Outokumpu Stock

Good afternoon, and welcome to Outokumpu's Second Quarter Results Presentation. I'm Johan responsible for Investor Relations. We will start with the presentation from our CEO, Kati ter Horst; and our CFO, Marc-Simon Schaar. And after the presentation, you have the opportunity to ask questions over the lines. And with that, Kati, I hand over to you.

Thank you so much, Johan. So welcome also from my side, and we will first with Marc-Simon cover the Q2 results, and then I will comment a little bit more in detail our very recent investment decision today. So if we start now with the result on Q2, profitability improved to EUR 100 million from EUR 65 million in Q1, and this improvement was mainly driven by the improvement in business area Europe.

Americas business area Americas continued its strong performance, and we also saw ferrochrome result further improve in the second quarter. Of course, in Europe, it's clearly that it's the regional measures in Europe, mainly CBAM and then also the steel safeguard measures that have supported the market. While we can say that in the U.S., the market has been -- and the demand on the market has been more robust, especially in the Industrial segments.

And for ferrochrome, especially our low-emission ferrochrome from Europe, in this geopolitical situation, the demand has been at a good level. We are today talking about our EVOLVE strategy, 2 important steps as milestones to proceed and progress with our strategy. One is the investment in high nickel alloys and the second one is really the publication of our first patent applications, and I come back to that a little bit later.

We usually always look at what do the imports look like. I think the main message here is that the imports in Europe have clearly stayed at the lower level. They were a bit higher in Q2, 17% compared to Q1, the 15%. I think this is also a little bit being upfront of the steel safeguards that came in -- came actually in force in the 1st of July.

Americas, if we look at U.S. only, the import level has stayed very stable at 20%, and there was a bit of increase in the whole Americas because of Mexico. Then if I would comment a little bit that did we see anything change in the underlying demand or the sentiment when we look at Q2 versus Q1, I would maybe highlight some of the positive things we've seen.

So basically, data centers, both in Europe and Americas have driven some demand. And I think then in addition to that, basically the heating and ventilation, air conditioning segment has done well. And then we see energy area being one. So those are the highlights we would have. On consumer side, transportation side, automotive, both continents, the demand has been sluggish. On deliveries, I think it's really important to comment here now a little bit.

Our deliveries in Europe in the quarter 2, they were the highest in 3 years, which brings the Group deliveries also to the highest in 3 years. But I also would like to highlight ferrochrome. So also in ferrochrome, we had a 4-year high in the deliveries. Where you don't see maybe Americas moving that much is maybe what we have to remember that we have 250,000 tons of our cold rolling capacity in Mexico, which we cannot currently use really to the full benefit of Americas due to the 50% tariffs from Mexico to U.S.

But volumes played a big role in Q2. Then on sustainability. So I'm very happy to say that our safety performance further improved from Q1. So we arrived on total recordable incident frequency rate at 1.4, which is below -- which is kind of better than our target level of 1.5. The whole half year was now 1.6. So this is a work that continues, but I would say that we are very much on a leading level here, but work continues.

Again, we also had a very high recycled content percentage. And then if we look at external recognition, I think it's important to say that being recognized by both the Financial Times as one of Europe's climate leaders for the third time now in a row and also by Time among the world's most sustainable companies, it really matters because it provides independent validation that the sustainability leadership is real, it's measurable and internationally recognized.

And these rankings assess not only the climate commitments, but also demonstrate progress, transparency and business performance. So such recognition reinforces our position as the sustainability leader in stainless steel and really supports our strategy of creating competitive advantage through decarbonization and circularity.

With this, I will hand over to Marc-Simon to go more in detail in the results.

Thanks, Kati. Good morning, good afternoon also from my side. In the second quarter, stronger profitability, combined with continued capital discipline, enabled us to further strengthen our financial position. This gives us a solid foundation as we keep executing our EVOLVE growth strategy. In line with our guidance, Group adjusted EBITDA increased from EUR 65 million in the first quarter to EUR 100 million in quarter 2.

