Ladies and gentlemen, thank you for standing by. I am Geli, your Chorus Call operator. Welcome, and thank you for joining the Erdemir Conference Call and Live Webcast to present and discuss the Second Quarter 2025 Financial Results. [Operator Instructions] The conference is being recorded. [Operator Instructions] Please note, Eregli Demir ve Çelik Fabrikalari T.A.S, Erdemir, may, when necessary, make written or verbal announcements about forward-looking information, expectations, estimates, targets, assessments and opinions. Erdemir has made the necessary arrangements about the amounts and results of such information throughout its disclosure policy and has shared such policy with the public through the Erdemir website in accordance with the Capital Markets Board regulations. As stated in related policy information contained in forward-looking statements, whether verbal or written, should not include unrealistic assumptions or forecasts. It should be noted that actual results could materially differ from estimates, taking into account the fact that they are not based on historical facts, but are driven from expectations, beliefs, plans, targets and other factors which are beyond the control of our company. As a result, forward-looking statements should not be fully trusted or taken as granted. Forward- looking statements should be considered valid only considering the conditions prevailing at the time of the announcement. In cases where it is understood that forward-looking statements are no longer achievable, such matter will be announced to the public and the statements will be revised. However, the decision to make a revision is a result of the subjective evaluation. Therefore, it should be noted that when a party is coming to a judgment based on estimates and forward-looking statements, our company may not have made a revision at that particular time. Our company makes no commitment to make regular revisions, which would fully cover changes in every parameter. New factors may arise in the future, which may not be possible to foresee at this moment in time. At this time, I would like to turn the conference over to Ms. Idil Önay Ergin, Investor Relations Director. Ms. Ergin, you may now proceed.

