Earnings call transcript: Acerinox Q2 2025 sees 10% sales growth, market uncertainty

Acerinox reported its second-quarter 2025 earnings, highlighting a 10% increase in sales compared to the previous year. The company’s EBITDA for the first half of the year reached €214 million, with a notable improvement in its Q2 performance. According to InvestingPro data, the company maintains strong financial health metrics with a current ratio of 1.61 and an impressive Altman Z-Score of 6.63, indicating solid financial stability. Despite these positive metrics, Acerinox’s stock price experienced a decline of 1.43% in recent trading, reflecting broader market uncertainties and investor caution.

Key Takeaways

• Acerinox’s sales increased by 10% year-over-year.
• First half EBITDA stood at €214 million.
• The company is expanding its North American production capacity by 20%.
• Acerinox is implementing a cost-saving plan targeting €100 million by 2026.
• The stock price fell by 1.43% amid market uncertainties.

Company Performance

Acerinox demonstrated robust performance in the second quarter of 2025, with sales rising by 10% compared to the previous year. The company reported a first-half EBITDA of €214 million, showcasing a 10% improvement in Q2 EBITDA over Q1. InvestingPro analysis indicates the stock is currently trading below its Fair Value, presenting a potential opportunity for investors. This growth is supported by strategic investments in production capacity and innovation, including the development of EcoStainless and the integration of Haynes International. InvestingPro subscribers can access 8 additional key insights about Acerinox’s valuation and growth prospects in the comprehensive Pro Research Report.

Financial Highlights

• First half EBITDA: €214 million
• Operating cash flow: €148 million
• Net financial debt: €1,222 million
• Sales: Increased by 10% year-over-year

Outlook & Guidance

Acerinox anticipates its Q3 EBITDA to align with Q2 results, reflecting expectations of market stabilization. The company is focused on expanding its production capabilities and exploring potential U.S. listings or asset separations. InvestingPro data reveals the company has maintained dividend payments for 40 consecutive years, demonstrating long-term financial stability. Despite challenging market conditions, Acerinox remains committed to its strategic investments and cost-saving initiatives. Get detailed insights into Acerinox’s financial health and growth prospects with InvestingPro’s comprehensive analysis tools and expert research reports.

Executive Commentary

• "We are controlling the controllables, going ahead with our strategy," stated CEO Bernardo Velázquez Herreros, underscoring the company’s proactive approach amid market uncertainties.
• CCO Miguel Ferrandis Torres remarked, "Uncertainty is not only in our sector, but uncertainty is also driving our customers," highlighting the broader market challenges.
• Velázquez Herreros also emphasized, "We are in the pole position for the new good cycle," indicating confidence in future opportunities.

Risks and Challenges

• Global market uncertainty and demand fluctuations.
• Potential impacts of tariffs and trade policies, particularly in the U.S. and Europe.
• Integration challenges with Haynes International.
• Market saturation and competitive pressures in high-performance alloys.
• Supply chain disruptions and cost management.

Q&A

During the earnings call, analysts inquired about Acerinox’s exploration of a potential U.S. listing or partial IPO of its assets. Discussions also focused on the impact of tariffs and potential European market protections, as well as inventory adjustments and pricing strategies. These queries reflect investor interest in the company’s strategic direction and market positioning.

Full transcript - Acerinox (ACX) Q2 2025:

Carlos, Conference Host, Acerinox: Good morning everyone and welcome to our second quarter 2025 results presentation. The call will be hosted today by Bernardo Velázquez Herreros, our CEO, together with Miguel Ferrandis Torres, CCO, and Esther Camós, CFO of the group. As you all know, this has been a challenging second quarter and first half of the year marked by significant geopolitical uncertainties, regional conflicts, and of course the Darifor. With no doubt, all of this has impacted the global landscape. During this call, we look forward to discussing the progress we have made in navigating this complex situation. Before getting started, let me remind you that this conference call is being broadcast on our website, acerinox.com, where you can also find the financial statements and the management report for the first half of the year. With that, I’ll now give the floor to our CEO, Bernardo. Please go ahead.

Bernardo Velázquez Herreros, CEO, Acerinox: Thank you, Carlos. Good morning everyone and thank you for attending this presentation. Thank you, Carlos, for the introduction. It has really been an uncertain year. We expected the recovery for 2025, remember after two consecutive years with the PMI below 50 in the United States, we expected the situation to improve and that really improved in January and February. In March we again went back to below 50 with all the uncertainties that are affecting all the markets all around the world. Basically, we have a lot of uncertainties in our lives. In this case, I think the tariff war is affecting strongly to our business. Imagine how difficult it is to organize your strategy if you don’t know if your customers are going to grow or not based on the different tariffs. You don’t know how your supplies are going to be affected by the tariffs.

You don’t know how your competitors and import competitors will be able to compete, that will be feasible to sell in the market. All this situation, what is finally happening is that everybody is in the situation of wait and see, even in the United States. It looks like the situation in the United States is better and it is. All these uncertainties are also affecting this market. Nobody is buying more than what is really needed, as we say in the market is from hand to mouth. We don’t buy more than what is really needed and many projects are being postponed. The situation is also affecting to high-performance alloys. This is basically the general situation and this is basically what has affected our results.

We expected a better behavior in the year and a better behavior in Q2, but still we haven’t defined what’s going to be the new rules of the game. We are waiting for negotiations between the different countries. We expect a soon agreement between the United States and Europe. Still the situation is not coming. This is what we are putting in our numbers and in our forecast. We are not predicting anything that cannot be predicted today. We are based on today’s information. This is what we expect for Q3. What is not bad, taking into consideration that we are in the summer period and normally a slowdown of our markets. Fortunately, the United States is our major market and also we have been diversified in the last years with VDM and Haynes International in high-performance alloys. This diversification allows us to have more standard results.

