Acerinox, S.A. (ACX) Earnings Call Transcript & Summary

Hello. Good morning, good morning, everyone, and welcome to Acerinox Fourth Quarter and Fiscal Year 2025 Results Presentation. As you well know, '25 has been a challenging year marked by a complex macroeconomic environment, low global demand and ongoing tariff tensions. However, despite these headwinds, the group has maintained a solid financial situation, demonstrating the strength of our diversified business model and a strategic position in the United States, Europe and South Africa. In many ways, '25 has been the year for setting the foundations for industrial reactivation in both the U.S. and Europe with the improvement of Section 232 in the U.S. and the Steel and Metals Action plan in the European Union. Looking ahead and although final demand remains low, we maintain a positive outlook for 2026 based on a solid strategy and supported by the different trade defense measures. Acerinox, thanks to its geographical diversification, is best positioned to benefit from this new environment. During this call, we will hear from our Chairman, Carlos Ortega; our CEO, Bernardo Velazquez; our Chief Corporate Officer, Miguel Ferrandis; and our CFO, Esther Camos. They will explain our full year results, our corporate strategy, and they will also provide us with an outlook of the upcoming year. Before we start the presentation, let me remind you that this conference call is being broadcast on our website, acerinox.com, where you can also find all of our year-end documentation, including the annual accounts and the management report. And now I'll hand you over to our Chairman, Carlos. Please go ahead.

Thank you, Carlos. Good morning, everyone. As Carlos said, this has been a very challenging environment, very difficult year, full of geopolitical tension, macro issues, low demand in all the markets that we have. But having said that, we believe in our strategy, and we believe we have done well within our strategy. And what we see is a very bright future in the medium term for Acerinox in particular. With that in mind, for '25, we have recorded an increase in net sales of 7%, EUR 5.78 billion, which incorporates Haynes, the acquisition we had last year. And in the level of EBITDA -- adjusted EBITDA, we are 5% below last year at EUR 420 million. But one of the key aspects of the results this year has been the generation -- the cash flow generation. The operating cash flow you see is EUR 455 million, which is more than 50% higher than last year. This has allowed us to follow up with our very significant CapEx program, investment program at the low part of the cycle, over EUR 300 million invested. We have paid taxes, almost EUR 100 million in taxes. And we allowed us also to pay our stable dividend policy with EUR 155 million this year paid as well. With all of that, plus, unfortunately, foreign exchange impact, the depreciation of the dollar versus euro, that has impacted our net debt has increased our net debt by EUR 68 million to EUR 1.189 billion net debt. Again, that increase -- slight increase in net debt is based on the investments we've made, the dividends and the FX differences. We have -- we stick to our strategy, as you saw the 4 pillars of our strategy, the excellence in our operations, in particular, Beyond Excellence program that is doing far better than expected. As you know, we had earmarked EUR 100 million savings in 3 years by 2026. We're doing better than expected, and we have increased our target to EUR 120 million because we believe we can do better. We are investing in the low part of the cycle, EUR 311 million this year. That adds to our increasing value added in the industry and in our strategy, as you know, is HPA is a very important part. We incorporated Haynes into our perimeter, and we believe we are going to higher value products for our customers. Sustainability continues to be a key part of our strategy. As you may know, we have been included in the S&P Sustainability report for 2026, which is the first time and the only stainless steel, the only steel producer in the industry that has that recognition. All of this allows us to continue with our financial strength, and that provides us the ability to continue with our stable dividend policy which is, again, EUR 155 million this year, EUR 0.62 that we continue, we want to keep doing for the years to come. So all in all, we believe it's a good year despite the headwinds that we have suffered in Europe, in particular, with the low prices, in the U.S. with low demand. But with all of that, we have generated a lot of -- a significant amount of cash flow that allow us to continue with our investments and dividend policy. With that in mind, I leave you to Bernardo, our CEO.

Thank you, Carlos. Good morning, everyone. Yes, our Chairman said, 2025 has been a challenging year. And if there is a word that can define the market situation is uncertainty. Everybody is speaking about uncertainty. So how can you make a budget if you don't know if you're going to have tariffs in your markets or tariff in the export markets? And how can you define what's going to be your competitors? If you don't know anything about tariffs and you have all these geopolitical tensions. So the word that we are using in all the market with other customers is uncertainty, what can happen. And this is the third consecutive year under this situation. We have -- we are showing in the stainless steel business in the left part of this slide, the parallelism between Europe and United States because the general situation is more or less the same. PME has been below 50 in both markets for 10 months of the year. So this is very representative of the sentiment, the market sentiment. Apparent consumption has been flat. It's minus 1.5% in the United States, plus 2.8% in Europe. So that is flat for the third consecutive year. Inventories in both markets are below the historical average. So the situation is more or less the same. And what makes the difference. In United States, we have a very effective Section 232 that, by the way, nobody is questioning. Nobody is questioning even if there was some rumors about the end of this tariff, but nobody is questioning and the Vice President of the United States said that it was a fake news. So no problem with this. But with this effective tariffs, imports have decreased by 17%, and we keep very healthy market conditions with stable and reasonable prices. In the case of Europe, it is very clear as we are demanding year-by-year that the saver measures are not effective are not effective and imports are increasing. Imports increased 25%, the opposite than in the United States. And under this situation with a flat market, a depressed market plus increase of imports of 25%, that means that especially if these imports are coming from countries with -- that are not playing this game with the same rules than we are, prices are going down. And we are in a critical situation of prices in Europe, probably the lowest in the history. Fortunately, we have a very clear strategy, and we are following this, and this help us with -- to compensate the good places, the bad places. We are in the United States, but you're in Europe, but we are also in high-performance alloys. And this is a different market, and this diversification is giving us more stability. I think that our volatility through the cycles is being reduced, thanks to this diversification. In the case of Europe, HPA is also affected because that's not because there are no projects or projects have been canceled. It's because under this uncertainty, many companies are postponing this investment. So this is why oil and gas sector and chemical industry is going down and that is affecting VDM. But on the other side, we have Haynes in the United States. And Haynes is more focused in aerospace and focus in turbines for the industrial gas power stations. And this is also booming now in the United States, especially because of the data centers and these data centers need a lot of electricity, so they need to build more power plants and they are using turbine gas and that turbines are made with our nickel alloys in Haynes. So in a challenging situation, in a difficult environment, we are demonstrating that we are -- we have the right strategy that we are resilient and that we are ready for what can happen in the future that we think will be better.

