business development, we will open the floor for your questions. Before we begin, please note that this call is intended for the capital market.

Speaker #4: We kindly ask members of the media to contact our Communications team directly. With that, I hand over to you, Gunnar.

Speaker #5: Markus, thank you very much. Good morning from our side. We are very happy to be with you today and to guide you through our first half of 2026, which has, bottom line, been a positive first half of this year.

Gunnar Groebler: Markus, thank you very much. Good morning from our side. Very happy to be with you today and guide you through our H1 2026, which has been, bottom line, a positive H1 of this year. We will show this in the upcoming minutes in the presentation. Let me quickly go through some of the facts and then followed by you, Birgit, on the financials. As you are well aware of, we are. Clicker doesn't work, but we'll fix that in a second. We are always starting with health and safety. As you know, we have a clear health and safety strategy, and we have a clear health and safety target. Unfortunately, primarily due to harsh weather conditions in the start of 2026, our numbers for the H1 are not looking as we want them to be and as we expect them to be.

Speaker #5: We will show this in the upcoming minutes of the presentation. Let me quickly go through some of the facts, and then I will hand over to you, Birgit, for the financials.

Speaker #5: As you are well aware, we are—but we'll fix that in a second. We are always starting with health and safety. As you know, we have a clear health and safety strategy, and we have a clear health and safety target.

Speaker #5: Unfortunately, primarily due to harsh weather conditions at the start of 2026, our numbers for the first half are not looking as we want them to be, and as we expect them to be.

Speaker #5: You see that we have set a target just shy of 6.6 on the LTF. We are way above that, so we have intensified the work on groupwide trainings and preventive health measures to improve the second half and still reach our targets for the full year 2026.

Gunnar Groebler: You see we have set a target just shy of 6.6 on the LTIF. We're way above that. We have intensified the work on groupwide trainings, on preventive health measures to improve H2 and to still reach our target for the full year 2026. Some way to go. We're happy with the development over the last years. However, this year needs further improvement, and we're working on that. It has been a very intense year and a challenging half year. This clicker is doing what the clicker wants to do, but not what I want to do. Let me check that. Challenging market conditions in the H1. Geopolitical, you know better than we do how the environment looks right now, and it will remain, and this is our view at least, highly volatile, intense also for the remainder of this year.

Speaker #5: So, some way to go. We're happy with the development over the last years. However, this year needs further improvement, and we're working on that.

Speaker #5: It has been a very, it has been a very intense year, and a challenging half year. This clicker is doing what the clicker wants to do, but not what I want it to do.

Speaker #5: Check that. Challenging market conditions in the first half of the year—geopolitical—you know better than we do. Thank you. We do know how the environment looks right now, and it will remain—and this is our view at least—highly volatile and intense also for the remainder of this year.

Speaker #5: ETFs reform. There has been a lot of discussion and outreach on the ETFs reform. We have seen the first proposal from the Commission—a first proposal.

Gunnar Groebler: ETS reform, there has been a lot of discussion and outreach on the ETS reform. We have seen the first proposal from the commission, a first proposal. I think that is very important to understand of that commission. This balancing between CO2 prices and investment certainty is certainly something that needs further discussion and also lobbying through the remainder of this year. First results or the results will only be available H1 2027. Big step for us. We have acquired 100% of HKM. We'll go through that in a second. Also, as said, encouraging H1 also in the numbers. That's certainly something we will talk you through. Volatility, geopolitical tension. This is somehow. Most probably I'm the problem today. Here we are. Geopolitical tension will remain. You see the map of Europe. Unfortunately, the color coding for the Strait of Hormuz is not perfect.

Speaker #5: I think that it is very important to understand that Commission. This balancing between CO2 prices and investment certainty is certainly something that needs further discussion and also lobbying through the remainder of this year.

Speaker #5: First results, or the results, will only be available first half of 2027. Big step for us. We have acquired 100% of HKM. We'll go through that in a second.

Speaker #5: And also, as said, an encouraging first half year—also in the numbers—so that's certainly something we will talk you through. Volatility. Geopolitical tension. This is somehow most copy.

Speaker #5: I'm the problem today. Here we are. Geopolitical tension will remain. You see the map of Europe. Unfortunately, the color coding for the Strait of Hormuz is not perfect.

Speaker #5: Certainly, something where quite some uncertainty comes from these days. And this will also remain, and as a result of that, at least partially, the GDP remains weak and also the steel demand in Europe remains weak.

Gunnar Groebler: Certainly somewhere quite some uncertainty comes from these days, and this will also remain. As a result of that, at least partially, the GDP remains weak and also the steel demand in Europe remains weak. Regulatory tailwinds is something that we have seen and I just mentioned, and we'll go through that now in more detail. What has happened on the EU trade policy is that it has been very active in terms of decision making and also implementing of new tools. The Carbon Border Adjustment Mechanism has started on 1 January. We have seen already positive impact of the CBAM on the price side, and also on the reduction of imports. The new steel safeguard measure has taken effect 1 July this year. Also here, significant reduction in imports.

Speaker #5: Regulatory tailwinds are something that we have seen, as I just mentioned, and we'll go through that now in more detail. What has happened on the EU trade policy side is that it has been very active in terms of decision-making and also the implementation of new tools.

Speaker #5: The Carbon Border Adjustment Mechanism has started on the first of January. We have already seen a positive impact of the CBAM on the price side and also on the reduction of imports.

Speaker #5: The new steel safeguard measure has taken effect, first of July this year. Also here, significant reduction in imports. Yes, there will be an impact on prices, or we have seen an impact on prices already—plus €30 if you look at ex-works Italy for hot rolled coil.

Gunnar Groebler: Yes, there will be an impact on prices, or we have seen an impact on prices already, plus EUR 30 if you look at ex works Italy for hot-rolled coil. The effects that we intended to see there. This is a bit annoying now with the clicker. Apologies for that. Technically, we can improve. The intended effects are already visible. I think what we need to state, and we have said that before, the new steel safeguards, we have seen market participants acting proactively on the implementation of the new steel safeguard measures by importing prior to 1 July. So this material needs to be worked through the value chain prior to seeing the full effect of that.

Speaker #5: So, the effect—intended to see there. This is a bit annoying now with the clicker, apologies for that. Technically, we can improve. The intended effects are already visible.

Speaker #5: I think what we need to state—and we have said that before—the new steel safeguards. We have seen market participants acting proactively on the implementation of the new safeguard measures by importing prior to the first of July.

Speaker #5: So, this material needs to be worked through the value chain prior to seeing the full effect of that. What happens now for 426, on top of those, is trade defense measures—anti-dumping measures on the cold rolled steel.

Gunnar Groebler: What happens now for 426 on top of those is trade defense measures, anti-dumping measures on the cold-rolled steel, and further anti-dumping measures, especially when it comes to hot-rolled coil coming out of Turkey. So there, EU is still active. I think what we have seen with the Steel and Metals Action Plan last year comes now more and more into effect, from our perspective, a good development. I mentioned ETS before. As said, we have seen the first proposal of the EU Commission. My read of that is, given that it has been a very cautious proposal, a bit testing the water, testing how the reactions are, and then now we will see a refinement, a readjustment of the proposal, as well as positioning from both the member states as well as parliaments.

Speaker #5: As and further anti-dumping measures, especially when it comes to hot-rolled coil coming out of Turkey. So there, the EU is still active. And I think what we have seen with the steel and metals action plan last year comes now more and more into effect. From our perspective, a good development.

Speaker #5: I mentioned ETS. I mentioned ETS before. As I said, we have seen the first proposal from the EU Commission. My read of that is, given that it has been a very cautious proposal, a bit testing the water, testing how the reactions are, and then now we will see a refinement, a readjustment of the proposal as well as positioning from both the member states and parliaments.

Speaker #5: What is good from our perspective is that the EU ETS as a system remains essentially unchanged. We see that the EU believes in the ETS the way it is designed.

Gunnar Groebler: What is good from our perspective is that the EU ETS as a system remains essentially unchanged. We see that EU believes in ETS the way it is designed. However, we also see that the current draft proposal is not, as they promised actually, is not putting first movers at an advantage or at least at par with those that have not moved so far. So here, certainly we need further alignment with the Commission and further explanation to the Commission. We have started that process already. We shouldn't over value this first proposal. It's the starting point of a natural trilogue between Commission, the member states and the parliament, as well as accompanied by industry and other stakeholders in here. ETS is only one thing. We should always keep in mind that it has to be accompanied by compensatory measures outside ETS.

Speaker #5: However, we also see that the current draft proposal is not as they promised. Actually, it is not putting first movers at an advantage, or at least at par with those that have not moved so far.

Speaker #5: So here, certainly, we need further alignment with the Commission and further explanation to the Commission. We have started that process already, so we shouldn't sort of overvalue this first proposal.

Speaker #5: It's a starting point of a lateral trilogue between the Commission, the Member States, and the Parliament, as well as accompanied by industry and other stakeholders in here.

Speaker #5: ETS is only one thing. We should always keep in mind that it has to be it has to be sort of accompanied by compensatory measures outside ETS let me point out two things here.

Gunnar Groebler: Let me point out two things here. The lead markets for CO2 reduced products made in EU. Lead markets is a concept that has been widely discussed, and we see more and more positive connotations to the concept of lead markets, also from industry, also from our customers, like for example, the automotive industry. The second measure we still have to work on, especially in Germany, is energy prices. We need to get energy prices on internationally competitive levels. That is a no-brainer. Why that is, I'll show you in a sec. Also here we have had good and intense discussions, also with German policymakers. Katarina Reiche visited our site in Salzgitter just a week ago, and rest assured, energy and energy prices has been one of the key topics that we have addressed. Looking at raw material and energy prices. We just talked energy prices.

Speaker #5: The lead markets for CO2-reduced products, made in the EU. 'Lead markets' is a concept that has been widely discussed, and we see more and more positive connotations to the concept of lead markets.

Speaker #5: Also from industry, also from our customers like, for example, the automotive industry. And the second measure we still have to work on, especially here in Germany, is energy prices.

Speaker #5: We need to get energy prices to internationally competitive levels. That is a no-brainer. And why that is, I'll show you in a sec.

Speaker #5: And also, here we have had good and intense discussions, also with German policymakers. Katharina Reichel visited our site in Salzgitter just a week ago, and rest assured, energy and energy prices have been one of the key topics that we have addressed.

Speaker #5: Looking at raw material and energy prices, as we just discussed—energy prices—let me start with the right-hand side. You see that electricity and natural gas have jumped upwards as a result of the Middle East conflict.

Gunnar Groebler: Let me start with the right-hand side. You see the electricity and natural gas has jumped upwards as a result of the Middle East conflict. The current peak in electricity on top of that is weather-related. You all have followed that we have seen shutdowns of nuclear power plants in France, in the eastern part of Europe, due to low water levels in rivers and also temperature levels there. On top, we have seen a lot of solar radiation in Europe, which on average increases electricity prices due to the fluctuating infeed that we've seen there. Raw materials on our side. Freight is one issue for the iron ore. Again, something that is connected to the Middle East conflict.

Speaker #5: The current peak in electricity, on top of that, is weather-related. You all have followed that we have seen shutdowns of nuclear power plants in France and in the eastern part of Europe due to low water levels in rivers and also temperature levels there.

Speaker #5: On top, we have seen a lot of solar radiation in Europe, which, on average, increases electricity prices due to the fluctuating infeed that we've seen there.

Speaker #5: Raw materials on our side—freight is one issue for the iron ore, again something that is connected to the Middle East conflict. Coal has been higher on a temporary level, which was primarily due to weather impacts in the mining regions.

Gunnar Groebler: Coal has been higher on a temporary level, which was primarily due to weather impacts in the mining regions, but coming back now, as you can see, as those weather impacts have been removed. Looking at steel prices, basically a good development since July last year, hot-rolled coil ex Ruhrgebiet has improved. We are now seeing EUR 715 per ton, so that's a good development. You also see the recent increase based on the regulatory development that I just mentioned. Also compared to China and the US, respectively, I think also here, again, in the middle and with a stable and good development. We see no signs, despite the low consumer market, we see no signs for this to change in H2. Looking at Salzgitter and looking at our key figures for H1, I said it's a positive development.

Speaker #5: But coming back now, as you can see, as those weather impacts have been removed. Looking at steel prices, basically, a good development since July last year: hot rolled coil ex Ruhrgebiet has improved.

Speaker #5: We are now seeing $715 per ton, so that's a good development. You also see the recent increase based on the regulatory development that I just mentioned.

Speaker #5: Also, compared to China and North America and the US respectively, I think here again we are in the middle, with a stable and good development.

Speaker #5: So, and we see no signs—despite the low consumer market—we see no signs for this to change in the second half. Now, looking at Salzgitter and looking at our key figures for the first half, as said, it's a positive development.

Speaker #5: Yes, we see improvements in all segments—in all segments. We have seen a stronger first half of '26 than we saw in the first half of '25.

Gunnar Groebler: Yes, we see improvement in all segments. In all segments, we have seen a stronger H1 2026 than we have seen H1 2025. This is a mixture of basically two things. One is the sort of development of market prices versus raw material prices, so a widening of the margin. But even more so, we have seen that also our own work that we have done in terms of restructuring, in terms of cost reduction, pays off. This is what you see in the results. If you look at trading, with a positive result of almost EUR 40 million H1 of this year, is clearly a result of the heavy restructuring we have undertaken last year. We have already reported to you guys, but just as a reminder, roughly 30% of the jobs have been cut on the trading side.

Speaker #5: And this is a mixture of basically two things. One is the sort of development of market prices versus raw material prices, so a widening of the margin.

Speaker #5: But even more so, we have seen that also our own work that we have done in terms of restructuring, in terms of cost reduction, pays off.

Speaker #5: And this is what you see in the results. If you look at Trading, with a positive result of almost €40 million in the first half of this year, it is clearly a result of the heavy restructuring.

Speaker #5: We have undertaken this last year. We have already reported to you, but just as a reminder, roughly 30% of the jobs have been cut on the trading side.

Speaker #5: Steel production, predominantly P28—our performance program—contributed roughly €50 million alone from Salzgitter Flachstahl here. So, we see it is really improving throughout the entire company, including also our ROG, which is also here.

Gunnar Groebler: Steel production, predominantly P28, our performance program, roughly EUR 50 million alone from Salzgitter Flachstahl contribution here. So seeing it is really improving through the entire company, including also Aurubis. Also here, we have seen a stronger H1 compared to last year. So good development here, and certainly something we will continue to work on, that we also can see that next year. Looking at two major projects we have been through, or that we are carrying through. One is SALCOS, of course. We had a rough start into the year. I mentioned weather. That has, of course, also impacted the construction site. But we've been able to catch up given that weather is not really an issue these days. The heightened tower is now fully assembled, 120 meters, second largest tower that we have now on site next to the DRI.

