Good morning to you all, and welcome to Acerinox third quarter 2025 results presentation. As you know, geopolitical uncertainties, regional conflicts, and tariff wars continue to affect world markets. Consequently, the third quarter has been another challenging quarter. However, as a group, we have demonstrated resilience in the face of the difficult market situation. During this call, you will hear from our CEO, Bernardo Velázquez Herreros; our Chief Corporate Officer, Miguel Ferrandis Torres; and our CFO, Esther Camós, who will explain the third-quarter results and provide the Q4 outlook. Before we start, please note that this conference call is being broadcast on our website, acerinox.com. I now hand over to our CEO, Bernardo Velázquez Herreros.
Thank you, Carlos. Good morning, everyone, and thank you for attending this presentation. We have released these results at the lowest point of a long cycle, defined by geopolitical conflicts, tariffs, and uncertainty. If one word can define this part of the cycle, it is uncertainty. How can you prepare a budget for next year? How can you organize your commercial strategy if you do not know whether tariffs will apply with certain countries? Everyone is working on a daily basis what we call “hand to mouth.” From hand to mouth means customers purchase only when strictly necessary to replace materials. Consequently, consumption is slow, and many decisions have been postponed.
The recovery that we expected has been postponed. We are confident that it will come and that upcoming trade measures will support an even stronger recovery for Acerinox. New trade measures in the EU are expected very soon. Section 232 and other tariffs in the United States are in place, and some tariffs are also being negotiated in South Africa. Meanwhile, we need to focus on short-term efforts, particularly cost-cutting and cash generation. Given the current uncertainty, and as everyone prepares for the year-end, Q4 is expected to be similar or slightly weaker.
Q4 will likely follow a similar rhythm to Q3 but for a shorter period due to strong seasonality in the United States and Germany; December is effectively a half-month. This outlook anticipates Q4 to be lower than Q3, primarily due to seasonality. Miguel, over to you.
The main market highlights for 2025 are clearly driven by uncertainty. We are a cyclical company operating in a cyclical business. We are at the bottom of the cycle, and most specialists consider that we have probably reached the lowest point. Demand has not recovered and is in the third consecutive year of no net recovery in Western markets after the strong correction experienced in 2023, when North America and Europe both corrected by more than 20%. We have not yet returned to those levels, and ongoing uncertainty is creating unique circumstances not seen before in three consecutive years without market recovery.
As a consequence, there is a clear effect on prices, mostly in Europe and Asia. This slowdown is also due to some Asian countries moving production into Europe, which does not contribute positively. Our main advantage is diversification. On this slide, we show where green shoots are appearing. We are taking advantage of these opportunities, particularly in our most relevant market, North American stainless steel. Inventory levels there are below historical norms.
imports have been declining, likely due to the commitment of the American administration to the industry. The “Buy American” initiative differentiates American customers. Section 232 increases have also positively impacted prices. This market has shown earlier signs of improvement. In high-performance alloys, the situation is bittersweet: investment is absent due to uncertainty, and many relevant projects, particularly in the chemical process industry, oil, and gas sectors, have been delayed.
As a result, European-produced high-performance alloys see slower order books. However, our diversification strategy including investment in Haynes in the U.S. and expansion into aerospace positions us to benefit from improving momentum in aerospace. Recovery is already visible in long-product nickel-base materials, and flat products are also gaining momentum, despite differences in the supply chain.
Looking at 2026, the high-performance alloys segment will likely drive profitability, especially for Haynes. Other sectors, like industrial gas turbines, are gaining momentum, supported by investments in data centers for artificial intelligence and by hydrogen transition projects. This is positive and expected to accelerate in the coming months and into 2026. In contrast, the European stainless steel market has yet to show meaningful recovery. Bernardo Velázquez Herreros will explain the new reality in more detail.
So far, an increase in demand of about 10% could seem healthy, but it is not, because imports have grown by 36%. Asian players continue to supply material to Europe, anticipating stricter EU measures. This growth in imports pressures inventories and keeps prices under stress. This has characterized Q3 globally. Now, let’s analyze what is coming.
