Acerinox anticipates working at 65pc of its normal capacity in Q2 2020, with a consequent negative impact in its earnings, the company announced while reporting its Q1 2020 earnings.
The Spanish stainless-steel maker said it would resume activity in Malaysia and South Africa in May after the COVID-19 related lockdowns end in both countries, though its EU and US facilities continue to operate. Given the expected negative impact this quarter, the company noted it was making strategic plans to reduce costs.
In Q1 2020, the company’s melting production decreased by 5pc to 599,843mt, compared with the same quarter last year, but increased by 22pc from Q4 2019.
The company’s net sales in Q1 2020 declined by 4pc to €1.159bn from the same period in 2019 due to lower alloy surcharges during the quarter. The average prices of stainless-steel plate in Acerinox’s major markets during the quarter were $2,683/mt in the US, $2,248/mt in EU, and $1,852/mt in Taiwan, up 1.5pc, down 4.8pc, and flat, respectively, from Q1 2019.
Acerinox’s net profit declined 14pc in Q1 2020 to €28mn from the same quarter last year. The profit was of note given the impact of COVID-19, which resulted in economic slowdowns across the globe.
Acerinox’s EBITDA rose to €85mn after a negative net realizable adjustment to inventory of €16mn, down 6pc from Q1 2019. However, EBITDA increased by 15pc compared to Q4 2019. The EBITDA margin on sales in Q1 2020 remained consistent at 7pc compared to the same period last year.
The company’s payments for investment in fixed assets amounted to €23mn plus the purchase of VDM Metals in March for €311mn. Layoffs in Acerinox Europa cost the company €26mn as staffing was reduced by 4pc to 6,507 in Q1 2020 compared to the same quarter a year ago.
The company launched the integration process for VDM Metals’ US and European operations with the intent to complete it by the end of this quarter. VDM has seven production sites in Germany and the US and nearly 2,000 employees with revenue of €852mn and EBITDA of €97mn.
Based in Werdohl, Germany, VDM develops and manufactures special nickel and cobalt alloys as well as high-alloy stainless steels. Acerinox plans to diversify towards these sectors with greater added value.
(€1 = $1.08)