Ladies and gentlemen, thank you for standing by and welcome to the Outokumpu First Quarter 2020 results. At this time, all participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. If you would like to ask a question over the phone at this stage, please press star then one on your telephone keypad. I must advise you the call is being recorded today, Wednesday, May 6, 2020. I would now like to hand the conference over to your first speaker today, Reeta Kaukiainen. Please go ahead.
Thank you, operator, and good afternoon on my behalf as well, and welcome to Outokumpu's first quarter earnings webcast. My name is Reeta Kaukiainen, and I am the head of Outokumpu's Communications and Investor Relations. As usual, the results will be presented by our CEO, Roeland Baan, and CFO, Pia Aaltonen-Forsell. Before I hand over to Roeland, I would like to remind you that the presentations that we will be using today can be found on our website, and as always, we will be making forward-looking statements in this call, so please pay attention to the disclaimer that you see in the presentation. Now, I will hand over to Roeland. Go ahead.
Thank you, Reeta. Before beginning with the earnings call itself, just one administrative matter. Today will be my last earnings call as CEO of Outokumpu, and first of all, I would like to thank all of you for your support and time you spent on covering Outokumpu. I believe we have fundamentally changed the core essence of our company for the last four and a half years to indeed become the best value creator in the industry, something that is being confirmed by our latest Q1 figures, by the way. Also with us is Heikki Malinen, the new CEO of Outokumpu. Heikki is the perfect choice to guarantee continuity in our progression as he has been on the Outokumpu board for the last eight years. He knows the company inside out, and he subscribes to the strategy as we had set out.
I would like to hand the floor to Heikki so he can say a few words as well.
Thank you, Roeland. Good afternoon. Good morning. Thanks for the opportunity to say a few words. As said, my name is Heikki Malinen, and I will be assuming the role of CEO here in about 10 days on May 16th. For me personally, it is a real honor to have been appointed to this position, and also, I am really excited about the opportunity to lead Outokumpu. Thanks to the transformation that Outokumpu has gone through under Roeland Baan's leadership. As Roeland just said, the company is in good shape with a strong balance sheet, world-class operations, and a very skilled workforce. A bit about my background. I joined the board of Outokumpu in April 2012 after the decision was taken to combine Outokumpu with Inoxum. I believe personally that the experience I have provides me with a strong background for my new position.
The bulk of my professional career has been spent in process industry, primarily in the pulp and paper sector in various executive roles in Europe and in North America. The roles have included sales, operational improvement, strategy, M&A, as well as leading business areas with full P&L responsibility. I also have 11 years of CEO experience, part of that running a listed company. I look very much forward to meeting the analysts, investors, and shareholders in the future as we get past this travel ban and other restrictions related to COVID-19. Now thank you for this opportunity, and I would like to hand it back to Roeland and Pia to go through the results. Thanks.
Thanks, Heikki. First slide, as always, our Vision 2020. Best value creator in stainless steel by 2020 through customer orientation and efficiency. As said before, in these times, in this environment, it makes no sense to show the figures that we had linked to this in 2016, as circumstances have changed. However, the relative performance and ambition does not change, nor our conviction that we literally will be and are in 2020 in that position. As I said, the Q1 numbers are a very clear indication of that. I would like to start with a few words on the COVID crisis itself and how we have been tackling it. If you look at the three different areas where we have been looking at safety, operations, and sales. First of all, we took our measures very early on.
We started by the end of February already to implement a number of our measures like social distancing, like suspending travel, et cetera. Then had everything fully implemented by March 15th, including remote working, et cetera. As a result, we have had altogether since the start of this pandemic, we have had 18 cases in the entire company of 11,000 people. I think that is a very clear sign of our operational capability and the speed with which we have been tackling this issue. We had, as a result, no impact on our operations whatsoever during Q1, apart from a one week closure of our service center in Italy, which was mandated by the government and not because of any other reason. Operations during our Q1, our mills have been operating normally. We have had no layoffs. We had no temporary layoffs.
