Street Calls of the Week
Eregli Demir Celik, a leading steel producer with a market capitalization of $4.6 billion, reported robust financial results for the second quarter of 2025. The company achieved a revenue of $2.5 billion and a net profit of $46 million. According to InvestingPro data, the stock responded positively, climbing 7.08% this week, continuing its strong momentum with a 13.85% gain year-to-date. The company’s current valuation appears undervalued based on InvestingPro’s Fair Value analysis. This surge reflects investor confidence in the company’s strategic investments and operational resilience, supported by a robust Financial Health Score of "GOOD."
Key Takeaways
- Revenue reached $2.5 billion, with 75% from domestic sales.
- Stock price increased by 7.44%, closing at $28.15.
- New investments in coke batteries and blast furnaces aim to boost efficiency.
- Temporary decline in steel capacity utilization due to maintenance.
- Conservative outlook on steel prices and raw material costs.
Company Performance
Eregli Demir Celik demonstrated strong performance in Q2 2025, with significant revenue growth driven by domestic sales, accounting for 75% of total revenue. The company’s strategic investments in new technologies and facilities are expected to enhance operational efficiency and reduce raw material usage, positioning it well for future growth.
Financial Highlights
- Revenue: $2.5 billion
- EBITDA: $270 million
- Net Profit: $46 million
- EBITDA per ton revised to $70/ton
Outlook & Guidance
The company maintains a conservative outlook on steel prices and raw material costs. It plans a capital expenditure of $800-850 million in 2025, potentially reaching $1 billion with additional investments in a gold mine. By 2030, Eregli Demir Celik aims to increase its steel capacity to 30 million tonnes, with a total CapEx of $3.2 billion. The company’s strong financial position is evidenced by its Altman Z-Score of 7.43, as reported by InvestingPro, indicating robust financial health and low bankruptcy risk. For detailed analysis and future growth projections, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
Executive Commentary
Edirionne Erkin, Investor Relations Director, emphasized the company’s cautious approach: "We always use the worst-case scenario in our projections." This conservative stance is reflected in the company’s strategic planning and investment decisions. Erkin also noted the expected efficiency gains from new investments: "We expect to see efficiency increase and cost reduction from our new investments."
Risks and Challenges
- Temporary reduction in crude steel capacity utilization due to maintenance.
- Decrease in domestic steel consumption by 3%.
- Potential volatility in raw material prices.
- Macroeconomic pressures impacting the steel market.
- Dependence on European Union export markets amid changing trade policies.
Q&A
During the earnings call, analysts inquired about the expected contribution of new investments, which are projected to add $40 million in EBITDA. Questions also focused on the company’s working capital, which is expected to see a slight decrease in the upcoming quarter, and its leverage, which is anticipated to remain below 3.3x.
Full transcript - Eregli Demir Celik-EXCH (EREGL) Q2 2025:
Gaeli, Chorus Call Operator: Ladies and gentlemen, thank you for standing by. I am Gaeli, your Chorus Call operator. Welcome and thank you for joining the Edema Conference Call and Live Webcast to present and discuss the Second Quarter twenty twenty five Financial Results. All participants will be in listen only mode and the conference is being recorded. The presentation will be followed by a question and answer session.
Please note, Ereguille de Merceli Fabrikalaritas, Erdemir, may, when necessary, make written or verbal announcements about forward looking information, expectation, estimates, targets, assessments and opinions. Erdermere has made the necessary arrangements about the amounts and results of such information through its disclosure policy and has shared such policy with the public through the Erdermere 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 the 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. Edirionne Erkin, Investor Relations Director. Ms. Erkin, you may now proceed.
Edirionne Erkin, Investor Relations Director, Erdemir: Thank you very much, Kelly. Good afternoon, everyone. Welcome to our conference call and webcast of Ademir for the 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 and A session, as usual.
So I’ll start with Page three. 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 commodity prices. On Page three, you will see the prices of fuel related commodities and HRCs.
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 tonne. At the beginning of the period, prices were supported by gradually increasing fuel 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 tonne in 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 tonne, supported by China’s announced stimulus measures and strong trade volumes. In the second quarter, Turkey’s imported scrap market showed generally weak performance due to cautious purchasing behavior by producers and strong supply pressure. Scrap prices fluctuate between $325 and $379 per tonne.
