Carlos Lora-Tamayo : Good morning, everyone, and welcome to the Acerinox Second Quarter Results Presentation. This quarter has been a very positive quarter for the group despite the continuing geopolitical uncertainties and regional conflict -- with an 85% quarter-on-quarter EBITDA increase, the strength of the stainless steel division in the U.S. has again proved to be the driver of our solid results. It is noteworthy to mention the strong order book in the aerospace and defense sectors as well as the recovery of Acerinox Europa within the European market. The new trade measures have started the 1st of July, and we are optimistic with regard to the future of the European steel industry. For this presentation, we will hear from our CEO, Bernardo Velazquez; our Chief Corporate Officer, Miguel Ferrandis; and our CFO, Esther Camós. Before we start with the presentation, let me remind you that this conference call is being broadcast on our website, acerinox.com. And now I hand you over to our CEO. Bernardo, please go ahead.

Bernardo Velázquez Herreros : Thank you, Carlos. Good morning, everyone, and welcome to the Acerinox Q2 results presentation. You all know that we have a new normal environment that is with our tariffs, sanctions, geopolitical uncertainties, conflicts and so on. And in this environment, it is easy to focus only in the short term. But we at Acerinox, we drive with our high beams. We are focusing in the long term and sticking to our strategy, loyal to our strategy. I think this is the key of the success of these results in this macro scenario, with a strong position in the United States, improvements in Europe and focusing on efficiencies in our excellent program, developing synergies, we can say that we are proud of the set of results. Our EBITDA, EUR 176 million has been 85% higher than Q1. And in the total semester, EUR 271 million is 27% higher than the same period last year. We have a stronger order book. We have higher prices. We have summer breakdowns ahead. So that is the reason why our financial debt has been -- has increased due to the working capital increase, basically stocks. But we are pretty confident that we will focus to go to a ratio EBITDA -- debt to EBITDA of around 2 at the end of the year. So this -- everything is in the control as we normally say, our focus is our strategy and control the controllables. And in this situation, we are delivering reliable results. Steel consumption is low with all the situation with all these uncertainties. Steel consumption is low in all the regions. In the United States, apparent demand according to our estimations, has gone down 8% after 4 years of a low cycle. Imports also are being reduced basically because of the higher transport cost and a stable situation in the United States, but 2 points from 24% to 22%. And inventories, everybody is cautious. Inventories remain according to our estimations, 10% below the historical average. We have the Section 232, thank God, that is providing stability to the market. And I think it is helping to the target of the United States industrial policies, reshoring and reindustrialization. We have seen several other examples before. We have spoke about the appliance developments, new factories and new assembling lines in the United States. Now we have read about General Motors as another example that coming back to United States, moving production centers to United States. So I think this is a reality, and we are enjoying this situation that as soon as we have more stability, more visibility, I think that we will see better consumption and better results from now. we don't see real good signs still for recovery. We can speak about data centers. This is true. We can see in the stainless steel business, we see a better performance for data centers in the heat exchanger sectors. We have a stronger order book in rebars. So we see some investments in infrastructure. It's a little sign that the truck industry is starting to improve, where is a good sign in the United States, but still is not enough to speak about recovery. In Europe, the situation is changing. I think the new situation is what we call it a game changer. CBAM started 1st of January. And since that time, imports have gone down from 24% to 16%. This is important because the target with the new trade measures is to go to a level of 12%, 13%. So CBAM has already reached the level of import that was desired in the European Union plan. And now with the new measures that have started in 1st of July, we can only expect consolidation, consolidation of this level and stability. Stability for us means low imports that is more local production, that is more volume and that is better cost and better margins for us. So we are very excited with this new situation in Europe. I think it's a situation with the steel in the center of the industrial policy of the European Union. But it's not only steel because we have to defend all our customers. And I think that finally, Europe has realized that we need the industry. We need industry to provide quality employment. We need industry for the strategic autonomy reason. So this is the new situation, the new situation in Europe, and we are very happy and very excited with this. We have from the last meetings that we have, we have the new quotas. New quotas has been already been published and the European Union is penalizing the countries that are responsible of the world overcapacity. This is very important because the worst penalized countries has been Taiwan and China with a 69% of quota reduction and Vietnam with a 30% quota reduction. Now this is important because they are normally countries offering lower prices and adding more distortions to the market. And in the case of South Africa, as a responsible country with a responsible supplier that is our Columbus Stainless, the European Union has kept the same level of imports, the same level of quotas that we have been using during the last 3 years. This is also important for us.

