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Operator: Ladies and gentlemen, thank you for standing by. I'm Polina, your Chorus Call operator. Welcome, and thank you for joining the Erdemir conference call and live webcast to present and discuss the full year 2025 financial results. [Operator Instructions] The conference is being recorded. The presentation will be followed by a question-and-answer session. [Operator Instructions]. Please note Eregli Demir ve Celik Fabrikalari T.A.S, may, when necessary, make written or verbal announcements about forward-looking information, expectation, estimates, targets, assessments and opinions. Erdemir has made the necessary arrangements about the amounts and results of such information through the disclosure policy and has shared such policy with the public through the Erdemir website in accordance with the Capital Markets Board through regulations. As stated in related policy, information contained in forward-looking statements, whether verbal or written, should not include unrealistic assumptions or forecasts. It should be noted that actual results could materially differ from estimates, taking into the account effect they are not based on historical facts but are driven from expectations, beliefs, plans, targets and other factors, which are beyond the control of our company. As a result, forward-looking statements should not be fully trusted or taken as granted. Forward-looking statements should be considered valid only considering the conditions prevailing at the time of the announcement. In cases where it is understood that forward-looking statements are not longer achievable, such matter will be announced to the public and the statements will be revised. However, the decision to make a revision is a result of a subjective evaluation. Therefore, it should be noted that when a party is coming to a judgment based on estimates and forward-looking statements, our company may not have made a revision at this particular time. Our company makes no commitment to make regular revisions, which would fully cover changes in every parameter. New factors may arise in the future, which may not be possible to foresee at this moment in time. At this time, I would like to turn the conference over to Mr. Idil Onay Ergin, Investor Relations Director. Mr. Ergin, you may now proceed.
Idil Onay: Thank you very much, Polina. Good afternoon, everyone. Welcome to our conference call and webcast of Erdemir for the last quarter of 2025. First, I will go through our Investor presentation, which you can find on our website, and you can also follow it through the webcast. Then at the end of this presentation, there will be a Q&A session as usual. Our presentation consist of two sections, as you already know. The first one is the market overview and then the financial results. So let's start with the commodity prices. On Page 3, you will see the prices of steel-related commodities and HRC. Let's take a look at coking coal, iron ore, scrap and HRC prices. In the fourth quarter of 2025, the coking coal markets experienced buyers strongest price period of the year despite weak steel demand and low profitability. During this period, coking coal prices averaged around $200 per quarter, while closing the year $218 per tonne above the annual average. Iron ore prices showed more resilience in the fourth quarter compared to the previous quarter, fluctuating between $102 and $109 per tonne and stabilizing at an average of $106 per tonne. Despite uncertainty regarding demand from China and strengthening global supply, the ability of Chinese producers to maintain production at a certain level, along with the speculative pricing kept prices mostly above $105 per tonne. It is expected that iron ore prices will remain sensitive to stimulus expectations and policy news from China in the short term. Despite buyers cautious spends, seasonal supply constraints enable suppliers to maintain a firm position resulting in Turkish imported scrap prices closing Q4 at an average of $359 per tonne above the annual average while there was no sharp decline in square prices throughout the quarter, a clear wait-and-see sentiment prevailed in the market. On the bottom right, we show HRC prices in Black Sea, China and South Europe. The global HRC market has left behind a period in which protectionist measures and trade policies became more decisive. The European Union steps to reduce import quotas and uncertainties surrounding sea import appetite while gradually increasing the bargaining power of European producers. In Asia, HRC prices remain fragile due to low demand from China and policy uncertainties, while a flat positive but cautious outlook prevails in the global HRC market. Q4 market expectations converged that as we enter 2026, the impact of protective measures will be felt more clearly and prices will be shaped by a cost-based search for equilibrium. On Page 4, you will see the production consumption, exports and import figures of Turkish steel market. In December, Turkish crude steel production rose to 3.5 million tonnes, representing a 7% increase compared to the previous month and 19% rise year-on-year, reaching the highest monthly output of the past 15 years according to the official data from the Turkish Steel Producers Association. This growth reflects resilience in domestic output despite the challenging global steel market conditions. Going back to the slide, while production and consumption rose by 3%, exports of steel products grew by 13% in volume during the year and reached 15 million tonnes. In the January, December 2025 period, the European Union continues to be the leading export destination with a 37% annual growth, while the MENA region ranked as the second largest market. Imports also increased by 9% to 19 million tonnes over the same period. As a result, the export import coverage ratio, which was 74% in 2024 increased to 78% in 2025. It was observed that the total imports were largely realized under the inward processing regime. As we shared in the last quarter's call, with the circular published by the Trade Ministry on September 16, 2025, it was made mandatory for 25% of the input of products processed to export to be supplied domestically. This change was welcomed in terms of domestic steel production. As a result, total flat product imports in December decreased to 653,000 tonnes down 23% compared to the previous month and 12% compared to the December 2024, marking the lowest monthly level recorded in the past 9 months. In the context of global steel trade policy, the