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Ladies and gentlemen, welcome to the Aperam Second Quarter 2026 Results Conference Call. I'm Iruna, the Chorus Call operator. [Operator Instructions] The conference is being recorded. The conference must not be recorded for publication or broadcast.

At this time, it's my pleasure to hand over to Mr. Sud Sivaji, CEO. Please go ahead, sir.

Hi. Welcome, everyone, and thank you for joining our Q2 2026 conference call. Our presentation covering the Q2 performance was published earlier today in our morning podcast alongside our financial results and relevant regulatory disclosures.

We have always set up things this way, so we can jump straight into Q&A and spend more time addressing what's top of the mind for you. I know it was a busy day for a lot of you, and hopefully, our podcast time helps make that day a little bit more easier for you.

Together with my colleague, Nicolas Changeur, we are looking forward to the dialogue with you now. Let's start straight away with the Q&A. Operator?

[Operator Instructions]

The first question from the phone comes from Tristan Gresser with BNP Paribas.

For the slide in the presentation that shows the net margin improvement. I have some questions around that number. If you could clarify if that is related to Europe only, if it's the spread -- the EBITDA per tonne improvement or the raw material spread improvement for H1 year to date? And if it's also on a spot basis or is that already realized in the Q2 results. So a few clarification on that number, that would be great.

Sure, Tristan. Let me start right away by saying that because it is for the Europe safeguard impact primarily, so it is just the scope of Europe, right?

And to be clear for Aperam because you may be looking at other stainless companies which do not have a distribution division. It covers the consolidated scope of margin improvement over both our businesses, meaning our stainless mills, which is part of the Stainless & Electrical segment and the European part of the Distribution segment. So this is a market view really end to end, okay?

Second one, it is not a raw material improvement. It is a net margin improvement. So you can consider the equivalent of EBITDA margin improvement per tonne. This is the reason we have spoken about demand being a factor. This is the reason we have spoken about volumes overhang from last year from some of the domestic suppliers being a factor. This is the reason we have spoken about energy costs being a factor. And this is the reason we have spoken about the raw material prices in Asia being a factor.

So it is a net EBITDA margin improvement.

As we promised last year, Q3 2025, we always talk about net figures, clear figures, which translate into adjusted EBITDA. And so this is the EBITDA impact.

And the impact we have shown -- your third point was it wasn't H1 or YTD, It is a spot assessment of as we stand after the TRQ measures came into effect. That answers the fact that not a lot of this margin improvement was present in H1. And the last point, you asked me if this is spot and some Q2 results have been have -- have they gone in. I can tell you that much of the Q2 results, as you remember, was in the period where the importers could not bring in volumes. But at the same time, we did have volume overhang from last year. So these results are present to a very small extent in the Q2 results. So if you do a quarter-on-quarter bridge, you should see a very limited part from Q2.

Okay. That's very clear and helpful. And if that's spot, I don't want to be too precise, but we've seen scrap prices kind of decline heavily recently. Does that include also that those lower scrap prices?

So in the sense, we are looking at net margin. So it does include the scrap price effect. So yes, we cannot double count it at that point. You have to understand that there's two parts to the discussion. One is that scrap price is declining, yes, but there is also a valuation effect coming out of it. So this is just a market effect.

And the structural EUR 200 per tonne improvement you discussed previously and that probably we need to compare to that EUR 75 per tonne. Do you see in the current market conditions? And I know it's the summer low, so it might be a bit difficult to have visibility, but with what you're seeing on the market, getting to this EUR 200 per tonne, do you currently have the conditions to get there? Or it might require something else? And then if it requires something else, it it likely that it's a margin recovery also, well, jumps a little bit into 2027.

Look, first of all, you rightfully pointed out summer is not quite ideal quarter for these measures to come into being, right? That's clear. So we cannot make that measure. So we do not see it over the Q3 period. The other part is that if you look at it, this margin improvement, as we've shown in the curve comes with a certain increased demand, which is what will lead to, okay?

The other factor which could lead to is reduced supply or inventory overhang in Europe from domestic suppliers. So those are the 2 factors.

From the demand side, at this point in time till end of Q3, our outlook, we don't see a strong order book coming in from underlying demand. There might be some restocking because people have also imported in Q2. So -- but from the demand side, there is not a trigger built into our Q3 forecast.

In Q4, we always see Q4 as a strong quarter because Europe comes back from summer. So let's wait and see how that develops. At this point in time, because our order book is also significantly shorter compared to other stainless players because 70% of our volumes go through our own distribution business, where you know the length of the order book is within a month. So we profit from it, as you see there from our distribution segment. But from our view for Q4, it's a little too early for me to give you any kind of outlook on how I see that demand.

Maybe one last question also on -- sorry, it's the European stainless steel outlook. But for carbon steel, there is a view that come September, October. It won't be a lot of imports. The inventory buildup would have declined. And you can see a bit of a supply squeeze. I was wondering if you could see the same thing for stainless? My understanding is that the import decline has already kind of been absorbed in a way that demand might be a bit weaker.

So would have to -- would love to have your views on what could potentially happen in that September, October time frame.

So first of all, let me start with the last statements of yours, Tristan. And please do ask questions because I understand this is a complex issue, and there are a lot of factors at play. So first one is that demand has not weakened. It has just continued being weak. That's the first thing.

Now the point is that if we compare to carbon, and I cannot speak for carbon, in stainless, we had Q1 and Q2 already reduced imports. Right? And so that's the reason we do believe that, that momentum will continue, so to speak.

The primary difference for us, as a positive trigger if you look forward is that with the 120,000 tonnes of cold rolled import quarter-per-quarter, we are right at like our curve shows the margin of what would be considered as a demand improvement. Is that clear? So in the sense, I don't say that for us, it is the same situation as carbon steel, but for us, it takes less to trigger this discussion because of the quotas per quarter.

[Operator Instructions] The next question from the phone comes from Bastian Synagowitz with Deutsche Bank.

Some of them have already been answered, but maybe starting with one quick technical question. Can you just help us to reconcile why there was a higher valuation effect in stainless last year compared to 2026 now? I guess in the context of what nickel did, I would have thought that the tailwind was stronger this versus last year rather than the other way around? That's my first question.

So Bastian, I think I'll give the numbers to Nicolas in a minute, but you do have to remember that stainless went up and then came down again, number one -- sorry, raw material prices went up and came down, number one. Number two is that we also have a scrap division. So we have a quicker rotation. So any price decrease, and that's what Tristan was talking about, that reflects much more quicker in our P&L because we are just faster in turning things around.

Got you. Okay. So quicker translation rather than, I would say, like a stronger gradual realization.

Yes. So you would see that you can call it valuation or timing effects at Aperam, both at S&S. And Nicolas, you can speak to that and at recycling, because we have the longer value chain. On a paper, you would expect us to have higher valuation effects. But in reality, because the quicker turnaround, and you see that in the excellent net working capital release, these translation effects reflect immediately on -- in our P&L. .

So Q2 has had a lot of it. And that's the reason the higher price effect on one side is balanced by the lower effect. What was the valuation effect, Nicolas?

Yes. So on the valuation, in Q2, you can consider that we had a low double-digit impact in our Q2 results. We don't expect this effect to come in Q3. We are rather neutral, let's say, on Q3 quarter.

Understood. Great. And my next question is just on Alloys, and I see the performance fell back a little bit from last year when comparing and you highlight the energy sector, which I guess is a reasonably obvious situation. But would you still be confident enough to say that you'll be able to grow the EBITDA for the business compared to last year, I guess, given the tailwinds you're currently seeing in aerospace, in particular? And maybe also, is there like a very early color which you could give us just across the business maybe with regards to the fourth quarter, even though I know that's very early.

No, that's a fair question. So the point is that oil and gas has been the biggest delta as you've seen across the sector, right? So in this case, for us, oil and gas has been the delta to last year.

The improvement compared to last year, there is a technical effect, Bastian, just that we had about 1.5 months of additional Universal this year compared to last year, if you remember, annually speaking, in our P&L because we closed mid -- late January, right? So 1 month, we did not have it in our P&L. So that's one effect, which is a technical effect, which brings additional EBITDA when you compare year-on-year.

The other part is that if you look at it, -- in terms of aerospace, order books are looking good. Outlook is more positive. You've seen our message on Boeing restarting the fourth line. So -- this should translate into order books end of Q4 and the positive effect should come probably in Q1. There might be some early gains in Q4. But this is plus a smaller impact. The main factor, if you saw wanted compensating for the lack of oil and gas at Aperam compared to the rest of the industry, which is dependent on oil and gas is our innovation products. The ramp-up in our innovation products, we have spoken about electrical and electronics engineering. We've spoken about OLED screens. We've spoken about our Magnetec acquisition, and that's something which we will talk about in our Capital Markets Day as well the potential going forward. And that's something that is already giving us some help this year.

And if you would just look across also some of the other units, I guess you talked about Europe already, Brazil obviously has the usual seasonality, but particularly recycling really has a relatively good fourth quarter seasonality as well. I guess there's alloys as well, and there's service solutions as well. So is there any early color on those? Does the seasonal pattern in those units still hold?

Nothing which you can think of. Typically, there's like -- these are all short-term businesses because recycling renewables, these are all typically people order scrap a month or 1.5 months ahead, so to speak, except for aerospace recycling where the orders are longer. So -- and S&S, the same on the other side, right?

So we don't see anything besides the normal seasonality there.

The next question from the phone Maxime Kogge with ODDO.

Sorry, I missed the start of the call. So excuse me, the first question has already been answered, but this was about volume development in Q1 versus Q2. So they were actually slightly down while you had guided them to be higher. So what's been at stake there? Is it that imports ticked up a little bit in Q2 versus Q1 that demand was weaker than expected or that competitors were also perhaps more aggressive. We've heard Acerinox say actually that they were able to expand the capacity from Q1 to Q2. So any view there?

So look, let me walk through that. When we guided to higher volumes, we did expect a higher demand. I think the demand did not get weaker. It's just been weak stable underlying. Okay? That's the first point.

The second point is that as Aperam, we always choose value. So we would not just sell volumes to just for the sake of selling volumes, we prize margins above everything, as you see in our results. And as a result, we did look at it. And we did margin arbitrage where we ended up selling some of these volumes through third-party players, so that our own distribution business, which would have typically imported to compensate these volumes. Right?

Because our S&S business is an independent entity with its own value creation and with a significantly higher ROC. So fundamentally, this business we decided, and we have given that in the podcast, not to import also because of the safeguards. And at the underlying demand level, we did not see that arbitrage paying us off.

So the volumes did go, which would have gone typically through our S&S, through independent distributors. And that's why it looks compared to what we expected in Q1. It is something which we did not want to play the volume game, so to speak, when demand is weak and we wanted to concentrate on margins.

But against that backdrop, since volumes have been perhaps a bit weaker than expected and a bit beyond what they should be, then we might have expected perhaps the Q3 guidance will be a bit more supportive there. Because you're already from a low base.

No, absolutely not. Volumes demanded from the market have not been weaker. But we did not have volume overhang from 2025, whereas some domestic suppliers did have that volume overhang from 2025. So we chose there to focus on margins and supplying our customers who are the independent distributors. And that's the reason for that. But the market volumes have not been weaker or stronger compared to previous quarters.

Okay. That's clear. And second question is a general one on regulation. So are you happy with the latest details of the new TRQ system? I mean, the country ceilings. There's still a possibility to carry over unused quotas. So probably that's something that remains quite negative, plus there are some discussions around the Mertert Port concept. I don't know if it's still as crucial as it was a few months ago when we didn't know much more about the country ceilings And in relation to that, what's your take on the reform of the ETS scheme? Should not have a major impact on you directly, but there's, of course, the risk that CBAM gets watered down, which could be a bit negative for your competitiveness also. So any color there would be helpful.

So let me start with the ETS discussion and then give you a broader answer, so to speak, right? .

Fundamentally, for stainless, the ETS discussion does not make a huge impact. Your assessment is perfectly correct there. There might be slight discussions on the CBAM side, but it's not going to fundamentally change the competitive advantage of European players and especially Aperam. I'd be very clear.

The second topic is you're talking about TRQ and the carryover mechanism and everything, right? Let me answer here, not just for Aperam but also for stainless industry, how we look at it, right? which is important. In Europe, we are introducing a significant trade reform together with the colleagues from the other European steel companies and we are happy that they started.

We welcome this, and that is the reason we have also gone ahead and put our money where our mouth is and announced investments already in Q1 into Europe. Now we tend to compare this to the previous years where things have been difficult. And the European Commission has recognized this and introduced this TRQ. And obviously, we would like to and we are working with Commission to extend this also to downstream.

So we look at all our customers as well, and we understand the carryover mechanism or the different quota treatments between the FTA countries or the non-FTA. It's a way to fairly balance a fair trade flow and at the same time, keeping our downstream competitive. And we continue to work if there are any loopholes, but Aperam was profitable even before the trade measures were introduced. EUR 75 per tonne was the profitability of our European business even before. So I welcome this to strengthen our European steel community, but also we have to look at downstream.

And in this context, I'm happy where we are. Mertert Port is a key clause because it's an unfair trade flow. And we'll continue to work with the commission. You've seen that the commission has already reacted on the aluminum side. and looked at it as an anti-circumvention measure. And this gives us also promise that when we continue to work with this commission, this will also be solved. So that is how I look at it.

So in the broad scheme of things, as we have shown, the supply side unfair trade flow through TRQs has been addressed properly, and we now have to ensure that we use this to develop European industry. And in the broader scheme of things, for Aperam, EUR 75 per tonne profitability before and a targeted over the cycle, EUR 200 per tonne improvement, I think it is something which we will strive towards. We will continue to work our own performance as your leadership [indiscernible]. There are things to improve, but it is not something I'm going to sit and complain about.

Okay. And just the last one, this is about molybdenum, where prices have kept being very high actually and increasing further in recent months. So since this dual pricing system in Europe doesn't really work anymore, I would have thought that this would be negative for you. At the same time, you have this 316A range that allows to save molybdenum. So probably you're gaining market share there.

So any view on how this very high molybdenum prices affect you?

Yes. So first, on molybdenum, so we process scrap mainly and not pure raw material. Second, it is a very high price. So it's something which is much less imported than any other grade. So it is a grade in which we pass on all the costs, and we have also a profit.

And on top of it, we have also a strong offer such as, for example, the 316A for the customers that would like to have the benefits of the 316 with a more competitive raw material. So we are really happy and there is no problem there with molybdenum, and we have, of course, a strong innovation pipeline in order to improve the TCO there.

We have a follow-up question from Mr. Tristan Gresser with BNP. Please go ahead, sir.

Just wanted to ask you if you could elaborate on the restructuring charges and legal provisions you had in Europe, Brazil, I think it was EUR 35 million in Q2. What was that? And if we should think of any cash impact as well in, I don't know, Q3 or Q4 moving forward? That's my first follow-up. .

Yes. So on the restructuring charge, as you know, we have announced a positive EBITDA impact linked with the PIS/COFINS that we have gained in Brazil of EUR 59 million. I need to mention on top of it that we have positive interest of EUR 24 million, okay?

So you are looking at EUR 83 million positive on one side, which will be transformed in cash in the next 3 to 4 years. Versus this, in the EBITDA, it's true we have EUR 30 million provision. You can consider that 50% is on Europe restructuring with the exception of France, okay? And the other, it is litigation in the different countries around the world where we closed some subsidiaries such as in the U.S. And this impact will also be over the next, let's say, 2 to 3 years for the second 50% and 4 years for Europe.

