Good afternoon, and welcome to Outokumpu's fourth quarter results webcast. I'm Johan, responsible for investor relations. We will begin with a presentation from our CEO, Kati ter Horst, and our CFO, Marc-Simon Schaar. After the presentation, you are welcome to ask questions over the line. With that, I'm pleased to hand over to you, Kati.
Thank you very much, Johan, and also very, very welcome from my side. We are here today in the studio in a very snowy, beautiful Helsinki. So let's go then directly to the business and talk about the fourth quarter, and also some comments, key comments on the full year. So if we look at the whole year as such, I think the comment there is that the stainless steel market did remain weak, and was very much pressured by the uncertainty we saw on the markets, and also the especially low-priced Asian imports coming to Europe.
Our full year Adjusted EBITDA then decreased to EUR 167 million, and the profitability improved very clearly in BA Americas and in Ferrochrome, but then it declined in Business Area Europe if you compare year-on-year from to 2024. Then the Q4 2025 profitability was impacted both by market weakness, but also the temporary challenges we've been having with the supply chain planning solution in the ERP rollout in Business Area Europe. We do expect more favorable market dynamics going forward, and I'll come back to that in a little while.
I also would like to remind you that we are advancing our evolved growth strategy, by investing in the pilot plant in the U.S. to develop this proprietary technology we've been talking about, which is aimed at producing low-CO2 metals, and its first focus being on ferrochrome and, high chromium content metal. CBAM and tariffs are now the two elements that we see changing the import picture, both in North America and Europe. So on the left side, you see Europe. The Q4 figures include, October and November, and you can see that the, the imports have come down. Same has happened in North America because of the tariffs. And this is something, especially now in Europe, that we do expect to continue, this quarter.
Wanted to give also a bit of a sense from the Q4 of the sentiment in different customer segments. So you basically see here our key customer segments, and the colors are giving a bit of the, the sentiment, and you can see that the sentiment has been quite subdued, so either no change or even a little bit kind of slightly negative on the automotive and heavy industry side. But now that we come to the beginning of 2026, I think it is changing a little bit. So first, I would like to comment on Europe, that we clearly see that CBAM and the expectation of the coming safeguards are supporting demand for European suppliers. It's not necessarily helping to increase the end customer use demand, and there we don't see really clear signs of recovery yet.
But demand for European producers, we do see supported by the policy instruments. Then on America's side, I would say that we now see some first signs on a market recovery or economic recovery, however you wanna call it, and that was also reflected a bit in the clearly better PMI index that was published in January. It basically jumping to 52.6 points. And I think that is also what we see in our order books and the sentiment that we see being somewhat more positive than before in the Americas.
There's one customer case here I wanted to share with you because it is basically an example of one of the product developments in Outokumpu that highlights how our innovative material development, in this case, the Lean Duplex Forta, provides a solution for a very challenging customer need in real life, and it also helps to support the energy transformation and sustainable production minerals and metals. So the customer here is Metso, very much in the space of mining and minerals and metals. Then moving forward, commenting then a bit on the Q4 result more. So we have clearly here a situation where Europe was weak, also for the whole year, and where BA Americas and Ferrochrome had a very solid performance.
The European weak financial performance very much based on the market weakness and the sustained pressure from the imports, and then as I said earlier, also in the Q4, some temporary challenges that we've been having with our supply chain solution in this ERP implementation. We have had significant improvement profitability in BA Americas. That has been driven very much by the higher volumes and lower cost, and then really in BA Ferrochrome, we actually seen a third consecutive year of improvement, and we also do see the robust demand continuing for our low-emission European ferrochrome. And then maybe on the own measures, I could comment that we had the target to have EUR 60 million savings in short-term cost saving measures, so we have reached EUR 63 million by the end of the year.
We have also reached the targeted level of EUR 350 million on this three-year run rate program that we've been running by the end of 2025, and therefore, also that program is now closed. Then moving to sustainability and commenting on some of the key items there. Our solid sustainability performance continued in Q4. We were also present in COP30 and had some really good interactions with some of our customers, but also different politicians talking about energy, talking about carbon capture and other important topics. On safety, we are on a world-class level in the process industry. We had a challenge in Q3, and I was very happy to see that now in Q4, we are really back on track in our safety performance, with a total recordable incident frequency rate of 1.4.