European Union and other major markets have implemented or proposed enhanced safeguard measures to counteract increasing import pressures. The European Commission has moved forward towards tightening steel import quotas and increasing out-of-quota duties, including potential reductions in tariff-free quota levels and higher tariffs for excess shipments, steps aimed at protecting domestic industries and reducing reliance on imports. Asian countries, which have been the most negatively affected by this policy increased their exports to unprotected markets. So let's take a look at the financial results and the operational metrics. On Page 6, you will see the summary of our 12 months results. We achieved USD 5.3 billion revenue. Also, we generated $501 million EBITDA and $13 million net profit. On Page 7, you will see the operational indicators of our company. Following the commissioning of the last 2 investments in our current investment package in the second quarter of 2025, our crude steel capacity utilization ratio, which was 75% in the second quarter and 90% in the third quarter increased to 95% in the fourth quarter. Accordingly, sales and production levels returned to their normal levels. Strong demand, we achieved sales of 2.2 million tonnes in the last quarter, sales volumes of over 8.2 million tonnes in 2026. So let's take a look at segmental breakdown of domestic sales and export volumes on Page 8. As you can see from the pie chart, there has been a slight change between sectors when we compare it to last year's breakdown. There has been a transition from general manufacturing and auto to pipeline profile and distribution chains on a percentage basis. We see similar changes between sectors in the long products, although its share in total sales is relatively small. We achieved an export volume of 1.5 million tonnes in 2025, representing 20% export share in total sales. Although our main focus is the domestic market, we also consider export as an alternative market. On Page 9, you can find a breakdown of revenue for domestic and export sales. 79% of the revenue comes from domestic sales in line with the domestic volume. Despite import pressure in the domestic market, we achieved to generate $501 million EBITDA. We generated $64 EBITDA per tonne in 12 months. Our EBITDA per tonne guidance for 2026 stands in the range of $75 to $85 per tonne. In 2026, we expect EBITDA per tonne to increase through cost reductions and increased efficiency resulting from newly commissioned facilities, increasing HRC prices and our company's increasing sales volumes. We generated $13 million net profit in 2025 as a result of legislative amendments stating that statutory financial statements will not be subject to inflation accounting. The deferred tax income recorded in March, June and September financial statements was reversed. Despite the increase in EBITDA, this noncash item had a negative impact on net profit in Q4. On Page 10, you can see how we reached a net profit from EBITDA. One of the largest items was depreciation, which was $278 million in 12 months. The other major item in this chart was financial expenses of $206 million due to the increase in deferred tax expense following the cancellation of inflation accounting, the tax expense amounted to $706 million -- excuse me, $76 million. And other expenses, net profit was -- after the other expenses, net profit was $13 million. The inventory provision release of $26 million is not included in the EBITDA calculation since it is a one-off adjustment. While calculating the net profit, $26 million of the consolidation classification arises from additional inventory provision release. In the graph below, you can see EBITDA to change in cash bridge. Our net working capital increased compared to the third quarter due to the extension of the trade payables maturity, as we shared in our previous quarter calls. Additionally, a dividend payment of $43 million was distributed in the third quarter. Also, we spent around $483 million to investment activities in 12 months. This amount also includes CapEx advances paid for the capital expenditures and sale of commercial offices for investment properties as well. On Page 11, you will see historical trend of financial borrowings and net debt. As you can see in the financial borrowings chart, the share of short-term debt in total debt decreased to 25% in Q4 with the support of $950 million Eurobond issuance. When we look at 2025, our net working capital decreased due to the extension of the trade payables maturity. We succeeded in keeping net debt EBITDA below 2 multipliers at the end of the year as a result of increased capacity and efficiency following the commissioning of our investments. EBITDA has increased. Therefore, CapEx decreased and the multiplier remains below 2. We expect to keep the net debt-EBITDA ratio around 2 multipliers in 2026. Slide 12 represents our cost of sales breakdown. In 2025 compared to 2024 due to the decrease in coal prices, the percentage of coking coal costs decreased in the raw material basket, which is in line with the trends in raw material markets. Since we can see the costs in first quarter, costs will increase in the first quarter of 2026 due to the rising coal prices. This cost increase will be offset by an increase in sales prices. Page 13 represents the historical capital expenditures. Total CapEx was $1.1 billion in 2024 and $775 million in 2025. As a reminder, the new first blast furnace in [Technical Difficulty] gold mine, as you already know, we announced the inferred resource in November '25. We expect that reserve announcement for the gold mine to be made at the beginning of the second quarter. Investment decisions will be made after this announcement is shared. We expect that CapEx will be approximately $800 million in 2026 with maintenance and other ongoing investments. Maintenance will be around $58 million per year as usual. Investments such as solar power plants, port and crane investments and energy efficiency investments are included in the CapEx figure of 2026. As you already know, this figure is accrual based and the cash outflow will be lower due to the advanced payments. On Page 14, just as a reminder, we announced our net zero road map in 2024. There are no changes to this road map, the details of which we previously shared. The first investment in this package solar power plants are planned to be partially commissioned by the end of 2026. Now we may continue with the Q&A session. We will be delighted to answer your questions. Thank you for listening.
