Investors

MARKET FORECAST

The second half of 2023 and the first six months of 2024 were not easy for steelmakers in Europe and in the USA, even if a downturn in margins and volumes was expected a recurring phenomenon after the boom periods of recent years. Exceptions to this were India, and the SEA and MENA regions, which maintained good volumes and significant steel consumption with a positive economic growth.

DANIELI PLANTMAKING

Thanks to strong results of the past few years our customers have continued to invest in new plants that will reduce CO2 emissions and improve the quality and competitiveness of operations, to cope with less favorable economic cycles. Our order book therefore remains satisfactory margin-wise, and diversified both in terms of quantity and quality.

The innovative technologies offered by Danieli - such as the Digimelter featuring Q-One that is progressively replacing conventional EAF power feeding systems, and the direct casting-rolling MIDA minimills for flat (QSP-DUE) and long (QLP-DUE) products - have growing success on the international market, so much so that our competitors have abandoned their own technologies to offer products similar to ours.

The success of the direct casting-rolling technology included in the MIDA QSP-DUE and MIDA QLP-DUE minimills is tied to the competitiveness of their total cost per ton: CapEx + OpEx + CO2 tax.

With the Energiron direct reduction process technology we will continue to have excellent opportunities for projects aimed at replacing polluting 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 now fewer blast furnaces.

On the contrary, blast furnaces will continue to be installed in India and China, where not enough gas is available to replace coal, although utilizing new technologies that can significantly reduce CO2 emissions.

In conclusion, the order backlog is satisfactory thanks to the positive steel market trend of the last two or three years, as well as to the innovative digital technologies that Danieli has made available to steelmakers.

ACCIAIERIE BERTOLI SAFAU -ABS STEELMAKING

As expected, the financial year 2023-2024 was complex for ABS, which maintained good volumes but suffered in terms of margins and therefore managed to close the financial year with a breakeven result.

ABS has continued promoting the products of the new Quali Wire Rod Mill (QWRM) on the European market, and the sale of products from the new high-quality ore grinding balls plant have started worldwide with consequent prospective improvement in profitability for the new financial year.

A new investment plan worth 650 million euro has been launched, targeting a production capacity of 2.3 million tons per year. Specifically, 575 million euro will be used for ESG (Environmental, Social and Governance) projects, to reduce CO2 emissions –whose levels are already virtuous– and to promote circular economy.

Further investments are planned in upstream raw materials collection (scrap), and downstream service centers.

We think that the market downturn could continue for the next two years or so, with the special steels sector able to recover sooner.

(We think that the special steel sector will show some growth sooner than the overall market during the next two years).

GROUP VISION

The fifth edition Danieli Innovaction Meeting –DIM 2024– was hosted in May at the Danieli Research Center, where ideas take shape. The event was attended by 730 customers and other industry professionals from around the world who met to learn about and share views on new Danieli technologies to decarbonize steel production.

Innovation is our priority, with the aim of reducing plant OpEx and achieving net-zero carbon emissions, to maintain front-runner positions in both plantmaking and steelmaking sectors.

Based on these considerations, the forecast for the 2024-2025 financial year is:

• Revenue 4 – 4.2 billion euro
• EBITDA 380 – 420 billion euro
• NFP stable at 1.5 – 1.6 billion euro
• Order backlog 6 – 6.2 billion euro

We will also invest additional 300-400 million euro to develop new initiatives in the steelmaking sector by participating in projects that are strategic for Italy and its competitiveness, through joint ventures with some of our customers.

SOCIAL ASPECTS, EDUCATION / EMPLOYMENT

Danieli aims at a sustainable development of all its businesses and continues with a social commitment to support the local community:

• The Educational Hub Zerotredici pursues its activities that are appreciated by students and families for the high quality of education, with focus on soft skills and teamwork.
• The MITS (Malignani Higher Technical Institute) of Udine, Italy, has obtained excellent results in preparing students, establishing itself as one of the top national higher technical institutes. 
• Facilities under construction include the new multifunctional center Corte Villalta (former Dormisch) that will also house the new premises of MITS and its modern laboratories in Udine; the new sport complex of the Corte delle Fucine Hotel in Buttrio; and the renovated headquarters of Telefriuli featuring larger and multifunctional broadcasting studios, also in Udine. Our target is to have these projects completed by 2025. 
• We have carried out several solidarity and charity actions in China, Thailand, and Turkey to address situations of need and hardship. 
• It is with great satisfaction that we continue to sponsor the Italian Paralympic Swimming Team which remains one of the best in the world, thanks to its commitment, values, and results.

We believe that the emission reduction target promoted at COP28 in Dubai should be a goal to aim for thanks to the innovations present today, but that it should also be accompanied by consistent and coordinated political strategies among states to allow for a reasonable economic balance.

Before concluding, we wish to thank our shareholders who continue to invest more than 85% of our profits back into the company as self-financing. This is perceived as an expression of the shareholders’ trust and esteem for the Danieli Team, which we intend to honor to the best of our abilities.

It is a trust which, in any case, has been repaid by the fact that the acquisition of Danieli shares has been confirmed to be a good, long-term investment.

On behalf of the Board of Directors and of the shareholders, special thanks go to the Danieli Group Team who, with passion and professionalism, are strongly committed to achieving the agreed objectives for our company’s continuing improvement, honoring the motto “Danieli, the reliable and innovative partner to be a step ahead in CapEx and OpEx”, for the satisfaction of our customers and business partners. And last, but not least, we express thanks for their efforts in bringing about the cultural change that today’s technological and social trends call for, which is essential to maintaining competitiveness and market shares in a highly complex and constantly evolving global economy.

Alessandro Brussi