While the net of timing and hedging impact in the quarter was less favorable than we had expected, our underlying operating performance was actually even stronger, driven primarily by higher margins in business area Europe. And speaking of Europe, I am pleased to report that the business area has returned to positive EBITDA. Our operating cash flow remained solid at EUR 85 million, allowing us to bring net debt down to EUR 224 million, while preserving our strong liquidity position.

With that financial overview, let me turn to the performance of our business areas, starting with business area Europe. The market environment in Europe was largely unchanged from the end of the first quarter. European producers continued to benefit from supportive regulatory measures, though end-use demand remained subdued.

A meaningful recovery in demand will require a clear improvement in business confidence, which continues to be weighed down by geopolitical uncertainty, particularly around the ongoing conflict in the Middle East. That said, volumes in business area Europe increased by 5% in the second quarter.

Beyond the volume growth, profitability in business area Europe was further supported by higher realized prices and lower fixed cost of sales in the second quarter following the backlog-related pressure we felt in Q1 from the supply chain planning solution challenges we had. With that, let's move on to business area Americas.

Business area Americas continued to deliver a strong financial performance, underpinned by growth in some segments showing improved demand such as data centers and related investments into infrastructure, energy as well as heating, ventilation and air conditioning.

The Mexican market also continued to show early signs of recovery with the manufacturing PMI moving above 50% in June for the first time in a year and its strongest reading since March 2024. In addition to the 4% higher volumes, profitability in Americas benefited from higher selling prices, driven by an increase in the alloy surcharge, supported by increase in commodity prices.

These positive factors were partly offset by higher costs, mainly related to freight and nonconforming material. Now with that, let's move on to business area Ferrochrome. Business area Ferrochrome was able to increase its adjusted EBITDA in the second quarter versus the first quarter, supported by the solid demand for our low-emission European offering as well as higher selling prices.

Overall, the demand remained healthy across all regions with North America continuing to be the strongest market. On the supply side, production curtailments in South Africa remained in place for most of the quarter, although electricity support measures have initiated production ramp-up, export volumes remained historically low, so the impact on the market prices during the quarter remained limited.

We also continued with our expansion into higher-margin ferrochrome products. And compared with the charge chrome market, the high carbon and high chromium ferrochrome as well as other special product segments are expected to be less exposed to the anticipated increase in South African production.

Now combined with CBAM, we do see that this is reinforcing the strategic value of our portfolio expansion. Now with that, let me close with a few remarks on cash flow and leverage. Supported by the improvement in profitability, our operating cash flow remained solid in the second quarter.

Together with some release in working capital and capital expenditures of EUR 34 million, our free cash flow improved to EUR 51 million compared to EUR 34 million in the first quarter. The working capital release came despite higher business activity and rising commodity prices during the quarter, once again demonstrating our continued focus on capital discipline.

The stronger free cash flow enabled us to further reduce net debt to EUR 224 million, as mentioned earlier, despite of the first dividend installment we paid in April this year. And finally, with both profitability up, net debt down, our leverage ratio declined from 1.3 to 1.1, in line with our financial policy.

And with that, back to you, Kati.

Thank you, Marc-Simon. I think then we come to actually our outlook and guidance. So let's take that next. So for the outlook, we say that the Group stainless steel deliveries in the third quarter are expected to decrease by 0% to 10% compared to the second quarter, and this is due to the seasonality in business area Europe.

And based on our current order book, the net impact of realized prices and raw material cost is expected to be positive. And with the current raw material prices, some raw material-related inventory and metal derivative gains are forecast to be forecasted for the third quarter.

So therefore, our guidance is that the EBITDA in the third quarter of 2026 is expected to be at the similar level compared to the second quarter of 2026. And then we can move to some more exciting topics here. So I'm personally very excited to announce that we are now starting the investment program into high nickel alloys.

