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IBERIAN DAILY 05 FEBRUARY + 4Q’25 RESULTS. PREVIEWS (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: ARCELORMITTAL, HIGHWAY SECTOR, IAG, INDRA, SANTANDER.

At the end of today’s report, and during the entire results season, we will include a presentation with positive and negative results highlights and previews for the 4Q’25 results to be released over the coming days in Spain.

Ibex continues to climb
It was a positive session for European stock markets thanks to business results and despite mounting tension in Iran and the drops in the technology sector. In the STOXX 600, Chemicals and Telecoms were the best performers vs. the drops of Technology (once more the worst performer for the second consecutive session) and Basic Resources (after Tuesday’s gains). On the macro side, in Europe, January’s inflation slowed down, as expected, to 1.7% YoY, with the core data slowing down slightly more than expected to 2.2%. The final services PMI was cut due mainly to France, which slowed down for the first time since October. In the US, January’s ADP private employment was disappointing, underscoring continued slowdown. January’s non-manufacturing ISM fell slightly less than expected due to the lower contribution from new orders and employment. The phone conversation between D. Trump and China’s president Xi Jinping was described as “excellent, long and detailed” by the former although no details have been unveiled. In US business results, Alphabet, Eli Lilly and Fox beat expectations, Uber worse than expected.
What we expect for today
European stock markets would open with slight drops, dragged down by sales in the technology sector. Currently, S&P futures are down -0.11% (the S&P 500 ended +0.36% higher vs. the European closing bell). Asian markets are sliding (China’s CSI 300 -0.63%, Japan’s Nikkei -0.77% and South Korea’s Kospi -3.86%).
Today the ECB and BoE will hold their meetings. In the euro zone we will learn December’s retail sales, in Germany December’s industrial orders and in the US weekly jobless claims. In 4Q’25 US business results Amazon, Ralph Lauren and Cigma Group, among others, will release their earnings.



COMPANY NEWS

ARCELORMITTAL. Better 4Q’25 Results in EBITDA, with optimistic messages on demand. OVERWEIGHT
4Q’25 Results came in above expectations in EBITDA (-3.7% vs. -8.6% BS(e) and -7.6% consensus) and with a sequential improvement vs. 3Q’25 in EBITDA/t (US$ 123.00/t vs. US$ 111.00/t in 3Q’25 and US$ 122.00/t in 4Q’24) on a seasonally weak quarter, marked by low prices in North America and volumes in Europe. With this in mind, the Mining business, along with the favourable spread, largely offset these effects. As for prospects, the company foresees improvements in deliveries in all regions, maintaining its optimistic message in Europe due to the implementation of CABM and the new tariff measures. Against this backdrop, we improve our EBITDA estimate for the 2026/28 period by +15% on average, now assuming € 10.51 Bn of normalized EBITDA, which lead us to raise our T.P. by +57% to € 56.50/sh. (+18.8% upside).

INDRA, OVERWEIGHT
According to the press, the Govt., through the Department of Economic Matters led by Manuel de la Rocha, would have called Angel Escribano (Chairman of IDR and shareholder with 14.3%) yesterday to suggest he resign as Chairman of IDR, which would facilitate a potential deal with Escribano (who, according to the press, has denied these rumours). Related to this, last week, and also according to the press, Belen Gualda, Chairwoman of the SEPI, would have requested Jose Vicente de los Mozos (IDR’s CEO) not move forward with the potential deal with EM&E. The reasons for the current lack of support from the Govt. (SEPI) would be: the rejection by some independent Board members and shareholders (SAPA and some minority stakes) in view of the conflict of interests the deal generates, as well as the “legal battle” under way started by General Dynamics due to the awarding of the PEMs.
Note that last week IDR’s governing body agreed (also according to the press) to authorize the CEO to initiate official talks with EM&E to analyse the different options to conduct the deal. The press also outlines they will wait for the release of the 2025 audit (March/April).
These rumours could be behind the stock’s rout, which over the past few days has already hit -14% (although the share price has also been hit by the rout in the IT sector from the doubts surrounding software and AI companies; this is the index on which IDR is listed) and this is negative news, as apart from the doubts regarding IDR’s merger with EM&E, for the first time the continuity of the Chairman (and largest private stakeholder in the company) has been called into doubt. The power struggles in IDR have led to sharp drops in the stock on previous occasions.
In any event, all this emphasises the different shareholders’ positions on the deal with EM&E, among which are the SEPI with its 28% stake (that unanimously agreed last year it was a strategic deal) and the complexity of the transaction. As we have reiterated, this is a complicated deal given the conflict of interest (already known since the interest was first made public) where the final valuation of EM&E (we will have to wait for the audit although the press mentions a range between € 1.5 Bn and € 2 Bn, 21.2% of IDR’s market cap at the midpoint) and the final structure (for the time being only the options that had been already rumoured are mentioned) will be key to assess the final impact.

HIGHWAY SECTOR. We still see tailwinds. Our favourite is Ferrovial.
Despite a backdrop of low economic growth and falling inflation, we still see drivers. Ferrovial (T.P. € 65.00/sh.; +13% upside) is our favourite due to the positive outlook for its Managed Lanes and the 407 ETR (especially on the toll level), its higher sensitivity to interest rates and better positioning in Managed Lane tenders. In Sacyr (T.P: € 4.60/sh.; +15% upside) we are positive towards the company’s growth capacity (3-4 greenfield assets/year BS(e)), the potential inclusion of a minority partner in Voreantis and the awarding of some Managed Lanes (with a much larger impact than in Ferrovial.