On the bottom right, we show HRT prices in Black Sea, China and South Europe. In Q2 twenty twenty five, the global HRC market experienced a downward trend amid 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 four, you will see the production, consumption, exports and imports figures of Turkish steel markets for the 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 7,700,000 tonnes. Imports also increased by 13% to 9,300,000 tonnes 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 US 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 six, you will see the summary of our six month results.
We achieved $2,500,000,000 revenue. Also, we generated $270,000,000 EBITDA and $46,000,000 net profit. On Page seven, you will see the operational indicators of our company. As we announced in the second quarter, we commissioned Agamir’s coke battery and the Stimmer’s 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 eighth holiday. So we expect total sales to be close to 8,000,000 tonnes in 2025. So let’s take a look at the segmental breakdown of domestic sales and export volumes in Page eight.
As you can see from the pie chart, there has been a slight change between factors when we compare to last year’s breakdown. There has been a transition from general manufacturing to pipeline profile and distribution chains on a percentage basis. We see similar changes between factors in the wall products, although its share in total sales is relatively small. We achieved an export volume of 483,000 tonnes 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 markets, we are also increasing the export share due to the attractive demand and good prices in the export markets. On Page nine, 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 six 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 $217,000,000 EBITDA and $46,000,000 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 NOK 129,000,000 in six months. The other major item in this chart was financial expenses of $2,017,000,000 dollars After other expenses, net profit was $46,000,000 The inventory provision release of $10,000,000 is not included in EBITDA calculation since it was a one off adjustment. While calculating the net profit, 10,000,000 of
Jason, Analyst, Bank of America: the
Edirionne Erkin, Investor Relations Director, Erdemir: consolidation 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 expansion of the trade payables maturity. Also, we spent around $242,000,000 to investment activities in six 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 percent in Q2 with the support of $950,000,000 Eurobond issuance. When we look at 2025, our net working capital decreased due to the expansion of the trade payables maturity. Despite high capital expenditures, we succeed to keep net debt EBITDA below three, three multiplier in the first half. We expect to keep net debt 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 costs decreased in raw material baskets, which is in line with the trends in raw material baskets raw material markets. Page 13 represents the historical capital expenditure. Total CapEx was $1,100,000,000 in 2024 and $521,000,000 in the 2025. As I mentioned earlier, the new first blast furnace in Istanbul and number four coke battery in Agenya was commissioned in the second quarter of this year.
Other than these investments such as palletizing plants, solar power plants and energy efficiency investments are included in the CapEx figure of this year. We expect that CapEx will be around $800,000,008.00 $6,000,000 as we shared earlier in 2025 with maintenance and other ongoing investments. So maintenance will be around $58,000,000 per year as usual. As we announced earlier, if the reserve in the gold mine is significant, it could rise up to $1,000,000,000 As you already know, we announced our next year roadmap last year in January. We plan to spend $3,200,000,000 by the 2030.
7080% of that amount will be sourced externally, utilizing easily accessible financial resources for the clean transformation. Agilent steel capacity will reach 30,000,000 tonnes by 02/1930. Now we may continue with Q and A session. We will be delighted to answer your questions. Thank you for listening.
Gaeli, Chorus Call Operator: Session. The first question is from the line of Verklaf Jason with Bank of America. Please go ahead.
Jason, Analyst, Bank of America: Afternoon, Adeel. Thanks for the presentation. Very thorough, as always. Look, two quick ones for 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?
Edirionne Erkin, Investor Relations Director, Erdemir: Hello, Jason. So I’ll start with the first question. So we are expecting efficiency increase and cost reduction from our new investments. So they 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 see the fully the full contribution to the EBITDA. So we will benefit two things from this investment, both efficiency increase and cost reduction. So we will use less raw material, basically.
Jason, Analyst, Bank of America: Okay.
Edirionne Erkin, Investor Relations Director, Erdemir: 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 q three. We hope to get that in q three. Of course, we don’t have the official report, but our cash management has some kind of assumption for the reserve, of course.
And we have the projected cost numbers in our projections.
Jason, Analyst, Bank of America: Just a little comment. I mean, 800,000,000 to $1,000,000,000 normally would be quite a large gold mine. Yes?