And it's important to understand that with this investment program being executed, we will really become one of the key global players in high nickel alloys for flat products. And during the past year, we have run several trials at our Avesta plant in Sweden to test the capabilities at our melt shop, hot rolling and cold rolling assets.

And we have, for instance, been able to roll Alloy 625 into a width of 1,800 millimeters, which nobody else is currently able to do in the market. So we will be bringing actually a differentiated value proposition to our customers. Then based on this trial experience and to accelerate the time to market, we have now decided to do the investment in 2 phases.

So in the first phase, we will actually invest in the electro slag remelting at the current melt shop. And we will also invest a bit in the process optimization, and we will complete the detailed engineering study for Phase 2 to confirm the total CapEx, which we still estimate to be about EUR 150 million.

And the estimate and the CapEx for the first part of this investment in the current melt shop is estimated to be about EUR 30 million. And once the first phase is then -- it's expected to be operational in Q1 2028. The second phase then is about the new melt shop. So that's about a vertical caster. It's about vacuum induction degassing, VDI and potentially a second ESR.

And this investment is planned to be operational in the end of 2029. Then moving a bit to the right side to talk about the property technology development in the U.S. So building of the pilot plant is proceeding on schedule and our first 5 patent applications covering the key process elements have now been published, which marks an important milestone in the technology development.

It's also important to mention that this technology has wider application possibilities for metals. So we are really exploring here a number of options for future growth based on the technology development. So with that, I come to some of the key messages from today. So our EBITDA improved to EUR 100 million, supported by market fundamentals across all the business areas.

And our adjusted EBITDA in Q3 then is expected to be in the same level despite the seasonality that we have in Europe. Financial position remains strong and the net debt decreased, and we are making really a progress in our EVOLVE growth strategy.

With that, I will open for the Q&A.

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

I have 2 questions. The first one is on the metal spread guidance that is positive into Q3. Could you give us some indication how it's going to differ region by region? I guess we should expect a stable development in the U.S. and an improvement in Europe? I'll start there.

Absolutely. On the net of timing and hedging, what we say is that we expect some gains in this area. And I would quantify this as a higher single-digit number compared to the EUR 11 million.

And I think in terms of business areas, why we don't give guidance over here, certainly, the Americas business is still on base plus alloy surcharge, and we see a bit of lower nickel price environment here in the U.S. So that's impacting then on the U.S. side and mostly then of the other result is being related to business area Europe.

Okay. Just a quick follow-up on Americas, given you have base plus surcharges, if surcharges are going down, that should impact your spreads, right? And the second question is also a follow-up.

When I look at Slide 22, which is the bridge Q1 to Q2 EBITDA Europe, the red column, that is pricing mix, raw material costs. If I understand correctly, the guidance, this should turn into a big green column into for Q3, right?

Well, what -- yes, I think we guided for on the one hand side, lower volumes and those being offset by than the net impact of realized prices and raw material costs, and you're referring to this item. So yes, this is a positive element and being offset by the volumes. And therefore, we guide on a similar level. And what we're referring to mostly is in relation to business area Europe.

Yes. And I guess it's correct to mention as well that we could have had better mix in Q2. So we do expect the mix in Europe, especially to improve in Q3.

And last question, just does this guidance of better spread, stainless metal spreads include the recent drop in stainless scrap prices or is that going to be more of an impact for your Q4 results?

I think this is more going out further into the later part of this year.

The next question comes from Bastian Synagowitz from Deutsche Bank.

My first one is just a quick follow-up on the Americas and the moving parts there into the next quarter. I guess the impact here from the metal and hedging gain in the second quarter was only quite meaningful. I guess usually in the U.S., you still see probably further positive tailwind from seasonality in the, I guess, in the third quarter.

So just wanted to check whether you would expect an all-in performance run rate, which remains pretty similar also here to the second quarter or will this be in the mix a slightly larger deviation here between Europe and Americas? That's my first question.

