Good morning to you all, and welcome to the third quarter 2026 results presentation. Before we begin, we would like to thank everyone for the messages of concern following the train accident two days ago. While that route is commonly used by our staff traveling to the factory, fortunately, no Acerinox employees were injured. Our hearts go out to those affected, and we extend our deepest condolences and support to the victims and their families. Q3 has been a strong quarter for Acerinox. As a group, we have demonstrated our strength in a complex market situation, and as we will explain during this call, we continue to prioritize our working capital and solid cash generation.
During this call, we will hear from our Chief Corporate Officer, Miguel Ferrandis, Esther Camós, our Chief Financial Officer, and Carlos Lora-Tamayo, our IR Communication and Reporting Director, who will explain our Q3 results and provide an outlook for Q4. Before we start with this presentation, let me remind you that this conference is being broadcast on our website, acerinox.com. Now, I will hand you over to our Chief Corporate Officer, Miguel Ferrandis. Miguel, please go ahead.
Thank you, Borja. When preparing this results presentation, trying to find the word, probably what comes more to my mind is the word of pride. We are presenting very remarkable figures in the current days, with challenges all over the world and with a highly complex environment. We are not yet reaching the levels of consumption, almost in every area, of the pre-COVID time. But what appears evident in these results achieved in the third quarter and in these nine months is that we are capitalizing opportunities where they are and when they come, and we are taking the best of that. If you see the figures appearing in these highlights, you can realize that the figure of sales, EUR 1.6 billion for the third quarter, is very similar to that one of the previous quarter.
Having said that, we have improved our EBITDA of 13%, reaching this figure of EUR 199 million. We like to be predictable when we forecast the outlook in the results presentation of the Q2. We announced that we shall be slightly above, and we shall be at 13%, one-three, above the figure of the second quarter. But when we go to the nine months figure, with this EUR 4.5 billion of sales, just 2% above the sales of the first nine months of last year, our EBITDA has gone up to EUR 470 million, and this means a 46% increase in EBITDA. With 2% increase in sales, 46% increase in EBITDA.
This demonstrates what we are trying to explain today of how we are able to capitalize the opportunities when they come, and this is as a consequence of our consistent strategy and the evidence that that strategy is fruitful. Our operating cash flow is slightly negative for the quarter, slightly positive for the nine months. This is obviously driven by the working capital. Our working capital is running normally in parallel of our performance, and the strong improvement that we are having is obviously, at the end, having the consequence of the increase in working capital in most of the year up to now, in the three quarters. This normally shall be strongly reduced or neutralized, as you normally know, in the fourth quarter.
It's true that the figure of the working capital at September, combined with the strong CapEx programs in which we are involved, combined with the semi-annual dividend payment that has been taking place during the quarter, has taken our debt to the peak in the year of EUR 1.5 billion, that at the end shall be reduced in the fourth quarter, mostly as a consequence of the expected working capital reduction. These are the main highlights for today's results presentation. In the following slide, we are showing the gradual improvement that we are realizing quarter after quarter. This is the reported EBITDA of the last three years, and at the end, what is clearly more easy to realize is the impressive track we are experiencing during year 2026.
An outsider of the company could consider that this is as a consequence of a cycle, several tailwinds that are benefiting us everywhere. By far, this is not the case. This is not that we are entering in a new cycle, that all the circumstances and all the markets are booming. Not by far. At the end, we still are seeing a low demand everywhere. Some specific sectors still are depressed. In addition, we are experiencing a strong increase in energy cost. There is huge uncertainties almost everywhere. But as we said before, the strategy, the diversification, the continuous improvement in efficiency are allowing us to experience this strong recovery, reaching figures in the third quarter of almost EUR 200 million as a quarterly figure, with a margin EBITDA of 12.5%.
This is coming, as I said before, taking the opportunities where they are, mostly of taking the good momentum that the specific sectors are experiencing in the States, combined with the turnaround that we are making in Acerinox Europa. At the end, this subsidiary that, in our case, has been loss-making for the last years, as you all know, we are gradually improving it. We have reached almost break-even at the EBITDA level. We mentioned it in June. We are still almost in break-even. At the end, obviously, the energy cost in the third quarter have improved, but we are reaching this almost EBITDA break-even level in the depressed base prices that we are experiencing in Europe. This is a great success.