So basically, you see overall, it is positive cash when you take the positive and the negative. .

Okay. And just a follow-up then on the tax rate, the effective tax rate for next year. Would you expect something? I know it's a bit early, but then given the -- would you expect an effective tax rate also to be a bit reduced?

Yes. Most probably, I expect the ETR to be slightly reduced. We are working on it and in particular in Brazil, I think it will be lower than in the past.

Okay. That's clear. And maybe a question on Brazil. If you could discuss a bit the market situation. And I know you flagged that you built some inventory levels because you had some projects in Q4. If you could just remind us what's going to be the impact from that project and where do you see the market at the moment?

So Tristan, this is a project which we announced last quarter, and it wasn't for Q4, it is for the first half of 2027. And since Brazil is a small market, we actually have to build these inventories over a year just to make sure that the market is not affected.

That's why we've started building these inventories right away, so that there is not a sudden impact on the market. And this is something which we published last time. It is a small, very low double-digit investment, and it increases the mix in our stainless and also the capacity of how much stainless we can supply because you know our philosophy. In Brazil, we are the only player in South America, and we are capable of producing from 800,000 to 900,000 tonnes, right, from upstream phase. And it has helped us every time we see an improvement in demand to marginally increase that demand. We produce about 350,000 to 400,000 tonnes of stainless in Brazil, and we see that the country continues to grow and the growth comes in increments, and that's the reason we are now investing this marginal amount to make sure our downstream keeps increasing with the country's demand. And that is the investment for next year, and we are starting to build inventories already this year. And we expect -- we said a high single-digit EBITDA impact, more or less.

Okay. And lastly, the Capital Market Day, I know it's in November, but can you give us maybe some hints or flavor on where you want to focus on then?

Yes. Tristan, I would suggest please come to the Capital Markets Day, but I can give you a sneak preview. Fundamentally, it's going to be on 3 topics, right? One is the fact that we have built a company, which is delivered, let's take Q2, for example, EUR 130 million EBITDA. This EUR 130 million EBITDA in the face of so many headwinds, there is some support from trade defense in Europe. But is fundamentally different from the EUR 130 million EBITDA, which would have been in 2019, 2020.

In 2019, 2020, stainless Europe would have been EUR 80 million to EUR 90 million of this -- or EUR 80 million of this EUR 130 million Today, it is exactly the other way around where all the other businesses, we have built, grown and acquired have gone on to perform this.

So we would like to present this transformation story and help all our investors understand that Aperam is not a one-trick pony, but we are actually building a company which is across the entire value chain. In one session where every division head comes and presents their plans and how they are executing this and how they compare to peers in their respective businesses.

Number two, is the fact that we are looking at our EBITDA target over the next 3 years to EUR 700 million to EUR 800 million, and there is a lot of moving parts in this. And we would like to translate this EBITDA target, which we have announced into executable actions and present that to ensure that our investors and you all understand what we plan to do and how we plan to do it. And the last one is Aperam as it expands beyond stainless Europe is looking at different markets and different end-user applications. We are talking about aerospace. We are talking about electrical and electronics engineering. We are talking about spacecraft. We're talking about defense. We are talking about growing infrastructure in countries like Brazil. And to look at this part of it and see where innovation is where the different end markets present to ourselves opportunities beyond even the 2028 time frame. This is the case for our Capital Markets Day.

The next question from the phone comes from Adahna Ekoku.

I've got one question remaining. So just on cash flow in the second half. On CapEx, you've only spent EUR 66 million of the EUR 200 million guidance. Is there anything in particular we should keep in mind about phasing of spending in Q3 and Q4?

And what working capital movement is currently assumed in the flat net debt guidance to Q3?

No. We will spend our EUR 200 million overall over the year. So you can basically count that we'll achieve it.

Okay. But is that kind of evenly split between the 2 quarters or kind of properly back end loaded in Q4?

Most probably, there will be more in Q4.

Okay. Perfect. And any comments on working capital? .

On working capital, we will achieve our deleveraging. So we are on track with what we have promised. So you can expect improvement in the working capital by the end of the year. And if you look at where we stand today. We are already at the level of the net debt that we have reached almost end of last year. So everything is going well there.

Gentlemen, that was the last question from the phone.

Thank you so much for attending and participating in our Q2 call today, and thanks for all the questions, and I would also thank all of you specifically on today because it's been a busy day as we have heard from a lot of you. We try improving how we present information to you ahead of time. So please reach out to us in case you would like that changed or adapted.

Now on our Q3 outlook and our Q2 results, we've had an excellent Q2 in the face of headwinds. And on Q3, if you look at it, we are guiding on an outlook based on seasonality. 2026 is already proving to be a defining year in Aperam's transformation. We thank you for your continued support as we build this momentum and I'm excited about the journey ahead.

As always, our Investor Relations team is available to connect with you and address any further inquiries. Please do not hesitate to reach out to us. For those of you in the Northern Hemisphere, have a fantastic summer, and we hope to talk to you soon.

Thank you. Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.

Hi. Good morning, and a warm welcome to Aperam's Q2 Podcast. My name is Sud Sivaji, and I am Aperam's CEO and I really hope you are having a good start to the day.

Today, together with our Chief Financial Officer, Nicolas Changeur, we are happy to explain our second quarter performance, give our view on the current markets, an update on Aperam's transformation and of course, give our outlook on Q3.

To echo how I concluded our last call, we are building Aperam into a diversified, high-value materials player, despite the current global landscape presenting unexpected challenges. I told you then that against these headwinds, our confidence in a strong 2026 would carry into Q2, and we delivered. Not only did our momentum continue, in fact, Q2 2026 has officially delivered our best quarterly performance in 4 years.

As is our standard practice, we will host the conference call with the Q&A later today. It will take place, as always, at 2:00 p.m. Central European Summer Time. We look forward to addressing your questions then. The registration link for the call is available on our website and can also be found on the penultimate slide of this podcast presentation.

Aperam is providing the following information as part of its earnings release documentation. This material supports our quarterly financial reporting and where applicable, our disclosure of regulated information.

Please take note of the disclaimer on Page 2.

Moving to Page 3. I'm pleased to share our Q2 2026 key figures, making our best single quarter performance in 4 years. EBITDA reached EUR 159 million, reflecting a 77% sequential increase, bolstered by strong performance in all segments and positive tax effects in Brazil. Adjusted EBITDA surged by 44% to EUR 130 million, driven by strong performance in all our businesses, with the Stainless Steel and Recycling segments returning to strength.

Our strategic initiatives are gaining momentum as well. Leadership Journey Phase 6 is ramping up strongly, delivering EUR 20 million in quarterly gains and bringing our total to EUR 38 million, keeping us firmly on track towards our EUR 150 million target by 2028.

Finally, with capital expenditure disciplined at EUR 33 million, our strong cash generation reinforces our commitment to a robust progressive dividend policy, paying out EUR 36 million to shareholders each single quarter.

On cash generation and balance sheet strength, the results speak for themselves. Cash generation and return on invested capital are core principles on how we run Aperam, and the second quarter was no exception. We turned our free cash flow around from negative EUR 44 million in Q1 to a positive EUR 106 million this quarter despite rising raw material prices. Through stronger earnings and disciplined working capital management, we reduced our net financial debt further by EUR 64 million down to EUR 993 million. Our deleveraging is well and truly on course, establishing a solid foundation for our progressive dividend policy.

Moving to the next slide to talk about our markets and key topics that are on top of your mind. One of the primary reasons we are evolving into a diversified value chain is not just to shield ourselves from shocks, but to seize opportunities from across the world and a wider range of end markets. The conflicts near the Strait of Hormuz and the resulting energy shock have brought new inflationary pressures, delaying expected interest rate cuts from central banks. The elevated energy costs did create headwinds, but our strategic diversification proved its resilience. While energy remains a volatile end market, regionalization of aerospace and defense and demand for infrastructure on electricity are key trends that are new opportunities for us.

Looking at our key business drivers on this slide, the overarching story of the quarter is our operational momentum offsetting macro headwinds. On the growth side, Europe and Brazil delivered strong operational lift driven by favorable pricing and solid post-holiday momentum, but underlying demand remained weak.

The recycling segment remains a clear highlight, with strength across aerospace and stainless recycling globally. In alloys, broad-based progress continues across most sub-segments and Universal integration is fully on track. While oil and gas remains weak, we view this as a timing issue before recovery kicks in. However, aerospace has a strong outlook and visible signs of recovery.

On the regulatory front, EU imports came in well below last year's levels before the safeguards were in place as of 1st of July, offering a stable trade defense backdrop. Finally, energy volatility remains our main headwind, now impacting quarterly EBITDA in a low double-digit million amount.

Looking at our EBITDA breakdown in the second quarter on the right. There is a lot of discussion about the stainless environment in Europe, which we are happy about, and I will again give you an update today. Stainless & Electrical indeed delivered a strong performance from grading from EUR 35 million EBITDA in Q1 to EUR 59 million in Q2. But what is notable? It represents only 42% of our total EBITDA pie.

In the past, this business carried the vast majority of our earnings. Today, the remaining 58% of our earnings power is generated by the other segments. Every single segment is a meaningful contributor to our bottom line. The key takeaway is simple. We are no longer tied to the fate of a single market or segment. Aperam has generated value without exceptions across every business in the past 3 years with no demand support. And looking forward, even the slightest demand momentum in Europe will serve as a significant upside in the current regulatory environment.

Let us discuss this a bit more detail in the next slide. The new post TRQ system was announced with country-specific quotas for the 1st of July 2026. This system replaces the past system, with the most evident change being the reduction in the amount of quotas for cold-rolled stainless from 220 kilotons to 124 kilotons per quarter. This is a significant decrease and by itself constitutes a structural improvement against unfair trade flows of stainless into Europe. There is a similar decrease for hot-rolled stainless as well. But the other crucial detail is that the new quotas have been defined by the commission at country level with specific players like China and Taiwan, who have sent significant imports into Europe in the past, receiving a lower quota than countries which have free trade agreements with Europe.

While this was done with a view on our trade agreements, it also presents a curve that reflects the fact that unfair trade flows are treated correctly as demand increases and as imports exceed the quota level of 124 kilotons per quarter for cold-rolled stainless, for example, the 50% duty comes into effect at the most expensive imported product.

For H1 2026, CBAM was effective, but the real values will be audited only next year and the new TRQ system was not yet in place. But shipping times and lower demand ensured that we experienced low imports at nearly post-TRQ levels already in H1. Now there are 4 additional factors at play: a significant overhang of volumes from Q4 2025 for some domestic players in Europe, real utilization being 75% to 80% across Europe with low underlying demand, increasing raw material prices due to Indonesian nickel quota announcements. And lastly, the energy cost headwind from the Iran crisis. Despite these factors, I can update that the margin improvement stands currently at about EUR 75 per tonne.

I would like to remind you of the EUR 200 per tonne structural improvement estimate over the cycle that we communicated in Q3 2025. Now, 3 of these 4 factors are one-offs that should roll back or affect all global players equally and the other one is the low point in the demand cycle. Especially with all these headwinds, this margin improvement is proof of structural change and welcome news for our stainless business in Europe, which was profitable even before these trade measures. But as discussed earlier, while all eyes are on European stainless steel, Aperam continues to deliver on its transformation, capturing value in Europe and beyond.

And to unpack the performance across our 4 segments, I will now hand it over to our CFO. Nicolas, the floor is yours.

Bonjour to everyone. I'm very pleased now to walk you through the performance of Aperam's 4 business segments in the second quarter as well as our outlook for the third quarter.

Looking at the figures, Recycling & Renewables' adjusted EBITDA came in strong at EUR 32 million, representing a 39% increase quarter-on-quarter. This strong performance was primarily driven by higher scrap prices and favorable valuation effects. On a year-on-year basis, we continue to see positive development compared to Q2 2025, supported by increased volumes and pricing.

Zooming into the market dynamics within scrap recycling, global demand for stainless steel scrap is surging, thanks to a focus on carbon footprint and recycling, driving solid overall market strength. Our operations across the U.S., APAC and Europe maintained high-level volumes, while performance was further aided by favorable valuation effects.

I would like to remind you that we are the largest recycler of specialty aerospace alloys in the world. And for us, crucially, the destocking phase in the aerospace alloys recycling sector is winding down, setting the stage for an order book recovery moving forward.

Turning to our BioEnergia business in Brazil. We saw regular demand for charcoal during the quarter. Seedling and sales are ramping up into H2 and overall fundamentals remain steady. Looking ahead into the third quarter, EBITDA is expected to be lower compared to Q2. This expected sequential change is primarily driven by seasonal effects typical for the quarter for the recycling part of the business in the Northern Hemisphere as well as the absence of the valuation support we enjoyed in Q2.

Turning to the next slide. The figures for Stainless & Electrical Steel segment show significant sequential improvement. Adjusted EBITDA for Q2 reached EUR 59 million, a 69% increase quarter-on-quarter. This quarter-on-quarter jump was supported by valuation effects and modest price recovery. On a year-on-year basis, adjusted EBITDA was slightly lower, mainly due to higher positive valuation effects present in Q2 2025.

PIS/COFINS tax credits related to prior periods in Brazil have been recognized in the consolidated statement of operation for a total amount of EUR 83 million, of which EUR 59 million in EBITDA as exceptional items and EUR 24 million in financing costs. These credits are expected to be offset against cash taxes over the next 4 years, resulting in additional cash inflows.

Our shipment remained stable compared to the previous quarter as volume increase in Europe offset inventory builds in Brazil. In Europe, we strategically reallocated supply toward independent distributors to maximize value. Meanwhile, in Brazil, we built in inventory levels ahead of the upcoming debottlenecking project announced last quarter, which will expand capacity by 5% to support growing domestic demand for high-value stainless.

Looking at our end markets. Construction; in Europe, recovery is still pending. In Brazil, we saw an uptick in demand following the previous quarter seasonal low. Consumer goods; Europe experienced a slight softening in demand, whereas Brazil saw an acceleration in buyer interest post-holidays. Automotive and transport, the slowdown in European car production continues. In Brazil, demand remains resilient, supported by government measures.

One is Move Brazil. It provides low interest, long-term financing to help professional drivers such as rideshare drivers, cabbies and delivery workers. They can upgrade their vehicles to newer, safer and more eco-friendly models.

Food, health and catering; in Europe, static demand has effectively plateaued over the past few quarters. Industry, energy and chemical; the European energy sector is currently awaiting a solution for the Iran war, while Brazil maintained solid activity despite some postponed projects.

Looking at our outlook for the third quarter, development in Europe is experiencing, as always, a seasonal slowdown due to the summer holidays. Performance in Brazil remains solid. While the seasonal impact in Europe might result in lower overall activity, group EBITDA for this segment in Q3 is expected to remain stable.

Moving to the next slide, Alloys & Specialties, the segment where high-performance materials serve the world's most demanding industries. Performance in Q2 remained solid, with adjusted EBITDA reaching EUR 29 million, up 7% quarter-on-quarter. This improvement was driven by better volumes and strong mix effects, where we see increased contribution from innovation in electrical and electronics. On a year-on-year basis, adjusted EBITDA was lower compared to Q2 2025 due to a weaker oil and gas market.

Looking at our key end markets. Aerospace; the aerospace order book is showing a strong recovery for year-end, with first signs of structural recovery as supply chain normalization gets underway, both at Boeing and Airbus. Boeing transitioned its baseline production from 42 to 47 planes per month in late Q2, and they have announced that they have activated a fourth 737 production line. The North Line in Everett, Washington is critical to Boeing's plans to ramp up to 52 aircraft per month.