If we then look at the recycled material content, actually all the quarters in 2025, we were at the record high level of 97% of recycled material content. And of course, together with the actions we've taken in energy efficiency and optimizing our processes, this has really delivered continued emission reductions for Outokumpu. And this becomes a more important topic going forward. So the low EU ETS emission intensity that we have, coupled with the free allowances that we have going forward, is really supporting our competitiveness, and I come a bit back to that a little bit later. Our sustainability leadership was also recognized externally early in the year in 2025. We got again the EcoVadis Platinum, and then towards the end of the year, the CDP's A rating for the climate was received.
Then, a couple words about how CBAM and the phase out of the free allowances under the EU ETS are expected to impact our business. So when you look at the left side, CBAM basically impacts the top line, while, then the discussion of the free allowances is a cost question to the industry and for the players. So both in stainless steel and in CBAM, or both in stainless steel and ferrochrome, so the key importers to Europe have carbon intensity default values that are clearly higher than the European benchmark. And this is clearly expected then to shift demand more towards the European suppliers. So you can see here in the left and in the middle, the black bar presenting the imports, and then the green bar representing the European reference values.
Further, then I would like to point out that Outokumpu has been one of the early movers in smart decarbonization, and that has now resulted in a very competitive position under the EU ETS. So we basically have available free allowances, covering our needs until 2030. I have here then another example on how we can reduce carbon emissions through partnerships that actually create win-win business concepts, in the ecosystem. So this is a partnership that we have announced as an MOU with Norsk e-Fuel, where basically the concept is that for the side stream of our ferrochrome production, the CO gas, we can deliver that to Norsk e-Fuel for the production of sustainable aviation fuel. The benefit here for us is that we are really.
By selling the CO gas, we are really reducing quite substantially our emissions. For them, it's a very cost-effective and good raw material for producing sustainable aviation fuel. So here, let's see how this continues going forward, but these are continuously the type of opportunities we are looking in partnerships. And then now I think I would like to hand over to Marc-Simon to talk more details about our financial position and the result.
Thank you, Kati. Good morning, good afternoon, everyone, and thank you for joining us today. Despite the challenging market environment, our solid financial foundation positions us well for future growth. Let's take a closer look at our financials at the end of the year. During the fourth quarter, our strong liquidity increased to EUR 1.2 billion. With positive free cash flow and the dividend payment in October, our net debt increased slightly, only slightly, during the quarter. At the same time, we secured a new unsecured EUR 800 million sustainability-linked RCF, with a four-year maturity and an option to extend until 2032. The new facility replaced two previous RCFs of the same amount, but with improved and more flexible terms. This once again demonstrates the strong and continued support from our lending partners.
Now, let's take a look at our fourth quarter profitability. Our fourth quarter group profitability of EUR 10 million was mainly impacted by lower deliveries and a lower pricing level in Europe. The decrease in stainless steel deliveries to 365,000 tons was driven by continued market weakness and challenges related to the new supply chain planning solution, as mentioned earlier. These negative impacts were partly offset by improved cost performance and higher electrification aid. Let's now take a closer look at the performance of our business areas in the fourth quarter, starting with Business Area Europe. Overall, the market conditions in Europe remained weak during the quarter. They were evident in manufacturing activity as the Euro area PMI remained below 50, much for the second half of the year, indicating continued contraction in the sector. Against this backdrop, volumes were lower during the quarter.
This reflected both the ongoing market weakness and a temporary impact from the implementation of the ERP rollout, which we expect to normalize going forward. The weaker pricing environment also weighed on spreads, namely our price net of raw material costs, and this impact was partly offset by improved cost performance, supported by higher fixed cost absorption as production activity increased. In response to the prolonged market weakness, we continued to take decisive restructuring actions to safeguard our cost competitiveness. These actions form part of the 100 million restructuring program announced in connection of our Q2 2025 result, which runs through the end of 2027. As part of this program, we expect to realize cost savings of EUR 50 million this year, with a primary focus on business area Europe and group functions.
Looking ahead, we also expect demand for domestic producers in Europe to be supported by the introduction of CBAM from the beginning of this year. With that, let me now turn to Business Area Americas. Despite seeing lower deliveries, Business Area Americas delivered another strong performance in the fourth quarter. Improved product mix and lower variable costs more than offset higher fixed costs related to the annual maintenance shutdown in the U.S., as well as lower gains from timing and hedging effects and the usual seasonal decline in deliveries in the Americas market. During the quarter, demand in the U.S. continued to shift from imports towards domestic producers, following the tariffs imposed by the U.S. administration in July last year. However, underlying end user demand remained weak. Similar to Europe, manufacturing activity was contracting, with PMI levels below 50 throughout the quarter.