Miguel Ferrandis Torres : If we move to the HPA market, you know our strategy has been driven by diversification, diversification by product, diversification by geography. It's a clear demonstration the success of this strategy of diversification when we analyze both performance of the market in America and in Europe. In America, the last 2 years have been driven, in our case, by what we call the AAA investment strategy, America, alloys and aerospace. The demand in America is very strong, driven by the industrial gas turbines, driven by the space exploration, driven by the aerospace in both civil aerospace as well as in defense. So this -- all these sectors now are booming are creating also prices going up. We have experienced in the second quarter, the 2 highest order entries per month in Haynes. And then we are seeing that it's a much steeper ramp than the post-COVID effect. So in that regard, the momentum is excellent, probably the backlog shall reach historical maximums also at the end of July. So the timing is very good. We -- it was appreciated early in the aerospace, as was mentioned, the long product recovery. And then finally, it has been coming to the flat product where currently, we still are more based, but the prospects remain very good in regarding of the aerospace, for example, the construction, which obviously in volume is the most relevant. The construction in the narrow-body aircraft in Boeing, in Airbus according to their comments is growing more than 40%. So what we have is currently for the coming years, more or less the appreciation that this is a sector which by far is going to have a spectacular performance. In addition, in the power generation, the industrial gas turbines, mostly driven by the data centers. The electricity necessities for the data centers are going to double in the coming years. So this unprecedented needed for dispatchable power generation. And in this regard, the large gas-fired combined cycle plants clearly are the solution. So obviously, we are there. So the momentum in alloys in America is brilliant. In regard to Europe, the situation is different. We still are waiting for investment projects. The most relevant sector for VDM, as you know, is the oil and gas. It's obvious that the oil and gas is facing its challenges currently with the conflict in the Middle East. But having said that, it's also obvious that as soon as the solution comes there, as soon as the situation is clarified, not only for the necessary projects that may come, but also for the reconstruction, clearly, we shall have a relevant role on that sector. So for us, we are comfortable understanding that it's a matter of time, and we are patient because we shall take part of that recovery. The situation is probably not so clear of the future or when it is coming the recovery in the chemical process industry. It's a sector that is in the lower part of the sector. The demand is dormant. In addition, we are seeing further complications with the 232, for example, section in the States, which is not allowed also for covering that market, combined also with the entry on the most commodity types of also new Asian players. So this is more or less keeping that the chemical process industry is keeping a low part of the cycle. It shall recover. But also let's assume that there are some parts of the chemical process industry that are having probably a good momentum for the coming future, as, for example, can be a clear case, the nuclear one. When we go to the results of the semester, the CFO shall explain in detail per section, stainless and the high-performance alloys. But just a general comment, first of all, the gradual improvement during the year quarter-over-quarter, we have increased melting production more than 10%, reaching 540,000 tonnes in the second quarter. We have about 1 million tonnes in the first semester compared -- which is 2% above the figure of last year. What's remarkable is the effect on the margins and especially the contribution on EBITDA. We have had a quarterly EBITDA of EUR 176 million, which is 85% increase the previous one. At the end of the first quarter, we made certain adjustments, and we explained them. So the quarterly EBITDA was EUR 95 million, but we explained that we have made some adjustments in the second quarter has not been necessary to make any adjustments. So more or less, it's not necessary to report any specific adjustments. We are in this figure of EUR 176 million, which makes a semester EBITDA figure of EUR 271 million. If we annualize this figure, we realized that in the current circumstances with a depressed market in terms of demand and all the circumstances and uncertainties are on place, we are able to reach this annualized figure, which should be above the EUR 500 million, which clearly is a demonstration of our efficiency, the improvements in our efficiency, especially in a time in which we are also suffering the effect on certain costs related to the Middle East conflict, which has been for the semester around EUR 9 million, could have been even worse, but also the diversification on our procurement has allowed us to minimize this effect. But still, that effect is on place. At the end, we are clearly successful of the achievement. The operating cash flow, as has been mentioned, is driven by the increase in working capital, but that increase in working capital is needed to accompany the recovery of the market in both volumes as well as in the increase in the cost of the raw materials. So we are consequently not concerned regarding this net debt reported, even though the clear commitment as our CEO has mentioned, is to be in the range of 2x debt to EBITDA, which for us is in the current CapEx program in the current days of the market, we think it's a remarkable figure also.

