311 million euro, mainly on the back of the preceding restructuring provisions in Q1 that you're all aware of. Talking about free cash flow before M&A, that was minus 140 million euro in the quarter, improving by 140 million euro year on year. That leads to a accumulated nine-month figure of minus 1.9 billion euro. Overall, important to note that reflects our usual cash flow pattern that will reverse in the running quarter. Miguel has already mentioned that we do confirm our full year guidance for free cash flow before M&A. With regard to our balance sheet, we maintained a solid net cash position at around 2.6 billion Euro. And in order to conclude the financial overview for the group, the key message is quite straightforward. We are executing strongly on performance management and at the same time preserving balance sheet strength while staying realistic about the macro and demand environment. Turning to the next slide, this provides a high-level view of sales and EBIT adjusted development in the third quarter. On sales, our message is that top-line development shows a promising momentum. Improvement was especially supported by material services, now TKXLS, with positive effects from prices and volumes, while other segments, such as automotive technology and decarbon technologies, still faced pretty low demand. Let's get to EBIT adjusted. Overall increase was mainly driven by steel on the back of restructuring efforts and more favorable raw material costs. In addition, material services and marine systems also posted pleasant year-over-year increases. These developments more than offset In short, the quarter demonstrates that our performance measures are becoming increasingly visible in the numbers, even though we are not yet seeing a broad-based market recovery across all segments. Let's turn to our segments. First, automotive technology. The key message for Q3 is that we are continuing to manage the soft market environment Thank you very much. Sales were rather flat. On profitability, EBIT adjusted, declined in the quarter. Restructuring benefits and our internal countermeasures are visible, but they could not fully compensate the lower volumes and higher special freight costs. On BCS business cash flow, the development was quite encouraging. Lower investments, improved networking capital, Both more than offset the earnings decline and restructuring cash outs. As a result, business cash flow improved year over year. So in summary, demand in automotive remains challenging, but the operational measures are gaining more and more traction. Let's move on to decarbon technologies. At decarbon technologies, we're still facing a pretty hesitant project environment, mainly in the chemical plant business. Customers continue to postpone projects which, together with the usual volatility in the project business, leads to weak order intake and therefore decrease in sales. The main driver of the sales decline was plant engineering, and these deteriorating sales negatively impacted our EBIT adjusted in the third quarter. That was also affected by project-related additional costs in the salmon business coming from past legacy projects. Performance measures and efficiency gains resulting from our ongoing restructuring and purchasing optimization could support earnings, however, we were not able to fully compensate for the decrease. Positive news on the last KPI on this slide, BT was able to raise business cash flow, mainly on the back of temporarily favorable payment profiles. Let's move on to material services, now known as TKExcells. TKXL has delivered a clear earnings improvement, supported by a favorable market environment, especially in North America, but also in Europe. We saw strong growth in sales that was driven by materials and processing business in Europe and North America, with significantly higher shipments, particularly in direct-to-customer businesses and on the back of distribution and processing volumes. Let's take a look at earnings. We will adjust it. Significantly increased due to supportive market conditions and a very strong operational performance with the North American operations delivering the strongest earnings uplift. In addition, our processing business as well as the European materials business also performed positively. Talking about cash flow, our business cash flow benefited here from higher earnings, partly offset by price increase, net working capital build-up. Moving on to steel, steel Europe, their sales increased in the third quarter, driven by higher shipments, particularly from automotive and industrial customers. However, pricing there remained under pressure, especially in packaging and electrical steel. Moving on to EBIT adjusted, that improved significantly in the third quarter, and more than doubled year to date. That was mainly driven by Our business cash flow also improved year over year, supported also by government funding for the direct reduction plan that is progressing. Overall, self-help measures continue to deliver tangible results and help offset the challenging market environment. Last but not least, Marine Systems, TKMS. As usual, only a couple of brief comments on Marine Systems, as all operational details have already been presented yesterday. But it's without saying that we as a majority shareholder are more than happy with the development of our segment. Marine Systems continues to build a strong foundation for future growth, supported by an order backlog of more than €20 billion. Let's move on to our EBIT adjusted bridge to net income. Looking at the special items, we saw a slight net positive effect that was mainly driven by the HKM exit from early July and its implications. And most notably, write-ups at Steel Europe of around about 400 million euro in light of a more profitable business outlook of the remaining segment without HKM. as well as the respective impairment losses of 276 million euro by classifying HKM as a disposal group discontinued operations. Please note that the actual deconsolidation of HKM with a negative low three-digit million euro impact will be included in our fourth quarter accounts. The remaining positions are rather straightforward after the financial results and taxes Net income for the third quarter came in at €34 million positive. Next chart. Our third quarter reconciliation to free cash flow before M&A. As you can see, in the third quarter we did not face any material net reconciliation items. Investments are net positive in the quarter, mainly on the back of funding for the direct reduction plant at Steel Europe. The M&A adjustment includes the proceeds for the sale of the remaining stake in AST in the range of a high double-digit million-euro figure. Overall, that led to a free cash flow before M&A of minus 114 million euros. While the quarterly figure remains negative, it approved year-on-year, and continues to reflect the typical seasonal cash flow pattern. So let's have a closer look at our outlook for the remaining year. As Miguel already mentioned, for the full year, we are lowering our group guidance for sales and narrowing for EBIT adjusted, while confirming for free cash flow before M&A. So let's have a look at the details. For the group, sales are now expected to be between minus 3% and minus 1% versus the prior year. Even adjusted is now expected in the range of 600 to 900 million euro, compared with our previous range of 500 million to 900 million euro. Pre-cash flow before M&A is confirmed at minus 600 to minus 300 million euro. including lower restructuring cash-outs of up to 250 million euro, as well as a somewhat lower capex guidance of 1 to 2 to 1.3 billion euro. The income is expected to be between minus 700 and minus 400 million euro, including restructuring provisions mainly at scale euro. At the segment level, there are several adjustments that led to the updated group guidance. Let me highlight a couple of them. We raised our guidance for sales and EBIT adjusted at material services and marine systems. We also raised our EBIT adjusted guidance for Skill Europe, while becoming a bit more cautious in terms of sales expectations. Overall, The guidance reflects improved operational execution while maintaining appropriate caution on market feasibility. And with that, Miguel, it's up to you again.

