Danieli & C Officine Meccaniche S p A : Press release dated 10.03.2021 related to the consolidated six-monthly report fo the period ended 31.12.2021

DANIELI & C. OFFICINE MECCANICHE S.p.A.

Buttrio (UD) - via Nazionale n. 41

Fully paid-up share capital of euro 81,304,566

Registration Number with the Register of Companies of Udine, tax number and VAT registration number:

00167460302

www.danieli.com

PRESS RELEASE

DANIELI GROUP

The Board of Directors of Danieli & C. Officine Meccaniche S.p.A. (hereinafter also "Danieli") met today, March 10, 2022, to examine and approve the consolidated six-monthly report for the period ended December 31, 2021, prepared according to international IAS/IFRS accounting standards, and acknowledging the result for the first six months of operations.

CONSOLIDATED SIX-MONTHLY REPORT FOR THE PERIOD ENDED 31.12.2021

(millions of euro)	31/12/2021	31/12/2020	Variation
Revenues(*)	1,568.3	1,278.1	23%
Gross operating margin (Ebitda)	116.4	95.5	22%
Profit before interest and taxes	62.4	56.5	10%
Net profit from continued operations	60.0	17.0	253%
Net profit attributable to the Group	59.7	14.1	323%
	31/12/2021	30/06/2021	Variation
Positive net financial position	934.9	1,002.0	-7%
Total shareholders' equity	2,075.0	2,016.3	3%
Number of employees at period end	8,745	8,668	1%
Group order book	4,050	3,534	15%
(of which Steel Making)	612	622	-2%

1. To be added to the revenues of 1,559.8 million euro for the period ended December 31, 2021, are self-constructed assets amounting to 8.5 million euro (this figure was 36 million euro for the period ended December 31, 2020).

Summary of results for the first six months of the tax year

EBITDA is up by 22% over the same period last year, driven by a Steel Making segment that in the period benefited from high prices and volumes even though margins were compromised at the end of the year due to the cost of energy factors having tripled, and a Plant Making segment with margins that are satisfactory but still limited due to work progress that continues to be slow on projects developed according to construction schedules agreed with customers.

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On the other hand, the Net Result for the first six months of the 2021/2022 financial year is up, favored by financial income due to exchange differences tied to the alignment of liquidity and the other items expressed in USD with the US/Euro exchange rate of December 31, 2021, which shows an improvement of about 5% compared to the exchange rate of June 30, 2021.

The types of orders currently being filled in the Plant Making order book and production planning of the Group's manufacturing units have allowed an orderly management of design offices and manufacturing shops both in Italy and abroad, without, for the time being, any major problems deriving from production limitations connected with COVID-19.

Group revenues are higher than they were in the same period last year, with sales showing a strong increase in the Steel Making segment thanks to the production contribution of ABS' new wire rod mill at Pozzuolo del Friuli, and dropping slightly in the Plant Making segment compared to the same period of the 2020/2021 tax year. Plant Making revenues are, however, in line with the forecasts made at the beginning of the year, with an EBITDA of 64.3 million euro, backed by orders in production that are more profitable, have a more sophisticated technological content and were obtained in a more favorable market.

Conversely, Steel Making revenues have exceeded the budget drawn up at the beginning of the year and show a gross profitability of 52.1 million euro, with approximately 630,000 tons of products shipped during the period ended December 31, 2021, (showing a 25% increase in volume over the same period last year), the aim being to increase profitability and volumes in the first half of 2022 and present a positive result for the entire current tax year.

The order intake for the period was also good, allowing us to increase our Plant Making order book to a high level for the period ended December 31, 2021, (a workload of more than two years) thanks to the innovative green plants and technologies promoted by Danieli and favorably received on the market.

The military intervention in Ukraine has generated a persistent increase in the costs of energy factors that could negatively impact the result of ABS Steel Making if it continues over the long term, while in the Danieli Plant Making segment there are currently no projects of significant value in Ukraine, and only some projects with Russian customers remain active (amounting to about 1.7% of the Group's order book for the period ended December 31, 2021), despite some delays due to the financial restrictions applied to Russian banks.

Our offices in Dnepropetrovsk are currently closed, and Danieli has arranged to bring to Italy and provide accommodation for the families of our Ukrainian colleagues, some of whom have remained in the country because of the government order to enlist in the military.

The performance of both the Plant Making (plant engineering and manufacturing) and Steel Making (production of special steels) segments and maintaining the order book at good levels are such that we can predict that year-end results will be in line with the forecasts that were made. In the Steel Making Segment in particular, the results already obtained in the second half of 2021 are expected to improve in 2022 thanks to a greater volume of tons produced and more remunerative prices tied to a better production mix in addition to a market that is still receptive to quality products.