Energy and Chemical; LNG demand remains consistently high. While the oil and gas sector continues to see subdued demand, we expect positive momentum post Iran war. Demand for chemicals remains below historical average.

Automotive and electric and electronics; we continue to see strong demand in displays and magnetics. While overall vehicle production is flat, the ongoing shift to electric vehicles is creating additional demand for our solutions.

Looking ahead to the third quarter, while demand fundamentals remain robust, particularly in aerospace, third quarter results will temporarily reflect our scheduled annual plant maintenance during the European summer holiday period. This planned downtime ensures long-term operational reliability in a business running at full capacity. We anticipate a strong rebound in production and an expanding order book as we enter the fourth quarter, especially in aerospace.

Turning to the next slide with our fourth segment. Let's dive into Services & Solutions, our direct link to the end market and our customer base. As a reminder, this is a business that is directly dependent on underlying demand. Performance in Q2 was very solid, with adjusted EBITDA reaching EUR 21 million, a 5% increase quarter-on-quarter despite slightly lower volumes due to weaker underlying demand. This higher quarter-on-quarter result confirms our strong segment performance, making our best quarter since Q3 2022. On a year-on-year basis, adjusted EBITDA was significantly higher compared to Q2 2025, driven by partial price recovery and positive valuation effects.

Looking at the market environment for distribution. Pricing; spot prices were driven higher by raw material price increases. Inventory; we saw distributor competitors restocking take place during the second quarter before the July 1 deadline for the new quotas.

Demand; there are still no signs of a broader underlying market recovery visible. Looking ahead to our outlook for the third quarter, Q3 EBITDA is expected to be lower than in Q2, primarily reflecting lower seasonal volumes typical for the summer period.

Moving to the next slide. While we have discussed how market dynamics and trade defense mechanisms continue to support our financial results, I want to focus now on our internal lever for performance; our self-help initiatives. We are actively progressing with Phase 6 of the leadership journey, spanning 2026 through 2028. This structured self-help framework is engineered to safeguard our industry-leading value creation, keeping our operations competitive and cash accretive even through the lowest point of the market cycle.

This strategic phase resets on 3 foundation pillars; One Aperam Synergies, establishing the industry's most integrated supply chain, where shared efficiency ensures our operations stay resilient and cash positive across all market conditions. Circularity; positioning Aperam as the sole industry player, treating circularity strictly as a value driver rather than a cost burden, scaling sustainable operations into clear, tangible financial returns. Innovation; driving product differentiation from bio-oil to high-tech OLED screens, to capture market share and unlock value across our entire portfolio throughout the economic cycle.

We are off to a very strong start with Leadership Journey Phase 6. In the second quarter alone, we secured EUR 20 million in gains, bringing our first half total to EUR 38 million to our overall EUR 150 million target for the 3 years, 2026-2028. This momentum secures our structural growth path early on, maintaining both profitability and operational competitiveness.

Looking at our key operating segments. These gains are well balanced across the business. Recycling & Renewables; gains were driven by enhanced raw material efficiency and deeper operational synergies with Stainless Europe.

Stainless & Electrical Steel; we captured significant purchasing gains in Brazil while maintaining strict cost control and delivering stronger productivity performance across Europe. Alloys & Specialties; progress was underpinned by the ongoing integration of Universal and upstream synergy capture alongside Stainless Europe. Services & Solutions; results benefited from accelerated digitalization initiatives and targeted cost-reduction actions.

The leadership journey remains the cornerstone of our long-term strategy. By combining circular economics, innovation and end-to-end integration, we are positioning Aperam to navigate market cycles effectively and deliver consistent structural returns.

Turning to the next slide. Last but not least from my side today. As last quarter, I want to highlight key facets of our transformation, which are part of our leadership journey, Phase 6. We get asked about the potential of the leadership journey continuing as the next phase. The answer is rooted in our focus on detail in realizing value across each of our businesses.

First, within our recycling segment, Aperam Recycling has launched the Titanium Center of Excellence in Frankfort, New York state, located right in the heart of Central New York's vibrant Mohawk Valley. This facility gives us a strong footprint to directly serve the booming U.S. aerospace and defense market. By leveraging optimized logistics and proprietary automation, this center accelerates turnaround times, solidifying our position as a leading circular economy provider and the key supplier to titanium smelters. It gives us a strong, high-performance foothold to capture continuous growth in the aerospace sector, helping us even more to participate in the growth of the aerospace industry, especially in the United States.

Secondly, within stainless steel, we are introducing our new duplex grade for pulp and paper, targeted at pulp and paper applications in Brazil. It is a high-performance duplex grade offering high strength and superior stress-corrosion resistance. Strategically, it provides a stronger and more cost-effective alternative to Duplex 2304, while also serving as an advantageous replacement for the standard steel grade 304. Designed specifically for critical equipment like digestors, tanks and piping, this product positions us to capture expanding demand as Brazil's pulp and paper industry continues to grow.

Thirdly, in our renewables business in Brazil, we are advancing our sustainability footprint through a major water sustainability project in the Jequitinhonha Valley. In a strategic partnership with the State Government of Minas Gerais, we are treating and reusing water from sanitary effluents. This provides 35 liters per second of treated effluent for reuse. In total, 1.1 million cubic meters of water per year.

This initiative guarantees a continuous, reliable water supply for our forestry operations at Aperam BioEnergia and demonstrates significant progress in sustainability, water solidarity and productivity. On sustainability; by reducing water collection from natural resources and transforming previously discarded waste into an essential resource for operations. On water solidarity; by reducing the discharge of sanitary effluents into the water resources used by the communities. On productivity; by reducing costs and securing water supply for Aperam's forestry operations.

In summary, one project accelerates our recycling capabilities in the very attractive U.S. aerospace market. Another delivers advanced, value-added steel solutions tailored to industrial growth in Brazil and the third strengthens our sustainable operations in BioEnergia by turning waste water into an essential resource. These developments showcase our transformation from our European core into realizing the full value of our businesses across the materials value chain. Together, they demonstrate how we continue to build a stronger, more resilient Aperam. One; high-value, strategic brick at a time.

Now, I will hand it over to Sud. He will give us the outlook for the third quarter.

Turning to our guidance. Following the strong momentum in Q2, let's talk about what we expect as we enter the third quarter.

In H1, we delivered what we promised. We targeted a run rate of EUR 100 million quarterly in H1 2026 and achieved even more. As always, this third quarter is the seasonal weakest quarter in Europe. And in total, we foresee an adjusted EBITDA in Q3 lower compared to Q2. Despite this, we expect that Q3 EBITDA will be slightly above a strong Q1 2026 as Brazil continues to see seasonally strong activity, partially offsetting lower seasonal demand in Europe across stainless, recycling and Services & Solutions, the scheduled annual maintenance in alloys and no additional support from valuation effects.

Net financial debt is expected to remain flat at quarter end, and we remain firmly on track with our deleveraging target to keep year-end net debt below 2025 levels. In an environment characterized by seasonal summer lulls and ongoing macroeconomic complexity, Aperam continues to deliver based on cost leadership, structural self-help and balance sheet discipline. We have the right road map, strong structural safeguard and a clear path towards our long-term goals.

As our leadership journey ramps up and the trade defense measures start translating in a normalized demand environment going forward, we remain confident in our progress towards our target of EUR 700 million to EUR 800 million. Q2 clearly shows that even with macro headwinds, our philosophy of self-help and our practice of converting performance into cash will translate into shareholder value.

Looking ahead, after the summer break, we will be available for meetings to discuss our ongoing strategic execution and market dynamics in detail. Starting at the end of August, Nicolas, the Investor Relations team and I will be hitting the road for an extensive series of conferences and roadshows spanning major financial hubs across Europe and North America. Our upcoming calendar reflects our commitment to face-to-face dialogue in as many places as possible. We are eager to catch up with you in person. So, please reach out to the IR team to set up a discussion or share any questions you may have. We look forward to connecting with you soon.

And finally, as the saying goes, saving the best for last. I'd like to cordially invite all of you to our Aperam Capital Markets Day in 2026. It will take place on Wednesday, the 18th of November 2026 in Paris. During the event, our leadership from all our business segments will present our key growth drivers and detail the execution strategies designed to support our group targets.

It will be a fantastic opportunity to deep dive into Aperam's transformation. Expect more details to understand our markets and how we plan to reach our target of EUR 700 million to EUR 800 million in EBITDA until 2028. If you want to register, please send an e-mail to [email protected]. We look forward to seeing all of you in Paris.

Thank you very much for listening to Aperam's Q2 management podcast. We wish you a pleasant day and look forward to your questions in our conference call this afternoon at 2:00 p.m. Central European Time.

Ladies and gentlemen, welcome to the Aperam First Quarter 2026 Results Conference Call. I'm Vicki, the Chorus Call operator. [Operator Instructions] The conference is being recorded. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Sud Sivaji, CEO. Please go ahead.

Hi. Good afternoon. Thank you very much for joining our conference call today. All our comments were contained in the podcast that we published this morning, which supports our quarterly financial reporting and where applicable, our disclosure of regulated information. We hope we can also save more time so you can ask pertinent questions during this call.

Together with my colleague, Nicolas Changeur, I'm looking forward to this dialogue with you. So, let's start right away with the Q&A. Operator, can you please open the lines?

[Operator Instructions] We will take the first question from Tristan Gresser with BNP Paribas.

The first one is on Stainless Europe. We've seen U.S. stainless price rising close to EUR 600 per tonne since Q4. Scrap prices are also up, maybe EUR 400 per tonne. So, it looks like you have a solid spread expansion year-to-date. But in your guidance, I have been surprised you do not mention any price cost effects into Q2. So maybe can you discuss the other elements of your cost base and if we should expect a positive cost effect in Q2 for Stainless & Electrical?

Tristan, let me start with and then Nicolas can answer the spread question, right? So, the one thing you do see is obviously these 2 factors, but the second thing is obviously what we have clearly guided to, which is also valuation effects, right? You have to understand that we do talk about the root cause of this rather than the effects. And the root cause we have clearly mentioned in our podcast and everywhere else is the utilization improvement in the European business, right? So, we clearly guide to that. And in the past, we have always been very explicit on the fact what happens when utilization goes up. And so, we thought it was obvious, but Nicolas, go ahead.

Tristan, so first, of course, price and raw material are increasing. But as you know, we benefit especially from our Service & Solutions division in which we have a short order book, and we have -- we are able to get benefits in terms of price versus cost in our account. The second point, maybe I can tell you, is about the valuation. We expect a low double-digit valuation effect in Q2, and we have the same in Q1.

Second question is a bit on the market situation, again, in Europe. I think you talked pretty positively about the import situation and also inventories being low and some restocking actually taking place. Do you see any risk of an import surge before the July quota implementation? And also, I think you mentioned short-term demand effects for your distribution arm. Just wanted to clarify that because I would have thought that market share gains versus imports would be more structural? Or is that just a near-term restocking?

There's two equations, right, Tristan. One is the fact that we do have to keep in mind that we cannot treat Q1 isolated. Remember, the above-average surge in imports in Q4 also trying to avoid CBAM, which came in, right? So, and this stock is in the inventory. And the second thing is we also are very clear that there is no underlying demand improvement, and that's the reason we see this short-term demand improvement in our distribution business. That's -- we typically tend to qualify structural demand as an improvement in underlying demand. However, the imports being reduced, and we have seen the Q1 run rates have increased more opportunities for supply for us.

So, yes there is a clear increase in utilization at the stainless mills in Europe because of this improvement in supply opportunities just because imports are already at the run rate post-safeguard.

And your first question about is there any risk in the next 2.5 months? Let's say, traditionally, supply chain-wise, we have needed at least 3.5 to 4 months for imports to come from Asia to Europe. And since we are within that time frame, I think we can say with some comfort that additional imports during this time frame, we do not see much of that happening.

The next question is from Adahna Ekoku, Morgan Stanley.

I have got 2 on Alloys. So, first, on the whole business, we saw a quarter-over-quarter margin improvement. Should we expect another step-up here from this kind of 10% level looking ahead given the maintenance costs in Q1? Or is there anything on the mix to flag?

And second, on Universal, I think you guided previously that the year 1 synergies should start showing from 2026. I believe these are EUR 9 million for this year. So, could you just give a quick update on how this is progressing so far?

So, on quarter-on-quarter, I think we are at the mix which we expect for H1, Adahna. So, for Q2, there should not be a significant mix difference, so to speak. The maintenance charges falling away may have, I would say, a very low single-digit million-euro impact, but that's not going to be material in the Aperam scheme of things for Alloys from Q1 to Q2. The margin improvement you see from Q4 to Q1 indeed is because of mix improving into Q1. But going forward, that should be the mix until we see a Boeing structural parts demand pick up, which we expect probably towards the second half of this year at this point in time.

On your second question, which was about synergies, yes, they are ramping up as planned, and that is included in our guidance. And the way we look at it is that we have guided to $30 million and about this EUR 9 million pickup that should happen through the course of this year.

The next question from Maxime Kogge, ODDO BHF.

So, first question is on Recycling & Renewables. I was wondering how sensitive the division was to higher scrap prices. Is the division set mostly to gain from higher volumes in the quarters ahead? Or is it also exposed to higher prices because in my understanding, it was set to generate a relatively fixed EBITDA per tonne irrespective of market conditions? But any color on these topics would be helpful.

So, Maxime, there's 2 parts to Recycling & Renewables. You are absolutely right. Your memory serves you right. It is a fixed margin. However, there is a volume effect. And when scrap demand goes up, that volume effect plays in. And secondly, there's the valuation effect because most of our net debt is purely the net working capital of recycling. So, there is an impact on that as well. So -- and today in the podcast, we have been very clear. I think Nicolas has presented that recycling is an improvement between valuation effect and the volume effect.

Yes, exactly. And on top, we see that all the actions we are doing to improve structurally also our scrapyard is working. And you see that in recycling benefits and also in the successful start of our leadership journey.

Okay. The second question is on working cap. So, this was -- there was a strong performance in that respect in Q1 despite the seasonal buildup. The guidance for Q2 looks also encouraging. So, I'm wondering if there could be a scenario where this year in 2026, you have a strong increase in volumes in prices and at the same time, contained working cap outflow unlike previous upcycles, and that would, of course, be very positive to free cash flow.

Yes. So, you remember that we have significantly improved our working capital last year, and this is a structural improvement based on all the synergies that we have and that we have developed inside our value chain. So, the seasonal -- slight seasonal increase that you see in our working capital is a reflect of that. And if your question is -- on the deleverage, I can very much confirm to you that we are on track, and we will deliver the deleveraging as we have guided.

Okay. And just the last one is on the guidance. So now you're guiding to EUR 700 million to EUR 800 million already for 2028. So, can you clarify whether that includes already the benefits from the CapEx initiatives that you announced in the latest quarterly results? I think there are some initiatives of ongoing ramping up on Recycling & Renewables by the end of the decade. And in other words, could we expect a further step-up when those initiatives kick in after 2028 to perhaps close to EUR 1 billion or above?

Yes. So Max, and this is an important question because we always invest for the next cycle. And this is something which I want to make very clear, and we will talk about this in our roadshows and probably even in fall when we get together to talk about our performance. Aperam always invests for the next cycle. What that means is that all the Leadership Journey 6 gains, which we have planned and announced to the market, the EUR 150 million, a significant part of that, close to 90% of that is coming from investments made in the previous cycle. So, the investments we are currently announcing, the ones we announced last quarter and the ones we are announcing right now, except when specifically mentioned, and Nicolas has presented this morning 2 short-term investments, which may come down on board much shorter. It's always for the next cycle.

