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Introduction & Market Context
Acerinox (BME:ACX) reported its Q1 2025 results on May 8, highlighting strong cash generation despite challenging market conditions. The Spanish stainless steel and high-performance alloys producer saw its stock decline 1.51% to €10.12 following the release, reflecting investor concerns about European market weakness and increased import pressures.
The company operates in a complex global environment, with manufacturing PMI indicators showing contraction in both the US (49.0) and Eurozone (48.6). While inventory levels remain low in most markets, Acerinox faces increased import competition in Europe, where flat product imports have risen to 22% of the market compared to 14% in Q1 2024.
As shown in the following market highlights slide, the company is navigating different regional dynamics, with more stable conditions in the US market where base prices remained steady quarter-over-quarter:
Quarterly Performance Highlights
Acerinox generated €99 million in operating cash flow in Q1 2025, nearly matching its EBITDA of €102 million. This strong cash generation occurred despite a 29% increase in production compared to the previous quarter, demonstrating effective working capital management.
The company reported consolidated net sales of €1,551 million, up from €1,481 million in Q1 2024 and €1,325 million in Q4 2024. While EBITDA of €102 million was lower than the €111 million achieved in Q1 2024, it represented a 12% improvement over the adjusted Q4 2024 EBITDA.
The following consolidated results slide provides a comprehensive view of the company’s Q1 2025 performance:
Net debt increased to €1,195 million, significantly higher than the €234 million reported in Q1 2024, primarily due to the acquisition of Haynes International (NASDAQ:HAYN). The company’s EBITDA margin remained stable year-over-year at 7%, though down from 11% in Q4 2024.
As illustrated in this overview slide, Acerinox maintained satisfactory performance despite challenging conditions:
Segment Analysis: Stainless Steel vs. High-Performance Alloys
Acerinox’s performance showed a clear divergence between its two main business segments. The stainless steel division, while increasing production by 29% quarter-over-quarter to 488 thousand metric tons, saw its EBITDA decline to €65 million from €80 million in Q1 2024 and €126 million in Q4 2024. The segment’s EBITDA margin contracted to 6% from 7% a year earlier.
The following slide details the stainless steel segment’s performance:
In contrast, the high-performance alloys (HPA) segment demonstrated robust growth, with EBITDA increasing by 55% quarter-over-quarter and 20% year-over-year to €37 million. This segment benefited from the full contribution of Haynes International for the first time, though margins were impacted by declining nickel prices.
The HPA segment’s strong performance is illustrated in this detailed breakdown:
This segment diversification has proven valuable for Acerinox, with the HPA business providing stability as the stainless steel market faces more significant challenges, particularly in Europe.
Strategic Initiatives & Capital Allocation
Acerinox’s strategy focuses on "controlling the controllables" amid market uncertainties. The company is implementing strategic initiatives including working capital optimization, capacity expansion at North American Stainless (NAS) by 20% and at VDM Metals by 15%, and diversification at Columbus (WA:CLC) Stainless.
The strategic focus is clearly outlined in this slide:
In terms of capital allocation, Acerinox generated €99 million in operating cash flow, invested €57 million in capital expenditures (up from €36 million in Q1 2024), and returned €77 million to shareholders. Despite a €6 million reduction in working capital, net debt increased by €75 million during the quarter.
The following waterfall chart illustrates the company’s capital allocation during Q1 2025:
Acerinox is also advancing its sustainability initiatives through its "360° Positive Impact Plan," which includes energy efficiency certification, biodiversity impact assessment, and the launch of EcoACX®, described as "the first stainless steel in the world" featuring three validated sustainability indicators: more than 50% reduction in CO2 emissions versus standard product, use of 100% renewable energy, and more than 90% recycled material content.
Outlook & Forward-Looking Statements
Looking ahead, Acerinox expects Q2 2025 EBITDA to exceed Q1 levels, supported by an improving order book in the stainless steel segment. The company anticipates stability in the US HPA market but lower volumes in Europe.
Management believes that tariffs should ultimately benefit Acerinox, though they are creating near-term uncertainties. The company maintains its focus on controlling internal factors while navigating external challenges.
The outlook is summarized in this concluding slide:
CEO Bernardo Velasquez emphasized this approach during the earnings call, stating, "We are doing what we have to do. That is a focus on controlling the controllables." The company aims to achieve breakeven in its European operations by Q3 and targets a net debt/EBITDA ratio of 1.2x within two years.
While Acerinox faces headwinds in the European market and ongoing uncertainties in sectors like Oil & Gas and Aerospace, its geographical diversification, segment balance, and strategic investments position it to weather current market challenges while preparing for eventual recovery.
Full presentation:
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