On a more positive note, we have recently seen early signs of improving market activity in the U.S. In addition, the Mexican government implemented tariffs on Asian imports, supporting domestic producers, producers such as ourselves in Mexico. Looking ahead, our focus in Business Area Americas remains on strengthening operational excellence to fully unlock the potential of our asset base, while advancing our commercial strategy through an expanded product portfolio and a more differentiated go-to-market approach. With that, let's have a look to Business Area Ferrochrome. We are very pleased that the strong financial and operational performance in Business Area Ferrochrome continued during the quarter. Against the backdrop of ongoing supply constraints in Southern Africa and continued geopolitical tensions, demand for our low-emission European ferrochrome offering remained strong throughout the quarter. While total deliveries declined due to lower internal demand, external deliveries increased, underlying our strong market position.
With the introduction of CBAM from the beginning of this year, we expect this positive trend in external demand to continue. Profitability in the fourth quarter benefited from higher prices, lower variable costs, supported by the electrification aid, and improved fixed cost absorption, driven by higher production levels. Looking ahead, despite the termination of the electrification aid and the increase in mining tax in Finland from the beginning of this year, we see our ferrochrome business as very well-positioned for the future. Our strong strategic setup, the continued expansion of our product portfolio into higher-margin ferrochrome as part of our evolved strategy, and improving mining efficiency through the expansion of the sub-level caving concept, will support further value creation in the business. Examples of our product portfolio expansion include our move into medium and high carbon ferrochrome, as well as low titanium products.
During 2025 already. In addition, recent underground drilling confirms that our mineral reserves and resources provide sufficient ore availability well into the 2050s, offering long-term visibility without the need for any major additional investments. With that, let me turn to some final remarks on the group's overall financial position. Despite the low profitability in the fourth quarter, our free cash flow improved significantly compared to the third quarter, driven by a strong release in working capital. Our ability to release additional working capital was limited by temporary challenges related to the implementation of the ERP system. As a result of the dividend payment of EUR 61 million during the fourth quarter, net debt increased slightly to EUR 265 million.
Given the current market environment, our primary financial focus remains on maintaining strong capital discipline, with a particular emphasis on working capital efficiency. Now, with that, I will hand it back over to you, Kati.
Thank you, Marc-Simon Schaar. So going forward, based on our evolved growth strategy, our focus is clearly on cost competitiveness in our foundational sustainable stainless steel business, while we are then targeting transformative growth in advanced materials and low carbon metals through the technology development. And on the next slide, just as a reminder, as communicated last summer during our Capital Markets Day, here you see the pillars of our evolved growth strategy. So it's maximizing the value from sustainable stainless steel, both in Europe, Americas, growing profitably in advanced materials and alloys, then working on technology to create innovative materials, and low carbon of low CO2 metals. And this is exactly the $45 million investments we've done on the pilot line in the U.S., which is proceeding well.
And then, of course, we continue to focus on total shareholder returns as well, and keeping our balance sheet healthy at the same time that we want to keep the possibilities open to, to invest in growth. Then we would be moving here now to the dividend proposal from the board of directors, and the proposal is EUR 0.13 per share for the year 2025, and to be paid in two installments. And I think it's important to mention, this is very much according to our dividend policy, where we also say that we need to look at the company's financial performance in the cyclical market conditions, while we maintain the financial flexibility to invest in transformative growth. you see here our dividend and per share and an earnings per share.
Then if you look at over the five years and you include this proposal of EUR 0.13, we have actually paid over the last five years about EUR 500 million of dividends to our shareholders. Then we move to the outlook for the first quarter of 2026. In the first quarter of 2026, the Adjusted EBITDA improvement is expected to benefit mainly from the recovering stainless steel deliveries, the volumes, which are forecast to be 20%-30% higher compared to the fourth quarter in 2025. The change in deliveries mainly reflects the normal seasonality that we have in the market, but also the exceptionally low level of business in Business Area Europe in the comparative period, so fourth quarter.
