GuruFocus -
- Quarterly EBITDA: EUR114 million for Q3 2024.
- Year-to-Date EBITDA: EUR350 million.
- EBITDA Margin: 9% in Q3 2024.
- Net Financial Debt: EUR453 million as of September 2024.
- Stainless Steel EBITDA: EUR258 million year-to-date.
- High-Performance Alloys EBITDA: EUR93 million year-to-date.
- Operating Cash Flow: EUR97 million positive for the nine months.
- Dividend Payment: EUR77 million in the quarter.
- CapEx Guidance: Expected to reach EUR200 million for the year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Acerinox SA (ACRXF) demonstrated resilience by maintaining a consistent quarterly EBITDA of EUR 114 million despite challenging market conditions.
- The company achieved an accumulated year-to-date EBITDA of EUR 350 million, showcasing its ability to perform in tough market environments.
- Acerinox SA (ACRXF) successfully reached an agreement to sell Bahru Stainless, which is expected to positively impact Q4 EBITDA.
- The company is committed to ESG initiatives, achieving 100% recycling of consumables and significant waste reduction.
- Acerinox SA (ACRXF) is expanding in the high-performance alloys market in America through the acquisition of Haynes, positioning itself for future growth in the aerospace sector.
- The company faced a weaker than expected demand in the American market, impacting profitability.
- Acerinox SA (ACRXF) experienced a significant increase in working capital due to the ramp-up of Acerinox Europa after a five-month strike.
- The European market remains weak, with depressed demand and low prices affecting profitability.
- The completion of the Haynes acquisition has been delayed due to lengthy antitrust approval processes in Europe.
- The company anticipates a lower adjusted EBITDA in Q4 compared to Q3 due to seasonal slowdowns and ongoing market uncertainties.
A: Prices in the US remain stable quarter on quarter, although transaction prices have declined due to the drop in nickel prices. The base prices, which determine margins, have been maintained. The gap in prices between the US and Europe is narrowing, but the US should continue to trade at a premium. The demand weakness is seen as temporary, partly due to election-related uncertainties, and restocking is expected post-election.
Q: How does the current aerospace weakness impact your production targets and investments for Haynes, and could it affect the realization of your synergy targets?
A: The aerospace sector accounts for less than 10% of our HPA business. The disruptions are seen as temporary, and we expect them to be resolved by the time we complete the Haynes acquisition. The synergies from Haynes are expected to materialize in the years 2028-2030, and current disruptions do not alter our long-term strategy.
Q: Can you provide an update on the Spanish plant's EBITDA performance and the European market situation?
A: The Spanish plant has not yet reached EBITDA positive status due to weak demand and the aftermath of a five-month strike. The European market remains challenging, with depressed prices and low demand. We expect improvements in 2025 as the market stabilizes.
Q: What is the expected impact of the Bahru Stainless sale on Q4 results?
A: The sale of Bahru Stainless is expected to positively impact Q4 EBITDA. The accounting gain will include the release of positive conversion differences, estimated to be in the range of EUR 80-90 million, in addition to the difference between the book value and net proceeds.
Q: How do you view the potential for increased trade protectionism in the US post-elections, and its impact on your investments?
A: We believe the US administration has been effective in implementing trade measures, and we expect this to continue. Our investments are focused on long-term growth, and while trade protectionism could provide short-term benefits, our strategy is not solely reliant on it.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.