Acerinox, S.A. (ACX) Earnings Call Transcript & Summary

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.

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 all 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 the key of the success of these results. In this macro scenario, we can say that we are proud of this set of results. Our EBITDA, EUR 176 million has been 85% higher than Q1 and in the total semester, to EUR 221.6 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 some breakdowns ahead. So that is the reason why our financial debt has been -- has increased -- 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 is 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 lower in all the regions. In the United States, apparent demand according to our estimations. This has gone down 8% after 4 years of a low cycle. Imports also have been reduced basically because of the higher transport costs 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 [indiscernible] that is providing stability to the market. And I think it's helping to the target of the United States industrial policies reshoring and reindustrialization. We have seen [indiscernible] in the United States. Now we have read about General Motors as another example that coming back to United States, so moving assembling lines in the United States. Now we have read about General Motors as another example that coming back to United States, so moving production centers to the United States. So I think this is a reality. 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 sense still for recovery. We're going to speak about data centers. This is true. We can see in the stainless steel business, we see a better performance for the percentage in the heat exchanger sectors. We have a stronger order book in rebar. So we see some investments in infrastructure. It's a little sign that the truck industry is starting to improve, what 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 first of January. And since that time, imports have gone down from 24% to 16%. It 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 of the desire in the European Union plant. 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 margin for us. So we are very excited with the new situation in Europe. I think it's a new situation with the steel is that we need the industry. We need the industry to provide quality employment, we need industry that finally Europe has realized that we need the industry. We need the 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 penalty is important because these are the normal countries offering lower prices and adding 30% quarter reduction. Now this is important because these are the 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 quotes that we have been using during the last 3 years. This is also important for us.

If we move to the HPA markets, you know our strategy has been driven by diversification diversification by product diversification by geography. It's a clear demonstration of 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 the -- what we call the AAA investment strategy, America alloys and other space. 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 these -- all these sectors now are booming are creating also prices going up. We have experience in the second quarter, the 2 highest order entries per month in -- at Hannes. 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 maximum also at the end of July. So the timing is very good. 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 base, 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 [indiscernible] according to the government 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 a 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's 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 markets combined also with 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 industries 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-by-quarter, we have increased melting production more than 10%, reaching 540,000 tonnes in the second quarter. We have about 1 million tons 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% increased than 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 master EBITDA figure of EUR 271 million. If we are [indiscernible] and all this figure, we realized that in the current circumstances with the depressed market in terms of demand and all the circumstances and certainties are in place, we are able to reach this annualized figure. We should be above the EUR 500 million also suffering the effect on certain costs related to the middle East, special in a time in which we are also suffering the the effect on certain costs related to the Middle East conflict, which has been for the semester around EUR 9 million, could having even worse, but also that was 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 as has been mentioned, is driven by increase in working capital, but that increase in working capital is needed to accompany the recovery of the market. In both volumes as well also 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.

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 -- 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 alloys surcharge despite also of the higher raw material costs. And the second is we have successfully start up the [indiscernible] that was hired last quarter, and this has allowed us to get better volumes as well as the reduction in the inputs that has been last quarter, and this has allowed us to get better volumes as well as the reduction in the inputs that has been mentioned. Of course, all these increasing 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, 12%, we are returning to the 2 digits 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 result for the aerospace due to the production lead times mostly in the second part of the year, mostly in the -- more in the end 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 mass in advance to be able to serve our order books. And the last factor that 70% of the tax allows is synergies. We have got a 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, our -- in the quarter, the EUR 107 million, but also to the higher prices of the raw material, especially in HPA. We have had a strong -- 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 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 in 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 increase in 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, it's been EUR 1,366 million, 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.

Okay. If we go to ambition, 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 accommodated synergies up to now of EUR 60 million we shall reach probably for the year around EUR 23 million in this year as committed. 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 -- the others are more in place or very close to me. But the most role about the future is coming in the States, it's 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 2020, working the expansion that was decide for years ago. You remember that plan of $250 million. This is in place, the increase in capacity of 20% in the core rollout North American stainless as well as a plan of $250 million. This is on place. The increase in in capacity of 20% in the core roll at 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 in place first quarter next year. And in Columbus also, starting next year, we shall have in 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 from the [indiscernible] Excellence Plan, which is our operational excellence. We were very ambitious on our program initially decide 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 places for the period '25 to the year '30, but the baseline is established according 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 and staff. And consequently, we are now working on further more ambitious target in this regard. So it's -- in this year, it's 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 plans. We have had a 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, obtain an increase in 10% compared with very low levels achieved last year. But having said that, keeping in mind that the rest of the month, the track has been excellent, and we are reinforcing all the measures for avoid laxation 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 performance in our industry. And also, we have been included this year in the standard according to the Standard & Poor's book, which means that we are in the top 15% on worldwide of every industries according to the Standard & Poor's Sustainability Yearbook member Conclusions, I think as we have explained is very, very simple. As I said, we are driving with the headings. 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 that we have enough experience to manage the daily changes. Now 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 a disruption in our supply chain, which is important. But we are still focused in the short term -- and even in a low scenario in a low cycle with -- 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. Things are changing. Things are changing, especially in Europe because now in very effective is in the of the European industrial policy. So the situation can only be better. The C1 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 EBITDA 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 cyclical. Finally, we'll 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 -- and we have this sustainability of this period with the breakdowns in the summer period. So we have to be cautious. But even in this case, with all these constances we have announced that our Q3 EBITDA results will be slightly higher than Q2. What is been considering all the situation, considering the low consumption of production of this part of the year, I think is very positive. Thank you. .

