Cognor

Cognor Holding S.A. Faces Financial Challenges Amid Production Delays and Covenant Breaches

Cognor Holding S.A., a leading producer of long steel products in Central Europe, reported a net loss of PLN 52.9 million for the first nine months of 2025, compared to a loss of PLN 22.1 million in the same period last year. Revenue declined by 5.8% year-on-year to PLN 1,634.5 million, while operating cash flow dropped significantly to PLN 57.1 million from PLN 246.0 million in 2024. The company’s financial performance was impacted by production delays at key facilities, including the Siemianowice Śląskie rolling mill, which only began operations in September 2025 after significant delays.

Major investments in modernizing production facilities, including the Gliwice steel plant, Kraków rolling mill, and Siemianowice Śląskie rolling mill, exceeded budgets and timelines, further straining financial results. Total debt increased to PLN 645.2 million, with breaches in financial covenants such as debt-to-EBITDA and operational cash flow ratios. Financial institutions have granted conditional waivers for these breaches through 2025, providing temporary relief.

Despite challenges, Cognor remains optimistic about its outlook, citing the ramp-up of the Siemianowice Śląskie rolling mill and a planned capital increase via an extraordinary general meeting on November 20, 2025, as critical steps toward stabilizing operations and improving liquidity.

Relevance: This article highlights key financial and operational developments directly impacting Cognor’s vertically integrated steel production model, including challenges in scrap-based steel production, energy costs, and construction industry demand for steel.

Cognor Holding S.A. Announces Share Capital Increase to Support Growth and Liquidity

Cognor Holding S.A., a leading producer of long steel products in Central Europe, held an Extraordinary General Meeting (EGM) on November 20, 2025, to approve key resolutions aimed at strengthening its financial position and supporting strategic growth initiatives. The meeting, held at the company’s headquarters in Poraj, Poland, resulted in the adoption of several significant decisions.

Key Resolutions Adopted

• Increase in Share Capital: The EGM approved an increase in the company’s share capital by up to PLN 90,000,000 through the issuance of up to 51,426,198 ordinary bearer shares (Series 14) and 8,573,802 ordinary registered shares (Series 15), each with a nominal value of PLN 1.50.
• Exclusion of Pre-Emptive Rights: Existing shareholders’ pre-emptive rights were excluded to facilitate a private placement targeting qualified investors and those subscribing for shares worth at least EUR 100,000 each.
• Use of Proceeds: Funds raised will be allocated to improve liquidity and support the company’s growth and development.
• Amendments to Articles of Association: The company’s share capital range was updated to reflect the potential increase, with a new minimum of PLN 257,130,996.00 and a maximum of PLN 347,130,994.50.

Details of the Share Issuance

• Subscription Deadline: Share subscription agreements must be concluded by December 31, 2025.
• Dividend Participation: New shares will participate in dividends starting from January 1, 2025.
• Trading: Series 14 shares and rights to Series 14 shares will be listed on the Warsaw Stock Exchange (WSE), while Series 15 shares will require conversion to bearer shares before listing.

Strategic Rationale

The resolutions aim to expedite the capital-raising process, minimize costs associated with issuing a prospectus, and attract new investors. This move is expected to strengthen Cognor’s financial position and support its strategic objectives, including investments in modernizing its production facilities and enhancing operational efficiency.

Relevance to Cognor S.A.

This development is highly relevant to Cognor S.A.’s business profile as it directly impacts the company’s liquidity and ability to fund its vertically integrated operations, including scrap-based steel production and infrastructure investments. However the issuance of new shares will dilute the ownership stake of minority investors.

Global Steel Demand Faces Challenges Amid High Costs and Geopolitical Uncertainty

Global steel consumption has been under pressure due to slowing activity in key end-user sectors, high interest rates in the EU and US, geopolitical instability, and intense competition from China, according to industry experts at the Kallanish Global Flat Steel 2025 conference in Istanbul. Alessandro Sciamarelli, Eurofer’s director of economic and market analysis, highlighted that trade barriers and tariff-related disruptions have not led to significant relocation of steel-consuming industries, as such processes require substantial time and investment.

Experts also pointed to high production costs, global trade uncertainties, and import pressures as ongoing challenges for the steel sector. The implementation of the EU’s Carbon Border Adjustment Mechanism (CBAM) is expected to impact steel exports to Europe, particularly from countries like Turkey, which currently lack a national carbon pricing system aligned with EU standards. Turkish steel producers expressed concerns over the potential reduction in shipments to the EU due to CBAM, emphasizing the need for clarity on its calculation and implications.

