Investors

MARKET FORECAST

The period from the second half of 2024 to the first six months of 2025 was not an easy one for steelmakers, who were penalised by the cost of energy in Europe and by geopolitical uncertainties in the USA. However, a downturn in margins and volumes was expected and should be absorbed by the end of 2025, leading to a fiscal year 2026 characterised by less uncertainty and better demand. Exceptions to this were India and the Southeast Asia (SEA) and Middle East and North Africa (MENA) regions, which maintained good production volumes and a significant steel consumption, with good lasting economic growth. The market is affected by the uncertainties generated by the US tariff policies as well as by the geopolitical situation in the European Union, where the conflict between Russia and Ukraine has led to considerable trade restrictions. However, expectations for a gradual normalisation could lead to a recovery in demand and consumption in the coming months.

DANIELI PLANTMAKING

Thanks to their good and solid economic results of the past few years, our customers have continued to invest in new plants to reduce carbon emissions and improve the quality and competitiveness of operations, to cope with a less favourable economic cycle. The plant making order book remains satisfactory margin-wise, and diversified in terms of technologies and grades. Moreover, the innovative technologies offered by Danieli - such as the Digimelter and its Q-One, which is progressively replacing conventional EAF power feeding systems, and the direct castingrolling mills for flat (QSP-DUE) and long (MIDA-QLP) products - have increasing success on the international market, so much so that our competitors have abandoned their own technologies to offer products similar to ours.

During this period, we strengthened our presence in the Japanese market and we were awarded a major order by the Swedish company SSAB, and are now finalising a project of the same magnitude and importance with Metinvest Adria, which confirms a strong interest in our endless casting-rolling technological solutions also in the field of quality flat products. The success of the QSP-DUE and MIDA-QLP direct castingrolling mills is tied to the competitiveness of their total cost per ton: CapEx + OpEx + CO₂ tax. With the Energiron direct reduction technology we have had and will have excellent opportunities for projects aimed at replacing existing coal-based blast furnaces with green plants, ready to utilize hydrogen when available in a competitive way. These opportunities are more numerous in Europe than in the USA, where there are fewer blast furnaces.

On the other hand, blast furnaces will continue to be installed in India and in China, where not enough gas is available to replace coal, although utilizing many innovative technologies that can significantly reduce CO₂ emissions. In conclusion, the order backlog is satisfactory thanks not only to the positive trend of the steel market over the last few years but also to the innovative and sophisticated digital technologies that Danieli is making available to producers.

DANIELI STEELMAKING (ABS – Acciaierie Bertoli Safau)

As expected from market trends, the fiscal year 2024-2025 was a complex year for ABS, which held up in terms of volumes but suffered in terms of margins, managing to close the year with improvement but not avoiding a loss.

Despite everything, ABS continued to invest in product innovation, primarily through its ACM research center in Metz, developing technological solutions for new steels with projects aimed at improving product characteristics and reducing their carbon footprint. ABS is committed to reducing Scope 1 and 2 emissions by 30% by 2030 and collaborates with various Italian and European universities, integrating academic and industrial research to improve the sustainability of the steel industry.

ABS has thus expanded the product range of its new Quali Wire Rod Mill (QWRM) for the European market, while worldwide sales have begun for the high-quality products from the new ore grinding balls production plant. This is expected to improve profitability for the new fiscal year which has just begun.

Investments have begun for the new Digital Green Plant furnace, which will increase production with significant improvements in energy consumption, acoustic impact, and a reduction in waste, along with water recovery. This will create a model of sustainable and circular steelmaking.

Although the market downturn might continue for another year, we believe the special steels sector will be able to recover sooner.

GROUP VISION

We have managed the Danieli Group operations with care and prudence, carrying on the spiritual legacy of the late President Benedetti to keep the company competitive and resilient in the years to come. In this phase, the market is showing a demand for highly complex large-scale plants, where the closing or not of an order entails very different, strategic management decision. The negotiations currently being finalised point to a good order intake also for the fiscal year 2025-26, which will enable the company to maintain a high order portfolio. Our commitment to innovation remains our top priority, with the aim of reducing plant OpEx and achieving net-zero carbon emissions to maintain a front-runner position in both plantmaking and steelmaking sectors.

Based on these considerations, the forecast for the 2025-2026 financial year is:

• Revenue 4 – 4.2 billion euro
• EBITDA 430 – 450 billion euro
• NFP (adj) stable at 700 – 800 million euro
• Order backlog 6 – 6.2 billion euro

Furthermore, during this period we will invest approximately 300-350 million Euro to develop new initiatives in the steel sector and participate in joint ventures with some of our customers, making strategic investments in Italy to improve the country’s competitiveness.

We believe that the emissions reduction target promoted by COP29 in Baku should be the goal to aim for, thanks to the innovations developed today, but also accompanied by coherent and coordinated political strategies between states, allowing for a reasonable economic balance.

Danieli Group excels not only in technology but also in its respect for the Environmental, Social and Governance principles (ESG), which must be transformed into levers of sustainable competitiveness for us and our customers along a path that will lead them to produce steel with zero emissions.

SOCIAL ASPECTS, EDUCATION / EMPLOYMENT

Danieli aims for sustainable development in all its activities and in this sense continues its social commitment to support the community:

• The Zerotredici Educational Hub continues its journey, appreciated by students and families for the quality of the education, focus on soft skills, and teamwork approach.
• The Malignani Istituto Tecnico Superiore (MITS) in Udine, Italy, is confirmed to be one of the best national technical institutes achieving excellent results in student preparation.
• The new Corte Villalta multipurpose center (formerly Dormisch) in Udine has been completed, now housing the new modern headquarters of MITS with cutting-edge laboratories. Also ready is the new sports complex serving the Corte delle Fucine hotel in Buttrio. The headquarters of Telefriuli, a local media channel, is currently under renovation in Udine, with larger, multipurpose studios. The aim is to complete these investments by the end of 2025.
• We have carried out multiple solidarity and charity actions in Italy, China, Thailand, and Myanmar in response to situations of need, in addition to supporting sports, cultural, and social associations in the areas where we operate. — We continue, with great satisfaction, to sponsor the Italian Paralympic swimming team, which remains among the top in the world for its commitment, merit, and achievements.
• The Group’s focus also extends to the promotion of the arts, aiming to safeguard and enhance regional cultural heritage.

We thank our shareholders, who reinvest more than 85% of profits back into the company as self-financing. This ongoing commitment is a clear sign of their trust in the Danieli Team, trust we honor with dedication and professionalism. Danieli shares have confirmed their value as a sound long term investment. On behalf of the Board of Directors and shareholders, we extend special thanks to the Danieli Group Team, whose passion and professionalism are key to achieving our objectives and honoring our motto: “Danieli – the reliable and innovative partner, always a step ahead in CapEx and OpEx.”

Finally, last but not least, we express our gratitude to all colleagues for embracing the cultural change demanded by today’s technological and social challenges – change that is essential for maintaining competitiveness and market share in a complex and constantly evolving global economy.

Alessandro Brussi