During the first half 2007 the stainless steel market has been characterized by the strong demand, which has allowed to transfer to customers the exceptional cost increases of raw materials, mainly of nickel, which price has tripled since the beginning of 2006.
The strong correction of the nickel prices in the London Metal Exchange from the middle of May has slowed down purchases from stockists, who await a new stabilization of the nickel prices and consequently of the alloy surcharges.
This nickel correction, necessary in view of the untenable price levels of the previous months, will have a positive effect in the medium term because it will decrease the stainless steel prices and will stimulate demand.
Nevertheless, in the short term, it will affect the apparent consumption for the third quarter, because the stockists will try to sell off their inventories before placing new orders.
The current inventory level in the market make us expect its fast recovery, favoured by a greater competitiveness of prices once the nickel stabilizes.
In this context, the total melting production of the Group, 1,314,379 Mt, is 4.6% higher than the output achieved in the first half of 2006.
Net sales of the Consolidated Group, 4,313 million euros, increases by 77% with regard to 2006 like period. Result after taxes and minorities achieved in the first half of the year, 411.55 million euros, is four times the result obtained during the same period of the previous year. Its quarterly breakdown shows the consistent margins achieved during the first six months of the year. With similar sales, the EBITDA margin has been higher than 17% in both quarters.
ACERINOX CONSOLIDATED GROUP - CONDENSED PROFIT & LOSS ACCOUNT
Regarding the quarterly results evolution, for third consecutive quarter, result after taxes and minorities remains higher than 200 million euros.
In the contribution by companies to the Consolidated Group result after taxes and minorities, NORTH AMERICAN STAINLESS (NAS) stands out with 40%, followed by the parent company, ACERINOX, S.A. with 34.7%.
The evolution of Consolidated Group balance sheet figures during the last twelve months shows an increase of the working capital, due to the nickel price increase.
However, the Group net leverage, 1,262 million euros, remain stable from December 2006. The gearing ratio has decreased to 48.5%.
ACERINOX CONSOLIDATED GROUP - CONDENSED BALANCE SHEET
Information by companies
Main economic & financial figures