Remember that one of the reasons to enter in high-performance alloys, it was because trying to avoid or trying to reduce the volatility and the cyclical condition of our business. This is really, really happening today. We believe that once the situation clarifies and once we have a clear picture of what are going to be the tariffs, the Section 232 tariffs, the reciprocal tariffs and all these things, market will find a way to work with the new rules of the game and the situation will come back to normal. It is important to explain the situation particularly of Acerinox Europe. In the last six years we have lived unexpected, a different crisis. Remember 2020 Covid, 2021 and 2022 we had a tremendous energy crisis in Spain and that our energy prices multiplied by times four. 2023 apparent consumption in United States and Europe went down by 20%.

2024 we suffered a five month strike in Spain and 2025 we have this tariff crisis, five totally different origins. At the end we are living for six consecutive years in a low. According to the Spanish accounting principles we have to consider crisis as the new normal. In this situation we have made an impairment on the tax credits in Spain that is affecting our result. It’s no cash related and is reversible. We have to follow the accounting principles and trying to be prudent with our accounting numbers. Having said this, I will not enter in the numbers because later Esther and Miguel will explain in detail, just to consider the strong effect of the U.S. depreciation in our numbers.

Of course, again insisting that our geographical and product diversification is putting Acerinox in the best position, in the poor position for the new economy and the new situation. Once all these uncertainties clarifies, with this I will pass the floor to Miguel.

Miguel Ferrandis Torres, CCO, Acerinox: Thank you. The positive slide, the next slide, is called More than resilient. The NR performance clearly in the first semester has been much more than resilient. Resilience was probably one of the most used words in the COVID year in the previous low, low part of the cycle. The word that probably defines better the actual scenario is uncertainty. We have uncertainty everywhere. Uncertainty is not only in our sector, but uncertainty is also driving our customers. Nobody regarding the tariffs, nobody still knows in every of our sectors, any of our customers has yet a clear view of what’s going to take place in terms of tariffs, when they are going to be finally fully implemented, where, who’s going to be affected, how much is going to be. As has been explained by Bernardo, no one is taking any specific position.

Everyone, all of our customers, is in a wait and see. We need to face that in addition to three tragic wars in different parts of the world. Europe is affected. This is clearly having its consequences in Europe. We have also the wars in the Middle East, which also provide uncertainties regarding oil and so on. This is the year we are facing fully, fully uncertain. On that basis, we have proven to be more than resilient. We have increased our sales compared with the previous first year semester at 10%. We have achieved improvement, 10% improvement in Q2 compared with Q1. We have obtained a first half semester EBITDA of €214 million. This is a first half EBITDA in this environment. Just analyzing it, if you realize that not many years ago this was our EV and above our EBITDA through the cycle.

Clearly, all the efforts done in the last years have proven to be effective. Once again, and this is relevant in our sector, with a strong operating cash flow in this environment, even we have been able to obtain €148 million of operating cash flow. We are more than resilient to the actual uncertainty era. In addition, we are keeping our program, we are keeping our strategy. We have devoted €125 million to CapEx in the first half. Gradually, this shall have more relevance in the second half of the year because we are keeping our organic growth. We are developing our strong programs of investments in our Kentucky plant for stainless in Nassau, as well as we are doing our investment programs in VDM and in Haynes. This is clearly our focus.

We are in position of keeping that, and we are obviously increasing our value added not only in the plant of Spain, but also we are, through this diversification, we go to the high part of the parameter, as you know, of the added value contribution, and this is clearly appreciated. First with the acquisition of VDM and later on, more recently with Haynes. In addition, we keep with our homework for improving all our operating expenses. We shall talk later on about our beyond excellence, and not forgetting in any case because it’s also part of a DIN sustainability we have launched. We shall talk later on. We have launched the new Equa 3 NOx. We have more than six types developing this. In this EcoStainless we keep being well recognized in terms of our sustainability merits. We keep the gold award by eco bodies.

We should have been in the platinum again, if it were not by the social conflict we experienced last year. This moved down our platinum to gold, and with a normalization coming for the next year, we are pretty confident that we shall be back again in the platinum. In health and safety, also we have obtained an improvement of 8% in addition to filling more or less all our targets in terms of carbon emissions reduction. We must be proud about keeping sailing on the actual circumstances with a strong profitability, being able to keep our strategy and also maintaining our focus on sustainability.

Bernardo Velázquez Herreros, CEO, Acerinox: Let me give you some highlights of how is the market today. The general explanation is what I already said. We are in the situation of wait and see. Nobody is investing, is postponing investments. This is affecting all the markets. All markets are depressed. The different conditions of the different markets show, as I’m going to mention, a big difference in results in the two groups. In stainless steel in the U.S.A. the situation is pretty much the same as in Europe, but with the low demand. Remember that demand went down 21% in 2023, was flat in 2024, is flat in 2025 now. With the protection of Section 232, we can keep our prices stable in the area. Now with the new 232, that is not only going to 50% of tariffs, but also is protecting our biggest customers.

Protecting customers like appliances, sinks, tubes, and other products where stainless steel is a big portion of the cost. Of course, we think that the demand finally will grow. Once we have more visibility and the situation is stabilized, the demand will grow. If you add that the situation in the stock levels is low, we are now 18% below historical average. That means that once we have a more clear picture, the situation for sure will improve. The United States is going to be the best market, is the place to be. In Europe the market situation is more or less the same, but with the low demand and low prices, imports have been growing close to 75% in the year. With this imports growth, this material is going to stocks, stocks are increasing. We have a lot of pressure in the market. Low demand, high inventories.

