SSAB AB (publ) (SSABA) Earnings Call Transcript & Summary

Good morning, and welcome to this presentation of the SSAB report for the first quarter of 2025. My name is Per Hillstrom, I'm Head of Investor Relations at SSAB. And presenting today, we have our President and CEO, Johnny Sjostrom, and also our CFO, Leena Craelius. And if we go to the agenda, could we -- I'm just asking the operator to please, if we can have the slides. Yes. Thank you. And the agenda for today, Johnny will start with the first quarter in brief. Leena then present more details on the financials, and then Johnny comes back at the end with the outlook and the summary. And after that, we will open up for questions. So please, Johnny, the floor is yours.

Thank you very much, Per, and good morning to all of you. I will start by going into the highlights of Q1. And within SSAB, safety is a priority, hence the reason why we always start with safety. Looking at our safety performance, it is on a good level, touch wood, and it continues to be a high focus area for all our employees. So that's a very strong highlight for the quarter. Now looking at the financial performance, looking at the operating results, we ended up on an expected level of SEK 1.3 billion roughly. I think one of those highlights is actually Special Steels' performance. They bounce back when it comes to volumes, but at the same time they were able to maintain prices all the way through Q4 last year but also Q1 this year. We've also seen sort of a recovery on the American market, and I will get back to that later on in the presentation. The topic on everyone's lips right now is the tariffs. I think it's important for us to try to explain our production footprint. And we have roughly 2.4 million metric tons of production capacity in United States, and we are a market leader when it comes to plate deliveries, which means that we are not importing as much into United States or exporting from the Nordics. That gives us flexibility, and I think that's important to highlight. However, of course tariffs is not something that we would like to see. We are very dependent on exports. We're dependent on free trade and fair trade. So for us, it is a worrying sign, of course. And long term, we don't know what the consequences would be. But short term, we have the flexibility to do production locally in United States. I started off talking about one of the highlights for the quarter was Special Steels' performance. And we increased our sales in Q1 to roughly 336,000 tonnes. It is a fairly good performance, also in line with our expectations. And the financial performance was roughly SEK 1.4 billion, so in line with our expectations, but it shows the unique customer value that Special Steels are able to supply into the market and that the market is willing to pay a premium for these kind of products. One of the things that I also want to highlight is that a decision was made by the Board to continue the transformation of the Mobile production facility into a more special steel production facility. So an investment of a tempering furnace was approved, which is very important for us in order to produce the most advanced grades we have within Special Steel. And one of those grades are Hardox 500 Tuf that we see a very high demand for. Looking at SSAB Europe, I think that the volume output for Q1 was fairly good, also an increase compared to Q4. We have seen that the market is stabilizing somewhat in Europe coming from a lower position, but it's sort of in line with our expectations. And the operating result ended up at SEK 33 million, which is maybe a little bit in line with what we expected. But also one of the things I want to point out that there was a strike in Finland that ended up with a cost of roughly SEK 120 million. So the financial performance could have been better if it wasn't for that strike. Now if you look at SSAB Americas, we had a positive delivery month. I think one of the most important thing is that we had a very good order intake in the month -- in the quarter Q1, and we could also see prices improve on the market. So the way it works for us is that we have quarterly, we have half year contracts, and we have some spot market sales. But the price increase will come gradually for SSAB Americas going forward. And that can also be reflected in the Q1 operating result for Americas that we haven't seen much of the price increase yet, but we're expecting that to come in Q2 and Q3 going forward. Then for the 2 subsidiaries, our 2 subsidiaries are seasonally low. It's always been like that. They don't sell as much during the winter season, but we're expecting that to improve. Even so, I think that they came up on a fairly good level. The operating result for Tibnor was roughly SEK 35 million. So that's good. And now looking at Ruukki Construction, had a better Q1 '25 compared to Q1 '24, and they have done a lot of activities to improve their cost structure. So I'm optimistic for the future in that regard. And also a short transformation update. So we're finalizing sort of the agreement on the cold rolling complex together with SMS. The cold rolling complex includes a continuous galvanizing line, a pickling line and also continuous annealing line. This is extremely important for SSAB, especially to provide the market with unique grades that primarily will go into the automotive industry. There is a big demand for these kind of products. Hence, this will be extremely important for us going forward to reposition SSAB Europe to be a more of a premium supplier into the market. We also have some new partners when it comes to fossil-free, Toyota Material Handling, Fassi and Putzmeister. I'm very happy to see that there is still a big demand for these kind of products and a big interest from the market and our progression when it comes to this transformation project. And then finally, at the end, we also secured a financing package of EUR 2.3 billion. A good job well done by the team. And with that, I'll leave it over to you, Leena.

