Steelmaker Acerinox expects weak demand to persist into fourth quarter
Adds share price, details on revenue and production, CEO comment, analyst comment
By Javi West Larrañaga and Jesus Calero
Oct 29 (Reuters) -Spanish steelmaker Acerinox ACX.MC posted a sharp drop in third-quarter net profit on Tuesday as a result of a weak stainless steel market in Europe and North America that it said will likely continue through the fourth quarter.
Its shares fell 4.1% by 0844 GMT, making them among the biggest losers in Spain's blue-chip IBEX 35 index.
Net profit plummeted 32% to 48 million euros ($52 million) on revenue down 16% to 1.31 billion euros. Profit fell despite a 21% rise in output as operations resumed at its steel mill in Cadiz in southern Spain after a five-month strike.
The company said its core profit decreased by more than 21% year-on-year in the quarter as demand in its main markets remained weak and global uncertainties continue to trouble the sector.
It expects core profit, excluding the effects of the sale of its Malaysian unit Bahru Stainless, to be even lower in the fourth quarter.
"The weakness in the demand for stainless steel continues in the fourth quarter," it said in a statement. "The seasonality of the end of the year and the geopolitical and macroeconomic uncertainties do not allow us to be optimistic in the short term, although the level of inventories is still low".
Acerinox's weakness comes as Europe's main steel industry group Eurofer points to global steel overcapacity, unfair trade, low demand in manufacturing industry and high energy prices as the biggest problems the industry faces.
Despite tough market conditions for stainless steel, CEO Bernardo Velazquez said in a statement its U.S. branch and the high-performance alloys division had robust performances.
J.P. Morgan analysts said they see Acerinox's outlook as challenging, highlighting a third-quarter miss to their core earnings (EBITDA) forecast, increased net debt and weak demand, which they said are likely to lead to substantial downgrades in 2024 and 2025 earnings forecasts.
($1 = 0.9249 euros)
Reporting by Javi West Larrañaga and Jesus Calero; Editing by Inti Landauro and David Holmes
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