Now if we go to the figures, today, we are not only presenting our year-end results, we have also published in our web page, the consolidated management report audited by PYC. We are well recognized for the transparency and the detailed financial statements. I strongly recommend you to go through it. Most of the questions or the basis for understanding the year 2025 are perfectly explained in our financial statements. Having said that, let's -- I want just to give 3, 4 ideas. You have the figures in the chart. Let's start by the EBITDA. The EBITDA of the year has been EUR 354 million. By itself, it could be considered it's not a remarkable amount, but we need to put the context of what's taking place in the market. First of all, it's probably the worst market condition ever achieved. The demand collapsed 20% in America and in Europe, in the Western world 3 years ago and still have remained flat. So we are playing in that environment for putting it on place, you can realize that more or less every time our distance from our competitors is getting bigger. So no one is getting even close to the figures we are reporting. So EUR 350 million in this environment is really relevant, but especially keeping in mind what has been taking place mostly at the year-end with that strong adjustment we have done for EUR 69 million. We have made 2 very relevant adjustments. One is taking place the rejuvenation plan in Acerinox Europa by EUR 9 million, but the most relevant is the EUR 60 million inventory adjustment. Why? What's taking place there? There are 2 issues, both very relevant in 2025. During the year, we have been experiencing a price decline, mostly in Europe, also in South Africa, but especially worse in the fourth quarter. It could be considered that the prices could not deteriorate more. But what in Europe took place in the fourth quarter is a clear reduction of prices as a consequence also for increase in imports in Europe, anticipating the new measures in place for the year 2026. So this has its effect. So consequently, at the year-end, we have made a huge analysis of the realizable value of our inventories, keeping also in mind that at the starting of the year, the nickel has been moving up. But in the actual market conditions, mostly in Europe, it's not so simple to believe that it's going to be a pass-through of the nickel cost. So as a consequence of that, in a very prudent exercise, we have preferred to make a strong inventory adjustments by this side. And in the other, in the huge strategic exercise of working capital reduction, we have also analyzed which material we were keeping enhance in our inventories and plants that in the current market conditions is not easy to sell and has not been rotated and material that for more than 1 year, we have keep it in our books and it's not so easy to consider that we are going to probably sell it in the short term in the current market conditions. We have preferred to scrap that. This shall be obviously benefiting our raw material purchases expenses in the beginning of the year because we shall use our own generated scrap. It's not going to be taking place a reversal on higher profits because of that, but we have just adjusted that to put it according to the scrap prices. So these 2 effects at the end has this EUR 69 million. We prefer for not making during the year. We never talk about adjusted and so on. We normally take about EBITDA at the year-end when there are some relevant issues taking place, we normally mention EBITDA and adjusted. For example, last year, the adjusted corrected the EBITDA we were reporting because it appeared the sale of value, which obviously was not a recurring part of the business. This year, the effect of the adjustment has been in the contrary because at the end, what has been taking place is this fact. It should not have been by this fact, the fourth quarter EBITDA should have been, as appears in the chart, EUR 101 million and EUR 422 million adjusted EBITDA for the tough environment experienced in the year 2025. We are proud about the figure that we have achieved. If we analyze also the bottom of the chart, we see the net financial debt. Net financial debt, EUR 1.2 billion is also, again, a consequence of our financial strength. It's a consequence that we have enough financial strength for making strategic acquisitions in the low part of the cycle, for moving forward, for making an aggressive expansion plan. And this is showing this figure. Keep in mind that just in the last year, the acquisition of Haynes, the AAA investment decision, America Alloys and Aerospace increase our net debt almost EUR 900 million. In addition, that 4 years ago also in our strategy of moving forward to the HPA, we also acquired VDM. So at the end, if not were for our strategy moving to the HPA by acquisitions and integration, we should be in a cash position only by our stainless business. So for us, it's relevant that our financial strength allows us to invest in every part of the cycle, even in such difficult times as today on. But we are not getting just comforted with that. In any case, what we are concentrating is also in generating cash and trying to compensate this increase of debt by a strong cash flow generation, which has been also remarkable in the way of EUR 455 million. We are keeping our strategy programs. We are keeping our investments. But we are generating cash also for minimizing the effects in our debt. Even though that, I always -- as I always remember, keep in mind that we have now a single covenant in our debt since the year 2009 related to results of EBITDA. So for us, it's an indicator, it's a KPI that's an internal indicator for us. But none of our leverage contracts is related to any specific debt-to-EBITDA ratio. And then having said that, I also want to remark one issue. 2, 3 years ago, we explained in our Investor Day presentations, our through the cycle, and we were more or less explaining. We consider currently after the big investments done in the past, we are in a through-the-cycle EBITDA of about EUR 700 million. If we analyze what has taken place after the COVID, we have 2 magnificent years and then 2 years of strong correction. And this year, which has been the worst. If we consider this to be a cycle because the valley and the bottom clearly has been achieved in the year '25, what appears is the average EBITDA of this period has been EUR 764 million, the average. But the average operating cash flow has been EUR 432 million. So we are generating cash in every part of the cycle. And the range from these horrible years to the remarkable year has been a range from EUR 294 million to EUR 544 million. Some years, the cash flow generation is driven by the profits. Some years, the cash flow generation is driven by the strong exercise of reducing working capital, and we are able to face every water in this condition. So 2025 has been the valley. We consider that we have reached the bottom. Any case, let me make some quotes. My favorite piece of music is from Handels, every valley shall be exalted. Exhaled in 2025 means we have generated EUR 455 million. We have reduced inventories in EUR 400 million. We have overperformed in sustainability. We have overperformed in the Beyond Excellence plan. We are keeping a strong organic growth plan at the same time that we are keeping a strong inorganic growth plan. All of these issues should appear in Esther's presentation now for all the financial details. But keep in mind that this year 2025, this valley