Outokumpu Oyj (OUT1V) Earnings Call Transcript & Summary

Good day, and thank you for standing by. Welcome to the Outokumpu Pre-Silent Conference Call Q1 2021. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your first speaker today, Linda Hakkila. Please go ahead.

Thank you, operator. Hello, all, and welcome to Outokumpu's Q1 '21 Pre-Silent Conference Call. My name is Linda Hakkila, and I'm the investor -- I'm the Head of Investor Relations here at Outokumpu. With me today, we have our CFO, Pia Aaltonen-Forsell. We will today start, first, with Pia's comments, and then we are happy to take your questions. But now without any further explanations, I will hand over to Pia.

Thank you, Linda, and good afternoon, everybody, or good morning. I certainly hope you are all staying self -- safe and keeping well. At least here in Finland, it's a sunny, sunny spring day today, so also enjoying a bit of sunshine now for a change. And with that said, I think that's a good bridge also now to our sort of Q1 comments and highlights what to share. And of course, I would like to start with a few comments from the market. I mean we have talked about the recovery in the demand side here since already sort of late 2020, and certainly, I mean, we have seen this continue also through 2021. And maybe even sort of from a segment perspective, seeing this now more across the board, whereas appliances and automotive, we're really sort of sticking out in a positive way early on when the kind of post-pandemic recovery started, now we can see this more sort of across the board of most segments, all industrial segments, certainly seeing only a few exceptions, maybe worth mentioning is those around hospitality field, hotels, restaurants, et cetera, and also still, at this point, a bit slow on the beer brewery side as well. But otherwise, really seeing recovery. And obviously, we have the guidance out there on volumes, saying that our stainless steel deliveries are expected to increase 10% to 20% in Q1 compared with the previous quarter. And certainly still sticking to that, I would say, maybe even leaning a bit more towards the higher end of that. And also to that, obviously we have seen our capacity utilizations being on a good level. I would especially emphasize there that we see recovery now through the standard grades, the plastic grades. And that means that, for example, our Tornio route is one of the really important ones now and really keeping a very high capacity utilization there. So I wasn't planning on really commenting sort of our figures for sales prices, but just based on the data published, for example, from CRU, we can certainly see that this improved demand has also been visible then in stainless steel prices having increased really through the quarter. And then talking about higher prices, obviously, I would mention Ferrochrome sort of pretty early on here. We now have the benchmark price already settled for the second quarter. So it's actually up 32% compared with the first quarter and now then on sort of USD 156 per pound. So this is really approaching now the top levels of 2017. So a really good and fast sort of uptick there. Obviously, they started already in late Jan with the Chinese spot prices increasing, and they have also kept at the higher level. So maybe those were really the main points sort of from the market side. And if I then look at a few highlights, obviously, seeing the increased demand and really important question is also scrap availability and raw material impact. And first of all, I mean, we are still satisfied with the scrap availability that we have, even though, obviously, this higher demand situation has also there increased the demand and resulted in a somewhat tighter market, but we are still able to operate at really good levels. And just also then from raw material impact to P&L also on a sort of general level, looking at Ferrochrome prices, looking at nickel prices, I mean, even though nickel really dropped very sort of a loss towards really the end of March. Still, if we look, for example, average quarter-on-quarter, we have been on more than EUR 1,000 per tonne higher prices there, maybe even a bit more on average. So these are the kind of movements that would typically really have some positive impacts into our raw material-related inventory and metal derivative gains. And yes, on derivatives, not so much to say, pretty sort of a small number there, a small positive number on the hedging side. But on the other sort of raw material impacts to the P&L, I would say that this sort of upward trend usually then is a positive sort of sign there. And maybe one sort of a little bit odd, metal is worth mentioning there, iron actually has also increased more than 25% during the quarter, and that's pretty unusual. And then the final point, maybe in my opening remarks, we launched our new strategy in November of last year, and we also had several improvement actions starting immediately. Those included, for example, negotiations with our personnel. And as we already informed even before our Q4 report, we have completed those negotiations according to our plans. So I think the general message I just want to give that also vis-à-vis the actions that we wanted to take based on our strategy. I think we're off to a good start, and that's also something that we will then be able to share more concrete results after our Q1 results release. So I think with that said, those were some of the highlights from the quarter, and as always, would be really happy now to take questions and maybe dig a bit deeper into some of the interesting areas here. So operator, I would be ready for the questions now.