So, like-for-like, they should lift the EBITDA of Aperam. You know our principle, the Leadership Journey gains are like-for-like, same macro environment, same raw material prices, and improvement to EBITDA, above this announced EUR 700 million to EUR 800 million EBITDA figure beyond '28, yes.

[Operator Instructions] The next question from Bastian Synagowitz, DB.

I've got a couple. Maybe, firstly, coming back on Tristan's question and particularly the spread side of things here. Could you let us know whether you think that we are now on track towards mid-cycle spreads in Europe already? And is there any time frame which you think -- within which you think we will hit those? That would be my first question.

Yes. So today, what we see is that we have achieved, let's say, 20% to 25% of what we have guided in terms of the potential margin improvement in Europe. And we spoke about EUR 200 per tonne spread if you remember. So, 20% to 25% is achieved. So, there is still some potential.

Understood. Okay. And then next one would be on the situation around the Indonesian mining regulation and maybe also sulfuric acid. We've seen nickel price going up, Chinese prices are going up. So, what does this mean for you in both Stainless and the Alloys business?

So, for the Alloys business, I'll start directly because there we have all our nickel requirements at pure nickel, so to speak, and even purer than battery nickel, if I can say that. There, we are completely hedged. All these contracts are based on LME. So, in that case, it is a pass-through for us in terms of costs. And these are high-value materials. We are talking about average revenue or average cost of 1 tonne of such materials above $50,000 for 1 tonne, so 20x the price of stainless steel, right?

When it comes to Stainless, short term, there is a limited impact because we are talking about scrap and that is raw material prices. Midterm, there is an impact because the raw material prices of our competitors go up, right, which is Asian competitors who do look at all this Indonesian raw material, either in the form of slabs or NPI as their raw material, and that has an impact. But if this continues, obviously, it lifts up also the scrap prices everywhere. So, it is for us -- a shift, a delta shift. Now we have to monitor this carefully because the Indonesian government obviously is doing this based on quota system and based on needs. But underlying for us, at this point in time, we do not see any paucity or scarcity of nickel.

Okay. Understood. Got you. Then very last question on volumes. Could you maybe give us some guidance on the quantum of the volume step-up, which you expect in the second quarter, even if just a range?

Tristan, I think -- sorry, Bastian, I think we have our S&S business, as Nicolas has explained, and that's where we always see the upside in short-term improvements. And there, the order books, as you know, are 1 to 1.5 months. So, we cannot give a volume guidance directly on the impact for the entire European supply chain. What we can see is that fundamentally, we said once the safeguards are implemented, depending on the player inside Europe, there should be a 7% to 10% utilization lift. So, we are well on our way to that. This H2, right? So that's what we said.

The next question from Krishan Agarwal, Citigroup.

My question is sort of a follow-up from what Bastian was asking on the volume uplift and sort of partially answered that. But if I were to run some numbers around it, like potential sort of a 1 million tonne of Stainless volume improvement purely from the lower imports into Europe. So how much of the market share gain you probably are looking at over the next, say, 2 years and not on a quarterly basis?

So, at this point in time, Krishan, firstly, we said the 17% reduction net-net, so to speak, for stainless. If you took a year, let's say, average of the years before, about 900,000 tonnes, 920,000 tonnes of imports, hot rolled and cold rolled combined, there would be a reduction of 300,000 to 400,000 tonnes is what we said, just to be very clear, and we are not talking 1 million tonnes.

And after that, there is the market share of every participant. And our base case is that every participant takes their market share. And there's enough capacity in European Union because we all operate electric arc furnaces. And in the past years, we have suffered close to a 20% utilization drop because of the poor demand. So, we can all absorb these volumes. And that's the reason I said, depending on where you are, what is your product base, there's a 7% to 10% utilization lift and that you can model for each and every player.

Understand. And then, I mean, you used to give a chart on the system inventory, which I don't find in the presentation this time around, but you said that distributor restocking is starting. So, is it fair to assume that, okay, the inventory noose, which we saw in the second half of last year has sort of been digested and then price increases are more sustainable?

So, the restocking basically has started because in Q4, we saw an extra inventory come in because of imports, right? That gets digested into Q1. And because you see Q1 import levels are already at the safeguard run rate, there is a need for slight restocking. And that's the reason we see that there is a slight restocking effect.

We have a follow-up question from Tristan Gresser, BNP.

Just -- yes, now it's my turn to come back to Bastian's question on the spread. So, when you said you've achieved 20% to 25% of the potential spread expansion in Europe, that's on reported Q1 or on spot? And if it's not on spot, is it -- what would it be on spot?

No, it's on Q2 and forward on spot, not on Q1.

Okay. That's clear. And on energy costs, what was the energy cost in Q1 so we can bridge into Q2 when you say -- when you provided guidance of high single digit?

There is [ no impact ]in Q1 of any energy shock linked with the iron ore, which will come into next quarter.

Okay. And last question on CBAM. Now we have 1 quarter in and previously, you were a bit cautious on CBAM, but now imports have reset lower. You also mentioned the market has adjusted to -- already to the new reality. So, does that mean that you think it's -- everything is already kind of priced in, in terms of price effect and it's just about volume into H2? And if Q1, you already kind of have a good decent run rate of imports, does the melt and pour that I think previously was very much needed and discussed is that important? If you can, discuss that as well.

So, Tristan, that's unfair because you've discussed 4 questions in one, but I will take that. It's an important discussion because we have to keep in mind, firstly, what we are saying is that we see the first signs of the uplift.

Secondly, you see that the safeguard level imports have already started, meaning that Q1 already shows that importers are looking at safeguard levels.

Third one on CBAM, we have to see the net effect because, as you know, the registrations are starting this year and there is a ramp-up. So, we believe that the net effect is -- and we have always been guiding to the market, the net effect is going to be more a midterm feature and not immediately in this year. And so that is how we see it even now.

So, to your question, is all price effects priced in, or volume effects priced in? There's 2 parts to the discussion. One is that to volumes, to Krishan's question, I've answered saying that on utilization, we see the ramp-up towards the utilization improvement. So, in H2 is when we will be hitting that utilization improvement fully on the missing imports.

However, there is a single important factor to all these price and discussions on the different effects. And that factor is, this is happening in Europe where demand is -- underlying demand is flat at a very low level. And we are not talking flat in terms of past average. We are talking 20% below past average. As you've looked through and walked through each of our divisions, specifically if you look at Stainless Europe and S&S, there has been a clear message from Nicolas this morning saying that there is no demand trigger anywhere. And so that is something which we have to keep in mind because most of these discussions center around which is the highest marginal cost on import. And that will be tested only when demand picks up. So, what I'm saying is the current scenario is purely a supply side fair competition, and as a result, utilization going up.

This was the last question. I would like to turn the conference back over to Mr. Sivaji for any closing remarks. Thank you.

So, good afternoon again, and thank you for joining the call and asking your questions. Thank you for your participation and your continued support.

For us, 2026 is already shaping up to be a watershed year for Aperam in our transformation. We look forward to talking to you over the next days and weeks. And as always, our Investor Relations team is available to connect with you and address any further inquiries. Please do not hesitate to reach out to us. Have a fantastic spring, and we hope to talk to you all soon. Take care.

Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call and thank you for participating in the conference. You may now disconnect your lines. Goodbye.

A warm welcome to Aperam's Q1 podcast. My name is Sud Sivaji. I'm Aperam's CEO, and I hope you're having a good start to the day. Today, together with Nicolas Changeur, our Chief Financial Officer, we'll explain our first quarter performance, current trading and give guidance. I will start, as I concluded last quarter's call.

We are building Aperam into a diversified, high-value material player and that even when things are happening around the world that many of us did not expect even a quarter ago. The conflict around the Strait of Hormuz and the resulting energy shock has led to inflationary pressures and forced central banks, including the ECB, to postpone anticipated interest rate reductions.

This has implications for the global economy, and this includes Aperam as well. But to make a long story short, while there is burden from higher energy prices in our Belgian operations, thanks to our diversified business chain, we are still confident that our good start into 2026 will continue into Q2, and we'll give details in this podcast.

As is our standard practice, we'll host a conference call later today. It will take place at 2:00 p.m. CET. We look forward to addressing your questions then. The registration link for the call is available on our website and can also be found on the penultimate slide of the podcast presentation.

Aperam is providing the following information as part of its earnings release documentation. This material supports our quarterly financial reporting, and where applicable, our disclosure of regulated information. Please take note of the disclaimer on Page 2.

Moving to Page 3. I'm pleased to share our results for the first quarter of 2026. To put it simply, Q1 was a really good quarter for Aperam. In fact, this represents our best start to a year in 3 years. While we have every reason to be proud of these figures, we are focused with quiet confidence to run businesses that structurally create shareholder value in every market we operate in, irrespective of the cycle.

We are operating in a complex global environment, and our success this quarter is a testament to our resilience and our differentiated value chain. If you look at the data on the slide, the momentum is clear.

Shipments reached 617 kilotons, 11% increase over Q4. This was largely driven by a healthy return of seasonality in Europe. Adjusted EBITDA rose to EUR 90 million, up 34%. This was not just volume. It was supported by some positive valuation effect, but more importantly, a very disciplined approach to our cost base.

Working capital increased by 10% compared to Q4, but this is good news. We have to be ready for the increasing business in the second quarter, and our integrated value chain has helped compensate for 1/3 of what would have been a normal increase.

We also saw a strong start to the sixth season of our Leadership Journey, contributing EUR 18 million this quarter. This is a promising start to deliver our EUR 150 million target by 2028.

And of course, our progressive dividend policy allows us to distribute EUR 37 million in dividends to our shareholders. It is our promise that we want to remain a reliable dividend payer.

Moving on to the next slide, to talk about our markets and some important topics that are probably on your minds. As many of you know, we have been listed on the stock exchange for 15 years now. But let me be very clear. The Aperam in 2026 is fundamentally different from the company that rang the opening bell in Amsterdam in January 2011.

Back then, we were largely seen as a European stainless steel player. Today, that description is not just old-fashioned, it is even inaccurate. We have evolved into a global diversified value chain. The geopolitical instability we face today would have crippled the Aperam of 15 years ago. Today, it is a variable we have built to manage.

Please look at our segment performance on the right. While we certainly have the European upside supported by higher seasonal volumes, we are no longer dependent on a single business and a single geography.

Brazil is delivering results consistent with its seasonally weakest quarter. Our diversified yet interconnected value chain is our foundation. When stainless steel faces headwinds, our global footprint and our other segments provide support as they have done in the last years.

Now the other side of our value chain, which is the integration and synergies between the business, is multiplying as stainless steel shows green shoots in Europe. Our Alloys segment is showing progress across almost all fronts, except some ongoing weakness in oil and gas. The integration of Universal in the United States is fully on track.

Look at the EBITDA per segment chart. Stainless & Electrical is strong at EUR 35 million, but it represents only 1/3 of the pie. The rest of Aperam's strength is distributed across the other 3 segments.

We have created several pillars where every single segment is a meaningful contributor to the bottom line. And the European business in stainless steel is indeed strengthening. Already in Q1, we are seeing the benefits of an upcoming trade defense environment.

EU imports have decreased to 12% reaching a sustainable post-safeguard run rate already. This gives us and the entire steel industry a fairer playing field in Europe.

On the energy front, yes, indeed, volatility is costing us a high single-digit million euro amount per quarter this year. But look at the result. Despite that headwind, every segment is performing. Our integrated model allows us to absorb these energy shocks.

The takeaway from this slide is simple. We are succeeding in creating value in every market and across the cycle. Whether it is our leadership in recycling or our high-performance alloys, we are adding to the value we create from these new businesses, and now we await the upside of stainless in Europe as well.

Let's dive deeper into the 4 segments. Nicolas, the floor is yours.

[Foreign Language] to everyone. I have the pleasure to take you on a journey through our 4 business segments with the development in Q1 and the outlook for Q2. Let's start first with the Recycling & Renewables segment.

Looking at the figures, Q1 EBITDA came in at EUR 23 million. While this is a 28% decrease quarter-on-quarter, it is relevant to put this in context. Q4 is always a seasonal quarter, which is bolstered by exceptionally strong end of year effects. On a year-on-year basis, we see a very positive trend driven by higher volumes and higher prices compared to Q1 2025.

Within the scrap recycling market, we are seeing global demand for stainless scrap rising, and we are finally seeing the destocking phase in aerospace alloys fading out. This is a significant positive for our high-value recycling streams.

In the BioEnergia business in Brazil, the news is equally positive. We benefited from an absence of weather extremes, allowing for consistent planting and regular operations. Our joint venture integration is progressing steadily, and we remain committed to our 20% expansion target over the next 5 years.

Looking ahead into the second quarter, the EBITDA outlook remains resilient. We expect to maintain the robust operational levels we saw in Q1. Underlying demand and pricing environment for scrap are strong enough to keep EBITDA steady.

Furthermore, this segment has minimal energy exposure, allowing it to remain a stable contributor even when other industrial sectors are under pressure.

Moving to the next slide. The figures of Stainless & Electrical segment speak for themselves. EBITDA for Q1 reached EUR 35 million. This is more than 3x the results we reported in Q4. This jump was driven by higher prices and supported by positive valuation effects.

On a year-on-year basis, adjusted EBITDA rose due to a combination of improved pricing power and the strict cost efficiency measures we have implemented across our plants, which are now paying off.

If we look at our end markets, the picture is mixed. Construction remains the most challenged sector in Europe due to cost inflation and in Brazil due to seasonal impact. No signs of improvement are visible in this sector.

Consumer goods. Demand in Europe remains adequate with a flat level for core appliances. Brazil marked a decrease driven by seasonality. Automotive and transport in Europe demand is steady, but manufacturers are under pressure. In Brazil, we see the effect from seasonal low.

Food, health and catering demand is flat and no indications of potential changes in the near future. Industry, energy and chemical, this was a bright spot. We are seeing increasing momentum in Europe and a moderate level in Brazil as industrial players prioritize local, reliable supply chains.

Especially regarding our energy needs, we have partially hedged our exposure and capped prices. This limits the impact to a high single-digit million euro amount per quarter for this year as guided previously.

Our outlook for the second quarter is very positive. We expect this momentum to continue for several reasons. Lower imports into Europe are driving higher capacity utilization and increased sales for us.

In Brazil, we anticipate a regular seasonal uplift. It is important to note that this growth is coming from supply side dynamics as we do not see signs of an organic macro demand recovery. Our outlook is based on our focus of being efficient and reliable in a market with supply opportunities.

Moving to the next slide, the Alloys & Specialties segment. This segment proves our focus on return on capital employed. Our growth in this segment is a perfect balance of organic expansion and value-accretive M&A.

We focus here on high-performance materials for the world's most demanding industries. The performance in Q1 was very encouraging. Adjusted EBITDA rose to EUR 27 million, a 23% increase quarter-on-quarter. What makes this particularly impressive is that we achieved this growth even while absorbing higher maintenance cost during the period.

On a year-on-year basis, EBITDA remained almost flat, showing the consistency of this business despite the broader market turbulence. The market environment for alloys is showing clear signs of normalization.

In aerospace, we are seeing normal market development. While Boeing has stabilized, we are still waiting for a full recovery to historical levels. Interestingly, demand for engine components is still outpacing structural parts where we are present.