Thank you, Johnny. Let's start by looking at the steel shipment volumes. Q1 shipments were 1,676,000, which was then increased compared to previous quarter of 16%. As already Johnny mentioned, this is typical seasonal impact as well. And to bear in mind that in Q4 we do have the annual maintenance outages that took place in Oxelosund and Raahe last year. And if we compare to previous year quarter 1 performance, the increase in shipments was 6%. And then referring to the guidance we gave during Q4, we were indicating significantly higher volumes in Special Steels and Europe division, and we were actually spot on. As you already saw, Special Steels deliveries were 28% or 29% higher and Europe 18% higher. And we were guiding somewhat higher volumes in Americas and the outcome was the 4%. So that was also well in line with the outlook we gave. If we then continue to revenue performance, Q1 revenue was SEK 25.5 billion. Compared to previous quarter, the increase is 8%. And while the shipments went up 16% and revenue only 8%, it is indicating that the prices were lower in Q1 compared to Q4. And then compared to previous year Q1, the drop in revenue was actually 6%. And while the shipments went up the 6%, this is also telling the same story about the price development that the prices are clearly lower during this year compared to previous year. EBITDA performance, Q1 SEK 2.4 million, which is an increase versus Q4, SEK 1.6 million, but a drop compared to previous year quarter 1 performance of SEK 4.1. But let us dive into more detailed analysis. Firstly, we are comparing the operating result of Q1 '25 with the Q4. The operating result in Q1 was this rounded up to SEK 1.4 billion perhaps. And then compared to Q4, the performance was SEK 487 million. Differences up and down, but as the graph is illustrating, the volumes were compensating for the price reduction. All the steel divisions were contributing with the negative impact on EBIT with prices and perhaps to point out that we also have an FX impact in the prices, giving a bit more negative twist there. Volumes, as already said, increasing compared to Q4. All the divisions contributing, mostly now Special Steels and Europe division. Variable cost had a negative impact, and this is coming through Special Steels and Europe division. On the other hand, fixed costs were lower. As I already mentioned, during Q4, we do have the maintenance outage that we didn't have any maintenance outages during Q1. Thus, the fixed cost is also on a lower level, and this is coming through mainly with Special Steels and Europe division. As is the capacity utilization also higher with no maintenance outages during Q1. So most of this is related to Special Steels and Europe division and a minor FX impact with revaluation of balance sheet items. Then if we compare the operating result Q1 with the previous year, last year, Q1 performance was SEK 3.2 billion. And as the graph is illustrating, clearly, the biggest impact is coming through with lower prices. And the biggest portion here is coming through Americas division, where the prices were 25% lower, thus SEK 1.5 billion of this is coming through Americas. Special Steel division prices were 5% lower, so much more resilient, and Europe division was 7% lower. Volumes higher than last year. Here, all the steel divisions have a positive impact. But as also Johnny mentioned, Ruukki Construction volumes were higher than last year. Variable costs, here, we have a positive impact with lower raw material costs that I will cover shortly. Fixed costs higher than last year, and this is related to somewhat higher FTEs and personnel-related costs. We have the salary index increase impact here. And the capacity utilization compared to last year, slightly better. And I would say that one issue here to take into account is the political strike we had last year in Finland. We had strike also, unfortunately, this year, but the strike was shorter in time, thus having a less impact in the production volumes and a minor positive impact with the FX. If we then walk through the cash flow generation performance during Q1, as we can see, the net cash flow difference compared to last year is SEK 1.2 billion lower. Clearly, the biggest deviation compared to last year is with the earnings level being SEK 1.8 billion lower. Change in working capital, as we were guiding or indicating during the previous webcast that the change in working capital will behave negatively as it did. Inventories actually came slightly down. Accounts receivable in line with the sales went up, but the biggest drop actually took place in accounts payable, as we were mentioning the large raw material invoices being paid out during Q1. And the deviation compared to previous year is exactly in the accounts payable. Some lower maintenance CapEx during this year compared to previous year. But on the other hand, the strategic investments were slightly higher than last year. The acquisition of operations, this is now related to the acquisition done in U.S., the ballistic operations, and the divestment of operation is related to Wispo entity sale. And both of these transactions took place in Special Steel division. A brief reminder of last year's share buyback program that was still ongoing during Q1. This year, we have not had the share buyback program ongoing. Then this is leading to net cash position end of Q1, SEK 14.4 billion, a drop compared to end of last year level of SEK 17.8 billion. SEK 2 billion difference is coming through the cash flow performance as illustrated in the previous graph. And then on top of this, we need to mention this SEK 1.4 billion revaluation of balance sheet items and the stronger Swedish crown impact on the mainly U.S. dollar cash items. This is leading to net cash ratio 21%, which is exceeding slightly our financial targets, plus/minus 20%. And as already mentioned, we were extremely pleased that we were finalizing the financing package for Lulea mini-mill project. I must mention that the package is extremely flexible of nature, thus allowing us to optimize our own cash utilization, but also securing the smooth project implementation. And perhaps a special thank you for the Credit Agricole, CACIB, team working with us. They have been truly supportive in this process. So thank you for that. CapEx outlook unchanged. This is exactly the same that we presented last time. We are still planning to spend SEK 10 billion during this year, SEK 3 billion for the maintenance and SEK 7 billion for the strategic CapEx. If we split this SEK 7 billion to projects, slightly above SEK 2 billion is related to Oxelosund, just below SEK 4 billion planned for Lulea investment. And then as Johnny already mentioned, we have other smaller strategic investments, so SEK 1 billion from this is reserved for that. And the estimated peak in CapEx outlook expected still to take place '26 and '27. Then briefly looking at the raw materials, iron ore, coking coal, both have developed downwards compared to previous year as the graph is illustrating. If we compare quarter-on-quarter during Q4 and Q1, on average level, iron ore has been rather stable, coking coal coming slightly down. So if we estimate the raw material consumption cost for our Nordic mills, those are expected to be relatively stable. As you can see, the graph illustrating the scrap price in U.S., the price went up during Q1 compared to Q4 level. That was squeezing the margins in the U.S. mills. But the expectation is, hopefully, it will remain more stable going forward, and we saw already some downward trend in April. Maintenance cost table. This we have only slightly adjusted since last time we illustrated [Technical Difficulty] nor will we have during Q2. We will have some in Q3, but the majority of the maintenance is happening during Q4. With that, I let Johnny to continue with the outlook.