Esther Camós : So as we announced in our first quarter results presentation, we expected a year with a positive trend of results. And this is exactly what we are presenting in this second quarter. We are presenting better results, and we are presenting better results in all the KPIs, so like production, sales, EBITDA, EBIT. So all the results have been better than first quarter. I think that there are 2 main aspects to highlight in the stainless division. First of all is U.S., our good performance in the States with better results, higher margins, higher volumes quarter-over-quarter and benefiting, of course, from the alloy surcharge despite also of the higher raw material costs. And the second is the improvement of the results in Europe, both in volumes and in margins as well. We have successfully start-up the P4 that was fired last quarter, and this has allowed us to get better volumes as well as the reduction in the imports that has been mentioned. Of course, all this increase in volumes means also higher contribution to fixed cost and therefore, higher margins. In terms of EBITDA, we are -- the stainless steel division has achieved an 80% higher result than in the first quarter. okay? And the margin at 12%, we are returning to the two-digit margin, which is very successful. We haven't seen that much since 2023. And this is even with the weak demand momentum because the demand is not in the higher volumes, and we have -- and Bernardo has already mentioned the reduction both in Europe and in the States. In terms of operating cash flow, the operating cash flow for the second quarter has been better than for the first quarter despite also the increase in working capital and the strong tax payments that we will later explain. And going to the half year results, I think we have the same positive results. We are presenting 66% higher EBITDA in EUR 236 million, and we are also growing in volumes, margins and all the different figures. Going to the HPA. HPA is also improving versus quarter 1, basically due to the better mix that Miguel already explained because of the stronger contribution of aerospace, this has allowed us to achieve better margins in this quarter. Other sectors, as Miguel already mentioned, like oil and gas and CPI remain weak, so remain weak. We expect to continue with this positive trend for the future quarter, especially because of the high order book that we are receiving. We are in the highest levels ever achieved. And we will see that results for the aerospace due to the production lead times, mostly in the second part of the year, mostly in the more in the end of -- on the year. This again demonstrates the success of our strategy to diversify to different regions, but also to different sectors because at this moment, we are benefiting from the sectors better performing. In terms of EBITDA, we are presenting an EBITDA of EUR 22 million, which is 76% better than in Q2. In terms of operating cash flow, the operating cash flow has been negative this year due to the increase of working capital, which in HPA is more significant due to the production lead times, which makes us to purchase the raw material much in advance to be able to serve our order books. And the last factor that we want to mention in high-performance alloys is the synergies. We have got cumulative synergies of EUR 16 million, which is 70% of the target that we had for this year. The target was EUR 23 million. So it's been also very successful. In terms of capital allocation, in the quarter, the EUR 176 million of EBITDA has been utilized. Of course, we have increased working capital, as we mentioned, due to the higher activity, but also to the higher prices of the raw material, especially in HPA. We have had a strong payment of taxes. There are 2 settlements, especially in the U.S. in this quarter, and that's the reason for the for the high amount of taxes paid. And the third expenditure -- higher expenditures is CapEx, okay? Due to the strength of our balance sheet, we are -- these allow us to invest even in the lowest part of the cycle. As we mentioned, we are having -- we are on an expansion phase of our investments. And therefore, our CapEx has been strong also this quarter. If we go to the half of the year, more or less the figures are the same, so increasing working capital, taxes and CapEx. And finally, the debt has been increased by EUR 173 million. We are -- the net financial debt at the end of this quarter has been EUR 1.266 billion, so EUR 1.3 billion with a ratio debt-to-EBITDA of 2.5, if we make the calculation as of June, but we expect to reduce it at the end of the year.

Miguel Ferrandis Torres : Okay. If we go to our vision, the 3 chapters included in this page show an EBITDA upside contribution of EUR 500 million. We are working on that. First of all, the synergies, as has been mentioned, we have accumulated synergies up to now of EUR 16 million. We shall reach probably for the year around EUR 23 million in this year as committed in regarding of the integration of the HPA division, we developed almost 700 integration activities and 89% have been completed up to now. So we are -- with good success on that. In regarding of the investments that shall provide us an EBITDA upside of EUR 300 million, well, the most relevant one for the future. because the others are more in place or very close to be, but the more relevant for the future is coming in the States, is coming for the HPA in both plants of Kokomo and in Kentucky of North American stainless also for the HPA possibilities. And then the progress is there. We are on track, and they shall be working for the year 2028. In the other expansion projects, most of the expansion project of NAS is currently working, the expansion that was decided 4 years ago. You remember that plan of EUR 250 million. This is on place, the increase in capacity of 20% in the core North American stainless as well as the program in BDM, which is almost working, just except the part of the power optimizer that shall be on place first quarter next year. And in Columbus also starting this year, we shall have on place the development of the CapEx done for covering also the electrical steel in Columbus for keeping this position of the most diversified steel plant in the world covering electrical, carbon steel as well as stainless steel. So this is on track. In addition, we have the incremental EUR 120 million -- sorry, EUR 120 million that is coming from the Beyond Excellence Plan, which is our operational excellence. We were very ambitious on our program initially decided for EUR 100 million. But as we clearly overperform, you know that we mentioned that we were increasing it to EUR 120 million for this year 2026. And we already have obtained up to now even EUR 29 million. So we have no doubt that we shall cover by far the plan in the remainder of the year in the second semester. So this shall be a strong contribution, and we already are appreciating its effect. So it has been mentioned in the current circumstances of the market with the prices that we still remain in Europe, the possibilities that this is giving us for being profitable and being efficient at this level of prices is a clear demonstration of the success of this policy. So we are extremely proud about it and especially of the combined effect of these 3 chapters for the future of the group. Last but not least from my side is obviously the sustainability as core of our strategy. You know the plan on place is for the period '25 to the year '30, but the baseline is established according to the year '21. So in this just 1.5 years, we have obtained the targets of 44% in the carbon emissions. We have obtained 89% success on the waste utilization. We have already obtained the target that was designed for the year 2030 of 15% of women in staff. And consequently, we are now working on a further more ambitious target on this regard. So it's -- in this regard, it is a success. The only area in which in this year we are not proud is in regarding the accident rate. We have reached extremely low level of accidentability on our plants. We have had an excellent track month per month, most of the semester, just except 1 month. And we have some incidents taking place in the month of April that has had its effect in the way that we have increased up to now obtained an increase in 10% compared with the very low levels achieved last year. But having said that, keeping on mind that the rest of the month, the track has been excellent, and we are reinforcing all the measures for avoid relaxation of personal behaviors, we understand that for the remainder of the year, we shall be on track for covering our target for the year. Having said that, if we go to our recognition in this regard, we had -- obviously, we keep the gold medal of EcoVadis, which includes us in the 5 better performers in our industry. And also, we have been included this year in the Standard & Poor's Sustainability Yearbook, which means that we are in the top 15% on worldwide of every industries according to the Standard & Poor's Sustainability Yearbook member.