For long-time followers of Acerinox, trade measures are not new. This time, however, we can speak positively. We are very close to achieving the protections we have sought for years. In March, after the new Section 232 in the United States, the European Commission released the Steel and Metals Action Plan, in which most of our petitions were considered. On October 7, the European Commission announced new trade measures, still pending approval, but highly positive.
I will read some quotes to show the importance of our industry. Ursula von der Leyen, President of the European Commission, said: “A strong decarbonized steel sector is vital for the European Union's competitiveness, economic security, and strategic autonomy.” Séjourné, Executive Vice President for Prosperity and Industrial Strategy, said: “A strong future for Europe is impossible without a vibrant and resilient steel industry.” We should be encouraged, because the EU is moving in the right direction. These new measures will create a more competitive and healthier steel industry in Europe, with a drastic reduction in quotas.
In the case of stainless steel, it can be at the level of 55% reduction in import market share. In steel in general, it's at 47%. Materials above the quotas will have a 50% tariff, double than what we have today. Every anti-dumping, anti-subsidy, or anti-sink convention case will be added on top of these tariffs and will apply country by country without exemptions, and the quotas will not have a carryover to the next quarter. What is also important is melted and poured will be considered. Melted and poured, that is, the origin of the material will be the place where it has been melted and poured.
This is very important because we are suffering a sink convention, very rapid changes in the country of transforming the slabs or black coals coming from Indonesia or China, and we have been invaded by materials rerolled in Taiwan, Vietnam, Turkey, and other countries. This new situation will stop this unfair competition. What is important now is that the EU will have to implement these measures as soon as possible. Still, we need the approval of the European Parliament. We think that we will succeed because there is strong support for these measures, and after that, the European Council will have to approve it. Generally, this is very good news for the industry not for the next quarter, but because it gives a level playing field.
We will compete with fair rules and fair competition, and we are confident that the situation in Europe will improve. On top of this, we have to consider what can happen with the Carbon Border Adjustment Mechanism (CBAM), which will start being implemented on the 1st of January, still with many uncertainties and unclear rules. This will also prevent the lack of competitiveness of the European industry based on CO2 emissions, ambition, reduction, and other measures. In general, I think that we have a better future. We are ready to receive the good news of having these new measures implemented. The safeguard measures will expire in summer 2026. We are pushing to accelerate the process as much as we can.
Maybe it can be 1st of April, but as soon as possible because it's urgent for the European industry to have these measures in place. This is good news for our future. This is what we have been claiming for many years. You know that we have always tried to ask and speak with the European Commission to develop these measures, and finally, they listened to us. We are happy to announce that this will be very good for the European stainless steel industry.
If we move to the results, both for the third quarter as well as accumulated, in these circumstances and days of uncertainty, we are proud to be well understood. We are proud to be reliable as well as predictable. When we presented the second quarter results, we made an outlook for the third quarter that should be in line with that of the second quarter. We have been in line with that, slightly below, but when you factor in the depreciation of the dollar our most relevant currency and the situation and evolution of prices in Europe, you understand that the third-quarter results are clearly consistent.
Especially when you put them in the context of the results that other players in the industry are in these days presenting, it clearly demonstrates the success of our diversification and strategy in recent years. In addition, due to the weaknesses in prices that we are announcing, we made an inventory adjustment at the end of Q3 for €31 million, preparing for the realization of our stock, mostly in the fourth quarter and especially in Europe. On this basis, we are proud that at the end, if we analyze the €108 million EBITDA or the €321 million EBITDA for the nine months, we are at the bottom of the cycle. We are clearly obtaining the average profits and contributions experienced over the last decade.
This clearly demonstrates that we are now more resilient and able to maintain this level of profitability. Also, it is extremely relevant to highlight cash flow generation. We obtained operating cash flow of €152 million in the quarter, almost €300 million (€299 million) up to September. This is a key driver. In the current circumstances, it's difficult to increase profitability, but we are able to generate cash and cover CapEx and dividends with the cash generated. This is one of the main values and principles of the company. Additionally, net financial debt at the end of the quarter is €1.2 billion.
