Patrick Mann

Patrick Mann inquired whether the rationalization of 600,000 tonnes of capacity alters the company's net paper integration level and how this factors into optimization strategy. He also asked if the 'Quick Win' projects are part of the previously mentioned bucket of at least $400 million in operational improvements or if they are a separate initiative.

Answer

CFO Ken Bowles confirmed the 'Quick Win' projects are a component of the second $400 million operational improvement target, serving as a building block toward that goal. He also stated that the capacity closures do improve the company's integration, raising it from approximately 86% to 89% for containerboard and from 67% to 71% for paperboard.

Patrick Mann from Bank of America sought clarification on how the 'value over volume' strategy would manifest: as improving margins on the same business base, or as a smaller, more profitable business resulting from divestments and restructuring.

Answer

CEO Tony Smurfit responded that it involves 'a lot of everything' mentioned. The strategy includes facility rationalization but is primarily about offering customers value-added solutions beyond a simple brown box, tailored to their specific needs in areas like logistics or sustainability. He emphasized this is the core Smurfit Kappa ethos that will unlock significant commercial synergies.

Patrick Mann from Bank of America questioned the change in the share buyback program's structure, from a multi-year plan to smaller tranches. He also asked if the $450 million EBITDA guidance for the Liberia iron ore expansion was conservative, given the Mining division's historical margins.

Answer

Executive Daniel Fairclough explained that the capital return policy is unchanged, with the new structure of executing back-to-back tranches intended to provide clarity and predictability. Group CFO Genuino Christino clarified that the Liberia guidance is based on conservative, long-term iron ore prices, and there would be significant upside if current price levels hold. He added the project is on track and will produce a very high-quality product.

Patrick Mann asked how ArcelorMittal is thinking about the potential impact on its Dofasco (Canada) and Mexico operations if the U.S. were to re-impose steel tariffs.

Answer

CEO Aditya Mittal acknowledged the risk, referencing the 2018-2019 period when similar tariffs cost about $100 million per quarter but were more than offset by higher revenue. While not guaranteeing a repeat, he noted mitigating factors include higher domestic slab production from the new Calvert EAF. He emphasized the company's focus is on strengthening the NAFTA trading bloc against external imports, which would be a net positive.

Patrick Mann questioned the share buyback program's pace and whether it could be reloaded before the next AGM, and also asked about the company's responsiveness to share price levels. He further probed the disciplined capital approach to decarbonization, asking what happens to plants that don't meet return hurdles for investment.

Answer

Group CFO Genuino Christino responded that the company has authorization to increase the buyback program and will decide on next steps upon completion of the current one, reiterating the policy of returning at least 50% of free cash flow. On decarbonization, he stated that investments will only be made when they make economic sense and that the European industry requires more support and protection to justify the large expenditures.

Questioned the reasons for the tightness in the scrap market and the risk associated with committing more capital to U.S. cold rolling without owning the hot rolling asset.

Answer

The company attributed scrap tightness to a combination of suppliers holding back material, low manufacturing activity, and slow consumer replenishment cycles. They expressed strong confidence in their long-term U.S. hot rolling agreement (until 2051) and their strategic position in the attractive U.S. market, viewing the investment risk as manageable.