Bernardo Velázquez Herreros : Conclusions, I think as we have explained is very, very simple. As I said, we are driving with the headwinds. We are focusing in the long term. This is very clear. We are very loyal to our strategy. And still in this case, we never forget and we have enough experience to manage the daily changes, not that we have to be very -- keep a very close eye to the daily changes because every day, we have a different situation. We have tariffs, we have freights, we have sanctions, we have many things. And we are -- I think we are managing this very well. Never -- we have never suffered disruption in our supply chain, which is important. But we are still focused on the short term. And even in a low scenario, in a low cycle, as we have mentioned in this depressed or low demand scenario, we are reaching a very good set of results. We are proud of this. and things are changing and things are changing, especially in Europe because now steel is in, as I said, is in the X of the European industrial policy. So the situation can only be better. The CBAM has been very effective until now. And we think that with the trade measures that have been published, having started the 1st of July, that will consolidate the level of imports that will give us more volume, more stability in the market, less distortions and that will make a healthier European market. This is very good. We are in the low part of the cycle, as I mentioned, still stocks are low. Customers are not investing in new stocks. Normally end user markets are also in the low part of the cycle. We are expecting a better reaction when we have more visibility. In HPA, we are in a very well diversified in all the sectors. And we are sure that sooner or later, the oil and gas market will come back for restructuring all the damages in this sector. CPI is very significant. Finally will come back. So the situation can only be better. So we are positive for our future. But in the short term, we have to be cautious because we are -- still, we haven't seen the improvements due to the trade measures in Europe. And we have this seasonality of this period, the breakdowns in the summer period. So we have to be cautious. But even in this case, with all these circumstances, we have announced that our Q3 EBITDA results will be slightly higher than Q2, but still considering all the situation, considering the low consumption and low production of this part of the year, I think it's very positive. Thank you.

Carlos Lora-Tamayo : Thank you, Bernardo and Miguel for the presentation. Let's move now to the Q&A session. Please, operator, go ahead.

Operator : The first question comes from Adahna Ekoku from Morgan Stanley.

Adahna Ekoku : My first questions are on Europe. So on the improvement that you spoke about, can you speak a little bit about what your order book looks like for Q3 and Q4? And just related to that on the profitability levels, how does this look in Q2? And are you still on track for reaching breakeven in Europe by Q3?

Bernardo Velázquez Herreros : Okay. Thank you, Adahna. Regarding the order book, order book has been improving through the year, but now we are facing the summer months. So now the situation is a bit weaker. And normally, we only have visibility for 2 to 3 months maximum. So our order book now is stable, considering that we are facing the summer months. According to the second question, we have been improving our results in Acerinox Europa since January, I mean consistently improving month by month. And we can say that we reached the positive EBITDA in June. So we have already reached positive results at the EBITDA level in June, but not in the accumulated numbers.

Adahna Ekoku : That's very clear. And maybe just on the HPA division. So again, on Haynes, you spoke about the strong order book. When can we expect this to start converting into a kind of stronger increase in shipments? And for the whole HPA division, you've spoken about a kind of EUR 30 million to EUR 40 million run rate per quarter in H2. Does that still stand?

Miguel Ferrandis Torres : Well, as we said before, the order book is very strong. The backlog also, this is more or less showing now obviously, the advantages of the increase in activity, but this is material that probably shall be supplied and showing its improvement in profitability for the end of the year or starting of next year. So the order books are there, but you know that the maturity in this sector is substantially higher than in the stainless one. So the momentum is brilliant. The contribution is increasing quarter-on-quarter, but this is -- shall have its more relevant effect in the P&L at the end of the year '26.

Operator : The next question comes from Maxime Kogge from ODDO BHF.

Maxime Kogge : So the first question is on valuation adjustments. So they distorted a lot of the picture in Q1. Can you confirm that there weren't any adjustments this time? I mean, I would have thought they might be positive given the impressive increase in EBITDA. And do you have any incorporated in the Q3 guidance as well? That's my first question.