Energy and chemicals. LNG demand remains stable and the order book is well stocked at high levels. This is a direct result of Europe's push for energy security. While the oil and gas sector remains slow, the chemical sector is holding steady, nevertheless, slightly below normal levels.

Automotive and electronics, this is a highlight for the quarter. We are seeing strong demand in displays and magnetics. Our automotive components business shows the very first signs of a recovery. The increasing demand for electric vehicles support us.

Our outlook for Alloys & Specialties in Q2 is very positive. The stabilization we saw in Q1 suggests that the business is ideally positioned for a broader cyclical recovery as we move through the year. With a healthy order book in electronic and civil aerospace demand, we expect results to continue their upward move in the coming months.

The alloys segment has seen no significant impact from increasing energy prices in its total cost structure as there is a clear surcharge mechanism for such critical alloys, making it a highly stable contributor during this period of geopolitical instability.

Moving to the next slide with the last segment. Let's look at Services & Solutions. At the end of our integrated value chain, Services & Solutions is our direct connection with the market. It is also the segment that most competes with imports.

While other independent distributors often rely on imports from outside the EU, our segment leverages our internal production to offer local, reliable and sustainable solutions, a massive advantage in today's disrupted trade environment. The performance in Q1 has been very good.

Adjusted EBITDA reached EUR 20 million, a 186% increase quarter-on-quarter. This was significantly impacted by higher short-term demand and positive valuation effect as the market adjusted already for the new reality in 2026 based on the new EU regulation.

The market environment for distribution remains complex. The import advantage. We are seeing a very positive effect from the general reduction in imports. As the chart shows, import volumes have dropped significantly compared to the peaks of 2020 and 2025. This has allowed us to stabilize our position and also to increase our capacity utilization in the Stainless & Electrical segment.

Inventory levels. Interestingly, distributor stocks remain at low level. We see no signs of major restocking yet, which suggests that the current demand is real and not just inventory building. However, restocking will be necessary in the future.

Pricing. Spot prices have escalated driven by raw material increase. This led to a significant positive valuation effect for our existing inventories this quarter.

Energy resilience. Similar to our other downstream segment, here, we have minimal energy exposure, ensuring that the current energy crisis has a very low impact on this segment.

Looking ahead to the second quarter, our outlook is positive. We expect EBITDA to be even stronger than what we have seen in Q1. This will be supported by the continued pressure on imports, which favor our local service centers model.

While we are not yet seeing a broad organic recovery in underlying market demand, our ability to compete effectively against imports put us in a very strong position for the months ahead.

Moving to the next slide. While we have discussed how market trends and trade defense are able to support our numbers, I want to focus now on what we are doing internally to improve the business. We officially launched the sixth edition of the Leadership Journey covering the years 2026 to 2028.

This is our self-help program, created to ensure that Aperam remains the leader in value creation in the industry and stays cash accretive even when the global cycle is at its lowest. This phase of the journey is built on 3 transformative pillars that touch every segment of our business.

The first one, what we call One Aperam Synergies pillar. We are building the most integrated value chain, capturing synergies in addition to the value of each business. I like to express it as 1 plus 1 equal to 3.

The second pillar is circularity, turning sustainability into tangible EBITDA. And the third pillar is innovation, moving up the value chain. Some of our products are already delivering functions to our customers.

We are off to a strong start. In just the first 3 months of 2026, we have already achieved EUR 18 million in gains. To put that in perspective, our total goal for this 3-year phase is EUR 150 million. Starting at this pace secures our structural growth early and provides a significant buffer against the geopolitical volatility we have discussed today.

This immediate traction in Q1 2026 is possible, thanks to tangible results delivered across all 4 of our business segments. The early wins were driven by a combination of strategic investment and operational discipline.

In Recycling & Renewables, we realized the initial benefits from the footprint optimization and automation of scrap yards. In Stainless & Electrical Brazil, we capture returns from our strip mill investment alongside significant improvements in raw material efficiency.

In Stainless & Electrical Europe, we executed on raw material optimization, rigorous cost management protocols and benefited from mutual synergies with Recycling & Renewables.

In Alloys & Specialties, we advanced the integration of Universal and unlock critical upstream yield synergies in coordination with Stainless Europe. We are ramping up our innovation journey.

Finally, in Services & Solutions, we realized scale-based gain through the continued rollout of automation and digitalization across our global footprint.

In summary, the leadership journey is why we can be confident in our future. It is not just a cost-cutting program. It is a structural transformation by extracting synergies, developing innovation and leveraging on our circular footprint, we are ensuring that Aperam will be in the future a leaner, smarter and more profitable version of ourselves.

Moving to the next slide. Today, I want to highlight 2 facets of our transformation from Q1, which are part of our Leadership Journey 6. Often we get asked about the potential of the Leadership Journey continuing as the next phase and the answer lies in our focus on detail in realizing value in each of our businesses.

What makes this project particularly exciting for our shareholders is the immediate scale of their impact. These 2 initiatives are expected to lift our annual EBITDA by around EUR 10 million once fully operational by end of 2027.

First, we are investing in the Timoteo cold-rolling mill upgrade in Brazil. For a modest CapEx of EUR 10 million, we are revamping a key cold-rolling bottleneck. This will provide 5% increase in capacity, specifically targeted as a growing Brazilian market for high-quality stainless steel. By mid-2027, this debottlenecking will ensure we can serve local demand more efficiently and capture additional value in one of our strongest geographies.

Secondly, I am pleased to highlight the acquisition of Magnetec, which we just closed on April 1. Magnetec is a specialist in nanocrystalline soft-magnetic and inductive components. This technology is essential for electric vehicles, the energy and the aerospace sectors. It was a strategic rescue acquisition from preliminary insolvency, allowing us to acquire high-value technology on a global footprint, spanning Germany to China with a very low investment.

It perfectly aligns with our strategy to move alloys downstream into high-value magnetic solutions, positioning us at the center of the electrification megatrend. With this acquisition, we are consolidating our operations in the area of magnetics across the world in a specific unit inside our Alloys & Specialties segment called Aperam Magnetic Components.

In summary, one project secures and expands our core capability and capacity in Stainless Brazil and one pivots us towards the future of alloys as a magnetic player in electronics and EVs. Together, these projects alone represent a EUR 10 million step-up in our EBITDA potential. This is how we transform Aperam, one high-value strategic brick at a time.

Now I will hand over to Sud. He will give us some color about our Transformation Journey and the outlook for the second quarter.

Thank you, Nicolas. Moving to the next slide. Our financial results and self-help program provide the foundation of our plan forward. And our future growth is being supported by highly targeted, high-impact investments, as Nicolas has explained. These are not just industrial upgrades. They are strategic moves designed to deepen our competitive moat.

Now when we talk with analysts and investors, the conversation often centers on the EUR 200 million to EUR 300 million annual EBITDA European upside. This is a very important, and it is a massive opportunity driven by trade defense and European market recovery. However, this is only half the story.

That is why I want to also showcase the other half, the EUR 150 million structural uplift that we are building through hard and consistent work to serve markets such as recycling, renewables, electrical and electronics engineering, energy, magnetics and aerospace across our global footprint. This EUR 150 million is not a hope. It is a result of the structural changes we are already demonstrating as presented by Nicolas earlier.

We've already decoupled a large portion of our earnings from the traditional European stainless steel cycle compared to a few years ago. We are growing our Alloys & Specialties and Recycling & Renewables segments regardless of the macro volatility in Europe.

Our South American operations provide a high-margin stable base that acts as a powerhouse for the group while Europe stabilizes, and with additional investments, we also see a clear upside. And on top of that structural foundation, we got the European recovery with the new trade defense rules.

As trade defense fully takes hold and the market returns to normalized levels, our Stainless Europe and Services & Solutions segments are positioned to capture an additional EUR 200 million to EUR 300 million. By optimizing our sourcing and operational synergies through the leadership journey, we ensure that we are able to benefit.

In the past, our floor was much lower and much more vulnerable. Today, we are developing a business where EUR 700 million to EUR 800 million is our target until 2028. We are working consistently on the areas we control, cost focus, transformation projects, recycling expansion and high-value alloys. So besides executing to benefit from being in the heart of Europe, we are also busy building the EUR 150 million structural bridge beyond.

Moving to the next slide. Let's talk about where we are going. Last quarter, I made a promise. We targeted EUR 100 million quarterly run rate in H1 2026, but in 2 steps and as a ramp-up. Today, I can confirm that we are exactly on track. We have achieved EUR 90 million in Q1. Now we are moving into the second quarter.

Our guidance for the adjusted EBITDA in Q2 is to be significantly higher than in Q1. As I've mentioned before, we intended to start the year with a steady pace and speed up. We are now entering that phase.

Why are we so confident? The Brazil catalyst. We are moving into a period where Brazil returns with its full seasonal strength. The European dynamics. We expect continued relief from imports, which directly correlates to higher capacity utilization at our European mills. We expect valuation gains. And last but not the least, the Leadership Journey 6 will add gains to EBITDA.

Beyond the immediate next quarter, there is a case for further momentum. The trade defense factor. As we've discussed throughout this call, the new trade defense measures should be implemented as of 1st of July 2026, and CBAM is in place already. We are seeing the factors play out already in Q2, and this should continue into H2.

And we focus on financial health. We expect a slight decrease in net financial debt in Q2 despite the typical working capital cycles. We also confirm the deleveraging target for this year with net financial debt end of 2026 to be below that of 2025.

In a world where all the focus is on the difficulties of the current geopolitical climate, Aperam is focused on execution. As supply chains become increasingly localized, we've delivered a really good Q1. We are guiding for an even stronger Q2 and the strategic heavy lifting we are doing today is setting the stage for a clear path towards 2028.

We started good. We are speeding up now, and we have the right road map to navigate the rest of 2026 and beyond. Thank you for your trust.

Looking ahead, we will be available for meetings to explain what we are executing at Aperam and what the market conditions are. Starting soon, Nicolas, the Investor Relations team and I will be hitting the road for a series of conferences and roadshows across Europe and the United States.

As the schedule on the slide indicates, we have prioritized being physically present in as many locations as possible. We're eager to connect with you directly, so please reach out to our Investor Relations team for corporate access or to share your feedback. Let's shape the future of 2026 together.

Thank you very much for listening to Aperam's Q1 management podcast. We wish you a pleasant day and look forward to your questions in our conference call this afternoon at 2:00 p.m. Central European Summer Time.

Ladies and gentlemen, welcome to the Aperam Fourth Quarter 2025 Results Conference Call. I'm Lorenzo, the Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Sud Sivaji, CEO. Please go ahead, sir.

Thank you very much for joining our conference call today. All our comments were contained in the podcast that we published this morning, which supports our quarterly financial reporting and where applicable, our disclosure of regulated information. We also save more time for your pertinent questions during this call.

Good afternoon to everyone joining this call. Together with my colleague, Nicolas Changeur, we're looking forward to answering your questions. So let's start straight away with Q&A. Thank you. Operator, if you could open the lines.

[Operator Instructions] The first question comes from the line of Gresser Tristan from BNP Paribas.

I have 2. The first, could you help us understand a bit the current situation in Europe if your order books are improving at the moment or not? Are more buyers of stainless steel turning domestic? Are buyers of stainless steel still importing like nothing has changed? You also flagged that inventory has decreased, but imports have surged in Q4. So I'm also trying to square that one out and see how much of an overhang there is on the market in Q1, Q2? That's my first question.

Tristan, thanks. So the discussion about the market in Europe currently is that our order books are recovering from Q4, but it's purely a seasonal recovery. Q1 is typically Europe comes back from its Christmas holidays and there's a seasonal recovery. So we don't see anything special additional like we said in the podcast. So it's seasonality purely.

The second question you had was are importers turning to domestic? No, we don't see that specific activity. Typical buying patterns, both apparent consumption and real consumption, which drives our production is at seasonal normal levels. In terms of the inventories being low, the distributor supply chain, the statistics were at the end of Q3. And as you mark correctly from our podcast, imports surge was there at the end of Q4, probably as some distributors were trying to cover for CBAM discussions.

So this will have, like we said in our podcast as well, some overhang in H1, but it's, I believe, a temporary overhang because, as you know, of the three bodies of the European Commission, two, the INTA, which is the association and the European Council have both come out and said 1st of July is the start of the new quota period for the trade safeguard duties. So we do believe that, that window is closing. So it's an overhang because of these imports end of Q4, but this overhang probably is going to affect the first half of the year a bit. And that's the reason we gave the guidance we gave.

Okay. No, that's very clear. And just following up on that. I think in your prepared remarks, you talked about the impact of CBAM depending on the behaviors of importers, basically, if they decide to take the risk or not to use actual default value. To what you're seeing so far, given that CBAM has been implemented now for more than a month, are they taking the risk? Or how do you -- how would you see that behavior being at the moment from importers?

At this point in time, we don't see anything abnormal, Tristan, but I'll also be very clear, like you just remarked, it's just 1 month in, right? So you cannot make a pattern out of what's happening in the first month, so to speak, right? So that's why we said we'll have to probably wait for 2, 3 months and see that if they are. But what is absolutely clear is that if they take the risk, sometimes it will look like in 2026, they don't have anything to pay, but that is just because of the plan that has been put in that all payments would be retroactive in 2027.

So -- we know that there is a lot of noise out there, and that's the reason, Tim and I recorded a video separately as well, just to be very clear showing that the default values are the standard values. And if somebody has to go for a real value, they have to actually show and accredit themselves to nationally accredited authorities in Europe.

Okay. No, that's very clear. And my second question is on the nickel situation. What's your view on the situation in Indonesia? Do you think the rally in nickel prices can be sustained? And I think we've seen higher stainless steel prices in the region already in Indonesia, China. I mean if imports are still coming in, that should definitely help to have those Asian prices at a higher level. Yes. Any help there to understand the situation would be great.

So yes, the prices in Asia have gone up by the raw material price go up. So it's primarily a shift up compared to raw material prices, right? So I think that development is completely independent of what we have said trade defense led because in that case, there is a reduction of imports in H2. So it should be an add-on, so to speak, rather than one replacing the other.

The next question comes from the line of Dominic O'Kane from JPMorgan.

So I have 2 questions. The first question just moves on from the nickel question. Could you maybe just give us a sense of how the moves that we're seeing in the nickel price could impact your bridge over the next 1 to 2 quarters? I assume you are fully hedged for the next quarter, but can you just maybe give us some context around your exposure to the nickel price moves?

Yes. So in fact, the -- so Nicolas Changeur speaking, good afternoon. So nickel have a moderate impact on our pricing. As you know, we are using scrap, and so the relative move of the nickel are very limited. We are mainly using nickel only in our prime nickel and so LME-related nickel with our fuel alloys business where we are fully hedged.

And my second question is just around capacity utilization. So in a market where we may start to see demand in Europe coming back, can you just maybe give us a sense of what your capacity utilization currently is and if you have spare capacity that you could bring back into the market relatively quickly?

Yes. So Dominic, absolutely. So first thing, our current utilization, depending on the player was between 65% and 75%. And typically, we've said the safeguard measures, which is different from what you asked in terms of underlying demand picking up. The safeguard measure, we had guided to from 7% to 10%, there should be a utilization lift just by the replacement of imports, which will now be reduced, right? So in our case, at Aperam, we have capacities available. As you know, we run electric arc furnaces, which can be switched on and off 3 times a day, and we have sufficient downstream capacity as well to match this utilization increase of 7% to 10%.

The next question comes from the line of Maxime Kogge from ODDO.