We have been operating actually at pretty good levels of production. If you look a little bit forward, the Q2 order book looks still very decent, but we do expect that towards the end of the second quarter, some of these orders, although they are in the books, might not materialize. As a result, we have been negotiating with local governments as well as with our unions and workers' councils, already in agreement to go to temporary shutdowns, if necessary. We have a great number of cost mitigating actions already on the shelf that we can pull off whenever we want to. Part of this all, of course, is cash. The whole story is about cash. Cash preservation and making sure that we, indeed, even in the current environment, will still be able to reduce our net debt. If we go to the next slide here, this responding.
We do have a solid balance sheet. We have a total liquidity currently available to us of EUR 0.9 billion, almost a billion of euros of liquidity. Cash balance of over EUR 400 million and no significant debt maturities until 2022. Of course, you can ask, "Well, how do you react to this? How do you know what's going to happen? How do you know it's sufficient?" We have done a number of iterations based on scenario-based financial planning. The scenarios we have used are the scenarios developed by McKinsey & Company, where we have been as draconian as possible by taking the deepest 2020 scenario they had and saying, "This is our base scenario." Then looking at not a V-shaped recovery, but a U-shaped recovery. So, taking time of getting out of it.
All these iterations and all the planning that we have done with the cost reduction plans means that we will be, from a liquidity point of view, in all scenarios, more than adequate. As said, we are eligible for government support. We have a strong focus on cash. We see another EUR 100 million coming out of our working capital. We have already cut our CapEx with EUR 40 million down to EUR 180 million and have further room if needed. We foresee another EUR 40 million of proceeds from non-core asset sales. All in all, we are very confident that whatever this pandemic throws at us, we will come out with some pain, as everyone does. You can't deny that this is something unprecedented, but we will come out strong. We can address this further in the Q&A. If we go to the results itself.
The result was driven by seasonally higher volumes, which we had in our guidance. But I think one thing that I really want to stress is our productivity. We had a record productivity throughout the company of more than 5% productivity gain. This is not a, how to call this, a financial calculation, looks good on paper thing. This is hard savings, 5% productivity, full productivity savings. What worked against us, biggest thing there is the mix. In the mix are two elements. One is the COVID-19 crisis closed down almost all shipyards in the Far East, which is where most of the scrubber retrofits on ocean-going vessels are being executed. As a result, this specific product, which is a large part of our high-end portfolio, was just down significantly. As a result, our mix was pretty much poorer than it was in the previous quarter.
Can we go to the next one? By the way, I am almost skipping forward. EBITDA at EUR 106 million came in very strong for this quarter. During the quarter, nickel declined. The nickel price, you know that nowadays, especially with so much of the stainless steel going in the effective price rather than in the surcharge. The nickel price really does not do much for our profitability. It does mean that with lower nickel price, we are generally speaking more competitive against the imports. Talking about imports, still in Q1, the imports were, in Europe, pretty high. 29% of consumption, down a little bit from the highs of 2019, where we reached 35%, but still high in historical terms.
This is to some extent, the effect of some of the importers trying to fill the quota early on, as we are getting to the end of the quota period at Q2. We will see that in Q2, some of the import pressure will ease up. If you go to the U.S., there clearly, you have seen the decline, especially since the enactment of Section 232, and we are now at a relatively comfortable 14% of total consumption. Back to Europe. We do see an issue there that, of course, with demand being reduced overall, the safeguard quota do not represent any more the reality of this market. We are working with the rest of the industry, including carbon and the European Commission, to help in reviewing and revising these safeguards, and have asked for a significant reduction in the ceiling of the quota.
This is being worked on, and it is not an automatic thing, of course. It will have to be put into a proposal from the Commission to the member states. We are working as well with the governments of the member states to make sure we get a good outcome that will protect the industry. What in the case of stainless specifically has helped as well is, of course, we have the provisional anti-dumping duties imposed on hot-rolled stainless coming from China, Indonesia, and Taiwan. Still looking at the anti-subsidy duties, which is an investigation that is going on as well, where we hope that there will be some decent support as well. Then we have an investigation running through WTO on the legality of the import ban from Indonesia of the nickel ore.
A lot is going on there. We already see positive results, as I said, from the first provisional anti-dumping duties, but we expect more to come in support of our industry. With that, I hand over to Pia to dig into the numbers a bit deeper.
