Salzgitter AG Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Bastian Synagowitz - Deutsche Bank AG - Analyst : Yeah. Good morning and thanks for taking my question. My first one is actually on the demands and volumes. So if we look at the first quarter volumes and steel, I guess they were the strong since Q1 2023, and I guess they have only been in total two quarters since COVID, which was stronger versus what you just reported. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 12, 2025 / 7:00AM, SZGG.DE - Q1 2025 Salzgitter AG Earnings Call What has been driving the strength, and do you believe that this was also customers buying a little bit ahead of the anticipated tariffs and safeguard event which we had at the end of the quarter. I guess it's probably hard to picture that underlying demand is really as strong as what it was two years ago, but I would be curious to get your view on this. That is my first question.

Question: Bastian Synagowitz - Deutsche Bank AG - Analyst : Understood. Okay. And then maybe also with regards to the second quarter, what's the volume trend you're seeing there so far? Do you think you will keep up that very strong volume run rate? I guess what's the general environment you're seeing? Is there any change in pattern in any of the markets either to the positive or to the negative as far as you see it? And maybe also more technical question, is there going to be a direct cost impact from the maintenance at blast furnace C? And when do you aim to bring that back?

Question: Bastian Synagowitz - Deutsche Bank AG - Analyst : Understood. And the other aggregates which you have on maintenance, are they downstream or what types of aggregates are those?

Question: Bastian Synagowitz - Deutsche Bank AG - Analyst : Understood. Okay. And then lastly, on free cash flow, which was actually very decent for first quarter as far as I thought, particularly on the working capital side. What helped you to manage the working capital here better? Was this also driven by the very strong volume offtake, which probably lowered the inventory side, which went down a lot, at least more than last year? And maybe could you also give us an updated guidance on what you expect for year-end net debt?

Question: Bastian Synagowitz - Deutsche Bank AG - Analyst : So on the higher, just to -- again, to get that clear, more towards the EUR1.5 billion, I guess?

Question: Boris Bourdet - Kepler Cheuvreux - Analyst : Hello, everyone. Good morning. I have two questions. The first is on the impairments that you booked, the [EUR10 million]. You refer that to being connected with portfolio streamlining. Can you bring some more details on which assets had been impaired? And also regarding HKM, do you have more visibility on the plant closure and what cost that could be for the group? Thank you.

Question: Boris Bourdet - Kepler Cheuvreux - Analyst : Okay. So you don't have -- but still you have some good visibility on your sourcing, right?

Question: Boris Bourdet - Kepler Cheuvreux - Analyst : Okay. May I had a very quick question on CapEx.

Question: Boris Bourdet - Kepler Cheuvreux - Analyst : Yeah. There has been some lines recently on a new walking furnace for an amount of three-digit million euro. Was that already planned? Or is it something incremental to your CapEx?

Question: Cole Hathorn - Jefferies - Analyst : Good morning. Thanks for taking my question. I'd just like some detail on the outlook for the steel production division. I'm just wondering what would make you revise that guidance towards the upside considering we do have some higher steel prices and raw material costs are quite muted. So I'm just wondering what would be the upside risk to numbers as we progress through 2025 to the steel production unit? And then on the technology business, can you just give an update on how you see that business into 2025 and the order book progression for the filling lines? Thank you.

Question: Cole Hathorn - Jefferies - Analyst : I'm just looking for some color on how you see the order books in the technology division. And any color on that business unit as it progresses through 2025?

Question: Alain Gabriel - Morgan Stanley - Analyst : Good morning. Thank you for taking my questions. The first one is on the CapEx budget. So the pace of spending year-to-date appears to be far below what you have budgeted for the year. Can you please reconfirm your spending budget for 2025 net of grants? And how realistic do you see a catch-up in the next nine months? That's my first question.

Question: Alain Gabriel - Morgan Stanley - Analyst : Thank you. So just to confirm, EUR800 million is net or gross? So you will be spending EUR400 million net. Is that the way to interpret it?

Question: Alain Gabriel - Morgan Stanley - Analyst : Okay. Very clear. And second question is on the outlook for raw materials given that you engage in a lot of hedging. How do you expect your raw material costs to evolve in the second quarter of the year given that met coal prices have pulled back a lot? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 12, 2025 / 7:00AM, SZGG.DE - Q1 2025 Salzgitter AG Earnings Call

Question: Dominic O'Kane - JPMorgan Chase & Co - Analyst : Thank you for taking my question. Two quick questions. The cash flow guidance that you've given is very helpful, the net debt guidance. I just wanted to just double check on the working capital. So blast furnace C maintenance between March and October, is that already fully reflected in your inventory valuation? Is there going to be a working capital impact in Q2, just to be aware of for the blast furnace C maintenance? And then second question, coming back to Alain's previous question on the derivatives, just looking into Obviously, markets are very volatile, very difficult to predict, but is the kind of volume of derivatives that you have in place in Q2 similar versus Q1? Again, should we think about these as a recurring derivative item? Or is there any kind of comments you can make on the derivatives positioning looking into Q2? Thank you.

Question: Dominic O'Kane - JPMorgan Chase & Co - Analyst : So just to be clear, if we think about an assumption, a scenario of a strengthening US dollar environment, we should think that would be a positive for a revaluation gain for Q2?

Question: Christian Obst - Baader Helvea Equity Research - Analyst : Good morning. Three questions, if I may. First on KHS. What is the current price and order trend? Are you see some headwinds or more pressure on prices, maybe flattening or declining orders? Or is everything right on track?

Question: Christian Obst - Baader Helvea Equity Research - Analyst : Okay. Thank you. When you talked about concrete orders that may come in the coming months. So you see that there are activities and so on and so forth. Can you give us some an indication where do you see the most possible orders coming?

Question: Christian Obst - Baader Helvea Equity Research - Analyst : Yeah. So there's some kind of a chance that we see some kind of an improvement, especially in beams, which is a highly loss-making entity so far that you see some improvement going into the second half or the end of the year?

Question: Christian Obst - Baader Helvea Equity Research - Analyst : Yeah. Okay. Makes sense. The last one is on financing policy. So net debt touching EUR1.5 billion with the risk going to EUR2 billion, whatever comes. So are you thinking about some kind of a new structure here besides banking financing, touching capital markets or some longer-term bonds or whatsoever? Any discussion on that side?

Question: Christian Obst - Baader Helvea Equity Research - Analyst : So this means that you are fine with the current structure so far?