Thank you, Leena. Well, the outlook looks pretty much the same as it did last time. I showed you this. We still have a pretty good demand in heavy transport globally. And of course, it varies depending on what kind of market we're talking about. But all in all, I would say that we have a fairly good demand in heavy transport. Automotive, however, we have seen a reduction in demand, not only in Europe, but also in America. The construction machinery, same thing there. We've seen some weak demand in Europe and in North America. China is, however, stabilizing a little bit, but we'll see. Still some question marks. Material handling, which is mainly to mining has been on a higher level, and this is a very important segment for Special Steel, and we continue to see a high demand. So it's not increasing, but it's on a high level. Energy segment has been very, very strong in the United States. A lot of orders that we've seen is actually related to the Energy segment. So it seems to be very strong and stable, is picking up. And then construction has been quite weak, especially in Europe, as we're still waiting for that to come back. And then service tenders, they are restocking, but the restocking is taking time, and they have not been fully restocked yet. And then for the outlook, the guidance that we have given is that Special Steels somewhat higher shipments, stable pricing for SSAB Europe, somewhat higher when it comes to shipments and then somewhat higher when it comes to prices. And then last, SSAB Americas with somewhat higher shipments, but significantly higher prices. So that's sort of the outlook that we have going forward. And then if we summarize this, first of all, I just want to point out sort of the safety. Safety is still very strong, and we keep high focus on safety, trying to maintain safety on a good level for SSAB. The reason why I'm mentioning this is because it is a priority within SSAB to keep our workers safe. And then we believe that Q1 was according to expectations, where Special Steel maintain a good position with good pricing and good profitability and shows very good resilience and unique market value. And we also could see a very strong recovery on the U.S. plate market with increased prices and a very strong order intake. And our transformation project continues according to plan. I think the last point here is more to sort of educate the market that we have a very strong production position in United States, and that gives us a very high flexibility when you have turbulence on the market related to tariffs, et cetera. But that was pretty much it from me. So over to you, Per.

Yes. Thank you, Johnny, and thank you, Leena. Then we are ready now to go into the Q&A. And as always, I just take the opportunity to remind it's perfectly fine to ask more than one question, but please state them one at a time to make the process a bit smoother. So by that, I will ask the operator now to please present the instructions for the telephone conference.

[Operator Instructions] And now we're going to take our first question. It comes from the line of Kaleb Solomon from SEB.

Just 3 questions from my side. Special Steel shipments were up almost 30% sequentially, which is quite a lot even considering seasonal effects. So is that more driven by shipments to the U.S. than Europe? And did you see any kind of inventory buildup related to tariffs for special steels, specifically given the lack of local capacity?

Well, I think if you look at the volumes, you compare it to Q4 and Q4 was slightly lower than maybe we expected. I think that the Q1 shipments was pretty much in line with what it was last year and also in line with our expectations. Of course, we've had some increase due to the tariffs, but I wouldn't say that we've had our inventory buildup due to this. We have a sort of a global general demand and special steel sales are going a lot into the mining segment, a segment which is very, very strong. So we're optimistic that it's going to continue like this.

We can also add that the European seasonality was quite pronounced true.

Sure, yes.

Okay. That's clear. And you also announced that you're investing a relatively small amount into your Mobile facility in the U.S. to expand the special steels capacity. Can you give any sort of color on how much that will add exactly in terms of capacity?