Operator: [Operator Instructions] The first question is from the line of Fairclough Jason with Bank of America.
Jason Fairclough: It is always very comprehensive. Look, a couple of related questions here about the balance sheet. So on the one hand, you've got quite a lot of cash sitting there. I mean I see $2.7 billion of cash, which feels like a very large cash balance. But on the other hand, if we look at the free cash flow over the past year, most of it's been driven by working capital and particularly the payables balance. So I guess my question is, how are you thinking about working capital from here? Do we actually need to normalize that payables balance? Or is this the new normal?
Idil Onay: Jason, thanks for the question. So this is our normal level after this quarter because actually, it all depends on the raw material prices and steel prices from now on. Considering that Q1 comes clearer in terms of both price and cost, increasing figures in Q1 compared to Q4 in net working capital. So there won't be any one-offs in net working capital. So we can say that it's all depends on the raw material prices and steel prices from now on.
Jason Fairclough: Okay. The other thing and a super simple one. Could you just repeat the EBITDA per tonne guidance? I heard it, but I didn't quite hear it. I think the phone cut out when you said it.
Idil Onay: Guidance for -- sorry, I just missed it, guidance for.
Jason Fairclough: For EBITDA per tonne for '26?
Idil Onay: Yes, sure. So we expect to have EBITDA per tonne between $75 to $85 per tonne for 2026.
Operator: The next question is from the line of Gabriel Alain with Morgan Stanley.
Alain Gabriel: I have a couple. Following up on Jason's question on the guidance for 2026 deal, the $75 to $85, how much of that is driven by self-help, i.e., the cost savings you will be or the efficiency gains from your new investments in your production footprint? And how much of that is your underlying assumption of a margin recovery in the market? That's my first question.
Idil Onay: So as you remember, by the way, I'm sure you remember that we said we are expecting full impact from our newly commissioned investments in Q1. So we will reach to the full positive impact of $40 per tonne from our NIM investments, and it will stay at that level. So almost $40 plus from investments but we're also expecting higher sales amount, tonnage, higher tonnage, higher volumes in 2026. I said above 8.2 million tonnes, but most probably it's going to be between 8.2 million tonnes to 8.4 million tonnes. So when you compare with the 2025 level of 7.8 million tonnes, it is higher. And we will also gain some EBITDA. We will increase our EBITDA from the increasing sales tonnage. But almost $40 in the first quarter, we will see the full impact of our higher efficiency because of the new investments.
Alain Gabriel: And this $40 compares to how much that you've achieved in, let's say, Q4 '25, just looking at the deltas of the bridges year-on-year?
Idil Onay: Roughly, we said in Q3 2025, we got $20 additional impact. And in Q4, it's roughly around $30. And in Q1 2026, it's going to be around $40. But of course, you need to take into the consideration that the market prices are not staying the same. So these additional numbers should be added to the current prices.
Alain Gabriel: Yes, absolutely. Absolutely. And my second question is on the business and how it's adapting to CBAM and the upcoming safeguards in Europe. Are you still able to sell into Europe easily now? Are you diverting your tonnes elsewhere? Can you give us a bit more color how you are adapting to this new environment in Europe, which is impacting Turkey as well?