Industry leaders stressed the importance of maintaining strong supply chains in Europe, particularly in sectors like automotive and construction, which are critical consumers of steel. However, no immediate improvement in steel demand is anticipated, given the current economic and geopolitical landscape.

Relevance to Cognor S.A.: The article is relevant to Cognor S.A. as it highlights key factors affecting the steel industry, including CBAM implementation, global trade pressures, and demand trends in construction and automotive sectors, all of which directly impact Cognor’s operations and market positioning in Central Europe.

European Steel Sector Faces Challenges Amid Market Uncertainty and Regulatory Changes

The European steel distribution sector is grappling with a challenging outlook as market conditions tighten, according to industry experts at the Kallanish Global Flat Steel 2025 conference in Istanbul. Declining profit margins, reduced inventories, and regulatory uncertainties are key concerns for distributors. Mario Borsese, general director of Trasteel International, highlighted that steel prices and margins are expected to decline in early 2024, while distributors must remain competitive and deliver quality products.

Experts noted that the ongoing Russia-Ukraine conflict has eroded market confidence, further limiting activity and inventory levels. Steven Vercammen of McKinsey emphasized the importance of aligning cost structures with EU trade policies, including the Carbon Border Adjustment Mechanism (CBAM), to maintain competitiveness. Meanwhile, Chinese steel producers are sacrificing profits to sustain export volumes, despite facing numerous anti-dumping cases globally. European steel prices are anticipated to rise in the long term, although short-term pressures persist due to position cargoes.

Jérôme Waterkeyn, CEO of SteelForce Group, pointed out that CBAM is creating inflationary pressures in Europe and deterring investment in the region. He also noted growing demand in African and Latin American markets, as well as robust performance in India, where mills are achieving higher profit margins compared to their Chinese counterparts.

Relevance to Cognor S.A.: The article is relevant to Cognor S.A. as it highlights key factors impacting the steel industry, including CBAM implementation, market demand trends, and the competitive landscape, all of which directly influence Cognor's operations and strategic positioning in Central Europe.

Polish Steel Prices Remain Stable Amid Weak Demand and Regulatory Uncertainty

Steel rebar and wire rod prices in Poland remained stable in the week leading up to October 17, reflecting ongoing weak demand and the impact of cheap imports. According to market sources, estimations for wire rod prices were around 2,580-2,650 zloty ($711-730) per tonne CPT, unchanged since mid-August. Similarly, rebar prices hovered at 2,420-2,450 zloty per tonne CPT, maintaining levels seen since early October.

Market stagnation has been attributed to sluggish activity in the construction sector, high energy costs, and regulatory uncertainty. However, the EU’s Carbon Border Adjustment Mechanism (CBAM), set to take effect in early 2026, is expected to provide upward pressure on prices in the future. Additionally, some rebar imports from Ukraine were reported at approximately €525 ($611) per tonne, DAP border.

Relevance to Cognor S.A.: The article is relevant to Cognor S.A. as it highlights market conditions affecting steel prices, demand in the construction sector, and the potential impact of CBAM, all of which are critical to the company’s operations and profitability as a leading steel producer in Central Europe.

EU Steel Market Faces Structural Shifts Amid CBAM and Import Restrictions

The European steel market is undergoing significant changes as the European Commission introduces new trade policies, including the Carbon Border Adjustment Mechanism (CBAM) and revised import quotas. CBAM, set to take effect on January 1, 2026, will impose additional costs of £30-130/mt on steel imports based on their carbon intensity, while the revised safeguard system will limit tariff-free imports to 18.3 million mt annually and increase out-of-quota tariffs from 25% to 50%. These measures aim to protect domestic producers and encourage decarbonization investments.

Surplus steel from global suppliers, driven by US protectionist measures, has flooded the European market, forcing mills to cut prices to maintain market share. However, reshoring trends and reduced reliance on Asian imports are expected to tighten supply and shift pricing power to domestic producers by 2026. Analysts forecast sharp price increases, with EU and UK steel prices potentially rising by £80/mt in the short term and exceeding £200/mt in the longer term. The measures are expected to reshape the market dynamics, with local sourcing gaining momentum as buyers seek to avoid CBAM-related costs.

Existing safeguard measures are set to expire on June 30, 2026, but the European Commission plans to implement new rules earlier, pending legislative and WTO approval. The UK is expected to align its policies with the EU, further reinforcing the shift toward domestic production and decarbonization efforts.

Relevance to Cognor S.A.: These developments are highly relevant to Cognor S.A., as the company operates within the EU steel market and relies on scrap-based EAF production, which aligns with the CBAM's focus on reducing carbon emissions. The new policies could enhance Cognor's competitiveness by favoring low-carbon domestic producers.