Worldwide prospects for the metals production sector that affect Danieli's Plant Making business

In 2021, the world economy grew by 5.9%, a sharp increase compared to the negative figure of - 3.1% in 2020, and the forecasts of the International Monetary Fund point to positive growth figures for 2022 and 2023 as well, albeit lower due to the performance of the two principal world economies: in the US this is basically due to an industry slowdown caused by supply shortages from the subcontracting chains, and in China because of the financial stress experienced by the real estate sector and the shutdown of businesses due to a zero-tolerance policy with respect to infection by COVID-19 variants.

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The average growth of 4.4% expected for 2022 and 3.8% for 2023 could decrease in part because of the inflation trend which has now reached high rates in both emerging countries and in those with advanced economies, also driven by the prices of energy factors that remain consistently high and no longer only in the short term.

In this scenario, it is not yet possible to predict the extent of the impact that the Russian-Ukrainian conflict that broke out at the end of February will have on financial markets, on international trade and on raw materials markets, particularly those related to energy production.

In 2021, world steel production was about 1,950 million tons, up 3.7% from 2020 (as reported by the World Steel Association). Asia experienced a slight rise in growth (where the increases in Japan, India and Korea have offset the drop in production in China), with results on the upswing in the rest of the world, especially in the US and the EU, but also in the Middle East and Africa.

In 2021, the average plant utilization factor remained steady around 80%, negatively affected by a reduced production capacity in China, and positively influenced by the increases of all the other producers in the rest of the world, driven by the prospects of an economic upturn after the COVID- 19 pandemic: however, the growth process could come to a standstill and experience a delay in the first part of 2022 due to the sanctions imposed on Russia by the US and EU because of the crisis in Ukraine.

The general outlook of the steel market is still positive for 2022, with rising prices and margins holding steady compared to 2021, thanks to a more receptive end market with the expectation of higher quantities and more vertical integration for better product quality, although margins could be negatively affected by significant fluctuations in the prices of energy and production factors.

In 2021, China maintained its leading role in the steel industry, producing about 53% of annual output. The country continued its transition process from primary metallurgy (ore-based) to secondary metallurgy (which uses recycled scrap metal), with a gradual rise in the use of electric arc furnaces (EAF), in order to cut down on direct CO2 emissions (scope 1). The new goal presented at COP26 in Glasgow of reaching zero emissions by 2060 will, in the next few years, bring about a rapid change in the technologies used to produce liquid steel, together with the need for substantial investments to significantly lower the environmental impact of steelmaking.

The subject of GHG emissions is becoming increasingly important for steelmakers in Europe as well, especially in terms of investments, costs for adjustments and sustainable manufacturing, considering the proposed taxation mechanism on the CO2 content of steel products that will gradually be applied together with the new European Environmental Certification System (ETS) favoring EAF steelmakers whose emissions impact is lower than that of traditional steelmaking in blast furnaces.

Primary steelmaking accounts for approximately 7-9% of global CO2 emitted by fossil fuels (an industrial sector that is second only to the energy generation sector), and its transformation according to the Paris and Glasgow agreements involves a decarbonization process that will initially improve the efficiency of blast furnaces but then gradually replace them with new iron ore reduction technologies.

The desire to set a cap of 1.5° on the rise in average global temperature, as determined by COP26, therefore requires that significant investments be made in the steel sector in order to use new plants that significantly limit the use of coal in the steelmaking process.

Producing steel with low CO2 emissions has today become a goal that is increasingly central to all investments in this sector, and will require greater availability of electrical energy from renewable sources, and the use of first gas and then hydrogen in competitive economic conditions in order to significantly decrease the emissions generated by the industrial process of liquid steel production. In order to remain competitive in this market, Danieli has invested considerably in innovative technologies to produce Green steel, reaffirming customer centricity first and foremost by:

• increasing plant productivity and, consequently, per capita added value;
• reducing GHG emissions per ton produced by applying innovative technological solutions with low environmental impact that are now consolidated;

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• putting into practice the principles of the 4.0 revolution in the steelmaking industry through the DIGIMET project, to ensure total control of production variables in all phases of production from liquid steel to the final, finished and packaged product, and;
• speeding up the production processes by reducing time and costs and optimizing production efficiency by combining various thermomechanical work phases with "endless" solutions for both long and flat products.

The research and technological development implemented by Danieli in the last decade have enabled us to expand the range of plants supplied to the entire metals sector (steel, aluminum and other metals), significantly lowering the cost of the initial investment of each project (CapEx) but also optimizing production operating expenses (OpEx) by combining several work stages in the production process, thus increasing the number of potential investors thanks to more economically feasible investments in countries with mature economies as well as in still developing countries.