Which was then impacted also by this challenges related to the supply chain planning tool in the ERP rollout during the fourth quarter. And then with the current raw material prices, some raw material related inventory and metal derivative gains are forecast to be realized in the first quarter. And then our outlook for Q4 2026, so our adjusted EBITDA is in the first quarter of 2026, is expected to be higher compared to the fourth quarter of 2025. Then I would like to summarize a bit with this slide, some of the key messages from today, and I would start by saying that we do expect more favorable market dynamics going forward in 2026.
So in Europe, this culminates very much currently to CBAM and the proposed safeguards, as they are supporting demand for low emission stainless steel and ferrochrome, supporting European suppliers. In the Americas, we see a positive outcome of the potential positive outcome of the USMCA negotiation would really support our business in, Mexico, and also create more capacity for us, eventually to, to sell in the, in the US. And like I said earlier, we see also first signs of economic and end user demand recovery in, in the Americas, so being clearly more positive than in, in Q4. And then we expect this robust, demand for our, ferrochrome to continue, also supported by the continued uncertainty on, on supply on the market.
And if I look at all the business areas, we are very much working on the commercial strategies and the product portfolios, and I see that we have a lot of opportunities in that side. Ferrochrome is already now bringing three new products to the market, so this is the way to continue. And on the Evolved strategy, I mentioned the technology development. It is very important for us, and we will tell you more about that as we go forward. So I'm very optimistic about our future, our possibility to grow and improve our financial performance and resilience. And then I think this takes us to the Q&A that we are now ready for. So please, happy to hear your questions.
If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Tristan Gresser from BNP Paribas Exane. Please go ahead.
Yes, hi. Thank you for taking my questions. The first one, I just wanted to ask about Americas. There was a strong performance in Q4. Any one-off tailwind that was in there, that will not repeat into Q1? Or is the type of margins on EBITDA per ton that you've seen and done in Q4, is that kind of a normalized level you see for the coming quarters? Is there more of the price increase to flow through in Q1, or that's all in the results we've seen in Q4?
Now with the visibility you have, and you flagged a bit of improvement as well on the demand side, do you think you can reach your EBITDA target for the division of EUR 150 million-EUR 200 million in 2026? If not, if you can tell us why.
Maybe I can start with taking your first part of your question, Tristan, on the performance and if there are any extraordinary items within the result. The answer is clear, no, and we can expect then this result to be an underlying result then also going forward, plus then the market dynamics which we see now. We expect a seasonal uptick in demand over here. And while we're not giving any price outlook, I think given the current situation and then referring also maybe to the early signs of a market recovery explains, I think, a bit about how we think about the overall market and the dynamics coming with that one.
Regarding the EBITDA target of EUR 150 million-EUR 200 million, is that, is that achievable for 2026?
Well, if I would say if the market recovery continues, then I think there are possibilities to go towards that, yes.
All right. That's, that's clear. And then kind of a similar question around Europe. I mean, it's always a market that is a bit difficult to calibrate. How do you think about the margin improvement for 2026? I mean, you went from negative EBITDA, adjusted EBITDA in Q4. The market was tough. There was a bit of one-offs, but consensus has EBITDA per ton for the Europe division going above 150 EUR per ton by Q4 this year. Do you think that's feasible? And if you can talk a little bit about the market environment as well. We've seen prices going up. I guess margins are going up at the moment as well.
If you can discuss a bit your order books and the impact of CBAM, that will also be helpful.
Yes. So maybe if I start, and then Kati can chip in and add. I think in the fourth quarter, we have seen the lowest volumes driven by the weak market. Yes, we also had here the implementation of the supply chain solution, which I mentioned before. But what we do see and from preliminary data also in January, is that CBAM is somehow supportive, as I mentioned before, expecting also a shift towards domestic producers in the European market over here. And as such, also seeing then a relative margin improvement here in Europe as well.
Let's just say, come on, that needs to also happen if you look at the overall volumes demand in Europe and the price level. So, yes, volumes need to increase and deliveries need to increase and prices need to increase.
Okay. No, that's clear. But you confirming that margin improving at the moment? And just the CBAM and the safeguards, is that enough for you to go back to historical margin levels? Or you think, absent a more pronounced demand recovery that on the end user side that you're not necessarily seeing at the moment, it will be difficult to reach, let's say, a historical margin level already this year, without the demand?