Thank you very much, Roeland. I think from the KPI page. Thank you, Reeta, for the microphone. I hope you can all hear me well. I still have traumatic memories from the CMD line, so good. What you see here, obviously, is, I think, very noteworthy relating to the volumes. I will just keep repeating that later when we discuss, for example, the impact on the working capital. Just looking at the increase compared with Q4 2019, I think is relevant then for further analysis. You have seen that we have ended up sort of at a decent volume figure, still lower than a year ago. As Roeland also stated, to some extent, especially relating to the progress, also already seeing some small impact from the COVID-19 situation.
Otherwise, you see here also our gearing still also showing a strong balance sheet, as well as then our net debt figure at EUR 1,249 million. I will most certainly come back to that in a few pages. I think we can move on, Linda, to the next page, please. This is now just to have little bit of a tighter grip on the BA specific figures. Obviously for BA Europe as well, you would see the big seasonal uptick comparing with a very low Q4 delivery number. Now the typical seasonal uptick then from Q4 to Q1. Here then you can see the negative impact from the mix actually being quite significant. When you look at the other deltas in the result, you see that compared with Q4, they are actually pretty minor.
We have some net of timing and hedging impact. This is obviously predominantly timing. We had also on a group level the pattern where the timing impacts were negative, the hedging impacts were somewhat offsetting that being positive. You can also see sort of cost and others balancing out. I would say under the circumstances relating to the market and the environment where we are in a very satisfying result of EUR 67 million EBITDA. Linda, if we move on. A pleasure to show you BA Americas results, the best quarterly results we have seen since 2017 of EUR 20 million in the quarter, particularly, of course, driven by very decent volumes. It is up to 168 kilotonnes from 134 kilotonnes in the fourth quarter.
Here then, when you look at the other impacts, you can also see a bit of positive on the pricing and the mix, as well as net of timing and hedging. Some of the costs here relate to the higher production level. Maybe I even want to comment the other, because it is a bit bigger than usual. You may recall that in the fourth quarter, we talked about some positive one time or catch-up effects from the yearly closing. Obviously then as a bridge now those couple of million positive would now turn negative. This other also includes some FX losses between Mexico and U.S. With that said, I would quickly move over then to long products. I think what we also see in these numbers is the seasonal uptick in deliveries.
This is then contributing a bit positively to the result, and then primarily the impacts of timing and hedging here are again dragging down. We can see that we continue to be very close here to a breakeven level. I think when we discuss the market situation, we already commented last year that there was a pretty tight situation and obviously it's also visible here than in the figures for Q1. Finally, ferrochrome. Always a pleasure to talk about ferrochrome production results and even here you see deliveries up a little bit compared with a year ago. We continue to have a very good operational performance. But you all know what the pricing levels have been for ferrochrome.
When we compare with a year ago, in particular, when we compare the results there, we are down and then even compared here, there is a slight negative deviation from the price. You have seen now the European benchmark price being out for Q2 at $ 1.14. Now we have seen a slight increase in the price level, maybe reflecting the new market situation there. Okay. But I promised to come back to the cash flow. Let's go to that page now. I think there's for sure a lot that could be said around that. I'll focus first a bit on the working capital.
First of all, when you look here at the cash flow, it's not a mistake, it actually just happened this way that the EBITDA came in at EUR 106 million, and then at the same time, the negative cash flow impact from working capital was EUR 106 million. This was more a coincidence that the figures were exactly the same. But the underlying driver to the working capital increase, I would say, is significantly, if not almost purely the much higher accounts receivable figure that we have at the end of the quarter. When you look at the volume uptick from Q4 to Q1, it is extremely significant.
Also as part of the very stringent credit control, we have now during this pandemic time period and the daily follow-up that we do with the overdues, I can only confirm that the Q1 end figure also relating to overdues, it was very well under control following the pattern from last year where we were really able to bring overdues down. The increase in accounts receivable was purely relating to the higher delivery volumes. There were not significant changes in payables or in inventories, even though there were, let's say, some smaller deltas there. That may be the first point there on inventories. Then you can also see that we've had some payments on provisions and pensions, et cetera. Here I think still it's valid to say, you remember we have talked about the German restructuring being quite a significant provision payout during 2020.
