ACERINOX: 4Q’20 RESULTS (ANÁLISIS BANCO SABADELL)
4Q'20 vs. 4Q'19 Results:Sales: € 1.217 Bn (-9.8% vs. -12.8% BS(e) and -13.3% consensus);
EBITDA: € 131.0 M (+74.7% vs. +26.9% BS(e) and +28.0% consensus);
Net Profit: € 19.0 M (€ -173.0 M in FY2019 vs. € 32.3 M BS(e) and € 35.0 M consensus);
FY2020 vs. FY2019 Results:
Sales: € 4.668 Bn (-6.8% vs. -7.7% BS(e) and -7.8% consensus);
EBITDA: € 383.0 M (+5.2% vs. -4.6% BS(e) and -4.4% consensus);
Net Profit: € 49.0 M (€ -60.0 M in FY2019 vs. € 62.3 M BS(e) and € 65.0 M consensus).
The results beat expectations in EBITDA thanks to better-than-expected sales. Net Profit came in below expectations due to a € 24 M provision linked to restrictions in Spain after recognising a negative taxable basis (not entailing cash outflow and reversible). Excluding this, Net Profit would have been above expectations.
As for its outlook, the comments are positive. ACX states that the recovery of the stainless steel market that started in mid 4Q’20 continues. Specifically, the company expects 1Q’21 EBITDA to beat 4Q’20 levels (€ 131 M). This means a € +46 M improvement on 1Q’20, and although this is a favourable comparison because VDM did not consolidate until 2Q’20, it is essentially the improvement we expect for all of 2021 (€ 48 M EBITDA) and 60% of that expected by the consensus, and thus if there are no big changes in the operating situation, we expect estimates to be raised once again.
Furthermore, the company outlined that inventories kicked off the year at record lows in the US and that the protectionist measures in Europe are providing results (hot rolling), expecting news on the investigation being carried by the EU on cold rolling in the 2Q’21. Lastly, it stressed that the special alloy market (~11% EBITDA) is seeing a recovery that is expected to materialize at the end of the 1Q’21 (with some recovery in the 4Q’20, with € 15 M of EBITDA vs. € 2 M in 3Q’20 in this business).
In short, good results and prospects that lead us to foresee a positive market reaction, despite the +43% rise since early November (+15% vs. IBEX). In any event, we expect more details in the conference call at 10:00 (CET). BUY. T.P. € 11.00/sh. (upside +14.08%).
Acerinox is the parent company of a group engaged in the manufacture and sale of flat and long stainless steel products, and stainless steel wires. Co.'s major products include slabs, billets, black coils, plates, hot-rolled coils, hot-rolled sheets, flat bars, hot-rolled re-bars, hot-rolled black bars, engraved sheets, cold-rolled coils, cold-rolled sheets and circles. Co. also provides long stainless steel products, such as wire rods, angles, hot rolled flat bars, hot rolled re-bars, reinforced bars in coils, cold rolled re-bars, hot rolled black bars, cold drawn bars, and smooth turned bars. In addition, Co. offers wires, welding wire bars, and bars for electrodes.
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