Esther Camós : Okay. Regarding the inventory adjustments, what we assume is that in this quarter, we have not -- it's been not necessary. Last quarter, we announced that we made adjustments for EUR 25 million. In this quarter, we have not -- it has not been necessary to do additional adjustments to this EUR 25 million. Of course, there are always figures in which we have some -- or inventories in which we have some adjustments, some on the side of the HPA, but the figure remains -- the adjustment has remained exactly in the same levels as for quarter 1.

Maxime Kogge : All right. And the second question is on the pricing trends. So stainless steel prices have been more or less stable in both in Europe and in the U.S. recently. I mean, if we adjust for the alloy surcharges, the base prices were basically flattish. And in the U.S., we actually see a strong traction in carbon steel prices. They are at multiyear highs. how do you explain the fact that stainless steel prices are not that strong? Is it because you're ramping up your capacity on your new cold rolling mill, so you're bringing more volumes. So this is somehow preventing price increases? And the same question for you Europe. Do you think that now on the back of the new trade regime system that has kicking in since the 1st of July, should we expect now prices to increase a bit like they're already doing in carbon steel? What's your view there? You're not the market leader in Europe, but interesting to have your view.

Bernardo Velázquez Herreros : Thank you, Maxime. Do you know that speaking about prices is a very sensitive issue. So we cannot develop too much this answer. But we can tell you is that in the United States, we have the alloy surcharge system that is working perfectly. So we are covering the ups and downs of the raw material prices with the alloy surcharge. During this period, nickel price especially went up. And with the alloy surcharge, we increased the final prices due to the higher alloy surcharge. Now we have a correction after the new nickel price, but it's not going to be very, very sensitive. In the case of Europe, market is following the same trend. It's not -- basically, we are working with effective prices in most of the cases. So we are trying to adapt our prices to the raw material prices. Still, we haven't gained with the margins. Still, we have enough competition in Europe. This is what we have been always saying that the European market has seen enough local suppliers. That means that we can cover the European demand. That means that with low imports, we don't have a lack of production in Europe. So we have competence. This is very healthy, very healthy for the market because we will be able to increase our volume. We will be able to develop our production and our projects. And with a better market situation, we will reach better prices, what is normal. This is a healthy business. But you cannot expect that only because of trade measures , we are going to increase our prices.

Operator : Next question comes from Tommaso Castello from Jefferies.

Tommaso Castello : It's good to hear Europe at a turning point. I would like to focus on volumes given the sharp decline in import penetration from roughly to around 16% of the market against the demand. So if you could help us quantify how much of this reduction has translated into incremental shipments for Acerinox and if you see it as sustainable? And then also given your current roughly 10% market share, whether you see scope to gain market share from the lack of imports going forward? Or do you think like the volumes displaced by European domestic producers, you will take roughly the same market share that you currently hold?

Bernardo Velázquez Herreros : I don't have the precise numbers here. What I can tell you is that in Q1, we couldn't enjoy the increase of volumes of the new import situation because we didn't have one of our hot-rolling and pickling lines, the P4 that suffered a fire in November '25. Now the line since April is now in operation. And since April, we are coming with the total capacity of the Algeciras factory. So we will increase our delivery by 20%. And that's why in quarter 3, we are reaching a better level of competitiveness, and we have reached the positive EBITDA. The market shares will depend on how our competitors are work and what is the performance of the rest of the market. It's something that we cannot speak about.

Tommaso Castello : Maybe if I may, the last one. Just looking at consensus, I think it's at around EUR 600 million for fiscal year 2026. How confident are you to get around that level?

Bernardo Velázquez Herreros : Miguel, you can answer. I don't want to make mistakes.

Miguel Ferrandis Torres : Well, I think we are giving -- in our sector, it's difficult to make predictions, but we are giving some messages. I give the messages that the annualized figure of EBITDA for the year should be EUR 540 million, keeping in mind that we are in an upward trend, has been a strong improvement in the Q2 compared with the Q1. The Q3, we are saying it is going to be slightly better. So I don't think it should be probably too ambitious consider that we should not be far away from the figure you mentioned.

Operator : The next question comes from Bastian Synagowitz from Deutsche Bank.

Bastian Synagowitz : First question is a quick follow-up on European volume situation. Bernardo, can I confirm, did you say that you expect European volumes to grow by 25% into Q3? And is this a delivery number? I guess your second quarter production number was really quite strong, I think up almost 100%, if I remember correctly. So I guess that would not have fully translated into the same equivalent shipment number, but if you can maybe give us some color there? And then maybe the same color on the U.S. side where production volumes were a little bit weaker. Do you still expect volumes to grow in North American stainless as well in the third quarter? These are my first 2 questions.

Bernardo Velázquez Herreros : Bastian, thank you. The question is very simple. Apparent consumption went down by 2% during this period. So more or less with some high -- some restocking at the end of the period. So we can say that we that was more or less flat. So with the 31% of import reduction, we have 31% more for local deliveries. This is very clear. How much of this 31% of the market that were going to take that we will see. This is business. This is demand and production, and we have to compete in the market. We cannot say is true is that the local suppliers will be able to share this 31% more of the market.