shall be exalted. Okay. Thank you, Miguel. Let me now explain you the results by divisions, okay? And I will start by stainless. And let me summarize the main drivers of the quarter. Most of them has been mentioned either by Bernardo or Miguel, but I will centralize what's been the main drivers of the quarter. First of all, the quarter has been marked by the weak demand, weak demand in both markets, both Europe and the United States. Secondly, the seasonality, especially in our main markets, United States with a decrease in the quarter of around 10% in volumes. There's been a consolidation price increase in the United States as we announced, and we have the opposite side in Europe. In Europe, Europe has been affected this quarter by the higher volumes prior to the approval of the CBAM. I think this was one of the reasons why fourth quarter was affected by higher inputs and consequently, a higher price pressure, which has led us to lower prices in Europe. And with all this, we have had extraordinary adjustments in this quarter that Miguel has already mentioned. In the case of stainless, the extraordinary adjustments have been the restructuring provision of EUR 9 million for Acerinox Europa and also an inventory adjustment of EUR 48 million in the case of this division. Out of this EUR 48 million, EUR 21 million is what's been the scrapping materials that Miguel has already explained. With all of this, our adjusted EBITDA in this division in the quarter has been of EUR 58 million, which compares to the EUR 56 million that we had last year. We are very proud of our successful working capital reduction plan. This has been launched throughout all the group divisions, and this has allowed us to generate EUR 104 million in the stainless division in this quarter. If I move to the year, and if I -- if we compare to 2024, we have grown 7% in productions in volumes, okay? That's not only affected by the strike that we had last year in Europe, but we have also grown in the United States. In the United States, we have grown around 6%, mostly not because of the demand, but mostly because of the reduction of the imports in that market. In the opposite side, we have Europe. Europe has been affected by the higher imports this year and consequently, the lower prices. And also to mention in the year is the negative impact in our results of the devaluation of the U.S. dollar. As you know, we consolidate in Europe. We have a lot of results in U.S. dollars. And this has -- this devaluation in the year has impacted more or less around EUR 20 million. With this, the adjusted EBITDA for the year in the stainless division has been EUR 226 and proud of our cash flow generation, mainly driven by the working capital plan. We have generated in this division EUR 269 million, which is more or less the figure of EBITDA that we are reporting in the year. Going to HPA, okay? If we go to HPA, I think the strategy of diversification that has been followed by the group, not only in diversifying in high value-added products with high-performance alloy, but also diversifying in the regions where we are really having higher profitability in this time. We have achieved in this division 40% of the EBITDA of the year, okay, with EUR 146 million adjusted EBITDA. The situation in HPA has been different on one side. We have had a gradual recovery of the aerospace sector, okay? And on the other side -- well, on the other side, sectors like oil and gas or chemicals have been progressively going down due to the uncertainties that Bernardo mentioned, okay, that is postponing investments, especially in big projects. That's what we have -- and even in this situation, thanks to our strategy, we have been able to balance these 2 different positions. In comparison, year-over-year, it was to mention also that last year, as we mentioned also, we had positive impacts of the nickel. We have tailwinds on nickel of around EUR 30 million. We are not having this year, okay? And the inventory adjustment, we also are releasing an adjusted inventory. The inventory adjustments in this division have been of EUR 12 million at year-end. The cash generation has been constant in both divisions, both stainless and high-performance alloys and mainly driven by working capital reduction. And this working capital reduction has been especially focused on reduction on inventories. The cash generation in this division in the year has been EUR 186 million. And if we go to the cash flow, and we start by the fourth quarter, again, the strategy, and you can see there, even the strategy of reducing working capital has allowed us in this quarter to reduce the net financial debt in EUR 55 million despite the high payment of taxes and the high investments in this quarter. The high payments of taxes was already announced. There was an extension in United States because of the floods in the state of Kentucky, and most of the payments of the year have been concentrated in this quarter, okay? That's the reason for the EUR 97 million. And out of the EUR 240 million reduction of working capital that we have had in the quarter, EUR 200 million is coming from inventories, okay? So really, it's been a high success of the working capital reduction, especially on inventories. And then moving to the year, as Miguel mentioned, we generate cash even in the lower part of the cycle and even increasing activity, okay? We have generated in the year the same cash flow as in year 2023 when we earn double EBITDA, okay? So even in the low moments of the cycle and even increasing the activity, we have been controlling our debt and generating cash of EUR 455 million, I think you are seeing, and now you have there the year. We are generating EUR 455 million of operating cash flow, almost, again, the reduction coming from reduction of inventories and working capital reduction. We pay a lot of taxes. Yes, we pay a lot of taxes, mainly in the United States because of our profitability in that market. But this year also, we are paying taxes in Germany and the taxes that we are paid in Germany come from 2023 from the results we had in 2023, which was the best result of VDM in that year, the most highly profitable. In the side of the interest payments, you see that even with a debt of USD 1.2 billion, we are paying $47 million of interest, which shows the competitive cost of our debt. Under the others, which we have EUR 64 million, it's true that we have also a conversion difference because of the devaluation of the U.S. dollar and part of this conversion difference affect also the -- has had an impact on the reduction of the working capital. The strong CapEx. We are having a CapEx of EUR 311 million, which is EUR 100 million higher than last year. All the projects that we have for generating higher EBITDA are also invested in the -- in our CapEx, okay? And we maintain a consistent return to shareholders of EUR 155 million. And with all this, we have increased a bit of our debt, but we have also an impact because of the devaluation and the conversion of the U.S. dollar. okay, the conversion of the U.S. dollar exchange rate has been applied to our cash in U.S. dollar and has -- and this has had an impact in the conversion of EUR 126 million, negative impact of EUR 126 million, which has made our debt to slightly increase from last year. But we are controlling our debt even in moments when we are doing investment and having lower EBITDA, which I think is a great success of the year and the thing that we can be more proud of is this cash generation.