Well, so we have the objective to produce the most advanced grades in Mobile for special steel grades that are being produced in Oxelosund today. And with these extremely advanced grades, we need to do an additional tempering. And as it has been, we have used our existing austenitizing furnaces for this kind of tempering, which is not efficient. It's not good for the productivity. So we're adding more capacity in order to do this kind of tempering. Then how much additional capacity that will lead to? Well, it depends on the mix and the thickness, what kind of grades, et cetera. So it's really hard to say. I mean, it's a smaller investment, but it's a very important strategic step for us going forward.

Okay. And just one last one. You also commented on the kind of higher seasonal buildup of working capital compared to last year, and you said the deviation was all due to a change in receivables. So just to clarify, you haven't built any sort of extra inventory of special steel products in the U.S.

No.

No, not really. I think prior to sort of the tariffs, we built up a little bit of an inventory just in case for some unique grades, but it's a very -- it's insignificant amount. So it doesn't have any impact at all.

Now we're going to take our next question. And the question comes from the line of Alain Gabriel from Morgan Stanley.

My question is on the loan, the green loan you have received the EUR 2.3 billion in 3 parts. So firstly, how does the financing term or how do the financing terms of these green loans compare with the general market terms? Did you get favorable interest on that loan? If you can just give us some general comments. That's the first part of my question.

Yes, a very general comment. Of course, we want to believe that the green financing has better terms. And I can say that the interest was really high. So it's also supporting this impression. But yes, we don't disclose the details of the terms and conditions. But yes, it is a good package.

Okay. Perfect. And the second part of that question is now that you've secured this liquidity that you need for the investments, does this mean that you can flex your balance sheet a bit more aggressively to boost capital returns to shareholders, given that you are above the 20% threshold?

If you are referring to some dividend plan, that remains for the Board to be decided upon. So the most important thing is that we have secured the financing to support the smooth implementation of the project, as you know, the volatility in the industry. So that has been the main goal.

And the third and last part of my question is on the sequencing of the project at Lulea. Now that also you've secured financing, you've also awarded the contract for the new cold rolling complex, how should we think about the sequencing of the spending at Lulea in '25, '26, '27?

As we have indicated, the peak in the CapEx will take place '26, '27. Of course, '28 will also have portion of CapEx. And now that we have finalized the negotiations and secured the financing, perhaps now we can start to plan on a more detailed level how the CapEx will turn out for coming years.

Any rough estimates or ranges that we should be thinking about in terms of billions of euros or SEK on the sequencing?

We haven't prepared such an estimate at this point, unfortunately.

Now we're going to take our next question. And the question comes from the line of Adrian Gilani from ABG Sundal Collier.

I'd like to start off with a few questions on the Q2 guidance. Can you provide some more nuance on the significantly higher prices in Americas in Q2 because market prices are up quite a lot more than just 10%? So I guess, can you quantify the increase you expect there?

Well, I think, first of all, the contracts that we have in the United States are either quarterly, half year, and we have some business which is actually spot business. So when it comes to increase in prices, it comes gradually. But as you probably are aware of, the average price increase on the market has been roughly 22.5%. So longer term, we probably should reach that kind of level. But then it's really difficult to quantify for a quarter depending on the mix of the contract length that we have. But we're expecting sort of prices to increase between 10% to 20%, somewhere in that ballpark.

Okay. Understood. Can you just explain how you arrive at raw material costs in Europe being stable into Q2? Because it looks like coal is down quite a bit in Q1 and iron is fairly flattish. So it looks like raw material costs should be sequentially down. Or am I missing something?

Yes. There is, of course, to remind that there is the lag in the impact with iron ore prices. There's this quarterly lag, what comes to the purchases and consumption cost. And the lag in coal prices is even longer, it's 1.5 quarters. And to remind also that we had the winter stocking with coal that took place during the second half of last year. So it is then a mix. And the good thing is that it is expected to slowly for sure, come downwards. But at this stage, we see that it's more stable level.

Okay. And a final one for me on the CapEx in Q2 -- or in Q1, you took roughly SEK 1 billion, which is only 1/10 of the full year guidance which, I mean, implies that the run rate has to increase quite a lot. And when do you expect that the major strategic investments in Lulea will sort of start to be taken?

It is during the coming quarters. We have to see. There will be bigger lots then depending on what the CapEx is related to. Now we start to spend with the OEM contracts, of course. And we have to see how the environmental permit is ending up because that is also then impacting the CapEx slightly.

But then as usual, maybe second half, we typically spend more.

Yes. That we could say.

Now we're going to take our next question. And the question comes from the line of Tom Zhang from Barclays.