Yes. I think as I mentioned earlier that we have had expected a higher impact -- a positive impact from net of timing and hedging in the first quarter. So a reason why that has not been materialized is basically the increase in commodity prices, which we have seen in the second quarter and then together with a different melting pattern, which we delivered to the market, a younger [ melted ] pattern, which we delivered to the market with higher raw material costs.

That was the reason here. Fortunately, we could offset this and stay fully within our guidance, which we gave for the second quarter. Now as this is a shift from the second to the third quarter on the [indiscernible] European side. On the other side, if we think about Americas, then here, what I also mentioned earlier before is that given current raw material prices, they are expected to be some -- or commodity prices somewhat lower than in the second quarter.

And that Americas is on an alloy surcharge basis. So that is having a certain impact here. But from the volume side, we should further consider a robust market in the Americas for the third quarter.

Okay. Okay. Understood. And then second, maybe zooming in quickly on the ferrochrome business, which did very well. You indicated here the potential effect from, I guess, the electricity regulation in South Africa.

Is this something you see impacting the market already, i.e., what are the current pricing dynamics you're perceiving pricing pretty stable? You see it coming under pressure already?

Well, as I mentioned in my part of the presentation on the ferrochrome side, we haven't seen any impact on the pricing and as well as driven by the fact that we haven't seen export volumes to pick up here. I think we mentioned that ramp-up in operations production has started.

We are not in a position and cannot guide on prices going forward and therefore, would rather leave it here with the important notion that we're going to develop our product portfolio into higher-margin business and which should give us then an opportunity to decouple to a certain degree from the pure charge chrome market.

Okay. Okay. Understood. And then last one quick question also on, I guess, your maintenance schedule. Usually, there are always some bigger maintenance breaks in either ferrochrome or the European operations.

There isn't any in the third quarter. Is there anything we should have on the radar with regards to this for the fourth quarter? I guess it would be quite helpful to have a bit of [ tee ] on that just ahead of time to avoid any negative surprises.

Well, indeed, we do have our annual planned maintenance shutdown in -- both in Europe and in the Americas towards the end of Q3 and beginning of Q4 over here. We do some small increase in maintenance costs in the third quarter, but I don't see any significant deviation from that third quarter level going into the fourth quarter.

And ferrochrome, actually, the biggest maintenance shutdown for SAF 2 actually took place already in Q2. So that's done.

Is there any cost impact still to come through from these in the fourth quarter, any major items at least -- just a ballpark at this point?

Not -- Bastian, not major items. There is a small increase in here, as I mentioned. But important is really to look at our guidance, what we have been saying that most important to understand the volume impact then also the net impact from the realized prices and the raw material costs and we do guide for similar.

That, I think, is the most important key part. And then you have different items, different dynamics. I mentioned on the maintenance break, nothing major. But in order to understand the guidance for the second quarter, I think we gave the elements in our guidance.

The next question comes from Joni Sandvall from Nordea.

Maybe starting off with the variable cost outlook. I think you mentioned the freight costs have increased, but could you give any indication of H2 outlook regarding freight costs and also energy?

Yes. Well, on the freight costs, transportation costs, fuel costs and related to the Middle East, we have seen an increase in our variable costs in the second quarter. Given what we see right now and the situation, which can evolve as we know and change every minute, we do not expect a significant deviation from what we have seen in the second quarter.

Okay. That's clear. Then maybe on the ferrochrome follow-up, does this development of your portfolio require some investments? And if so, when are you expecting to be ready with this?

Well, actually, this part of the portfolio development doesn't require such a big investment. We also use the ferrochrome converter that we already have at the plant. Then, of course, when we want to use the technology we are developing to further go to 90% chromium metal, then we talk about an investment. But we are not in that stage yet that we can discuss that.

Okay. Okay. That's clear. And then lastly, on the pilot plant start-up and the timetable here. When should we expect more information around the patents and maybe the start-up timetable for the pilot factory?