So the main driver for the operating cash flow has been the strong working capital reduction. We made a very ambitious program for years '25 and '26 of working capital reduction. We have, by far, overperformed. What is also relevant to remark is that it has been done through the whole organization. So this working capital reduction of EUR 406 million for your understanding, EUR 202 million has been taking place in stainless and EUR 204 million in HPA. So it's almost equal, keeping in mind any case that HPA is very few tonnage compared with those of stainless, but in its value is substantially higher and also the maturity of the process is substantially longer. But it has been done through the whole organization, half on stainless and half on HPA. And also what's relevant is that this is not window dressing. So we have not been focusing on making factoring contracts regarding customers, reverse factoring for suppliers. We have mostly focused on inventories, and we have been extremely active and aggressive in our inventories in hand. The driver from this EUR 406 million is the EUR 383 million in inventories. And again, I insist half in stainless, half in HPA, EUR 194 million in stainless and EUR 189 million. So it's a global program, and the whole group is absolutely focused and committed on this basis. So this is -- for us, is some of the most remarkable issues we must be proud in this by year of 2025.

As our Chairman mentioned at the beginning of the presentation, we have a very clear strategy. I think it's something that is remarkable and most of our analysts, most of the people that are following realize they have the clearest strategy in the sector. And this is very important for us, and we are keeping since 2020, more or less the same basis, we adapting the strategy we have released this year, a new plan '26 2030, but following the same 4 pillars that we always speak about. Excellence because we are a commodity maker. We are focusing in making new stainless steel grades, new HPA, but we cannot forget that stainless steel is a commodity. In a commodity, you have to be very competitive and to be competitive today is not enough being good. You have to be excellent. And this is why we are focusing in this. This is productivity. This is efficiency, and this is the way of doing things aligned and through all the organization. We are focusing in added value. we call added value to the HPA, nickel alloys and also the special stainless steel grades that we are developing, and we have been successful in this is trying to fill the pyramid of material that we have presented several years that -- so we are making the base of the pyramid that is stainless steel commodity and then tailor-made grades for our customers and users. Then we have the top of the pyramid with HPA, very special materials, but we are filling the gap in between with very special stainless steel and grades that are developed tailor-made for our customers. Not it's just a standard grade, but adapted to the necessities to the machinery of our customers. So this is very important, and we can say today that we have the widest portfolio of products in our industry. And some of our competitors are following this strategy, but they are late. We can before, and we are playing with the best components of this market. Sustainability and speaking about sustainability, always from, of course, social, environment point of view, but very related with our efficiency and with our social action. I mean, efficiency, we are speaking about reducing the emissions of CO2. This is very important, but it's important because we are more clean than before, but it's also important because we are consuming less gas and less electricity than before. And this is cost. This is efficiency and this is excellence as well. And this is what we are doing, focusing in efficiency, reducing water consumption, reducing electricity, reducing natural gas in our furnaces and trying to put in value what we are doing in our communities because as you know, we have big plants that are normally out of the big cities. We are in rural areas and other areas where we have to develop the community. We have developed the skills of the people that they don't have when we arrive to these places. And we are cooperating with diversity, with women and minorities inclusion. We are cooperating with developing dual colleges and universities, and we are very proud of this. So this is why this is not, as Miguel mentioned, for other reasons, but it's not window. This is not greenwashing. This is reality. we are sustainable. And our financial strength that we have spoken a lot about this, but this is the base of all this strategy. So this is what we are doing, delivering through the cycle value creation. And this is the base of our strategy.