Edirionne Erkin, Investor Relations Director, Erdemir: Yes. Yeah. So right now, unfortunately, I don’t have the exact numbers, but soon we have to announce the the real report, the exact numbers.
Jason, Analyst, Bank of America: You you may need to change the name of the company.
Edirionne Erkin, Investor Relations Director, Erdemir: We’ll see.
Jason, Analyst, Bank of America: Thank you very much.
Edirionne Erkin, Investor Relations Director, Erdemir: Thank you.
Gaeli, Chorus Call Operator: The next question is from the line of Ivanka with MetLife. Please go ahead.
Edirionne Erkin, Investor Relations Director, Erdemir: Hello. Thank you for taking my questions. So the first one would be on production. How much production do you expect for the entire year? And what was you and sorry if I missed it, the decline in Q2?
Eika, so we expect to have the production figure around 8,000,000 tonnes for the whole year. And we also expect to see a sales figure close to 8,000,000 tonnes. So because of the transition from the old like coal battery and blast furnace to the new one, so we uncommissioned the old plant 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 investment.
Understood. And in terms of CapEx, and then, yes, I just to wrap up and make sure that I understand. So total CapEx cash spent was EUR $210,000,000 in the first half. And whilst you reported €521,000,000 CapEx in the presentation. So the difference of €310,000,000 was accrued and basically reflected in higher payables.
Is it correct? So Eita, in the first six months, we incurred EUR $521,000,000 in capital expenditures of capital. And this figure is an accrual. So the accrual includes two significant investments we capitalized in the second quarter. So the NOK $521,000,000 accrual includes $350,000,000 in advance paid in previous years and SEK $2.00 6,000,000 in cash payments made in the first half of this year.
So because capitalization was made in the second quarter, there was no advanced 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 to understand now payables, I mean, how should I expect payables to develop into q three. Will they come down, or what is your shall we see a CapEx?
I mean, now in terms of CapEx in cash terms, I got 200,000,000. What am I going to see by the year end? 800,000,000 or less than that? I’m 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 eight hundred million eight fifty million dollars And if the gold reserve is significant, it will rise up to $1,000,000,000 So at the end of the year, the cash amount, the cash payment for investment activities And the total CapEx, the equivalent one, will be quite similar, so around these numbers.
So the advances that we mentioned will be 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 heard 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 tonne as EBITDA And per tonne for the whole given that steel prices are still under pressure, and where is incremental EBITDA per ton coming from? Do do you expect raw materials to come down?
And and so what your iron ore and coal? Actually, 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
Gaeli, Chorus Call Operator: next question is from the line of Maniwa with Zananda with UBS. Please go ahead.
Maniwa, Analyst, UBS: Sure. Thank you for taking my question. Just if I can come back quickly to the $40 per can. I get it’s unofficial yet, but then is that for the whole group, or is there a specific tonnage
Gaeli, Chorus Call Operator: Mister Mariva, I’m sorry to interrupt. This is this is the operator. I I’m not sure that management can hear you.
Edirionne Erkin, Investor Relations Director, Erdemir: Can you please speak a little
Gaeli, Chorus Call Operator: closer to your microphone, please?
Maniwa, Analyst, UBS: Okay. Can you can you hear me?
Gaeli, Chorus Call Operator: I think it’s better now. Thank you. Please proceed.
Maniwa, Analyst, UBS: Cool. Thank you. Sorry about that. Thank you for taking my question. Just a quick one.
Just a 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, the specifics around that? And then, the second question I have is 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?
Edirionne Erkin, Investor Relations Director, Erdemir: Fernando. 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 off 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 loss was applied in the six 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 cost, it has no impact on the gross profit.
Maniwa, Analyst, UBS: What just one more question. Are you are you able to tell us what what the one off was?
Edirionne Erkin, Investor Relations Director, Erdemir: It was related to commissioning our coal 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 convert it.
Gaeli, Chorus Call Operator: The next question is from the line of Bistrova Eugenia with Barclays.
Eugenia Bistrova, Analyst, 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, 400,000,000. 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?