Speaker #5: We have seen a stronger first half compared to last year, so good development here. And certainly, this is something we will continue to work on so that we can also see that next year.

Speaker #5: Now, looking at two major projects we have been through, or that we are carrying through: one is SALCOS. Of course, we had a rough start into the year—I mentioned weather.

Speaker #5: That has, of course, also impacted the construction site. But we've been able to catch up, given that weather is not really an issue these days.

Speaker #5: The Heiden Tower is now fully assembled at 120 meters, making it the second-largest tower we have on site next to the DRI. Large components have been installed.

Gunnar Groebler: Large components have been installed, and especially on the power supply system, utility and power supply system, we are well on schedule here with the development. Commissioning in the late summer 2027 is our plan, and there is no sign that there will be a delay on that. Just also to remind you, this is only the first phase of SALCOS. We have at least two more phases to go. Here we are using the modularity of SALCOS to really find the sweet spot in the decision making for the next phase, which would be an electric arc furnace. The investment decision has been paused. We have reported on that. But rest assured, the preparation for this second step is well underway.

Speaker #5: And especially on the power supply system, utility and power supply system, we are well on schedule here with the development. So commissioning in late summer 2027 is our plan.

Speaker #5: And there's no sign that there will be a delay on that. Just also to remind you, this is only the first phase of Salcos.

Speaker #5: We have at least two more phases to go, and here we are using the modularity of SALCOS to really find the sweet spot in the decision-making for the next phase, which would be an electric arc furnace.

Speaker #5: The investment decision has been paused. We have reported on that. But rest assured, the preparation for this second step is well underway.

Speaker #5: So we're doing the engineering, we're doing the business case modeling for that, so that we are able to execute as soon as we deem this to be the right time.

Gunnar Groebler: We are doing the engineering, we are doing the business case modeling for that so that we are able to execute as soon as we deem this being the right time. Second big step of the H1 of this year is, of course, the acquisition of HKM. We have been able to strike a deal with the two co-owners, Thyssenkrupp Steel and Vallourec. We are now, since 1 July, 100% owner of HKM. We have bought into HKM with a clear target to decarbonize also this site. The EAF has been contracted already in July this year. Also here we are ramping up our project work to deliver green steel out of HKM as of late 2029. 90% CO2 reduction is the target we are looking at. Yes, this comes with heavy restructuring in HKM, and we have been very clear about this the entire time.

Speaker #5: The second big step of the first half of this year is, of course, the acquisition of HKM. We have been able to strike a deal with the two co-owners, Thyssenkrupp Steel and Vallourec.

Speaker #5: Since July 1st, we are now 100% owner of HKM. We have bought into HKM with a clear target to decarbonize this site as well.

Speaker #5: So, the EF has been contracted already in July this year. So also here, we're ramping up our project work to deliver green steel out of HKM as of late 2029.

Speaker #5: A 90% CO2 reduction is the target we're looking at. And yes, this comes with heavy restructuring—in HKM, and we have been very clear about this the entire time.

Speaker #5: We're looking at roughly 3,000 people employed at HKM today, and we will reduce that number by 2029 to roughly 1,000. This has been discussed and negotiated with the works council and with the unions, and is signed.

Gunnar Groebler: We are looking at roughly 3,000 people employed at HKM today, and we will reduce that by 2029 to roughly 1,000. This has been discussed and negotiated with works council and with the unions, and is signed. We have certainty on the numbers and certainty also on the cost impact of that. This has been part of our business case all the way through, together with the investment. Birgit will show us some more numbers on the HKM later in this presentation. Let me finish with an outlook for 2026. The regulatory measures that I mentioned will certainly also help us through the H2 of this year. We have seen improved demand in terms of production from European steel makers, European producers. The German association, Wirtschaftsvereinigung Stahl, showed a 9% increase H1 2026 compared to H1 2025. That is certainly positive.

Speaker #5: So, we have certainty on the numbers and certainty also on the cost impact of that. And this has been part of our business case all the way through, together with the investment.

Speaker #5: And you will, Birgit, you will sort of show us some more numbers on the HKM later in this presentation. Let me finish with an outlook for 2026.

Speaker #5: The regulatory measures that are mentioned will certainly also help us through the second half of this year. We have seen improved demand in terms of production from European steelmakers, European producers.

Speaker #5: The German Association of Wirtschaftsvereinigung Stahl showed a 9% increase first half 26 compared to first half 2025. So that is certainly positive. However, fundamental demand needs to further pick up.

Gunnar Groebler: However, fundamental demand needs to further pick up. We also expect the special funds on infrastructure and defense to be more visible late this year and predominantly in 2027. That will also then certainly help, especially us in our product mix, going forward. I think we should also mention that, especially for the steel processing side, given that this is predominantly project business, we also need those impulses from special funds and other projects to remain on the good level that we have seen in the H1. As said, market is stabilizing at lower level. We have been through the worst in 2025. We are now picking up. We said in March, back in black.

Speaker #5: And we also expect the special funds for infrastructure and defense to be more visible later this year and predominantly in 2027. So, that will also certainly help, especially us in our product mix going forward.

Speaker #5: I think we should also mention that, especially for the steel processing side, given that this is predominantly project business, we also need those impulses from special funds and other sorts of projects to remain at the good level that we have seen in the first half.

Speaker #5: As said, the market is stabilizing at a lower level. We have been sort of through the worst in ‘25, and we’re now picking up. We said in March, back in black. I think we underpin that—we are clearly in black.

Gunnar Groebler: As said, market is stabilizing at lower level. We have been through the worst in 2025. We are now picking up. We said in March, back in black. I think we underpin that we are clearly in black, and we remain in black in 2026 with a good recovery and a good result we are going to foresee for 2026. With that, I hand over to you, Birgit, to guide us through the financials.

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

Speaker #5: And we remain in the black in '26 with a good recovery and a good result we're going to foresee for 2026. And with that, I hand over to you, Birgit, to guide us through the financials.

Speaker #1: Thank you. First of all, a warm welcome also from me to you. We're happy to have you here, and please excuse us for struggling with the technology.

Birgit Potrafki: Thank you. First of all, a warm welcome also from me to you. Happy to have you here. Please excuse us for struggling with the technology here. It seems like we are always jumping to the end of the presentation if we do not keep a certain time frame. Let's try to deal with that challenge. I hope it keeps everybody's attention high. As Gunnar has just said, the economic environment is not yet providing meaningful support, which somehow a bottom, but not yet really meaningful support that we can see here. What is helping us, and also Gunnar has talked about this, are the EU trade defense measures, which are having or will be having a positive impact on price levels. Despite the absence of the economic tailwinds, we achieved a significant year-on-year earnings improvement.

Speaker #1: It seems like we are always jumping to the end of the presentation if we do not keep to a certain time frame. So let's try to deal with that challenge.

Speaker #1: I hope it keeps everybody's attention high. So, as Gunnar has just said, the economic environment is not yet providing meaningful support—there is somehow a bottom, but not yet really meaningful support that we can see here.

Speaker #1: And what is helping us—and also, as Gunnar has talked about—are the EU trade defense measures, which are having or will be having a positive impact on price levels.

Speaker #1: Despite the absence of economic tailwinds, we achieved a significant year-on-year earnings improvement, and Gunnar has shown that. I'm really happy to see that we could reach that in all segments.

Birgit Potrafki: Gunnar has shown that, and I am really happy to see that we could reach that in all segments. All teams really did a great job here, I have to say. We expect this positive trend to continue also in the H2 of the year, albeit at a somewhat slower pace than what we have seen in the H1. I will also spend some words later on that because I know you may have some different expectations here. Our performance, that makes me especially happy, continues to deliver really strong results. After H1 of the year, we have almost reached the full year's target. As Gunnar has laid out, from July onwards, HKM will also contribute positively, both to revenue and to earnings. All this, of course, before purchase price allocation effect.

Speaker #1: All teams really did a great job here, I have to say. We expect this positive trend to continue also in the second half of the year, albeit at a somewhat lower pace than what we have seen in the first half.

Speaker #1: I will also spend some words later on that, because I know you may have some different expectations here. Our performance—which makes me especially happy—continues to deliver really, really strong results.

Speaker #1: After half of the year, we have almost reached the full-year's target. And as Gunnar has laid out, from July onwards, HKM will also contribute positively, both to revenue and to earnings.

Speaker #1: All this, of course, is before the purchase price allocation effect. We do not—and I can say this—we do not expect any significant net cash outflows from the consolidation.

Birgit Potrafki: We do not, and I can say this, we do not expect any significant net cash outflows from the consolidation. If we look at the H1 of the year, our net financial position is exactly where it was one year ago. The difference is just EUR 4 million. Quite stable year over year. Including the HKM consolidation, our outlook for the net financial position for the total year remains broadly stable. I can say with confidence that the business is now increasingly well-positioned to benefit from any future improvement in economic conditions. Looking at the half year's numbers, we see on the left upper side our sales revenues amounting up to EUR 4.6 billion, which is 1.6% below previous year's level and driven by trade only, we have to say.

Speaker #1: If we look at the first half of the year, our net financial position is exactly where it was one year ago. The difference is just €4 million.

Speaker #1: So, quite stable year over year. And including the HKM consolidation, our outlook for the net financial position for the total year remains broadly stable.

Speaker #1: So I can say with confidence that the business is now increasingly well positioned to benefit from any future improvement in economic conditions. Looking at the half-year numbers, we see on the upper left side our sales revenues amounting to €4.6 billion, which is 1.6% below the previous year's level.

Speaker #1: And driven by trade only. We have to say, here we also see that the economy doesn't really help. All the other segments are stable or slightly increasing.

Birgit Potrafki: Here we also see economy doesn't really help and all the other segments are stable or slightly increasing. However, only negative revenues compared to previous year in the trade business unit. The EBITDA and the EBT are significantly above previous year in all segments. The main contributions, of course, coming from Aurubis, but also a very strong contributions from steel producing as well. As I mentioned before, all the others also contributing in a good way. Here you see a little bit grayish, the figures that are not the adjusted result figures. Here you see that even the EBT, including the evaluation effect of the exchangeable bond, here we are also clearly positive. If you look at the right side, working capital, we see an increased working capital of EUR 2.6 billion, mainly coming from accounts receivable. This has increased compared to one year before.

Speaker #1: However, only negative revenues compared to the previous year in the Trade business unit. The EBITDA and EBIT are significantly above the previous year in all segments.

Speaker #1: And the main contributions, of course, coming from Aurubis, but also very strong contributions from steel production as well. And as I mentioned before, all the others also contributing.

Speaker #1: In a good way. And here you see, in gray, the figures that are not the adjusted result figures. And here you see that even the EBIT, including the evaluation effects of the exchangeable bond—here we are also clearly positive.

Speaker #1: If you look at the right side—working capital—we see an increased working capital of €2.6 billion, mainly coming from accounts receivable. This is increased compared to one year before.

Speaker #1: And all of this is resulting then also in our operating profit, which reaches €59 million in the first six months. And this has an impact on our net financial position.

Birgit Potrafki: All of this is resulting then also in our operating profit, which reaches EUR 59 million in the first 6 months. This has an input on our net financial position. As I mentioned before, very stable compared to one year before. If you look at our income statement, Gunnar has mentioned already and I have mentioned already the P28 contributions that are of course spread all over most of the items in the profit and loss statement. Let me show you the structure of the profit and loss statement, where we have the biggest contributions. Here I would like to mention two major, how to say, categories that lead to the fact that we have reached such a good result.

Speaker #1: As I mentioned before, we are very stable compared to one year ago. If we look at our income statement—and as Gunnar has already mentioned, and I have mentioned—the Q2 contributions are, of course, spread throughout most of the items in the profit and loss statement.

Speaker #1: But let me show you the structure of the profit and loss statement, where we have the biggest contributions. And here I would like to mention two major, how to say, categories.

Speaker #1: That led to the fact that we have reached such a good result. One is, if we look at our cost of materials, we see in the box below a significant improvement compared to the year before of €122 million.

Birgit Potrafki: One is if you look at our cost of materials, we see in the box below a significant improvement compared to the year before of EUR 122 million. To give you also a relation, this cost of materials represents 61% of our sales revenue, whilst one year before, we were still spending 65% of our sales revenue for cost of materials. The other nice big new figure you see more on the right side, the +EUR 113 million, mainly driven by the nice performance of our Aurubis participation here. Also having a nice major impact on our profit and loss. All of this resulting in the EUR 258 million EBT and including the valuation of the exchangeable bond, also positive, 76. Then after taxes we come to a result all in of EUR 43 million. Looking at our balance sheet, here starting with the asset side.

Speaker #1: And to give you also a relation, this cost of materials represents 61% of our sales revenue, whereas one year before, we were still spending 65% of our sales revenues on cost of materials.

Speaker #1: And the other nice, big green figure you see more on the right side—the plus €113 million—is mainly driven by the nice performance of our Aurubis participation, here also having a nice, major impact on our profit and loss.

Speaker #1: And all of this resulting in the €258 million EBIT, and with including the evaluation of the exchangeable bond, also positive, €76 million. And then after taxes, we come to a result, all in, of €43 million.

Speaker #1: Looking at our balance sheet, starting with the asset side, we see an increase in our assets of €374 million, driven mainly by three impacts.

Birgit Potrafki: We see an increase in our assets of EUR 374 million, driven mainly by three impacts. First impact, if you look at the non-current assets, of course, here we see the impact of the Aurubis evaluation. This is partially compensated in a negative way because the fundings we received, they decreased the investments we have done because the fundings were also related to former spendings. We see cash and securities have been increased also due to inflow of fundings. The other current assets are mainly accounts receivable. If you look at the equity and liability side, here are two things to be mentioned. First, our equity ratio is stable with 42%. Second, we have a switch between long-term and current liabilities, and this is due to the remaining maturity of some of the financial instruments we are using.

Speaker #1: First impact, if we look at the non-current assets, of course, here we see the impact of the Aurubis revaluation. And this is partially compensated in a negative way because the funding here received decreased the investments we have done, because the fundings were also related to former spendings.

Speaker #1: And we see that cash and securities have increased, also due to the inflow of funds. The other current assets are mainly accounts receivable.

Speaker #1: If we look at the equity and liability side, there are two things to mention. First, our equity ratio is stable at 42%. Second, we have a shift between long-term and current liabilities.

Speaker #1: And this is due to the remaining maturity of some of the financial instruments we are using. Coming to the cash flow statement, starting with the left side—of the operating cash flow—I have mentioned the €59 million already.