[Operator Instructions] Your first question today is from the line of Seth Rosenfeld from Exane.

Obviously, there's been a very strong recovery in the stainless market over recent weeks. Wondering if you can touch on first the outlook for your product mix. I think when we spoke last earlier in the year, you flagged the recovery in more standard grades with having kind of a negative impact on the product mix, a specialty grade recovery was lagging that of commodity grades. How are you seeing that progress now going into Q2? And with the broader-based recovery in demand, is there any opportunity for the mix to begin to improve further as we look forward into spring? I'll start there, please.

Yes. Thankyou, Seth. And yes, indeed, a very good question. And what we have talked about earlier is still obviously sort of true for the realized mix in Q1. I mean, out of the recovery that we saw earlier, it was really predominantly the standard grades. And what we are seeing now in our order intake, it's a more sort of broad-based recovery. I would, though, still say that there are maybe -- there is maybe one sort of exception that is worth noting on top of what I said earlier. And it is that the scrubbers business that has been one of the important business in our value-added sort of selection is still very slow. But there are some other interesting projects into significant industrial projects or there's even some sort of oil and gas-related projects that start to sort of -- is come to live sort of the wrong way of expressing it, but where there's sort of clearly movement happening now and some pretty big projects at least sort of in a bidding phase. And some even come to a realization phase. So with all of that said, I would say that this gives some base for also the mix starting to improve when we are just sort of looking more forward. But still for Q1, obviously, I mean, it is really a mix with really predominantly a lot of the standard grades.

Very clear. And I guess, second question, please, with regards to ferrochrome. Obviously, phenomenal recovery in the spot market and now also in the Q2 European benchmark. Can you please give us an update on your own product mix? I know that there's been a structural shift towards less spot exposure, more contract exposure. What will that impact be on Q1 and into Q2? And then secondly, are there any lags we should be aware of with regards to the realization of the European benchmark? Or should we expect that full $1.56 to be hitting you in Q2?

Yes. Yes. Thankyou. Obviously, the question was super relevant last year, especially as the drop also in internal demand was significant, I mean, on the back of lower stainless steel demand. So we were really exposed to the spot market in a situation where also spot price is very low. At the moment, obviously, we see both the Chinese spots as well as now for Q2, the European benchmark being on much a clearly higher level. So there wouldn't be such a big sort of difference between the 2 in these market conditions. But I would still say that based on what we communicated last year, we have engaged in a sort of high share of long-term contracts. And obviously, with the higher stainless steel demand now as well, the share of internal demand is also somewhat higher than last year. So all of this sort of drives more towards the pricing that is based on the European benchmark, I would say, clearly. And that is why also in the Q1 -- Q4 report, excuse me, we also wanted to say that the rise of the spot price doesn't have that significant of an impact. What's really important is the benchmark price. So when you asked about the lags then of a realization, I hope that kind of answered that question as well. So we are really -- the benchmark price is an important pricing mechanism for us now.

Just a last follow-up. Is the historic guidance of the, I think, EUR 10 million EBITDA impact reached EUR 0.10 move in ferrochrome, does that still stand? Is there any difference at the extra cost structure to alter that?

Yes, yes. I think as sort of a rule of thumb, and obviously, that's per quarter, I'd just add that, but that's how it's been all the time. So I just want to say, yes, that is still relevant. And then there is also -- I think you need to take into account a few more topics there, and one of them obviously is the U.S. dollar-euro rate as well. And I mean, if we see a strengthening of the U.S. dollar, obviously, that's been sort of more positive for us once we translate it, et cetera. So there could be some delta from that, but that rule of thumb still applies.

