DUFERCO ANNUAL REPORT

We are pleased to present the Annual & Sustainability Report of Duferco Participations Holding S.A. for the financial year 2025 (FY25).

Over the past year, it has become increasingly evident that the world is undergoing profound and rapid transformation. The era of intense globalisation has drawn to a close. More specifically, we are witnessing a distinct change in its pace, driven by trade policies, tariffs, maritime disruptions and ongoing conflicts that are slowing international exchanges. The duration of this transitional phase remains uncertain; however, what is clear is that the Western world now finds itself on the defensive and is likely to remain so for decades, largely due to demographic trends. Conversely, certain regions across the globe – more populous, dynamic and increasingly influential compared to those facing stagnation – continue to experience growth and to fuel global demand for commodities. Thus, operating primarily within a region that is not projected to lead global growth in the years ahead, Duferco recognises the fundamental importance of maintaining an effective balance between the current increasing trade regionalisation – also supported by policies designed to protect the European industry – and continued engagement with global markets, so as to capture the growth opportunities arising from emerging economies.

Despite the rising geopolitical complexity, and while operating in an environment characterised by tighter margins and subdued demand, we delivered another consecutive year of excellent financial results. Although lower than the previous year – reflecting the normalisation of market conditions in the energy sector after the exceptional environment of recent years, combined with the continued weakness across global and European steel markets – the Group achieved a high double‑digit net profit of 86.8 million USD (152.4 million USD as of 30 September 2024). Our net financial position remains strong with only a marginal increase in the financial indebtedness and a steady healthy liquidity (690 million USD of cash reserves as of September 30, 2025). Net working capital stands at an excellent 1,025 million USD (as of 30 September 2025) and our total equity is approaching 2 billion USD (1,930 million USD as of 30 September 2025), double the level recorded seven years ago and almost five times the net financial position.

Our strong financial performance reflects a business model that is both highly diversified and constantly oriented towards sustainable development, with a particular focus on the energy transition and circular economy. This combination enables us to remain resilient amid complexities of the current environment and to seize emerging opportunities. This strategic approach continues to underpin Duferco’s leadership across the sectors served by our four Divisions – Steel, Energy, Shipping and Innovation.

The Energy Division is at the forefront of our commitment to the energy transition. This year, the Division achieved a solid net profit of approximately 118 million USD. Throughout the year, the Division successfully continued its wholesale and retail activities in energy products, particularly electricity and natural gas, with over 625,000 active supply points, a scale that brings operational challenges but also major value creation. The Division is expanding its renewable energy capacity, focusing on hydro and solar projects in Italy, Albania and Brazil, and produced nearly 220 GWh in FY2025. We also see great potential in the Mediterranean region – Tunisia, Algeria and Morocco – where we are developing photovoltaic projects and building long-term partnerships. Italy’s unique cultural proximity to these countries is a distinctive asset that we intend to preserve and strengthen. Although energy trading activities did not replicate the extraordinary performance of the past few years, due to the stabilisation of gas and electricity prices, we nonetheless delivered robust results – which continue to form the backbone of the Group’s financial performance – and continued to grow internationally while maintaining an excellent reputation. The stability and strength provided by the trading business enabled us to seize opportunities even in unstable market conditions with an ever-growing focus on instruments that incentivise the energy transition and decarbonisation. During the year, following the acquisition of Comal S.p.A., a leading Italian company specialised in the development and construction of large-scale photovoltaic plants, Duferco entered the solar EPC (Engineering, Procurement & Construction) and solar tracker supply business, significantly expanding the industrial perimeter within the renewable energy sector while activating substantial synergies with the Steel Division. The outlook for the Energy Division remains increasingly positive, supported by surging global demand for energy – particularly from fast-growing regions and new sectors such as artificial intelligence – and, for trading activities, by market volatility reinforced by geopolitical instability.