Bastian Synagowitz : And I was actually more asking on your own shipments specifically, I guess your production volumes in Q1 and Q2 were up about 100%, almost, I think, 98% or so. And I was wondering, given the strong production level and your current order book, where would you see shipments in Europe in the third quarter in the European business.

Bernardo Velázquez Herreros : Basically, as I mentioned, we couldn't use part of our capacity during Q1 because of the fire we suffered in our hot-rolling and pickling line. So this line is in operation again. It started in April. So in Q2, we were able to use almost the total capacity. So that means that from Q1 to Q2, Q3, we are increasing by 20% of our deliveries.

Bastian Synagowitz : So sorry, Q3 versus Q1 or Q3 versus Q2?

Bernardo Velázquez Herreros : Q2, I'm speaking about capacity, no deliveries.

Bastian Synagowitz : Yes, okay. And then any indication on shipment in Q3?

Bernardo Velázquez Herreros : No, no. We never give indication of this, but you have to consider that we're in the summer period. So we will close the Cadiz plant for 2 weeks in August. this is for normal holidays. I don't know what our competitors are going to do. I don't know what the levels are. But normally, especially August is a very weak month. Let's see September. September is going to be the key.

Bastian Synagowitz : Okay. And then my last question would be on your underlying performance. I guess when you look at the second quarter, nickel prices have gone up a lot. That usually is always a very strong tailwind, particularly in the U.S. where you still work with the dual pricing mechanism and alloy surcharge. So hence, rising metal prices would give you a temporary positive. I think that will swing into a temporary negative in the third quarter and that swing overall on your results obviously can be still probably quite meaningful. And that means that if you guide for better numbers, your underlying performance has to improve a lot. So this improvement Q3 versus Q2, will this be pretty much driven across all core businesses, i.e., HPA as well as the different individual regional stainless businesses. Will each of them improve if you were to ignore the metal effect?

Bernardo Velázquez Herreros : Too many questions in one. I think as I said, we have the alloy surcharge system in the United States. That means that normally when the raw materials are going up, normally the alloy surcharge mechanism let us increase prices a little bit faster than our raw material cost. And this is because we use the average cost system. Now in this case, of course, in the United States, we have been enjoying some of a tailwind that will not happen in quarter 3. In the case of Europe, we are not using the alloy surcharge mechanism. So more or less, we have been following the raw material trend. So we can -- we haven't enjoyed this tailwind in Europe. This is just the basic business.

Carlos Lora-Tamayo : Further questions from the call. Okay. We can move for some questions that we have from the website, the webcast. We have one coming from Inigo Egusquiza from Kepler Cheuvreux, and it's about the U.S. listing. It says could you please give an update on this potential project, calendar? And what is the planned a dual listing or IPO of the U.S. business?

Bernardo Velázquez Herreros : No answer for this. We haven't taken any decision. So there's no news in the U.S. listing. As you perfectly know, we are considering and studying this possibility. We are preparing the group for a potential IPO, but we haven't taken any decision yet. We are still studying the market, studying the situation and as you know, many issues because this is not a simple decision.

Carlos Lora-Tamayo : Okay. And the last question is coming from Enrique Yaguez of Bestinver and it's regarding working capital and the expected evolution in the second half of the year.

Esther Camós : Okay. As you know, we remain on our control of working capital. We have a very strict plan in the group to try to reduce working capital levels and days, and we continue with our program. Because of the seasonality in some of the markets, we would expect to reduce working capital for the third quarter. So the trend in terms of debt -- we had also the dividends in the third quarter, but we will compensate that with a bit of a reduction of working capital. It also much depends on the prices of the raw material. So it will depend also on the level of nickel. But according in terms of inventory tonnages and days, we are still with our control, and we expect to reduce it.

Carlos Lora-Tamayo : Okay. I think that we solved the problem from the call. So we can -- if there is any further question, please, operator, go ahead.

Operator : The next question comes from Francisco Riquel from Alantra.

Francisco Riquel : So just one for me. Regarding the EBITDA that you have printed in Q2, I wonder if you can share with us what would have been the EBITDA without the losses in the European business. You mentioned that Europe is already breakeven. So just to want to assess to have a better sense of the underlying profitability now that Europe has turned the corner. And if you think that we are already close to EUR 200 million, if you can give an indication.