Okay. Thank you. Bernardo, Miguel, for the presentation. Let's move now to the Q&A session. Please, operator, go ahead. .

[Operator Instructions] Our first question today comes from Adahna Ekoku with Morgan Stanley. .

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 -- and just related to that, on the profitability levels, how did this look in Q2? And are you still on track for reaching breakeven in Europe by Q3? .

Okay. Thank you, Adahna. Regarding the order book. So other book has been improving through the year, but now we are facing the summer months. So now the situation is it a bit weaker. And normally, we only have visibility for 2, 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 Europe since January, have been 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.

That's very clear. And maybe just on the HPA division. So again, on [indiscernible], 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'd spoken about a kind of EUR 30 million to EUR 40 million run rate per quarter in H2. Does that still stand? .

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 increasing 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.

Our next question comes from Maxine Kogge with ODDO BHF.

So the first question is on valuation spend. So distorted a lot the picture in Q1. Can you confirm that there weren't any adjustment 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. .

Okay. Regarding the inventory adjustments, what we assure 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.

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 allow charge the best 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 corralling mills, so you're bringing more volume. So this is somehow preventing price increases? And the same question for you Bernardo, do you think that now on the back of the the new trade regime system that asking since the first of July, should we expect now prices to increase a bit like they're already doing in in carbon steel, what's your view there? You're not the market leader in Europe, but interesting to have your view.

Thank you, Maxim. Do you know that speaking about prices is a very sensitive issue. So we cannot develop too much this answer. But what I can tell you is that in the United States, we have the [indiscernible] system that is working perfectly. So we are covering the ups and downs of the raw material prices with the Alloy during this period. nickel price, especially went up. And with the surcharge, we increased the final prices due to the higher alloy surcharge. Now we'll have a correction after the new new nickel price, but it's not going to be very, very sensitive. In the case of Europe, the 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 have a gain with the margin still we have enough competition in Europe. This is what we have been always saying that the European market has 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 great 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 measure, we are going to increase our prices.

Thank you. Next in queue, we have Tommaso Castello with Jefferies. .

Good morning, everyone. Thanks for the presentation. 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 like 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 you think like the volumes displaced by European domestic producers, you will take roughly the same market share that you currently hold?

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 hotel and pickling lines the P4 that suffer a fire in November '25. Now the line in April is now in operation. And since April, we are coming with the total capacity of the [indiscernible] factory. So we will increase our delivery by 20%. And that's why in quarter 3, we are reaching a better level of positiveness and we have reached a 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.

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?

Miguel, you can answer. I don't want to make mistakes. .

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 on mind that we are in an upward trend has been a strong improvement in the Q2 compared with Q1. The Q3, we are saying it's 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. .

Moving on to our next question from Bastian Synagowitz with Deutsche Bank. .

First question is a quick follow-up on the 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 10%, 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 [indiscernible] as well in the third quarter? These are my first 2 questions. .

The question is very simple. The apparent consumption went down by 2% during this period. So more or less, it's with some high -- some restocking at the end of the period. So we can say that we do -- that was more or less flat. So with 31% of imports reduction, we have 31% more for local deliveries. This is very clear. How much of this 31% of the market that we're going to take that will we will see this is a business. This is demand and production, and we have to compete in the market. We cannot say -- but the is true, is that the local suppliers will be able to to share this 31% more of the market. .

But 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, 80% -- 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? .

Basically, as I mentioned, we couldn't use a part of our capacity during Q1 because of the fire we suffered in our hotel in pickling line. So this line is in operation again started in April. So in Q2, we are able to use almost the total capacity. So that means that from Q1 to Q2, Q3, so we are increasing by 20% of our deliveries. .

So -- sorry, Q3 versus Q1 or Q3 versus Q2?

Q2, I'm speaking about capacity not deliveries. .

Yes. Okay. And then any indication on shipments in Q3? .

No, no. We will never give indication of this, but you have to consider that we're in the summer period. we will close the Acerinox plan for 2 weeks in August. This is formal holidays. I don't know what our competitors are going to do. I don't know what the levels of -- but normally, especially August is a very weak month. Let's see September. September is going to be the key. .

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 delayed surcharging. 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 able has to improve a lot to 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 net asset?