That was not yet prominent in Q1. We expect the first major payment of about EUR 20 million in Q2, then the full year forecast for that is still the above EUR 50 million that we have talked about before. That's not yet part of these figures here. Overall, then, the cash flow before financing activities was a - EUR 90 million. I think when we talk about the cash flow going forward, also now mirroring only what Roeland already told you, we are expecting at least EUR 100 million of cash inflow this year from working capital. Then you may say, "Well, that's a tough start after a negative Q1." But actually, from my perspective, Q1 purely followed the seasonal pattern.
Now, with expected lower delivery volumes as per our report as well, it's clear that we will be able to have a very stringent working capital control, and I believe that we have all the actions in place to bring home that EUR 100 million at least, as we have foreseen as a full year figure there. A bit on CapEx. You can see here the composition of the EUR 180 million that we currently estimate for the full year. What we have really reduced is the typical maintenance to the lowest level that we could foresee reasonable. We have also made some cuts into the other growth buckets that we've had here. You can see that we are continuing the strategic investment in the Kemi deep mine, almost as foreseen earlier.
We have not lost any speed or momentum in that investment in this plan. I think there is maybe a little bit more to be said around the cash flow predominantly then from the sale of the non-core assets that we have talked about. But that's, of course, more something that we are foreseeing for the remainder of the year, and it's not visible yet in the Q1 cash flow. Okay. Following then this cash flow, we can see the net debt figure on the next page. We are still repeating, I would say here in this graph, just so that it's visible how much the IFRS 16 impact is. You remember that from last year. That was a pure accounting impact, not a cash impact as such, and it's not visible in the pre-2019 figures.
Just still visually here, remind us of that, also showing that we have really kept on track and reduced the debt during the last years. I would then say, just looking forward, still repeating that I think these working capital reductions are well underway. In addition to that, Roeland has spoken to the important support that we could get from governments in terms of subsidies or support in case we need to idle our capacity on a temporary basis or have some sort of other measures that relate, maybe short-term work, for example. All of these have been planned, but also I would say a very long list of other responses from the cost side. I think this is the way now to react and make sure that our cash preservation is the highest priority during these uncertain times.
Finally, I think my final page is then on the debt maturity. So there first, just a confirmation. We repaid the convertible bond of EUR 250 million in February, but we have taken a lot of other actions as well that I would like to briefly mention. One of them is a refinancing of a EUR 120 million pension loan that we completed during the first quarter. That is obviously significant because the maturity of the new loan is 10 years. With the refinancing, we were able to bring forward maturities of EUR 80 million that we would have had in the next two years. This was one good step that we have taken in this time period. We have also, just from an operational perspective, decided that we want to have a clearly higher cash balance. You can see that already in our Q1 figures.
That is also one of those measures that we have taken based on the COVID-19 situation. Finally, I still wanted to comment the commercial paper market in Finland. Some of you are more familiar with that and might know that the market has been rather sluggish following the pandemic situation. From our perspective, we have still been active in this market. Since really the outbreak also started to impact the markets in Europe, we have been able to issue more than EUR 80 million of new papers. Typically, you know that these are shorter durations, typically between one and three months. I think it just shows that the market is still open and kind of remains one of the tools that we have in our funding box.
You see here as well our maturity profile compared with some of the profiles from previous years. I think we have a clear improvement here, which is also a very good position to be in during these times. With that said, thank you, and Roeland, back to you.
Thanks, Pia. That brings us to the outlook for the second quarter. The preventative measures and lockdown related to COVID-19 pandemic are expected to have a significant impact on the stainless steel industry during 2020. By the way, not only the stainless industry, but the industry in general. As a result of the lower industrial production and diminishing consumer spending we are expecting, demand for stainless steel is expected to decline from the first quarter. We expect our stainless steel deliveries in all business areas to decline by depending on the area to 10%-20% compared to the first quarter of 2020. Given the uncertainty caused by the COVID-19 pandemic, we will not give quarterly guidance on adjusted EBITDA until further notice. With that, I hand back to Reeta.
All right. Thank you, Roeland. Operator, I think we are now ready for the Q&A.
Thank you very much. As a reminder to all, to ask a question over the phone today, just press star, then one on your telephone keypad and wait for your name to be announced. You can cancel the request by pressing the hash key. Once again, star then one if you'd like to ask a question over the phone today. The first question on the line comes from the line of Seth Rosenfeld from Exane BNP. Please go ahead.