I think that certainly CBAM, and then safeguards are supporting us here in what you just described. At the same time, yes, we see increased activities, but this is not coming really from an underlying demand in the end user segments. To be clear, in order to get back to historical levels, we also need further demand from the market side as well, given also the capacity utilization we're currently running still being on the lower side.
All right. That's, that's very clear. Thank you.
Thank you.
The next question comes from Tom Zhang from Barclays. Please go ahead.
Hey. Hi, good afternoon. Thanks for taking our questions. Two as well for me, please. So yeah, maybe just on ferrochrome. You know, I know a lot of the quarter-on-quarter improvement was from these electrification aid, but I think underlying, you also talked quite positively about the ferrochrome market, which I was a little bit surprised by because, you know, stainless volumes have not been very strong. There were still a lot of stainless imports. And CBAM, I guess, will help, but it's only just coming in from January. Is there much of a step up again into Q1 for the underlying ferrochrome business? And so, you know, as I kind of look at Q1, even without the power subsidies, do you think it's possible that ferrochrome earnings can remain fairly stable?
I think, maybe if, if I can take that. When it comes to Q4, yes, there was a positive element of then the electrification aid, as we, as we mentioned before. What we have seen as an increase from the third quarter to the fourth quarter, I would say approximately half or a bit more, half of that improvement is coming from that electrification aid. And the rest is real underlying improvement, stronger performance. Coming to the market side, yes, stainless steel demand is lower, is weak. However, we constantly also reporting that the demand for, again, our European low emission ferrochrome is very solid. And as such, we saw an increase, not in internal demand, but in external demand.
We're also expanding our product portfolio, as I mentioned before. So, these are areas and topics together then also with improving our cost performance in ferrochrome with this new or continued the expansion of our mining method to Sub-level caving. That's all contributing positively. Now, if we think about then Q1, certainly, the impact which I mentioned to you before the electrification aid, but then also the impact from the mining tax in Finland then will have a negative impact in the fourth quarter, compared to in the first quarter compared to the fourth quarter. However, we continue to improve on the mix side and also on the cost performance.
I would only bake half of the impact of electrification and mining tax into the forecast.
And maybe to add to that a bit, just as a reminder, so we're delivering now internally, externally, about 400,000 tons of ferrochrome. We have a capacity of 500,000 tons. So we have capacity to increase also external deliveries. And maybe another aspect, just to add that this portfolio development in ferrochrome, low titanium ferrochrome, medium carbon ferrochrome, and now our latest test based on concentrate, more than 60% chrome content ferrochrome, they bring us also to other customer segments. So it's not only then stainless steel anymore being the customer, but the other segments. So we see the outlook for ferrochrome quite positive.
Okay. No, that makes sense. Thank you. Sorry, just following on from that quickly. I think in Q2, you guys had talked about a mining tax, you know, could be a sort of EUR 50 million hit. Is that still the right number to think about?
No, it's so I can be a bit more specific on that. So the mining tax increase now, for this year, so last year we paid about EUR 8 million. This year we are paying EUR 21 million based on the current premises and volume estimates, so it's a EUR 13 million increase in our mining tax. And what does continue in Finland, the parliament has asked the government to look at also at the hybrid model, which would be partly based on royalty and partly then based on the actual result. So that-
Mm.
... discussion should continue this year. And then the other item there was the electrification aid. So Outokumpu has been getting, in total, about EUR 20 million in the electrification aid. So if you put those together, then the impact, I think right now, is about EUR 30 million-EUR 35 million.
Very clear. Thank you. And then the second question was basically around, you know, there's been a lot of headlines around ETS reform or potential, you know, extension of free allowances. As I understand, that would potentially mean CBAM also needs to be drawn out to adhere to WTO. Given, you know, your emissions are already well below international levels, you're covered for allowances out to 2030. Do you see the extension of free allowances as a bit of a risk for stainless, or do you think it's, yeah, kind of not, not too material?
No, at least from our perspective, I don't see it as a big risk. Of course, there's a lot of discussions going on. If my understanding is correct, there will be some kind of a review now in the summer of the EU ETS system. But I think that's also about should it be extended to some other sectors where it's not now yet. So we will definitely hear more about the review and what is being reviewed in the summer. But I think it is. I think European Commission is still quite determined to their emission reduction targets. And of course, EU ETS system also goes a bit hand in hand with CBAM. So we need to see also the effect in the CBAM going forward.