If we move to sustainability, at the end, you know because it's public that we have very ambitious targets for 2030, mostly with a continuous effort on reducing 10% the accident rate, but also a 45% reduction on carbon emission for 2030 and -- as much as 90% of recycled waste utilization. When we analyze the parameters of the 2025, it has been a great success. First of all, by its relevance, we have reduced the lost time injury frequency rate at 15.2%. In addition, we have reduced the carbon emissions, Scope 1 plus 2, almost more than 13%, 13.4% and in recycled waste utilization of more than 79%. So we clearly are on the track. We are confident that we are more than fulfilling all these ambitious targets. But also what is more relevant as far as I also mentioned that we are well recognized by the quality of our financial statements. We are also well recognized every day more in the sustainability ratings. Apart of the -- all those that we normally mentioned, only in last week, we received 3 new awards. We can only explain today too, by some licenses issues and so on. But last week, we have been awarded in 2 extraordinary relevant sustainability ratings. One is the Clean 200. So analyzing the largest publicly traded companies in the world of every sector, analyzing 8,300 companies. We are in the list of the 200. We are in the 122 position by the more sustainable revenues. And then this is revenue sustainable due to our products and our solution. This is absolutely remarkable. And in addition, last week also, we were notified that the Standard & Poor includes in the Sustainability Yearbook of 2026 because of an achievement in 2025. This is an analysis of every sector in all the world of the listed traded companies of 9,200 companies and they are only selecting less than 9%, 850 companies, we are there. We have obtained the maximum qualification, 100 over 100 in transparency and reporting. And we are above 90% in business ethics, in product management and in health and safety. So also now all the rating agencies are realizing and putting on value and certifying all the works we are doing in this area. In addition, if we move to the efficiency plan, we are doing on continuous and recurring savings. We launched last year the Beyond Excellence plan for creating EUR 100 million in savings in 3 years. At the conclusion of the second year, we have overperformed and now we have achieved EUR 83 million. So this and the more knowledge we have been developing through all our internal benchmarking on the group and the participation of all our teams, we have realized that we can be again more ambitious and reaching for the coming year '26, the new target of the EUR 120 million. You have the split of which is more or less including in that by order of importance or relevance in this split. Obviously, the first chapter is customer-centric. This obviously means quality. We are talking mostly about predictive quality, big achievements over there. Big achievements also in efficiency and efficiency in our sector is critical, mostly efficiency in raw materials as well as in variable costs. We are also overperforming there as well as in research and development. And obviously, in this regard, once again, we need to mention the nodes. We are launching and with great success the EAO, which is produced with 100% renewable energy, which is produced with 90% of recycled material and with a 50% reduction in emissions. So in all these areas, we are clearly overperforming. Sorry, in regard of the synergies that we are obtaining in the integration of our high-performance alloys in the group, we have achieved the targets, slightly above the target for year 2025. We have obtained in the first year, $12 million. We are confident that we are reaching in 2026, at least the $23 million. Obviously, this year is more concentrating in cost synergies. Gradually also the revenue synergies shall appear as a consequence of cross-selling and so on. And the biggest contribution is coming from now and mostly in the year '28 and '29 when in addition, we shall be running the new equipments in place. And if we go now to the projects actually in place, the organic growth, you can realize that the end currently in the current years, in this period, we have organic growth investments. If we aggregate all the CapExes appear here, we reached EUR 505 million. Clearly, we are prioritizing for CapEx, the areas where we are -- where there is more warranty return. Obviously, the first in this warranty return is no other than North American stainless. You know the big expansion we are accomplishing there since year 2023. Actually, it's coming on place in 2026. The crane was installed last year. We announced it as well as the cold roll that has started its trials in 2026 as well as the AP2, the skin pass now shall be starting on the month of April. So this is mostly now coming during the year 2026. In addition, in Haynes, a part of the acquisition, we are also investing for taking advantage of the excellent momentum coming, not only in aerospace, but also in the gas turbine, we are growing also in VDM in Europe with EUR 63 million. And in those companies where still there is no such a warranty return, but we are doing our best for improve and transform the business. We are diversifying even more Columbus with the introduction of electrical steel. So now Columbus is able to cover the necessities of the South African and the African market. as well as sporting, but mostly having the most diversified portfolio, which is stainless, it's carbon steel, it's electric. It's allowed also to transform HPA. And in the case of Acerinox Europa, we're also involved in the turning around and also is a relevant part of our programs actually in place. With this, we are clearly in position for the coming years to increase our EBITDA more than EUR 300 million.

So this is a beautiful summary of what Miguel has been mentioning. We started in 2020 with this strategy. We have been not even with the bad years, we suffered COVID, we suffered all the tensions, geopolitical tensions, the disruptions of the supply chain and all the geopolitical situation that we are facing, the tariffs, whatever uncertainty, everything, but we are going ahead with our strategy. We are going ahead, and we are revising the strategy, but insisting in the same simple and beautiful. You can put the starting point whatever you want in the average through the cycle EBITDA last year, whatever, but we have a potential upside potential of EUR 500 million EBITDA with the organic growth that Miguel has been explaining. That is including also the possibility that is exciting. It's a fantastic project that we are going with the new investments in Haynes with the new forks and the new furnace. We will have an excess of production of that we will be able to process in North American stainless to make long products. Haynes is focused in flat products. And as we have both flats and long. So we will start making HPA long products in North American stainless. So making a very boutique project in a commodity factory. That's going to be a game changer. Synergies, EUR 68 million, with the next year, EUR 120 million in total. We believe that we have a potential of EUR 500 million EBITDA in our future. So our future can only be better than our present. And we have a new environment, and this is the thing that is going to change. That's why we think that we have already touched the lowest part of the cycle. We have a new environment, and we are actively participating in the creation of this new environment. We are actively participating in Washington in Brussels to explain and demonstrate the administrations that the industry is totally essential for our future that we need industry and we need basic industry and we need stainless steel. We are defining this landscape and prioritizing strategic autonomy. You have seen how the European Commission is changing the wording now. Until a few years ago, it was impossible to speak in these terms. Now strategic autonomy is very common and everybody knows what it is, and everybody knows what are we referring to. But in the last weeks, Ursula von der Leyen, the President of the Commission is strengthening this message. It's not speaking about the strategic autonomy. It's speaking about independency, the need of independency for Europe, for the European industry. And something unbelievable before that the commissioner of the European community is speaking about a by European program that we need to local purchases, especially for public purchasing called responsible purchases, but also for products or projects that are subsidized or receive any kind of help from the European Commission. This is very important. Europe is waking up and Europe is realizing that there's no future without industry. And this is the picture that we have here. We have United States, already a protected market with this Section 232 that nobody is questioning. This is applying to every country. It's with a 50% tariff that is not under consideration with no exclusions per country, with no exclusions per product and also extended to downstream product that is very important. So our best customers are also protected by this Section 232 because tube makers, since makers, screws, all these kind of things that are -- where stainless steel is a big portion of the cost of the product are also included here. So our customers are also included. And of course, the that is avoiding the possibility to do convention between countries to avoid the tariffs. The other tariffs, who knows? This is today's uncertainty. We have the reciprocal tariffs that has been canceled by the Supreme Court in the United States. Now they are applying Section 122, that is 10% duty and it's a general duty for every country, every product except what is included in Section 232. Let's see it can be increased to 15% because still there's nothing published officially. And we know that the administration and we are cooperating with that is looking for new tools or new tariffs or reviewing the American law and the American constitution to find out where they can put this protection that in some cases, we can complain because it's a political -- are using tariffs as a political instrument, but in other products or in other terms are necessary to keep a healthy industrial production in the country. In the case of Europe, we have CBAM that is already in place since 1st of January. There is not a tax. This is not a protection. This is something that to compensate the efforts that we, the European industry are making in decarbonization. What we can say until today is that there's a lot of uncertainties yet. This is -- importers are applying the default values to calculate CBAM. This is very high today. It's going up to EUR 600 per tonne for several countries. The average is around EUR 400 per tonne. So it's a lot -- in the future, these exporters will have to calculate their own values, and they have to evaluate these values and somebody will have to certify that these values are right. And this is part of the uncertainty that we have. But what is true is that already in January, imports have been low, have been decreased a lot. And in February, it looks like it's going to be more or less the same. So we hope that CBAM is going to compensate the effort that we are doing and will be a kind of filter for unfair or nonsustainable steel coming from other places. In the case of the new trade measures that we are working hard on this. We have seen and we have during these years that the measures have not been effective, and we need something stronger. We need a strong support and demonstration of the European administration that we need the industry. What I can say is that in the case of Spain, the Spanish administration is cooperating with us and is helping us a lot and is supporting all these activities in Europe. Of course, the industrialized countries in Europe are supporting our initiatives, but Europe is a complex mechanism. And there are some other countries with other interest. But today, it's clear that we will defend the industry. With the new system, the target is reduce imports at the level of 15% market share. That means in the case of stainless steel that imports will have to reduce by 15%. So very helpful. If we have a market where imports are only 15%, of course, we will compete because we have enough capacity between the European producers. But having more stability, having no dumping imports at the end, we'll have a more stable market and we'll have a healthier prices that will help us to generate EBITDA in Europe that will help us to keep on investing and paying dividends to our shareholders that is necessary to keep the industry alive. Now the situation is improving, as I mentioned at the beginning, we have lower stocks in all the market. And what is positive, the PMI in the biggest economies are turning around. United States from December to January, the PMI went from 47.9% to 52.6%. This is a big change in the European Union from December to February, it moved from 48.8% to 50.8%. So we are -- in both areas, we are in the positive side now. So we have a future with measures, a future with more industrial activity and a future in which we have developed a very strong and reliable strategy. So that takes us to the end of the presentation. So we consider that we have a good result in 2025, a very good EBITDA in the lowest point of the cycle. But we are delivering our strategy and nobody is confusing us. So we are following the way that we have defined for Acerinox. And we have a clear strategy that is already in place and is being developed and it's going to be the base for our future success. We have a better environment. We have a more positive environment for our future. So at the end, it can only be better. So we will start gradually recovering through the year. We will start gradually increasing our EBITDA through the year. And that take us to the -- especially in the second half of the year with the new commercial measures in Europe that will help us. And gradually, we will be increasing, and that's why we said prudently that our outlook for this first quarter 2026 that the adjusted EBITDA is going to be slightly higher than fourth quarter. That's all from the presentation.