First one for me. I'm just trying to get a sense of what kind of tariff risks your order book is baking in today because I think your guidance is obviously predicated on what you see today in your order books and the prices that are in there. And I imagine a big portion of your order book is still from prior to these Liberation Day tariffs. So I guess my question is, since the tariffs were announced, did you see many order cancellations from customers who are getting worried? And could you maybe talk a bit about how your order intake has trended through April? Did you see everyone start holding off purchases after the tariffs? And did you see much of a sort of recovery, I suppose, after the 90-day pause in tariffs? Yes, maybe we can start there.

Well, if you're speaking about the general market in the United States, I guess you can split it into 2. One, which is more consumer driven, consumer related, such as cars or even new housing and things like that. We don't sell too much into this part of the business. When it comes to the industry like energy, oil and gas, heavy transport, the order intake has still been very, very strong. And also for pipes and tubes, we have had a massive amount of orders coming in related to these segments. So I guess it's a very simplified picture when we talk about the general steel market in the United States. But you're right, the consumer-driven steel industry has been going down, but the part that we're working with primarily is still very, very strong.

Any comments on Europe as well? Because I guess it's kind of a global impact, not just within the U.S.

No. I mean one of the questions you asked if we've seen any cancellations. So we haven't seen that anywhere on the market, not in Europe, not in the United States. And in Europe, there is a balance between the supply and demand. And in Q1, we could see sort of lower imports, and that was good for the market in Europe or good for the suppliers in Europe. But we haven't seen any kind of impact. I mean the market conditions in Europe has been quite weak for the last 2 years. And we haven't seen any impact more or less from the tariffs in general.

Okay. Fair enough. And then the next question was just on -- you were talking about heavy transport already. I think in the presentation, you mentioned there's some recovery in heavy transport and heavy production in Europe. But then in the press release, you write the slowdown in demand has continued in heavy transport. Maybe you could just help join those 2 up as you saw a recovery through the quarter in heavy transport. Yes.

So depending on what kind of products we're talking about. But let's say, if you focus on Europe, we've heard some positive signs, both from Volvo Trucks that it is slightly improving. So that's good from that regard. Also, I think I've heard similar from Scania. So this part of the business is improving. And then also, we've seen some positive signs in other segments similar to this, where you do tippers and trailers and so on, even though that can also go into yellow goods or raw material handling, but we have seen some positive signs from very low levels, and that's also good. Agriculture is also an area where we've also seen an improvement from low levels again. So there are signs on the market that it's picking up.

But you're right, Tom, that Q1 heavy transport, some of these segments you described were relatively weak.

Yes, but outlook.

But Q2 outlook, Q2 recovery. So one comment is for Q1 and then for the next quarter. So that's also part of the things you referred to.

Okay. That makes sense. And then a final question, maybe for you, Leena, was as a follow-up to the previous question around raw material costs. So I think the lag makes sense. The other portion I thought would have helped on the raw material cost is currency. So obviously, the move up in krona, if you put a lag on that as well, I would have thought gives you a bit of FX-linked cost tailwind. Are there hedges in place that prevent that tailwind from coming through? Or is that all already baked into your stable guidance?

The hedging is not sort of included in any of these analysis. And you're absolutely right that it should start to show a reduction in the raw material cost due to the currency impact as well. But that's more then remains to be seen during Q2 and end of the quarter rather than in the beginning.

And now we're going to take our next question. Just give us a moment. And the question comes from the line of Tristan Gresser from BNP Paribas Exane.

The first one is on the U.S. plate market. It seems that prices have stabilized despite lower scrap prices in April and now into May. Can you discuss a little bit the change in the structure of the market following the tariff implementation, notably, if you still see some pressure from Canada? And you mentioned improving demand. Anything aside energy? And do you expect that positive momentum to hold up now? It seems energy has been weakening again. And lastly, just on plate, how big is shipbuilding for your business at the moment? And do you believe there is some opportunity there for that end market?

Okay. A lot of questions at the same time, I'm trying to remember. So related to the U.S. market and the pricing, you're right in a way that the prices seems to have stabilized right now in the market. Then your question is, is there room for any price increases? What are the market dynamics looking right now? And I think for the plate market, we know that the distributors and service center hasn't been able to restock fully yet. So there is still an underlying demand from them. And also when you talk about the plate market, which is related to the industry, there's still a very strong underlying demand there. Even though there are some announcements saying that offshore energy or wind power mills is going to pretty much disappear, there's still a lot of orders right now for the onshore and a lot of our customers are delivering to that. So we've seen a lot of demand related to this. And of course, we're going to try to do where we can to maintain prices. And I think that there is an opportunity maybe to at least stay on this level. And we're very optimistic for the remainder of the year when it comes to orders because we have had a good order intake that is spread over the year, gives us more opportunity to be more aggressive on the pricing. So I'm quite optimistic in that regard. And then you asked a question regarding shipbuilding. I think that's something that we do not talk about maybe enough. But as we have one customer in Mobile, Austal, that last year bought almost 40,000 tonnes. And that's only one customer. And we have a few. So it has been roughly 200,000 tonnes, which is significant, and we're expecting that actually to grow going forward. And I think here, we also supply some unique grades for this kind of application. So that goes into what we would typically say as in Swedish icebreakers. I don't know if you call it the same way in English, but -- and here, we do some unique supplies into those kind of ships. So we're quite optimistic, and we think it's going to maintain on a good level.