But I think it's definitely a competitive advantage to have been an early mover in this area, in the case of Outokumpu.
Maybe to add also with smart decarbonization here as well. I think-
Yes.
... Kati has mentioned one example with how we think about ecosystems and partnering and making the reduction in emissions as economically feasible.
Okay, thank you very much. I'll turn it back.
Thank you.
The next question comes from Anssi Raussi from SEB. Please go ahead.
Yes, hi, all, and thank you for the presentation. I have a couple of questions left. First, about CBAM and safeguard in Europe, like, how do you see the situation if you think about, you know, scrap value chain? Like, if the end user demand is declining due to these new regulations, even though it will be positive for your stainless side, but, do you think that scrap suppliers would face some problems, for example?
Well, Anssi, if I can take that question, then I think that well, well, overall, there is then a stronger demand for stainless steel scrap, and this is what we do see then in the market as well. But overall from... I can only speak from an Outokumpu point of view, that through our partnerships with our suppliers being very well covered, and also going forward.
Okay, thanks. That's clear. And, then about BA Europe, like, what kind of delivery times you have right now? Because I think your contracts are so-called all-in price-based contracts, so how long it takes before we see this, you know, positive changes in market environment in your P&L?
Maybe to start with, not all of our business is on effective pricing. So I would say around 30% of our business in Europe is still based on base plus alloy surcharge, and our U.S. business is completely on base plus alloy surcharge. Certainly, we have around one third of our annual expected volumes under contract, these contracts being concluded by mid to end of last year. And as such, there is naturally a certain delay in here. But we should see a gradual improvement here from the first quarter in Business Area Europe.
Got it. Thank you. That's all from me.
Thank you.
The next question comes from Dominic O'Kane from JP Morgan. Please go ahead.
Hello. I have two questions. So first, could you maybe provide us with an update on your current thinking for Tornio? And then second question, and is a related question. If we, if we think about cash flow, you had two successive years of negative calendar year free cash flow. You've done a good job on working capital management, but it, it may be that is gonna be difficult to continue and replicate going forward. And, and so if I think about what you said at the Capital Markets Day, you, you didn't provide us with any forward-looking guidance for 2026 CapEx. So I just wonder if you could maybe just help us with those building blocks.
Are you able to maybe give us an update on 2026 CapEx, and how should we think about the free cash flow potential in 2026?
So if I leave the cash flow question to Marc-Simon, I could maybe comment on Tornio. So you're referring to this potential investment in the annealing and pickling line in Tornio. We said in the fall, when we were discussing the mining tax topic, that it's currently on hold. So now we know what the impact on the whole Kemi-Tornio setup is cost-wise without this electrification aid and the mining tax. So what we are doing currently, we are updating the investment case, and also, of course, looking at, is there other ways, are there other items we can take in so that this investment case basically, you know, reaches our hurdle of 15% IRR for foundational investment?
So the investment case is still valid, and it's being reviewed now with new assumptions, as some of the cost assumptions have changed, and we also have some other ideas what more we could do. It's under review currently.
Yes, and if I then continue on the cash flow question, first of all, during the fourth quarter, as mentioned earlier, our ability to reduce working capital was limited, for a given reason mentioned before. So if I think about the first quarter, yes, business activities do increase. As we mentioned before, our volumes, then we have also seen the nickel price increase, but expectation at the moment is that working capital will only increase moderately into the first quarter of this year.
We do think then for the entire year, I mean, that pretty much depends also on how business activities and prices further develop, but we as the management team are very committed and focusing on improving our working capital, and particularly inventory efficiency now during this year, and have dedicated programs in place. Coming back to your particular question around CapEx, guidance for this year is around EUR 200 million. And then if we think about financial expenses, pretty much in line with what we have seen this year, around, I would say EUR 50 million. In terms of taxes, I would add or take the similar levels as we had a cash out in this year, according to our plan.
We do have restructuring provisions here as well, which we should take into account, and which we have been reporting earlier as well.
Could I just ask on the, on the EUR 200 million CapEx, does that include anything for Tornio?
No. So if we look at, like, a bigger investment on the AP line, or we would look at more transformative investment in Avesta, no, it does not include that. And maybe as a reminder, we capped our CapEx this year, also because of the financial performance cash flow to EUR 160 million, and I think we arrived at EUR 145 million.
Mm-hmm.
