PRESS RELEASE
28th October 2011
Results as of 30th September 2011
- Acerinox Group reports for the first nine months of year 2011 results after taxes and minorities of 103 million euros, 5.4% higher than the figure achieved for the same period in 2010
- Results before taxes for the third quarter was 5.5 million euros and results after taxes and minorities was 1 million euros. This period has been heavily impacted by the sharp fall in the raw material prices and the consumption slow down due to the world financial uncertainty
- The inventories has been adjusted to net realizable value for 17 million euros
- The policy of working capital reduction has allowed us to reduce the debt in the third quarter by 212 million euros. Moreover, also in the third quarter Acerinox has increased the credit lines by 150 million euros. This allows us to face the financial uncertainty with confidence
- The Phase I of investments in Bahru Stainless started up in November accordingly to the forecasted schedule and budget
- The forecasted market recovery has not occurred, and is not expected until the first quarter 2012
2009 2010 2011
19
-93
68
6
16 25
1
-162
34 71
10
-175 -125 -75 -25 25 75 125
1º Q 2º Q 3º Q 4ºQ 1º Q 2º Q 3º Q 4ºQ 1º Q 2º Q 3º Q 4ºQ
RESULTS AFTER TAXES AND MINORITIES
Million € ACERINOX GROUP
Raw Materials
The Nickel price has experienced a correction in August and September of 27%
because of the international financial uncertainties, which has affected the expected recovery of demand from the month of September.
The alloy surcharges continue to decrease from the high values calculated in Europe for March, with a drop of 22%. In the United States the highest alloy surcharges were applied in April and as of September the accumulated reduction is 16%.
J F M A M J J A S O N D J F M A M J J A S O N D 0
5,000 10,000 15,000 20,000 25,000 30,000 35,000
OFFICIAL NICKEL PRICE IN THE L.M.E.
(Years 2010 – 30 September 2011)
Average price: cash / three months USD/Mt.
Markets
• Europe
The expected recovery of consumption in Europe has not taken place despite the low levels of inventories. The uncertainty of the financial markets, the imports from other countries and the downward trend of the alloy surcharges have affected the volume of orders for the third and fourth quarter.
• America
The better situation of the North American market, our largest market, has maintained the rises of base price of the second quarter.
STAINLESS STEEL COLD ROLLED SHEET PRICES AISI. 304 2.0 mm(2002 – September 2011)
Base Price Alloy Surcharge SOURCE: MBR
USD/Mt NORTH AMERICAN MARKET
02 03 04 05 06 07 08 09 10 11 0
500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 5,500 6,000 6,500 7,000
02 03 04 05 06 07 08 09 10 11
STAINLESS STEEL COLD ROLLED SHEET PRICES AISI. 304 2.0 mm(2002 – September 2011)
Base Price Alloy Surcharge SOURCE: MBR
€/Mt GERMAN MARKET
0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000
• Asia
The Asian market is still the most active, although, as discussed in June, the Nickel weakness and the existing high capacity in this market have not allowed to increase prices.
02 03 04 05 06 07 08 09 10 11
STAINLESS STEEL COLD ROLLED SHEET PRICES AISI. 304 2.0 mm(2002 – September 2011)
USA
GERMANY
SOURCE: Metal Bulletin Research “Stainless Steel Monthly”
ASIA (since year 2008;
average of China,Taiwan and South Korea)
USD/Mt, final price, alloy surcharge included
1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 5,500 6,000 6,500 7,000
Production
The Group production has dropped to match to the lower entry of orders and to adhere the policy of inventory reduction. Year to date production is 4.5% lower than in the same period of 2010.
EVOLUTION OF ACERINOX GROUP PRODUCTIONS
Year 2010 Year 2011
MELTING SHOP (Mt)
535,544 559,227
492,691 492,256
451,990 472,132
571,646
0 100,000 200,000 300,000 400,000 500,000 600,000 700,000
1º Q 2º Q 3º Q 4ºQ 1º Q 2º Q 3º Q 4ºQ
2010
1Q 2Q 3Q 4Q Accumulated Jan - Jun
Melting shop 571.6 492.3 452.0 1,515.9 1,587.5
Hot rolling shop 502.3 435.9 394.8 1,333.0 1,368.2
Cold rolling shop 346.2 308.1 295.0 949.3 995.2
Long product (Hot rolling) 51.2 52.1 46.0 149.2 158.8
Thousand Mt 2011
Results
In the third quarter, the net sales of 1,061 million euros, is 7.5% lower than the previous quarter. Thus, the accumulated net sales as of September are 3,622 million euros which is 8.2% higher than in the previous year.
