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Spanish steelmaker Acerinox said on Wednesday its net profit in the second quarter of the year shrank 59% compared with the same period in 2022 to 142 million euros ($157.12 million) as demand for steel fell.
Earnings before interest, taxes, depreciation and amortisation (EBITDA) also fell 55% over the period to 236 million euros but came in slightly higher than in the first quarter, benefiting from a stronger performance in the United States.
The company, which specialises in stainless steel, said EBITDA may fall in the third quarter from the second quarter.
The profit decline and the weak outlook sent its shares 3.7% lower to 9.63 euros by late morning.
As investment dries up in Europe due to economic uncertainty and higher interest rates, global steel prices have dived amid soaring energy costs that are squeezing steelmakers’ profits down from record levels in 2021 and 2022.
“There has not yet been a recovery in demand, and price levels, mainly in Europe and Asia, have remained at the lowest levels ever seen,” Acerinox said in a statement.
However, the company is optimistic about an improvement in orders in the second half of 2023 as inventories are easing across all markets.
Sweden’s SSAB, which kicked off European steelmakers’ quarterly earnings season last week, said its operating profit more than halved in the second quarter and warned a further downturn in European demand is coming in the third.
“We keep conservative hypotheses given the weak evolution of manufacturing indicators,” Bankinter said in a note to investors.
While the European steel industry continues to show signs of fragility, still impacted by cost inflation, the American market is in good condition with more stable prices, the company said.
“Qualitatively the European outlook remains very soft but we continue to view this as a more negative read-across for peers rather than Acerinox since the U.S. market remains more robust”, Barclays said.
Acerinox has more exposure to the U.S. than its European rivals.
(Reuters)Â