Thank you very much, Geli. Good afternoon, everyone. Welcome to our conference call and webcast of Erdemir for the second quarter of 2025. First, I will go through our investor presentation, which you can find on our website, and you can also follow it through the webcast. Then at the end of this presentation, there will be a Q&A session as usual. So I'll start with Page 3. Our presentation consists of two sections, as you already know. The first one is the market overview and then the financial results. So let's start with the commodity prices. On Page 3, you will see the prices of steel-related commodities and HRC. Let's take a look at coking coal, iron ore scrap and HRC prices. In Q2, coking coal prices ranged between $170 and $196 per ton. At the beginning of the period, prices were supported by gradually increasing steel production in China, mine maintenance shutdowns in Australia and logistical disruptions, which together caused supply constraints. Towards the end of the quarter, stimulus expectations and reform pledges from China created short-term optimism in the coking coal market. Tariff-related actions also had an impact on the coking coal market. Iron ore prices moved between $92 and $105 per ton in the second quarter. This volatility was primarily driven by the global trade tensions, uncertainties regarding China's economy and disruptions in the supply-demand balance. In recent weeks, prices climbed back above $100 per ton, supported by China's announced stimulus measures and strong trade volumes. In the second quarter, Turkey's imported scrap market showed a generally weak performance due to cautious purchasing behavior by producers and strong supply pressure. Scrap prices fluctuate between $325 and $379 per ton. On the bottom right, we show HRC prices in Black Sea, China and South Europe. In Q2 2025, the global HRC market experienced a downward trend and weak demand, rising cost pressures and protectionist trade policies. Despite stimulus measures, signs of recovery in China remained muted, while high U.S. tariffs and protectionist policies in Europe suppressed global trade. In Europe, the CBAM, Carbon Border Adjustment Mechanism, implementation and restocking needs could support prices after summer. On Page 4, you will see the production, consumption, exports and imports figures of Turkish steel market for the first half of 2025. While production increased slightly by 2% and consumption decreased by 3%, exports of steel products grew by 18% in volume during the first half of the year and reached 7.7 million ton. Imports also increased by 13% to 9.3 million ton over the same period, mainly driven by higher semi-finished product imports. As a result, the export-import coverage ratio, which was 74% in the first half of last year, increased to 80% in the same period of this year, thanks to the upward trend in exports. The tariffs imposed by the U.S. during the Trump administration have continued to offer Turkish producer a more competitive environment. The U.S. reached agreements with some countries -- with many countries. However, steel was generally excluded and remains subject to a 50% tariff. Asian countries have been the most negatively affected by this policy. These countries may increase their exports to less protected markets. In addition, there is an increasing momentum in the EU to expand and reinforce safeguard measures across a wider range of steel products. Although Turkey continues to hold the largest quota for hot-rolled coil and remains as a primary import source, the evolving policy environment may lead to more restrictive conditions for exporters in the near term. So let's take a look at the financial results and the operational metrics. On Page 6, you will see the summary of our 6 months results. We achieved $2.5 billion revenue. Also, we generated $217 million EBITDA and $46 million net profit. On Page 7, you will see the operational indicators of our company. As we announced, in the second quarter, we commissioned Erdemir coke battery and Isdemir blast furnace, which are the last two investments of the current investment package. Due to the nature of integrated production processes, output declined during the transitional period of decommissioning old facilities and the commissioning of new ones. Although our crude steel capacity utilization rates appear to have weakened due to the planned maintenance in the first quarter and transition efforts in the second quarter. These rates still remain above the global average. We expect capacity utilization rates to return to their previous performance by the third quarter. The main reason for the decrease in sales tonnage in the second quarter was that road transport could not be carried out legally due to the 8 holidays. So we expect total sales to be close to 8 million ton in 2025. So let's take a look at the segmental breakdown of domestic sales and export volumes in Page 8. As you can see from the pie chart, there has been a slight change between sectors when we compare to last year's breakdown. There has been a transition from general manufacturing to pipe and profile and distribution chains on a percentage basis. We see similar changes between sectors in the long product, although its share in total sales is relatively small. We achieved an export volume of 483,000 tons in Q2, representing 27% export share in total sales. This figure is the highest export rate in our history despite the challenging market conditions. Although our main focus is the domestic market, we are also increasing the export share due to the attractive demand and good prices in the export market. On Page 9, you can find breakdown of revenue for domestic and export sales. 75% of the revenue comes from domestic sales in line with the domestic volume. We generated $64 EBITDA per ton in 6 months -- sorry, in Q2. As there is a clearer outlook for the second half, we have revised our 2025 EBITDA per ton expectation to $70 per ton. Despite import pressure in the domestic market, we achieved to generate $217 million EBITDA and $46 million net profit in the first half of the year. On Page 10, you can see how we reached to net profit from EBITDA. One of the largest items was depreciation, which was $129 million in 6 months. The other major item in this chart was financial expenses of $117 million. After other expenses, net profit was $46 million. The inventory provision release of $10 million is not included in EBITDA calculation since this is a one-off adjustment. While calculating the net profit, $10 million of the consolidation classification arises from additional inventory provision release. In the graph below, you can see EBITDA to change in cash bridge. Our net working capital increased compared to the first quarter due to the extension of the trade payables maturity. Also, we spent around $242 million to investment activities in 6 months. This amount also includes CapEx advances paid for the capital expenditures and sale of commercial offices for investment properties as well. On Page 11, you will see the historical trend of financial borrowings and net debt. As you can see in the financial borrowings chart, the share of short-term debt in total debt decreased to 21% in Q2 with the support of $950 million Eurobond issuance. When we look at 2025, our net working capital decreased due to the extension of the trade payables maturity. Despite high capital expenditures, we succeed to keep net debt to EBITDA below 3 multiplier in the first half. We expect to keep net debt-to-EBITDA ratio below 3.3 multiplier for 2025. Slide 12 represents our cost of sales breakdown. Due to the decrease in coal prices, the percentage of coking coal cost decreased in raw material basket, which is in line with the trends in raw material baskets -- raw material markets. Page 13 represents the historical capital expenditure. Total CapEx was $1.1 billion in 2024 and $521 million in the first half of 2025. As I mentioned earlier, the new first blast furnace in Isdemir and number four coke battery in Erdemir was commissioned in the second quarter of this year. Other than these investments such as pelletizing plants, solar power plants and energy efficiency investments are included in the CapEx figure of this year. We expect that CapEx will be around $800 million to $850 million, as we shared earlier, in 2025 with maintenance and other ongoing investments. So maintenance will be around $58 million per year as usual. As we announced earlier, if the reserve in the gold mine is significant, it could rise up to $1 billion. As you already know, we announced our net zero road map last year in January. We plan to spend $3.2 billion by the end of 2030. 70%, 80% of that amount will be sourced externally, utilizing easily accessible financial resources for the green transformation. Erdemir and Isdemir's crude steel capacity will reach 13 million tons by 2030. Now we may continue with the Q&A session. We will be delighted to answer your questions. Thank you for listening.