The North American market is the largest market of the Acerinox Group, representing 45% of the sales.
The contribution of the Spanish market to the Group results continues decreasing. Net Sales in the Spanish market are only 9.5%
September 2011
September 2011 Year 2010
AFRICA 6.5% 5.9%
AMERICAS 45.0% 44.4%
ASIA 9.2% 9.1%
EUROPE 38.7% 40.3%
OCEANIA 0.5% 0.3%
TOTAL 100.0% 100.0%
GEOGRAPHICAL DISTRIBUTION OF ACERINOX GROUP NET SALES Million €
EVOLUTION OF ACERINOX GROUP NET SALES
617
783
1,152
918
1,413
1,176
1,061
675
1,147 1,173
999
0 250 500 750 1,000 1,250 1,500
1º Q 2º Q 3º Q 4ºQ 1º Q 2º Q 3º Q 4ºQ 1º Q 2º Q 3º Q 4ºQ
2009 2010 2011
EBITDA for the first nine months of 2011 of 315 million euros, is 10.1% higher than in the previous year, despite the third quarter being the worst of the year, of 58 million euros (74 million euros in 2010) .
The accumulated EBIT amounts to 205 million euros, 17.2% higher than the figure achieved for the same period in 2010 (175 million euros). EBIT in the third quarter is 22 million euros (37 million euros in 2010).
Condensed profit & loss account. Acerinox Consolidated Group
The reduction of the alloy surcharges has led the Group to carry out an adjustment of inventories to net realizable value in the amount of 16.7 million euros.
Once the previous adjustments have been made, the income before taxes achieved by the Group totals 162 million euros, improving by 12.9% on the figure obtained in the first nine months of the year before.
Net income of this period total 103 million euros, which is 5.4% higher than the figure of 2010 like period.
Million € 1º Q. 11 2º Q. 11 3º Q.11 2011 2010 Variation
Net sales 1,413.35 1,147.13 1,061.29 3,621.76 3,348.59 8.2%
Gross margin 388.81 329.84 261.07 979.72 935.92 4.7%
% over sales 27.5% 28.8% 24.6% 27.1% 27.9%
Gross operating result
/ EBITDA 151.21 106.18 58.30 315.70 286.74 10.1%
% over sales 10.7% 9.3% 5.5% 8.7% 8.6%
EBIT 114.09 69.81 21.69 205.60 175.45 17.2%
% over sales 8.1% 6.1% 2.0% 5.7% 5.2%
Result before taxes
102.51 54.13 5.50 162.13 143.64 12.9%
Result after taxes and minorities
67.81 33.99 0.96 102.76 97.50 5.4%
Depreciation 37.36 35.93 36.45 109.73 109.89 -0.1%
Net cash flow 105.16 69.91 37.41 212.48 207.39 2.5%
January- September
Condensed balance sheet. Acerinox Consolidated Group
The Group working capital has decreased by 14 million euros in the first nine months of the year. The third quarter has had a significant reduction of 210 million euros, mainly due to a significant reduction of inventories.
The debt has been reduced by 212 million euros in the quarter. The net financial debt as of 30th September amounts to 1,074 million euros
ASSETS
Million € Sep 11 2010 Variation
Non-current assets 2,144.02 2,235.57 -4.1%
Current assets 1,921.40 2,004.79 -4.2%
- Inventories 1,196.04 1,336.66 -10.5%
- Debtors 517.50 534.96 -3.3%
Trade debtors 478.02 494.44 -3.3%
Other debtors 39.48 40.52 -2.6%
- Cash and other current assets 207.86 133.17 56.1%
TOTAL ASSETS 4,065.42 4,240.36 -4.1%
LIABILITIES
Million € Sep 11 2010 Variation
Equity 1,859.77 1,923.74 -3.3%
Non-current liabilities 1,076.74 992.19 8.5%
- Interest-bearing loans and borrowings 823.35 724.74 13.6%
- Other non-current liabilities 253.38 267.45 -5.3%
Current liabilities 1,128.92 1,324.43 -14.8%
- Interest-bearing loans and borrowings 430.97 472.39 -8.8%
- Trade creditors 460.77 603.76 -23.7%
- Other current liabilities 237.18 248.27 -4.5%
TOTAL EQUITY AND LIABILITIES 4,065.42 4,240.36 -4.1%
The cash flow generated by the Group for the first nine months of the year totals 174 million euros. 270 million euros of cash flow achieved in the third quarter more than offset the negative flow from the first half of the year.