Thank you very much, Axel.

Let me wrap up today's call with five key messages. First, we are changing the setup of Fusengrupp AG into a lean financial holding company That transformation is in execution. Second, the TK Exalis spin-off will be the next visible proof point in delivering on ACES 2030. Third, on the Steel Europe Capital Markets Day at the end of September, we will provide transparency on the recent progress and milestones that we have reached. Fourth, we will continue to take an individual approach for each business, including the necessary restructuring to secure sustainable success. And finally, we will leverage the opportunities arising from the green transformation. And with that, we are at the end of today's presentation. Thank you all for your continued interest and trust. Axel and I are now happy to take your questions. Andreas, back to you.

Thank you very much. We are now coming to the Q&A session. You know the drill. Please go to Teams and use the Raise Your Hand button. And then please unmute yourself. So the first question is coming from Efrem Mavi from City. Efrem, please.

Thank you. Three quick questions. Firstly, should we see the steel capital market stay as sort of a prelude for, you know, what you kind of have done for marine systems and XLS, i.e. kind of a spin-off with, you know, holding and then, you know, 1-20 shares or is this, you know, not kind of a signal to the market that that's the The reduction in sales guidance but upgrade in EBIT guidance Should we kind of take that as more lower volumes, but obviously higher prices and profitability that you're expecting for the last quarter of the fiscal year? And third and final question. Sorry to ask this. I know this is a boring and standard question, but Rhine River levels in terms of impact on raw material cost and finished product logistics costs. Could you give us a sense as to how much potentially volume impact or cost impact could be because of that development? Thank you.