So, at the end, the gradual recovery is a combination of that higher contribution, taking advantage of the proper niches in the American market, and that the previous loss-making unit that was Acerinox Europa now is turning around and reaching almost the break-even. If we go to our main market, which is obviously North America, January to September, the U.S., North America, is 56% of our sales. Clearly, it is our main market. More than any other circumstance, we are North American. The main virtue that we can remark today about the American market is the stability. At the end, this stability is obviously well-supported by the American administration that is consistently supporting the local industry. This is providing stability, and that stability is good for every player in the market. The prices in the Stainless Steel remain solid in America.
But this is circumstances that is favorable to the market, favorable to the customers, favorable to the distributors, as also favorable to the producers. Every player knows the status quo, and consequently, this allows us that even though the demand is low, but the players are facing the current circumstances in a, let us say, satisfactory way. The imports have been reducing, reaching or representing now 21% of the total market. Still, North America is a net importer market, but the imports have been reducing more than 18% for reaching that level. This is a good sign for the coming months. Another good sign for the coming months is also that the inventories remain low. At the end, what still we are waiting is that the good momentum we are seeing in specific end users spread to others.
Still, the apparent demand is 2% below that one of the previous year. In America, there are specific sectors that are performing very strong. Obviously, as you all know, the aerospace sector is a sector that is now in a very good momentum. In addition, also, the construction of data center is also driving increases in demand and in consumption of several of our products. For example, all those related to the energy end users, as well as also the pipes and so on. This is also experiencing a good momentum. Other sectors in which we historically have been active are also doing great. For example, the food and catering industry, this has already recovered. But still, we are missing sectors that for us are relevant. One sector that for us is relevant and it still remains negative, for example, is the domestic appliances.
Another sector that still is to come is the transporting, which especially in the heavy transport, we are active, as well as in the tank trailer. We are, at the end, as I say, taking the best from those sectors that are doing great. For us, it is really exciting to imagine what could be our contribution and our profitability in America when the proper cycle comes and all these other sectors that still are relatively dormant incorporate again and follow the trend of the sectors that already have been reacted. We are still satisfied and optimistic regarding the North American market and our performance in the North American market.
Okay. We move to the European market. This year, it has been a very challenging year, a very volatile year for Europe. The weak economy situation, the geopolitical uncertainties are affecting our demand, that is in a very low point. Saying this, it is true also that in the first half of the year, we experienced a good demand, a strong demand coming from big distributors. This is probably driven by some lack of supply. The imports in the first half of the year went down significantly, mainly in the first four months of the year. But at the end of the second quarter, imports started to increase, and this creates also some excess of stocks in the market that is being delayed, the expected recovery for the third quarter, after the implementation of the new trade measures.
Consequently, we have an overbuying in the first half of the year, and then a third quarter market by the typical seasonality, the energy prices also that went up significantly, yes, both electricity and gas, and also at the stocking process. The consequence of this is that the apparent demand went down 22%, a very big number, quarter on quarter. Imports went down 50%, 50%, in this quarter, and represents 16% of the total market. Keep in mind that we were coming from import penetration last year, in the first nine months of last year, of 24%. So this is the good news, that imports are, with these new measures, moving down.
Okay, saying this, the third quarter, a very challenging quarter, seasonality, excess of stocks in the market, but what we are fully confident is that the new European regulation is going to be a game-changer for the European market. Once we digest all these inventories that are in the market, local producers will benefit from this reduction on imports. And this new regulation will provide much more stability for the market, the same stability that we have in the U.S. So we are positive for the mid-long term. Hopefully, the beginning of next year, we can start to see this better environment. But it is true that this recovery, it has been delayed due to the excess of stock, the imports that came in advance of the implementation of the new trade measures.
Now moving to High Performance Alloys. The market environment of the High Performance Alloys industry, same as secure in Stainless Steel, is different depending on the region, but more specifically depending on the sector. Starting by U.S., okay, it is true that the stronger support of the U.S. administration to the industry is benefiting High Performance Alloys through the 15% of global tariff on imports. As you know, the Section 232 does not include the High Performance Alloys material. Demand in the U.S. continues very strong, improving the order entries and the backlog. This, of course, is making that our lead times are extending, but our capacity utilization levels are also becoming higher utilization. And we keep confident on the good momentum for 2027.
We have insisted that most of the orders on the aerospace were more for 2027 than 2026, and this is the result and the evidence on the increase on our backlog. The strongest markets in the U.S. are those in which we are, so it is aerospace and gas turbines. The aerospace continues picking up, and also space application are gaining some traction. The strongest growth is in the industrial gas turbines, as I mentioned, both in traditional and emerging technology, and driven by the power generation requirements for electrification. Good momentum and good expectations for 2027. Moving to Europe, the demand remains subdued due to geopolitical uncertainties. We are still waiting some investment projects, but the positive thing here is that we believe that the worst is over.