Well, look, we today said that our first 5 patents are public. So the patent applications are public. So you can see what the base technology is and what is the process technology we have made the applications for. We have other patents in this journey that will be public then later.

And the time line is today what we have said from the beginning that the furnaces at the pilot plant should be operational in the first half of next year, meaning that by summer '27, we can then confirm that the technology would be scalable. So we are on schedule, in budget and on time schedule with the pilot plant.

There are no more questions at this time. So I hand the conference back to the speakers for any closing comments. The next question comes from Tristan Gresser from BNP Paribas.

Did you, Tristan, still have a question?

Yes. Just on Avesta, the Phase 2, why -- there's a bit of a delay on the decision for this? And now given you have more visibility on your CapEx, should we expect the CapEx to decline quite a bit next year?

And second question on working capital. I mean it's pretty unusual to have Q1, Q2 release has been pretty strong. How would you think about H2 or the full year for working capital? That would be helpful.

So if I take Avesta and CapEx and Marc-Simon can comment then on the working capital. So remind me still the Avesta question was exactly about?

Yes. I think initially you were thinking of taking the decision for the melt shop earlier and not it's [ in a year ].

Why we are doing it like, yes. Look, we have learned a lot. Let's put it like that. So we have done a lot of trials in Avesta, both using basically doing our own melting and running it through, but also getting slabs in on alloys 600, 625, 825, which we already produce ourselves and tested the downstream assets as well.

But we have also learned that we actually can use the current melt shop for these 3 alloys. And the only thing we would need to add there is an ESR, which increases the purity of the metal, what you need for these kind of metals for quite a few customers. So in that sense, we actually -- when we first invest in the current melt shop, we are not delaying the whole project, but we are coming faster to the market with these 3 alloys.

And we probably are 1.5 years faster than we would have been otherwise. So through the learning we had in Avesta, we have found capabilities in the current melt shop that we were not sure about before. And therefore, this investment case has improved with a phased approach. And we still think the total investment is about EUR 150 million.

But to be exactly sure of the second phase investment, we still want to complete our detailed engineering study, and that is exactly what we are doing. And then on the CapEx, then we have said on maintenance CapEx that it's about EUR 100 million a year. That's where we are about this year as well.

We have room for, of course, strategic investments. We will start this Avesta investment cycle now. So some small CapEx probably spent this year continues the next year. But we have also other strategic initiatives on the table. So I think more in the end of the year, beginning of next year is the right moment then to comment when eventual other decisions come, what does the strategic CapEx start looking like going forward?

And then maybe I can then answer your question, Tristan, on working capital. So for the third quarter, we -- and based on or due to the planned maintenance, which we have towards the end of the quarter, beginning of quarter 4, we do see a certain inventory buildup here.

So we expect working capital to go up here with current market prices here as well. We also have some other one-off payments in the third quarter, such as related to our restructuring programs for which we provided the provisions already last year, beginning of this year. Having said that, as a result thereof, we expect our net debt to increase in the third quarter.

And then you mentioned maybe also a bit outlook into Q4. I think now if I look at the market and the dynamics, we need to see how the market is coming back from basically the vacation summer period, our customers being back and how then the market develops and picks up here. So it's a bit too premature yet to give a reliable outlook over here.

The next question comes from Maxime Kogge from ODDO BHF.

I have a few questions on the nickel alloy project. It's a quite exciting one. Actually the market is rather two-sided between on the one hand, oil and gas and chemical processing, which are relatively weak. And on the other hand, aerospace, electronics that are pretty booming.

So do you have a view already of the market you would like to address? And plus related to that, do you think you can really become a relevant U.S. player given that the footprint will be in Europe? Your peers have actually had to make some acquisitions there U.S. to really position themselves as the U.S. players. Any view on the [indiscernible] time line yet to give a little [indiscernible] guidance that would be helpful as well.