The Order Book includes many innovative plants, also for Green steel production, thereby confirming steelmakers' tendency to invest in new plants, not only to be more competitive but also to head towards Net Zero.

Summary of Results by Business Segment

Revenues (*)
(millions of euro)	31/12/2021	31/12/2020	Variation
Plant making	863.9	925.3	-7%
Steel making	704.4	352.8	100%
Total	1,568.3	1,278.1	23%
Gross operating margin (Ebitda)
(millions of euro)	31/12/2021	31/12/2020	Variation
Plant making	64.3	68.0	-5%
Steel making	52.1	27.5	89%
Total	116.4	95.5	22%
Profit before interest and taxes
(millions of euro)	31/12/2021	31/12/2020	Variation
Plant making	33.6	53.4	-37%
Steel making	28.8	3.1	829%
Total	62.4	56.5	10%
Net profit attributable to the Group
(millions of euro)	31/12/2021	31/12/2020	Variation
Plant making	35.8	14.8	142%
Steel making	23.9	(0.7)	3514%
Total	59.7	14.1	323%

(*) Plant Making revenues include 8.5 million euro for the supplies sold to ABS (36 million euro for the period ended December 31, 2020)

Gross Operating Margin (EBITDA) is a measurement used by the Issuer to monitor and evaluate the performance of operations, and represents the operating profit before depreciation and amortization of fixed assets and net write-downs of receivables (this measure is not specified in the IFRS standards and therefore may not be fully comparable with other entities that use other calculation criteria).

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On the basis of the IFRS 5 accounting standard, the revenues and costs of the EWS pipe mill were reported separately since they refer to discontinued operations and are correlated with their closure, and the result for the period is directly entered under profit/loss for the year.

Thanks to the investments made in both operating segments, the Danieli Group intends to offer its customers better and better service in terms of quality, prices and on-time delivery, as well as streamlining company processes to reduce wastefulness and emissions, while striving for maximum customer satisfaction through innovative, environment-friendly products.

Strategies

Below are some of Danieli's mottos:

• "Innovaction to be a step ahead in Capex and Opex" which aims to make the most of the Group's new organizational model, promoting multicultural, intellectual growth and creating solutions to meet current market requirements more effectively.
• "Passion to innovate and perform" but also "We do not shop around for noble equipment". The
  Danieli Group will therefore continue to consolidate and expand its business in order to be more competitive in terms of innovation, technology, quality, costs, productivity and customer service.
• "Absolute Steel Quality" which summarizes ABS' constant commitment to produce steels with a degree of finish and a customer service that are always in line with the most demanding expectations and for the most innovative and rigorous industrial applications.

Innovation and noble products are developed and manufactured primarily in Europe, whereas plants with already consolidated technologies are designed and manufactured in our Asian plants, which guarantee the same European quality at a lower cost for both the western steelmaking market and the Asian one, where almost 70% of the world's steel is produced.

In the field of special steelmaking, ABS is recognized worldwide as one of the most modern facilities in the world for the quality of its plants that not only guarantee certified products but also the highest production efficiency and full protection of the ecosystem in which it operates.

The product quality and delivery times of ABS are in line with those of the best producers in the world, and its goal is to be the leading special steelmaker in Italy and among the first three in Europe.

Order Book

The Group's order book is well diversified by geographical area and product line, and for the period ended December 31, 2021, amounts to 4,050 million euro (of which 612 million euro in the special steelmaking sector) compared to 3,534million euro for the year ended June 30, 2021 (of which 622 million euro for special steels).

Even with the considerable uncertainties of the current geopolitical and economic situation, we feel that the Group is not exposed to significant risk deriving from the Russian and Ukrainian markets, where for the period ended December 31, 2021, our production volume was 3% or 49 million euro (this figure was 185 million euro for the year ended June 30, 2021). The job orders under way in these markets, net of the accruals made at the end of the six-month period, do not show a significant or negative net exposure, and net receivables from Russian and Ukrainian customers that have expired and have not been written down amount to about 25 million euro. Orders received but not yet in force in the afore-mentioned markets amount to about 520 million euro and were not included in the order book value for the period ended December 31, 2021, or in net financial position due to already collected advance payments. The order book does not include, prudently, the portions still to be completed on projects for Russian customers, where we especially expect slowdowns or delays amounting to about 370 million euro.

Management is examining the various repercussions on the Group of this situation and of the system of sanctions that was recently applied and is still changing, even though the potential impact

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