Miguel Ferrandis Torres : Well, in the previous results presentation, more or less, we explained that our target was that with the improvements in Acerinox Europa, anytime in the third quarter, we should reach the monthly positive EBITDA or above breakeven. This has been anticipated. As Bernardo mentioned, we have reached this level in June. So on a monthly basis, June, we have changed the trend. This is a very good indication for the future. So having said that, it's true that at the end, it's the first month in which has been achieved. So gradually, we shall obviously be following the track. On the third quarter, even though the seasonal slowdown in Europe and combined with the fact, as we mentioned, that we are more or less stopping operations for half the month of August, the challenge should be that now what we are going to be neutralizing this effect of August is in position of reporting a positive contribution for the quarter. But this is going to be gradual. So with the current momentum that is facing the European market, let's see the evolution. It's difficult to predict. And as has been said before, it's a fact of weak demand and it's a fact of prices and let's see which is the evolution of the prices. Bernardo mentioned, we are in effective transaction prices. Up to now, the prices have been going up following the raw materials. If we consolidate the level of prices with a lower nickel, this may be better margins, but still it is too soon to appreciate it. So we are moving to August. And you know that the European market gives signs in September. So still soon, but what's very good for us is that we are there. we already have seen the positive monthly figures. And clearly, we are in position for making it consistent.

Francisco Riquel : Okay. And just last one for me is regarding the EBITDA upside that you see of EUR 500 million that you mentioned in the presentation. So if you can comment over what pace it is, if it is over '25 or '26 EBITDA and how much of this upside comes from external market conditions? Or do you think that is just due to your own internal levers?

Bernardo Velázquez Herreros : When we calculated this number, it is based on technical analysis and considering the increases in efficiencies, increases in volumes and what the new CapEx will contribute to our numbers. Normally, we're basic in the average EBITDA. We call it through the cycle EBITDA, and this is something that we can consider with ups and downs. Of course, if prices are lower, we will be below EUR 500 million. If prices are better, we'll be above that. We consider the average situation.

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

Dominic O'Kane : I know we've spoken about the revaluations, but I just want to come back to the question because I'm finding it quite confusing. So I think in the earlier comment, you mentioned that there was no requirement for a Q2 inventory revaluation. But again, can I just push you on whether that actually was an inventory revaluation because you don't disclose it in your adjusted EBITDA. Is that to say that you're not reporting it going forward? Or it's just that the value was 0? And then in addition to that, if we're looking forward, I think there's some inconsistency as to which number we're looking at. So for Q1, the focus on the headline EBITDA was adjusted EBITDA. Can you just confirm to us as we move from quarter-to-quarter, what is the EBITDA number that you're going to be quoting? And will there be disclosure on an ongoing basis about what the revaluations are, please?

Esther Camós : Thank you, Dominic. I will try to clarify this figure, okay? One thing is the inventory adjustments and devaluations that we normally report and makes us to report an adjusted EBITDA on the first quarter, okay? That, let's say, devaluation of inventories was of EUR 25 million, and this is the one that we have not changed for this quarter, okay? That's a different thing. The different thing is the inventory revaluation due to the higher prices of nickel, okay? And that is what Bernardo has already explained, which is in the United States due to the alloy surcharge that we apply in the sales, okay, we get benefited from the higher prices of nickel at some point. And because of our valuation of inventories at an average, we get some time until achieving these values, and that is benefiting us. It is true that it has an effect in the short term in the states. But this effect because of the alloy surcharge mechanism in Europe does not -- is not working, we are not benefiting on that in Europe. In this quarter, in the states, we have had a tailwind because of this inventory revaluation, but that's a different thing from the adjustment that I was explaining, which we have not changed from last quarter.

Dominic O'Kane : So again, if I look at the adjusted EBITDA in the account, the value for Q2 is zero. So is that to say that the nickel and the alloy surcharge revaluations exactly canceled out the negative EUR 25 million from the first quarter? Or is it just that you're not going to be providing those revaluations on a go-forward basis?

Esther Camós : We will only provide that number when it's a significant number that really it's impacting our EBITDA. But in this case, the EBITDA has not been impacted by that.

Dominic O'Kane : I'm sorry. So if I could just push on that one more. What constitutes a significant number? Are we talking a single-digit number or a double-digit number?

Esther Camós : No, it's yes, when the nickel goes down and we have to make adjustment because our expectation for the next period is going to be a huge impact, then we have to do devaluation of our inventory. In this case, we are not doing any. So that's the reason why we are not reporting any more this figure. This is business as usual, okay? We, of course, are impacted by the trends of the raw materials. And when raw material is going down because of the accounting policies, we need to anticipate that losses, okay? And that is not the case for this quarter. We do not have any need to anticipate any losses because we are not in this situation right now.

Miguel Ferrandis Torres : Sorry, let me try.

Dominic O'Kane : And then sorry just on the ongoing basis, will we focus on EBITDA or adjusted EBITDA.

Miguel Ferrandis Torres : Let me try to clarify. We make inventory adjustments for adjusting the realizable value of our inventory, but we do not reevaluate the inventory. When the market goes up, when the nickel goes up, we experience a tailwind because at the end, clearly, this is having a quick effect when we realize our inventories, but we do not revaluate. What we normally do and we anticipate as a prudency issue is we are making adjustments to our inventory to net realizable value. This is what was done in the first quarter. And this has its effect that consequently, our inventory was adjusted in the first quarter. And at the end, as a consequence of that, this material has been realized. At the end of the second quarter has not been necessary to make any inventory adjustment because our inventory is properly valued for a net realizable value. So consequently, has not been made any adjustment. The one that was done at the end of the fourth quarter has had its effect because that material has been sold out already.