The worst is over, and we have started seeing some signs of recovering, both in oil and gas and in chemical processes. This keeps us confident for 2027. Just as a note, for the first time, our order book in Europe has become slightly higher than that for 2025. This is why make us to believe that the worst is over. Going to some sectors, of course, the geopolitical situation is keeping demand low in oil and gas, but the reconstruction is still to come. Even it is expected that when it comes, it might create some supply problems due to the excess of demand. We are confident for the future.
While those sector recover, what we are trying is to capitalize the best of the moment by moving to our production to other improving sectors like nuclear, with a strong demand for small modular reactors, or semiconductors with lower volumes, but better margins. We are always trying to get the best of the moment, and our good news here is that we really think that we are seeing signs of recovery. Going to the consolidated results of the group. Again, I think that the operational performance of the third quarter demonstrate the strength of our strategy of diversification. In the third quarter, despite the lower activity, mainly as a consequence of the seasonality in Europe, and also despite the Middle East conflict, our EBITDA has amounted to almost EUR 200 million, to EUR 199 million, being the best operating result in the last 13 quarters.
Also with margins growing. We are now in margins of 13%, mainly due to the higher activity in the U.S. in both divisions. As mentioned, both divisions are performing better, but with a stronger contribution of the Stainless Steel division. The activity in the third quarter, if we compare it has been lower than the second quarter, but I think that it is remarkable that if we compare it to the third quarter of last year, we are growing 11%. If we consider the nine months, we are also growing by 5%. I think that the activity is getting better. EBITDA, as mentioned, is EUR 199 million, mainly supported by the higher activity in the United States, both in Stainless Steel and in HPA. What is also important is also because of the turnaround of our plant in Algeciras that Carlos will later mention.
This EBITDA, well, is negatively impacted by the Middle East conflict. Aside of the impact that it might have on our sale to the oil and gas, definitely the increase of cost in energy and in transport has had an impact in this quarter of EUR 16 million, and EUR 24 million if we look at the year figures. The result before tax, which I think is also remarkable, is 3x , with all this, 3x better than that of 2025. Now we go to the operating cash flow. We will later explain in the capital allocation, but we have had a slight negative operating cash flow of EUR 60 million. This is mainly driven by the increase of working capital. I will explain this.
As a result of the good trend of results, as Miguel explained, there has been a working capital, but I think that it is important to explain the reasons in the quarter, which is mainly led by two opposite factors. On one side, we have had a slight increase in inventories of EUR 71 million. Out of the EUR 152 million of increase of working capital, EUR 71 million is an increase of inventories. This increase on inventories is mainly explained by three reasons. We think these are temporary reasons, so we will be able to revert in the fourth quarter. These reasons for the increase of the inventories is, first of all, the preparation in the U.S. for our program annual shutdowns, maintenance shutdowns, that we are doing in Q4, both in the United States and in VDM.
This has made us to build some stock to continue being able to serve our customers. Secondly, the higher order book in High Performance Alloys division, extending our lead times and increasing our capacity utilization, is making also us to increase our work in progress material. So, as long as all this stabilizes, we will not have such an increase. Then there is also a third reason for that, which is the replacement of the external processing at VDM. The partial replacement of external processing by internal insource, which give us also a reduce of cost and improving efficiency, is making us to have a longer route. So, all of that is what has made it to increase the inventories. The second reason for the increase of working capital is a reduction of payables of EUR 91 million.
This reduction of payables is mainly due by the reduction of purchases due to the lower activity that we expect for the fourth quarter. So, we are reducing purchases, but at the same time, we are paying those payables of the highest level of activities of the month of mainly June and some July. This is what is also making the working capital to increase. With all this, we definitely believe that we will be able to reduce the working capital in the fourth quarter. We will have less activity, and we will generate cash. With all this, our net financial debt has ended in EUR 1.5 billion, but we are confident that we will reduce it for the fourth quarter.
The Stainless Steel division has experienced a very strong third quarter. In fact, it is the best quarter since the second quarter of 2023. This is mainly marked by the solid performance in the U.S. by North American Stainless, that more than offset the seasonality in Europe and the energy prices increase. This EUR 175 million of EBITDA, it is 14% higher than the previous quarter and more than double the EBITDA of the third quarter 2025. We are seeing a very progressive improvement during the year. In the first quarter, we achieved an EBITDA margin of 8%. In the second quarter, we achieved the double digit, 12%. In this third quarter, we achieved a remarkable EBITDA of 14%. The situation this year, it is clearly better than that of the last year. We think that this consistency and solid performance of the U.S. market is key.
