Results 1st Quarter 2011

Markets


During the first Quarter 2011 the stainless steel market has been featured by a good situation of demand, particularly in consumer goods. There are recovery signs regarding capital goods, which consolidation will determine the market evolution during the next months.

The rise of nickel prices during January and February has resulted in an inventories replenishment, which, despite this, keep reasonable levels.

The nickel correction of March has slowed down the entry of orders for May. The levels of inventories in the market make us expect a recovery of the activity in the following months.
 

Europe

The overcapacity still existing in Europe hinders the base price recovery despite the best situation of the markets.

The Euro appreciation can lead to an increase of the imports and to curb the competitiveness of the European producers and users of stainless steel.

Final consumption is strong in Northern and Central Europe.

· North America

The continuous strength of the North American market has allowed North American Stainless (NAS) to improve prices for the second Quarter, which have been immediately accepted in the market.

NAS is working at full capacity, having achieved record productions in this first Quarter.

· Asia

The Asian market keeps a strong growing, although the prices have not completely offset the raw materials prices rise, due to the strong competition existing in the market.

Productions

The quarterly production of the Group improves by 6.7% with regard to the same period of 2010.

As mentioned before, NAS has achieved record quarterly productions.

Results

The quarterly net sales of the Group, 4,413 million euros, is the highest from the beginning of the international financial crisis (second Quarter 2008).
 

North America consolidates as the first market of Acerinox Group.

The EBITDA of the first Quarter 2011, 151 million euros, increases by 2.5 times the figure of 2010 like period and it is 60% higher than in the fourth Quarter 2010.

Condensed profit & loss account. Acerinox Consolidated Group

The result before taxes and minorities, 102.5 million euros, shows Acerinox Group competitiveness.

The result after taxes and minorities, 67.8 million euros, is 6.7 times higher than the figure achieved in the first Quarter 2010 and is 2.7 times higher than the one of fourth Quarter 2010. This evolution confirms the positive tendency already announced in our previous press release.

Condensed balance sheet. Acerinox Consolidated Group

In spite the higher levels of activity, the working capital has only increased by 9%, 114 million euros.

The Group net debt keeps stable at 1,123 million euros.

The financial strength of the Group allows to keep the financing lines for 2,067 million euros and only 60% has been used.

Thanks to this situation, we can face the market recoveries and higher needs of working capital, both regarding volume and the higher prices of the raw materials.

The long term debt is 2/3 of the total Group debt, which allows us to tackle with the tensions concerning liquidity which could arise in the financial markets.

Bahru Stainless

The production of the finishing fills progress satisfactorily.

The construction of the factory is well under way and the rolling and annealing facilities of the first phase are being installed. The first shipment of 5,000 Mt from Algeciras pier to Bahru Stainless pier has already been carried out.

Roldán, S.A.

The hot rolling mill of Roldan Factory, affected by the fire occurred on the 20th November 2010, has started again its activities during April, a month ahead than foreseen.

The speed of the works of clearing up, repairing and replacing the affected equipment has been outstanding.



Start up of the Service Centres in Monterrey (Mexico) and Warsaw (Poland)

Following the Acerinox Group Strategic Plan, it has been inaugurated on April the slitter and shearing lines of the Service Centres in Monterrey (Mexico) and Warsaw (Poland).

With this new lines we try to improve the service to our costumers in these growing markets with higher annual growth rates than the worldwide stainless steel consumption average.


Outlook

The market strength and the clear signs of recovery have featured the first Quarter 2011, which are limited by the political and economic uncertainty worldwide which reduces the visibility.

The recent slow down of the orders entry in Europe is leading to a process of inventories reduction which will not be very tough for the low level of inventories in the market. This circumstance join to the improve in the final demand allows us to expect for the second Quarter similar results as in the first one.

Figures by companies

Main economic-financial magnitudes