When we compare, with the third quarter in 2024, net debt was €453 million. This aligns with our strategy, and we feel proud that we can invest at any point in the cycle and continue our strategy plan. Our financial strength allows us to do this. In the current circumstances, we made a relevant investment the acquisition of Haynes which explains the comparison with last year’s net debt. Our strategy remains consistent. Financial strength allows us to face challenges without leverage issues
All our debt is covenant-free regarding profitability. While we track some KPIs, they do not affect our debt. Additionally, we maintain competitive debt levels, ensuring finance charges are manageable. The debt-to-EBITDA KPI appears high this year due to the combination of low EBITDA and the Haynes acquisition, but this will gradually dilute with consistent, committed cash flow generation.
In the stainless division, several factors characterize this quarter. First, seasonality in Europe according to the collective bargaining agreement signed last year, production in Europe was closed for 15 days in August. Second, weak demand, affecting both Europe and the United States, but more significantly Europe. Third, input pressure, which has caused prices to reduce even more in Europe. We are selling this quarter at the lowest prices of the year. On the positive side, the United States has much better pricing despite weak demand.
Also positive is cash generation of €82 million in the quarter and €165 million accumulated, demonstrating the effectiveness of our working capital reduction projects throughout the year. Production decreased 10% quarter over quarter, and sales decreased 8% quarter over quarter, lower than production due to higher prices in the United States. EBITDA is lower by €2 million, which is exactly the effect of U.S. dollar depreciation this quarter. On the positive side, margins increased.
We are increasing margins in this third quarter despite the lower sales, with margin at 8% instead of 7% in the second quarter. Going to HPA, due to our diversification into different sectors, we are compensating the negative impacts experienced in oil, gas, and chemical sectors, where our group VDM is more exposed. This is offset by gradual recovery in aerospace, which affects mostly Haynes. EBITDA is lower by €2 million, achieving €32 million this quarter and €103 million for the nine months, including contributions from Haynes. Operating working cash flow in the quarter is €70 million, better than the second quarter.
Most of this is driven by inventory reduction, totaling €134 million for nine months. Regarding capital allocation, our working capital reduction plans continue to generate cash successfully. In this quarter, working capital was reduced by €85 million, generating €152 million in operating cash flow. CapEx was €88 million, including down payments for investments. Free cash flow was €64 million, and dividends of €77 million were paid, increasing debt only by €21 million. We maintained debt despite stronger CapEx and dividend payments. For the nine months, operating cash flow was €299 million, CapEx €212 million, and free cash flow €155 million, matching dividend payments. This would have kept debt flat if not for U.S. dollar depreciation. The U.S. dollar depreciation increased our debt by €123 million due to currency conversion effects.
We remain focused on our strategy. At North American Stainless, capacity is increasing by 20%, with new equipment in place next year. VDM is increasing production and efficiency by 15%.
In Acerinox Europe and Columbus, we are transforming the business, preparing for current market circumstances and future recovery. Columbus is now producing stainless, carbon, and electrical steels.
We are also prepared for high-performance alloys processing. Haynes integration is successful, with additional investments planned for the future. We continue strict control of working capital and cash generation.
In the short term, demand remains weak after three consecutive years. Q4 will follow the same rhythm as Q3, considering seasonality. I remain very optimistic about the future.
The group’s diversification across countries and materials, along with ongoing projects, positions us well to benefit from the emerging level playing field in Europe, the U.S., and possibly South Africa. Thank you for the presentation. We can now start the Q&A session. Please, operator.
Thank you. To ask a question, press star one. To withdraw, press star two. Our first question is from Tristan Gresser at BNP Paribas Exane. Please go ahead. .
Yes, hi. Thank you for taking my questions. First, on the U.S. market, cold roll production is down 5% year on year. Does this reflect the demand decline in the U.S.? Any differences between flats and longs? Will Q4 positive pricing offset lower volumes?
The U.S. situation is similar to Europe, with better pricing. Demand fell 5% in 2022, minus 20% in 2023, and flat in 2024 and 2025. Both long and flat products are affected. Recovery is expected, particularly in consumer goods for flat products, reactivation in oil and gas for long products, and U.S. infrastructure projects, including stainless steel rebars for bridges.