The new factory in Malaysia accounts for the majority of the total accumulated paid investment of 129 million euros.
CONDENSED CASH-FLOW STATEMENT CONSOLIDATED GROUP
Million euros
Ene - Sep 2011
Jan-Dec 2010
Jan-Sep 2010
Result before taxes 162.1 192.5 143.6
Adjustments for: 193.6 205.5 156.1
Depreciation and amortisation 109.7 147.8 109.9
Changes in provisions and impairments 4.0 1.0 5.4
Other adjustments in the result 79.9 56.7 40.8
Changes in working capital -87.5 33.3 -187.9
Changes in operating working capital (1) 14.0 -74.9 -338.3
Others -101.5 108.2 150.4
Other cash-flow from operating activities -93.9 -75.9 -21.7
Income tax -50.5 -26.2 11.2
Financial expenses -43.4 -49.7 -32.9
NET CASH-FLOW FROM OPERATING ACTIVITIES 174.4 355.5 90.1
Payments for investments on fixed assets -128.9 -223.2 -164.9
Others -1.4 -11.0 -7.9
NET CASH-FLOW FROM INVESTING ACTIVITIES -130.3 -234.2 -172.8
NET CASH-FLOW GENERATED 44.1 121.3 -82.7
Acquisition of treasury shares 0.0 0.0 0.0
Dividends payed to shareholders and minorities -87.3 -112.2 -87.3
Changes in net debt 78.0 11.5 205.1
Changes in bank debt 57.2 49.3 246.3
Conversion differences 20.8 -37.8 -41.2
Attributable to minority interests 34.6 11.7 0.0
Others 0.5 0.4 0.2
NET CASH-FLOW FROM FINANCING ACTIVITIES 25.9 -88.6 118.0
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 70.0 32.8 35.4
Opening cash and cash equivalents 113.6 73.3 73.3
Effect of the exchange rate fluctuations on cash held -4.0 7.5 9.5
CLOSING CASH AND CASH EQUIVALENTS 179.5 113.6 118.2
(1) Inventories + trade debtors - trade creditors
The financial strength of Acerinox Group has allowed an increased in the third quarter of the lines in force by 150 million euros up to 2,182 million euros. This increase contrasts with the current international credit restrictions. This, joint with the reduction in debt of 212 million euros allow us to face with guarantees the financial turbulences.
The Group liquidity is guaranteed for the next years thanks to the fact that 77%
of the debt is long term. Nevertheless, Acerinox Group following its traditional policy continues exploring efficient financial alternatives.
As of 30th September Acerinox Group complies with all of its debt covenants.
23%
77%
September 2011
DISCLOSURE OF THE SHORT AND LONG TERM DEBT WITH FINANCIAL INSTITUTIONS
(*) Treasury has been deducted of the short term debt
Long term debt Short term
debt (*) 57%
43%
September 2011
Total existing lines:
2,182 mill. € CURRENT CREDIT LINES IN ACERINOX GROUP
Used credit facilities
Available credit facilities
Investor’s Day
On the 8th November the company will hold the “Investor’s Day” in London (UK).
The Group senior management plans these events annually, alternating with the Group factories and international financial places. In 2010 it was held in Kentucky (US).
Bahru Stainless (Malaysia)
The cold rolling mill is finalizing the installation of the equipment just before the final start up.
Bahru Stainless has a current staff level of 209 people.
Roldán, S.A.
The factory of Ponferrada (Spain) is back to normal after the fire occurred at its hot rolling facilities on November, 20th 2010. The new equipments are working since April. The extra-costs suffered as a consequence of this fire has been covered by the insurance company.
Commercial network
In addition to the traditional activity of the Group in Turkey through Betinoks a new subsidiary 100% owned by the Group is to be added in this area due to the increasing importance of this market. Its commercial activity will also extend to the Middle East.
Likewise, in this period the offices of Indonesia and Vietnam have also begun their activities, within the strategy to enlarge the Acerinox Group commercial network in Asia.
Reorganization project
The Extraordinary Shareholders Meeting held in September supported by wide majority the business reorganization and the creation process of Acerinox Europe.
This new society will start on the 1st December and there is already a date fixed for its first Board of Directors to be held on the 7th December.
