Acerinox sees steel market improving after 2023 profit more than halves

(This Feb. 29 story has been corrected to fix the net profit from 68% to 58% in paragraph 2)

By Matteo Allievi and Natalia Siniawski

(Reuters) - Spanish steelmaker Acerinox said on Thursday it expects demand for steel to start recovering in coming months after its net profit more than halved last year.

Net profit fell 58% to 228 million euros ($246.31 million) in 2023 after rising to record levels in 2021 and 2022 as strong demand pushed prices higher.

A market adjustment that started in the second half of 2022 led to lower stainless steel demand and lower prices, Chief Executive Bernardo Velazquez told Reuters.

He said he expects an improvement as early as the second quarter of this year in the United States but not before the third quarter in Europe.

"The European economy is still lagging behind the U.S. but lower interest rates are likely to make more money available and could revive demand for household appliances and cars," Velazquez said.

The European Steel Association Eurofer said earlier this month that the anticipated steel market recovery in 2024 will be slower than expected as industrial output is still subdued on a bleak economic outlook.

Velazquez estimates that steel consumption in both Europe and the U.S. dropped by around a fifth, while the alloys business, which accounted for 22% of Acerinox's revenue in 2023, remained positive.

To take advantage of the strong market for alloys and faster recovery in the U.S., Acerinox this month announced the acquisition of alloys maker Haynes International for $798 million. The North American market already accounted for around half of Acerinox's sales.

Velazquez declined to give a profitability target for the year but estimated the company is losing 180,000 euros per day due to a strike that started three weeks ago at its Cadiz steel mill, which represents about a quarter of the company's production.

The company also said it will propose a dividend of 0.62 euros per share to be paid out of 2023 profit, up 3% from that paid on the previous year's profit.

($1 = 0.9257 euros)

(Reporting by Matteo Allievi and Natalia Siniawski; Editing by Inti Landauro, Kirsten Donovan)