The situation is roughly the same, flat demand, but with better price levels while waiting for recovery. In Q4, prices reflect the increase announced at the end of Q2. We have negotiated price increases with customers where no long-term agreements exist, including six-month or quarterly contracts. Q3 reflects this price increase. Q4 is expected to maintain similar levels, with further recovery and increases expected in Q1 2026. Thank you, Tristan
With severe seasonality into Q4, does this mean group EBITDA could be lower year-on-year?
Operations are more U.S.-driven at North American Stainless and in high-performance alloys in Europe. December is usually slower. In America, activity drops from Thanksgiving to Christmas, making Q4 effectively shorter by three to four weeks. The market evolution and effectiveness of working capital reductions will influence the inventory adjustment. We feel comfortable stating that the Q4 shall be lower, and we feel comfortable saying that mostly due to seasonal slowdown. I invite you to take your conclusions on your model.
One last question: Regarding the import situation and measures in Europe, stainless semi-finished products aren’t covered by quotas. Should semi-finished products be included, and what risk exists with CBAM and quotas on CRC and HRC if slabs continue coming through?
We are asking for semi-finished products to be included. Semi-finished products will be covered by trade measures. We expect products with high stainless cost influence, such as tubes and sinks, to be included. CBAM will help avoid circumvention.
Okay. All right. Very clear. I jump back into queue. Thank you.
Our next question is from Adahna Ekoku from Morgan Stanley. Please go ahead.
Hi, Morgan. Thank you for taking my questions. I've got two. First, just to follow up on the U.S. prices, could you give us a sense of how the contract negotiations are going for 2026, just given the kind of continued weak demand as well as the new volumes coming to market? You mentioned your expectations to be higher heading into Q1.
Apologies, the line is very unclear, Adahna, so we weren't able to get your question. If you could kindly try dialing back in, and then we can move on to you again. In that case, we'll take the next question from Tom Zhang at Barclays Bank PLC. Please go ahead. Maybe if I could understand.
Hi, can you guys hear my line? Is that okay?
If I could understand something in the previous call, it's speaking about U.S. contract negotiations for 2026. We are busy in these negotiations today. There's nothing that we can add. Normally, these negotiations happen earlier. Normally, it starts happening in July. Many years in October, we have already finished the negotiations. With the uncertainty and lack of visibility, everything is being postponed. We are now negotiating, and we expect that in November, December, we will close all these contracts. It's difficult for our customers to predict volumes. In most of the cases in this previous forecast, we're speaking about repeating volumes with 2026, but it's no idea. That can change in months when the recovery starts or once the rules will be more clear.
Thank you. Sorry for the interruption. We'll now move on to Tom Zhang at Barclays. Tom, please go ahead.
Great. Thank you. Thanks for taking the questions. First one for me. You mentioned in the presentation sort of inventories growing now in Europe, and I guess maybe that's a little bit of pre-stocking ahead of measures. How much further do you think inventories can keep going in Europe? I guess I'm just trying to figure out how much more import pre-buying we could see in the next couple of quarters before measures come in and the market normalizes a little bit. That's the first one. Thanks.
Thank you, Tom. This is very difficult to predict, as Miguel mentioned. Some of the importers can think that it's better to import now because next year will be more difficult. We have more protection, or it's going to be difficult to predict what is going to be the effect of CBAM on the first of January, and if the new trade messages are going to be applied in April or in May, or when the safeguard message expires at the end of June. It is difficult to predict what's going to happen. If I were an importer, if I were a distributor, of course, I would keep my stocks at reasonable levels, not high because everything can change. The volatility is very high. I don't think personally that it's a good time to increase the stock, but I cannot answer your question.
Okay. Fair enough. Could you just remind us about the kind of volumes that you send from South Africa? I think historically, that was a very export-driven plant. I know you've brought the export volumes down a lot in the last few years. I think the last we heard was it was about 50-50 between domestic and export shipments. I'm just wondering, does that flow get affected at all by the European trade measures if you send any material from South Africa into Europe?