Birgit Potrafki: Coming to the cash flow statement, starting with the left side of the operating cash flow, I have mentioned the EUR 59 million already we have received in the H1 of the year. 1 year before, we could manage to receive EUR 81 million, and the difference is mainly driven by a different way of the development of the working capital, which increased, whilst in the Q2 last year we could significantly decrease. If we look at the right side at the cash flow statement, we see that we could increase our cash up to EUR 1.2 billion. What is really nice is that we see that in all categories we have a plus, even in the cash flow from investments and also in the cash flow from financing, at least a smaller amount here. So far for the cash flow statement. Investments and depreciation.

Speaker #1: We have received it in the first half of the year. One year before, we were able to receive €81 million. The difference is mainly driven by the different development of working capital, which increased, whereas in the second quarter last year, we were able to significantly decrease it.

Speaker #1: If we look at the right side of the cash flow statement, we see that we could increase our cash up to €1.2 billion.

Speaker #1: And what is really nice is that we see that in all categories, we have a plus—even in the cash flow from investments and also in the cash flow from financing, at least a smaller amount here.

Speaker #1: So far, for the cash flow statement, investments and depreciation, we have quite an overseeable number in the first half of the year, amounting to €88 million.

Birgit Potrafki: We have quite an foreseeable number in the H1 of the year, amounting up to EUR 88 million when we look at our investments. Also strongly influenced, of course, by the fundings we received, worth EUR 290 million. For the total year, we are looking at investments of EUR 650 million, and included in this, a EUR 100 million investment in HKM. You see that the majority of the investments goes into all the business that is not SALCOS related, because the SALCOS portion also for the total year will be profiting from the funds that we have received and that we still will receive in the upcoming months. Very happy to talk about the performance program P28, because as I have mentioned before, on the right side you see the target, EUR 122 million.

Speaker #1: When we look at our investments—also strongly influenced, of course, by the funding we received—this was €290 million. And for the total year, we are looking at investments of €650 million.

Speaker #1: And included in this, a €100 million investment in HKM. And you see that the majority of the investments go into all the business that is not Zycus related, because the Zycus portion also for the total year will be profiting from the funds that we have received and that we still will receive in the upcoming months.

Speaker #1: Very happy to talk about the performance program P28, because, as I have mentioned before, on the right side you see the target: €122 million.

Speaker #1: And next to that, you see what we have effectively achieved after six months—not months—€97 million, which is already 80% of the total year's target.

Birgit Potrafki: Next to that you see what we have effectively achieved after 6 months, EUR 97 million, which is already 80% of the total year target. As you may remember, we have overachieved our targets that we have set for last year significantly. So we are quite confident that we will not only reach our target for 2026, but that we will also be able to again overachieve our target. Gunnar has also mentioned the major contributor here you see with above EUR 50 million is the steel production area, followed by steel processing and technology. Again, I would like to mention that restructuring effects are not represented in this program. This is why the nice restructuring effects we have seen in trade are accounted for in a different category, not in P28. Gunnar has shown it.

Speaker #1: And as you may remember, we have set for last year, significantly. So we are quite confident that we will not only reach our target for 2026, but that we will also be able to again overachieve our target, and Gunnar has also mentioned the major contributor here.

Speaker #1: You see, with above €50 million, euro is the steel production area, followed by steel processing and technology. And again, I would like to mention that restructuring effects are not represented in this program.

Speaker #1: This is why the nice restructuring effects we have seen in trade are accounted for in a different category, not in P28. And, I mean, Gunnar has shown it.

Speaker #1: We have lost quite significant sales in the trade area, and we could improve the profit. That is also strongly influenced, of course, by the effects that we realized due to our restructuring activities.

Birgit Potrafki: We have lost quite significant sales in the trade area, and we could improve the profit. That is also strongly influenced, of course, by the effects that we realized due to our restructuring activities. HKM, of high interest, I know. Results, positive contribution, we will see in the H2 of 2026 when we will consolidate HKM. Of course, this before the purchase price allocation effects. I have mentioned that already before. We will complete that by the end of this year. Of course, the results, we will see positive impact on the revenue side. If you ask how much, you can look at how much we have shifted our guidance. That's the major portion, of course, coming from HKM.

Speaker #1: HKM is of high interest, I know. Results: a positive contribution we will see in the second half of 2026 when we will consolidate HKM. And we will see this, of course, before the purchase price allocation effects.

Speaker #1: I have mentioned that already before. We will complete that by the end of this year. And of course, with the results, we will see a positive impact on the revenue side.

Speaker #1: And if you ask how much, you can look at how much we have shifted our guidance. That's a major portion, of course, coming from HKM.

Speaker #1: And looking at the profit side—and of course, you will ask that question: how much is the profit going to be that you will have in addition? I can say as much as this: it is a midsize, double-digit million value.

Birgit Potrafki: Looking at the profit side, you will ask that question, how much is the profit going to be that you will have in addition? I can say as much as this is a mid-size double-digit million value. If you look at the balance sheet effect, the consolidation of HKM will prolong our balance sheet. However, it will not change the structure as it is. We will have one positive implication, though, and this is concerning the leverage, because HKM is coming with almost no debts and bringing additional EBITDA to the table. Cash impact on Salzgitter. I know that this is one of the most, how to say, the figure of most interest to you. A lot of questions are asked and will be asked, of course, about single views like restructuring or investment and transformation.

Speaker #1: And if you look at the balance sheet effect, of course, the consolidation of HKM will prolong our balance sheet. However, it will not change the structure as it is.

Speaker #1: We will have one positive implication, though, and this is concerning the leverage, because HKM is coming with almost no debts and bringing additional EBITDA to the table.

Speaker #1: Cash impact on Salzgitter—I know that this is one of the, how should I say, figures of greatest interest to you. And a lot of questions are asked and will be asked, of course, about individual topics like restructuring, investment, and transformation.

Speaker #1: However, I have to really stress that we have to look at HKM as a whole. So, we have money that comes from operating activities of HKM, we have the contributions from the former shareholders, and we will receive funding for the transformation.

Birgit Potrafki: However, I have to really stress that we have to look at HKM as a whole. So we have money that comes from operating activities of HKM. We have the contributions from the former shareholders, and we will receive funding for the transformation. That money, of course, will be used to transform the company, to do the restructuring, and also to do the investment. So what is the figure that is, for me, the most important one to look at is, if we look at Salzgitter as a whole, including HKM, how much additional cash overall will be required due to the fact that we now own HKM? I can disclose the figure that is mentioned here, which is within the next three years, the net additional cash over all of these items that I have mentioned just right now.

Speaker #1: And that money, of course, will be used to transform the company, to do the restructuring, and also to make the investments. So, the figure that is for me the most important one to look at is: if we look at Salzgitter as a whole, including HKM, how much additional cash overall will be required due to the fact that we now own HKM?

Speaker #1: And I can disclose the figure that is mentioned here, which is within the next three years. The net additional cash overall for these items that I have mentioned just now, we will need €100 million over the next three years.

Birgit Potrafki: We will need EUR 100 million over the next three years. So I think that's quite an overseeable amount. Since we talk a lot about SALCOS and since you are all very familiar with the SALCOS figures, it's just logic that we also talk about the investments for the transformation at HKM. Here we are talking about round about EUR 900 million, and we will receive EUR 200 million fundings. As I mentioned before, there is no need to be, how to say, concerned because the overall holistic view shows in the next three years, it's around EUR 100 million net additional cash that this will require. So that is the number I ask you to keep in mind.

Speaker #1: So I think that's quite a manageable amount. And, of course, since we talk a lot about Zycus, and since you are all very familiar with the Zycus figures, it's just logical that we also talk about the investments for the transformation at HKM.

Speaker #1: And here we are talking about roughly €900 million. And we will receive €200 million in funding. And as I mentioned before, there is no need to be, how to say, concerned.

Speaker #1: Because the overall holistic view shows that, in the next three years, it’s around €100 million net additional cash that this will require. So that is the number I ask you to keep in mind.

Speaker #1: Bringing all of this together, looking at our guidance—of course, you have seen that our sales amounts are now up to €10 billion, EBITDA VX between €725 and €825 million, a pre-tax result between €325 and €425 million, and a return on capital employed marginally above the previous year's figures.

Birgit Potrafki: Bringing all of this together, looking at our guidance, you have seen that our sales amounts now up to EUR 10 billion, EBITDA VX between EUR 725 million and EUR 825 million, a pre-tax result between EUR 325 million and EUR 425 million, and a return on capital employed marginally above the previous year's figures. I also know that you are challenging us again on whether we keep to be too prudent rather than being too bold, looking at where we are after the H1 of the year and comparing that to our guidance. I can tell you we feel quite confident with our guidance. I would also like to already give you some information here. Why is this the case? First of all, we will have seasonal effects, as we always do have, coming from the summer period and coming from the Christmas period.

Speaker #1: And I also know that you are challenging us again on whether we tend to be too prudent rather than too bold. Looking at where we are after the first half of the year, and comparing that to our guidance, I can tell you we feel quite confident with our guidance.

Speaker #1: I would also like to already give you some information here as to why this is the case. First of all, we will have a seasonal effect, as we always do.

Speaker #1: Coming from the summer period and coming from the Christmas period, we will have downtimes for maintenance, of course, influencing the business. We had a one-time effect in the first half of the year, not sustainable effects, with around €20 million.

Birgit Potrafki: We will have downtimes for maintenance, of course, influencing the business. We had one time effect in the H1, not sustainable effects, worth around about EUR 20 million. Taking all this into account, we think that we will still continue the nice path we have seen in the H1. However, as I have mentioned in my introduction, a little bit, very slightly more moderate. With this, I think we are starting now the Q&A session and are ready to receive your questions.

Speaker #1: And taking all this into account, we think that we will still continue the positive path we have seen in the first half of the year.

Speaker #1: However, as I have mentioned in my introduction, it is a little bit—very slightly—more moderate. And with this, I think we are now starting the Q&A session.

Speaker #1: And are getting ready—are ready to receive your questions.

Speaker #2: Sure. So ladies and gentlemen.

Gunnar Groebler: Sure.

Birgit Potrafki: So ladies and gents.

Operator: So ladies and gents.

Speaker #3: Prior to that, again, I apologize for the earlier technical difficulties. I hope you were still able to follow. Please be reminded that the presentation is available on the internet.

Gunnar Groebler: Prior to that, again, an apology for the mess up with technology. Hope that you still were able to follow. Please be reminded the presentation is available on the internet. If there is anything you want to get to through the Q&A, please do. Apologies. It is not our standard, and we will certainly do better next time.

Speaker #3: So if there's anything you want to sort of get to through the Q&A, please do apologies it's not what we it's not our standard and we certainly do better next time.

Speaker #4: Well, at least I hope the audience appreciates that I had a more active role in the presentation than—yeah. Okay, let's start with the presentation.

Markus Heidler: Well, at least I hope the audience appreciate I had a more active role in the presentation than

Markus Heidler: Well, at least I hope the audience appreciate I had a more active role in the presentation than-

Gunnar Groebler: Yeah.

Markus Heidler: Okay. Let's start with the presentation.

Speaker #3: Now with the questions.

Gunnar Groebler: Now with the questions.

Speaker #2: Okay, so should I start? Yeah?

Operator: Okay.

Markus Heidler: Yeah.

Operator: So-

Markus Heidler: Reinhard. Reinhard, please.

Operator: Should I start, yeah?

Speaker #4: Yeah.

Speaker #3: Yes, please.

Markus Heidler: Yeah.

Gunnar Groebler: Yes, please.

Speaker #2: Okay, perfect. Ladies and gentlemen, if you have joined by telephone and would like to ask a question, please press star-nine and the pound key on your telephone keypad.

Operator: Okay. Perfect. Ladies and gentlemen, if you have joined by telephone and like to ask a question, please press star nine and pound key on your telephone keypad. If you would like to withdraw your question, please press star three and pound key. If you are connected online and listening via the web interface, please click the telephone handset button, and then the raise hand icon. This will allow you to ask questions verbally as well. If you are experiencing any technical issues, you can also send written questions. Please use the Ask Question button. We already have many questions. We start with the first one from Reinhard Vandewal from Bank of America. The stage is yours.

Operator: Okay. Perfect. Ladies and gentlemen, if you have joined by telephone and like to ask a question, please press star nine and pound key on your telephone keypad. If you would like to withdraw your question, please press star three and pound key. If you are connected online and listening via the web interface, please click the telephone handset button, and then the raise hand icon. This will allow you to ask questions verbally as well. If you are experiencing any technical issues, you can also send written questions. Please use the Ask Question button. We already have many questions. We start with the first one from *Reinhard Vandewal from Bank of America. The stage is yours.

Speaker #2: If you would like to withdraw your question, please press star three and the pound key. If you are connected online and listening via the web interface, please click the telephone handset button and then the raised hand icon.

Speaker #2: This will allow you to ask questions verbally as well. If you are experiencing any technical issues, you can also send written questions. Please use the Ask Question button.

Speaker #2: So, we already have many questions. So, we start with the first one from Reinhard van der Walt from Bank of America. The stage is yours.

Speaker #5: Hi there. Gunnar and Birgit, thank you very much for your time. Maybe just first a question on market conditions. The recent price increases that we've been seeing in HRC—do you think any of that has been driven by the European water levels?

Reinhardt van der Walt: Hi there, Gunnar and Birgit. Thank you very much for your time. Maybe just first a question on market conditions. The recent price increases that we have been seeing in HRC, do you think any of that has been driven by the European water levels, whether that be steepening of the cost curve or impacting supply?

Speaker #5: Whether that be sort of steepening of the cost curve or impacting supply?

Gunnar Groebler: Thank you, Reinhard, for the question. Of course, we are monitoring water levels, especially on the River Rhine, very thoroughly given that this has, of course, an impact on HKM. So far, we have not been impacted by low water levels as Salzgitter, but your question was more general. I think it is too early, really, to see price increases through weather conditions like the low water levels on the rivers. But certainly if that continues to be the case, and if water levels further drop, then you might see shortages there. Then it might have an impact on price. So far, I would say we have not seen that. At least I am not aware of any price increases due to restrictions on production.

Gunnar Groebler: Thank you, Reinhardt, for the question. Of course, we are monitoring water levels, especially on the River Rhine, very thoroughly given that this has, of course, an impact on HKM. So far, we have not been impacted by low water levels as Salzgitter, but your question was more general. I think it is too early, really, to see price increases through weather conditions like the low water levels on the rivers. But certainly if that continues to be the case, and if water levels further drop, then you might see shortages there. Then it might have an impact on price. So far, I would say we have not seen that. At least I am not aware of any price increases due to restrictions on production.

