Acerinox Sa Unsp/Adr

Good morning to you all and welcome to the third quarter 2026 results presentation. Before we begin, we would like to thank everyone for the messages of concern following the train accident two days ago. While that route is commonly used by our staff travelling to the factory, fortunately no Acerinox employees were injured. Our hearts go out to those affected and we extend our deepest condolences and support to the victims and their families. Q3 has been a strong quarter for Acerinox. As a group, we have demonstrated our strength in a complex market situation, and as we will explain during this call, we continue to prioritize our working capital and solid cash generation. During this call, we will hear from our chief corporate officer, Miguel Ferrandis, Esther Camós, our chief financial officer, and Carlos Lora-Tamayo, our IR, communication, and reporting director. who will explain our Q3 results and provide an outlook for Q4. Before we start with this presentation, let me remind you that this conference is being broadcast on our website, atherinox.com. And now I will hand you over to our Chief Corporate Officer, Miguel Fernández. Miguel, please go ahead.

Thank you, Borja. When preparing this results presentation trying to find the word probably what comes more to my mind is the word of pride. We are presenting very remarkable figures in the current days with challenges all over the world and with a highly complex environment. We are not yet reaching the levels of consumption almost in every area of the pre-COVID time. But what appears evident in these results achieved in the third quarter and in these nine months is that we are capitalizing opportunities where they are and when they come. And we are taking the best of that. If you see the figures appearing in these highlights, you can realize that the figure of sales, 1.6 billion for the third quarter, is very similar to that one of the previous quarter. But having said that, we have improved our EBITDA by 13%, reaching this figure of 199 million euros. We would like to be predictable when we forecast the outlook in the results presentation of the Q2. We announced that we shall be slightly above and we shall be at 13%, one three, above the figure of the second quarter. But when we go to the nine months figure, with this 4.5 billion euros of sales, Just 2% above the sales of the first nine months of last year, our EBITDA has gone up to 470 million euros, and this means a 46% increase in EBITDA. With 2% increase in sales, 46% increase in EBITDA. This demonstrates what we are Our operating cash flow is slightly negative for the quarter, slightly positive for the nine months. This is We are obviously driven by the working capital. Our working capital is running normally in parallel of our performance and the strong improvement that we are having is obviously at the end having the consequence of the increasing working capital in most of the year up to now in the three quarters. This normally shall be strongly reduced or neutralized, as you normally know, in the fourth quarter. But it's true that the figure of the working capital at September, combined with the strong CAPEX programs in which we are involved, With the semi-annual dividend payment that has been taking place during the quarter has taken our debt to the peak in the year of 1.5 that at the end shall be reduced in the fourth quarter, mostly as a consequence of the expected working capital reduction. So these are the main highlights for today's results presentation. In the following slide, we are showing the gradual improvement that we are realizing quarter after quarter. This is the reported EBITDA of the last three years. And at the end, what is clearly more easy to realize is the impressive track we are experiencing during year 2026. An outsider of the company could consider That this is as a consequence of a cycle, several tailwinds that are benefiting us everywhere. And by far, this is not the case. So this is not that we are entering in a new cycle, that all the circumstances and all the markets are booming. Not by far. At the end, we still are seeing a low demand everywhere. Some specific sectors still are depressed. In addition, we are experiencing a strong increase in energy costs. There is a huge uncertainty almost everywhere. But as we said before, The strategy, the diversification, the continuous improvement in efficiency are allowing us to experience this strong recovery, reaching figures in the third quarter of almost 200 million euros as a quarterly figure with a margin EBITDA of 12.5%. This is coming. As I said before, taking the opportunities where they are, mostly of taking the good momentum that the specific sectors are experiencing in the States, combined with the turnaround that we are making in Acerinox Europe. So at the end, this subsidiary that, in our case, has been loss-making for the last years, as you all know, we are gradually improving it. We have reached almost break-even at a bit of level. We mentioned it in June. We are still almost in break-even. At the end, obviously, the energy costs in the third quarter have improved. But we are reaching this almost a bit of break-even level in the depressed base prices that we are experiencing in Europe. And this is a great success. So at the end, the gradual recovery is a combination of that. Thank you very much. Obviously, North America, January to September, the States, North America is 56% of our sales. So clearly, it's our main market. More than any other circumstance, we are North American. And the main virtue that we can remark today about the American market is the stability. And at the end, this stability is obviously well supported by the American administration that is consistently supporting the local industry. And this is providing stability, and that stability is good for every player in the market. So the prices in the stainless remain solid in America. But this is circumstances that is favorable to the market, favorable to the customers, favorable to the distributors, as also favorable to the producers. So every player knows the status quo and consequently this allows us that even though the demand is low, but the players are facing the current circumstances in a, let's say, satisfactory way. The imports have been reducing, reaching or representing now 21% of the total market. Still, North America is a net imported market. But the imports have been reducing more than 18% for reaching that level. So this is a good sign for the coming months. Another good sign for the coming months is also that the inventories remain low. And at the end, what still we are waiting is that the good momentum we are seeing in specific end users is spread to others. Still, the up and down is 2% below that one of the previous year. In America, there are specific sectors that are performing very strong. Obviously, as you all know, the aerospace sector is a sector that is now in a very good momentum. In addition, also the construction of data center is also driving increases in demand and in consumption of several of our products. And for example, all those related to the energy and uses, as well as also the pipes and so on. So this is also experiencing a good momentum. Other sectors in which we historically have been active are also doing great. For example, the food and catering industry, this has already recovered. But still, we are missing sectors that for us are relevant. And one sector that for us is relevant and still remains negative, for example, is the domestic appliances. Another sector that still is to come is the transporting, which especially in the heavy transport, we are active, as well as in the tank trailers. We are, at the end, as I say, taking the best from those sectors that are doing great. And for us, it's really exciting to imagine what could be our contribution and our profitability in America when the proper cycle comes and all these other sectors that still are relatively dormant Incorporate again and follow the trend of the sectors that already have been reacted. So we are still satisfied and optimistic regarding the North American market and our performance in the North American market.

Welcome to the European market. This year has been a very challenging year, a very volatile year for Europe. The weak economy situation, the geopolitical uncertainties are affecting our demand. That is in a very low point. Saying this, it's true also that in the first half of the year we experienced a good demand, a strong demand coming from big distributors. This is probably driven by some lack of supply. The imports in the first half of the year went down significantly. mainly in the first four months of the year. But at the end of the second quarter, imports started to increase and this creates also some excess of stocks in the market. That it's been delayed, the expected recovery for the third quarter after the implementation of the new trade measures. So consequently, we have an overbind in the first half of the year, and then a third quarter marked by the typical seasonality, the energy prices also that went up significantly, both electricity and gas, and also the stocking process. The consequence of this is that the apparent demand went down 22%, a very big number, quarter on quarter. Imports went down 50% in this quarter and represents 16% of the total market. Keep in mind that we were coming from import penetration last year, in the first nine months of last year, of 24%. So this is the good news, that imports are, with these new measures, moving down. OK, so saying this, the third quarter, a very challenging quarter, seasonality, excess of stocks in the market. But what we are fully confident is that the new European regulation is going to be a game changer for the European market. Once we digest all these inventories that are in the market, We are positive for the mid-long term, hopefully the beginning of We can start to see this better environment, but it's true that this recovery has been delayed due to the excess of stock, the imports that came in advance of the implementation of the new trade measures.