This is something that we predicted, and we have been working in South Africa and Columbus Stainless to change the situation because we always thought that in the future we will be more regional, and Columbus will not have the possibility to export big volumes to Europe or to any other region of the world. That's why we are starting making mild steel in South Africa, and we are also prepared now to produce also electrical steel. We are concentrating Columbus in the local market. In the past, at the beginning, it was 70% export, 30% local. Now we are targeting to have more or less 60% local, 40% export. In that case, all the volumes exported to the European Union will be into the quota. We will not have to pay any extra tariff there because the material that will come to Europe will be included in the quota.
Okay. No change in terms of volumes going from South Africa into Europe. It's already well below the new quota level. Maybe just final one for me. Around NAS volumes, I guess, with the capacity expansion, I think you guys previously talked about first coil meant to come out by the end of the year. Do you have any visibility on that and maybe any early targets on how long the ramp-up period will be, if any, for the NAS expansion? Thanks.
The NAS expansion is going very well. We already installed the crane in the melting shop, but still we don't have this capacity increase because we are repairing or revamping one of the other existing cranes. Everything is ready. Hot rolling mill is also ready. We will produce the first coil in the cold rolling mill at the end of January. The ramp-up will depend basically on the revamping of our AP number two, that is the annealing and pickling line that we are modifying to absorb the increase of capacity. That will be ready also first of January or early January, and the ramp-up can take three or four months. We will be ready for the recovery of the American market.
Okay. Very clear. Thanks very much. Our next question is from Bastian Synagowitz at Deutsche Bank AG. Please go ahead.
Good morning, all, and thanks for taking my questions. Hopefully, the line is okay here. Maybe firstly on Americas, can I briefly ask, is the softness in the U.S., which you're seeing here in the fourth quarter, any more than the usual seasonality? Is this really very much in line with what you're usually seeing, or is there anything more in it? That's my first question.
No, no. It's more or less, as I mentioned before, it's the same, more or less the same consumption rhythm that they have had in the second quarter and quarter three. We're more or less the same. There's not additional weakness in the market. It's just seasonality.
Okay. Thank you. Maybe moving over to the HPA business, I guess the third quarter was actually pretty stable, but you still obviously seem to see a lot of softness in energy and also chemicals, as you're saying, mostly in the former VDM business. Do you think that we have already seen the trough here in HPA and the contribution? Should we sort of, would you be comfortable to say that we'll stay pretty close to these levels and then rebound from here? Is there any color you could give us, any conviction?
Secondly, on your investment strategy here, where you have a reasonably big pipeline for investments, are you confident that these investments still all make sense, or have you taken at least any action to pace those down and maybe adjust for the current market, also in the context of your net debt to EBITDA obviously hitting around 3 times? You clearly have a lot of comfort on that, and I think you expressed that, but are you still pacing down the CapEx side here? That's my question.
Thank you. Bastian, regarding the HPA, I think it's differentiated, obviously by the areas, as we told before. The weakness of the chemical process industry, the maturity and the lead times for this sector, as well as on the oil and gas, are also driving lower order book than normal in the current days. We clearly assume that the best semester of next year for these sectors is not going to be relevant. More or less what we also consider now, and this is obviously the consequence of our strategy, is that the improvement in the aerospace could compensate. Obviously, when we talk about the aerospace, it shall be more reflected in the United States through Haynes, should compensate this weakness that we are going to experience in the chemical process mostly and in the oil and gas.
In the oil and gas, there are some volumes more related to maintenance, but not for new projects. This is obviously for Haynes as well as for North American Stainless, for example, for all the drilling. This end-use still is not there. In maintenance, there are some issues, but still clearly we must take in mind that VDM is mostly covering, and two-thirds of its production covering both areas. The other areas, the automotive, show certain improvements. The electronics remains there. In the case of Haynes, we shall experience the growth and the clear recovery of the aerospace industry. The gas turbine generation, also as was expressed, is also doing well. Our understanding is on the global picture for next year, we think that probably shall be more or less compensated, the correction or the effect in a global year of this weakness with the other strength.