Edirionne Erkin, Investor Relations Director, Erdemir: Erdenia, so I’ll start from 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, exempt from Section two thirty two, when they say that everyone will be part of everyone will be implied that back in February, actually, this is more competitive market. It means that it’s more competitive for Turkish steel producer because now everyone has a trade equal condition 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 two thirty two. So most probably, we will increase our exports to U.
S. During the time. But right now, the main export market is European Union. Net working capital was your first question, if I’m not wrong. So, yes, our net working capital decreased due to the expansion of the trade payables maturity, which means it was around thirty days, and now it’s almost double, almost sixty days.
So of course, I mean, that helps. But considering that q three 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, Ergenia?
Eugenia Bistrova, Analyst, Barclays: So does this mean that in q three in the cash flow statement, we will see, like, an outflow for working capital?
Edirionne Erkin, Investor Relations Director, Erdemir: No. Inflow. There will be inflow.
Eugenia Bistrova, Analyst, Barclays: And what will 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.
Edirionne Erkin, Investor Relations Director, Erdemir: 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, expansion of the trade payables maturity.
So from now on, it will be quite stable. Of course, there will be slight decrease in Q3, but it won’t change dramatically from quarter to quarter.
Gaeli, Chorus Call Operator: The next question is from the line of Gustavo Campas with Jefferies.
Gustavo Campas, Analyst, Jefferies: Yes, 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.
Edirionne Erkin, Investor Relations Director, Erdemir: Jeffrey, 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 movements 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 mentioned 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.
Gustavo Campas, Analyst, Jefferies: 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 correct from this time?
Yeah.
Edirionne Erkin, Investor Relations Director, Erdemir: Yeah. Correct. We will achieve this due to cost reduction from our new investments such as flush furnaces and. Correct.
Gustavo Campas, Analyst, Jefferies: And and it it doesn’t assume any improvement on the on the on the steel prices and other commodity tailwinds?
Edirionne Erkin, Investor Relations Director, Erdemir: No. Because we always use the worst case scenario in our projections. So if there will be any increase in the face prices, of course, that’s fine. That’s good. But it doesn’t.
So that’s why we always use the worst case scenarios in our projections.
Gustavo Campas, Analyst, Jefferies: Okay. Understood. Yes, that is very helpful. So overall, you don’t expect an improvement in steel prices. And 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?
Edirionne Erkin, Investor Relations Director, Erdemir: 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 safe prices in our projections, and we took stable raw material prices. But of course, stable means the purchased raw material costs. So the purchased raw material costs will be stable.
That’s how we project it. But the used raw material costs, the cost of sales will be less due to our cost reduction and efficiency increase due to our new investments.
Gustavo Campas, Analyst, Jefferies: 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 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?
Edirionne Erkin, Investor Relations Director, Erdemir: So when you look at the first two quarters, it’s less than three multipliers. So when we said we’re gonna keep it less than 3.3 multipliers, 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 level. But again, the number that I shared of 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.
Gustavo Campas, Analyst, Jefferies: Okay. Yes. And could you remind us your covenant level? Do you have any what’s your incurrence covenant level?
Edirionne Erkin, Investor Relations Director, Erdemir: We have one covenant from Eurobond, which is 3.5 multiplied.
Gustavo Campas, Analyst, Jefferies: And and that’s incurrence. Right?
Edirionne Erkin, Investor Relations Director, Erdemir: Sorry. I couldn’t catch your question.
Gustavo Campas, Analyst, Jefferies: Yes. That is incurrence covenant. Right?
Edirionne Erkin, Investor Relations Director, Erdemir: Like,
Gustavo Campas, Analyst, Jefferies: in in other 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. Okay. Perfect.
Yes. Thanks again for taking my questions. Very helpful.
Edirionne Erkin, Investor Relations Director, Erdemir: You’re welcome.
Gaeli, Chorus Call Operator: Ladies and gentlemen, this concludes our Q and A session. I will now turn the conference over to Ms. Ed Kim for any closing comments. Thank you.
Edirionne Erkin, Investor Relations Director, Erdemir: Thank you very much for joining us. We hope to meet you again in our third quarter call. Have a nice day. Thank you.
Gaeli, Chorus Call Operator: Ladies and gentlemen, the conference has now concluded, and you may disconnect your telephone. Thank you for calling, and have a good afternoon.
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