Outokumpu Oyj Q3 2023 Earnings Call Transcript

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

Question: Anssi Raussi - SEB, Research Division - Analyst : A couple of questions, and I start with the guidance, Q4 guidance. So as you mentioned, be that we should expect EUR 30 million of positive delta from business area Europe. So that leaves us, of course, EUR 30 million of negative delta from Americas and from if we are going to end up at a flat

Question: Anssi Raussi - SEB, Research Division - Analyst : Okay. And then about your potential investment in the U.S. like $1 billion investment and your current EBITDA run rate is, of course, quite low. So could you remind us what kind of CapEx level you are seeing, if you talk about so-called maintenance CapEx? And what is your plan B if you're not able to finance this post potential investment with your operational cash flow? So is it going to be debt or what kind of options you're looking at?

Question: Antti Koskivuori - Danske Bank A/S, Research Division - Analyst : Yes. A few questions for me, if I may. Starting with the call a potential investment in Calvert. Could you comment about the time line for the feasibility study? Has your visibility improved on this now that a few months had passed by, not expecting a date, but any color about the process would be appreciated? And related to that, how should we think about the timing of the decision? Should you do it as soon as the feasibility study is ready? If the outcome is positive or would it make more sense to wait for external trigger like termination of the current contract by AMNS? Then, one more, if I may. Maybe on the U.S. and pricing, you talked about it a little bit already. But I think you've earlier mentioned that you see some price pressure in the U.S. And we've seen now that in the statistics, base price coming down for the first time in many, many months. How should we look at this? Or how do you look at this? Is that just a minor adjustment and kind of -- and stays like that? Or could it be a beginning of a longer term trend as prices obviously in U.S. have kept quite well over the turbulent times. Those would be my questions.

Question: Maxime Kogge - ODDO BHF Corporate & Markets, Research Division - Analyst : So my first question is on a potential contract with Tesla. The press has been reporting that you might be providing them with stainless steel panels for the exterior of the new cyber truck car. So could you give us an update on where the discussion stand and whether there will be a key factor in deciding the in-sourcing of the hot rolling mill?

Question: Maxime Kogge - ODDO BHF Corporate & Markets, Research Division - Analyst : Okay. And the second question is on import pressure. You're saying that it has basically very much reduced in Europe now and that imports are very low. So my question is, don't you feel that all this material that used to come from Vietnam, Turkey and Taiwan now gets diverted to the U.S. where trade barriers on the world satisfactory, but there can also be some loopholes.

Question: Maxime Kogge - ODDO BHF Corporate & Markets, Research Division - Analyst : Okay. And just a last one, still on trade barriers. The U.S. is possibly considering removing the tariff rate quotes in favor of European Union. And I know that you're exporting some advanced grade products from Europe to the U.S. So would you be impacted if this was the case? And would you be able to transfer production from Europe to the U.S., if necessary? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 07, 2023 / 1:00PM, OUT1V.HE - Q3 2023 Outokumpu Oyj Earnings Call

Question: Moses Ola - JPMorgan Chase & Co, Research Division - Analyst : Moses here from JPMorgan. So I just wanted to understand a bit more on the result here in Europe. If we compare this to the trough in COVID, deliveries are at some level. Obviously, base prices around that time were higher. But if you look at your margin per tonne on that base price, you were still able to keep a positive margin versus this quarter. So just wanted to understand versus that quarter, what's driving the loss here? Is it mainly just higher energy prices? Because obviously, when you look at some of the efforts sort of streamlined the business as well versus then you would expect to perhaps have a more positive result at this trough of the quarter. And then in terms of looking at the recovery, if we compare it as well to the COVID period, I mean, this time, we're seeing material tightness here in scrap yet producers like yourselves are still hesitant to start buying scrap pricing in scrap raw material. How would that recovery profile in during COVID? And is, there any similarities we can draw versus this period in time? That's my first question.

Question: Moses Ola - JPMorgan Chase & Co, Research Division - Analyst : Okay. Because I guess my follow-up to that then comes back to your through-cycle run rate of $500 million to $600 million. And again, this is based on base prices recovering to EUR 1,000 per tonne versus a level where they are now low triple digits. So as we go into 2024, when could we expect to perhaps get an update here on this through cycle target, especially looking at different businesses and how they've also evolved since you first gave that guidance?

Question: Moses Ola - JPMorgan Chase & Co, Research Division - Analyst : And then final question for me. So the U.S. and Europe have been in discussions on a trade deal for steel and aluminum for green steel and alumina. And they've been unable to reach a deal with talks shelved into next year. But on all accounts, people still do not expect there to be a deal giving different approaches towards green steel and trade tariffs for the 2 regions. Is there any potential impact to your businesses if the U.S. and Europe aren't able to achieve a deal? And are you prepared to run a business where you have obviously diverging left towards protecting green steel or to having a green steel market from your 2 key regions. Is that something that you are currently prepared for having sea dam in one region and not having sea dam in the other and potential impact that could have there as well on the new businesses?