Probably in the first semester, especially for oil and gas and chemical process industry, we do not see now any recovery. If it comes, it should be more in the second semester. Regarding the investments, we are long-term driven. This sector is huge in investments, and it's not for thinking on a short-term basis. The investment plan in Haynes and especially the areas where it's focused, as well as also what we are investing in North American Stainless for process HPA, takes full sense. It's a growing sector, and also the main driver of the synergies and the future synergies is coming from that. It's not more or less any type of questioning of the timing of the investments, as also the same circumstances take place in VDM. There are investments for increasing not only.
Volume, but it's mostly for increasing efficiency, as well as for avoiding dependence from three players and having the possibility of making the whole process as much as possible internally. This is clearly the efficient also is coming through that. It takes sense. As I said, we are obviously following our debt carefully and making the best in cash generation, but we should not reconsider these investments as they are because of the current level of debt. As I told before, we are clearly investing on growth where we have a warranty return, and in these cases, it's evident.
Okay. Perfect. Thanks, Miguel. Our next question is from Maxime Kogge at ODDO BHF Corporate & Markets. Please go ahead.
Good morning. The first question is a follow-up on three stands one. On semis, I think actually you are yourself sourcing some semis on the market, and that's quite recent, especially from Indonesia. What has led you actually to adopt this strategy recently? Could you go further in that direction? Would there be a case for Europe actually to really focus on the hot rolling or even just cold rolling mill and source its slabs externally, given that Europe's production is bound to remain quite uncompetitive compared to some other regions in the world, at least in the hot phase?
As we mentioned before, we are suffering from unfair competition, especially for materials that have been melted in Indonesia and rolled in other countries and entering in Europe with other origins than Indonesian. That's making not only in stainless steel, also in carbon steel, the industry unsustainable. We cannot live in these conditions. The European steel industry is in real danger, and that's why the Commission is now placing this set of measures that are going to be very important for us. Still, we don't have these measures. We have to do something. That's why many players started to bring slabs from Indonesia. We have to do two things. We defend the European industry, but then we close our melting shops, and we start bringing material from Indonesia. In our case, we only have made one trial. It's not a significant volume.
Okay. That's clear. Second and last question is on South Africa because historically, you had a big competitive advantage because you had access to quite cheap ferrochrome. Now the industry, the local industry, is in disarray. There could be a future when the whole industry will have disappeared. How do you see the situation there? How does it impact Columbus? What's your view potentially on the export tax on chrome ore as well that is being envisaged? That would be helpful, yeah.
You know that very recently, production of ferrochrome in South Africa was suspended because of the high electricity price, basically because of high electricity price. The ferrochrome producers were asking for better conditions because otherwise they are exporting. Instead of producing in the country, they are exporting the chrome ore to China. China, with South African chrome ore, has become the biggest ferrochrome producer in the world. They have around 56% or 60% of the world production. That is why, because South Africa in the last years has lost competitiveness. Now the situation is better in terms of availability of electricity. There are some negotiations between the ferrochrome producers, we are included in these negotiations, and the government, asking for better electricity price for the electro-intensive industries, as well as an export tax or export duty for the exports of chrome ore that are damaging the competitiveness of the country.
Having said this, we still have access to cheap chrome compared with the rest of the world. We can use it, as we have mentioned many times, in liquid form. We can use liquid ferrochrome because we have a ferrochrome smelter just as a neighbor company, less than one kilometer away from our plant. This is a significant advantage because we don't need electricity to melt this ferrochrome because it's already liquid. We also save a lot of money in refractories and in electrodes. Still very competitive. Basically, most of the materials that we are exporting to Europe from South Africa are ferritics, because it's our speciality and because we are more competitive.
Okay. Thank you for the comprehensive insight. I'll jump back to the queue.
Our next question is from Inigo Escaziza from Kepler. Please go ahead.
Good morning. Thank you for taking my question. Good morning, Bernardo, Miguel, Esteban, Carlos. I have four questions, if I may. The first one would be on the European Union's safeguard measures. Fernando, can you share with us what are your expectations in terms of calendaring implementation? I think you have mentioned April, May, but maybe we have to wait until June. If you can share with us what could be a potential calendar, I know it's tough. This is the first question. The second question would be on Haynes International integration. If you can also elaborate and share with us how is the integration going, how are the synergies, the number that you increased, how are things going on this front. The third one would be on stainless steel. If you can also elaborate a bit, how is the profitability of the U.S. versus Europe?