Okay. Thank you. Thank you very much, Bernardo, and all the presenters. Let's start now with the Q&A session. We will start first here in the room and then we will move to the conference call. [Operator Instructions]

Congrats on the free cash flow. Just one. You have shown us today your long-term vision, but what should be the levers in terms of regional volumes and pricing that would lead to reach the EUR 500 million figure for EBITDA improve?

So when we calculate the potential of these new investments, all this strategy normally is calculated at historical average of the reasonable price. But still, we have to develop this CapEx program. We have to develop the new equipment. We have to do the ramp-up, and we'll have to, of course, to increase our production with this investment. But it's reasonable because it have been calculated with the actual prices.

Francisco Riquel from Alantra. I have two. The first one is on the U.S., which is your core market. I want to assess how NAS is holding up in the current environment, whether the short-term weakness in the group earnings is also applies to the NAS or it is also mainly related to Europe. So if you can comment on volume and margin dynamics in the U.S. And also on the EUR 60 million of inventory write-downs, you mentioned EUR 12 million allocated to HPAs. So anything also for the U.S. or if that is mainly the rest to Europe? And my second question is about Europe. CBAM is already effective. So I wonder if you can update on what you are observing in the market since the beginning of the year in terms of import flows, your order book and utilization rates and pricing dynamics or whether you are still dealing with excess inventories in the system?

This is a short question that this is a very long answer. But thank you, Paco. United States, the situation is, as we mentioned, speaking about apparent consumption is still low. It's around 20% below what was normal because it was accumulated close to 30% reduction since 2022. And the situation of NAS is very healthy. N, you have visited is a great factory. It's the best plant in the world, but at least in the Western world and is looking more or less at 85% of capacity utilization today, improving because our order book is increasing now in the beginning of the year, partly because of the seasonality of our business, but also because we see a very slight recovery. Too soon to say that. We are finishing February, still we don't have too much information for this. But NAS is performing very well, making money with stable prices and stable costs and stable production at this level that I have mentioned. In the case of CBAM, there's nothing that we can say yet. January imports have been low, but we cannot conclude that that's going to happen for the rest of the year. Let's see how how it works in February, it looks that it's going to be similar than January, and let's see. I think that I read in the magazine in one of our sector that prices were increasing in Europe because of CBAM. I don't think so. I think that prices are growing in Europe a little bit because nickel price is going up because the market is better and is accepting these price increases and CBAM maybe is giving this support to these activities. But we hope it will work well. But this is an experiment. There's no experience for this. To speak about inventories, Miguel, do you want to.

Yes. As we said before, inventory reduction has been taking place everywhere. The adjustment and the write-off has been done mostly in Europe.

Any other questions here in the room? So we can start now with the questions coming from the conference call. Please, operator, go ahead.

[Operator Instructions] Our first question comes from Dominic O'Kane with JPMorgan.

I have 2 questions. So the -- if I think about the outlook for 2026 and the guidance you've given us for Q1 on EBITDA to be slightly higher. Could you maybe just help us with the bridge about how we think about the cadence of the EBITDA growth coming through in 2026? Is it in your expectation, skewed to the second half? And is that going to be driven by price? Or can you talk to us maybe about specific volumes in the second half of the year that will drive significant improvement in the EBITDA? That's my first question.