Maybe starting on the segments. I think you mentioned some of the important ones. So even maybe the oil production is not increasing in barrels, we see increase in exploration. And the oil exploration is going deeper, more difficult places. It requires more pressure resistance and all that.

So we see that market. Of course, Middle East now is a bit different, but for instance, in Latin America are proceeding quite well if you look at the plants. Power generation is one area. Electronics is one area. Specialty chemicals is one area for sure. And these are global businesses.

When it then comes to U.S., well, I think our biggest volumes, what we plan here to have are probably not for U.S., they probably more for Europe and Asia, but they are also partly for U.S. and for Latin America. And maybe one thing to remember that when steel products now have a 50% tariff being exported from Europe to U.S., high nickel alloys or nickel alloys have 15% tariff, the normal 15% tariff. So it is product that travels.

Interesting. And the second one, this is on commodity prices. So nickel is now taking a bit of a hit, but molybdenum remains very strong. And I was wondering whether that was more of a challenge or an opportunity for you? And maybe if you could shed light on the development of the Greenland Resources project, which will allow you in the end to have your own capacity there.

Well, first, on the molybdenum price itself, yes, you're absolutely right. I think the market is since a couple of years in a structural deficit here. We have seen molybdenum prices going up, which then also puts a certain pressure on the margin of these products here. That's so much from the commodity pricing side. But what was the second part I didn't get it fully.

I think -- yes, it's on the Greenland Resources project. Any color you could give on the development, on the time line and when it could be operational?

Yes. I think from what we understand also in the discussions here with our partner, I think the project is well on its way. And the exact date and time of when going operationally, that is still something which needs to be explored, but we are very positive and looking forward for the mining project to become online.

Yet I'm not in a position to give any further details, unfortunately, but I'm pretty sure that soon we will be in a position here during the second half of the year and then give also a bit more color on it.

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

If there are no more questions, then I thank you all very much for your participation and good questions, and see you next time then when we talk about the Q3. Thank you.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

[Operator Instructions]

The next question comes from Tristan Gresser from BNP Paribas.

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

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

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

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

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

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

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

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

The next question comes from Adahna Ekoku from Morgan Stanley.

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

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

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

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

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

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

The next question comes from Bastian Synagowitz from Deutsche Bank.

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

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

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

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

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

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

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

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

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

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

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

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

Inventory position.

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

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

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

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

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

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

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

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

The next question comes from Maxime Kogge from ODDO BHF.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Thank you.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The next question comes from Tom Zhang from Barclays.

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

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

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

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

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

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

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

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

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

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

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

The next question comes from Anssi Raussi from SEB.

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

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

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

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

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

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

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

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

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

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

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

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

Correct.

The next question comes from Maxime Kogge from ODDO BHF.

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

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

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

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

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

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

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

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

The next question comes from Bastian Synagowitz from Deutsche Bank.

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

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

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

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

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

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

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

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

No. No, nothing major.

The next question comes from Igor Tubic from DNB Carnegie.

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

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

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

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

The next question comes from Joni Sandvall from Nordea.

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

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

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

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

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

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

Thank you.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The next question comes from Adahna Ekoku from Morgan Stanley.

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

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

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

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

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

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

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

The next question comes from Anssi Raussi from SEB.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The next question comes from Joni Sandvall from Nordea.

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

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

I think most important is really lead times.

Yes.

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

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

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

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

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

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

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

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

The next question comes from Maxime Kogge from ODDO BHF.

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

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

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

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

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

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

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

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

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

The next question comes from Meet Mehta from Barclays.

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

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

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

This is under net of timing and hedging, yes.

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

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

The next question comes from Bastian Synagowitz from Deutsche Bank.

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

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

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

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

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

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

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

Yes.

Absolutely. Absolutely.

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

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

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

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

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

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

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

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

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

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

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

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

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

Krefeld

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

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

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

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

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

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

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

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

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

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

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

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

Thank you.