[Operator Instructions] The first question is from the line of Fairclough, Jason with Bank of America.

Look, two quick ones from me. First, in terms of the new equipment that's been commissioned, what does this mean for operating costs on a go-forward basis? Do operating costs get structurally lower? Or do we see better productivity? Or how do you think about the benefit there? And then my second question was just on the gold mine. Help me understand how you've got to these CapEx numbers if you don't yet have a resource number, please?

So I'll start with the first question. So we are expecting efficiency increase and cost reduction from our new investments. So there are actually five investments in total. So two blast furnaces, two coke batteries and one vacuum degassing. So from these five investments, I mean, it's an unofficial number, but we expect around $40 EBITDA contribution in total. But this contribution will be seen when they are fully working. So right now, there is a learning curve. So we just commissioned them in the second quarter. So we expect to see gradually EBITDA contribution during the third and fourth quarter. And most probably starting from the next year, we will be seeing the full contribution to the EBITDA. So we will benefit two things from these investments, both efficiency increase and cost reduction. So we will use less raw material basically. And the second question, gold mine. So they are assumption numbers, of course. I mean we don't have the official report yet, but we expect to get it in Q3. We hope to get that in Q3. Of course, we don't have the official report, but our top management has some kind of assumption for the reserve, of course. And we have the projected cost numbers in our projections.

Just as a little comment, I mean, $800 million to $1 billion normally would be quite a large gold mine.

Yes. So right now, unfortunately, I don't have the exact numbers. But soon, we hope to announce the real report, the exact numbers.

You may need to change the name of the company.

We'll see.

The next question is from the line of Ive, Erica with MetLife.

The first one would be on production. How much production do you expect for the entire year? And what was your, and sorry if I missed it, the decline in Q2?

So we expect to have the production figure around 8 million tons for the whole year. And we also expect to see sales figure close to 8 million tons. So because of the transition from the old like coke battery and blast furnace to the new one, so we uncommissioned the old plants and commissioned the new ones. Of course, there will be some production cuts during that transition phase. That's why our production is less when you compare to the first quarter because of the transition phase of our new investments.

Understood. And in terms of CapEx and then yes, I -- just to wrap up and be sure that I understand. So total CapEx cash spend was $210 million in the first half. And whilst you reported $521 million CapEx in the presentation, so the difference of $310 million was accrued and basically reflected in higher payables. Is it correct?

So in the first 6 months, we incurred $521 million in capital expenditures and this figure is an accrual. So the accrual includes two significant investments we capitalized in the second quarter. So the $521 million accrual includes $350 million in advance paid in previous years and $206 million in cash payments made in the first half of this year. So because capitalization was made in the second quarter, there was no advance adjustment in the first quarter. That's why the first quarter figure appears higher. So is that the answer for your question?

In part but just to understand payables, I mean, how should we expect payables to develop into Q3? Will they come down? Or what is -- shall we see a CapEx -- I mean now in terms of CapEx in cash terms, I got $200 million. What am I going to see by the year-end, $800 million or less than that? I'm a bit confused the way you report CapEx, to be honest.

Actually, at the end of the year, so I shared that we expect to have $800 million, $850 million. And if the gold reserve is significant, it will rise up to $1 billion. So at the end of the year, the cash amount, the cash payment for investment activities and the total CapEx, the accrued one, will be quite similar, so around these numbers. So the advances that we mentioned will return to the CapEx, the real CapEx. So the numbers at the end of the year will be very similar.

Okay. Understood. And in terms of -- last question is on EBITDA per ton per year. Did I understand correctly that you expect $70 per ton?