The historical core of the Duferco Group, the Steel Division – navigating the current macroeconomic context marked by further slowdown, driven by escalating trade tensions, persistent geopolitical conflicts and subdued global demand – reported a loss of 23.4 million USD in Italy in FY2025. However, even within this challenging environment, the Italian companies experienced an increased sales volume, mainly driven by the gradual and steady enhancement of the technical performance and efficiency of the San Zeno Naviglio rolling mill. With a significant investment of 250 million euros, the SBM (Smart Beam Manufacturing) rolling mill stands as Europe’s most advanced, largest and greenest plant of its kind. The facility represents a new paradigm for European steelmaking, leveraging full automation, data-driven process control – including robotics, widespread sensors, AI and digital systems – and seamless vertical integration with the existing steel mill to maximise production quality and efficiency while minimising costs and lead times, enabling a just-in-time service to customers. These features, combined with its productivity – a capacity of 700,000 tons per year with the potential to increase to 1 million tons – and strategic central position within the European market, allow the plant to establish a high barrier to entry for many producers, particularly foreign competitors, positioning Duferco as Europe’s best-cost-producer of long steel products. Set within a European steel sector which pioneered sustainable production by leveraging renewable hydroelectric power from the pre-Alpine valleys and the circular use of abundant post-war scrap, the SBM rolling mill likewise stands as a new benchmark for sustainability. With a carbon footprint of just over 0.5 ton of CO₂ per ton – compared to 1.8 tons for integrated-cycle plants – the facility benefits from renewable electricity supplied through PPAs, a 9-MW rooftop photovoltaic system, and readiness to operate with up to 15% hydrogen, even though biomethane is expected to be the most viable transitional option. Moreover, the use of over 90% recycled scrap as raw material further strengthens its contribution to circular economy principles. In parallel, the reconversion of the Giammoro site progressed towards completion, transforming the area into a strategic logistic platform, bringing the Peaker plant into operation and advancing the “Hydrogen Valley” programme. In a further strategic step, Duferco completed the integration of steel and energy operations into a single industrial holding company, strengthening its strategic positioning by combining advanced steelmaking capabilities with extensive expertise in energy markets – an ever-more distinctive competence recognised by the market. Despite the challenges faced by the sector in recent years, the prospects for the Steel Division are expected to benefit of increasingly favourable market conditions driven by three key EU measures: a stricter safeguard regime to limit excessive imports, the full implementation of the Carbon Border Adjustment Mechanism (CBAM) applying an environmental levy on high carbon non-EU steel, and new public procurement rules requiring a higher share of EU-produced steel.

The Shipping Division enables us to operate as a leader in a niche market by offering flexible and customised services, and to leverage a key position for observing international macroeconomic dynamics. In FY2025, the Division contributed 11.9 million USD to the consolidated result which, despite geopolitical challenges, confirms a stable performance. Already operating the world’s largest cement carrier’s fleet, the Division further strengthened its market position during the year through the formation of a new partnership between NovaAlgoma Cement Carriers (NACC) and DP World, a global provider of marine solutions including offshore energy support, port services and complex cargo transport. Moreover, through this partnership, the company secured a second order for a 40,000-dwt green cement carrier, thereby reinforcing the Division’s commitment to reducing GHG emissions across its fleet. Looking ahead, the Division remains well-positioned, supported by solid market fundamentals and a strategic configuration of the fleet. Demand for bulk cargo such as grain, coal, soy, salt, scrap and steel is expected to remain robust as emerging economies continue to expand. At the same time, the fleet of “Handysize” vessels offers a structural advantage in today’s increasingly regionalised trade flows: while larger vessels can access only a limited number of deepwater ports, these more versatile ships are able to call at almost any port, ensuring broader market reach and greater commercial flexibility.

The diverse business sectors and operations in which Duferco is engaged are closely linked to technological advancements and innovation. Over the years, we set up a transversal Innovation Division to address these emerging challenges, leading projects which improve operational efficiencies and advance energy transition and decarbonisation efforts. In FY2025, by establishing a strategic partnership with Generative Bionics – a leading Italian deep-tech start-up in humanoid robotics supported by top-tier industrial and financial players – we reinforced our ambition to engage with frontier technologies capable of enhancing industrial performance and driving long-term innovation across businesses.

The strength of Duferco Group continues to stem from its people, a unique combination of generations working side by side: the fresh capabilities and technological curiosity of younger talents, ever more crucial as innovation accelerates, and the experience, cultural continuity and steady guidance provided by longstanding colleagues. The launch of the Duferco Academy, our new training and development programme, provides an additional space for cross-fertilisation, where employees are encouraged to exchange experiences, ideas and perspectives with colleagues across Divisions, further reinforcing the human fabric that characterises the Duferco identity.

We extend our gratitude to all our people for their dedication as well as to all our stakeholders for their unwavering support and trust, acknowledging that an interesting road lies ahead, a journey in which building and nurturing relationships, both close and distant, remains essential, as Duferco has always been, above all else, a community of people.

Bruno Bolfo