Speaker #3: Thank you, Reinhard, for the question. Of course, we are monitoring water levels—especially on the River Rhine—very thoroughly, given that this has, of course, an impact on HKM.

Speaker #3: So far, we have not been impacted by low water levels at Salzgitter. But your question was more general. I think it's too early really to see price increases due to weather conditions like the low water levels on the rivers.

Speaker #3: But certainly, if that continues to be the case, and if water levels further drop, then you might see shortages there. And then it might have an impact on price.

Speaker #3: So far, I would say we haven't seen that; at least, I'm not aware of any price increases due to restrictions. Production.

Speaker #5: That's very clear. Thank you, Gunnar. Maybe just a, I guess, follow-up question on the market conditions. We've heard some sort of mixed comments from your peers about what volumes could look like in Q3.

Reinhardt van der Walt: That is very clear. Thank you, Gunnar. Maybe just, I guess a follow-up question on the market conditions. We have heard some mixed comments from your peers about what volumes could look like in Q3. Some saying it will be up, some saying it will be down. In your business, are you expecting usual kind of Q3 seasonality in volumes, or do you think the TRQ is maybe already going to deliver some volume benefits?

Speaker #5: Some are saying it’ll be up; some are saying it’ll be down. I mean, in your business, are you expecting the usual kind of Q3 seasonality in volumes?

Speaker #5: Or do you think the TRQ is maybe already going to deliver some volume benefits?

Speaker #3: Well, I think in Q3 we're going to see the effects of the TRQ starting. As I mentioned, some of the traders have reacted proactively.

Gunnar Groebler: Well, I think in Q3, we are going to see the effects of the TRQ starting. As I mentioned, some of the traders have reacted proactively, have proactively bought material and shipped to Europe prior to the TRQ kicking in. So that we will see. That needs to work through the value chain. But I would assume that some of the TRQ effects will be visible already in Q3. However, when it comes to flat, I would say stable development going forward, especially plate and large diameter tubes, which are more project-related businesses. Certainly, we need to see a pickup here. As Birgit mentioned, those market has been relatively silent last quarter, so we certainly need a pickup after the summer break. So certainly something we are working hard on different projects, but also need to bring them home here.

Speaker #3: They have proactively, sort of, bought material and shipped it to Europe prior to the TRQ kicking in. So that we will see, and it needs to work through the value chain.

Speaker #3: But I would assume that some of the TRQ effects will be visible already in Q3. However, when it comes to flat, I would say stable development going forward.

Speaker #3: Especially plate and large-diameter tubes, which are more project-related businesses, certainly we need to see a pickup here. And as Birgit mentioned, those markets have been relatively silent last quarter.

Gunnar Groebler: Certainly, we need to see a pickup here. As Birgit mentioned, those market has been relatively silent last quarter, so we certainly need a pickup after the summer break. So certainly something we are working hard on different projects, but also need to bring them home here. Then again, as soon as it is international projects, we also need to look at the trade developments, especially with the US.

Speaker #3: So we certainly need a pickup after the summer break. So certainly something we're working hard on, on different projects, but also need to bring them home here.

Speaker #3: Then again, as soon as it is international projects, we also need to look at the trade developments, especially with the U.S.

Gunnar Groebler: Then again, as soon as it is international projects, we also need to look at the trade developments, especially with the US.

Speaker #5: Understood. Thank you, Gunnar. Thank you, Birgit. I'll pass it over.

Reinhardt van der Walt: Understood. Thank you, Gunnar. Thank you, Birgit. I will pass it over.

Speaker #2: Thank you, Reinhard.

Operator: Thank you, Reinhard.

Birgit Potrafki: Thank you, Reinhardt.

Speaker #3: Thank you, Reinhard.

Gunnar Groebler: Thank you, Reinhard.

Gunnar Groebler: Thank you, Reinhardt.

Speaker #2: So the next question comes from Tristan Kresser from BNP Paribas. The stage is yours.

Operator: The next question comes from Tristan Gresser from BNP Paribas. The stage is yours.

Speaker #6: Yes, hi. Thank you for taking my questions. The first one is on the cash needs. You mentioned for HKM, it's a very large EAF, and I think you need to build the additional infrastructure investment around it.

Tristan Gresser: Yes. Hi. Thank you for taking my questions. The first one is on the cash needs you mentioned for HKM. It is a very large EAF, and I think you need to build the additional infrastructure investment around it. So EUR 900 million for the full thing on the growth basis seems a bit low, but do you have built some contingency? Are you really confident that that is the highest point you will have to spend? Then if you can help us also understand the restructuring cost, maybe the cadence of it and the total amount. I will have a follow-up on that, but I will start there.

Speaker #6: So, €900 million for the full thing on a gross basis seems a bit low. But have you built some contingency? Are you really confident that that's the highest point you'll have to spend?

Speaker #6: And then, if you can help us also understand the restructuring cost—maybe the cadence of it and the total amount—and is the... yeah, I will have a follow-up on that.

Speaker #6: But I'll start there.

Speaker #3: So, cash needs—yes, we're confident with the €900 million. We have HKM, and we have, as you know, done quite thorough project work on it.

Gunnar Groebler: So cash needs, yes, we are confident with the EUR 900 million. HKM has, and we have reviewed that, done a quite thorough project work on it. With our experience from Salzgitter, we of course have critically reviewed that, and we are confident that those 900 millions are sufficient. Yes, we have contingencies in that budget, so there is a bit of headroom also here. We shouldn't forget that HKM is in a pretty lucky position given that grid infrastructure is already there. Unlike our project here in Salzgitter, no grid infrastructure needs to be built, and also space is available there, so they are in a relatively favorable environment for a project like this. So that is one element. Restructuring costs, basically, it was predominantly the reduction of personnel. As said, this has been negotiated, so we have certainty on that.

Gunnar Groebler: *So cash needs, yes, we are confident with the EUR 900 million. HKM has, and we have reviewed that, done a quite thorough project work on it. With our experience from Salzgitter, we of course have critically reviewed that, and we are confident that those 900 millions are sufficient. Yes, we have contingencies in that budget, so there is a bit of headroom also here. We shouldn't forget that HKM is in a pretty lucky position given that grid infrastructure is already there. Unlike our project here in Salzgitter, no grid infrastructure needs to be built, and also space is available there, so they are in a relatively favorable environment for a project like this. So that is one element. Restructuring costs, basically, it was predominantly the reduction of personnel. As said, this has been negotiated, so we have certainty on that.

Speaker #3: And with our experience from Salkos, we, of course, have sort of critically reviewed that. And we're confident that those €900 million are sufficient. And yes, we have contingencies in that budget.

Speaker #3: So there's a bit of headroom also here. We shouldn't forget that HKM is in a pretty lucky position, given that the grid infrastructure is already there.

Speaker #3: So, unlike our project here in Salzgitter, no grid infrastructure needs to be built. And also, space is available there. So, they are in a relatively favorable sort of environment for a project like this.

Speaker #3: So that's one element. Restructuring cost basically was predominantly the reduction of personnel, as said. This has been negotiated, so we have certainty on that.

Speaker #3: The main element of the personnel reduction will only come late in the process, because this is when we stop the second blast furnace, and with that the coking unit, the center plants, and also potentially parts of the power plant.

Gunnar Groebler: The main element of the personnel reduction will only come late in the process, because this is when we stop the second blast furnace, and with that, the coking unit, the Sinter plant, and also part of the power plant, potentially. So that is when the larger headcount reductions will actually appear. So that it is. We have not disclosed the total amount of the costs, but it is well in line, or I would say slightly below what you have seen in other restructuring processes in the German steel industry lately.

Speaker #3: So that's when the larger headcount reductions will actually appear. So that is it. We have not disclosed the total amount of the cost, but it is well in line, or I would say slightly below, what you have seen in other restructuring processes in the German steel industry lately.

Speaker #6: Okay, so that's clear. So that's going to come more in 2029, if I'm correct. That's when you plan to shut down the second BF.

Tristan Gresser: Okay. So that is clear. So that is going to come more in 2029, if I am correct. That is when you plan to shut down the second BF?

Speaker #3: Correct, correct. But what I forgot to mention, of course, with the shutdown of the first BUF, is that we have already seen a significant impact this year.

Gunnar Groebler: Correct. What I forgot to mention, of course, with the shutdown of the first BOF, we have already a significant impact already this year. But you are right, the larger portion then comes in 2029, yes.

Speaker #3: But you're right, the larger portion then comes in '29.

Speaker #6: So, there is some restructuring cost impacting 2026 due to the shutdown of the first blast furnace. Is that correct?

Tristan Gresser: So there is some restructuring costs impacting 2026 due to the shutdown of the first blast furnace. Is that correct?

Speaker #3: Yes. Exactly.

Gunnar Groebler: Yes, exactly.

Speaker #6: Okay, and that's included in the guidance you provided for the consolidation of HKM?

Tristan Gresser: Okay. And that is included in the guidance you provided for the consolidation of HKM?

Speaker #3: That is absolutely included. Yeah, you can—sort of rule of thumb is one quarter of the cost in '26 and three quarters in '29.

Gunnar Groebler: That is absolutely included, yeah. The rule of thumb is one quarter of the cost in 2026 and three quarter in 2029, just to give you a bit of a ballpark.

Speaker #3: Just to give you a bit of a ballpark.

Speaker #6: Okay, that's clear. And just on the €100 million for the next three years for HKM—you also have, I think, included in your capex guidance update €100 million from HKM for just those two quarters.

Tristan Gresser: Okay. That is clear. Just on the EUR 100 million for the next three years for HKM, you also have, I think, including your CapEx guidance update, EUR 100 million from HKM for just those two quarters. What is this EUR 100 million? I guess it is not maintenance. I am just trying to reconcile those two figures if we need to factor in some additional maintenance for HKM in the coming years as well.

Speaker #6: So, what is this €100 million? I guess it's not maintenance, but yeah, just trying to reconcile those two figures—if we need to factor in some additional maintenance for HKM in the coming years as well.

Speaker #2: Yeah. So, what is part of the €100 million is, of course, the update of the remaining blast furnace—that is one part, a major part.

Birgit Potrafki: What is part of the EUR 100 million is, of course, the update of the remaining blast furnace is one part, a major part. Then what you need to keep HKM up and running every year. No major other, how to say, bigger investments included here. If your question is on what do we have to expect in the upcoming years as investments that are not related to the transformation towards the electric arc furnace, you can count between EUR 50 million and EUR 100 million investment.

Speaker #2: And if you— and then what you need to keep HKM up and running every year, no other major, how to say, bigger investments included here.

Speaker #2: If your question is on what do we have to expect in the upcoming years as investments that are not related to the transformations of the electric to towards the electric arc furnace, you can count between 50 and 100 million euro investments.

Speaker #6: For HKM maintenance.

Tristan Gresser: For HKM maintenance per year.

Speaker #2: For HKM, yes. Yes.

Birgit Potrafki: For HKM. Yes.

Tristan Gresser: Okay. But the cash impact over the next 3 years, that's excluding maintenance?

Speaker #6: Okay. But just to confirm, the cash impact over the next three years—that's excluding maintenance, correct?

Speaker #2: No, I would like to—thanks for putting that question again. The €100 million I have mentioned, that is the amount that you need looking at HKM in total.

Birgit Potrafki: No. Thanks for putting that question again. The EUR 100 million I have mentioned, that is the amount that you need looking at HKM in total, taking into consideration all needs for restructuring, for investments, be it the gray route, need already investments for the green route, and all this funded by the shareholders' contribution, funded by the activities that HKM is organizing, and by public funding. The total picture, including also the investment I have just mentioned, including also the investments for the electric arc furnace. This figure is including all of this.

Speaker #2: Taking into consideration all needs for restructuring, for investments—be it the gray route, be it already investments for the green route—and all this funded by the shareholders' contribution, funded by the activities that HKM is organizing, and by public funding.

Speaker #2: And the total picture, including the investments I have just mentioned, as well as the investments for the electric arc furnace—this figure includes all of this.

Speaker #6: Okay. Including the maintenance, but also including the cash generation from the rent.

Tristan Gresser: Okay. Including the maintenance, but also including the cash generation of the plant.

Speaker #3: Oh, yes. Absolutely.

Birgit Potrafki: Yes.

Gunnar Groebler: Absolutely.

Speaker #2: Yes.

Speaker #6: Okay. Okay. Okay. No, that's clear. And maybe one last question: can you help us a bit to understand what we should expect in terms of investment and cash needs for next year?

Tristan Gresser: Okay. No, that's clear. Maybe last question. Can you help us a bit understand what we should expect in terms of investment cash needs for next year? I think you still need to receive EUR 200 million in funding. What's the timing of that maintenance for next year as well, and what's remaining on SALCOS so we can calibrate a bit better the investment for the coming quarters and especially next year? That would be great. Thank you.

Speaker #6: How much do you think you still need to receive to reach €200 million in funding? What's the timing of that? Also, what about maintenance for next year, and what's remaining on Salko, so we can calibrate the investment a bit better for the coming quarters and especially for next year? That would be great.

Speaker #6: Thank you.

Speaker #2: For the coming quarters. For the coming quarters, I have talked about that in one of my slides. So we have spent 88 million euro in the first half of the year.

Birgit Potrafki: For the coming quarters, I have talked about that in one of my slides. We have spent EUR 88 million in the H1 of the year. The figure was especially low due to the funding that we received worth EUR 290 million. We expect, including HKM, to spend in the total year EUR 650 million. Without HKM, EUR 550 million. As I mentioned, for HKM, you can count in for each year between EUR 50 million and EUR 100 million, depending on the topics that need to be invested. For SALCOS, for next year, you may count for roundabout something around EUR 0.5 billion investment for 2027.

Speaker #2: The figure was especially low due to the funding that we received, worth €290 million. We expect, including HKM, to spend in the total year €650 million; without HKM, €550 million.

Speaker #2: As I mentioned, for HKM, you can count on, for each year, between €50 million and €100 million, depending on the topics that need to be invested in.

Speaker #2: And for Zycos, for next year, you may count on roughly half a billion euros of investments for 2027.

Speaker #6: Okay. And the funding, the 200 million that you need to receive, that's going to be H2 or next year? And maintenance of the rest.

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

Speaker #2: No, the €200 million funding will be spread along the total investment of the €900 million, because what is happening in the procedure is that once you have paid the machinery provider, you are able—or we are able—once we have paid them, we are able to ask for the reimbursement to the States and to the German Republic.

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

Speaker #2: And then they are quite quick in paying that. But this goes along with the investment that is really, how to say, done—where you really had the cash outflow.

Speaker #2: Yeah?