Yeah, thank you very much for the questions. I would like to start with how to frame the steel capital market day end of September. Actually, as explained, we have been concluding three major milestones in steel, which was in December the agreement on the restructuring plan, then, as mentioned, also the HKM agreement and deal, and third, obviously very important as well, is the European Union tariff, tariffs and quota reduction, tariff increase and quota reduction being in place since July 1st. These three major events need to be, in our belief, better explained. And that's the reason why we are doing this Capital Market Day end of September. in order that the impact from these three very important milestones can be interpreted in the right way by you. And that's the motivation for doing this Capital Market Day, that we are driving also steel into independence. I think this has been communicated, this is very clear. But we should first of all inform about the three major things that happened and we take it from there.

All right. Hi Efrem. Maybe I start with your question on the Rhine River situation. That's something we're monitoring on a daily basis. Steele has set up a dedicated task force for that. We are slightly adapting logistics and also taking precautious measures at our production. I cannot yet tell you any potential impact. Let's see what the next weeks will bring. But there is a laser focus on the topic and production is all on it. Second, with regard to your question, steel fourth quarter, exactly as you said, assuming lower volumes and somewhat better pricing.

Thank you. Sure. Thanks, Efrem. Now the next in line is Dominic O'Kane. Good morning, Dominic. Please go ahead.

Thank you. Thanks for taking my questions. I have two questions. Again, going back to Steel Europe and the, again, the guide that you've given for the full year. So, again, my question is, to what extent is the guide overly conservative or is it signalling quite significant weakness for Q4? Obviously, if we look at your nine months realised adjusted EBIT, you're at 373. So you're already comfortably at the midpoint of the range. But given what you're seeing at the moment in terms of the slowdown in Europe, is still Europe profitable, adjusted EBIT for Q4? So again, I just want to get a sense of are you actually signaling a materially weaker Q4 at still Europe than I think ourselves and consensus might be expecting? My second question is, Again, just maybe going back to the group structure and the success that you clearly had on TPMS and Excelis coming up. How are you thinking about Again, the 51% long term is the right ownership level. Again, we're at a situation where at the moment we obviously have kind of peak demand for defence, very strong performance for that market. How are you thinking about maybe monetising the opportunity and the strengths that you see for both TKMS and Excellus at the moment? Thank you.

Should I start with your last question?

I think it has been a very successful start that we did with the marine system and also we expect a good start with TK Exalis with our 51% ownership and there is no plans In the future to monetize that or to change that so far.

All right, Dominik. Let me try to answer your question on our steel guidance. I'd say in your words, it's more caution than weakness. And caution is due to a couple of factors. First of all, uncertainty in energy prices, given the quite volatile situation In and around Iran. Then we've touched upon the Rhine River situation. That's also something we need to monitor. And there is some upcoming and planned maintenance. So that is probably the underlying reason for what we would call more caution than weakness.

Could you maybe just elaborate on the maintenance? How long will the maintenance be affecting the plants?

It's not an overall maintenance. Are you aware that that plant consists of many huge aggregates? I'd say a major maintenance period is now upcoming for around about two quarters. It's a regular business, and that's something we need to manage. So that would be Q4 and Q1, just to be clear? Yeah, Q4, Q1, and also lindering into the second quarter. Thank you. Thanks very much. I'll get back to you.

Thanks, Dominic. And the next in line is Jason Fertler, Bank of America. Jason, please.

Hi, guys. Thanks so very much for the presentation and for the opportunity to ask questions. Two for me, please. First one's on SLS, and then just a follow-up on steel. So first of all, in a cellist, obviously a big increase in profitability. I'm just wondering if you could give us some color on how this might be helped by inventory effects from materials that were perhaps previously acquired at a lower price and are now being sold for higher prices versus how much is actual structural profit uplift from running the business better, perhaps in anticipation of the spin. So that's the first question. Second question is on steel business. It's a bit of a turnaround here, right? So you previously effectively were looking at giving this away for free. So you've now got the TRQ, you've got the announced restructuring. Are you willing to confirm a potential profit uplift in steel from the labor restructuring of, say, 400 to 450 million euros?