So first question is again on nickel. Sorry for that. But I mean, you're explaining to us that nickel does not really have any impact on the stainless business given that you procure most of your nickel needs from scrap. But if I look at the alloy surcharges that you published and, you and your peers, we see a big increase actually in February. So I guess that's still related to nickel. Is there anything I'm missing there?

Yes. But the business that is related to the this alloy is very limited, in fact, in Europe. So the impact is small.

Maxime, we published the prices because there's still 1 or 2 customers who buy based on the alloy surcharge discussion, right? But as you know, in Europe, we moved to a fixed price discussion in 2019, and we have not looked back at all because the dumping of imports into Europe has contributed that we have all moved to a fixed price policy to compete with them.

So those alloy surcharges are not really that relevant. Fair enough. So regarding Brazil, there has been some announcements last week about higher duties for certain product categories. It affects stainless and electrical, so where duties are supposed to rise from 12.6%, I think, to 25%. So what's your take on that? And can you expect a positive impact in the coming quarters?

Yes. We expect a positive impact. And we evaluate this impact at mid-single-digit EBITDA per quarter. As you know, we are already booked for Q1 and beginning of Q2. So basically, we see this picking up end of Q2 and beginning of Q3.

And you expect those duties to remain in place permanently because at this stage, you're only valid for 1 year, if I'm right.

They said that they're going to review this for a year, but we remain confident if the dumping from Asian countries continues, the Brazilian government has been very keen on ensuring that there is a fair trade policy in Brazil. So we look at it for the next year, as you have said, but this is something which we will work together all the time, just we do.

Okay. And last one is on your guidance for recycling and renewables on the one hand, and alloys and specialties on the other hand. So there was traditionally an EUR 80 million to EUR 85 million guidance for R&R. Is this figure still achievable despite the miss that we saw last year? Should we expect the first contribution there from the diversification activities like bio-oil, biochar?

And regarding A&S, so there was a EUR 100 million EBITDA guidance. You add to that the EUR 60 million contribution from Universal. And then there are the first synergies flowing in of around EUR 9 million. So does this figure add up to lead to something above EUR 160 million?

Yes. So basically, we expect this to be pretty much in line. There is a ramp-up over the year of 2026 with the alloys business. So -- but overall, we expect by the end of the year to be basically at this level. In particular, as you know, oil and gas has been a little bit under pressure. There is also Boeing that is ramping back during 2026. So your numbers are fully right by the end of the year.

And for R&R also?

R&R is at stable levels, Maxime. So alloy should reach that run rate, which you said, like Nicolas, for the last quarter, and that's our view currently, looking at oil and gas and Boeing. And R&R is at the stable numbers you have mentioned.

The next question comes from the line of Inigo Castellanos from Kepler Cheuvreux.

So I have three on my side. The first one is a clarification on the CapEx. You mentioned CapEx for 2026 is going to be around EUR 200 million. And then in the presentation and during your podcast, you are talking about some additional site upgrade CapEx of EUR 160 million over 3 years, if I am right. So can you explain a bit, I guess, that this EUR 160 million in 3 years is included in the EUR 200 million figure for 2026? And can we assume that this is going to be, I mean, EUR 200 million in the following years as well? This is the first question.

Yes. So the EUR 160 million are absolutely integrated in the EUR 200 million. As you know, our continuity CapEx is around, let's say, EUR 150 million. So after you have those EUR 160 million over the next 3 years. So plus/minus in 2027, 2028, you can count around a similar level of CapEx if there are no new growth opportunities.

My second question is on the outlook, you are giving for Q1 2026. You have mentioned in the press release that EBITDA in Q1 would be higher than in Q4, but also during the podcast, you gave some more indications regarding EUR 100 million quarterly run rate EBITDA in the first semester, but I understood slowing in Q1 and accelerating in Q2. Can you please elaborate a bit on that sequential number? And also in addition to this, how do you see the consensus EBITDA number for 2026, which according to Bloomberg is around EUR 520 million EBITDA?

So Inigo, on the question, Q1, I think we have given a consensus it will be higher. But we also said that it's -- we are confident enough based on our Leadership Journey contributions to give that for the first half of the year, it will be $100 million run rate. And we said it will happen in 2 steps. So I think it gives you clearly kind of an indication how these 2 steps happen because we said we'll start slowly and we actually ramp up in the second quarter. So I think that gives enough guidance on how you plot these numbers from one quarter to another.

On your question for the annual year, see, unfortunately, we have just discussed that. There are so many variables also on H2 and our order books, as you know, are typically 2.5 months long. Compared to other players in the industry, you have to consider that Aperam's stainless business in Europe's order book is considerably shorter because we run our own distribution division. As a result, we would like to give outlook only for Q1, right? The fact that we are doing for Q2 this time is primarily because we know that seasonally, Brazil will come back, and we know the contribution of our Leadership Journey, and that's the reason we are giving some color on Q2. Sorry about not being able to guide for the year.

No problem. Thank you. Very clear answer to the question. And just a final question on my side. On the European Union trade defense protection measures, you are mentioning again that you expect the application to start July 2026. I don't know if you can elaborate a bit where do we stand? Why is taking, I would say, longer than expected, although you were pointing to that July as the application date. But where do we stand? Are we expecting for any European Union Parliament meeting to take a final decision? Any color would be much appreciated.

First of all, thank you Inigo, for acknowledging that from the beginning, we've always said it's going to be most probably 1st of July. And our message hasn't changed. This application has to pass through 3 bodies. One is the European Council, the other one is the INTA and the third one is the European Parliament. And this is a process. Each of them make their own proposal, and they have to start a process to discuss among themselves to come to a common proposal.

The good news is that everything is proceeding on plan for a 1st of July introduction, meaning the European Council and the INTA have made their proposal and have started discussions. And we expect around the third week of February for the European Parliament also to start this discussion and see what their version of the proposal could be. And after that, it is going to take them time to talk among themselves.

It is important to remember this whole process has been triggered because the previous safeguards expire on the 30th of June. So legally, the European Commission always pointed out that the earliest it could start -- sorry, the latest it could start is 1st of July, and now I think they are going to respect that deadline.

[Operator Instructions] the next question comes from the line of Adahna Ekoku from Morgan Stanley.

I've got one left. On the normalized EBITDA guidance, so this is EUR 700 million to EUR 800 million. I believe previously, this was EUR 800 million before Universal. So could you just run through what's changed here? And if you could go through the kind of key building blocks of this bridge, that would be really helpful.

Adahna, sure. I think let's start with EUR 350 million for 2025. And then when we add the EUR 150 million new Leadership Journey guidance we have given, without any trade defense and CBAM support, this EUR 150 million includes the EUR 500 million just on Aperam's own first. Secondly, the synergies of Universal were included -- are included in the EUR 150 million as well. So this is something to keep in mind, right?

From EUR 500 million, you see that we have announced new investments, and we do expect another EUR 50 million additional EBITDA improvement from the investments we have announced. But this should happen ramping up in 2028, but the full effect in 2029 visible, so to speak. So it's post Leadership Journey 5. And the delta then from the EUR 550 million to the EUR 750 million is basically utilization improvement in Europe plus support from trade defense measures. What you are seeing now as a range from $700 million to $800 million to the previous $800 million is the difference is basically if CBAM is going to be immediately effective or is there going to be a ramp-up. That is the delta of the $50 million to $75 million that you look. Is that bridge clear? Or should I?

No, that was very clear. Thank you.

The next question comes from the line of Tommaso Castello from Jefferies.

I have 2 left. The first one is on Brazil, which obviously performed better than last year at EUR 75 million EBITDA. Should we consider that as a normalized run rate also for 2026 onwards?

Yes, it will be a normalized low cycle for Brazil for next year, yes.

Okay, and then the last one...

I'm sorry, just keep in mind that in 2024, it was exceptionally low because we had a hot strip mill investment. And as a result, there were for the first half of the year, losses in EBITDA. So the EUR 75 million is at the low end of the cycle, like Nicolas said.

Yes, yes, definitely. Thanks for that. And then the last one. I know it's probably hard to estimate. But, for example, carbon steel, we have some estimates on the potential impact of the new trade measures, basically cutting around 10 million tons of steel being imported -- from being imported into Europe. Now the stainless steel market is obvious smaller, but I was wondering if you had any estimates on how much the new trade measure could impact in terms of percentage of, yes, the volumes basically being shipped to Europe.

So this is what we said earlier also, which was that we expect a 7% to 10% jump in utilization. So depending on what you take the stainless market and demand at, that gives you an estimate of the number. So it's a 7% to 10% jump in utilization.

The next question comes from the line of [indiscernible] Capital.

Hi, can you hear me?

Yes, Lucian, loud and clear.

Sud, and congrats on the results. Just going back to the Adahna's question. So if the normalized EBITDA was previously the target was EUR 800 million. You've got Universal on top, which should kind of add, say, EUR 90 million to EUR 100 million, so you get to EUR 900 million. So why is that now actually stepping back to EUR 700 million to EUR 800 million, especially considering safeguard measures that are going to be coming in, which should obviously be a further boost on top of that previous range?

Absolutely. So Adrian, I think we have to understand in the past, when we have discussed, we said that the margin in Europe in 2025, for example, thanks to imports -- or rather no thanks to imports and the dumping is EUR 300 per tonne below the previous average, right? And our assumption, and that's the reason I split out what we can do on our own. And if you say the entire EUR 300 per tonne on the margin comes back, then we are back to that EUR 800 discussion.

That is the reason I say EUR 500 million on our own, EUR 50 million due to the investments announced, it's EUR 550 million, and then it's up to trade defense measures in CBAM. So the delta to the previous EUR 800 million you're looking for is our 2025 margin being EUR 300 per tonne below compared to previous averages. And I think this is the official discussion we've had before as well, that the low cycle has been EUR 300.

How much of this recovered? So it's not a change in the results. It's basically when we say EUR 500 million on our own because of the different business model, EUR 50 million due to the additional investments, and then based on CBAM and trade defense, are we going to recover the entire EUR 300 million or part of it is the delta to the number.

Got it. So yes, you're just setting the floor lower, which is good. And hopefully, there's upside to that.

Exactly. So if you say that, that entire EUR 300 million is coming and additional trade defense, but those are theoretical discussions, and we wanted to just be clear what our performance and what is expected from the market.

The next question comes from the line of Bastian Synagowitz from Deutsche Bank.

A few quick ones maybe. Just getting back to the European market. So I guess just coming back to the point you said, so you're saying that you're not seeing any abnormal demand or nothing extraordinary in your order book. But then I guess when we look at the quarter drawdown, it has come down significantly in the first couple of weeks of '26 as it should do as a result of CBAM. So just curious, do you read this as well as customers are currently really heavily absorbing their inventory? Is this what's currently happening? That's my first question.

Look, customers are drawing down on the inventory not because of the regular inventory being drawn down because in Q4, as you know, there's been a significant surge. So there's a lot of inventory in the system.

Okay. But these are your reads as well that if you -- I guess, if quota drawdown is lower, demand doesn't really show up in your order book extraordinary, then it must be a much more significant drawdown of that extra inventory, right? Of the market share from quotas, yes.

Sorry, you are correct. But fundamentally, there's 2 comments to that. One is the fact that realistically speaking, based on 2 weeks, you cannot estimate the entire quarter drawdown discussion. I hope you understand. And the second thing is that, yes, with the deliberate intention of consuming those inventories in this quarter is why importers have brought in all these inventories in Q4. So we do see that demand drawdown happening from inventories.

And just also getting back on CBAM. So I'm wondering where do you see the average CO2 footprint in the current import mix, the way you judge it versus particularly also the most efficient -- CO2-efficient sources of supply, which you now have on the import side. I'm pretty sure you've done the math. So maybe you could give us your views on how you see the battlefield there at the moment and how it has been impacted by CBAM.

The battlefield is exactly as it's been defined by the commission's default values. If you look at it, the commission's default values on carbon dioxide emissions from different countries are basically at the levels which we expected them to be. The one thing is, of course, is there some circumvention because some of these countries probably using metal from Indonesia, that is something I'm sure that the commission will continue to monitor. But the default values basically set the exact map of how we see the different carbon footprints of the different countries are.

And then maybe a very last question on the next chapter of your Leadership Journey and I guess, the new investments, which from my understanding, are mostly tech to Europe. And Europe for the last couple of years obviously has not been a great ROI place as maybe -- as it comes to the different options. So are these investments still under the condition that, I guess, everything is really panning out the way we hope it to pan out? Or are there basically no regret moves and you will go ahead with those independently from whatever is happening?

I would say that fundamentally, you have to look at it in 2 different directions. One is that 2/3 of these investments are diversification into specialties in alloys and stainless specialties. And another 1/3 is into automation and putting in new lines with higher productivity and higher efficiency. So if you look at it in -- if the demand picks up and the cycle comes back, these lines will be used or the one with higher productivity will be used to serve the upside structurally. If the demand goes in low cycle, we are a cyclical business, primarily in stainless, then we have the most efficient lines running, and you do know that we have a track record of variabilizing our costs depending on the demand. So that's the reason.

So in a sense, yes, these are measures which are required because we want to move primarily into specialties in stainless and alloys. But at the same time, we take the opportunity to put in modern lines. See one primary principle of this, and we've mentioned this in the podcast is that we want to push the technology to make sure we are best-in-class and do not fall pray to the same thing which some other industries in Europe have fallen pray to. We want to be out there competing with the most modern lines being built in Asia and to take productivity gains in low cycles and upsides in high cycles.

Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Sud Sivaji for any closing remarks.

So thank you for joining the call, everyone, and it was a pleasure answering your questions. As you know, Nicola and I, with the Investor Relations team will be on the road over the next couple of weeks, meeting a lot of you. You know, for us, a very eventful and exciting year has just begun, and we look forward to talking to all of you in 2026. As we say in Dusseldorf, have a fantastic carnival season, and we hope to talk to you soon. Thank you.

Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your line. Goodbye.

A warm welcome to Aperam's Q4 podcast. I'm Sud Sivaji, Aperam's CEO, and I hope you're having a good start of the day. Today, together with Nicolas Changeur, our Chief Financial Officer, we will discuss our fourth quarter performance, current trading and outlook for the first quarter.

But first of all, I want to share how honored and energized I am to officially step into the role of Aperam's CEO at the beginning of 2026. Thank you for sending me your kind wishes.

Now is a crucial moment for Aperam. We've grown in the diversity of geographies, the mix of our businesses and improved the value chain of Aperam by two acquisitions and one joint venture in the last 4 years. This happened in the middle of a world in turmoil as companies continue to shrink and disappear. Today, I'm motivated and absolutely confident that the strength of our global team will continue to drive Aperam into a successful future. But now you are interested in our Q4 2025 results as well as our guidance. I will also take the opportunity to introduce you to the next phase of our strategy.

As always, we will host a conference call later. The start time is 2:00 p.m. Central European Time, and we welcome your questions then. The link to register for the conference call is available on our website and on the last slide of this podcast presentation. Aperam is providing the following information as part of its earnings release documentation. This material supports our quarterly financial reporting and where applicable, our disclosure of regulated information. Please take note of the disclaimer on Page 2.

Starting with the highlights and the development in the fourth quarter of 2025. As expected and announced, this quarter was very challenging, but our guidance was supported by the strong focus on self-help. Despite a challenging macro environment across all businesses, I'm delighted that we delivered a solid trough EBITDA, thanks to structural improvement from the Leadership Journey Phase 5. The trough quarter showcases Aperam's inherent competitiveness gained by our leadership journey. We delivered EUR 30 million in gains in the fourth quarter. More importantly, we've reached EUR 195 million of our EUR 200 million target. This means the original 3-year plan was completed already in just 2 years.