Prices are going down. The same conditions, same market conditions, different situations and different behaviors of our companies in Spain and United States. I would like to remember that we are waiting for the post safeguard measures. I hope that finally the European Commission will take the necessary measures to protect the European market. If we want to have our strategic autonomy in high-performance alloys, is pretty much the same. Oil and gas is projects, projects are being postponed. Chemical process industries more of the same. Electronics and automotive are stable. Thanks to our last investment in Haynes, we are in aerospace. Aerospace is the best sector today in the economy. Having said this, Miguel, could you explain our profit analyst account?

Miguel Ferrandis Torres, CCO, Acerinox: Let’s go to the group figures later on. Our CFO shall explain in detail by our business segments any case relevant facts for the group. First of all, as we anticipated in our first quarter presentation, the result of Q2 were going to be higher as they have been. They have been at 10% higher than that of the first quarter. It could even have been bigger.

Carlos, Conference Host, Acerinox: If.

Miguel Ferrandis Torres, CCO, Acerinox: The dollar euro should maintain stable. Because of the dollar weakness, which for us obviously is a relevant fact, we have experienced an effect of around €10 million. €10 million. It could have been 20% improvement in a more stable scenario. In addition, at the quarter end, what we have done is an inventory adjustment of €28 million due to the absolutely poor situation of the European market. Still the prices, as has been talked by Bernardo, the prices are going down. There is the demand is extremely weak. Increased imports of 80% are going through our distribution. On that basis it has appeared very prudent to make such inventory adjustment for preparing ourselves to the third quarter. This has been done at the end of the quarter. In terms of this €28 million, when we compare with the first semester last year, there are two circumstances.

One obviously is at that time we have the strike in Spain. Most of the contribution was coming for our most profitable business. Also, when we take our most profitable business, which is North American Stainless, we must keep in mind the product mix. Especially in the stainless steel, we are more or less running clearly our mill. In these uncertainty days there are sectors which for us are high margin sectors that are less active. For example, in the long products or in the hot material, which for us are better margin sectors, there is no activity, there is no investment. Everyone is waiting for taking a specific decision. We are concentrating our production more in the ferritic types, in the appliances and all these other sectors which at the end their margin contribution is lower.

This combined with the effect of a lower extra alloy surch create this effect of the lower contribution in very good margins, but lower contribution than the previous year by North American Stainless. This is something that gradually, as soon as more or less there is more visibility, the market normalizes shall be improving. This is also something that has been taking place during this first semester. We have made the non-cash tax impairment that Bernardo mentioned. Because of that, at the bottom of the P&L, it appears some loss, which at the end is not a cash out. It’s just a clear over prudent scenario for assuming difficult circumstances in Europe.

Also, following the laws for being not only more than prudent, but also having a limit on all the recovery of the tax credits that can be done on an annual basis, this obviously is an adjustment that should be reversed. As soon as the conditions improve, we reach our net financial debt. You know that this for us is really not a headache when you compare at the bottom of the second file. Last one year ago our net debt was €191 million. We should be probably on cash if we should have not decided to make the strategic investment of Haynes. As a consequence of that, we are showing this net debt of €1,222 million. Obviously, it’s also affected by the depreciation of the dollar against the euro, which has had around €120 million impact. It’s something that does not concern us.

As you know, we have no any structural problem regarding debt, regarding covenants. All our debt is covenant free. In terms of profitability, it’s just more or less showing that at the end we are in position of making aggressive strategy investments and acquisitions in the low part of the cycle. Because of that, the debt appears to be high. As I expressed before, this is not an issue, and we understand that with a normalization of the market and a higher contribution of the EBITDA, gradually we shall be able obviously to reduce as scheduled.

Going to divisions. If we focus on stainless steel, we are presenting a better beta, 20% better EBITDA than in first quarter. It would have been even better if we take out the effects of the conversion to the U.S. dollar and the depreciation of the conversion of our U.S. dollars into Euros. If we continue with the comparison between quarters, we see that with similar production volumes, we are just reducing by 2%. We are getting these better margins. We are growing in margins from 6% to 7%. This is basically due to the higher contribution from our U.S. markets. We are progressively increasing the margins in United States. Regarding Europe, the market situation, as they have explained, is weak. The main effect in this quarter is the pressure of the inputs. The pressure of inputs in this quarter is affecting not only the volumes but also the prices.

There is a strong price pressure in Europe which is negatively contributing to our results. In terms of operating cash flow, we remain with our program of reducing working capital, and we are maintaining an operating cash flow of around $40 million, same as we achieved in quarter one. Despite this challenging momentum, when comparing with the figures with 2024, we cannot forget the effects of the strike. It is important to take into consideration that because of the strike in 2024, we were selling more in those markets with the higher margins. That’s the explanation of the reduction of market margins compared to 2024. As I said, we are increasing margins from first quarter to second quarter and we expect to continue on that line.

Regarding cash flow, there is also an effect when comparing to 2024 and it is also caused by the strike, because we were reducing inventories and selling from inventories because of the non production in Europe. If we go to high-performance alloys in this section and in this division, the operating EBITDA really has been flat. It’s true that they’re reporting we have $3 million less compared to first quarter, but this is purely an accounting effect. Because of the purchase price allocation, when acquiring North American Stainless, we did a revaluation of inventories to fair value and now we are releasing that revaluation and it has affected in $3 million. If we take out that effect, the result would have been the EBITDA would have been exactly the same as for first quarter. I think that it is important to remark the strategy, okay?