Idil Onay: So when you look at the export in Q4, so you will see a slight decrease. But actually, it's intentional. It's intended to be like that because obviously, the local market is more strong right now. The demand is stronger. So normally, when you look at the previous year's results, the export share was between 10% to 15%. So that was our normal levels for long years. Only 2025 was exceptional. Our export share in the total sales to 20%. But obviously, the domestic market is strong again but demand is strong again. So internationally, we -- strategically, the company prefers to sell their products domestically. So our order book is full for 2.5 months. I'm sure you remember, normally, I say it's full for 2 months. But right now, it's 2.5 months. So we already sold almost 2 million tonnes in Q1. So I can say that the demand is really good in the local market. But of course, we will sell to European markets and other export markets. But most probably, we are going back to our previous levels of 10% to 15% in the total sales.
Alain Gabriel: And then last question from my side is on the CapEx guidance of $800 million. You mentioned that's on an accrual basis. How much would that be on a cash outflow basis?
Idil Onay: Actually, I guided $600 million for 2026.
Alain Gabriel: Okay. That's the cash component.
Operator: The next question is from the line of Meyiwa Zenande with UBS. I'm very sorry. The question is from Bystrova, Evgeniia with Barclays.
Evgeniia Bystrova: Just a couple of follow-ups. So first of all, on the CapEx guidance, I think I was confused because during the presentation, you said on accrual basis, the CapEx would be $800 million in 2026. But just now you said $600 million is the cash component. Is that correct? And then -- so my second follow-up is regarding the local market. So you're saying that the local market is very strong in terms of demand. Could you please maybe break down what exactly are the drivers of such strong local demand? And if you're expecting CBAM in any way to affect the prices that you're selling into Europe at? And finally, on payables, I didn't quite get your answer. So you're saying that another inflow in Q4 was expected. And from now on, we shouldn't expect such inflows on working capital in the cash flow statement. Is that correct to understand?
Idil Onay: So the CapEx for 2026 is expected around $600 million. If I said $800 million, so it's a mistake, sorry, let me correct that. For 2026, we are expecting $600 million as CapEx. So it's all included all of our CapEx, maintenance, et cetera. So as we spent $775 million in 2025, so it is decreasing because we already commissioned most of the largest investment of our company, such as blast furnaces and coke batteries in the second quarter. So the rest is just solar power plant, basically, port and crane investments and energy efficiency investments generally. These are the list of investments that we are planning. So the second question was about the sales. Actually, the main thing -- the demand was strong. The demand was quite strong for some time but we prefer export markets because of the prices. But right now, we experienced higher prices in the local market. And with the strong demand, we prefer to operate in the local market. But of course, there will be export share but we have the flexibility to change some of the European exports to the local market because we have the enough demand in the local market, obviously. So that's why we are expecting higher sales tonnages also between 8.2 million tonnes to 8.4 million tonnes for 2026. So basically, the demand was always good, but the price wasn't that good. But in this year, in 2026, we also experienced strong demand and better prices. And also, we are expecting to see higher prices in the local market. And the last question -- can you just remind me the last question about working capital?
Evgeniia Bystrova: Yes. I just wanted to understand the payables move because I think after Q2, you said that basically you're not expecting another working capital inflow in the cash flow statement. However, we have seen another payables like inflow from payables in Q3 and Q4. So I'm just trying to understand what will happen in 2026. Previously, you said that current net working capital is like an optimal level for you. So is that a right understanding from me that we shouldn't expect any working capital inflows on the payables side in 2026?
Idil Onay: So in 2025, we just changed the trade payables system actually. So I mean, our net working capital has changed due to the extension of the trade payables maturity. So this is what happened in 2025. But from now on, we expect stable working capital, also cash based. But as I shared with Jason, it all depends on the raw material prices and steel prices.
Evgeniia Bystrova: Okay. And what -- sorry, one last follow-up. And what is the specific driver that has kept local domestic prices higher than export prices in Turkey?
Idil Onay: Actually, domestic prices are not higher than export prices. Obviously, right now, European market is very protected. So every day almost, we see higher prices in the European markets. So when you compare with the Turkish prices, European prices are obviously higher. But we know that the trade Ministry is working on some kind of revisions to increase the protectionism in Turkey. So they are working to increase that 25% of obligation to use local product when they are using emerge processing regime. We know that the trade Ministry is also working on some kind of revision to increase that level and also apply that obligation to -- for the coal product as well. So -- and some other revisions and the systems, for example, they are working on ETS emission trading system in Turkey, et cetera. So we know that our trade Ministry is working on trying to increase the protectionism in Turkey. And most probably, we will hear in the second half of the year. So these will help to increase the domestic sales prices. So that's why we are trying to focus in the domestic market.