That was also how we were managing the cash. I think 200 is more going on the ongoing initiatives, what we have, normal maintenance that we have.
Yeah.
Then potentially other investments, they would probably not start in 2026 yet, impacting our CapEx-
Mm.
... but later.
But, the-
Thank you.
... announcement on the CapEx in the U.S. with the new proprietary technology, the $45 million-
Yes.
... U.S. dollar, that's being part of the $200 million, as well?
Correct.
Thank you very much.
Welcome.
The next question comes from Maxime Coghe from ODDO BHF. Please go ahead.
Yeah, good afternoon. So my first question is on dividend, because there had been some expectations on our side, on the sell side, that you would at least roll over the existing payout, and you have cut it by half. So it's fair, considering the other constraints you mentioned. But going forward, yeah, how should we think about your dividend payment ability? Is it fair to assume that as long as you have not been back to this ratio of net debt to EBITDA of one, which is your long-term target, dividends are going to stay quite limited?
Well, I think our kind of target in the dividend area is, of course, to continue to deliver stable and growing dividend over time. We just have to maybe remember in what kind of cycle we have been, and what kind of financial performance we have had. So, that consideration is there, and then the other consideration is, of course, the financial health, so, our balance sheet, and then also keeping this room for potential investments in transformative growth. So those are the aspects that we are considering in the dividend policy, and that's why the proposal now of the EUR 0.13 dividend per share.
All right, second question is on the nickel price. So, so price of nickel has surged by 20% over the last two months. So when we ask a question to your main competitor, they were relatively dismissive of, of any impact, since they procure, most of the nickel needs from, from scrap. That's the same for you. But still, would you, would you believe that there could be a positive, price volume impact associated with a higher nickel price, in the sense that the distributors in such, phases of higher nickel prices tend to, to rush to buy material?
And, yeah, would it apply in particular in the U.S., where the market is more geared towards distributors, plus you have this pass-through mechanism of the base plus alloy surcharge, which is working quite well, unlike in Europe?
Yes, to answer your question directly, with the higher nickel price, also, we expect an improvement here on the price level, and also within, within our margins.
Okay, but you don't see any volume impacts associated with that, do you?
We do need to see here really recovery in the underlying demand certainly with CBAM, as mentioned earlier. And then let's see safeguards coming in, that there is a shift in from imports to domestic producers. But we definitely need to see how the economic activities are recovering.
Okay, fair enough. Just the last one is on your long-term EBITDA target. That's also in light of comments made by your main competitor around its own long-term target of EBITDA, that it dropped from EUR 800 million to EUR 700 million-EUR 800 million, and that was despite a big acquisition made in between. As far as you're concerned, you have a very ambitious and very high long-term EBITDA target at EUR 750 million-EUR 850 million. That's an improvement over the existing EUR 500 million-EUR 600 million. I understand this target is based on the quite high base prices, plus you have the benefit of this new ton, new investment.
So how comfortable are you with this target, given the fact that prices remain quite depressed at this stage, plus consensus has expectations at a much lower level, including for 2026 and 2027?
I think you mentioned yourself here the pricing environment right now, and this is. And also the long-term target here as well, and this is how we should look at this as well. We also set this is then the target, looking through the cycle here as well, and having the improvements as we communicated during the Capital Markets Day through investments in the foundational business here, which is then building up here the improvements. And yes, we're still comfortable around this level.
Okay, thank you. I'll turn back.
The next question comes from Bastian Synagowitz from Deutsche Bank. Please go ahead.
Yeah. Hi, good afternoon, and thanks for taking my questions. I have two quick ones left as well, please. Maybe firstly, on Americas, where you've been doing quite well. You mentioned the USMCA agreement. I guess we don't know what the outcome will be, but could you briefly remind us on the sensitivity to your numbers in the current price and margin environment, should the U.S. tariffs be dropped completely? That is my first question.
Yeah, maybe, maybe I start with that. I'm not so much talking about the whole USMCA, for instance, with Canada, but, but more referring to the negotiations and the sentiment we have, from the negotiations between Mexico and the U.S. So I think they've been constructive, quite positive. Of course, we don't know the outcome, but what was done in Mexico now as well, Mexico imposed, 50% tariffs for Asian imports as of, beginning of the year. That is, I think, something what U.S. been also asking for, so that has happened. That gave us some opportunities for price increases, and it could also support then, demand to a domestic supplier in, Mexico, which we are the only one.