On the businesses, let's begin with Europe. We saw the seasonal volume upticks in Europe, though conditions remain tough in terms of pricing and margin. In Brazil, performance was impacted by seasonality as expected and the scheduled annual maintenance, but also from some price pressure by non-stainless imports. Alloys was impacted as well by repair and maintenance of a key asset as guided, but the asset is back in operation now. However, oil and gas as guided, remains weak. The good news is that Universal is fully on track to deliver the synergies of EUR 27 million over 5 years.

Imports reached as in the last quarter already, the 25% mark. 25% imports at the low-cycle is a high number and makes it clear that action from the European Commission is welcome and necessary to ensure fair competition. We also delivered benchmark cash performance with an operating cash flow of EUR 422 million and made a big step towards de-leveraging. Thanks to the efficient working capital management, we achieved a net-debt reduction beyond our initial forecast.

Moving to the next slide to talk about the different end-markets. For Aperam, the construction sector is important, but the outlook remains unchanged and only the heating market is showing some recovery. The German spending program will materialize, but this will take some time to be visible, especially as it is late cycle demand for stainless. The construction sector in Brazil marked a stable development. Consumer goods are stable. The focus is today on necessary replacements, but not additional demand. The automotive sector is characterized by discussions on system transformation towards electric vehicles. As a result, customers are unsure about these decisions and also driven by a weak economy, the momentum in the car production is not yet picking up.

In Brazil, the development is definitely healthier, especially the truck sector is developing positively. Demand in food, health and catering is flat, however, below a normal level. The industrial demand shows an increasing momentum in Europe. A return to standard level is possible. In Brazil, demand is solid, but the oil and gas segment continued its weakness. Aerospace is growing and manufacturers have full order books apart from the short-term economic outlook. The issues at Boeing are homegrown problems, but the production is recovering now. As a result, de-stocking along the supply chain will happen in 2026, and we believe helping our specific demand, as we go into H2. As mentioned already, imports into Europe kept a high mark of 25%, and this is happening in a time of low demand. Inventories even decreased further in Q4 on the distribution supply chain.

Moving to the next slide. I'd like to directly address three topics currently defining our conversations with the capital markets. Nickel price volatility and evolving EU regulations regarding trade defense and CBAM are not just topics of interest, especially EU regulations are potential structural shifts that define Aperam's competitive landscape heading into 2026. Let's look at nickel price development. After a period of stagnation and oversupply, we saw a significant surge in the final weeks of 2025 into 2026. And the rally also for other metals continued in January and the nickel reached even more than $19,000. Now the nickel price has come back from the speculative spike into the area of $17,000, but it remains highly volatile.

For Aperam, our message to the market is one of stability on nickel. While these price swings often cause ripples elsewhere, the impact on our valuation is limited. We use LME-grade nickel primarily only in our Alloys & Specialties segment, where they are suitably hedged. Furthermore, because scrap prices, our primary input do not correlate directly with LME, but rather follow their own supply and demand fundamentals, pure nickel volatility has a negligible effect on us in the short term. Now if nickel prices stay up permanently, it will influence Asian raw material and stainless prices, thus having an indirect effect on our business.

Coming now to the regulatory environment. Of course, we are closely monitoring the safeguard and trade defense measures proposed by the European Commission and had many meetings and discussions in Brussels last year. While several details are still being finalized, the trajectory is clear. These measures are designed to prevent unfair global trade practices in the European market. We anticipate these measures will officially kick-in by July 1, 2026. Consequently, we expect to see a positive ramp-up in our earnings throughout the second half of 2026 as many of you seem to have already factored-in.

Finally, the most transformative shift, the Carbon Order Adjustment Mechanism known as CBAM. As of January 1, 2026, full enforcement is happening. CBAM is a very important milestone for Aperam. By looking at the carbon intensity of imports, the EU is finally leveling the playing field. As a leader in low-carbon stainless steel production, our competitive advantage is now backed by legislation. While the first half of 2026 may see some noise due to an import surge at the end of 2025, the long-term outlook is resoundingly positive. We expect the cost of carbon to be reflected in the price of imports. But the effect is ramping up slowly and the impact on our earnings in 2026 will depend on importer behavior. If they choose to ignore the risk, we clearly expect that they will pay the default values as duties in 2027 retroactively.

I suggest you watch the video we have prepared for you about our position on CBAM and clearing some myths around it at the end of this call. Now I will hand it over to Nicolas.

Bonjour to everyone. Let's start with adjusted EBITDA. In the fourth quarter, we delivered EUR 67 million, where we guided in a decrease compared to EUR 74 million in Q3. The fourth quarter faced challenging conditions, in particular, price pressure in Europe, weak oil and gas and the repair of key assets for Alloys, as well as seasonality and maintenance in Brazil. However, thanks to our Leadership Journey 5, as mentioned by Sud, we have been able to improve our competitiveness, staying ahead of competition.

You will notice also that we had in the fourth quarter exceptional items amounting to EUR 28 million. This includes EUR 10 million of restructuring for the next chapter of our Leadership Journey and also year-end inventory adjustment. As already commented by Sud, Aperam has shown its strength in cash flow generation. Operating cash flow is solid in Q4 2025 as it was in Q4 2024. This covers CapEx, dividend and also the strong de-leveraging. Net debt was reduced again, and we achieved more than forecasted originally, after the closing of the acquisition of Universal, thanks to our very high-level of operating cash flow of EUR 422 million over the year.

Moving to the next slide. Our 4 segments performed without any surprises and based on the guidance that was given. Recycling & Renewables adjusted EBITDA increased to EUR 32 million. This was driven by more favorable pricing despite lower volume and positive valuation effects. For Q1, we expect lower adjusted EBITDA also due to lower valuation effects. Stainless & Electrical generated adjusted EBITDA of EUR 11 million. The decrease was due to price pressure in Europe, combined with seasonality and annual maintenance costs in Brazil. In Q1, the seasonality in Europe and modest price recovery will drive higher results despite the weakest quarter of the year in Brazil.

Service & Solutions achieved adjusted EBITDA of EUR 7 million. This increase happened despite price pressure due to lower valuation charges. The market is still challenging, but usually, Q1 is a seasonally stronger quarter, and we expect a positive EBITDA development. Alloys & Specialties reported quarterly adjusted EBITDA of EUR 22 million. The decrease resulted from the weak oil and gas segment as well as the repair and maintenance of key assets. The repaired asset is back in operation. And in total, despite some market weakness, EBITDA should increase in the first quarter.

Other and Eliminations amounted to minus EUR 5 million, and this is not an unusual figure for a quarter. Intercompany Elimination resulting from the strong integration across Aperam business such as recycling, forest, stainless steel mills and distribution are located here as well as corporate cost.

Moving to the next slide, let's talk about the Leadership Journey. The Leadership Journey is our self-help program since the creation of Aperam in 2011 where we focus on improving competitiveness and driving Aperams' transformation. It has 5 phases with Phase 5 plan in 2024 to 2026 focused on efficiency to mitigate the effects of substantial global inflation, cost increases in Europe while ramping up key assets in Brazil and in alloys. Thanks to the gains generated in Leadership Journey Phase 5, we were able to remain profitable and competitive, particularly in Europe despite intense market headwinds.

Also, as mentioned by Sud, in Leadership Journey 5, we reached the entire 3-years goal in the first 2-years. Thanks to this early achievement, we are officially launching the next chapter, Phase 6 with focus on value growth by leveraging our integrated value chain and innovation.

Let me introduce further our new Leadership Journey, Phase 6. Leadership Journey is not only a simple cost management and efficiency program. Our self-help program leverage every link in our value chain and entails structural transformation. We are not just weathering the cycle. We are reengineering our business to lead it. Phase 6 is based on three critical foundations.

First, synergies. We are generating even more value from our differentiator in the market, our integrated supply chain. In Europe, we intensify the cooperation between the different segments from scrap as a raw material over the mills to the distribution in Service & Solutions. In addition, 40% of our Alloys products are running through our European stainless mills. Also in Brazil and at Universal, we will unlock further synergies with our Recycling & Renewables segment. By optimizing this One Aperam approach, we ensure that our operations stay competitive and cash positive even when the market hits the low cycle. An important proof point for this is also in terms of the synergies, net working capital employed. As demonstrated in 2025, we continue to optimize net working capital between our units. In addition, we will streamline our SG&A across the businesses to remain cost efficient and ensure resilient margins in a volatile macro environment.

Second, we are redefining circularity. For many sustainability is a regulatory burden. But for Aperam, it is a competitive hedge. Through recycling 2.0 and our forest, we are scaling sustainable business that offer tangible financial returns. Recycling 2.0 is where we are investing in our footprint in recycling with three objectives: Consolidating into a more efficient hub and spoke model to serve our key clients; to use digitization in Europe and the U.S. to improve synergies with our mills and; lastly, investing in automation and productivity to become the state-of-the-art recycler for aerospace alloys in the U.S. market.

In Renewables, we are increasing the productivity of our forest and scaling up our bio-oils and carbon credits turning our green credentials into profit. Finally, innovation is our path to differentiation. We are moving up the value chain from bio-oil to high-tech OLED screens by expanding our alloys footprint into alloy space in Europe, developing our electrical and electronics engineering offerings and growing further in the energy sector, we are focusing on innovation to ensure our product mix drives value in new markets. By the use of robotics and automation in our production and AI agents in our commercial and distribution, we see clear benefits across all our businesses. You can see on our website 2 recent patented examples of innovation.

Our patented 316A grade for high value-added marine application. It is a low-cost, low-carbon footprint stainless steel grade replacing 316L in all applications. It is fully plug and play for our customers. Another recent patented innovation is our Slinky Solution for electrical motors, increasing performance, reducing size of motors and reducing waste for our customers.

To bring it together, Leadership Journey Phase 6 is about finding value in our supply chain through synergies between the businesses which work well together through scaling our Recycling & Renewables platform and vitally growth with innovation across all our businesses. We are building a business model at Aperam that is more circular, more innovative and thus more profitable across the entire economic cycle.

Coming now to the update on net financial debt. Our promise after the successful and really fast closing of the Universal acquisition was de-leveraging. Starting with the peak at the end of Q1 2025, just after acquisition, we have been able to generate cash for CapEx for attractive dividends and EUR 257 million to reduce net debt to less than EUR 1 billion. Originally, the target was to de-leverage by EUR 200 million. Despite the challenging market conditions, cash generation was successfully achieved also in the low of the cycle. This development is driven by our cost leadership and the ability to generate cash also in difficult times, helped by effective working capital management. With the financing we did, the balance sheet is stable and the mid- and long-term financing of Aperam, secured. We were in the fortunate position of having excess demand when raising debt. This underlines our strong position and credibility in the capital market. Our focus will remain on cash also in 2026, and we will continue to earn the dividend for our shareholders during the lowest of cycles without raising debt, fund our transformation and be ready for the recovery whenever it happens.

I hand it over to Sud for the outlook.

Thank you, Nicolas. As Nicolas has explained, we want to focus on growing the value of our integrated supply chain inside Aperam. Now I'm thrilled to go a step further. At Aperam, we want to look beyond the next cycle. This is why we invested in a modern cold rolling mill in the middle of COVID, or in 2023, invested in the hot rolling mill in Alloys. In this tradition, I would like to announce transformational investments in our European footprint across our businesses.

Firstly, on Stainless, we have three investments planned. First, we plan to invest in a new automated cold rolling mill in Genk, Belgium. Genk today offers our entire stainless product portfolio, capturing the upside in high cycles or when the trade measures become effective and providing us an efficient integrated site with cost advantages in low cycles. We are investing in a revolutionary annealing technology in Ch�telet, Belgium, which will save us energy costs, reduce our carbon footprint and provide us with flexibility in our annealing capacities. And we are investing in our cold rolling mill in Gueugnon, France to develop this site into a center for Specialties. Processing alloys already now moving to specialty stainless, specifically moving into energy and heat efficiency applications.

In Alloys, we will invest in a new vacuum induction melting VIM furnace complex, de-bottlenecking our upstream for specialties. As is today, the mills of stainless Europe will continue to provide the downstream capability for 40% of alloys material flow. This synergistic development will help us capture the growth in aerospace in Europe, energy and electrical and electronics engineering applications. But why now?

It is a clear strategy. Europe is a key market for us, and we believe that we should prepare for the future with modern technologies that can compete with the best in Asia and create value by being the fittest. With the coming trade defense measures and European investments in energy and aerospace and defense, the upside is tangible. But we want to build an Aperam that capitalizes on its efficiency and the ability to serve the customer demands across the cycles. We are investing in these modern automated tools that can in low cycles, ensure our operations remain the most efficient and cost effective in the market, in high cycles, allow us to capture maximum upside and better reach the market and deliver growth in the specialties market in both Stainless and Alloys. The investments kick off in 2026 and ramp up into 2028, except the Alloys investment would need until 2029.

We expect a cash outflow of EUR 160 million across these projects over the next 3 to 4 years. I would like to remind you that we expect at least a 15% IRR on our investments. As always, we will keep you posted with these updates as these investments start and develop. As you can see now, Aperam is not just reacting to the market. With these investments, we are forging our future in Europe and for Europe.

Moving to the next slide. I'd like to conclude with the outlook, having 1 month of 2026 behind us, the development of Q4 2025 has continued. Underlying demand, apart from the seasonal development, remains stable, albeit at a low level, and that visible spark of momentum everyone is looking for is still missing. But the good news is that in Europe, in alignment with historical seasonal patterns, we anticipate an overall increase in shipment volumes throughout Q1. While Brazil is currently navigating its seasonal low, seasonal higher demand in Europe will be the driver for the quarter. Alloys continued to deliver EBITDA at a stable high level despite the oil and gas weakness and the wait for volume recovery.

Also, in 2026, net debt should decrease, but not in the first quarter due to capital needs for more working capital based on our seasonal higher activities. In total, we expect EBITDA in Q1 2026 on a higher level compared to Q4 2025. With Brazil seasonally returning in Q2, we expect to see a further recovery. This, combined with our Leadership Journey contribution, gives me the confidence to guide to a quarterly EUR 100 million run rate in H1 2026 for Aperam, but in two steps. Please be aware, that we start slowly into the new year and speed up later. As discussed at different points in this podcast, we expect to see additionally some positive effects in H2 from the trade defense measures starting in July. Now let's look into our transition into 2026 and beyond.

Now this slide is more than only a financial road map. It is a testament to the value we have built and the growth we are now positioned to capture. We've navigated the low cycle with discipline, and we've built a more cash-generative business model with our differentiated value chain. Firstly, our strategic diversification beyond stainless. While stainless remains our heritage, our future growth is significantly more spread-out. Through Leadership Journey Phase 5, we have successfully developed our Alloys and our Recycling & Renewables segments. Between 2020 and 2025, the addition and growth of these 2 segments has contributed to an additional EUR 130 million to our annual EBITDA. When you look at the growth in shareholder value between 2020 and 2025, we've seen a EUR 280 million increase in market cap. But more impressively, the additional EBITDA in Alloys & Recycling Renewables equals to EUR 810 million EV when applying our historic multiples.

Now on top of 2025, with the future upside of the development of Universal, we see further EUR 400 million in value on the horizon. As I've explained, our investment to de-bottleneck the upstream in the Alloy segment with the new vacuum induction melting furnace will be a cornerstone of this continued value through innovation, as we look to power the sector growth in aerospace, energy, electrical and electronics engineering. As we continue to build Aperam further, our focus has not diverted from fortifying the foundation.