Well, the -- sorry, for the year 2026, I think it should be a gradual recovery. More or less, we understand the situation. As Bernardo mentioned, we are in stable -- much more stable environment in America, even though, obviously, there is uncertainty. The uncertainty was the main driver for year '25, but still there is uncertainty on the starting of the 2026. And we have seen more or less what has been taking place everywhere in the last 2 months. So still even for our customers, the situation is a bit unclear. And our customers are not in position of taking any strategy approach of grow or how to grow because still the rules of the game are not going to be clear. We see now, for example, in the agreement, Europe and America and so on. So all of you know what we are facing. So it's not so simple. Having said that, when we say that gradually it's going to be moving up, the basis of our performance on the North American market is in stainless are very solid. We think that the gradual recovery expected in Europe, mostly for the second semester, one since the 1st of July, the new measures taken by the European Union are on place, and this at least should allow us to improve the situation in Europe. The situation in Europe, first of all, the new rules of the game appear to be favoring the industry and especially from the second semester. In our case, in the plan that we are putting on place and the turnaround plan in Acerinox Europa, we're also preparing everything for taking advantage in the coming future. We have done the adjustments that we have done for preparing and having everything well prepared, but still what's not clear is when it's coming the reactivation of demand. It's unique. The situation we are experiencing in the last 2 years, it must come. But with the uncertainty, the demand still is a bit dormant. And this is the point which makes difficult to make predictions for the second half of the year. We are doing our best. We understand that gradually, we're going to improve. We understand that we shall be in position for bringing gradually Europe breakeven maybe for the second half of the year because still at this level of prices in Europe, it's impossible to be profitable for the industry in general. So this is something that must change. But we have better rules. We are in better condition, but still the demand in Europe has not been reactivated. In the case of the HPA, we are at the end, benefited by our diversification. So now it's coming a proper tailwind for -- especially for the aerospace and the gas turbine generation. This should be clearly benefiting Haynes. But VDM, which is more concentrated in the oil and gas, still that sector appears to be facing a tough challenging year for 2026. So our strategy always has been diversification for trying to play the cycles and sometimes there are regional prices, sometimes there are by sector. Fortunately, we can grow in HPA, but the growth is going to be driven gradually from the aerospace that is more or less recovering and also the recovering is coming to the flat products and Haynes shall be there as well as to the gas turbine. These are going to be very relevant drivers for the HPA in America in the coming years. So we understand that we are probably moving up gradually during the year, but still there is uncertainties on place. So we cannot have a much more clear vision.

Our next question is from Adahna Ekoku from Morgan Stanley.

First, on Europe, is there any kind of indicative guidance you could give in terms of what uplift from the safeguard measures and CBAM that we've discussed on your profitability? Could we assume that at full run rate in maybe 2027, you could reach normalized volumes of around 600 kt and the normalized EBITDA, which I think sits at EUR 100 million to EUR 150 million? And then just second, on the NAS expansion, what proportion of the 200 kt volumes should we expect to see in 2026?

Thank you for your question. For the first one, there's not much that we can say. CBAM is already in place. And with the actual situation that the Parliament and the European Board plus has accepted what the European Commission proposed. Now they have to meet between the 3 parties. It's called the, and they are starting meetings. They started 23rd of February with the first meeting, and they are supposed to finish by first part of May. So that means that even trying to push and go fast will be in place 1st of July. How is it going to affect the market and prices, but will depend on the situation when we start having these measures. But still it's difficult to predict. We don't have the crystal ball for this. So I think that the analysts have to make the calculations. It's something that we cannot speak about prices. For the next expansion, we are already started. First coil was called roll last week. Now when you do the first coil, you have to fix many, many things and do the fine-tuning of the equipment and then we'll start with the ramp-up. So probably this new equipment will be in full production by June. That means that in this year, we are going to contribute to the EBITDA of us. And of course, it will depend also in the market condition. Today, we are working at 85% of capacity utilization. If we increase our capacity utilization, then the new equipment will bring the 20% so the potential of 20% production increase that we are planning for this equipment.

Our next question is from Bastian Synagowitz from Deutsche Bank.

I've got 2. So my first one is just coming back on the European business. I think you mentioned that with current prices, it's impossible to be profitable in the current market. yet I think, I guess some of the European peers have been profitable in Q4. I guess, generally see some uptick in Q1. So I just wanted to just get back to that point. So is your view basically that you will not be able to get the business back to breakeven just stand-alone with the current market conditions you're seeing, I guess, given that prices have started to trend up a little, probably also taking currently a little bit of market share back from imports? And do you really need the TDI to turn the business around? And then also, is there actually an earnings level and a return target for the European operations, which you basically have set to yourselves to keep allocating capital to the European operations? That is my first question.

I don't know what our competitors are doing, what our sector are doing in general in Europe. So we are all complaining that under this situation, even if you are a little bit profitable, this is not sustainable because of the level of prices in carbon steel and stainless steel. We are more or less all in the same situation. Some of us are better or worse than others, but the situation is the same for everybody. We don't disclose results per unit. So we cannot speak about this. Of course, market share, we will increase our market share coming from imports. If we reduce import level from 24% that is today to a level of -- a target of 15%. So that means there will be 9 points of market share that will be distributed between the European players. We can have from 10% to 15% of that market. So this is more or less what we will increase in our production if finally we have these measures and finally, these measures work as we believe. Of course, the volumes are very important for our business. So with these new volumes, we think that we'll be able to be above breakeven point. This is the target with all the plans that we have, with the investments that we have, how we're improving with a small little CapEx in digitalization and things to debottleneck things and upgrade our lines, update with the electronics and best technology. So the factory with these measures, I think, will be in a better position and able to contribute to the profits of the group. We're allocating CapEx to all the plants. This is compulsory. I mean, if you don't invest in a factory like ours, you have to close the factories very, very soon because you always need some investments in maintenance and trying to keep the equipment updated with the new technologies. And in this case, we are not facing a big CapEx program in the place because even in a company like Acerinox, even being a Spanish company, we don't have an unlimited amount of money to invest. So we have to -- with -- according to our strategic plans, according to our budgets and predictions for the future. So we have a certain amount of money that we dedicate to CapEx. Fortunately, we have a lot of ideas, and we have more ideas than money. So that means that we have to limit our CapEx program and to limit this CapEx program, we have to give priority to the places where the return is faster. The payback is faster. That especially investing in United States in Hayes and us and second in VDM in HPA in Europe. But we never stop investing because we have to.