Good afternoon. Thank you for taking my questions today. If I may, I have a few with regards to outlook for demand and product mix. If I can address one to the new CEO, please. With regards to demand as we go into Q2, can you give us a bit of color in terms of how much order intake has already fallen in April, and whether or not certain regions are out or underperforming others? I note that your guidance for shipments down 10%-20% appears to be better than what we heard from your peer, Aperam, this morning, guiding to max down 25%. Any sense on your end what could be benefiting Outokumpu? Should we expect perhaps a degradation of mix in Q2 to contribute to that volume boost? I'll start there, please. If I can please come back for the question to Heikki later. Thank you.
Yeah. We had a decent first quarter in line with the volume indications we are giving, and we still have an open order book, or let's say orders in handbook , it is better to avoid any misunderstanding. An orders in handbook that will get us to the volume in that range of -10% to -20%. What benefits Outokumpu over the competitors if they guide lower, I cannot tell you. I do not know why they guided lower than we do. I know that our guidance is what it is. On the mix, no, we do not see a further deterioration compared to Q1. The shipyards in the Far East are going back slowly. I do not expect some whip back into the old mix, but definitely not further deterioration.
That is great. Thank you very much. If I can address a question to the incoming CEO, Heikki. First, congratulations on the new role. I think that investors' number one concern with Outokumpu today remains the balance sheet. Can you please share your own personal thoughts on the state of Outokumpu's balance sheet and liquidity today? Are you comfortable with where things stand going into this unprecedented period of market volatility? Or do you believe that more structural measures might be needed? Thank you very much.
Thanks for the congratulations and thanks for the questions. I think overall, in terms of, let's say, more specific plans on how we are going to move forward, I will address those more specifically when we come back in the future quarters. I will go into more detail, in the next sessions. Just generally, as Roeland said, the Vision 2020 that the company has been working on, I think sets the company in a relatively good position as we go into COVID-19. It will, of course, remain to be seen what the next months bring in terms of government restrictions and so forth. But, I do believe that the company is in relatively good position as Roeland already alluded to.
Okay. Thank you very much.
Thank you very much. The next question today comes from the line of Alain Gabriel from Morgan Stanley. Please go ahead.
Yes. Thank you, everyone. Just one follow-up question on Seth's question on Q2. Are you able to qualitatively give us some indication? Are you seeing any green shoots in any of your sub-segments from your end markets? That's one, and the second question is on ferrochrome. Have you seen any increased demand on your product given the outages in South Africa? How would you assess the current state of the ferrochrome market? Thank you.
Okay. The problem with your question on green shoots is that we haven't seen yet the brown shoots. It has been very much, in April, business as usual. As I said, our order book has been filling normally as well. If I look a bit further out, then not surprisingly, we see a slowdown on order intake from the automotive sector. We are expecting that there will be some pressure as well from oil and gas. The good news is that oil and gas is a very small part of our portfolio, and even automotive is not determining large part of the portfolio. You know we have a very well dispersed and balanced portfolio of products as well as end segments. It's not as if these two sectors will have a disproportionate effect on our shipments. On ferrochrome, we see, let's say, normal-ish demand on ferrochrome.
Of course, there is less melting going on around the world of stainless steel, and as a result, the overall demand will be down somewhat. The shutdowns in South Africa have some impact, but don't forget that at the same time, there have been very large amounts of chrome ore sent to China, which can be melted there as well. So altogether, I would say it's a decent market. You see that in the pricing for the quarter, which was set at $1.14, so up from the first quarter. But there is, of course, as everywhere, caution about where it develops from here.
Thank you.
Thank you very much. The next question today comes from the line of Alan Spence from Jefferies. Please go ahead.
Hi. Thanks for taki ng my questions. I have a few, so sorry for kind of bouncing around here. The first on ferrochrome. A good quarter on the cost side. You noted some lower maintenance costs. Are those something that will return in the second quarter, or is that more structural? On CapEx, you mentioned that the reduction will not impact the investment into the Kemi Deep project, but you did not mention the Fenix investment there. Is there any potential delay to when Fenix will ramp up? And lastly, to on-
Delay on what?
Is there any delay to the Fenix investment, when that will be ramping up in the U.S.?
Okay.
