Acerinox sees lower core profit in Q4, still expects record FY results

MADRID (Reuters) -Spanish steelmaker Acerinox said on Thursday it expects steel inventories unloading due to market uncertainty to dent its fourth-quarter core profit, though it still expects record full-year results.

The company sees its fourth-quarter earnings before interest, taxes, amortisation and depreciation (EBITDA) lagging behind the third quarter as uncertainty looms over the European market, affecting inventories.

"Even so, the 2022 results will be the best in our history, demonstrating our ability to take advantage of the good moments in the cycle and the level of competitiveness achieved," it said in a statement.

The World Steel Association last week downgraded its short-range outlook, forecasting that demand for the commodity would erode by 2.3% this year, as inflation, U.S. monetary tightening, China's economic deceleration and Russia's war in Ukraine were hampering the steel-using sectors.

"The change in our customers' expectations has caused inventories to be high in most markets," Acerinox Chief Executive Officer Bernardo Velazquez said, adding that the markets were now starting a regularisation process that Acerinox expected to end by the beginning of 2023.

The company said that following a first half during which consumption grew alongside import volumes, the third quarter had seen a change in trend as uncertainty over the geopolitical situation, cost inflation and interest rate hikes affected European markets.

Acerinox's shares were down 3.8% at 0945 GMT as Spain's blue-chip index shed 0.4% since the previous day's close.

The company's nine-month net profit nearly doubled to 741 million euros ($745.6 million) from 373 million euros a year ago.

Revenue improved due to a good order book situation and price levels that allowed the steelmaker to pass on the increase in raw material and energy costs to customers, Acerinox said.

Steel production in the third quarter at 502,366 tonnes was 22% lower year-on-year and 19% lower than in the previous quarter.

The company also completed a buyback program of 7 million shares, equivalent to 2.7% of share capital.

Acerinox said it would propose a dividend increase to 0.60 euros gross per share from 0.50 euros per share at next year's annual shareholders' meeting.

In 2021, the steel producer posted a record net profit for the full year that represented an 11-fold jump from 2020.

($1 = 0.9938 euros)

(Reporting by David Latona; Editing by Robert Birsel and Mike Harrison)