In 2026, we generated EUR 422 million in cash flow from operations. This disciplined cash focus allowed us to bring net debt below the EUR 1 billion mark. By de-leveraging now before the next up-cycle, we've ensured we have the balance sheet strength to be opportunistic and capture the gains when the market turns. In terms of shareholder value, just between Q1 2025 and Q4 2025, we have moved above EUR 250 million from debt to equity in our shareholder enterprise value. And last but not the least, let's talk about our Stainless business in Europe. Even in the worst market conditions, our European stainless operations have remained profitable. This is not by accident. Through continuous improvements in cost competitiveness and productivity, we've ensured that our low-cycle floor is higher than before and has resulted in the European cost leadership. In fact, our Stainless & Electrical segment is delivering a run rate of EUR 150 million even at the bottom of the cycle. This gives us confidence to invest in productive new tools to capture the upside resulting from a stronger trade defense to diversify into high-value specialties and to have modern tools with low-cost, defending our competitiveness in low cycles.

I wanted to conclude with a simple analogy. We can thrive even when the wind is against us, and we are building a company that powers on its own engines from Recycling & Renewables to Stainless to Alloys to Distribution. When the trade winds shift, we are ready to capture that upside as well. As we transition beyond 2026, we are on a clear path to a normalized EBITDA of EUR 700 million to EUR 800 million annually. Aperam is no longer just a cyclical steel company. We are a diversified, high-value material player with a focus on cash, a solid balance sheet and a clear plan for value growth. Let's look into the future together.

Starting next week, we'll meet investors. Nicolas, the Investor Relations team and I will be on the road attending conferences and carrying out roadshows. As you can see on the slide, we have a full schedule to be available at many locations in Europe as well as in the U.S. All of us are looking forward to meeting as many of you as possible. Please contact our Investor Relations team with any feedback or if you need corporate access. We are happy to help you and to look into the future.

Thank you very much for listening to Aperam's Q4 management broadcast. We wish you a pleasant day and look forward to your questions in our conference call this afternoon at 2:00 p.m. Central European Time.

But I have just one more thing now. CBAM was mentioned already, and there are many interpretations and misunderstandings about it. This is why my predecessor and now Board member, Tim Di Maulo and I recorded a video to share background information and explanations. This video is available on the Aperam's website, but it's also now part of this podcast. We hope this video is helpful for you, and you will enjoy the special kind of education on a topic which will impact us for many years to come.

[Presentation]

Ladies and gentlemen, welcome to the Aperam Third Quarter 2025 Results Conference Call. I am George the Chorus Call operator. The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Timoteo Di Maulo, CEO. Please go ahead.

Hello, everybody, and thank you very much for joining our conference call today. All our comments were contained in the podcast that we published this morning, which you know supports our quarterly financial reporting and where applicable, our disclosure of regulatory information. We also save more time for your partner question during this call.

As you know, this is my last quarterly conference call as CEO of Aperam. I'm proud of the work we have done to the stronger resilient pattern during the last 11 years. Just like in the podcast, my colleagues, Sud Sivaji and Nicolas Changeur are here, and together, we are working forward to answering your questions. Let's start straight away with the Q&A, please.

[Operator Instructions] Our first question comes from Tristan Gresser with BNP Paribas.

I have two, the first one, in your outlook presentation, you mentioned some price pressure from imports in Brazil. Can you discuss a little bit the situation there. I thought that you had received recently a renewal of the antidumping duties from China and Taiwan on CRC. Is that enough? Do you need more? Usually, we talk a bit more about Europe input pressure and not so much Brazil. So has anything changed recently?

Tristan, Sud here. So because it's Brazil, let me answer, and I think it's important, and your understanding is correct. There is price pressure is not on our stainless product portfolio. It's actually the non-stainless part, specifically the commodity electrical steel grades, which is the NGO part and some carbon steel part, so to speak. We just mentioned that just to be clear what are the different moving factors for your model, so to speak. It has nothing to do with stainless. And there, your understanding is correct. There is a proposed antidumping revision, and we are waiting for the results of that one on stainless. This is just the non-stainless part.

And the effect is not very significant, but still the effect is there. And the reason we wanted to mention that is because, as you know, Brazil goes into a summer quarter in Q4, and it has been our most profitable contributor compared to Europe, which is positive but slightly positive. So when volumes disappear, smaller changes become visible, and that's the reason we gave that guidance. So it's no concern on the stainless market. Demand remains stable margins have not unchanged. The import pressure has not changed to post the minus in stainless in Brazil.

Okay. That's very clear and helpful. And my second question is on CBAM. So in the presentation, you mentioned that CBAM is on track. Can you mention a little bit the details of what you expect from the policy would be a good outcome, a more neutral outcome and a more negative outcome? Do you firmly believe that Scope 3 on NPI will stay? Can Scope 2 be included? And does that even matter? Do you think the commission will be able to assign a carbon intensity by company or by country? And finally, if you have a view on the benchmark, I believe there are differences depending on the grades of scale less steel you look at. So any color there would be greatly appreciated.

Okay. It's a complex question, knowing that not everything is clear today and because the commission has not decided seems like the benchmark deal value, which has an impact in term of numbers. Now what is clear as of today is first the application from the first of January.

The second thing that is clear is that for stainless steel, there will be the inclusion of the precursor. Precursor, meaning the raw material, the most important arrays that are in the scope of stainless steel like ferronickel, pure nickel or nickel pig iron or ferrochrome.

The third point, it is clear and that you have mentioned is that Scope 2 is not considered. Okay, I will not be considered the application of the CBAM for the time being.

The other point, which is clear is that CBAM will have a progressive ramp-up. This has been already disclosed many times. And so it will start in January 2026 and will have the full effect in the next 7 years.

This is what is clear today. Another part that is clear is that considering the very high level of CO2 of the producer, which are the most competitive because they have a [nickel pig iron, this will have a big impact on all producers, which are used on nicely. The other part, which is also clear is that the commission is putting in place the melt report just to avoid the non-traceability or improve the traceability. All this is positive. The numbers are not yet communicated and in particular, all as you mentioned, all the management and the default values are not for the moment known.

The next question comes from Maxime Kogge with ODDO.

Two questions on my side. The first is on volumes, actually and the bridge from Q3 to Q4. So reading between the lines, I understand that you expect volumes to increase in Europe in line with your seasonality, which I equities in contrast what has been guided by your two main competitors. And in Brazil, this would be lower, but in line with seasonality. Can you confirm that? And perhaps a bit more color on the trends you're seeing.

No, no, I fully confirm that. The seasonal effect in Europe and in Brazil, plus months. The Europe will increase their volumes because in Europe typically in the month of August is very low because of the closure of all this out of Europe or France, et cetera. And then for Brazil, you start this summer. And so there will be a summer in Q4. So all in all, I confirm that Europe will be a increase of volumes and Brazil will be some decrease in volume, but in line with the seasonality.

Okay. Very clear. And second question is on the aerospace end market, which has actually quite soft, like your initial expectations. So perhaps can you shed more light there on your customer portfolio, your exposure between the market and new equipment or kind of information that can be useful to appreciate the potential of upside in 2026.

Okay. So fundamentally, we are exposed to aerospace in universal and a little bit in some activity of recycling but these are minor compared to nines our exposed to aerospace. What has been here in aerospace, and we have discussed in previous cold is that there has been a long phase of destocking in which we are still now.

What is clear also in aerospace is as a market, the market is very solid and the order book of all the producers that we are addressed producer, which are the typical Boeing, et cetera, but all the supply chain of this producer with motors with landing gears, et cetera, they have a very solid order book.

Now once we'll be stocking is finished and we see that this is going to the end in the next few months, the market will go back to the performance that they have shown in 2024 and the beginning of 2025. It's clear that this market is a bit different from the commodity market that we address with the standard steel where the stock and inventory are between 2 to 3 months, 4 months. Here, we are discussing of inventories, which are along the supply chain of many, many more months and we are at 12, 15 months. And so whenever there is a disturbance in the demand, this has a very long, let's say, consequence and this is what we are experiencing. On top, we have had some maintenance during Q3. But as I repeat, we are very confident on 2026.

The next question comes from Tom Zhang with Barclays.

Just one for me, actually. On the CBAM, I think we discussed before, there's clearly a lot of potential loopholes and specific issues of sales, whether that's different grades, whether that's sort of default values? And is the global market these as a quite smart guys are going to try and slide ways around it. So in my mind, with CBAM, it's not just about getting the policy right. It's about being very quick to react to examples of circumvention and changing the policy, which is why I think the delays that we're going to have in even if there's something like benchmark and default values has made a bit of a concern.

From your discussions in Brussels, is there anything that gives you confidence the commission is going to be more flexible and a particular to react to adjust the CBAM in the future, try and shut out circumvention? Sort of any thoughts to go around that would be interesting.

For sure, they have I see you are very well informed. So for sure, they have fully understood about the benchmark and they know personally the story of the grade, and they have bonded us that this will be fully considered because not only the grades are sent end of CO2. And so typically, the highest content of CO2 is in austenetics, which represent 75% of the market. So they are fully aware and they are supportive on this point.

We look also that you are referring are they well known they are on the capacity sharing and this circumvention. And all this has an answer, which is the melt and pour and the implementation of both melt and pour, the benchmark and the default values is part of what the commission is working on, knowing that it miles a very clear view on what are the loopholes and the possible measure, at least we have given them all the possibility to put in place leisure with our totally satisfactory.

Okay. Maybe if I can just wish you slightly. I mean, we've had some stories of Asian producers basically melting slab and then immediately scrapping that slab and remelting it and basically just calling it scrap as one way of circumventing CBAM. Maybe this is a very small scale, but just give us an example. I guess the question is more, once bans in place, do you think the commission is going to faster going forward in the tour do you think it's still going to be quite a slow European process when we see circumvention, maybe it's going to take 1, 2, 3 years for them to go out and pick it.

I don't think you can change dramatically the speed of Europe. Now what is clear is that all what is described here is very well known and it is not discovered tomorrow mony they will not start to work on all these problems from more and more, okay?

On top of the question, the question is also the fact that you have let's say, refer to things which are relatively heroic. So scrapping a sub and then remelting this lab is something which has a cost the end you have a very low interest to the debt. So I'm confident that progressively, the CBAM will be a strong support for a level playing field. Then we will see.

[Operator Instructions] Our next question comes from Bastian Synagowitz with Deutsche Bank.

My first one is also coming back on the plan policy changes. I guess as a starting point, no one at the moment is really making any money in Europe this way easily EUR 100 away from what used to be previous mid-cycle margins. would you be confident enough to say that with what is coming in, what planned, we should be going back to mid-level margin levels before demand rebound, which we've been waiting for, for some time, I guess, which we can't really think on? That would be my first question.

Yes. The answer is clear, yes. Now the answer is not if we are confident or not to make this will level. The question can be in which month, we will see the effect because it's a question of months. We don't know exactly when the commission will put in place. We have asked the first of January a lot of member states are supporting the first of January. But at the end, when the level of the imports will be reduced at a sustainable level, which was the level of 2012, 2013, when the utilization rates of the plants in Europe will be let's say, much better in close to the 80%, 85%, yes, the market will be different.

Then and this will be different even in a moment where the final demand is still lagging behind because as you have seen also in our podcast for the moment, the markets are not yet recovering. So we can expect a double effect. Which is on one side, the full, let's say, ramp-up of the circuit and the other side, the fact that some policy like the German plan, will enter in effect and the demand will be stimulated and go back to a more normal level.

Now as I repeat and as to be clear to everybody, it's a question of months. Not a question on years, not question quarters. I think it is a question of months, can be 1 or 4, I don't know. But it will come.

That's been very clear. Then my next question is on alloys. Can you maybe help us understand how, I guess, the former business pre-Universal is doing? And are you still confident we'll be hitting the EUR 100 million EBITDA target this year? Or has this become out of reach. I guess you obviously have the maintenance situation here, which is constraining you a little bit.

And then maybe also give us a bit more color on how much Universal is contributing relative to the, I guess, previous EUR 60 million pre-synergy earnings aspiration level is used to have. Those are my questions on alloys.

So on the question, Yes. So we've given you two points, which is that we have this temporary weakness in the oil and gas market, which I'm sure the entire industry is going through, right? And based on that, on an annual run rate level, the previous alloys business would be awarded about 10% less level, so to speak. So that's an upside, and we still stick to the EUR 100 million goal for the previous alloys business.

And the Universal business, if you remember, we are actually only taking this year, and that's something we kept in mind only 11 months, right? So the first one was before. Just to keep run rate in mind. We had guided close to EUR 60 million for the year in a steady-state run rate. And the weaknesses, which Tim has explained in the market and the maintenance issues between alloys before Universal will traditionally bring Universal probably to around 50%, 60% of that number this year, so to peak. So this is the broad level we expect this year.

Starting next year, it should be full run rate for Universal because we'll have it 12 months in our portfolio and alloys as well and then synergies have to start kicking in Remember, we guided to 27 million synergies also. So because this is a year of ramp-up of synergies, so there should be a run rate of the first year of the ramp-up, which we promised this split across the next 4 years, should also start flowing in, just to give you alloys.

That's great color. Just briefly on , are you seeing any same signs that this is now starting to come back for the next year, I guess, in terms of earlier call-off rates and indications? Or is it just too early to say?

It's too early to say because also there's a lot of year-end-related store loan, a lot of equipments, which get called off end of the year, as you know. It is not just simply a Brent price compared to the investments or calculation. So it's too early to say.

Okay. Great. My last question is on your financing line, which was slightly higher this year. Can you maybe just quickly update us on how much of the financing costs were related to things like advisory and also hedging and what would be an assumption here for, I guess, the recurring run rate. You mentioned EUR 50 million cash cost in the report, but what can we use as a P&L item for the next quarter?

Nicolas speaking, so for the interest rate, you can use for your model, EUR 15 million basically per quarter. The rest of the cost is indeed the derivatives. We are looking here at a timing effect, and this effect would be neutral over a period of time.

Okay. So EUR 60 million annualized is basically the financing line in the current situation with the balance sheet and financing costs as it is?

For this year, Bastian if I can jump in. But I think the broader guidance is look at our debt, and we have the 4% to 5% rate plus you add a few utilization fees and everything. So you have to understand, you've announced this time refinancing of $790 million. So that refinancing, obviously, the older lines were probably at 3% to 4% because they came in from 5 years ago, right? So that will probably have a smaller hit a very, very, let's say, high single digit or low double digit, and I'm talking now 10 million or 11 million ] to that number starting next year, if you want to look at long-term ones.

Ladies and gentlemen, this was our last question. I would now like to turn the conference back over to Timoteo Di Maulo for any closing remarks.

Okay. Thank you very much for attending and participating to our Q3 call today. As I opened, this is my last quarter conference call as the CEO of Aperam. However, you know that I will remain close connected to Aperam, not only as a shareholder, but also as a future member of the Board of Directors. I also intend to continue supporting Aperam and will continue as a strategic adviser on public affairs for Europe, for example, so that we can build a clean steel industry in Europe.

I am confident that our open transparent dialogue with the capital market will continue, thanks to my successor. And that you will continue to have confidence on the fact that the headwinds that we have faced in the last quarters are going to be partially sold or totally sold in the next future. So thank you both on the corporation and CEO and have a fantastic start to the Christmas and holiday season. Bye-bye to all of you.

Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.