Okay. That's pretty clear. And kind of a similar kind of question for Special Steel, on the demand. You mentioned heavy truck and mining doing well. Any increased interest on the defense side just yet? And we've seen some higher Q&T prices in North America, and I know your products are pretty differentiated. But do you believe there's actually a possibility that you've seen ASP stabilize to actually see some higher prices into H2? Or is the goal now to keep those ASPs stable while you grow volumes? Yes.

Well, we're always going to try to match our pricing with the market, put market prices out there. And how the price is going to look like for the second half, it's hard to say. But I think the intention is to try to increase it as much as we can, and we see if the market accepts it or not. The question regarding defense industry -- there's a lot of quotations out there, a lot of demand. And usually, there is a time lag between a customer getting the order for a military vehicle or a military ship until the order comes to us. But the defense industry is good in a way because it's usually 5-year contracts, and it's very solid when it comes to payments and so on. So when it's on the table, we know we're going to get it. The question is when we're going to get it. But we foresee an increase in this demand. We don't really know exactly when, but it's going to come.

All right. That's clear. Maybe last question, just a follow-up on Special Steel. I think you had some volume targets of 80,000, 100,000 tonnes of additional volume every year for the next couple of years. And now that you're saying that demand is pretty good that managed to stabilize the ASP, is there a reason why we shouldn't get back to that growth trajectory for this year?

Well, I mean, we should be able to grow with that kind of volume. But we said that in the past as well. And then we had this Russia-Ukraine situation with a lot of sanctions that reduced our sales by 80,000 tonnes overnight. Then we had sort of the -- we have other political issues where we haven't been able to deliver because of those kind of reasons. So it is a little bit hard to say. And I think I've mentioned it before, if sort of -- if the German tipper market would come back to the level where it was 2019, only that part of the market would give us roughly 30,000, 40,000 tonnes just for that segment, for that market. But it's really hard to say. And we have a good product. We have the potential, but the market needs to come back. And when that will happen, it's really hard to say.

Now we're going to take our next question. And the question comes from the line of Anders Akerblom from Nordea.

Starting off on Europe, I would like to ask just with regards to some, should I say, third-party market forecasters that have stated that after quite intense restocking during the beginning of this year, most distributors are quite well covered until Q3, while you state both in the report and now that inventory levels in Europe remain at a somewhat low to normal level. So I'm just trying to bridge this and grateful for anything you can say here. Has the beginning of this quarter perhaps changed your thinking a bit going forward?

Per, do you want to cover that?

No. I mean we know that there is no sort of -- the statistics in Europe regarding the inventory levels have quite a lag to it. So there can be different views on the status. This is sort of our best when we listen to the organization, what do they see, what do they estimate. But these are estimates, and there's no clear statistics that you can follow with a short lead time to get. So these estimates will vary also in the future, I think.

And exactly, it also varies. I mean, if you look at the material that goes into the car industry, we know for a fact that they're maybe a little bit overstocked, but then there are other segments which are understocked. And looking at our own inventories, we need to improve our stocks to improve the availability. But the demand is high. We haven't been able to do that. So...

Okay. And asking just shortly about Americas and your expectations of the price increases that, of course, will come through going forward in both Q2 and Q3, it would be interesting to hear the proportion of your upcoming deliveries in the coming 6 months that have been contracted now in Q1 and how much kind of remains.

So the tactics we've had because the demand has been so high, we try to open our order books a month at a time. And when we opened up May, it filled up within a day. It was just like selling Bruce Springsteen tickets. It's just the demand was massive. I think that Chuck was going to open up June, if it was this week or last -- end of last week. But what he told me is we're going to experience exactly the same situation. But then we also have contracts which are a bit longer, and we had some pipes orders that is delivered through the year even into Q1 next year. And that gives us -- because when we have this load, this base load, that gives us confidence when we walk into price negotiations that we don't need to take orders just to fill the mill because we have a base load. And I think that's good for us. And when you talk to Chuck, who's the Divisional Head of SSAB Americas, he's very confident for the full year of 2025 when it comes to production volumes.

And sorry, just so I understood correctly, when you opened up the books for June, you're saying that you didn't really note a sequential slowdown, so to speak, compared to May?