Speaker #6: Yeah, sorry—I meant the funding for SALCOS Phase One.

Tristan Gresser: Sorry, I meant the funding for SALCOS® phase I. I think you received

Speaker #2: Oh, sorry. You were not at HKM. You were at—sorry, I was thinking you were still stuck with HKM, but you're now talking about Zycos fundings?

Birgit Potrafki: Sorry, you were not at HKM. Sorry, I was thinking you are still stuck with HKM, but you are now talking about SALCOS funding?

Speaker #6: Yes, Salco's. I think you still need to—you got 1.1. You need to get 1.3, so there's €200 million extra that comes in H2 or next year.

Tristan Gresser: Yes, SALCOS, I think you still need to. You got 1.1, you need to get 1.3, so there is 200 million extra.

Birgit Potrafki: Yeah. Absolutely right.

Tristan Gresser: That comes in next year or next year.

Speaker #2: Yeah, half-half.

Birgit Potrafki: Yeah, half-half.

Birgit Potrafki: Yeah, half-half. Round about half-half.

Tristan Gresser: Half-half.

Speaker #6: Half-half.

Speaker #2: Round ballpark. Half-half.

Birgit Potrafki: Round about half-half.

Speaker #6: Okay. Thank you.

Tristan Gresser: Okay, thank you.

Speaker #2: So, next question comes from Maxime Crocker from Auto BHF. You can speak now.

Operator: Next question comes from Maxime Kogge from ODDO BHF. You can speak now.

Speaker #6: Yeah, good morning all. So, first question: I'm staying on HKM. You mentioned a mid-double-digit impact on EBITDA in H2. Is that purely an accounting impact, or is that a reflection of the underlying contribution of HKM?

Maxime Kogge: Yeah, good morning also. First question, I am staying on the HKM. You mentioned the mid-double digit impact on EBITDA in H2. Is that purely an accounting impact or is that a reflection of the underlying contribution of HKM? Can we perhaps annualize that to about EUR 100 million to get a view of a sense of its recurring contribution?

Speaker #6: Can you can we perhaps annualize that to about 100 million to get a view of a sense of its recurring contribution?

Speaker #2: Maxime, I cannot tell you what you can model in your models. And you're right, it's the mid-million double-digit amount I have mentioned—for half, for the second half of 2026.

Birgit Potrafki: Maxime, I cannot tell you what you can model in your models. You are right, it is the mid-million double-digit amount I have mentioned for the second half of 2026. As you are very well aware, not only concerning HKM but concerning all other entities as well, at this point in time, we are not disclosing any expectations for next year since we are still in the process of putting our planning together. So I am also not going to disclose any expectations for HKM results for 2027 right now.

Speaker #2: As you are very well aware, not only concerning HKM but concerning all other entities as well, at this point in time we are not disclosing any expectations for next year.

Speaker #2: Since we are still in the process of putting our planning together, I'm also not going to disclose any expectations for HKM results for 2027 right now.

Speaker #6: Okay. Okay. But is that purely accounting, or is there really an underlying contribution there in H2?

Maxime Kogge: Okay. But is that purely accounting or it is really the underlying contribution there in H2?

Speaker #3: The combination.

Speaker #2: I don't understand the question, to be very honest.

Birgit Potrafki: I do not get the question, to be very honest.

Speaker #6: Is that—I mean, is that, yeah, is that purely?

Maxime Kogge: Is that purely

Maxime Kogge: Is that purely-

Speaker #3: It's a mix, Maxime, sorry. It's a mixture of both, right? There's an element of underlying business, and there's an element of sort of accounting in there.

Gunnar Groebler: Maxime, sorry. It's a mixture of both, right? There's an element of underlying business and there's an element of sort of accounting there.

Speaker #6: Okay. Okay. But you at least you don't want to split the you don't want to split the two. Yeah.

Maxime Kogge: Okay. But at this stage, you don't want to split the two, yeah?

Speaker #3: No.

Gunnar Groebler: No.

Speaker #2: Okay, okay. Also, as we have said, Maxime, what's important to keep in mind is that effects from the purchase price allocations are not yet included in this figure.

Maxime Kogge: Okay.

Birgit Potrafki: No, as we have said, Maxime, what's important also to keep in mind is that effects from the purchase price allocations are not yet included into this figure. Yeah?

Speaker #2: Yeah?

Maxime Kogge: All right. I would have thought that the financial contribution of Vallourec and Thyssenkrupp would already be recognized in the balance sheet at the onset of the acquisition. I guess this will also flow progressively over the next 3 years now as restructuring needs and CapEx needs also increase. Am I right to understand that?

Speaker #6: All right. All right. And I would have thought that the financial contribution of Valurek and ThyssenKrupp would already be recognized in the balance sheet at the onset of the acquisition.

Speaker #6: But I guess this will also flow progressively over the next three years now, as restructuring needs and capex needs also increase. Am I right to understand that?

Speaker #3: Absolutely right, Maxime. Yes.

Gunnar Groebler: Absolutely right, Maxime. Yes.

Speaker #6: Okay. All right. Okay. Thank you. Naif, I'll switch to the Q2 results now. I had one on the Trading Division. The Trading Division had very good results once again.

Maxime Kogge: Okay. All right. Thank you. If I switch to Q2 results, you had one on the trade division. Trading division had very good result once again, and this time it was not driven by exceptionals. I imagine there is some valuation adjustments including into that. Can you perhaps give us some sense of the underlying result for trading versus valuation adjustment contribution there?

Speaker #6: And this time it was not driven by exceptionals, but I imagine there are some valuation adjustments included in that. Can you perhaps give us some sense of the underlying result for trading versus valuation adjustment contribution there?

Speaker #2: Yeah, I can give you one reason why the results were so nice. You're right. In the first quarter, we had a non-sustainable one-time effect of €10 million—or €11 million to be more precise—which we did not see in the second quarter.

Birgit Potrafki: Yeah, I can give you one reason why the results were so nice. You are right. In Q1, we had a not sustainable one-time effect of EUR 10 million or EUR 11 million, to be more precise, which we did not see in Q2. The good result in the trade was also driven by a very favorable combination of material cost basis and price basis because our colleagues from the trade segment, they had some stock built up, making use of very good material cost and then being able to transform that into business. For your next question, how do they look at H2?

Speaker #2: And the good result in the Trade was also driven by a very favorable combination of material cost basis and price basis, because our colleagues from the Trade segment had some stock built up, making use of very good material cost.

Speaker #2: And then being able to transform that into business. And for your next question, how do they look at the second half of the year?

Speaker #2: They are a lot more prudent when they look at the second half of the year, also because the geopolitical tensions are putting pressure on international trade.

Birgit Potrafki: They are a lot more prudent when they look at the H2 of the year, also because the geopolitical tensions are putting pressure on international trade, and here we all deal with quite a high degree of uncertainty.

Speaker #2: And here, we all deal with quite a high degree of uncertainty.

Speaker #3: Yeah.

Speaker #6: Okay, no, that's clear. Yeah. And just the last one—yeah, it's on your tax position. Because as far as I understand, you have recognized on your—so precisely, it's not recognized on your balance sheet, but you have €4 billion of tax loss carried forward accumulated over the past years.

Maxime Kogge: Okay, now that is clear. And just the last one, it is on your tax position because as far as I understand, you have recognized on your, so precisely it is not recognized on your balance sheet, but you have EUR 4 billion of tax loss carry forwards accumulated over the past years, and so far you had not recognized anything of that or very limited amounts because you had limited profit generation ability. But now that things are improving a lot, that you are returning to healthy profit generation ability, should we expect that to be recognized on the balance sheet? So perhaps not at 30 September, but at 31 December and further beyond this time frame?

Speaker #6: And so far, you hadn't recognized anything of that, or very limited amounts, because you had limited profit generation ability. But now that things are improving a lot, that you're returning to healthy profit generation ability, should we expect that to be recognized on the balance sheet?

Speaker #6: So, perhaps not on the 30th of September, but on the 31st and further beyond this timeframe?

Speaker #2: Yes, of course. We will make use of that as soon as we can. That's very clear, and you are absolutely right. Since our business results were not in the range that allowed us to make use of these losses carried forward, we simply didn't.

Birgit Potrafki: Yeah, of course. We will make use of that as soon as we can. That is very clear. And you are absolutely right. Since our business results were not in the range that we could make use of these losses carried forward, we just simply did not. And some of the positive results we achieved were mainly organized abroad. We also could not in some parts, but of course, as soon as we can, we will make use of that. That is absolutely clear.

Speaker #2: And some of the positive results we achieved were mainly organized abroad. We also couldn’t in some parts, but of course, as soon as we can, we will make use of that.

Speaker #2: That's absolutely clear. Yeah.

Birgit Potrafki: Yeah.

Speaker #6: Okay. And we should therefore expect that tax outlays will remain minimal over the last over the past next years, yeah, over the next year, sorry, because you have so many tax loss carried forward.

Maxime Kogge: Okay. And we should therefore expect that tax outlays will remain minimal over the past next years? Over the next year, sorry, because you have so many tax loss carry forwards.

Speaker #2: As long as these results are able to be accounted against the losses brought forward, yes.

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

Maxime Kogge: All right. No, thanks. I will stop there.

Speaker #6: All right. No, thanks. I'll stop there.

Speaker #2: The next question comes from Bastian Zunagovitz from Deutsche Bank. The stage is yours.

Markus Heidler: The next question comes from Bastian Synagowitz from Deutsche Bank. The stage is yours.

Speaker #6: Yes, good morning. Thanks for taking my questions as well. I have a few more follow-ups on HKM, if that's okay. Maybe you can bring us up to speed there.

Bastian Synagowitz: Yes, good morning. Thanks for taking my questions as well. I have got a few more follow-ups on HKM, if that is okay. Maybe you can bring us up to speed there. What has been the recent production levels in 2025 at HKM level, and how exactly does the planned blast furnace setup look like from here onwards? I understood that one of the two blast furnaces is currently being relined, but will that even come back? That is my first question.

Speaker #6: But what have been the recent production levels in 2025 at HKM level? And how exactly does the planned blast furnace setup look like from here onwards?

Speaker #6: I understood that one of the two blast furnaces is currently being realigned. But will that even come back? That's my first question.

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

Gunnar Groebler: Let me answer the blast furnace question. The reason for taking this blast furnace out of operation is, as you said, the relining and basically upgrade the blast furnace to then go back into operation in August, and then carry HKM through the upcoming 3 years. You might recall that the whole concept is based on us reducing capacity at HKM already this year. We have an installed capacity of roughly 5 million tons. We will reduce that to 2.5, meaning one blast furnace. That is exactly the blast furnace that is relined right now. As soon as that one is operational again, and stable, we will take out the other blast furnace and close that one down. That is then the first part of what we discussed with Tristan also when it comes to the restructuring, reducing the workforce, roughly one fourth.

Speaker #3: So, you might recall that the whole concept is based on us reducing capacity at HKM already this year. We have an installed capacity of roughly 5 million tons.

Speaker #3: We will reduce that to two and a half, meaning one blast furnace. And that's exactly the blast furnace that is realigned right now. As soon as that one is operational again and stable, we will take out the other blast furnace and close that one down.

Gunnar Groebler: As soon as that one is operational again, and stable, we will take out the other blast furnace and close that one down. That is then the first part of what we discussed with Tristan also when it comes to the restructuring, reducing the workforce, roughly one fourth. That will certainly happen. Production levels for the two blast furnaces in 2025 have been good. The whole structure of HKM has been that HKM basically produce an optimal level to support the three shareholders. Production levels in 2025 have been on a very good level.

Speaker #3: And that is, then, the first part of what we discussed with Tristan, also when it comes to the restructuring—the reducing of the workforce. Roughly one fourth.

Speaker #3: So that will certainly have happened. And production levels for the two blast furnaces in 2025 have been good. You know, the whole structure of HKM has been that HKM basically produces at an optimal level to support the three shareholders.

Gunnar Groebler: That will certainly happen. Production levels for the two blast furnaces in 2025 have been good. The whole structure of HKM has been that HKM basically produce an optimal level to support the three shareholders. Production levels in 2025 have been on a very good level.

Speaker #3: So, production levels in 2025 have been at a very good level.

Speaker #6: And what does that mean? Is it like 4 million tons, or...?

Bastian Synagowitz: What does that mean? Is it like 4 million tons or?

Speaker #3: I don't have the output number off the top of my head for the total HKM, because I only looked at our share. It has not been published.

Gunnar Groebler: I do not have the output number on top of my head for the total HKM, because I only looked at our share. It has not been published. Unfortunately, I cannot deliver that number. It has not been published, given that it has gone through three different shareholders.

Speaker #3: Okay. So, unfortunately, you cannot deliver that number. It has not been published, given that it has gone through three different shareholders.

Speaker #6: Okay. Okay. Fair enough. And so then, as the one blast furnace, which is currently being realigned, is coming back, when will the second one leave?

Bastian Synagowitz: Okay. Fair enough. Then, as the one blast furnace, which is currently being relied as it is coming back, when will the second one leave? What is the broad timing for that? Is it going to be early next year?

Speaker #6: What's the broad timing for that? Is it going to be early next year?

Speaker #3: No, no, no, no, no, no. As soon as the realigned blast furnace is operational and stable, we will take that one out. So it's going to happen in Q3, certainly.

Gunnar Groebler: No. As soon as the reline blast furnace is operational and stable, we will take that one out. So it is going to happen in Q3, certainly.

Speaker #6: Even in Q3?

Bastian Synagowitz: Even-

Gunnar Groebler: Very quickly after the relined one is back in operation.

Speaker #3: Very quickly after the realigned one is back in operation.

Speaker #6: Yeah. Okay. But basically, if we look at it at a high level, even with you not, I guess, disclosing the 2025 numbers, basically what's happening here is that we go from two blast furnace operations back in 2025 to basically an exit run rate using just one blast furnace at the end of this year.

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

Speaker #3: Absolutely. Yes.

Gunnar Groebler: Absolutely, yes.

Speaker #6: So it's a net-net cut. Yeah. Okay, very clear. And then, just getting back on the CapEx guidance, which you guided for with $50 to $100 million maintenance, that's a pretty broad range. Is this—?

Bastian Synagowitz: So it is a net cut. Okay, very clear. Then, just getting back on the CapEx guidance, which you guided for with 50 to 100 million maintenance, because that is a pretty broad range. Is this referring to just a one blast furnace operation, or is the upper end of that still based on two blast furnaces?

Speaker #6: Is this referring to just one blast furnace operation, or is the upper end of that still based on two blast furnaces?

Speaker #2: Yeah, it's for what we expect for this year and the next years. Yeah, so it's a range—it's for the one blast furnace. And you're right.