Well, maybe let's start with, Jason, maybe let's start with Excel's material services. The uplift that we are mentioning, the majority is based on volume, but it's also due to the effect you've been describing, selling materials at higher prices. So it's a mix of volume and price increases. For steel, can you specify your question maybe? What do you mean with 400 to 500?

So you're laying off, you know, you've got, I think, a total of 11,000 people who are leaving the business. 5,500 are leaving, leaving, 5,500 being outsourced. If we think about 5,500 and the cost of a steel worker, if we think about the run rate profitability of this business, it could be several hundred millions of euros per Peter Walker, Stefan Schmitt

Why we are now doing the Capital Market Day end of September because we want to be transparent in what the different buckets will be impacting the bottom line. So please stay tuned until end of September and I would like to see you in London and then we will get you and all the other market participants then informed about what the three big things that I mentioned before will be in terms of bottom line and also in the medium term. So it's indeed something very important to communicate.

Just so that I understand, so historically there was a dual track here, which was Separate the steel business through an IPO, like we've done already with Marine, like we're doing with Azelec, or potentially pursue a trade sale to a third party. Would you confirm that the focus today is very much on door number one?

Definitely.

Okay, thank you.

You're welcome. Thanks, Jason. And next in line is Paulus Gordy from Kepler Policies.

Hello gentlemen, thank you for taking my question. So just as a follow up on Jason's question on the On the steel CMD and potential spin-off, would that be a minority spin-off or would that be a majority spin-off? Because I remember in the past you were really much looking to make that business independent. And given the three elements you've outlined, like the TRQ, the restructuring and the deal on HKM, do you see now the lines moving in terms of potential buyers? But the first question and the second question would be on restructuring. I haven't seen provisions for restructuring moving so much quarter on quarter. Is it something pending that we should expect in Q4? and maybe a very last one on the DRI plans. I remember the total investment was a gross investment of 3 billion, financed up to 2 billion with public funding. I've seen press release this morning pointing to potential renegotiations. So what could be the upside here? Thank you.

All right. Boris, it's excellent. Maybe on the DRI, you're totally right, overall volume of around about 3 billion funding or public funding is 2 billion. There is no really no negotiation on the financial terms or fundings. There is talks around to what extent we need to, let's say, use hydrogen in the first instance. That is something we have been very successfully and very positively negotiating with both the EU on a EU level, but also on a national level. So from a financing perspective, nothing's going to change. 3 billion overall, let's say capex, and of that 3 billion, 2 billion is publicly funded. So that is with regard to DRI. Then your question with regard to restructuring provisions, there is not much more to expect in the remaining year. So we've done our restructuring provisions mainly for steel in the first quarter and we've now That is also important to realize. In the first quarters, we have somehow anticipated restructuring provisions for HKM. However, as you know, we have now sold our shares to Salzgitter. And that is why there's not going to be any restructuring provisions on HKM anymore. And I guess, Miguel, you're going to take the...

Yeah, regarding your question about a spin-off in steel, majority and minority, I would like to indicate, let's please do a step-by-step. The next step, and that's the reason why we announced it the other day, the next step is to get the Capital Market Day for Steel end of September. There we will inform about, as mentioned before, the three major... Thank you very much. so no decisions are made and we have been making a lot of good experience with getting really very organized step by step and we will do so the same way for C. Thank you.

Thanks, Floris. Next in line is Alan Gargrail from Morgan Stanley. Hello, please.