No. What he told me is that he believes that we're going to fill that order book immediately, just like we did in May. That's his assumption. Because I mean, the market in United States is differentiated. We can't just say that the overall condition is like this. We have to look at what is it that we're selling. And material that is, let's say, normalized material that goes into pipes and tubes or for other sort of special applications. Here, we see a very, very strong demand. And when the requirements are high, we are one of the few suppliers even from SSAB Americas. And here, we see a very strong demand.

Okay. That's helpful. And just a final question, if I may. Yesterday, obviously, the announcement from LKAB about, should I say, slowing down the investments in the Gällivare HYBRIT plant. Does this change your thinking in any capacity? And I understand, of course, not with regards to the investments in Lulea, but how should one maybe think with regards to the potential cost inflation in your production owing to the DRI -- planned DRI volumes? How does this change your thinking?

So we have a long-term plan to improve the production footprint for SSAB in Sweden. And the decision for the Lulea investment rests on a lot of aspects. One aspect is that we have a hot strip mill in Borling that was built in 1965. It is also located in Borling. We need to upgrade that. We also need additional capacity in order to supply the automotive industry with material that is going through the continuous annealing line or that is galvanized because we're fully loaded there as well. So we need to add more capacity. That's part of the Lulea investment package. And then maybe thirdly is that we have an old blast furnace and a coke oven in Lulea that needs investments. So either we invest in old technology that is emitting a lot of CO2 or we invest in new technology, which would be the electrical arc furnace. For us, our strategy remains. And we have several different options to run this electric arc furnace on. It doesn't have to be DRI. With that said, the cooperation we have with LKAB is very, very important, and it's been very fruitful. And we stay in close contact all the time. We talk about the development, technical development, innovation development together, and we do that jointly. And I would say that, first of all, it wasn't really an announcement. So there was an interview by Anders Borg, but I think that we have some insights here that hasn't been published yet.

Okay. And I mean, the logic makes sense. I guess the question was a bit more, but I appreciate your elaboration. But I was kind of referring more to how you're thinking about the steel, the scrap volumes vis-a-vis the DRI with this announcement in mind, if we just assume that it will change the future volumes that you're able to receive. How does this change your thinking with regards to cost inflation in the production?

Well, of course, it's a very large investment we do in Lulea. And just to put all the eggs in one basket would be too risky. Of course, we have other options. We have backup plans. We have mitigation plans that we're working on continuously. If we would use scrap instead of DRI, our assumption is that it will not be more costly. It will be a cost-efficient product even so. Yes, that's all I can say.

Now we're going to take our next question. And the question comes from the line of Bastian Synagowitz from Deutsche Bank.

I got 2 questions left actually. So just starting off on Europe. So I guess when I look at the European volume performance, it's really been the strongest since about 7 quarters in an environment where demand is definitely lower versus what it was, say, 1.5 years to 2 years ago. So that's obviously despite the strike. What has been driving this? And was there any front-loading due to tariffs here or anything else? Because I guess the European volume number does look very strong in the current market context? That's my first question.

Can you repeat the question? I was just... Has there been any specific driver behind the SSC volumes?

Yes.

Bastian thinks it's a really strong number for Europe, I think 880 ktonnes something. Has there been any specific drivers for this?

It's been the strongest quarter in 7 quarters when the market clearly was -- has been trending weaker. And so I'm wondering if the market is weaker and you're basically printing the strongest volume numbers in almost 2 years, what's been driving it?

So one of the things that we should maybe take time to inform the market on is that the SSAB Europe's sales is more fragmented that you can actually -- than you can actually think. So a lot of it goes into color coating, a lot of it goes into tubes and pipes. Some goes into galvanizing, some goes into continuous annealing, becomes advanced high-strength steel. And we try to avoid to sell hot-rolled coil as much as we can. But it wasn't just a single reason for the increased demand is that we have an overall general demand for our products. We're being perceived as a better quality supplier on the market. And I think that we sometimes underestimate the uniqueness of SSAB Europe and the amount of premium that they actually sell into the market. I think that we, at some point, need to educate the market a little bit more on the portfolio of SSAB Europe and a little bit of the uniqueness that they can provide. But the question is, it's right because a lot of our competitors are struggling and have a very hard time to fill their mills. At the same time, we have much better orders than the rest at slightly higher prices. Then of course, there's a question mark. And the reason for that is because of the uniqueness that we actually provide. There are only a few areas where we're not being unique, where we are more spot price sensitive. But all in all, I think that we have more resilience. And that's something that we're going to continue to build on. And also at the same time, to invest in the Lulea production will give us more capacity to be unique and sell more premium to reposition Europe even more into a premium supplier into the market.

Okay. Understood. Okay. And just maybe being a bit more detailed here. So did automotive come in much stronger in Q1 as well? I guess there were a couple of automotive suppliers, which actually did notice like a reasonably decent, I guess, volume trend into Q1. So have you been seeing anything in particular out of that segment as well?