I think our strategy of diversification and growing in new markets and new sectors and is with the acquisition of Haynes is really allowing us to compensating negative with positive effects. On one side we have this lowdown on oil and gas and chemicals. In the other side we can compensate that with the progressively growth on the aerospace and the aerospace and the gas tubing, which is where we are more exposed now in the United States. This is really, really. We are really proud of our strategy and how we are able to compensate. Another effect to take into consideration, and that’s especially when comparing to 2025, is the effect of the nickel. Okay? We cannot forget the nickel has strong impacts in these high-performance alloys for two reasons.

One is the content of nickel of the material that we produce and the second is the higher level of inventories. In that sense we were still positively affected last year by the nickel tailwinds, while in this year we are likely on a headwind. That’s also a factor to take into consideration. Lastly, on the operating cash flow which has been reduced in this dependent envision from quarter one. This is mainly impacted by the payment of taxes, okay? We have had a payment of $37 million of taxes in this second quarter. That relates to results that we had in 2023, okay? It really was the best year in history of VDM. That is what is causing the cash flow in the second quarter to get down.

Now going into the capital allocation and our cash flow, okay, we have generated an operating cash flow in this quarter of $48 million, okay? Starting by the EBITDA. We had an EBITDA as mentioned of $112 million in this quarter, okay? We are continuing as mentioned with our plans to reduce working capitals. This has had a positive effect in this quarter of $73 million. It is true that these $73 million are also impacted by the depreciation of the U.S. dollars, which is what you see on the column other. Out of these $77 million, $52 million is the conversion differences of the working capital, but still reducing our working capital in the quarter. We have paid taxes and if you compare to last to the half, okay, all of the taxes are paid in this quarter. We are paying $47 million of taxes.

With all that, our operating cash flow of $48 million in the quarter, $148 million in the semester going into CapEx, okay? We are growing in CapEx. We have mentioned that we are in a strong year of CapEx and it will be increasing along the year. In this quarter we have had €68 million, which is compensated with the €68 million that we have received from the sale of Bahru. Remember that we had a delayed payment in this quarter and this has been received. Mostly it is compensated. That is why our free cash flow is €49 million, which is the same as the operating. Then it comes the effect of.

Carlos, Conference Host, Acerinox: The.

The depreciation of the U.S. dollar, okay? Because of our strong position in cash in U.S. dollar, which remains solid, remains strong, we have an effect when converting into Euros. That’s the $76 million that we are showing in the last column, which makes our debt increase $27 million in the quarter and achieve the figure of $1.2 billion. If we go to the half of the year, the effect is even stronger. We have had a negative effect on the debt of $116 million because of that conversion factor. That has been $116 million out of the $102 million of increase of net financial debt. $116 million is caused because of this conversion difference.

Miguel Ferrandis Torres, CCO, Acerinox: In sustainability, once again we are proud about our safety improvement of 8%. Remember last year we committed that reducing all those minor injuries that were taking place as a consequence of the continuous interruption in production. We have achieved that. In terms of our targets on waste reduction, we are fully committed to this circular economy and we are getting close to our target of valorization of 90% of our waste. We are already almost in 80%. We still have more five years for fulfilling that target. We are sure we are going to be there earlier than expected. In terms of the emissions, we have reduced 25% intensity of our reduction from the base year of 2021. Also, in terms of water footprint, we have overperformed our aggressive initial targets. This motivates us to establish even a more ambitious target.

Now we are making, in terms of water footprint, specific targets for each of the plants according to their local circumstances. This is a program that we are actually developing and shall be in place in the second semester of the year at the end. Also, we are proud about the great success of the EcoStainless. We have gone through more than six types of stimulus now done in this basis with 100% renewable energy use and with more than 90% recycled material from its source. With this we are able to commit and verify and certify to our customers also a 50% reduction in the CO2 intensity. It has been a great success. We are developing, it’s getting well introduced to our customers, and this is something that clearly deserves our recognition to our team for developing and putting it in place.

Bernardo Velázquez Herreros, CEO, Acerinox: Going to the Beyond Excellence plan. It’s important to say that despite all the organic growth that we are facing and despite all the new investments, we know very clearly how important it is to keep our cost under control in our business. This is the origin of the Beyond Excellence plan. In this case, we predicted a €100 million saving starting in 2024 and 2026. The target for 2025 is €45 million, and in the first half of the year we have achieved €23 million. That is 50% of the target. Just to remember, how are we following this plan? This is based on individual projects in all the mills. All these projects are not repeated between the mills because once we succeed in one of the mills, it is extended to the rest of the units and is based on six pillars.

Efficiency, that is basically optimization of raw materials and consumables, trying to find all the time the cheapest raw material for our basket to produce stainless steel and high-performance alloys. Productivity, that is basically working time, and we are applying the new maintenance technologies. Customer centric, there is quality and service adapted to customers, and R&D, there is a new grade that we are developing adapted to the necessities of the market. Supply chain is purchasing and store optimization, and decarbonization, that is the way that we are following our targets in decarbonization with the improvement of our efficiencies, reducing energy consumption, gas and electricity to reduce our CO2 footprint. Of course, all these things are not only based on our experience and our benchmark between the units, as we did in the past.

We are applying all our knowledge and we are applying all the new technologies in digitalization, artificial intelligence to take the right decision, to anticipate problems, to have a kind of predictive maintenance, but also predictive quality control. We are happy to say that this new methodology for our residence plants is performing really well, and it’s a way to implement a culture of continuous improvement in the company. We will keep on reporting what is happening in this field.

Miguel Ferrandis Torres, CCO, Acerinox: In regarding of the controllables, we have demonstrated that we are properly sailing in these troubled waters of the uncertainties in this year. In addition, we are clearly focusing on our strategy. When you see the main chapters, it’s easy to understand if we go to the upper line, we are investing and we are making relevant investments in that part of the business where we are obtaining higher results, higher margins, and consequently where the return is warranted to be achieved quickly. This is in the case of North American Stainless. We are increasing production capacity by 20%, probably starting from the end of this year. In an excellent time, according to the expected conditions on the money market, especially with more visibility that is gradually coming during the second semester. The timing is adequate for North American Stainless.