Yes, correct. Earlier, we shared that we expect between $90 to $100 for the whole year. But as we have a clearer picture for the second half and because we are a very conservative company, we decided to revise it to $70 per ton as EBITDA per ton for the whole year.

And given that steel prices are still under pressure and -- where is the incremental EBITDA per ton coming from? Do you expect raw materials to come down and so what, your iron ore and coal…

Actually, I mean, you are correct, you are right. So the sales prices are coming down. So we can see that in our orders, in our order book. And we expect to see stable raw material prices. But we actually project that the efficiency increase and cost reduction from our new investments will help and have some contribution to our EBITDA starting from third quarter.

Right. Okay. And that's -- can you quantify that? Because it looks significant to me.

I mean the unofficial numbers, in total, we expect to see around $40 EBITDA contribution, but this number will be seen when they are fully working. So as I mentioned earlier, these investments are quite new and in the learning stage, learning curve. So it will be seen fully starting from the next year.

The next question is from the line of Meyiwa, Zenande with UBS.

Just a quick one, just to follow up on the EBITDA per ton on the $40. Is that for the whole group? Or is that for specific tonnage that you're aiming for? And would it be possible to perhaps maybe walk us through the specifics around that? And then the second question I have is just on the other revenues line that came through during the quarter, which is a little bit negative. Do you mind walking us through what happened there? And if we should expect a similar trend moving forward?

So the first question, $40 is -- when we said EBITDA contribution around $40, we mean consolidated EBITDA per ton. So this will be seen in the group's consolidated EBITDA numbers. And for the second one, actually, there was some kind of one-offs in the first quarter. So revenues and costs related to raw material sales realized in the first quarter have been reported on a net basis in the half year income statement. So since the net cost was applied in the 6-month income statement, this led to differences in your calculations, most probably in the first and second quarter revenues and costs. But actually, as the net cost was applied to both revenues and costs, it has no impact on the gross profit.

Just one more question. Are you able to tell us what the one-off was?

It was related to commissioning our coke batteries. So as I mentioned earlier, there was a production cut during the transition. So one of the cargoes, one of the shipments of raw materials was canceled. So it was onetime, one-off that we added to revenue and then we just converted it.

The next question is from the line of Bystrova, Evgeniia with Barclays.

Congrats on results. I have a few questions. So my first one is related to your working capital. Could you please maybe elaborate a little bit on payables because it's quite a substantial inflow of payables, $400 million. I mean you mentioned that there is an extension. Just want to understand what shall we expect in the second half of the year for working capital? Will these payables reverse in the rest of the year? And then also on your debt maturity profile, could you please provide maybe a little bit more details in terms of what are the key facilities that you have currently in your capital structure and what are the maturities of those? And finally, on export markets, could you please confirm what are the key export markets that you were able to reach in the first half?

So I'll start with the last question. So export markets, mainly we export -- almost half of our exports goes to European Union markets, sometimes more than half. So our main export market is European Union countries basically. But of course, when Trump administration announced some kind of canceling -- like exempts from Section 232 when they say that everyone will be part of -- everyone will be implied in that Section 232, actually, this is more competitive market. It means that it's more competitive for Turkish steel producer because now everyone has a trade -- equal conditions in U.S. market. So in the first half, we could send one shipment to U.S. market. So it was actually less than 5% in our exports. So it doesn't mean that we will increase it in a very short period of time. Of course, it will take time. But we believe that we have more chance when everyone was part of that Section 232. So most probably, we will increase our exports to U.S. during the time. But right now, the main export market is European Union. So net working capital was your first question, if I'm not wrong. So yes, our net working capital decreased due to the extension of the trade payables maturity, which means it was around 30 days, and now it's almost double almost 60 days. So of course, I mean, that helps. But considering that Q3 becomes clearer in terms of both price and cost, we expect to see a slight decrease in net working capital in Q3. So did I miss any question, Evgeniia?

So does this mean that in Q3 in the cash flow statement, we will see like an outflow for working capital?

No, inflow, there will be inflow.

And what would be the driver of this inflow again? It's just quite like the working capital change in the first half was quite significant, almost 3x the EBITDA amount. So I'm just trying to understand what we shall expect going forward?

