President & CEO Roeland Baan
“The third quarter proved to be as tough as we had predicted. Our adjusted EBITDA decreased to EUR 45 million largely due to weak demand and increased imports to Europe resulting in low deliveries and price pressure. This situation was particularly true for business area Long Products, reporting over 30% lower deliveries year-on-year. Additionally, the sharp rise of the nickel price led to hedging losses throughout our business.
The weakness in the European stainless steel market is expected to continue. The EU’s revised safeguard measures enforced since the beginning of October have not yet had noticeable impact. However, the market should get more balanced as import quotas get filled. We also welcome the announcement by the European Commission that they have started anti-dumping investigations and countervailing duties against China and Indonesia.
We expect the fourth quarter to be similar to the third with limited upside in the market. While the nickel hedging losses will not be repeated, rising imports, typical seasonality in the US and higher maintenance costs will have a negative impact on our profitability.
Our focus on reducing net debt remains unwavering. We have already reached our 2019 target to reduce net working capital by EUR 150 million, well ahead of plan. In the fourth quarter, we will get further support for our cash flow from the EUR 90 million cash proceeds related to the real estate sale in Benrath that was announced in May 2019.
While the market trends are not working in our favor, we continue to pursue our efficiency and productivity improvements. We have started additional actions including personnel negotiations in Germany and business area Long Products to enhance the competitiveness of our European operations. The long-term growth prospects for stainless steel remain sound, and as the industry leader, our aim is to keep our position in all market circumstances.”