In addition, we are also expanding and investing in VDM Metals as has been announced, increasing its capacity almost for a 10%. We are concentrating our relevant CapEx in these areas with highest warranty returns. In the areas which are facing more difficult conditions and more market uncertainties, we are making virtue out of necessity. In the case of Acerinox Europa, as you know, we have been developing a new business model in which with no huge investments, we are able to increase the value added of our production approach directly more final customers and so on. It has taken a bit more time than expected and obviously we need to pass through the strike last year in order for having the implementation in the wage agreement of all the measures that were necessary. Finally they are there.

In the case of Columbus also what we have been is focusing our strategy on diversifying its range of products and making it the most flexible plant in the group and mainly in the world for creating not only stainless, but also creating carbon steel, producing also electrical steel and now covering the whole range, which is more or less the best position for Columbus for not being exposed to exports and also being focusing on covering the necessities on different type of steels at the local market. In addition, at the same time we are doing that we are clearly excited and extremely satisfied of the integration process of Haynes International. There is a great success on the 22 work streams that have been around the whole group working together in that integration.

We have confirmed that more or less even the initial synergies figure established at 71 probably can be. We recognize in the last results presentation that we are now focusing on 75 and maybe it shall be appearing more and they are actually in place. We have been very agile also in the allocations of the investments to be done, and most of the equipment already are in the final process or already have been allocated. In that regard, it has been very satisfactory working together and integration of the local team at North American Stainless with expertise in expansions and investments of our people in Kentucky, in North American Stainless, obviously with the know-how and expertise in that segment by the VDM team in Germany. The combination and the integration is running fabulously and consequently we are going to be probably obtaining earlier success even than expected.

In addition, an area that is obviously our key focus as we assume the level where we are, the debt that we have incurred for making this strategy approach, and we are focusing in controlling the working capital, which is in our sector and especially for the cash generation is one of our drivers. As has been appearing in the slides, we are also in these circumstances obtaining great cash flow generation.

Bernardo Velázquez Herreros, CEO, Acerinox: Coming to the end. Just to remark that we are controlling the controllables, going ahead with our strategy in this situation. I think the results that we’re delivering is the best that we can do and that will improve because we are doing our homework. I think having been in this position as CEO of Acerinox for the last 15 years together with this team, I think that we have already demonstrated that we know how to serve in these waves. It’s not the first time that we have to go back to our trenches and try to control our working capital, deliver a good cost reduction, and at the same time trying to improve and do our best to take advantage of our diversification, our localizations, and what is happening in the new economy. Adapting to the cycles and adapting to the new economy.

In this sense, the expansion in the United States with organic growth in North American Stainless and with high-performance alloys in Haynes was a really good decision and we are proud of our study. Of course, this is something that we cannot do if we don’t have our traditional financial strength. It’s also, I think, very important to say that we are investing in the low part of the cycle. In the low part of the cycle with the lowest results, we are capable to afford all these shareholder remuneration and all the capital expenditure that we have mentioned before. We think that we are in a very good situation. We’re in the pole position for the new good cycle and in stainless steel we are sure that of course the conditions in the American market are going to mitigate our exposure to the European market, but also will improve.

In high-performance alloys we have a weak order book, especially in Europe, but we are compensated with a better situation. In aerospace, with this low visibility, with all these uncertainties and trying to, considering the facts that we have today and we are calculating our forecast, we don’t have a crystal ball, but according to today’s conditions, we expect Q3 to be in line with the EBITDA of Q2, despite this is a liability of this period. Of course the situation changes, the situation improves. We believe that once the tariff situation is stabilized and once we have a clear picture of what are going to be the new rules of the game, the markets will restart again and the situation is going to be better.

In this sense, with being in United States, being in Europe, being in South Africa, our three strong markets, and also being diversified in high-performance alloys and all the sectors of high-performance alloys from chemical to aerospace, we are in the best position. I think our strategy is the best in the market and we have a more clear future. Thank you very much.

Carlos, Conference Host, Acerinox: Thank you, Esther, Bernardo, Miguel, for the presentation. Let’s move now to the Q and A session. Please, operator, go ahead.

Conference Operator: Thank you. If you would like to ask a question, please press 1 on your telephone keypad. If you would like to withdraw from the queue, please press star 2. The first question is from Adahna Ekoku from Morgan Stanley. Please go ahead. Hi, morning all. Thank you very much for the presentation. Just on the guidance, as you mentioned at the end, could you help us with the building blocks? Are you assuming kind of broadly stable volumes and prices across Europe and the U.S. or is there any kind of price recovery assumed in the U.S. and maybe some lower volumes given seasonality? Thank you.

Bernardo Velázquez Herreros, CEO, Acerinox: We are forecasting a stable situation for Q3. Prices in Europe are low. We don’t expect a recovery and cannot go down more in Europe during the summer season. In the United States, we are trying to increase our prices, which is not easy under the current circumstances, but we are working on that. Also, considering a stable scenario, more or less considering the seasonality of our business, more in July in the United States, more in August in south of Europe, we are considering a stable market. That’s why we are forecasting that Q3 is going to be very much in line with Q2.

Miguel Ferrandis Torres, CCO, Acerinox: You too.