Birgit Potrafki: Well, it is for what we expect for this year and the next years. So it is a range. It is for the one blast furnace. You are right, if you see that we have run two blast furnaces this year for half of the year, or HKM did. Then we will have one, then, of course, you can assume where you maybe find yourself back between the 50 and the 100. I am not going to give a more precise figure because, as I have said, we are still now in the process of putting our mid-term plans together. So it would just not be fair to give any more precise figure because it is simply not there right now.

Birgit Potrafki: Yeah, it is for what we expect for this year and the next years. So it is a range. It is for the one blast furnace. You are right, if you see that we have run two blast furnaces this year for half of the year, or HKM did. Then we will have one, then, of course, you can assume where you maybe find yourself back between the 50 and the 100. I am not going to give a more precise figure because, as I have said, we are still now in the process of putting our mid-term plans together. So it would just not be fair to give any more precise figure because it is simply not there right now.

Speaker #2: If you see that we have run two blast furnaces this year for half of the year, or HKM did, and then we will have one. Then, of course, you can assume where you maybe find yourself—back between the 50 and the 100.

Speaker #2: Yeah, I'm not going to give a more precise figure because, as I have said, we are still now in the process of putting our midterm plans together.

Speaker #2: So it just would not be fair to give any more precise figure, because it's simply not there right now. Yeah.

Speaker #6: Yeah, okay, fair enough. And maybe on to next year—and I totally appreciate you can't really say too much, given we don't know that much about the market yet, or can only make assumptions here.

Bastian Synagowitz: Yeah. Okay, fair enough. Maybe onto next year, and I totally appreciate you cannot really say too much, given we do not know that much about the market yet. Can only take assumptions here. But I guess what we do know is, I guess you have a maintenance CapEx guide for 50 to 100, at the upper end, certainly looks relatively high. There is quite a bit of restructuring coming already next year from what you say. I guess if you cut 500 people, that is giving you a decent mid-double digit cost-saving amount already. I guess it would be quite surprising if you would be taking this on without at least covering the full amount of the maintenance CapEx, right? So I guess whatever you expect as an earnings contribution must probably fully cover that. Is that a fair assumption?

Speaker #6: But I guess what we do know is, I guess you have a maintenance CapEx guidance of 50 to 100. And the upper end certainly looks relatively high.

Speaker #6: There's quite a bit of restructuring coming already next year from what you say. I guess if you cut 500 people, that's giving you a decent mid-single-digit to mid-double-digit cost saving amount already.

Speaker #6: I guess it would be quite surprising if you were taking this on without at least covering the full amount of the maintenance CapEx, right?

Speaker #6: So I guess whatever you expect as an earnings contribution must probably fully cover that. Is that a fair assumption?

Speaker #2: "Fully cover the restructuring cost, you mean?"

Birgit Potrafki: Fully cover the restructuring cost, you mean?

Speaker #6: Fully cover at least, like, probably the maintenance CapEx plus premium.

Bastian Synagowitz: Fully cover at least probably the maintenance CapEx plus premium.

Speaker #3: Yeah.

Speaker #2: Yeah. As I said before, looking at it as a whole, we have, as you know, as we have talked about, that HKM is organizing some result from business activities.

Birgit Potrafki: As I said before, looking at it as a whole, we have, as you know, as we have talked about, that HKM is organizing some results from business activities. We have the contributions from the shareholders, and the funding is, of course, 100% related to the electric arc furnace. But all of this funding, plus EUR 100 million spread, as I have mentioned before, is enough to pay for CapEx, for restructuring, and for the transformation.

Speaker #2: We have the contributions from the shareholders, and the funding is, of course, 100% related to the electric arc furnace. But all of this funding, plus the €100 million spread, as I have mentioned before, is enough to pay for CapEx for restructuring and for the transformation.

Speaker #3: Yeah. We shouldn't forget that as part of the takeover, HKM also included a delivery contract that we have signed with ThyssenKrupp Steel. So for the years '26, '27, and '28, we'll deliver slabs to ThyssenKrupp out of HKM.

Gunnar Groebler: We shouldn't forget that part of the takeover of HKM was also a delivery contract that we have signed with Thyssenkrupp Steel. So for the year 2026, 2027, and 2028, we'll deliver slabs to Thyssenkrupp out of HKM, with the biggest portion being in 2027. So from an operational business, we should also expect good results from HKM in that year. So basically, the short answer to your question is yes.

Speaker #3: With the biggest portion being in 2027. So, from an operational business perspective, we should also expect good results from HKM in that year. So, basically, the short answer to your question is yes.

Speaker #6: Yeah. Okay. Okay. Thank you. Then, last question: Is there any early color on the PPA effects from HKM, which we may see? Will they be positive?

Bastian Synagowitz: Yeah. Okay. Thank you. Then last question. Is there any early color on the PPA effects from HKM, which we may see? Will they be positive? Will they be negative? Any quantification, if broad?

Speaker #6: Will there be a negative? Any quantification? If broad?

Speaker #2: No, it's too early. Please understand that it's really too early to color that figure already as of today. Our teams are really busy dealing with that right now.

Birgit Potrafki: No, it is too early. Please understand that it is really too early to color that figure already as of today.

Bastian Synagowitz: Okay. Fair.

Birgit Potrafki: Our teams are really busy dealing with that right now.

Speaker #6: Sounds good. Thanks so much for taking my questions.

Bastian Synagowitz: Sounds good. Thanks so much for taking more questions.

Speaker #2: Thank you.

Birgit Potrafki: Thank you.

Birgit Potrafki: Thank you.*

Speaker #3: Thank you, Bastian.

Gunnar Groebler: Thank you, Sebastian.

Speaker #2: Bastian.

Speaker #1: So the next question comes from Boris Bourdais from Kepler Cheuvreux. You can speak now.

Operator: The next question comes from Boris Bourdet, from Kepler Cheuvreux. You can speak now.

Speaker #7: Hi. Can you hear Yes.

Boris Bourdet: Hi. Can you hear me well?

Speaker #3: Me, well? Very well. Hi, Boris. Okay. Very.

Gunnar Groebler: Very well. Hi, Boris.

Operator: Hi, Boris.

Birgit Potrafki: Hi, Boris.

Boris Bourdet: Hi, everybody. I will stay on HKM. I get it that it is a net EUR 100 million cash that you need to cover the needs for HKM. But I am curious to know whether there is a specific sequencing across those coming three years. I would guess some cash drain at the start and then things getting better over the end of the period. Because you only get EUR 200 million public funding to cover the cost of the new EAF to be built over three years. I am also wondering if there is any additional public funding you would expect from the European level, maybe in connection with the ETS reform. I would be interested in getting that point. Thank you.

Speaker #7: Hi, everybody. Yeah, I'll stay on HKM. So I get it that it's a net €100 million cash that you need to cover the needs for HKM.

Speaker #7: But I'm curious to know whether there is a specific sequencing across those coming three years. I would guess there might be some cash drain at the start, and then things get better toward the end of the period.

Speaker #7: Because you only get 200 million public funding to cover the cost of the new EAF to be built over three years. So also wondering if there is any additional public funding you would expect from the European level, maybe in connection with the ETS reform, would be interested in getting that point.

Speaker #7: Thank you.

Speaker #3: Well, thank you, Boris. Let me start, and then I'll hand over to you. With the additional public funding—there's no additional public funding in our business plan.

Gunnar Groebler: Well, thank you, Boris. Let me start and then hand over to you. With the additional public funding, there is no additional public funding in our business plan. If there would be an opportunity, of course, we would try to grasp that, but there is no expectation on additional public funding in the business plan. Secondly, Boris, we shouldn't forget that also the two shareholders that left HKM deliver substantial contribution to the whole financing of HKM restructuring plus the investment. So it is not only the public funding, but also money coming from the two shareholders that we will use and make use for the upcoming work that we have with HKM.

Speaker #3: So, if there were to be an opportunity, of course, we would try to grasp that. But there's no expectation of additional public funding in the business plan.

Speaker #3: And secondly, Boris, we shouldn't forget that the two shareholders who left HKM also delivered a substantial contribution to the whole financing of the HKM restructuring, plus the investments.

Speaker #3: So it's not only the public funding, but also money coming from the two shareholders that we will use and make use of for the upcoming work that we have with HKM.

Boris Bourdet: Okay.

Birgit Potrafki: For the spread, EUR 100 million, the question, right? I can tell you that the majority is not going to hit this year. So it is quite evenly spread, I would say, over the years. No significant impact already this year.

Speaker #2: For the spread 100 million, the question, right? I can tell you that there is not like the majority is not going to hit this year.

Speaker #2: So, it's quite evenly spread, I would say, over the years. No significant impact already this year.

Speaker #3: Okay, okay. Thank you. And maybe a follow-up on the contribution from ThyssenKrupp in Belarus. Is it fair to assume something like €500 million total?

Boris Bourdet: Okay. Thank you. Maybe a follow-up on the contribution from Thyssenkrupp and Vallourec. Is it fair to assume something like EUR 0.5 billion total?

Speaker #3: We have agreed not to disclose the numbers on those contributions, Boris. Sorry that we can't comment on that.

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

Speaker #7: Yeah, I guess we'll have to wait for the publication of their provision.

Boris Bourdet: Yeah. I guess we'll have to wait for the publication of their provision.

Speaker #2: Maybe a possible way.

Birgit Potrafki: Maybe a possible way.

Speaker #7: Yeah. Okay. Thank you.

Boris Bourdet: Yeah. Okay.

Gunnar Groebler: Yeah.

Boris Bourdet: Thank you.

Speaker #3: Thank you, Boris.

Gunnar Groebler: Thank you, Boris.

Speaker #1: So the next question comes from Andrew Jones from UBS. You can speak now.

Markus Heidler: The next question comes from Andrew Jones from UBS. You can speak now.

Operator: The next question comes from Andrew Jones from UBS. You can speak now.

Speaker #6: Hi. Can you hear me again?

Andrew Jones: Hi, can you hear me again?

Speaker #3: Yep.

Speaker #1: Sure.

Gunnar Groebler: Yep.

Speaker #6: Cool. So yeah, we've had lots of questions on HKM. I'm still slightly confused. Just to keep it simple — if you're talking about your net CapEx, or net of any subsidies or contributions from Thyssen or Vallourec — broadly, how should we look at the CapEx schedule over the next few years?

Andrew Jones: Cool. We have had lots of questions on HKM. I must admit, I am still slightly confused. Just to keep it simple, if you are talking about your net CapEx, so net of any subsidies or contributions from Thyssen or Vallourec, broadly, how should we look at the CapEx schedule over the next few years? You are saying EUR 650 this year. I think you were saying the gross SALCOS should be EUR 500 next year. What was the net number and what is the likely total for CapEx next year? Can you give us a ballpark for 2028?

Speaker #6: You're saying 650 this year. I think you were saying that gross Salco should be 500 next year. What was the net number, and what's the likely total for CapEx next year?

Speaker #6: And can you give us a ballpark for the '28?

Speaker #2: Yeah. Talking about Salco, this year and next year, I have shown that this year the CapEx will be quite overseeable in our graph. You have seen that.

Birgit Potrafki: Yeah. Talking about SALCOS phase 1, this year and next year, I have shown that this year the CapEx will be quite overseeable. In our graph, you have seen that. Due to the nice high public funding we have received, we have talked about that there are around 200 million EUR open of public funding for SALCOS phase 1, and that they will be more or less evenly spread over this year and next year.

Speaker #2: Due to the nice, high public funding we have received, we have talked about that there are around €200 million of public funding open for Salco's phase one.

Speaker #2: And that they will be more or less evenly spread over this year and next year. And next year we will see quite a high Salco spending year, as I have mentioned.

Birgit Potrafki: Next year, we will see quite a high SALCOS spending year, as I have mentioned, around half a billion EUR after funding. So it's a net figure.

Speaker #2: Roundabout half a billion euros after funding, so it's a net figure.

Speaker #6: That's a net figure. Okay. So, I mean, if we're talking about net figures, HKM shouldn't be adding much to that. And if we add in sort of maintenance, what's a fair number for maintenance fees today?

Andrew Jones: That's a net figure. Okay.

Birgit Potrafki: Yeah.

Andrew Jones: If we're talking about net figures, HKM shouldn't be adding much to that. If we add in maintenance of, what's a fair number for maintenance these days? I mean, all in, if we say 500 plus, I don't know, 50 for HKM plus, I don't know, 250. Is that a fair sort of number? So maybe we get up to about 800. Is that a reasonable ballpark?

Speaker #6: I mean, all in, if we say 500 plus, I don't know, 50 for HKM, plus, I don't know, 250 is about a fair sort of number.

Speaker #6: So maybe we get up to about 800. Is that a reasonable ballpark?

Speaker #3: You're trying to build up the CapEx for 2027. Is that right?

Gunnar Groebler: You are trying to build up the CapEx for 2027.

Andrew Jones: Yeah.

Speaker #6: Yeah. Yeah.

Speaker #3: What you're trying to do?

Gunnar Groebler: What you are trying to do?

Speaker #6: Yeah. Exactly. Yeah.

Andrew Jones: Yeah, exactly.

Speaker #2: So I would rather — I think €800 million would most likely be too prudent, because you have, as I said, half a billion euro for Salco.

Birgit Potrafki: I think 800 would most likely be too prudent.

Andrew Jones: Too prudent.

Birgit Potrafki: Because you have, as I said, half a billion EUR for SALCOS.

Birgit Potrafki: Because you have, as I said, *half a billion EUR for SALCOS. You have between EUR 50 and 100 million for HKM, not Green Rules. You will have the first payments for the electric arc furnace at HKM already this year, and further payments already next year also for the electric arc furnace at HKM. Then we have investments around about between EUR 300 and 400 million for everything that is not related to the green transformation. So the number 800, I would rather see it as the lower number. Yeah? Rather above that.

Speaker #2: You have between €50 million and €100 million for HKM, not Green Room. You will have the first payments for the electric arc furnace at HKM already this year, and further payments already next year.

Birgit Potrafki: You have between EUR 50 and 100 million for HKM, not Green Rules. You will have the first payments for the electric arc furnace at HKM already this year, and further payments already next year also for the electric arc furnace at HKM. Then we have investments around about between EUR 300 and 400 million for everything that is not related to the green transformation. So the number 800, I would rather see it as the lower number. Yeah? Rather above that.

Speaker #2: Also, for the electric arc furnace at HKM. And then we have investments of around €300 to €400 million for everything that is not related to the green transformation.

Speaker #2: So the number 800, I would rather see it as the lower number. Yeah, rather above that.

