Spanish steel manufacturer Acerinox expressed optimism on Thursday, anticipating a rebound in steel demand in the forthcoming months following a significant drop in net profit last year.
In 2023, the company’s net profit plummeted by 68% to 228 million euros ($246.31 million) after achieving record levels in 2021 and 2022, driven by robust demand and price escalations.
Chief Executive Bernardo Velazquez attributed the profit decline to a market correction initiated in the latter half of 2022, resulting in reduced demand for stainless steel and lower prices.
Velazquez projected an upturn in demand as early as the second quarter of this year in the United States, with Europe expected to follow suit in the third quarter. He highlighted the potential impact of lower interest rates in Europe, potentially stimulating spending on household appliances and automobiles.
Despite a sluggish industrial output and a subdued economic outlook, the European Steel Association Eurofer cautioned that the steel market recovery in 2024 might progress slower than anticipated.
Velazquez noted a roughly 20% decline in steel consumption across Europe and the U.S., while Acerinox’s alloys business, contributing 22% to revenue in 2023, remained resilient.
In a strategic move to capitalize on the buoyant alloys market and expedited recovery in the U.S., Acerinox recently announced the acquisition of alloys manufacturer Haynes International for $798 million. The North American market already accounted for approximately half of Acerinox’s sales.
Amid operational challenges, including a strike at its Cadiz steel mill impacting production, Velazquez refrained from setting a profitability target for the year. The ongoing strike is reportedly costing the company around 180,000 euros per day.
Additionally, Acerinox disclosed its proposal to distribute a dividend of 0.62 euros per share from the 2023 profit, marking a 3% increase from the previous year’s dividend payout.