The next question is from the line of Harri Taittonen from Nordea.

I just wanted -- no, if you can sort of help us being prepared for the results and the guidance that you will be giving, I mean, with the current management, what is kind of the way you tend to communicate? Or is there some sort of verbal code for the situation when you are guiding the next quarter's result? I mean, is it just -- is it possible to kind of develop what sort of practice you will kind of use when communicating the outlook?

Yes. Harri, what a good question. I think actually your question gives me first opportunity to just maybe say that we have been, in a way, quite straightforward, but you could also say simplistic in that when it comes really to our EBITDA guidance, I mean, we tend to say it's higher or it's lower or maybe it's stable. But we really -- I know of some companies that use sort of much more sort of grade sort of scales and [ objectives ] and explaining more. But we tend to be sort of a bit more straightforward to this extent. This is at least now how we've done it over an extended period of time. And I would say that's kind of what we have done and most likely we'll stick to now also in the future. So that's maybe sort of a first starting point. Then I think it is important to continue to talk about the demand and the volumes for the next quarter. And there, you've also seen us have a practice now we've given some sort of range when it comes to volume change in percentages. So I think that's as much as I can say. I definitely recognize also that there could be sometimes a style of kind of being more, how should I say, more forward-leaning or more optimistic or then -- or being sort of very realistic. But I hope we sort of -- that we can strike a good toning in trying to be as open as we can early in the quarter. But I don't see a big change to sort of the philosophy or the style, how we have done it until now.

No, that's very good to -- useful and happy with that. And just wanted to clarify because there can be some people who are kind of then starting to look for additional color. And so it's good to know it in advance. And yes, I mean -- well, I mean, well, maybe just a follow-up on the sort of Ferrochrome. I think there's been a little bit of softening or sort of -- maybe sort of from the sort of high appreciation, but I mean, is there something you still would like to say about that market or the observations like going forward? I know that you were talking about the outlook when the result is out, but...

Yes. Sure, sure. No. I think there's sort of -- there's many sort of really interesting and very relevant elements around it. And now I guess that everyone on the line is sort of really into the details here, but I'll still recap sort of the main points. I mean, obviously, the sort of -- almost rally in prices that started in late January from the Chinese index or spot price was clearly driven by simultaneously a really good demand because stainless steel, obviously, also then in sort of the more Western world had started to to grow in demand. And we know that in Asia, the pickup happened already earlier. And at the same time, then a lot of supply restrictions in Mongolia, but also since COVID-related troubles, whether Kazakhstan or South Africa, et cetera. So there's -- there has certainly been some sort of economic theory rationale for why it happens. And then we can think of what do we understand and what do we see in the market. I agree with you that sort of some very recent data show maybe, not a weakening, but at least sort of a stabilization or maybe sort of a little bit of a sort of -- how should I say, kind of looking for where the safe level will be. There, I would say that what we have learned historically is that with such high prices, there has been a supplier response. I mean some earlier sort of furlough capacity or otherwise have been brought up to line and up to speed. So I think that's what we've learned from history. And yes, history has some sort of tendency to repeat itself. But I think we are still on -- really, we are on good levels. Also what we see in terms of our own operations and our own production, obviously, this is really -- this is that 1 year in every 4 years when we don't have a big maintenance break. So it will also allow us to really sort of push the production in this good market environment.

That was well planned. Good timing.

Yes. Yes, yes, exactly. Yes. We have these very long-term cycles here.

The next question is from the line of Alan Spence from Jefferies.

On the volume guidance, can you just give us a bit of sense of how you're seeing U.S. versus Europe? And which one might be pulling up that average and which one pulling it down?

I think sort of without exaggerating, we do see the recovery now on both sides of the Atlantic. And to be fair, obviously, the sort of COVID-related news going forward, they seem to be more encouraging in U.S., I mean, just to give sort of the practical example that we know that for example, in our operations, we already have a fairly large portion of our employees, for example, having been vaccinated. So things just progress more rapidly on that area on the other side of the Atlantic. But that doesn't sort of -- that's not visible really in -- if I look at sort of the volume guidance and whether the growth is from Europe or Americas. I think we can see the growth in both.

