Steel Production Data | Europe: May - Global Output Flattens Out

Research evidence excerpt

Steel Production Data | Europe: May - Global Output Flattens Out

UpdateMn Successful restructuring of the HKM asset, driving upside to earnings estimates

Risks to Downside

n A de-rating of Aurubis shares

n Worse than expected demand environment in Europe

n Spending slippage at SALCOS Phases 1/2/3

thyssenkrupp AG (TKAG.DE)

We derive our PT via a SotP approach, applying industry average EV/EBITDA multiples to our

average CY1, CY2 and CY3 EBITDA estimates given similar exposure to end markets. We apply

multiples of ~7.6x for Materials Services, ~6.0x for Automotive Technology, ~5.8x for Steel,

and ~8.0x for Decarbon Technologies. We value stakes in Nucera and TKMS at market value

and the elevator stake at 16% of the EUR20.3bn equity value implied by the Kone deal..

Risks to Upside

n Fading raw material cost pressures

n Successful restructuring of loss-making businesses

n Asset sales at a premium to our base case

n Weak demand from the automotive industry

n Ongoing cash burn that erodes existing cash balances

n Inability to undertake structural changes to the portfolio

voestalpine AG (VOES.VI)

In line with the other carbon steel equities, we apply a through-the-cycle multiple on esti-

mated average 2027-28 EBITDA, which captures the first period in which the new, stronger

European trade policy regime is fully reflected in industry economics. We apply a multiple of

6.8x, which is the stock's own historical average.

n Faster steel margin expansion vs our base case

n A more pronounced end-market demand inflection, driving higher volume growth

n A steep decline in CO2 prices

n Elevated decarbonisation spending levels eroding equity value

n A deeper cyclical downturn in automotive/top line

n Rapidly increasing carbon costs, above our base case