By Javi West Larrañaga
(Reuters) -Spanish steelmaker Acerinox reported weaker than expected third-quarter earnings on Friday and flagged an uncertain short-term future amid low demand for stainless steel in the U.S. and Europe.
The company pointed to a slower-than-expected recovery in demand and said it expects its sales in the U.S. to “undoubtedly” fall in the fourth quarter due to year-end seasonality.
That will drag fourth-quarter earnings before interest, taxes, depreciation and amortisation (EBITDA) below those of the third quarter, Acerinox said.
Shares in the company fell as much as 3.4% before regaining some ground. They were down around 2% at 1007 GMT.
Adjusted EBITDA came in at 108 million euros ($125.95 million) in the quarter, missing analysts’ average estimate of 112 million euros, according to data compiled by LSEG.
Net profit nearly halved to 25 million euros, missing consensus by 31%, according to JPMorgan.
“The outlook continues to indicate no immediate recovery in sight, with demand ‘at low levels’,” JPM analysts wrote in a research note.
DOUBLE EDGED TARIFFS
Though Acerinox said the U.S. 50% tariffs on steel imports were helping its business there as they limited imports from foreign competitors, the company also pointed to negative aspects of the trade-related uncertainty.
“The prevailing mood of reserve and caution has continued, in which major distributors have only replenished what they have sold, awaiting greater clarity on the economic future,” Acerinox said in a statement.
Even though Acerinox should benefit from a push towards protectionism in both of its main markets, a mix of increased uncertainty, supply-chain disruptions and companies deferring purchases and investments has hit its results.
The company is set to benefit from the European Commission’s recently announced import quotas, as prices in Europe have not picked up due to what European steelmakers denounce as global overcapacity and cheap imports from Asia.
($1 = 0.8575 euros)
(Reporting by Javi West Larrañaga; Editing by Anna Pruchnicka)