Speaker #6: Okay, okay. And after that, Salco stops, and then it's just HKM plus maintenance. So we should be going down to somewhere closer to that, sort of €500 million figure, right?

Andrew Jones: Okay. But after that, SALCOS stops, then it is just HKM plus maintenance, so we should be going down to somewhere closer to that sort of 500 million figure, right?

Speaker #2: Most likely, yeah.

Birgit Potrafki: Most likely, yeah.

Speaker #3: Yeah, sounds good. I think, Andrew, what we shouldn't forget here is that, as we've seen in the past, there have also been delays, right?

Gunnar Groebler: Yeah. Sounds good.

Gunnar Groebler: Yeah. Sounds good. I think, Andrew, what we shouldn't forget here is that we have seen also in the past, we have seen delays, right? The cash out profile has always been sort of pushed out in time. Even though big numbers, yes, but when things are getting paid, normally drags out a bit in time. That is certainly an effect that we have seen in the past also with SALCOS. Yeah? Let's be sure about that. I also expect that to happen for next year and the years to come.

Andrew Jones: What-

Gunnar Groebler: I think, Andrew, what we shouldn't forget here is that we have seen also in the past, we have seen delays, right? The cash out profile has always been sort of pushed out in time. Even though big numbers, yes, but when things are getting paid, normally drags out a bit in time. That is certainly an effect that we have seen in the past also with SALCOS. Yeah? Let's be sure about that. I also expect that to happen for next year and the years to come.

Speaker #3: So the cash-out profile has always been sort of pushed out in time. So even though there are big numbers, yes, but when things are getting paid, it normally drags out a bit in time.

Speaker #3: So, that is certainly an effect that we have seen in the past also with Salco. Yes, let's be sure about that. And I also expect that to happen for next year and the years to come.

Speaker #6: Okay. And then, just on the operating costs for the new year, and also the new SALCOS production booth, if we compare it to the existing production booth, how do you expect OpEx to actually sort of trend?

Andrew Jones: Okay. Then just on the operating costs of the new EAF and also the new SALCOS production route. If we compare to the existing production route, how do you expect OpEx to actually sort of trend? First of all, as we go into SALCOS phase 1 of the main sites, and then when you start up the EAF at HKM compared to the existing blast furnace setup, how do you expect costs to trend in a sort of stable CO2 price environment?

Speaker #6: First of all, as we go into Salcos phase one at the main sites, and then when you start up the EF at HKM—compared to the existing blast furnace setup—how do you expect costs to trend in a sort of stable CO2 price environment?

Speaker #3: Yeah, I think there are a couple of very important assumptions that we have to look at, right? If you say stable CO2 prices, it's certainly not what all the expectations on CO2 prices that are publicly available look at, right?

Gunnar Groebler: Yeah, I think there are a couple of very important assumptions that we have to look at, right? If you say stable CO2 prices is certainly not what sort of all the expectations CO2 prices that are publicly available look at, right? They look at a clear CO2 cost increase even with the ETS reform here. So the signal that we get from anybody or everybody on the policymaking side is that the price signal and the increase of CO2 prices will remain. The question is how fast. So that's a difficult question to answer right now. But of course, if you expect regulatory developments as they have been planned so far, I think it was Boston Consulting Group who put out a study that the electric arc furnace with DRI would cross the cost curve of a BOF in the early 2030s.

Speaker #3: They look at a clear CO2 cost increase. Even with the ETS reform here, the signal that we get from anybody and everybody on the policymaking side is that the price signal and the increase in CO2 prices will remain.

Speaker #3: The question is how fast. So that's a difficult question to answer right now. But, of course, if you expect regulatory developments as they have been planned so far, I think your BCG put out a study that the electric arc furnace with DRI would cross the cost curve of a BOF in the early 2030s.

Speaker #3: So that's one. We also expect that by then, electric arc furnace DRI is more cost-competitive than a blast furnace due to the input costs that you would have there.

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

Speaker #3: Of course, we're looking at brand new electric arc furnaces, both in Salzgitter and in HKM, and I expect them to outperform on the cost side.

Speaker #3: Any other EAF that we have in Europe?

Speaker #6: Okay, no, that's clear. And just one other follow-up: I mean, the closure of the blast furnace at HKM—are you—I mean, I guess there's kind of a natural life to most of these blast furnaces, but clearly the European market will be tightening up as we see the imports drop off in the second half.

Andrew Jones: Okay. That's clear. Just one other follow-up. The closure of the blast furnace at HKM, I guess there's a natural life to most of these blast furnaces, but clearly the European market will be tightening up as we see the imports drop off in the H2. Would it not be beneficial to keep that blast furnace running to take advantage of some of that additional volume or demand for European steel in the market once imports drop out?

Speaker #6: I mean, would it not be, I guess, beneficial to keep that blast furnace running to take advantage of some of that additional volume or demand for European steel in the market once imports drop out?

Speaker #3: Yeah. Of course, we have analyzed that, and we are closely monitoring how the market is developing. So far, our strategy for HKM remains as just described.

Gunnar Groebler: Yeah, of course, we have analyzed that, and we are closely monitoring how market is developing so far. Our strategy for HKM remains as just described, because you shouldn't forget, we would need an offtake of roughly 2.5 million tons of slabs into the European market just from HKM. That comes also then, of course, with quite some uncertainty on the market side, whether the market is prepared short term to digest another 2.5 million tons. We are in talks, but for now, I would say the main scenario is that we're going to close down the blast furnace. If there are opportunities, of course, we're happy to evaluate those, but we need to be relatively fast with that, because once the coking unit and the blast furnace is switched off, it's impossible to switch them on again.

Speaker #3: Because you shouldn't forget, we would need an offtake of roughly 2.5 million tons of slabs into the European market just from HKM.

Speaker #3: And that comes also, then, of course, with quite some uncertainty on the market side—whether the market is prepared, short term, to digest another 2 to 2.5 million tons.

Speaker #3: So, we are in talks, but for now, I would say the main scenario is that we're going to close down the blast furnace. If there are opportunities, of course, we're happy to evaluate those, but we need to be relatively fast with that, because once the coking unit and the blast furnace are switched off, it's impossible to switch them on again.

Gunnar Groebler: We are in talks, but for now, I would say the main scenario is that we're going to close down the blast furnace. If there are opportunities, of course, we're happy to evaluate those, but we need to be relatively fast with that, because once the coking unit and the blast furnace is switched off, it's impossible to switch them on again. That would be a decisive point in time where we cannot go back.

Speaker #3: So that would be a decisive point in time, where we cannot go back.

Gunnar Groebler: That would be a decisive point in time where we cannot go back.

Speaker #6: Yeah. And is the do you think there's a possibility that with these imports dropping out in line with the quota cuts, do you think that we'll need an imported ton paying the 50% tariff to bounce the market, or do you think that domestic capacity is capable of stepping up to meet that additional demand?

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

Speaker #3: A question about what you're talking about, right? If you're talking about slabs, as of now, slabs are not part of the TRQ. So that's something that is still to be sort of negotiated and included.

Gunnar Groebler: A question what you're talking about, right? If you're talking slabs, as of now, slabs are not part of the TRQ. That's-

Andrew Jones: Oh, no, I am talking finished.

Gunnar Groebler: That is still to be negotiated and included. From that end, I do not see a big change through regulatory developments. I think the dropping out of Russian slabs will certainly have an impact on the European market. Either through additional imports or then through us with HKM as an example, we can certainly serve that market. That is also the idea post 2028 when we have free capacity with that one blast furnace/EAF, certainly to address that market. That is part of the business plan.

Speaker #3: So from that end, I don't see a big change from through regulatory developments. I think the dropping out of Russian slabs will certainly have an impact on the European market.

Speaker #3: And either through additional imports, or through us with HKM as an example, we can certainly serve that market. And that's also the idea post-2028, when we have free capacity with that one blast furnace slash EAF, certainly to address that market.

Speaker #3: That's part of the business plan.

Speaker #6: Yeah. I was talking predominantly about the actual finished steel market. I mean, if we lose 14 million tons, is that 14 million tons of capacity that can actually restart in a timely manner, from what you can see at the moment?

Andrew Jones: Yeah, I was talking predominantly about the actual finished steel market. If we lose.

Andrew Jones: Yeah, I was talking predominantly about the actual finished steel market. If we lose. 14 million tons, is there 14 million tons of capacity that can actually restart in a timely manner from what you can see at the moment?

Gunnar Groebler: Oh

Andrew Jones: 14 million tons, is there 14 million tons of capacity that can actually restart in a timely manner from what you can see at the moment?

Speaker #3: Well, I can speak for ourselves. We shouldn't forget we have blast furnace C that is not in operation right now. It's planned to kick in in Q4.

Gunnar Groebler: Well, I can speak for ourselves. We shouldn't forget we have a blast furnace C that is not in operation right now. It's planned to kick in in Q4. So we have, at least from a Salzgitter perspective, we have the opportunity to increase our capacity if and when needed at short notice. So, that doesn't take a lot of time.

Speaker #3: So, at least from a Salzgitter perspective, we have the opportunity to increase our capacity if and when needed—at short notice. So that doesn't take a lot of time.

Speaker #6: Okay. But do you think, with the issues at Ilva and, I guess, those Liberty assets—I mean, a lot of that doesn't look like it's coming back quickly.

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

Speaker #6: So I mean, potentially your tons at HKM might be needed. Do you think the market can step up to meet that demand overall, from what you can see from some of your competitors?

Speaker #3: If you look at the European market as a whole, I think, yes, the market should be able to step up to fill at least the vast majority of that demand.

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

Speaker #3: Yes. And if there's more, then certainly we will have to talk about imports and then at a different price point.

Speaker #6: Okay.

Andrew Jones: Okay.

Speaker #3: Yeah.

Speaker #6: Thanks.

Gunnar Groebler: Yeah.

Andrew Jones: Thanks.

Speaker #3: Thank you.

Gunnar Groebler: Thank you.

Speaker #2: So there's another question from Tristan Dresser from BNP Paribas. The stage is yours.

Operator: So there's another question from Tristan Gresser from BNP Paribas. The stage is yours.

Speaker #7: Yes. Hi. Thank you for taking the follow-up. Just a quick one on the gross capex—well, no, the net capex guidance for 2027. And I understand it's not really a guidance, but if you have the first payment of HKM EAF next year, with all the moving parts, is there actually a probability the capex goes above a billion?

Tristan Gresser: Yes. Hi. Thank you for taking the follow-up. Just a quick one on the gross CapEx, well, no, the net CapEx guidance for 2027. I understand it's not really a guidance, but if you have the first payment of HKM EAF next year with all the moving parts, is there actually a probability the CapEx goes above EUR 1 billion?

Speaker #3: No, then I would—I could see that right now. But then again, let us put the numbers together. And now in fall, and certainly we will also adjust capex levels to something that is digestible for the company.

Gunnar Groebler: Not that I could see that right now. But then again, let us put the numbers together now in fall, and certainly, we will also adjust CapEx levels to something that is digestible for the company. But above EUR 1 billion, that would be very surprising.

Speaker #3: But above a billion, that would be very surprising.

Speaker #7: Okay, that's clear. And maybe just on Q3, if I understand correctly, HKM will be consolidating steel production. Within steel production, you'll have the relining of one blast furnace at HKM.

Tristan Gresser: Okay. That's clear. Maybe just on Q3, if I understand correctly, HKM will be consolidating steel production, and within steel production you'll have the realign of one blast furnace at HKM. You mentioned the restart of blast furnace C, but it's probably Q4. So how should we think about cost quarter-on-quarter for the steel production business? Also maybe if you can give us a sense of the spreads margins that you would expect some stability or maybe some contraction there. Anything would be helpful there. Thank you.

Speaker #7: You mentioned the restart of blast furnace C, but it's probably Q4. So, how should we think about costs quarter on quarter for the steel production business? Also, maybe if you can give us a sense of the spread margins—do you expect some stability, or maybe some contraction? Anything would be helpful there.

Speaker #7: Thank you.

Speaker #3: On the spread side, I would rather say it's stable with a slight chance of contraction. But just looking at the two of you, that's how I would guide Q3.

Gunnar Groebler: On the spread side, I would rather say stable with slight chance of contraction. Just looking at the two of you, that's how I would guide Q3. On the cost elements, the relining is basically done, that is then CapEx. Certainly will help also to get the operational costs further adjusted downwards for the blast furnace. With a reline, you normally have a better opportunity to work on your cost levels than with the worn-out one. That's certainly something where I would expect further improvements on the HKM side. For Salzgitter, I don't see a major change.

Speaker #3: And on a cost element, the realigning is basically done, and that is then capex. Certainly, it will also help to get the operational cost further downward—adjusted downwards—for the blast furnace. With a realigned one, you normally have a better opportunity to work on your cost levels than with a worn-out one.

Speaker #3: So that's certainly something where I would expect further improvements on the HKM side. And for Salzgitter, I don't see a major change.

Speaker #7: Okay, all right. And maybe a last one, just—sorry—on the Treasury share program. Any reason to believe that the program, the pace that you had on the selling in Q2, would be any different in Q3?

Tristan Gresser: Okay. All right. Maybe a last one, just sorry, on the treasury share program. Any reason to believe that the program, the pace that you had on the selling in Q2 would be any different in Q3?

Speaker #2: Yeah, I can take that question. And as you have seen from our cash position, we have, how to say, no pressure. We have quite a comfortable cash position.

Birgit Potrafki: Yeah, I can take that question. As you have seen from our cash position, we have, how to say, no pressure. We have quite some comfortable cash position. As we have said, we will sell our own shares by doing it in a way that is, how to say it, friendly for the value of the stakes, right? This, most likely, of course, will remain also our strategy since we are not depending on the cash inflow right now coming from that sale.

Speaker #2: So, as we have said, we will sell our own shares, but we will do it in a way that is, how to say, friendly for the value of the stakes, right?

Speaker #2: And this most likely, of course, will also remain our strategy, since we are not depending on the cash inflow right now coming from that sale.

Speaker #7: All right.

Tristan Gresser: All right. Perfect.

Tristan Gresser: All right.

Speaker #3: So we will observe the market and act according to market developments.

Gunnar Groebler: We will observe the market and act according to market developments.

Speaker #2: Yes.

Birgit Potrafki: Yeah.

Speaker #7: All right. Perfect. Thank you for answering all the questions. I appreciate it.

Tristan Gresser: All right. Perfect. Thank you for answering all the questions. Appreciate it.

Speaker #2: No problem.

Birgit Potrafki: No problem.

Speaker #3: Thank you, Tristan.

Gunnar Groebler: Thank you, Tristan.

Speaker #2: So we have another question from Dirk Schlamm from DZ Bank. The stage is yours. The next question comes from Dirk Schlamm from DZ Bank.