I guess Europe is, again, making losses, but I don't know if they are bigger or smaller than a year ago. What could be the implications of the new European Union safeguard measures for the European business profitability? Can we expect this facility to reach break-even if the new safeguard measures are implemented, to reach break-even by 2026? The final one, I'm sorry for being long, on the U.S.-based prices that you have mentioned, if you can quantify a bit, how large has been the base price increase that you implemented during the summer of 2025? Thank you. Gracias.
Thank you, Inigo. I cannot answer the first question because it's not in our hands. The existing safe measures will expire the 30th of June. Apparently, if we are moving fast in this sense, it's because we need to finish the process. All the European processes are long, safe, but long, and have to be ready at the end of June. Of course, everybody is aware of the emergency that we have in the end of these measures, and everybody, including the European Commission, is making their best to accelerate the process. This is nothing that I can add. I have read that it could be 1st of April, but we don't have any information on this. We cannot control this process.
Regarding the Haynes integration, we are there. We are satisfied. There has been a huge effort. The integration at the end is more or less with participation of relevant people, not only at VDM, also at North American Stainless, also at three North American Stainless headquarters. It is a global team who is accelerating the process of the integration. We are really satisfied with how things are moving on. Regarding the synergies, the estimation of the synergies, obviously we are in the year of the start of the process. The synergies fixed for this first year were €11 million, and we are there. We have accomplished what has been the analysis for the first stage, assuming that the synergies should gradually be increasing year after year. Those for the first year, already we are there, and we are very comfortable with that.
Regarding stainless and the contribution of Europe, we are following our strategy in Europe, which is resulting to be positive. All the KPIs that we are measuring, comparing, going higher value-added, going end customers versus distributors and so on, everything is making us trust on that strategy that we are following. The problem in Europe is being, as said, is first of all, demand, and second, import pressure in prices. These low levels in prices, I think, are affecting all the industry. We are positive in the future. We are positive with the measures because we think that those measures, we cannot predict what is going to happen with the prices. We expect that with these measures in place, the market will be able to increase prices, and that definitely will help in our strategy. The contribution compared to last year is being better. It's a reflection of that all our measures are going in the good direction, but still suffering from these price levels and demand.
Inigo, when we are speaking about prices, normally we are speaking about the prices that are published in several magazines. Because we cannot speak about prices, we are very sensitive to this. As I mentioned, everybody is speaking that the prices in Europe today are very low. They are around €100 per ton below the average of this cycle and probably below €300 per ton below the average of the previous cycle. We are not speaking about our prices. In the case of the United States, it's exactly the same. We are negotiating customer by customer, product by product. Everybody has a different price, and this is something that we cannot disclose. We announced that we are increasing prices, but this is not an official tariff. We are not publishing official tariffs and say, "This product will have this price for every customer," or whatever.
This is negotiations, and it will depend on everything: the situation of the customers, the situation of our plant, the needs to have more or less orders in several products. That depends very much. We cannot disclose our pricing situation very much.
Okay, thank you, Bernardo. Gracias. Our next question is from Tommaso Castello at Jefferies. Please go ahead.
Yes. Good morning, and thanks for the presentation. Is the line clear? Can you hear me?
Yes.
Okay. Thank you. I have one last question, and thanks for taking it. You have highlighted cutting costs and cash generation through the management of working capital as key priorities for year-end. Given the ongoing market uncertainty, do you anticipate further opportunities to release working capital in Q4? If you could remind us of your cost-cutting initiatives to date and if there is any target number and date there. Thank you.
We are pushing hard in terms of making the best of the working capital in Q4, and this is a clear guideline that every division of the business is actually focusing on. This has been recurrently re-stated from the headquarters, and all the group is committed. In this regard, we understand that this is going to be a strong and relevant effect coming in Q4. You also can see that one of the Q3, for example, was substantially higher than Q2. In this regard, we are clearly focused. I started introducing it previously. With the cash generated up to now, we have covered the relevant CapEx up to now, but also the dividend for the whole year. There is no cash out coming for dividend payment in the fourth quarter, but it's a strong tax cash out that also is going to take part.