Conference Operator: Thank you. The next question is from Tom Zhang at Barclays. Please go ahead. Hi. Thanks. Two questions for me, please. The first one, just a follow up around the U.S. We understand you’ve been trying to push price increases. We’ve seen some pretty hefty attempted hikes, I think north of $300 a tonne on base price, I guess. Any color around how much of that you’re baking in into your Q3 guidance? I mean, are you being still quite prudent or just any color around what we could see into Q3? The other question, just around a potential U.S. listing. I mean, you’ve been probably a little bit more open about talking around, looking at options for the first time. Could you just talk about how far along you are in terms of those considerations and controlling the controllables? How high a U.S.

listing might rank in your list of priorities, please. Thank you.

Bernardo Velázquez Herreros, CEO, Acerinox: Christian, you know that price is a very sensitive issue and we cannot speak in general about prices. The concept of market price is something that I always insist that doesn’t exist. I mean, prices are negotiated customer by customer, grade by grade, order by order. In this sense, we see the good conditions. We will try to push prices up, also defending our customers. We cannot abuse our customers. We are trying to always get the better price for the condition in which we are working. We are now trying to identify that there’s an opportunity in the United States to increase some prices, not all the market. We are working on that. This is basically what I can say about this. Regarding the U.S. listing, of course, we have to study every possibility if that is creating value for our shareholders.

In this case, now we are involved in the Haynes integration. It is our most important topic and Haynes must be integrated. The best way to have a good integration process is when you own 100% of the company. In this sense, we have the next two years, three years that will be a focus and 100% focus on the integration of Haynes. Once we finish with this integration, maybe we can consider the possibility to be listed in the United States. We don’t trust very much in the dual listings, so we are thinking maybe in listing some of our business, part of our business, especially the American part, in the United States. This is something that still we don’t have on the table.

Conference Operator: Thank you. Our next question is from Tristan Gresser from BNP Paribas Exane. Please go ahead. Yes, hi. Thank you for taking my questions. I have two as well. The first one, maybe if you can discuss a little bit the free cash flow outlook, if you can confirm if there’s been any change to the CapEx for the year. What would you expect in terms of working capital into Q3 or Q4? I think previously you had expected to decrease net debt by year end. Is it still the plan? Are you going to be able to bring it down on a year-on-year basis? The second question is just going back to the U.S. I was wondering, I think one of your competitors in Ohio was ramping up a bright annealing line, notably targeting the appliance market.

I was wondering if you’re seeing any impact of that, what your expectations are around that. Regarding the tariffs, more generally speaking on the downstream products, we’ve seen some reshoring announcements as well. I just wonder if you could comment a little bit on the demand picture there and the potential impacts on reshoring. Thank you.

Okay, thank you Tristan. Regarding free cash flow and net financial debt, as we announced and we continue on that line, we are on expansion phase and we think that our CapEx is going to grow also in the second half. We expect in the year to be in the range of $300 million, which is what we have announced over the quarters. We are almost closing and some of them have already been closed, the contracts for the investments in Haynes, and that will be payments that will be raised in the second half of the year. We continue with our expansion in the CapEx and increasing from in the second half probably more than in the first half. About net financial debt, we do not expect many changes on the debt.

We will try to keep on with similar levels as where we are now and using our working capital to really compensate those increases on the CapEx for the second half. We also expect higher tax payments. We had some postponements on the tax on the U.S. because of the floods in Kentucky state, so most of the tax payment will come also on the second half of the year. In the end, of course, we have factors that we cannot control, which is the U.S. dollar and things like that. At similar levels of U.S. dollar as what we are now, we expect to keep the net financial debt in the level where we are now.

Bernardo Velázquez Herreros, CEO, Acerinox: Regarding your question about competition in bright and ill material in the United States, what I can say is that BA in the United States is a good business. That’s why we invested in a BA line there. We came first, but it’s a good movement. I think there’s room for the two of us. Appliances is a sector that is growing in the United States with the current tariffs to appliances with the different countries, plus being included appliances in Section 232. It is normal to think that imports will go down in the future and that the American consumption will increase. In this sense, most probably Cleveland Cliffs, they will take a portion of imports of BA material, and there’s room for everybody. We are fully booked in BA material and probably market needs some more American production.

Conference Operator: Thank you. Our next question comes from Krishan M. Agarwal from Citigroup Inc. Please go ahead. Hi, thanks a lot for taking my question. One question on Europe. The markets have been weaker and the prices have been lower. Can you confirm as in what level of profitability Europe is operating? Is it breaking even or no? Is it loss making at current price cost spread dynamics, and then are you looking for any kind of a cost optimization into the second half, particularly in Europe?

Bernardo Velázquez Herreros, CEO, Acerinox: Thank you, Christian. I’m sorry, but I cannot speak about prices, and also we do not disclose the profitability per company, so we cannot answer the first two questions. Cost optimization, of course, we have a very strong program of cost optimization in Europe, in Acerinox Europe, and not only cost reduction but also increasing in the top of the profit and loss accounting, improving and increasing our sales or our turnover, looking for more end users, looking for more difficult sector, looking for new stainless steel grades, and especially stainless steel that can give us with higher added value and a better margin. We are working hard on this, and this is what I can say.

Conference Operator: Thank you. Our next question comes from Dominic O’Kane, JPMorgan Chase & Co. Please go ahead. I’ve got two questions. If I could ask the previous question a slightly different way, are you considering capacity curtailments or closures in Europe at the moment? My second question, if I just go back to recent comments and the comments you made on the U.S. listing, if I understand correctly, are you also considering, rather than a straight change of the primary listing, an option to demerge your U.S. steel assets? A separation and a demerger of U.S. assets only. Thank you very much. Bye.