The last one on the working capital reduction. You sound quite confident on the EUR 100 million, and obviously visibility is quite low for the second half of the year. Should we assume, you might be able to achieve a large amount of that reduction in Q2 alone?
All right. I will take the ferrochrome, Alan, and on question, then Pia can talk to the CapEx and working capital. On ferrochrome, the maintenance difference, of course, is quarter-on-quarter as well. It is a bridge effect. So, it is normal, seasonal. We expect them to be the same for Q2. You will not see a recurrence. A lot of the rest of the cost efficiencies come from things as better coke pricing. We have been able to secure better coke contracts. The efficiency in the operations, specific electricity consumption, et cetera. So those are part of our productivity numbers that I gave you, the 5%, that is clearly in ferrochrome as well. Pia?
Thank you. Your second question was on the Fenix investment, and I think that the cuts of CapEx cash out this year are to some extent, impacting also those projects or that project. So you understand that predominantly we are trying to operate also through timing and scheduling, both of the assets but also of the payments. So, I think we are still assessing at this point how much of a delay we could expect. But I would say with this first cut in CapEx, there is a fair chance of some delay. If we then go for further cuts, then the delay could be more significant. So at this point, obviously, we are talking about months, not more than that. Then working capital, I think your question was first of all, what could we expect in Q2? Then maybe some more qualitative comments on that.
If we look at our plans right now, with lower deliveries expected during the quarter and just the significance of the accounts receivable increase during Q1, I think that gives us a lot of tools to change the tide already during Q2. Whether that would be really enough to mitigate what was built up during Q1, I think that is too much to say at this point, but at least being able to turn the direction, that is clearly possible and within our current plans. How to react to the uncertainty and the situation going forward, I think the reason for being so confident on this is that it is so well anchored.
This is maybe a bit of a Swedish word, sorry for that, but it is very well aligned with the S&OP planning that now, as the situation is uncertain, even takes place on a daily level, just realignment, reiteration, replanning as need be. That gives us a very profound grip of the situation.
Okay. Thank you. If I could just have one follow-up question on the debt maturity profile. Perhaps you could, Pia, talk about where you would like to see that in maybe 12 months. You do have quite a bit of liquidity, and you mentioned no real repayments till 2022, but that liquidity is currently scheduled to expire in 2022 and 2023. It has quite substantial repayments. Where would you like to see that profile shift?
Yeah. Well, I would say that, since I started about a year ago, we have already significantly expanded the maturity profile, going from very short-term funding into the four-year, EUR 400 million term loan, for example. I think that is the direction I would like to see going forward, that we are able to gradually and in a controlled way, expanding the weighted average maturities. We are still, from my perspective, when I look at this, we are still with rather high stacks per the year where we have the maturities. One example is now the EUR 120 million pension loan that is now for 10 years. That is, of course, now a very long, long part of this. Further extensions are needed, but we also just need to find the right balance with the pricing and the yields expected for that.
This environment right now, I think is not the easiest one in terms of expanding the maturity profile, and this may lead to a longer time period needed in order to get there, but the target is clearly there to still take, I would say, two or three more steps in that direction to really prolong similarly as we were able to prolong last summer.
Okay. Thank you very much. And Roeland, best of luck in your new position.
Thank you so much.
Thank you very much. The next question today comes from the line of Harri Taittonen from Nordea. Please go ahead.
Yes, good afternoon, Roeland, Heikki, and Pia. I want a sort of clarification still on the average pricing. You mentioned that most of the price erosion was related to price mix, but what sort of changes were on a like for like basis and particularly in the contract prices for sort of the customer contract business? What are you seeing there?
Negligible. The contracts were rollover, almost to the door. Pricing was probably down something like $20 on average in the U.S. and something similar, EUR 10, EUR 15 million on like- for- like in Europe. So very little effect from real pricing. It really is the mix. As well, if you look at the relative mix, of course, if you have an increase in volume like we had from Q4 to Q1, then that was all predominantly in the, let's say, more standard qualities. So you have a higher representation of standards at lower margin anyway than you would have from the higher margin side.
Okay. Just another question on the cost side. You talked about the improved or increased flexibility in the fixed cost side if need be. But what are you seeing on the sort of variable cost, input cost levels and the sort of the scrap collection and scrap ratio in the near term compared to Q1?