Okay. And then kind of sticking on the U.S., with ATI's exits. Can you give us any updates around conversation with customers? And confidence in taking some of that market share? When you might start delivering to new customers?

Yes. Yes. I would say, my take on it is that following the ATI announcement, the sort of the customers already took their peaks. And I think we have got our -- if I could call it fair share. So yes, there might be some customers that are new, but it could also be more around just sort of share of wallet that we can get. And I mean, obviously, from sort of a U.S. geography point of view, I mean, it does leave a certain area where ATI was strong, where certainly now like customers have to look for the options. But we think this has pretty much already happened.

Okay. So if I kind of just understand that you're kind of -- I believe your typical market share was around 25% there. Correct me if that's wrong, maybe you're saying maybe you get 1/4 of those volumes up for grabs. Is that -- Am I understanding that?

Yes. No, sort of the market share of this that you cited seems a little bit sort of on the upper end of what I would have thought. But still, I would say that if we now talk about their standard grades, like really the standard grades that they are giving up on, then I would say that pretty much those volumes have been -- customers have been looking for new suppliers already.

I'm sorry. I don't think I understand your answer. Are you saying you don't expect to get incremental volumes from ATI's exit?

Yes, we do expect, and I think that they are probably already in the books.

The next question is from the line of Ioannis Masvoulas from Morgan Stanley.

The first question is around the European business and the long-term contracts. How should we think about the year-over-year development for contracts that you signed, I guess, within December and January? Are you getting enough upside given the spot price dynamics? Or could that be dilutive to your overall realized pricing for -- at least for Q1? And also clear for the first one.

Yes. Thank you, Ioannis. I think this is a good question. And I mean, to be transparent, the environment where we agreed about annual contracts towards the end of last year, if you just look at the price curves, you can see that they maybe have started certainly to be an upward movement compared with the low points during the summer. But we have certainly, at least based on CRU, they see a more rapid movement upwards after that. So I think the fair assumption is to say that there is -- these are probably somewhat dilutive in the pricing overall because really for spot prices, the CRU data shows that there's been a rapid increase, whereas the annual contracts would then more sort of be set in a slightly more sort of -- yes, almost not bearish, but in a sort of lower market sentiment. I don't want to exaggerate this. It's not a huge figure. It's definitely sort of per -- it's sort of a double digit figure, but not more than that.

Okay. And just for my understanding, what sort of percentage of the volume overall are we talking about when it comes to Europe that is linked to longer-term contract?

Yes, yes, yes. So we used to be -- I mean, the sort of history was that we had a very high percentage. And there typically, these were also like alloy surcharge base, and we haven't really published how much is these days, but you know that the pricing mechanism in Europe shifted very heavily, like really, really the majority towards effective pricing. So I mean we are talking definitely about the smaller share here. I think that's as much as I can say. It's definitely sort of clearly, clearly below 50%. But yes, maybe I'll leave it there.

Okay. No, that is helpful. And the second question, can you talk about lead times in Europe and the U.S. right now? And how have they developed, let's say, relative to the beginning of the year. If there has been any change?

Yes. Yes. Well, lead times have clearly extended. And I think this is true for sort of both Europe and U.S. We are actually, as we speak, selling into Q3 right now. I mean, now I don't want to sort of exaggerate this, but for certain grades, we are certainly even selling into Q4. But if we talk sort of more standard, I mean, especially for Europe, we are now clearly into sort of Q3 territory here. And also for Americas, where typically we have a little bit sort of less of lead times, we are also really extending right now and could be selling into August. So lead times are longer.

Understood. Okay. And the last question for me. In terms of the raw material-related inventory gains that you alluded to, could you perhaps quantify what sort of new figure we're looking at? And within that, when do you book the gains on Ferrochrome in terms of the inventory, is it a Q1 or a Q2 EBITDA effect?

