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ACERINOX: 2Q’20 RESULTS (ANÁLISIS BANCO SABADELL)

2Q’20 vs. 2Q’19 Results:
Sales: € 1.172 Bn (-5.5% vs. -39.3% BS(e) and -20.9% consensus);
EBITDA: € 80.0 M (-17.5% vs. -39.2% BS(e) and -45.4% consensus);
Net Profit: € -26.0 M (€ 37.0 M in 1H’19 vs. € 11.0 M BS(e) and € 1.0 M consensus);
1H’20 vs. 1H’19 Results:
Sales: € 2.331 Bn (-4.5% vs. -21.7% BS(e) and -12.4% consensus);
EBITDA: € 165.0 M (-11.3% vs. -22.6% BS(e) and -25.8% consensus);
Net Profit: € 2.0 M (-97.1% vs. -43.5% BS(e) and -58.0% consensus).

The company has released better results than expected, specifically reported 2Q’20 EBITDA reached € 80 M, far above the consensus estimate of € 59 M and our own estimate of € 53 M. This was thanks to the larger contribution than expected from VDM, as well as better cost performance than forecast. We should also point out that this EBITDA figure has been affected by two negative one-off factors: (i) an inventory devaluation of € -20 M and (ii) € 14 M of costs stemming from the VDM acquisition. Thus, organic EBITDA would have totalled €~114 M excluding these effects. The bottom line was hit by a € 43 M asset impairment in Bahru Steel, this being the reason Net Profit came in below expectations, despite the solid EBITDA figure. Excluding this, the figure would have easily been above forecasts.
As for the outlook, the company has made it clear that visibility is still low, but in the short term it considers a scenario we deem reasonably positive, given the circumstances. Specifically, ACX thinks that, thanks to the cost-cutting being undertaken, the better performance in the US and the signs of recovery in the European market, it could reach a similar EBITDA figure in 3Q’20 to that seen in 2Q’20. This would bring accumulated EBITDA to €~260 M, compared to the €~290 M consensus estimate and €~240 M BS(e) for the full year.
In short, the results came in far above expectations and should lead to estimates being raised over the coming months, which explains the stock’s positive performance today (since February’s highs, the share price has fallen -27%, in line with IBEX). We maintain our BUY recommendation. T.P. € 8.70/sh. (+24.11% upside).