Operator: So we have another question from Dirk Schlam from DZ Bank. The stage is yours. The next question comes from Dirk Schlam from DZ Bank. You can speak now. Okay, maybe Dirk has some technical problems, but I saw he also sent the question in written form. Will you read it out by yourself, or should I read it out?

Speaker #2: You can speak now. Okay, maybe Dirk has some technical problems, but I saw he also sent the question in written form. Will you read it out yourself, or should I read it out?

Speaker #1: We cannot see it here right now.

Birgit Potrafki: We cannot see it here right now.

Speaker #3: No, we can see it here. So, if you could read it, please, then we can continue.

Gunnar Groebler: No, we can see it here. If you could read it, please, then we can continue.

Speaker #2: Yes. He has three questions. So the first question, at Q1, you said you plan to restart Blast Furnace C in autumn. Is that still the plan?

Operator: Yes. He has three questions. The first question, at Q1, you said you plan to restart blast furnace C in autumn. Is that still a plan given the still relatively weak demand environment and the full consolidation of HKM?

Speaker #2: Given the still relatively weak demand environment and the full consolidation of HKM.

Speaker #3: As said, we're looking at Q4 for the restart of blast furnace C, and we can do this at relatively short notice. So we will certainly observe the market and market conditions, but the way we read the market right now is that we restart in Q4.

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

Speaker #2: Okay. So the second one is: Are the current low water levels having any meaningful impact on your business? Is it mainly higher logistics costs, or are you also seeing an impact on production?

Operator: Okay. The second one is, are the current low water levels having any meaningful impact on your business? Is it mainly higher logistic costs, or are you also seeing an impact on production?

Speaker #3: Well, we don't see any impact on production yet. With regard to the lower water levels—if you look at Salzgitter, our main harbor is the Hamburg Harbor, which is not impacted by the low water levels.

Gunnar Groebler: Well, we do not see any impact on production yet with regard to the lower water levels. If you look at Salzgitter, our main harbor is the Hamburg Harbor, which is not impacted by the low water levels. So there is no change there. When it comes to HKM, we have taken precautious measures to deal with the low water levels on the River Rhine. We also have now transported coal via train from Rotterdam to HKM, and we have also increased stock at the HKM level to be able to run at production as planned. So far, no indication that we would have to change that going forward. So for Duisburg, water levels are still okay to be reached via vessel and deliver coal and ore. Of course, we have to make use of more vessels given that we cannot load them fully.

Speaker #3: So there's no change there. When it comes to HKM, we have taken precautionary measures to deal with the low water levels on the river Rhine. We have also now transported coal via train.

Speaker #3: From Rotterdam to HKM, and we have also increased stock at the HKM level to be able to run at production as planned. So far, there is no indication that we would have to change that going forward.

Speaker #3: So for Duisburg, water levels are still okay to be reached via vessel and deliver coal and ore. Of course, we have to sort of make use of more vessels, given that we can't load them fully.

Speaker #3: But that is something that our colleagues in Duisburg are not only very well aware of, but also trained in. So, no impact on production. And yes, of course, for HKM, this means an impact on logistic costs, but this is something we can also transfer to the customers of HKM, which is only partly Salzgitter. As I mentioned, we also have contracts with, for example, Just-In-Cope Steel.

Gunnar Groebler: That is something that our colleagues in Duisburg are very well not only aware of, but also trained in. So no impact on production. Yes, of course, for HKM, this means impact on logistic costs, but this is something we can also transfer to the customers of HKM, which is only partly Salzgitter. As I mentioned, we also have contracts with, for example, Thyssenkrupp Steel. So those logistic costs will end up there.

Speaker #3: So those logistic costs will end up there.

Speaker #2: Okay. So, question number three: on technology, order intake was weaker quarter-on-quarter and clearly below last year. How should we think about this development?

Operator: Okay, so question number three on technology. Order intake was weaker quarter on quarter and clearly below last year. How should we think about this development? Is it just normal quarterly volatility, or were there some larger orders in Q1 and Q2 last year? Thank you.

Speaker #2: Is it just normal quarterly volatility, or were there some larger orders in Q1 and Q2 last year? Thank you.

Speaker #3: Well, thank you, Dirk, for that question. Finally, we get technology to be mentioned—that's very nice. Now, look, of course, there are some seasonal effects in there when it comes to the last quarter.

Gunnar Groebler: Well, thank you, dear, for that question. Finally, we get technology to be mentioned. That is very nice. Look, of course, there are some seasonal effects in there, when it comes to the last quarter, and also some projects that were, as you mentioned in your questions, that were available in Q1, Q2 last year. So it is rather project nature than structure nature that we see here. So we are still, I would say, from our perspective, well on track when it comes to cages.

Speaker #3: And also some projects that were, as you mentioned in your questions, that were available in Q1 and Q2 last year. So it's rather project nature than structure nature.

Speaker #3: ...that we see here. So we're still, I would say, from our perspective, well on track when it comes to cages.

Speaker #2: Okay. And we have a few more written questions. Some of them have already been there for a longer time, so I don't know if maybe you already answered them, but I will read them out.

Operator: Okay. We have a few more written questions. Some of them are already there for a longer time, so I do not know if maybe you already answered them, but I will read them out. There are three questions from Alain Gabriel from Morgan Stanley. The first one is, how much would the electric arc furnace at HKM cost? How would the spending be phased, and do you think that you will be able to secure additional grants, subsidies for this investment?

Speaker #2: And there are three questions from Elaine Gabriel from Morgan Stanley. The first one is: How much would the electric arc furnace at HKM cost?

Speaker #2: How would the spending be phased? And do you think that you will be able to secure additional grants or subsidies for this investment?

Speaker #3: I think I mentioned all the points. So, the total investment is roughly €900 million gross. If you take the €200 million public funding, it's €700 million net.

Gunnar Groebler: I think I mentioned all the points. The total investment is roughly EUR 900 million gross. If you take the EUR 200 million public funding, it is EUR 700 million net. Hold on. Second, the phasing of the cost is, as usually, rather to the end of a project. When it comes to additional grants and subsidies, I also said that we have not planned for additional subsidies. Of course, if there are opportunities through programs on EU level or national level, we will certainly look into that.

Speaker #3: Hold on. So, second, the phasing of the cost is, as usual, rather towards the end of a project. And when it comes to additional grants and subsidies, I also said that we have not planned for additional subsidies. Of course, if there are opportunities through programs on the EU level or national level, we'll certainly look into that.

Speaker #2: Okay. So the next question: How much restructuring costs do you expect to incur at HKM? Over what time period would this be incurred, and how much contributions have you received from ThyssenKrupp and Valorec?

Operator: Okay. The next question, how much restructuring costs do you expect to incur at HKM? Over what time period would this be incurred, and how much contributions have you received from Thyssenkrupp and Vallourec?

Speaker #3: Ellen, we have talked about those issues. We will not disclose the contributions. And on the restructuring cost, predominantly it is personnel restructuring costs, and, as said, 3,000 employees today; 1,000 then at the end of 2029.

Gunnar Groebler: Ellen, we have talked about those issues. We will not disclose the contributions. On the restructuring costs, predominantly, it is personnel restructuring costs, and as said, 3,000 employees today, 1,000 then end of 2029. The cost that we have basically agreed upon with IG Metall and other unions and works council is in the same ballpark than other restructuring efforts we have seen in the steel industry. I would say rather slightly below that. But compare that to recent restructuring and you get a good picture of that.

Gunnar Groebler: *Ellen, we have talked about those issues. We will not disclose the contributions. On the restructuring costs, predominantly, it is personnel restructuring costs, and as said, 3,000 employees today, 1,000 then end of 2029. The cost that we have basically agreed upon with IG Metall and other unions and works council is in the same ballpark than other restructuring efforts we have seen in the steel industry. I would say rather slightly below that. But compare that to recent restructuring and you get a good picture of that.

Speaker #3: And the cost that we have basically agreed upon with IG Metall and as unions and works council is in the same ballpark as other restructuring efforts we have seen in the steel industry.

Speaker #3: I would say rather slightly below that, but compare that to recent restructuring, and you get a good picture of that.

Speaker #2: And then, last question from Elaine: Trading had a very strong result in Q3. How much of this performance was driven by windfall gains, and how much is from self-help?

Operator: The last question from Alain Gabriel. Trading had a very strong result in Q3. How much of this performance was driven by windfall gains and how much is from sell side? I am trying to get a sense of how sustainable these profits are.

Operator: The last question from Alain. Trading had a very strong result in Q3. How much of this performance was driven by windfall gains and how much is from sell side? I am trying to get a sense of how sustainable these profits are.

Speaker #2: I'm trying to get a sense of how sustainable these profits are.

Speaker #3: No, you mean Q3 last year, right? I think there were some—if you look at this year, in the first half of this year, you had roughly €10 million positive one-off effect, right, in the results.

Gunnar Groebler: Now I need to understand Q3 last year, you mean? I think there were some. If you look at this year, in H1 of this year, you had roughly EUR 10 million positive one-off effects, right, in the results. So those were certainly not sustainable through the year.

Speaker #3: So, those were certainly not sustainable throughout the year.

Speaker #2: No, no, I can also say that Q3 last year was not especially strong.

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

Speaker #3: I think he means Q2.

Gunnar Groebler: I think he means Q2.

Speaker #2: Q2.

Operator: Q2.

Speaker #3: Yeah, we're quite strong in development in Q2.

Gunnar Groebler: Yeah, we had quite a strong development in Q2.

Speaker #2: Q2 this year. Then I have talked about this strong contribution in Q2 this year, which was that our colleagues from the trade segment—yes, right—they pre-purchased quite some material.

Birgit Potrafki: Q2 this year. I have talked about this strong contribution Q2 this year, which was that our colleagues from the trade segment, that is right. They pre-purchased, acquired some material. They were making use of the good material prices, which they can quickly transform into revenues, especially also in the second quarter.

Speaker #2: They were making use of the good material prices, which they can transform into revenues, especially also in the second quarter. Yeah, okay. Then we have another question from Emmanuelle Bero from Reuters, but I think you already answered the question.

Birgit Potrafki: Yeah.

Operator: Okay. Then we have another question from Emmanuel Debero from Reuters, but I think you already answered the question. Can you estimate the effect of low Rhine water levels? We have a question from Stephan Zwinger from Privatinvestor. You mentioned in your prepared remarks that you pocketed EUR 50 million from the sale of your treasury stock. Are you willing to continue selling at current prices as your cost price is around EUR 63, or how would you like to proceed? Thanks.

Operator: Okay. Then we have another question from Emmanuel *Debero from Reuters, but I think you already answered the question. Can you estimate the effect of low Rhine water levels? We have a question from Stephan [Zwinger] from [inaudible]. You mentioned in your prepared remarks that you pocketed EUR 50 million from the sale of your treasury stock. Are you willing to continue selling at current prices as your cost price is around EUR 63, or how would you like to proceed? Thanks.

Speaker #2: Can you estimate the effect of low Rhine water levels? So then we have a question from Stefan Zwinger from Privatinvestor. You mentioned in your prepared remarks that you pocketed €50 million from the sale of your treasury stock.

Speaker #2: Are you willing to continue selling at current prices, as your cost price is around €63, or how would you like to proceed? Thanks.

Speaker #3: I think, Birgit, you mentioned that already—how the strategy looks when it comes to the treasury shares. So I think that's answered.

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

Speaker #2: Okay, so the last written question for now, from Jakob Schleider from IMC: Good afternoon. Your order book growth in steel production looks solid at 6%.

Operator: Okay. The last written question for now, from Jacob Schleider from IMC. Good afternoon. Your order book growth and steel production looks solid at 6% year-over-year. Can you comment on what you are seeing in your order books for steel production into the back end of the year? Is this reflective of current spot pricing?

Operator: Okay. The last written question for now, from Jacob *Schleider from IMC. Good afternoon. Your order book growth and steel production looks solid at 6% year-over-year. Can you comment on what you are seeing in your order books for steel production into the back end of the year? Is this reflective of current spot pricing?

Speaker #2: Why or why not? Can you comment on what you are seeing in your order books for steel production into the back end of the year?

Speaker #2: Is this reflective of current spot pricing?

Speaker #3: So what we see on the flat side is a stable, positive development in the order intake, also for Q3 and the remainder of this year so far.

Gunnar Groebler: What we see on the flat side is a stable, positive development on the order intake also for Q3, and the remainder of this year so far. We do not see any major changes to what we have seen in Q2, I would say. Slightly different on steel processing. As said, much more project-related business, there, certainly, we are further working on securing projects there. On the flat side, relatively stable development.

Speaker #3: So, we don't see any major changes from what we have seen in Q2, I would say. Slightly different on steel processing, as said.

Speaker #3: Much more project-related business. So, certainly, we are further working on securing projects there. On the flat side, relatively stable development.

Speaker #2: Okay. So, at the moment, there are no more questions. This will be the last opportunity to ask your question. You have to press star nine and the pound key on your telephone keypad.

Operator: Okay. At the moment, there are no more questions. This would be the last possibility to ask your question. You have to press star nine and pound key on your telephone keypad, or you can insert a question via the button down below. If there are no more questions coming, I would hand over to you again for some closing words.

Speaker #2: Or you can insert a question via the button down below. So, if there are no more questions coming, I would hand over to you again for some closing words.

Speaker #3: Well, thank you, then. Thank you for your questions and the discussion we had. I appreciate your interest in Salzgitter and in how we have performed to date.

Gunnar Groebler: Well, thank you then. Thank you for your questions and the discussion we had. Appreciate your interest into Salzgitter and into how we perform to date, but also what the plans are going forward. Hope we could clarify most of your questions and concerns. I understand that there were some concerning questions when it comes to HKM. I hope we could give you a bit of relief when it comes also to the cash out profile here. Again, thank you for your interest and see you soon again.

Speaker #3: But also, what the plans are going forward. Hope we could clarify most of your questions and concerns. I understand that there were some concerning questions when it comes to HKM.

Speaker #3: I hope we have been able to give you a bit of relief when it comes to the cash-out profile here. And again, thank you for your interest, and see you soon again.

Speaker #2: Yes, thank you also from my side.

Operator: Yes. Thank you also from my side.

Birgit Potrafki: Yes. Thank you also from my side.

Speaker #3: Thank you. Bye. Take good care. Bye-bye. Stay safe.

Gunnar Groebler: Thank you. Bye. Take good care. Bye bye. Stay safe.

Operator: Yeah.

Birgit Potrafki: Yeah.

Browse all earnings call transcripts

Q2 2026 Salzgitter AG Earnings Call

Request TrialDemo

Salzgitter

Earnings