There will be some impact already in Q1. So I mean, just to sort of -- there will be some positive impact already in Q1. I think I have typically not said sort of the exact amount. Here is as much as I can say. First of all, the hedging impact is very close to 0. It's a little bit positive, but it's really close to 0. And then the sort of other raw material-related impacts. This time, they are positive, both from Ferrochrome, from nickel and from iron. And I think this figure for us, if I look sort of long-term over the quarter, sometimes it's been minus 20%, sometimes it's been plus 20%. This is -- these are sort of the typical magnitude that we have. And what is maybe a little bit remarkable about this quarter is that we really sort of throughout these 3, nickel, Ferrochrome and then also iron sort of have the definitive putting push in all of those.

The next question is from the line of Patrick Mann from Bank of America.

Pia, I wanted to ask a -- I think, a slightly longer-term question around the strategy. So my understanding of the strategy was it had quite tight CapEx controls for 2021 and 2022, where you were going to limit it to EUR 180 million. And then only really once deep mine was finished, would you look to kind of further capital investments, which would improve productivity and kind of give you a bit more competitiveness. I'm just wondering, in -- yes, I'm just wondering in this very strong price environment, does that -- is it possible or are you thinking about bringing your strategy forward? Is it possible for you to maybe get to where you wanted to be in terms of product and investment in productivity, et cetera? Could that come forward?

Yes, yes. I think that's a really sort of well-timed question. So Patrick, thanks very much for that, and it gives me the opportunity maybe to say sort of 2 really different things. The first one is that, obviously, from some of our technological and engineering teams, we have not stopped sort of thinking and planning ahead. So obviously, there is a pipeline of sort of potential things that are being evaluated by a small group of people. So we do keep our eye on things. But I just want to be really clear that we stay committed to the targets that we set for the first phase of the strategy. And we talked about '21 and '22, we talked about the scrutiny on CapEx still through '22 because exactly, as you said, I mean we are still working with the deep mine, and that still kind of takes a quite significant chunk of the EUR 180 million as we speak, both in '21 and in '22. So obviously, we stay committed to our targets. And those targets were that we wanted to deliver the EUR 200 million EBITDA run rate improvements, and then we wanted to make sure that our leverage is below 3x. And I think we are absolutely committed to delivering those targets as a priority and restricting the CapEx helps just. And once we have reached those targets, obviously, then we will launch the next phase. And then we will be also elaborating more on what sort of -- what investments could go about here.

Okay. So -- sorry, I'm again, just trying to make sure I understand. So it's possible that it comes forward, but as long as the balance sheet is under 3x and you're still making -- you're making progress. Is that the right way to think about it or is EUR 180 million for '21 -- for '22, let's say, a completely nonnegotiable, that is the limit?

Well, I would say it's completely non negotiate until we have reached the 3 targets that we set up for ourselves.

The next question is from Seth Rosenfeld from Exane.

One more question from my side, please. Wondering if you can comment on the European emission trading scheme, please? In the recent weeks, I believe that the benchmark for pre-allocation was cut quite dramatically for EAS and for stainless with the benchmark volume, but 24% versus prior. So you oversee much less reallocation in the last set. And is that what you were expecting? And how will that impact your expected inventory position of EUA credits? And on that basis, can you provide an update for when you would expect to be net short carbon credits and be acquiring on an annual basis getting P&L?

