DUFERCO ANNUAL REPORT

In celebrating and recognizing an extraordinarily challenging year, marked by intensified inflation and global economic adversities, FY2023 results serves as a powerful affirmation of the Duferco Group’s constant resilience and adaptability.

This year was indeed characterized by significant successes in all Divisions, largely due to teams’ dedication and flexibility, which demonstrated the Group’s ability to face global challenges by adapting its way of working to the circumstances.

The Group’s net profit witnessed a noteworthy increase, rising from 385 million USD in FY2022 to 450 million USD in FY2023, marking a year-on-year growth of 17%, despite consolidated revenue decreased to 27.6 billion USD due to significantly reduced energy prices, lower steel prices and shipped volumes related to steel production and distribution business. This is further confirmed by other main consolidated financial results, which also in FY2023 remain very strong, such as, a net working capital of more than 1,156 million USD (941 million USD in 2022) and a total equity of around 1,836 million USD (1,486 million USD in 2022).

However, the important results achieved by the Group are not limited to economic and financial results. It continued to maintain commitment to sustainability issues and is still optimistic about advancing and improving ESG performance across all four divisions: Steel, Energy, Shipping and Innovation.

In this regard, the new green rolling mill was inaugurated in October 2023, a strategic investment of 250 million euros intended to radically transform Group’s industrial capacity and equally promote energy transition and decarbonization with the application of innovative technologies as well as renewable energy supply. This important investment represents one of the most remarkable initiatives undertaken by the Italian steel industry in recent years, consolidating Duferco’s leading position in the market. To meet the needs of the plant, a substantial indirect economic value was also generated for the surrounding communities, especially through the employment of external workers as well as partnership with local suppliers during construction.

Duferco has chosen to focus part of its business on supporting the energy transition. This commitment is reflected in the ongoing efforts to increase the capacity through solar, wind power and biomass plants intended for energy production. About 100 GWh is the renewable energy produced by the different sites around the world in FY2023, with the goal of increasing this value more and more in the coming years as well as adopting enabler solutions that allow to make renewable-energy generation steady despite its inherently intermittent character. Moreover, the trading activity, constantly growing and with record financial results in FY2023, is further focusing on the off-taking and trading of the Guarantees of Origins (“GOs”) associated to renewable power plants, as well as, on carbon market in general.

The 2023 financial year has been a challenging year also for the Shipping Division. Indeed, despite a high market volatility, the second-best financial results in Nova’s history have been achieved. At the same time, new solutions are constantly being explored to reduce ship-related emissions, also in line with upcoming EU regulations and to improve the energy efficiency of this complex business segment.

Duferco’s business is always based on innovation and dynamism, components that are reflected in the Group’s wide range of activities.

The spotlight is on Innovation Division, committed to enhancing the synergies of the Group and assisting employees in facing new challenges every day.

This Annual Report publicly demonstrates Duferco’s intrinsic commitments to transparency of sustainability issues and related performance. It also lays the foundation for Group’s future aspirations, consisting of long-term ambitions that drive the transition towards global sustainable development.

The entire Group would like to express its gratitude for the trust and resilience every stakeholder has demonstrated.

This year has reaffirmed the belief in collective strength and as Duferco persist in its shared journey of growth, it looks forward to scaling new heights of success together.

Bruno Bolfo