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

Tristan Gresser : Apologies if I repeat others, I joined a bit late. In Europe, you sound pretty constructive. What we saw in May, June and maybe July is that alloy surcharge in the region were moving up, but transaction prices were steady on paper, that would imply maybe some margin squeeze or some softness there, but your message is pretty positive. So on a spot basis, when you look at your order book in Europe, can you comment a bit on the margin contribution and the expectation for Q3 and Q4? That would be my first question.

Bernardo Velázquez Herreros : Thank you, Tristan. Expectations for Q3 and Q4 is very difficult to predict. What I can tell you that in Europe, as you know, we have lost in most of the customers, the alloy surcharge mechanism, and we are working with effective prices. In some end users, we are still keeping the alloy surcharge mechanism. Now this is very comfortable because you apply immediately the ups and downs of raw material prices. In the case of the -- most of the other customers, including distribution, we are working with effective prices. This is something that we suffer for this Asian invasion of imports. And then you have to try to negotiate every single order trying to adapt the new situation on according to market conditions to the raw material prices. I think that thanks to the good situation of imports, we have been able to pass all these increases of raw materials to our customers, including freight, including gas. So we are keeping a good level of margins that if improvement is not due to the difference between price and cost, it's due to our efficiencies and our higher volume. So this is something that you always have to remember. It's not only a question of alloy surcharge, nickel prices and the things, we have a lot of homework trying to reduce our costs and increase our efficiency, our metallic yields and everything. So this is the situation in Q3. Are we going to be able -- this is a question of market. I don't know. The demand is healthy. I am sure that we will accelerate our order entry. This is very important in our market. As far as we extend our delivery times, then we are able to negotiate higher prices. until now, we are still working with a low visibility, especially now that we have the summer period ahead. So let's see what happened. We are pretty optimistic because we think that with this -- the lack of distortion because it's not only the level of imports, it's the level of distortion that most of these importers were applying to the market that many times when nickel prices or raw material prices were going up, the excess of production, especially in China, but also in Taiwan, in Vietnam, in India sometimes, this excess of production will go into Europe at very low prices and destroying totally the market structure. This is very healthy because we don't -- we will not suffer this now. So from now on, we can expect a better behavior of the European market, more organized and structured European market following the ups and downs of raw material prices, but especially following the market conditions, following the demand and the level of production of the current players, the local players. This is very healthy. This is business as usual. I think this is nothing new. We are coming back to the period that we enjoyed, and we were very profitable, all the European players before the invasion of this import due to the overcapacity that was created in the Asian countries. So now we will be in a more healthy situation. Okay.

Tristan Gresser : Okay. That's clear. And maybe just 2 quick follow-up on that. If I were to really simplify it, stainless steel prices in Europe went up in H1. So maybe in Q1, you saw that spread increase and in Q2, it kind of paused. Is that a fair assessment? And now you're working on efficiencies to drive EBITDA higher. Would that be a fair assessment? And then when it comes down to the CBAM, the quota structure, et cetera, the fact that the market is structurally going to be in a better footing. Do you have maybe a time line on when do you think you will be able to revert back to the old dual pricing system with base price and a lower surcharge?

Bernardo Velázquez Herreros : I'm sorry, Tristan, but my compliance officer is following this conversation, and we cannot speak about prices.

Tristan Gresser : Okay. My second question is just on the U.S. And sorry, again, maybe you touched on it, but you flagged some soft demand. And I'm sorry, about prices, but what would be required to move from maybe a steady margin outlook to something a bit more positive? Is it demand or even with the current outlook you're seeing into H2, you could see maybe some positive momentum there?

Bernardo Velázquez Herreros : According to my experience in this market and especially in stainless steel, you can -- you need a better demand to increase your prices, but a good KPI for you to follow this possibility is looking at the order book. When we extend our delivery times because we have had a strong order book, then it's time to increase prices. This is the normal mechanism, but this is something that I can speak about because it's just experience has always been the same. If we are not filling our capacities, if we have a short order book, we need to feed the plants because we are very sensible to volumes. All the competitors is the same. We have learned to manage our capacity. I think that now we are very flexible, more flexible than we were before, for sure. And -- but I think also our competitors have done the same homework. So if we need to feed our plants to a reasonable level that we can be competitive. But when we are extending our delivery times, it's time to -- normally when price increases are happening.

Tristan Gresser : And I think in the release, you talked pretty positively about your order books. Would you be able to comment on those currently in the summer?

Bernardo Velázquez Herreros : It's very difficult to increase your order book when you don't have customers because they are holidays. So I think we will have to wait until the end of the summer period to see how efficient all these new measures are being.

Carlos Lora-Tamayo : There is no further questions. So thank you very much for joining in this second quarter results presentation. Thank you for your questions and enjoy the summer break.