Yes. Thank you, Seth. That actually -- that question first as were we surprised or not, this links to our sustainability strategy, where actually, I would be happy to share -- we would be happy to share some more details also then with our Capital Markets update in May. And the reason I'm saying that is that we have been prepared for a scenario where emission rights get more scarce, and through that, obviously, being prepared for a scenario where we also need to work very much on reducing emissions. And as you know, based on our science-based target, we already have the target set for the year 2023, but obviously, at the moment, we also need to kind of think and go beyond what are then the next steps. So a little bit more about that will follow. Then obviously, still, at end of last year, we were clearly at the surplus. Now Linda, I don't remember as we actually disclosed the figures. But I would say, based on the sort of previous forecast that I have seen, then we are still many years out from having to start to sort of be a net buyer here. Based on the surplus that we still have and are able to move between the programs and then sort of the balance of what our emissions are and the new rights that we get. But the new program for sure, is -- this is getting stricter and stricter. So maybe I don't want to sort of completely pass on that question without giving an answer, but I think we can give a more specific answer when we also are more clear on our sort of targets going forward in this area.

The next question is from the line of Luke Nelson from JPMorgan.

First question is just on the European market. Just relative to your guidance, are you growing in line with market? Or do you think you're taking share across the main product segments? That's my first question.

Yes. Yes. Hello, Luke, thank you very much for the question. I think that we are, at the moment seeing in import quotas filling, but with sort of less speed maybe than in some previous quarters. So just looking at the data, it is clear that imports are somehow also reflected by logistics costs and by the general dynamic of the market. So in that sense, my sort of take on the situation is that there is also some sort of shift here, which gives us some more room. That's my best guestimate. Obviously, I don't -- there's not all the facts are not available yet. So this is more kind of based on what we have seen now in the first months of the quarter.

And I suppose, within the domestic share of shipments is -- are you sort of maintaining share or growing share relative to domestic peer?

Yes. Yes, that will be slightly more difficult for me to answer yet sort of without the figures. But I think we have seen -- we are very much sort of in line and even towards the upper end of our volume guidance. So I think at least we have seen sort of a good speed here and during the first quarter. I don't know what the others are saying.

Okay. That's useful. And just on the Americas, on the cost side, there's obviously some pretty severe weather in Q1. Is there anything that we should be factoring in, in terms of additional cost, transport, et cetera, from any weather event?

Yes. I think it's a fair question. And the really interesting thing is, obviously, you sort of really had a big upset and turbulence in Texas, and it's not too far from Alabama. And yes, indeed, I mean some days were rather rough and tough. But the interesting sort of side effect or consequence of this was also some challenges vis-à-vis Mexico, et cetera. But I still want to say it's not been a walk in the park. Definitely, these weather conditions where also, to some extent, causing, I would say, challenges. But on the other hand, I mean, you haven't seen any announcement from us relating to that. And I think if it would have been really significant, I mean, we should have flagged it. So there's really -- I just want to recognize that no one sort of see the weather, and we also had, to some extent, suffer from it. But I don't think that there was operationally any significant impact.

That's very clear. And my final question, just touching back on that question on Ferrochrome. Obviously, with the sensitivity that you typically talked about. And yes, I mean in 2020, the benchmark went up, pricing -- your contribution from pricing went down. So just given the mix effect, should we be expecting catch up for the loss sensitivity in 2020? So the sensitivity as you get more mix back to a long-term contract could actually be above that $10 million per quarter?

Yes. And then -- yes, yes. I do think it's fair. I would put sort of a small plus sign there saying, yes, there is probably something in it, but I don't want to change that sort of basic sort of dynamic of the sensitivity calculation per se. I just think this is not so easy to just answer with one sort of figure, simply because last year, it was detrimental to have more spot because there was really also this -- the spot prices were also very low. In the current market conditions, you have both sort of spot and now the benchmark price for Q2 at a good level. So there's also not maybe the same sort of significant negative deviation. So -- but some catch up -- I mean, definitely, we are now at sort of very low spot levels at the moment.

Sure. That's really useful. And maybe -- sorry, last question, just on cash flow and maybe just on working capital, if you can give any sort of indication or quantify how that could -- how that's progressed over Q1?