Bernardo Velázquez Herreros, CEO, Acerinox: No, asking the second question. Still, we are not considering anything. Still, we are busy with integration of gains. If there’s different possibilities to be listed in the United States and that can give us more value for our shareholders, we will think in the different possibilities. Remember that multiples in the past were more or less the same in Europe and in the United States. United States is since 2018 when multiples started to grow in United States and to go down in Europe. I remember that traditionally our EBITDA multiple was eight or nine times. Now we are probably in five and some of our American competitors are above 10. This is something that came after 2018. Who knows in a couple of years how it’s going to be. The situation now, there are different possibilities.

We think that for the size of the market, and this is just first impression because we haven’t analyzed and studied this issue in depth, but have a dual listing for a medium company as Acerinox, I think we can lose liquidity. Moving to United States is a difficult operation. We can make an IPO of the American assets in United States. Probably this will be easier. Still, it is very preliminary. Still, there’s nothing decided and we are not studying seriously this issue.

Conference Operator: Thank you. Our next question is from.

Bernardo Velázquez Herreros, CEO, Acerinox: Sorry, sorry.

Conference Operator: Go ahead.

Bernardo Velázquez Herreros, CEO, Acerinox: I forgot to answer. The first question is capacity in Europe. The situation in Europe is not of overcapacity. Of course, if the imports are not limited and doesn’t change, we have to study some capacity reductions or some consolidation, I don’t know. Until now this possibility has not been considered in the European Commission. Remember that the last time that one of the European players wanted to acquire another one, it was not allowed, or they were forced to, as a remedy, to sell one of the assets. Now this is not easy. I think what we have to Europe is a good market. Europe has good stainless steel producers. We don’t have a clear overcapacity in the business. What we have is an excess of low price imports in the area.

Conference Operator: Thank you. Our next question is from Tommaso Castello at Jefferies. Please go ahead. Yes, good morning everyone and thanks for the opportunity. Maybe as a follow up to the last two, Bernardo’s last comment on imports. I was wondering whether, like from a macro standpoint, I mean in carbon steel we are hearing about rumors regarding China cutting overcapacity by, I don’t know, like 50 million tons potentially towards the end of the year. Is there any similar discussion happening for stainless as well? If you could again give some color on where are, like, imports mostly coming from. Thank you.

Bernardo Velázquez Herreros, CEO, Acerinox: I remember that it was more than 10 years ago when the WTO implemented the group to discuss the excess of capacity, overcapacity in the steel sector. Since that time, China started promising to reduce capacity. They are closing some of the old plants, but they are building new plants. What I think is that we have to consider that we have to protect our markets. If China, in the case of steel, China plus the Chinese players in Indonesia are now responsible for 72% of the production of our sector. Somebody has to put a limit if China doesn’t want to tackle this point. I think that with the markets, with the different market, we have to protect now. I don’t believe that there’s a serious discussion in carbon and I hope that it really happens.

Still, this is not a reality and I don’t think that is going to happen at this time. What I expect is a reaction in the European Union strengthening conditions to try to import unfair competition from imports. The main source today is basically Indonesian material that is rolled in other areas, as can be Vietnam or basically Taiwan. This is Chinese or Indonesian materials. That’s why we also want to change the rules of origin in Europe and move to this melt and port. If you produce slabs in Indonesia and China and you hot roll these slabs in other countries, the origin changes to the new country. We cannot control the anti-subsidies that were implemented in the EU against Indonesia, for example.

Conference Operator: Thank you. Our next question is from Maxime Kogge from ODDO BHF Corporate & Markets. Please go ahead. Yeah, good morning. Two questions on my side. The first is regarding the new cold rolling mill in the U.S. You have hit certain milestones and the startup is getting near. I was wondering if you could speak about the ramp-up profile of this new unit. Do you need to go through some certification process with the clients, or can it be relatively fast, and can we bank on something like a 20% increase in cold rolled output already next year? The second question is about the tariffs in the U.S. It seems that the activity is held back by the fact that everyone’s counting on these tariffs to go down, possibly to 25% or 0%. What’s your view on that?

Do you think that the government will stay firm in maintaining this 50% of tariffs, or will it make some concessions like it has already done with the UK? Thank you.

Bernardo Velázquez Herreros, CEO, Acerinox: Okay, so we are going ahead with our capital expenditure in the United States. We are now, we finished the foundations of the new cold rolling mill and we expect that we’ll start the first coil in December. At the end of the year when we made our plan for this capital expenditure, we are considering normal growth of the American market of around 2%. That basically will, with this new cold rolling mill, we will keep our market share. This is going ahead. Not really, we don’t really need special certifications for the new material. Most of the customers have already certified the plant and all the assets and the new cold rolling mill. In this case, maybe some of the very special industries would like to have a special certification, but it’s something that is not going to take a long time to be done.

Regarding tariffs in the United States, what I can tell you is that this is totally, today is totally unpredictable. I cannot say what’s going to happen. I know that the negotiations, apparently negotiations between the European Commission and the United States are very close. Apparently, they are going to put a general 15% tariff for all the European goods. No idea how this can affect Section 232. What we think is that it’s important that we don’t have any exemption in 2032 and we don’t have quotas. Only with these two things, the American market is going to be very well protected. 15% is already too much for the Europeans to pay in the United States. I don’t mind if it’s 25, 40, or it’s 50. We are happy the way it is for the rest of the items.

Of course, if we protect the rest of the industry, we will protect our customers. There is no way that we have protection in the steel industry and then our customers cannot compete with imports of their products. In this sense, I think that the United States is moving in the right direction.

Conference Operator: Thank you. Our next question is from Bastian Synagowitz from Deutsche Bank. Please go ahead. Yes, good morning all and thanks for taking my questions. My first one is coming back on your guidance actually for the third quarter and the building blocks there. Just focusing on the, I guess, the $28 million negative impact from metal charges in the second quarter. I guess also the very big price increases which you have announced in the U.S. Those are two pretty big tailwinds in theory at least, assuming that those are unwinding. Please correct me if the assumption is no longer valid. From memory, I think you have like 1/3 of your U.S. business in spot and then another 30% in quarterly contracts. In principle, you should get pretty decent translation from the higher prices as long as these are at least being accepted.