The birth of the new ACERINOX EUROPE has been favourably accepted by the specialized analysts and the social agents. Its creation will enhance the Group culture as a whole and will give more operative agility and a more mature organization.
Outook
The strength and competitiveness of the Group will finish the year with a good global result, although the market recovery expected for the fourth quarter will be delayed due to the troubled euro zone.
Nevertheless, we are convinced that the geographical diversification of the Group will allow us to offset these local problems with the relative strength of the other markets, our unique competitive advantage in the sector and benefits of the strategy being developed by the Acerinox Group.
Despite the uncertainty and poor visibility, the final demand and inventory levels make us think that the market will start to recover at the beginning of next year.
Figures by company
1st Q. 11 2nd Q. 11 3rd Q. 11 4th Q. 11 Year 2011 % over 2010
Acerinox, S.A. 180.4 155.9 151.1 487.5 -8.8%
NAS 260.9 219.1 208.6 688.5 2.9%
Columbus 130.4 117.3 92.2 339.9 -11.5%
Acerinox Group 571.6 492.3 452.0 1,515.9 -4.5%
1st Q. 11 2nd Q. 11 3rd Q. 11 4th Q. 11 Year 2011 % over 2010 Acerinox Group 1,413.3 1,147.1 1,061.3 3,621.8 8.2%
Acerinox, S.A. 436.6 361.2 306.0 1,103.8 -3.9%
NAS (million USD) 952.4 740.7 688.4 2,381.5 20.3%
Columbus 246.5 207.1 199.7 653.3 0.5%
1st Q. 11 2nd Q. 11 3rd Q. 11 4th Q. 11 Year 2011 % over 2010
Acerinox Group 67.8 34.0 1.0 102.8 5.4%
Acerinox, S.A. 15.5 -3.7 -12.4 -0.5 ----
NAS (million USD) 68.2 61.2 29.4 158.8 50.1%
Columbus -0.3 -3.1 -8.2 -11.6 ----
Thousand Mt MELTING PRODUCTION
Million € NET SALES
Million €
PROFIT AFTER TAXES AND MINORITIES
Main economic-financial indicators
Year 2010
CONSOLIDATED GROUP 1st Q. 2nd Q. 3rd Q. 4th Q. Accumulated Jan - Sep Production (Mt.)
- Melting shop 571,646 492,256 451,990 1,515,892 1,587,532
- Hot rolling shop 502,294 435,946 394,791 1,333,031 1,368,234
- Cold rolling shop 346,185 308,053 295,014 949,252 995,235
- Long product (hot rolling) 51,185 52,051 46,005 149,241 158,786 Net sales (million €)
Group 1,413.35 1,147.13 1,061.29 3,621.76 3,348.59
- Acerinox, S.A. 436.62 361.24 305.97 1,103.83 1,148.59
- NAS (million USD) 952.42 740.73 688.38 2,381.53 1,979.45
- Columbus 246.47 207.13 199.71 653.31 649.87
Gross operating result / EBITDA (*)
(million €) 151.21 106.18 58.30 315.70 297.37
- % over sales 10.7% 9.3% 5.5% 8.7% 8.9%
EBIT (million € 114.09 69.81 21.69 205.60 175.45
- % over sales 8.1% 6.1% 2.0% 5.7% 5.2%
Result before taxes and minorities
(million €) 102.51 54.13 5.50 162.13 143.64
Result after taxes and minorities
(million €) 67.81 33.99 0.96 102.76 97.50
Depreciation (million €) 37.36 35.93 36.45 109.73 109.89
Net cash flow (million €) 105.16 69.91 37.41 212.48 207.39
Number of empoyees 7,438 7,455 7,430 7,430 7,442
Net financial debt (million €) 1,123.61 1,286.14 1,074.82 1,074.82 1,275.94
Debt to equity (%) 58.7% 71.4% 57.8% 57.8% 64.8%
Number of shares (million) 249.30 249.30 249.30 249.30 249.30
Return to shareholders (per share) 0.10 0.10 0.15 0.35 0.35
Return to shareholders (million €) 24.93 24.93 37.40 87.26 87.26 Daily average shares traded (nº of
shares, million) 1.54 1.17 1.34 1.35 1.23
Result after taxes and minorities per
share 0.27 0.14 0.00 0.41 0.39
Net cash flow per share 0.42 0.28 0.15 0.85 0.83
Year 2011