Yes. Thank you very much. That's a good question. I think a couple of things sort of worth mentioning on the cash flow. So overall, for the year total, I mean, we have been sort of putting down working capital over several years. And we said we now sort of reached the limit where we want to make sure that we keep up the good performance and particularly the good relative performance and then even sort of really striving towards balancing the working capital for the year. But then obviously, we can talk more about that towards the end of the year when we see the specific demand conditions that apply then. However, the first quarter usually for us is somewhat of an investment into working capital. And with the increased volumes, I think that's sort of a safe assumption that normal dynamic applies. We had quite a big figure in Q1 of last year. I think the investment was more than EUR 100 million. And I think we have sort of tried to really be as diligent as we can, but at the same time, still just want to say really openly this dynamic is that there is an investment to working capital in the first quarter.

The next question is from the line of Anssi Kiviniemi from SEB.

A couple of questions also left from my side. First of all, kicking off with Americas and the ferritic investment. What is the situation of the investment ramp up currently? And is there any clear impact on earnings in short term, meaning Q1 and Q2? That's the first one.

Yes. Thank you, Anssi. A really good question, especially as we have been really proud of the fact that we got this up and running sort of late Q4 of last year. So I mean, clearly, we are already delivering to customers and then the balancing act for us here is now on the one hand, sort of taking our fair share of the market and sort of establishing us here, and at the same time, facing an overall good demand situation, which gives you a range of opportunities. So I would say very much moving according to plan. Maybe for the first quarter, I don't want to talk about a significant earnings impact. But the earnings impact that is there is positive. But it's -- I certainly don't want to sort of talk about the big number.

Okay. That's clear. So a small positive. Then the second question is a bit more broader. I mean, if we look at Q1, volumes are clearly up, prices are up in stainless quite markedly. The mix is still weak, contracts perhaps slightly lower, raw materials are up, scrap market this time, that's a lot of arrows basically pointing to different directions. So I was wondering if you could help us a bit on what has happened to stainless margins in Europe and in U.S. in early 2020? I know that you don't want to give anything specific, but any indications, I think we all would be really thankful of that.

Yes, yes, yes. So directionally, I still think there's a few things that are really sort of fair to mention here and also very much in line with the what we have talked about earlier. And as you know, obviously, the prices of -- from a stainless steel perspective, the prices of Ferrochrome and nickel and even the iron that I mentioned, I mean, of course, sort of the key thing is here then that when we are pricing with our customers, that we get this impact also through our sales prices. And I think I sort of alluded to that even in the Q4 call just to say that in the market environment where we see the demand coming back sort of almost throughout the segments, of course, this is still the sort of environment as well where the kind of metal movements that we see shouldn't be disruptive, but rather the market should then support sort of just taking this into account in the prices as well. So I certainly don't want to change that message. So I clearly want to say that a good market environment is helpful also from this extent. So even though we still have effective pricing, particularly in Europe as a really important pricing mechanism, but there is sort of a market sort of that recognizes the fact that a lot of the input factors have also increased. So maybe that's sort of as far as I can go, just sort of indicating kind of the same demand around the topic. And then I still want to say that maybe this is -- this is sort of just a good indicator as well. We talked about the raw material-related inventory and then also hedging gains earlier. And that's typically also something that we are trying to follow-up on one hand, what we sort of call the underlying sort of operative business performance and then sort of have on top of it this raw material-related inventory gains and hedging gains, all of this, of course, as well. And I think that now we also have a quarter where clearly sort of the direction for that raw material-related inventory gains and hedging gains is positive, which is then also supportive to the margin. Anssi, I think that's sort of what I can say. Yes. Yes.

And there are no further questions at the moment. So I'll hand back to the speakers.

Thank you very much, and thank you for the good questions. I want to say we have sort of touched broadly on the elements of demand costs and also, to some extent, of the cash flow elements here. And obviously, when we need prior -- after the Q1 result, we will also be able to share some more details about the strategy execution and the progress of that. So with that said, thank you all very much, and I hand back to Linda.

Thank you, Pia. So thank you all for participating in our conference call today. And before we close the call, I would like to remind that we are publishing our Q1 '21 results on May 6. Now thank you once again, and have a happy Easter.

Thank you. That does conclude the conference for today. Thank you for participating. You may now disconnect.