Thank you for taking my questions. I have three short questions. The first is on HKM and the impact of that business that it had on the steel Europe. So now that you're stripping out HKM, can you give us an order of magnitude of the impact of that business, upside or downside to your underlying steel Europe EBITDA or EBIT in that sense? That's one. And then two on TK elevators. If you were to hypothetically sell your state today, would you be incurring any capital gains taxes? and then space on your free cash flow guidance. You've lifted your EBITDA, EBIT, you've cut your capex and yet your free cash flow remains unchanged. Presumably this is entirely a change in assumptions on the networking capital or is there anything else that you've changed? Thank you.

All right. Thanks, Alan. Maybe let me start with HKM. We cannot quantify the EBIT impact, but I think I can give you a little bit of a calibration. We were able, by selling HKM, we were able to write up our steel business at an amount of around 400 million euros. That should give us, that should give you an impression, let's say, what the impact Free Cash Flow It's still, I mean, we're expecting still restructuring cash outs. We have confirmed our guidance. Again, minus 300 to minus 600 million euro. And we're quite optimistic in order to reach that guidance. Can you specify your question with regard to TKMS that wasn't so clear to me?

Yes, you do have it on your statement, on your balance sheet, at book value. If you were going to sell your state, let's say, at market value today, would you be incurring any capital gains tax? Or do you have some tax losses that you can write off against it so that you can sell it at market value?

I'd say, from the top of my mind, capital gains tax would be insignificant. Thank you. Thank you.

Thanks, Alan. And now the last one currently is Bastian. So in order to ask a question, if you still want to ask a question, raise your hand. But now, Bastian. Bastian, please.

Yeah, hey, good morning. Thanks for taking my questions. So, I started off quickly on automotive, I guess, where you've been cutting your guidance, but I guess if we extrapolate what this now implies for your expectations on the fourth quarter, it would still be obviously an improved performance relative to Q3. I guess usually there's also a bit of softening automotive seasonality. So, could you please help us to understand what's riding this improvement? I suppose it is restructuring. But I guess when we look at the overall restructuring cash out, which you're guiding for, I think it's gone down to 250 from 350 before. So is this just a deferral? And why is the restructuring, basically the restructuring pace being slowed here? That would be my first question.

All right. First of all, automotive, remainder of the year. Yeah, there's still some way to go, but honestly, it's a similar pattern you've seen throughout the past years. Let's say part of the automotive business is also claims management towards the end of the quarter, particularly towards the end of the fiscal year. And that is something the guys from automotive are also pushing on heavily. And that is part of the reason or the major source why we expect automotive to come up what we've guided for. So it's basically short answer is claims management. Then, second part is free cash flow. We're not slowing our pace. It's something, the 350 million euro was also Part of the figures was also related to HKM, which we're now not restructuring, but we're selling, and the remainder is going to become visible also for the next year. So what we see is our FTE decrease in SE is currently still the majority coming from our hiring freeze, but the real restructuring is more and more kicking in, and that's something we're going to also report to you over the next quarters.

Okay, great, very clear. Maybe just given that we mentioned HCAM, maybe starting with that as the next question, I guess given that the transaction here is now finalized, can you just update us, I guess the provisions for any potential future payments to HCAM, will these fit in the steel entity or in the parent entity piece?

Yeah, thanks for the question. Happy to answer that. Because we've made clear cuts, we've transferred our patent provisions to HKM, so nothing's going to sit with Stihl or with TKAG.

But I was actually referring more to any potential future payments for restructuring, decarbonizations where I thought there was still a difference. I think you mentioned that in the last course that some of the potential payments would be in a deferred way and come just in the future years. So I was just wondering whether it's been made all of the parent entity or of the steel entity?