No, I wouldn't say that there was a unique increase in automotive. We are a preferred supplier of safety parts going into automotive. And we have a global demand for these kind of products also to United States as well as in Europe. We supply a product that offers excellent crash barrier properties. And this is the reason why we need to invest in additional capacity because there's a big demand for it. But there was an increase in demand in Q1. We can't say that now.

Got you. Okay. Great. Then my second question is just on the U.S. as well. So your investment into the new tempering line, is that a reaction to, I guess, the recent U.S. policy? And then also, I guess, if you look -- then I also want to ask if you look at the competitive landscape, so companies like Hyundai, I guess, have announced a new capacity project in the U.S. in reaction to the recent U.S. tariffs. Are you seeing the risk of any additional market entrants into your particular segments as well in plate?

Not really. I mean, first of all, the investment of the tempering mill, so we're continuously upgrading our customers to more advanced material to help them to have a much lighter vehicle and more sustainable vehicle. And this Hardox 500 Tuf, which is unique on the market, can offer that kind of property for the customers. But like I said, in order to produce this at really advanced grade, we need to do tempering. And this capacity we have been limited with in the United States in the past. And we have a long-term plan for the Mobile facility to gradually produce more of the specialty grade, more advanced grades, and we will take investments when we have the need and grow with the demand. So that's the plan. So we will probably see more like this in the future.

Okay. Great. And any peer projects, any capacity projects in the landscape you're seeing?

You mean are there any new plate mills planned from producers coming into our side into the U.S., any new plate mills?

Not plate mills. There have been some announcements regarding coils and material for the automotive industry, but not any new plate mills.

Nothing on the plate front?

No.

Now we're going to take our next question. And the question comes from the line of Patrick Mann from Bank of America.

I just wanted to ask maybe a longer-term question because most of the questions have been asked, obviously. Just around European policy around steel, a while ago now, we had the announcement about the action plan on steel, the review of CBAM, a permanent replacement for the safeguard measures that expire. Is the industry or is SSAB and the industry sort of actively involved in talking to the European Commission on what those policies will look like and sort of getting to put an input? I suppose it just feels like it's gone a little bit quiet after those initial announcements. So are things progressing? What are you expecting, I suppose, going forward towards the end of the year? I think they both said that they wanted it -- or they wanted to propose something before the end of the year on both measures. So just where we are with that would be helpful.

Well, SSAB is very active in these discussions. Of course, the policies of the European Union is of great importance for us going forward. I also have to say that I'm very pleased with the way the European Union has been acting. They have reached out to the steel industry. I personally was invited with the meeting with Ursula von der Leyen to talk about topics like this to sort of give them input on what kind of concerns that we see impact from tariffs, impact from Chinese material coming in through other countries into Europe. Those kind of discussions we've had. I think that the intention is to try to support the steel industry in Europe and try to make sure that we maintain production of steel in Europe. And I'm confident that the European Union will put up whatever measures needed to sort of help or protect Europe from unfair trading. That's my belief. And I also think that this might -- some of the initiatives might happen short term and not maybe long term, but those are my beliefs.

Yes. Operator, we just have to say now that we're approaching 1 hour, and we have a bit of a busy schedule. So we can take one more question before we close.

And now we're going to take our last question for today. And the question comes from the line of Christian Kopfer from Handelsbanken.

Right. Yes, 2 quick ones for me then. On the European division, it seems that you are doing a lot of good things. Still profitability in SSAB Europe is still on very low levels. How far from more acceptable profitability are you with the current production setup in your view?

I think that we're pretty far away from the acceptable level according to my assessment. The profitability needs to improve. We have a long-term plan for that, and we're going to continue to work effortlessly to reach a higher profitability level. But it's going to take some time, develop new grades, develop new customer relationships, qualify new materials, at the same time getting the investment in Lulea in place, we can get that kind of capacity. But we will be able to do things prior to that. And that's also very important for the optimism of SSAB Europe. That is more unique than maybe people know, and we will capitalize on that and try to increase our uniqueness and our premium sales within SSAB Europe.

Excellent. And then finally then, I think you guided for flat pricing for special steels in Q2. And what I understand is that you have started to raise prices for Hardox in the U.S., for example. Is that something that should come in Q2? Or is it more later on?

Well, I think we should stick to the guidance in this case. Like I said in the previous statement, we -- of course, we'll try to maximize our prices, and we are increasing prices. But we'll see what the effect is going to be and when it's going to happen. But you're right that we are working on the pricing here as well.

Okay. Thank you. And that will conclude today's conference. Thank you, Johnny and Leena. Thank you, the audience for listening in. We have to stop now. But please, if there are further questions, you're most welcome to contact Investor Relations. We're available here through the day. So yes, by that, thank you.

Thank you.

Thank you. Thank you, Per. Thank you, Leena.

Thank you, Johnny. Thank you, Per.