But of course, there is a tariff now between U.S., from Mexico to U.S., of 50% for steel. And, it doesn't take into account whether the steel has been melted in America or not. So that is, of course, an upside for us, if we can also use the Mexican capacity for the needs of the U.S. market, because the Mexican market currently is very weak. It can recover with some of the measures somewhat, but we would very much in this situation want to use the capacity more for the U.S. demand as well. So therefore, if this tariff would become lower or disappear, of course, that would support our business, clearly.
Could you maybe just give us a like a quick understanding on what the sensitivity is if that 50% tariff would be dropped, just looking at the cross shipments from the U.S. into Mexico and vice versa?
Well, I think in the past the shipments have not been so very high because the Mexican market was also doing well, so probably 10-15,000 tons. But we have, of course, more capacity in Mexico, so should the Mexican market stay weak, which I of course don't hope, and the tariff would not be there, it would give us opportunities to bring even bigger volumes to the U.S.
Okay, understood. Okay, great. And could you just clarify, the Mexican tariff, does that also cover at least part of your clients, client sectors as well on the downstream side?
So, yes. So there, there's a derivative list, and there are certain products then on the derivative list where there is no tariff that are made out of steel. I think refrigerators happens to be one of them. But it's a bit of... It depends, what is on the derivative list and what's not on the derivative list. But everything that's in a form of raw material or steel is tariffed by 50%.
Okay. Got you. Thanks, thanks, Kati. Then lastly, are there any big items for us to keep in mind for 2026 on the maintenance side? I guess that's probably the usual, but I don't know, is there anything extraordinary here? And then also anything similar, any one-off, like the ERP, which you had last year, which we should just factor in?
No. No, nothing, nothing major.
No.
Okay, excellent. Perfect. Thanks so much.
The next question comes from Igor Tubic of DNB Carnegie. Please go ahead.
Thank you, and thank you for the presentation. I just have two follow-ups. You mentioned that the mix in Americas improved. I just wonder what we should expect in terms of Q1 for 2026, both for Americas and for Europe. And then also, if you can comment anything about in what segments you saw improvements, I would say, in the mix in Americas. Thank you.
Well, I guess we have to start by saying we don't guide on the BA level for the Q1, but you saw our guidance of improving volumes in stainless steel between 20%-30%. So that goes both... You know, it's combined Europe and Americas.
Yes.
I think that is an answer on there. And then if we look at the, I could maybe generally answer that if you look at the end-user segments that are booming in Americas, data centers is one, electrification goes forward. But I think this is also very much about our own work, so we are digging deeper to different customer segments where we see opportunities for our product portfolio. So we are becoming more of a market maker in the segments where we want to grow. So this work, I'm also expecting to bring some results in the coming quarters.
And maybe to come back a bit more on the first quarter, I think the best way really to look at our first quarter and the guidance is, as we said and stated in the guidance, it's the volume recovery. There are, of course, a couple of offsetting effects left and right, but the major driver is really the volume recovery in the first quarter.
Okay, thank you.
The next question comes from Joni Sandvall from Nordea. Please go ahead.
Yeah, thanks for the presentation. One quick question from me. Could you give... I think this, a bit of, you answered partly, but could you give any indication how your lead times have developed now under the CBAM regime, effective first of January? So have you seen, you know, increasing order books for yourselves and any indication of, of, you know, how lead times have developed after this?
Yes, lead times have developed. Lead times have improved. And right now we're middle of February, and we have already start booking into the second quarter, April into May.
Okay, thanks. And maybe a quick one also just to confirm, was the ERP rollout completed already during the Q4?
Well, it is a huge project in itself. We talked about the difficulty and the implications from the supply chain solution as part of the ERP program, and the aftercare will still continue into the first quarter of this year. But yeah, we expect then, by the end of the first quarter, to have then a stable situation going forward, so being temporary.
Okay, thanks.
Thank you.
Yeah, thanks. That's all from me.
Thank you.
There are no more questions at this time, so I hand the conference back to the speakers.
Thank you very much for your active participation today, and I think this in principle concludes our session today. Like I said a while ago, I think we are really confident about our future going forward. So we will look at growing this company, we will gain the resilience, and we will work hard to improve our financial performance. So thank you very much for being with us today, and talk to you then again in our, when we talk about the Q1 result in the spring. Thank you very much.
Thank you.