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ACERINOX: FY2019 RESULTS (ANÁLISIS BANCO SABADELL)

4Q'19 vs. 4Q'18 Results
Sales: € 1.349 Bn (+18.4% vs. +12.5% expected and +4.1% expected by the market consensus);
EBITDA: € 75.0 M (+29.3% vs. -8.6% expected and +51.7% expected by the market consensus);
Net Profit: € -173.0 M (€ 16.0 M in FY2018 vs. € 7.3 M expected and € 29.0 M expected by the market consensus);
FY2019 vs. FY2018 Results
Sales: € 5.011 Bn (0.0% vs. -1.4% expected and -3.3% expected by the market consensus);
EBITDA: € 364.0 M (-24.2% vs. -28.8% expected and -21.5% expected by the market consensus);
Net Profit: € -60.0 M (€ 237.0 M in FY2018 vs. € 120.3 M expected and € 142.0 M expected by the market consensus);
The results came in slightly above our expectations in EBITDA but below those of the consensus. The latter has been affected by significant one-offs: i) provision for the downsizing plan in Acerinox Europe totalling € 38 M (vs. € 35 M BS(e)), and ii) negative inventory adjustment to net realisable value of € 20 M (vs. € 15 M BS(e)). Excluding these items, EBITDA would have come in at € 112 M, and therefore above levels of € 103 M BS(e).
The bottom line of the P&L statement is also marked by significant one-off headings that we had not considered: (i) asset deterioration in Bahru Stainless worth € 98 M; (ii) goodwill deterioration in Columbus Stainless worth € 68 M and (iii) tax shield deterioration in Spain wroth € 61 M. These effects do not entail cash outflow but explain the significant difference vs. the market expectations in Net Profit.
As regards its outlook, the company sees strength in North America, which along with its low inventory levels, lead us to be optimistic. However, in Europe, the uncertainty remains present although it sees an improvement in activity, remaining confident that the EU will impose antidumping measures against Taiwan, China and Indonesia. The company expects the 1Q’20 EBITDA to be in line with that seen in the 4Q’19 (in our view, without one-offs) and thus ~ € 112 M (+24% vs. 1Q’19). As for the coronavirus, the group mentioned it cannot confirm the possible eventual impact on the sector. We expect further details at today’s presentation at 10:00 (CET). BUY. Target Price: € 9.80/sh (upside 15.73%)