Okay, you mean the pattern, let's say we are, let's say we've guided a law to emit a three-digit menu number for HKM and that's going to come over the next three years and it's going to be paid off from steel.

from Stihl. Yeah, gotcha. Okay, perfect. And then just maybe looking at Stihl again and just given the overall refinancing and separation you're currently working on on the business unit level, can you already give us some color on the starting balance sheet which you're aiming for for Stihl and whether you're planning to equip the entity with a certain portion of your net cash which you still have on a group level? I guess when we look at SLIS as a comparable case, I guess it's been allocated actually with some debt on top of the pensions and you've already been investing heavily over the last couple of years you know the economics are clearly improving there's obviously a lot of restructuring on the way but then there's obviously the pension restructuring and maybe still a bit of an unknown on decarbonization so what are your thoughts here?

Yeah, Bastian, I totally appreciate your interest in that question but it's too early to talk about So we're going to talk about the right tempered structure for the business when time comes and we're really looking forward to talking about the performance of the steel business in our upcoming Capital Markets Day in September.

Okay, great. And last one, can you maybe help us with how much out of the 3 billion budget for the transformation and DI plant has been paid already relative to what is still due in the next few years?

Yeah, so first of all, what I can, again, referring to what I've mentioned a couple of minutes ago, over around about 3 billion and 2 billion funding and so far we have received round about 1 billion euro public funding.

Okay, and how much have you been paying then on a gross level for the project? So if you say relative to the three, how much of the three have you been paying in total?

Yeah, so round about net payment after funding, this has cost us so far round about 300 million euro.

Thank you very much. And there is a follow-up question from Jason. Jason, please.

Thanks, guys. Just wanted to

Let's chat a little bit about the pensions. This is a bit of a bugbear for a lot of people in the market. I think historically you've said that about half of the $5 billion associated with steel maybe could give us a little bit of color about how much of the pension is actually leaving with HKM. And then again, as we think about all these businesses being deconsolidated, Is it time to start thinking about an attributable pension liability rather than a consolidated pension liability?

Jason, this is Axel. First of all, your light pension provisions overall amount more or less to 5, 5.2 billion Euro. It's also true that about half of it is with steel. What has been transferred to HKM is not a significant number. If I'm not mistaken, it's a low three-digit million euro number.

Okay, so again, on a go-forward basis, as we think about all these carve-outs and spin-outs and IPOs, Historically, the view was let's deconsolidate steel and we deconsolidate half of the pensions. Is that still a consideration or is that moved to a bit of a backseat?

Well, it depends on the capital structure and pensions, as you know, is a part of the capital structure. And ideally, every business, every segment is able to finance on its own its capital structure. So does TKMS and so will do TKXLs. And to give you an example, With TKXLS, we've also transferred pension liabilities that can be tied to the business.

So if we look at the, because I think it's the annual cost flowing through the income statement is about 300 to 400 million, or is it 300 million and then the cash payments is 400 million. I assume that's broadly correlated with with the actual pension liability. So, again, if we look at that payment, half of that payment is being made by the steel business. Is that the right way to think about it?

That is absolutely correct.

Okay. So, I guess, again, I think we probably need to go in and have a think about, you know, just treating this as 100% consolidated debt. It maybe feels like we're being a bit too harsh on it.

All right. Understood. Thanks Jason and now Samuel from Odo, please.

Hello everybody and thanks for taking my question. Just one thing on the bullet point in the presentation where you said that you want to leverage the opportunities of the green transformation question here. If this is within the existing, let's say, technologies and assets, or would you also look beyond? So some color here would be appreciated. Thank you.

Well, I think the green transformation has been driven in decarbon technologies on one hand, and on the other hand in steel with the DRI. We have seen over the last three years very hesitant markets in around clean fuels overall and of course also impacted by the regulations not clear, so policy frameworks not clear, but also by geopolitical impacts. Having said that, we are focusing of course very much still on the technologies that we have currently on hand and that will be so for the next time as well. As soon as markets stabilize and we have a much better visibility of what will be coming regarding clean fuels, then obviously Thank you very much. That seems to be all from your side. Thank you very much for participating. Thanks for all your questions. If you have follow-up questions after the call, please call myself or the team.

Thank you and have a great day.

Thanks, everyone. Bye-bye.