Just from your guidance for flat EBITDA in the third quarter, can we assume that your base case basically assumes that the $28 million metal headwind will pretty much continue in the third quarter and that the U.S. prices are not really sticking or impacting in the third quarter? Is there anything which goes meaningfully worse, which is basically absorbing these two effects? You said that European prices are pretty much stable and I guess with current low profitability, I don’t think that the volume which you’re losing because of the third quarter seasonality in Europe can weigh that much. Would be great to get a bit more color on that. That’s my first question.

Miguel Ferrandis Torres, CCO, Acerinox: Thank you, Bastian. Obviously, as we are saying there are several uncertainties. We are giving this guidance at the 24th of July, so there is not probably big room to changes from the info we have today. As normal, in the summer season it is normally not the common season for thinking on price increases. In a business as usual or in a business as where usual, once upon a time in Europe, normally the improvements in prices and so on took on September. In the actual circumstances it’s very difficult to see there is going to be a change in the feeling and in the business climate to accelerate the reaction of our customers and accelerate the order improvements. We are not considering relevant prices taking place during the third quarter.

As a consequence of that, we have made an inventory adjustment because we understand that with all the pressure on prices the situation is not going to change because of that. We have made that inventory adjustment for putting our inventory in the realizable value at the actual basis. This covers probably the reality for August and September. At the end of September we shall see if there is more visibility. If finally it appears that there is an agreement between European Union and the States, if there is more clarity of what takes place in the Russian Ukrainian war, all these facts may contribute. Maybe when we present the results of the third quarter we can give some color for the fourth quarter in Europe. On the actual basis we cannot expect any changes.

If the market remains as it is, we are more or less to be considered to be in line. If the market shall improve, shall be for the fourth quarter and also if still there is a huge deterioration of the circumstances in Europe, which we hope not to be the case, maybe we need to make another inventory adjustment at the end of September. In principle with this we are okay. Regarding the States, at the end everything is as expressed consequence of the same. Still we are lacking from our customers visibility on investing, on going through projects. This sector is, as I said before, is a high margin sector. We are running our mill with types which at the end are enough for running the mill, enough for having good profits. As has been indicated, the discussion on prices is customer per customer.

We appreciate that we are well based in a market in which the local supply is appreciated. The Buy American works. Obviously, this is our advantage. Unfortunately, we do not need to compete with the commodities because this is the part that is covered by imports, and also imports have raised in the state. We have our niche, and we are running properly in our niche. Actually, we think that more or less the discussion per customer that may be moving to move prices up shall be gradually during the second semester, but not necessarily for August or September being imprint changes. On that basis, the most clear picture we can say is that the third quarter shall be in line with the second quarter. We hope that in the results presentation of the third quarter we can give a more positive color.

Conference Operator: Thank you. Next question is a follow-up from Tom Zhang at Barclays. Please go ahead. Yes, thanks very much for taking the follow-up. Just one quick one for me. You’re obviously putting a lot of CapEx now into the U.S., I guess $240 million or so into North American Stainless and then the $200 million into Haynes. Do you know if any of that investment is eligible for 100% expensing or deductibility under the big beautiful bill? Could that be a sort of tax tailwind that we might see this year or next year?

Thank you, Tom. Yes, of course we are searching for any tax benefit from those expenses and of course most of them will qualify. This will help us just to make the 100% deductibility and extend the payment. For sure a lot of it might qualify for the deduction.

Thank you. This now concludes the Q and A session. I will hand back to Carlos for any closing remarks.

Carlos, Conference Host, Acerinox: Okay, thank you. We have one question from the webcast. The question is coming from Robert Jackson from Santander and it’s as follows. Could you give an overview of Columbus in the current environment once CapEx plants in VDM and U.S. are coming to a completion? Any plans for Columbus considering you invest in the low part of the cycle?

Bernardo Velázquez Herreros, CEO, Acerinox: Columbus is following our strategy that is in this case focused on the African market and diversification. In this sense, this year the stainless steel market is not in the best situation as is happening in the rest of the world. I think parent consumption is down by 4% and we are going ahead with our diversification. We are in carbon steel selling to some South African customers this year with some pressure coming from imports and trying to find, you know, to specialize in ferritics and other special grades. This is the idea to reduce the dependency on exports. In this sense, Columbus is more or less having a good margin and good profitability in South Africa and suffering a little bit because of the conditions of the European market and some other markets. Everything is going ahead and Columbus is in a good position.

I mean we have a very strong position in the African market and there is not cash burning. I mean it’s okay. Second question is CapEx plans. First of all, Robert, we have to finish our CapEx plans and every CapEx or every expansion of our plants is a project itself. We are used to have to be always successful with our investments. Every investment is a challenge and we have to finish the CapEx. The growing CapEx at VDM, the organic growth in the United States, the new investments in Haynes to modernize the plant, increase capacity and increase also the quality of the equipment of the product. We have to work with that to align with North American Stainless, to combine the assets of the two mills and to enter in new products and do a spread our portfolio. We have many things to do.

Columbus has some plans, we have some CapEx that we are considering but still this is not. They are not mature enough to be announced.

Carlos, Conference Host, Acerinox: Okay, thank you Bernardo, Miguel and Esther. As there are no further questions, that concludes today’s conference call. Thank you very much again for joining us. We hope that you enjoy your summer holidays and have a nice day.

Miguel Ferrandis Torres, CCO, Acerinox: Thank you.

Conference Operator: Thank you.

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