Acerinox’s Q3’22, weaker than expected (Ebitda -18%); prospects for Q1’23 improve

Acerinox cool

Bankinter | Acerinox has reported net profit of 741 million euros in the nine months to September, 99% higher than a year earlier. However, in the third quarter net profit dropped 22% to 133 million euros, due to a slowdown in activity in this period.

The main figures compared with the company’s consensus for Q3’22: Revenues 2.175 billion euros (+28% yr/yr) vs 2.314 billion estimated; EBITDA 241 million euros (-18% yr/yr) vs 253 million estimated, NAP 133 million euros (vs -22% yr/yr) vs 143 million estimated. The EBITDA margin was 11% for the group as a whole, 11% in Stainless Steel and +12% in high performance alloys. Net debt was 763 million euros up from 547 million (vs 530 milion estimated), which represents 0.51x NFD/EBITDA (of the last 12 months) vs 0.37x at June ’22. Operating cash flow in Q3’22 was -50 million euros, given the increase in working capital and the share buyback.

The dollar is still favouring exchange differences. The outlook for Q4 2022 flags up an EBITDA lower than that in Q3. Despite that, the company points out that the US is maintaining a better tone than the rest of the markets. It expects this to continue in the coming months and they remain optimistic about the high performance alloys sector. Furthermore, they expect a reduction in working capital which will have a positive impact on cash generation and debt reduction. 

Bankinter analyst team view:

The results are slightly below consensus, although close to the company’s outlook. They already flagged an EBITDA in line with the average for 2021 (some 247 million euros vs 241 million announced). This already anticipated a shift in trend after the record figures of previous quarters. The EBITDA margin falls to 11%, towards the historic average of 8.1% (ex 2009 negative). 

Acerinox’s outlook for Q4 flags up a new decline in EBITDA. It’s a fact that this is a seasonally weaker quarter in the US, where estimates point to a better tone than in the rest.

So we will revise our estimates and valuation after the company’s presentation today. In the short term, the stock will continue to be pressured by uncertainty in the European business. However, we believe it is trading at historically low multiples (close to two standard deviations below its average EV/EBITDA) and has exposure to the US market and VDM, where the outlook remains positive, and a good financial position.

ACERINOX (Under Review; T.P. Under Review)

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