Yeah. So, scrap ratios, scrap input has been high. We're running in, again, like- for- like where we have the, let's say, the Outokumpu stainless steel, we're running at over 90% scrap. We still don't see a change in that. Of course, pricing is all dependent on the market at the moment. For now, the scrap pricing for Q2 is similar to the scrap pricing for Q1.
Right. Good. Maybe just one more. You mentioned that working with the EU is not an automatic thing. Just wondering what, in the critical path, when should we see the proposals go to commissions or, and the member states? So what are the critical dates in order for the quotas to be adjusted on time for the next period?
Exact dates for steps I don't have for you.
The discussion with Commissioner Hogan that we had earlier this year, led to him starting the review earlier. The review was planned for June. He now started already in February, and that will mean that instead of coming out in October with proposals to the member states, we now would expect them to come out in June. Of course, one reason why there are no fixed dates is that no one knows who will be in what office when and how. That does throw a spanner in the works. But we are in touch with the Commission, with the working groups directly and through EUROFER, and we are pushing for quick resolution.
Okay. Thank you very much.
Thank you very much. As a reminder, to ask a question, star then one on your telephone keypad. The next question today comes from line of Bastian Synagowitz from Deutsche Bank. Please go ahead.
Yes, good afternoon. I have a couple of questions left, and my first one is actually one for Heikki as well. Heikki, you seem to be pretty happy with what you're taking over, just from your comments. Are there any potentially larger strategic state changes you aim to be looking at? Are you, for example, any adjustments to the portfolio, just thinking about assets like Americas?
Thank you for your question. A big question, obviously. The strategy that we have in place, I think, is very sound. I've been on the board when we approved it, and if there are any new thoughts I have, then we'll come back to that later. But as I said, I think the strategy is sound as it's been presented to you.
Okay. Thank you. Then my second question is probably one for Pia. If I look at this waterfall chart on Americas, it seems like there has been a pretty large impact from other costs, almost EUR 10 million. Is this the FX impact you've been referring to, or is there anything else in there?
No. The FX impact came in that bucket other, so the FX impact was negative, but it was in the bucket other. The cost is really more related to the increased level of production that we have seen.
Okay. The FX impact was actually in this other bucket. Okay. That was actually [crosstalk].
It was in the other, yes.
Yeah. Got it. Okay. Negative, right. Exactly. Okay, perfect. My last question is just on your guidance. So far you've obviously been only giving directional guidance, and it's probably fair to say that in this market, anyone would have expected you to guide in principle down for the second quarter, just simply given what's going on out there, even though your trends seem to be slightly better than for others. Now, the fact that you are not guiding down and withdraw even from giving any directional guidance, despite the fact that your volume volatility seems to be probably way less than yours or than your peers, almost suggests that you think that your numbers may be potentially flat to up, but you understandably may not have the conviction to really write that on paper or basically don't want to mislead the market. Is that observation fair?
Because otherwise I do not really understand why you would not at least guide directional like you did in the past, like all of your peers obviously are still doing.
Well, they do not all. If you follow the markets well enough, they do not give numerical guidance. Of course, if your volume is down 10%-20%, your EBITDA will be down. There is no way we can jack up our margins by 20% in this market. So, the not wanting to give guidance is more a reflection of the uncertainty, and as well to be more qualitative on the underlying factors. If you just shout out that it will be lower, then it can be anything too negative. Whereas if we give you more handle on what is the underlying reasons, for instance, a reasonably acceptable diminishing of volumes. We talked about cost and pricing roll-off, et cetera, to give you a better framing of where it would go.
Okay. That is actually very insightful and helpful. I would have thought that your previous style of guidance would have still worked out in that sense though, so I was just a little bit confused about that, but that makes all perfect sense. Okay. Thanks so much for your help.
You are welcome.
Thank you very much. Once again, it's star one if you'd like to ask a question over the phone today. Thank you very much. No further questions coming through the phone at this stage. Please continue.
All right. Thank you. If there are no further questions on the line, I think it's time to conclude this call. Just reminding you that the second quarter results will be published on August 7. That's one way off still. I am sure we will be meeting some of you or many of you virtually before that, if not in person. Now, thank you, all. Stay safe and healthy, and goodbye.
Thank you very much for joining us for today. Thanks for participating. You may all disconnect.