Yes. But first quarter was a different reason. It was from value-added tax and also inventory. But in the second quarter, it's completely different structure. It's because of the, as you mentioned, extension of the trade payables maturity. So from now on, it will be quite stable. Of course, there will be a slight decrease in Q3, but it won't change dramatically from quarter-to-quarter.

The next question is from the line of Gustavo Campos with Jefferies.

I have a few questions here. Firstly, on your EBITDA per ton guidance. First, I would like to understand what drove this negative revision. Was it mostly due to the weaker backdrop that's expected for the remainder of the year, the uncertainty around tariffs? Was it because of the external environment? Or is it -- are there any other underlying reasons? That would be my first question.

So yes, we had more optimistic expectations at the beginning of the year but looking at the current picture, we are more conservative. Basically, the main reason is actually China's situation. So at the beginning of the year -- actually, the last part of the last year, they were given more hope to the steel market that they will cut production. So the stimulus packages, everything, it was more optimistic outlook when we started the year. But when we come to August, we can see that there won't be -- so at the beginning of the year, we were expecting that the sales prices will increase starting from the second half. But so far, we haven't seen any positive movement in the prices. So some of the expectations and outlook says that starting from September, there might be positive movements in the sales prices. But still, as I always mention that as a company, we maintain our conservative stance regarding the second half. That's why we decided to revise our expectation for EBITDA per ton for the whole year.

Understood. That is very helpful. But you -- when you look at $70 per ton, that still implies at least $80 per ton for the second half of the year, right, given that the first half was a bit slower. And that EBITDA upside there, is my understanding correct that it would be mostly driven by your energy efficiency and investment initiatives that will have like lower raw material requirements. Is that also a correct understanding?

Yes, yes, correct. We will achieve this due to cost reduction from our new investments, such as blast furnaces and coke batteries, correct.

And it doesn't assume any improvement on the steel prices and other commodity tailwinds?

No, because we always use the worst-case scenario in our projections. So if there will be any increase in the sales prices, of course, that's fine, that's good. But if doesn't, so -- that's why we always use the worst-case scenarios in our projections.

Okay. Understood. Yes, that is very helpful. So overall, you don't expect an improvement in steel prices. And what is your expectation for coal and scrap prices -- sorry, coking coal and iron ore prices for the remainder of the year? Do you expect them to stay where they are basically? Or could we see more downward pressure?

So let me just share that there are some expectations for September and beyond, which are more optimistic for the prices. But again, we just go with the safe expectations. So we did not use any increase in sales prices in our projections, and we took stable raw material prices. But of course, stable means the purchased raw material cost. So the purchased raw material costs will be stable. That's how we project it. But the used raw material cost, the cost of sales will be less due to our cost reduction and efficiency increase due to our new investments.

Okay. And if I may ask one more question here. Could you just clarify, you said you expect net leverage at lower than 3.3x in 2025. So is it correct to assume that you see 3.3x as the peak net leverage that would occur in the second half of this year and then deleveraging from -- in 2026, given lower CapEx expectations as the bulk of your CapEx will be spent this year? Is that the right way to visualize this?

So when you look at the first 2 quarters, it's less than 3 multiplier. So when we said we're going to keep it less than 3.3 multiplier, it doesn't mean that we will reach to that level. So most probably in the second half, we can maintain these levels, the current levels. But again, the number that I shared as 3.3 multiplier is the maximum in the worst-case scenario, the maximum level we might reach. But the projection is to keep this level in the same figure actually.

Okay. And could you remind us your covenant level? Do you have any -- what's your incurrence covenant level?

We have one covenant from Eurobond, which is 3.5 multiplier.

And that's incurrence, right?

Sorry, I couldn't catch your question.

Yes, that is incurrence covenant, right? Like in other words, you wouldn't be able to draw into additional debt facilities in case your net leverage went above 3.5x.

Yes, that's correct.

Ladies and gentlemen, this concludes our Q&A session. I will now turn the conference over to Ms. Ergin for any closing comments.

Thank you very much for joining us. We hope to meet you again in our third quarter call. Have a nice day. Thank you.

Ladies and gentlemen, the conference has now concluded, and you may disconnect your telephone. Thank you for calling, and have a good afternoon.