Operator: The next question is from the line of Jones, Andrew with UBS.
Andrew Jones: Just a couple of questions or clarification. Just firstly, I think you said to Alain that there was about $30 a tonne included in the fourth quarter EBITDA per tonne from these projects. And for next year, it's $40. So we're basically saying that we're going up from $71 plus $10 effectively as we go into the first quarter without any market movement. So your guidance of roughly $80 a tonne for next year, is that basically assuming pretty flat market spreads compared to what we saw in the fourth quarter? I've got a follow-up, but I'll stop there.
Idil Onay: Okay. So yes, I said $20 additional EBITDA per tonne contribution to EBITDA per tonne in Q3, Q4, $30, and we are expecting full impact of $40 contribution to our EBITDA per tonne. But as I shared with Alain, the market prices are not staying in the same level. So in Q4, the sales prices were decreasing. So I mean, we didn't really see the $10 plus $10 between Q3 to Q4. But obviously, we will experience $40 in Q1, but it all depends on the current prices, of course, raw material prices and sales prices.
Andrew Jones: That's clear. Okay. And then just on the CapEx, I mean, what's the trend in the coming years? Because obviously, the pellet tires are still going -- I mean, if we exclude any gold mine stuff, I mean, when does the [indiscernible] CapEx kick in? Like what does 2027, '28 look like? What's the general profile we're expecting there?
Idil Onay: Well, we are not expecting any number, any figure higher than $600 million. So for 2026, it's going to be around $600 million. I mean, I don't think we will see even $650 million. This is our expectation. But for the next years for 2027, 2028, we are expecting similar numbers $550 million to $600 million for coming years.
Operator: The next question is from the line of Ive Erica with MetLife Investment Management.
Erica Ive: Just a couple of more follow-ups on CapEx of $600 million, including 6. What could it be the cash outflow given that I understand there is this accrued component? Basically, I'm asking it will be the actual cash outflow lower than $600 million.
Idil Onay: Okay. Sorry, Erica, there was a technical problem. So actually, the cash number should be close to $600 million with the advance paid. So most probably, we will see close figures to $600 million as cash for investments.
Erica Ive: Okay. That's very helpful. And then on the working capital balance, right? I mean, in terms of movement for the year, based as well on what you explained about payable and so on, shall we expect a muted movement, so something closer to 0 in terms of movement for the year? How should we see or a small -- still a small outflow?
Idil Onay: Actually, we are not expecting anything -- any change -- any material change in net working capital in 2026. So of course, it all depends on the raw material prices and steel prices. But right now, our trade payables maturity already. We have finished the extension of the trade payables maturity. So except from this change in 2025, we are not expecting any change from the company because of the company. It all depends on the market prices. I mean there is -- I mean let me just explain why we are expecting for the market prices. So there is a maturity mismatch in our balance sheet. We sell products and pay for raw materials mainly in cash. So when the steel prices and raw materials are in an increasing trend, our work will always require additional cash and our working capital increases. So on the reverse side, there is going to be a release from the working capital.
Erica Ive: Okay. That explains. Okay. Good. And last question is on net leverage. Do you have a figure in mind that you try to reach in 2026?
Idil Onay: Actually, yes, it's going to be around 2 multiplier. So we achieved less than 2 multiplier in Q4. It was 1.9 multiplier net debt EBITDA level. So we believe that we will be able to keep our net debt-EBITDA level around 2 multiplier because obviously, the capital expenditures will be less and that will -- and the EBITDA also will increase. So with the help of these 2, we will be able to keep net debt EBITDA around 2 multiplier.
Erica Ive: And obviously, that excludes any investment in a gold mine, I guess...
Idil Onay: Yes, it is.
Operator: Ladies and gentlemen, there are no further questions at this time. I will now turn the conference over to Ms. Ergin for any closing comments. Thank you.
Idil Onay: Thank you very much for joining us. We hope to meet you again at our first quarter conference call. Have a nice day. Thank you.
Operator: Ladies and gentlemen, the conference has now concluded, and you may disconnect your telephone. Thank you for calling, and have a good afternoon.