On that basis, we consider that we shall reduce probably the net debt. A lot of the cash generated through the reduction of working capital also shall be for paying taxes. On that basis, it's not going to be, even though we make our best and we are successful in the discipline of reduced working capital, we are not going to make or experience a huge reduction in the debt because of that. The taxes to be paid in the fourth quarter, according to the circumstances on the areas where we are profitable, are clearly there. Regarding the other plan, we have no clear public number of the cost reduction plan that we are involved, but also the plans remain in place, and we are healthy there. Obviously, as much as productivity is higher, as much as they are better appreciated.
Sometimes, even though we make a huge effort for reduced costs and that can increase our profitability in the current level of prices, not always it's so appreciated in the final P&L because at the end, as has been previously stated, the magazines are reporting base prices now in these days of around €450. I remember in the old days we considered that it was not possible for the industry to be profitable below €900 or €950. Then we developed for be profitable at levels of €700. Now we see this level of prices. Still, the cost savings that we can obtain that are significant in our business and for our controls and benchmarks, but has less visibility when the market is so poor.
Anyway, remember that sometimes we have mentioned that with the volatility of the cycles in the last decade, we have learned to run our plans like the cars. We have the eco mode, and we have the sport mode. When w e go to export, and we try to focus on productivity. Where we are in the low part of the cycle, we are not fully at full capacity, and then we go to the eco way. I mean, trying to focus on cost. This is what we are doing now: trying to be effective and very efficient in all the production, trying to save in everything, in electricity, trying to save in refractories, all the consumables. Trying not to make extra hours, trying to take holidays when it is possible, and also focusing on our excellent program, our Beyond Excellent plan. That is succeeding. We published the numbers in quarter two for the first half of the year, and it's moving very well. We are focused on all these projects that will help us to improve our profit and loss account.
That's clear. Thank you very much. All the best and good luck.
Tommaso, regarding this Beyond Excellent plan, as Bernardo mentioned, we publish twice a year in H1 and full year results. In H1, the target for the year is €45 million, and in H1 we achieved €23 million. We are going on track, and we expect to be very close to this target by the year-end.
Thanks again. Have a nice day.
Our next question is from Dominic O'Kane, JPMorgan Chase & Co. Please go ahead.
Hello. I just have one quick question. I just wanted to double-check with the Q4 guidance for lower EBITDA quarter on quarter. Does that also include any assumption for an inventory revaluation? Thanks in advance.
No, the guidance is only including what can be considered adjusted EBITDA.
Okay, thank you.
At this time, we currently have no further questions in the queue.
Okay. Thank you. We have two questions from the webcast. The first one is coming from Adahna, from Morgan Stanley, and it's as follows. On high-performance alloys, conditions for VDM continue to be weak, which is getting partly offset by Haynes. Can you help us with a split of how these two businesses are doing, or maybe how much lower VDM is tracking relative to its normalized EBITDA, which I think you previously said is around €120 million?
I think we already have explained that. Obviously, it still is a bit early. It shall depend on circumstances, and it still is too early for considering what may take place in 2026. We already have indicated that the order book appeared to be weak for the first half, but let's see what comes later. On the other side, the recovery in the aerospace industry is coming. We understand that this shall compensate, but it still is too early to make any commitment in which shall be the profit contribution for that division. We shall have more visibility probably the year or when we make the year-end results presentation in February. It still is too soon.
Thank you, Miguel. The last question is coming from Marisa Hernandez from Times Square. What are your expectations for CBAM impact on stainless prices in Europe?
Very difficult question. We still don't know what the rules are of CBAM. We know the rules, but we still miss some information that is going to be necessary for this. Because still, we don't know what is going to be the benchmark for the industry. We cannot compare prices or different CO2 emissions between importers and this benchmark. There are some uncertainties in the formula. There is nothing that I can add here. I also cannot give you information from consultant companies or whatever because the range is so big that some people are speaking about €100, some people are speaking about €500. This is not the price increase. This could be the effect for importers. There is no visibility on this. I cannot help you.
Okay. Thank you. That concludes today's conference call. Thank you very much for all your questions and for joining us today. Have a good day.