Acerinox’s Strategic Evolution Amid Geopolitical and Market Volatility
In 2024, Acerinox, a global leader in the stainless steel industry, concluded a year marked by significant strategic decisions, including the acquisition of Haynes International and the sale of Bahru Stainless. These decisions exemplify the company's continued commitment to expanding into high-value-added solutions while navigating the volatility of the steel sector.
Despite a challenging market environment, driven by factors such as the geopolitical tensions in Europe and economic uncertainties due to the U.S. elections, Acerinox effectively mitigated the impact of these external factors and managed to maintain a relatively strong financial position. The company also demonstrated a remarkable ability to adapt to market conditions, successfully restructuring operations and making investments that would foster long-term growth.
Financial Overview and Strategic Adjustments
Acerinox’s financial performance in 2024 was shaped by a series of strategic decisions aimed at positioning the company for sustained success. The company reported:
• Revenue of EUR 5,413 million, down 18% from 2023, largely driven by external market conditions, including a 20% drop in demand in 2023 and continued weak demand in 2024.
• EBITDA of EUR 500 million, a 29% decline from 2023, impacted by various extraordinary events and operational disruptions.
• Profit after tax and non-controlling interests amounted to EUR 225 million, a decline of just 1% from 2023.
• The EBITDA margin stood at 9%, slightly down from 10% in 2023.
Despite these declines, Acerinox maintained a solid cash flow, which is indicative of the effectiveness of its strategic decisions in a highly volatile market.
Strategic Moves: Acquisition and Divestment
Acerinox’s strategic focus on expanding high-value-added solutions was evident through two key actions in 2024: the acquisition of Haynes International and the sale of Bahru Stainless.
1. Acquisition of Haynes International:
In a major move, Acerinox acquired Haynes International, a U.S.-based company with more than 100 years of experience in high-performance alloys. This acquisition strengthens Acerinox’s position in the high-performance alloys market, particularly in the aerospace and industrial sectors. The acquisition, finalized for USD 799 million, expands Acerinox’s footprint in the U.S. market, which is crucial for the company’s growth strategy.
o The acquisition aligns with Acerinox’s long-term strategy of expanding into more profitable, higher-value industries.
o Haynes International brings an established presence in the aerospace sector and a strong research and development foundation for new alloys.
o Over the next four years, Acerinox plans to invest approximately USD 200 million to increase production capacity and develop synergies across both companies.
2. Sale of Bahru Stainless:
Acerinox made the strategic decision to sell its Bahru Stainless plant in Malaysia to Worldwide Stainless Sdn. Bhd. for USD 95 million. This was a result of the market shift and intense competition, particularly from China and Indonesia, which made the operation less profitable.
o The sale marked the end of Acerinox’s operations in Southeast Asia, allowing the company to focus on more strategic markets with better growth potential.
o This decision aligns with Acerinox’s strategy to focus on high-margin, high-value-added products and reduce exposure to markets with low profitability.
Operational and Organizational Developments
In response to ongoing challenges in the market and workforce dynamics, Acerinox also took significant steps to reorganize its operations and improve efficiency:
1. New Organizational Model at Acerinox Europa:
At the Campo de Gibraltar plant (part of Acerinox Europa), the company implemented a new organizational and production model designed to improve efficiency and strengthen its position in high-value-added products. This restructuring involved:
o The signing of a new collective bargaining agreement after months of strike action. The agreement, which will last until 2027, includes a series of measures to increase workforce flexibility and improve employee relations.
o Measures like voluntary paid polyvalence, voluntary paid availability, and new production bonuses aligned with Acerinox’s strategy to increase product quality and broaden its range of high-performance alloys.
o A wage increase of approximately 12% over four years.
o A commitment to a labor rejuvenation program that offers early retirement options to eligible employees.
2. Expansion Projects:
Acerinox continued to invest heavily in expanding its operations, with key investments in both North America and Europe:
o North American Stainless (NAS): Acerinox announced an investment of USD 244 million to increase production capacity by 20%, focusing on flat products with higher added value. The expansion project is progressing on schedule and aims to increase Acerinox’s share in the North American market.
o VDM Metals: Acerinox invested EUR 67 million in VDM Metals, a company acquired by Acerinox in 2020. This investment aims to increase sales by 15% and includes upgrading production capabilities, particularly in additive manufacturing. A sprayer for producing stainless steel and high-performance alloy powders is among the key upgrades.
3. Beyond Excellence Program:
Acerinox launched the 2024-2026 Beyond Excellence program, aimed at increasing competitiveness through continuous improvement initiatives. The program focuses on:
o Digital transformation to streamline operations.
o Cross-functional collaboration and innovation.
o A target to increase EBITDA by EUR 100 million by 2026, with EUR 45 million expected in 2024.
The program achieved EUR 41 million in savings in its first year, with 91% of the target achieved despite delays due to the strike at Acerinox Europa.
Outlook for 2025: Anticipated Recovery and Continued Expansion
Looking forward to 2025, Acerinox’s outlook is optimistic, driven by its strategic investments, structural changes, and continued focus on high-value-added products:
1. Stainless Steel Market: Acerinox expects a recovery in stainless steel activity starting March 2025, with distributor inventories currently lower than the historical average. As demand for stainless steel rebounds, Acerinox is well-positioned to capitalize on this recovery.
2. High-Performance Alloys: The high-performance alloys market is expected to remain stable, with a strong order book despite some weakness in the aerospace sector.
3. Financial Outlook: Acerinox anticipates that Q1 adjusted EBITDA in 2025 will be slightly higher than Q4 adjusted EBITDA, reflecting a positive shift in demand and operational efficiency.
4. Market Drivers: Acerinox also expects that the U.S. administration’s recent measures will favor demand in the U.S. market, particularly for high-performance alloys.
Key Takeaways
• Revenue for 2024 was EUR 5,413 million, an 18% decline from 2023, reflecting the impact of market volatility.
• EBITDA fell by 29% to EUR 500 million, driven by operational challenges and a drop in prices.
• Profit after tax was EUR 225 million, down by just 1% from 2023, demonstrating resilience in a volatile market.
• Acerinox’s strategic moves included the acquisition of Haynes International (USD 799 million) and the sale of Bahru Stainless (USD 95 million), both aimed at expanding into higher-value sectors.
• Operational changes at Acerinox Europa and expansion projects in North America (NAS) and Europe (VDM Metals) are key to future growth.
• The Beyond Excellence program generated EUR 41 million in savings in 2024, helping to improve efficiency and competitiveness.
• Acerinox expects a recovery in stainless steel demand in March 2025, driven by low inventories and increased market activity.
• The company is positioned for future growth in high-performance alloys, especially in aerospace and industrial sectors.
Acerinox’s strategy remains focused on long-term growth, operational excellence, and expansion into high-value-added markets, positioning the company well for success in the years to come.
