Despite today’s fall of 0.6% in the Ibex 35, Acerinox confirmed in a press conference that it is looking for buying opportunities in its two main markets, the United States and Europe, which allow it to continue with its growth . However, it rules out listing on the US market, despite considering that the company is “undervalued”.
For his part, on the occasion of the company’s general shareholders’ meeting to be held this Tuesday, the president of the steel group, Carlos Ortega Arias-Paz, said that Acerinox “is always seeing organic and inorganic growth opportunities.” However, he stressed that they are looking at everything there is to generate value for the shareholder and recalled that in 2022 there had already been a hostile takeover bid by the Dutch Aperam, but in the end it did not prosper due to its low price in the offer.
In relation to the purchase, he did not rule out any type of business, be it in stainless steel, where the group is the leader, or in value-added products, a sector in which Acerinox took a giant leap with the acquisition of the German company VDM Metals . The CEO points out that they would like something similar to the operation carried out by the German company but they cannot find it.
The ‘list’ will not be the solution
However, the manager recognized that in Europe it would be more difficult to consider betting on an increase in its production in the region, since it is currently working at 80-85% of capacity. With a debt/Ebitda ratio below the set bar of 1.2 times, Acerinox sees itself as having sufficient financial robustness to undertake an acquisition if the opportunity arises, or to continue improving remuneration if it does not. to its shareholders, after having raised the dividend this year by 20% -from 0.5 euros to 0.6 euros per share- through share repurchase plans whenever market conditions allow.
What Ortega did rule out was both the group’s jump to listing in the United States and a possible corporate operation on Acerinox by a company in the sector in the country. “I see it as easy for someone from there to buy us, they don’t have enough size to buy the leader,” he said.
Regarding a possible ‘listing’ in the United States or another market such as the Netherlands, following in the footsteps of Ferrovial, for example, with which to seek to give greater visibility to the value of the company, Ortega acknowledged that it is something “very simple”.
“We do not see that the solution is to make a ‘listing’ in the United States so that the American investor enters Acerinox. I do not think that the ‘listing’ is the solution”, he assured.
Consequently, the president of Acerinox did consider that the group is “an expert in sweets” and “a bargain” for anyone due to its low price. “Compared to our peers, we have a very relevant country compared to the others, such as the United States, so our growth and profitability is higher, so it is a surprise that the market does not reflect it that way. We think we are undervalued, we must be open to anything that creates value for our shareholders,” added Velázquez.
A “very American” company
Despite its Spanish roots, Ortega stressed that Acerinox feels like a “very American company”, the main country for the group with half of its sales, since the United States offers it a “very strong market, with stable demand, which gives it financial strength and highly relevant results”, for which reason he stated that, in his opinion, the undervaluation of the company is “a market anomaly”.
Likewise, Velázquez said that the world is undergoing a “regionalization” process that gives the group a competitive advantage due to its geographical diversification to produce in final markets. “We have spent years preparing for a change in the economic model, with a process of greater regionalization. We have spent years working to raise awareness of the need for materials of a strategic nature,” he assured.
Extra costs for energy
Regarding the energy prices that have such an influence on the business of the steel sector, Velázquez suggested that the energy crisis experienced last year due to the impact of the war in Ukraine moved into an additional cost of some 136 million euros, compared to a 2021 in which he obtained more than 80 million euros above average.
For this reason, he highlights that the company is betting on long-term power purchase contracts (PPAs) and is confident that by the middle of this year it will be able to cover more than a third of its energy consumption as well and that this extra cost is “improved” this year.
On the other hand, regarding the negotiation of the agreement for the Acerinox factory in Los Barrios, Velázquez opted for reaching a “sensible solution, as has always happened”, and that wage increases can be decoupled from inflation, “due to the benefit of the company and its workers”, he said.
Final dividend of €0.30 per share
This Thursday, on second call, Acerinox will hold its ordinary general shareholders’ meeting, in which it will propose the payment of a complementary dividend of 0.30 euros gross per shareholder.
This amount will be paid on July 17 and, with the 0.30 euros gross already paid in January as an interim dividend, the total shareholder remuneration charged to 2022 will amount to 0.60 euros per share, 20% more than in the previous exercise. This will mean that the steel company distributes among all its shareholders a total import of 150 million euros in dividends for the year 2022.
Together with this dividend proposal, as well as the examination and approval of the annual accounts, Acerinox will submit its shareholders for re-election as directors of the group of George Donald Johnston and Pedro Sainz de Baranda Riva, both with the category of independent. Likewise, the re-election of PwC as auditor of the accounts of the steel group for this financial year 2023 will be proposed to the general meeting of shareholders.