If I may add to that, with the expectations in Europe, with the new trade measure, CBAM, it would be remiss will be -- I believe we'll have a problem if we were not to invest a bit on our EPM plants because the future is there. I believe the European plant will -- with these new measures, with the lowering of imports, demand, who knows. But just with that, prices should go up a bit. And with that, we should be able to capture some of the profitability coming from the European side. As Bernardo said, we are investing heavily in the U.S. as we keep doing because that's where we believe the demand is there. The already protection measures work well and they are improved. So we believe the future is there, but also will be a problem if we were not to capitalize on the return on the turnaround of European business, thanks to these new tariffs that hopefully will be put in place in July.

The next question is from Maxime Kogge from ODDO BHF.

So 2 questions on my side, too. So the first is on CBAM. What's your initial takeaway of CBAM that has been now in place for 2 months? It seems to be driving a little bit of price uptick. Some default values have also been revised upwards. So it seems to be more efficient than it was originally meant to be. So yes, any view on that would be helpful. And what are the remaining loopholes that you see need to be addressed for it to be fully effective? And the second question is on South Africa because basically, I mean, we've seen some measures taken in countries like Brazil or Mexico where your competitors operate. Could we hope for similar tariffs to be introduced in South Africa and thus address the risk of defection of Chinese imports, which cannot make their way now into the U.S. and soon into Europe?

Thank you, Maxime, for the first question. As I mentioned before, CBAM is very early yet to speak about the -- how it's going to affect our market, what I said. I don't think that prices are going up because of CBAM. Prices are going up because we have more activity in the market and because these raw materials are normally linked with this more activity. And so -- and we have been able. But at the end, if we have been able to increase our prices to pass some of these raw material prices to the customers is because the market is in better conditions. Otherwise, we will not be able to do it. But I don't think that we can say that CBAM is provoking this price increase. I don't think so, but we will support the better market conditions for sure. In the case of South Africa, -- you know that we are -- for South Africa, for Columbus, the second market is Europe. And still, we have -- we are exporting to Europe, and we have a lot of clients in Europe that need the South African material, especially ferrochrome. Columbus, as you know, so we have -- South Africa is a big producer of ferrochrome. We have a very competitive ferrochrome price in South Africa. And that means that we can be very competitive in ferritic grades, and we are exporting to some of the European customers, especially in the auto sector. Having said this, we think that in the future, all these measures are going to be tougher for importers. We are trying to anticipate this in Columbus and trying to diversify in products through the flexibility of the plant. We think that we have a very strong position in the African market. We have close to 50% market share in the whole continent. And most of that is in South Africa, but in some other countries. And what we're doing is trying to develop the African market because sooner or later, it is true that we have been saying this for many, many years, but sooner or later, Africa will have to wake up and we have that strong position there. We are making stainless steel in South Africa. We are making carbon steel. We are already making electrical steel and with this new line that we are implementing, so we'll be able to coat this electrical steel to be able to send it to the market. This is the only electrical steel plant in Africa, the same that we have the only stainless steel plant in Africa. So situation is there. South African market is also depressed, but we are also working with the local administration with the South African government to increase tariffs. We had a 5% tariff in South Africa that we have incremented to 10%. And now we are negotiating a tariff increase to 50. That is the magic number that everybody is applying today. So South Africa is the best plant in Africa. It's the only plant there, and it's a very good position, but our market is smaller than Brazil or Mexico. It's not comparable. So that's why we are focusing in the whole continent.

The next question comes from Inigo Egusquiza from Kepler.

The first one is just a clarification on the regulation, Bernardo. On the U.S., you mentioned that nobody is questioning the new tariffs approved by the U.S. administration back in summer 2025, but there were some press comments that the U.S. was thinking on the possibility of changing this new system. Can you confirm with the information that you have that this is not going to be the case? So this is the first question on the U.S. regulation. On Europe regulation from what you mentioned, Bernardo, the impression is that we are not going to see an anticipation on the new system, new tariffs ahead of July when the existing system expires. So this is the first question on regulation. And the second question is just on CapEx. Probably Miguel, a question for you. What is going to be the CapEx for 2026 going to be similar to the EUR 311 million invested in 2025?

Thank you, Inigo. For the first question, regulation, I don't know, sometimes you are surprised with what you read in the newspapers, but we are -- so we are not being informed of the regulation. We are actively participating in this regulation. So we have firsthand news about this. And I can tell you that nobody is questioning the Section 232 in the United States. And even when there was that fake news, it was in a very serious media, there was Financial Times, but there was this fake news. So we -- the American steel industry, we call to the government for -- to clarify or not and very, very soon, the Vice President of the United States made declaration saying that was fake news, but there's nothing there. So Section 232 nobody is questioning it. In case of Europe, yes, you're right. Everything goes slow in Europe, but at least it's moving. And we were optimism, thinking that maybe measures will be in place in around May of this. But with the new information saying that the final conclusion will be taken in by mid-May, it's going to be very difficult because after -- it is only that if they take the decision mid-May, they have to publish the -- they have to publish the law. Once it is published, they have to be translated to the 27 languages of the European Union. So it's going to be difficult to start before 1st of July.

Regarding the CapEx for 2026, the figure should not be far away from the figure of 2025. So probably slightly below as a combination of the starting up final payments on the expansion in NAS taking place at the same time that we are moving, and we have already made the adjudication of the equipments for the expansion also taking place in in Haynes and so on. The aggregated amount of all these figures shall be slightly below that of 2025.

We have no further questions in the queue. So I'll hand back to the management team to wrap up the call.

Okay. That concludes today's conference call. Thank you very much once again for joining us and for your continued support. Thank you very much.