On one hand, we have higher volumes than the previous year, but also, as you may recall, we increased prices in the second half of 2025. First, for one-third of our order book, and since the very beginning of the year, we fully implement the price increase for the rest of our order book. This allow us, on one hand, to improve our profitability. But also, the situation in Acerinox Europa is improving. You know that we have the turnaround program, trying to focus more on margins, on high added value product, trying to improve our product mix. This allow us, as we are commenting today, and we explaining when we publish the second quarter results, to achieve break-even in the month of June. Even with very low prices, because prices are still in a very depressed situation.
But we were able to achieve this break-even. In the third quarter, it is true that with the increase in energy prices, this has been difficult to maintain, but we are very close to the break-even. If we move to the nine-month figure, we achieve an EBITDA of EUR 411 million compared to EUR 218 million of that of the same period of 2025. This is an almost 90% higher than in 2025. Also, the EBITDA is EUR 317 million. That is 145% higher than the previous year. Last but not least, we would like to highlight the operating cash flow. As Esther mentioned before, the working capital impacted this year significantly, but even with an increase in working capital due to the higher activity of EUR 195 million, we were able to achieve in the Stainless Steel division an operating cash flow of EUR 73 million.
Moving to the High Performance Alloys, also we experienced a better quarter than the second one. We increased sales of 4% and the EBITDA in a 9%. It is true that these figures still are very well below the last year levels. Maybe to explain this, it is important to look at our main sectors of consumption. You know that our aerospace and industrial gas turbine in the States, and oil and gas and CPI in Europe. Those of the U.S. market are performing in a good situation, and the ones in Europe below those of the U.S. So the aerospace and industrial gas turbine, we have a very strong order book, as we are commenting. Important to mention that this strong order book is not yet reflected in the P&L. This will be mainly next year.
We expect that this good momentum will continue, and we will improve our profitability in 2027. The oil and gas, due to the Middle East conflict, is in a weaker situation. But as Esther mentioned before, we think that once this conflict finish, we have a good opportunity to improve our order book with the reconstruction in the area. We have no doubt that this end market will improve moving forward. The chemical process industry, the CPI, is the one that is in a weaker situation. We are switching a bit to more nuclear and semiconductors, trying to improve our presence there, and we are improving a bit our order book. This sector is a strategic sector for the European Union, so we hope that Europe, as is doing in other sectors, can put measures in order to defend the chemical industry in the European market.
Maybe to finish with positive news here, it is September, was the first time in the last 12 months that the order book increase in VDM, compared to last year. So hopefully we are in an inflection point, and the worst is behind us.
Let's explain now the cash out of the quarter. I will start by the remuneration to shareholders. Of course, half of the dividend of the year is paid in this quarter, okay? We maintain our remuneration policy to our shareholders steady at EUR 155 million for the year, and out of this, EUR 77 million have been paid in this quarter. Okay? Regarding CapEx, we continue as we have been announcing in all our presentations with our investment projects to execute the strategic plan. Those investments that we have been explaining are mainly focused on our most profitable markets. We have finalized the investments of NAS, of the EUR 244 million to increase the capacity. All of that we already explained and was executed in Q4.
Over the next few months, just in North American Stainless, we will put in place the cogging that will allow NAS to produce the long products for Haynes. At Haynes, we have started with the civil works of the new building for the new VIM and for the new forge. Total investments in the quarter, including also the maintenance, has been of EUR 80 million and EUR 228 million for the year, in line with the investments that we have been announcing along the year. Tax payments. We have made tax payments also this quarter of EUR 38 million as a result of the profitability of the U.S. Okay? Just as a note, last year, for example, and to compare to be able to realize the good momentum of the U.S. market, last year we paid EUR 15 million in the same quarter.
Regarding working capital, yes, we have increased working capital. We are confident that we will be able to reduce. The reasons for that have been already explained. The working capital in the year, as mentioned, is mainly driven by the increase of inventories, and that increase of inventories have been also affected by higher raw material cost and higher production cost with the increase on the electricity and gas that we mentioned compared to last year. All in, for us, this third quarter is a temporary increase on the net financial debt of EUR 174 million, but we are confident that we will be able to reduce our debt for the fourth quarter.
Yes, to conclude, the main comments for remark what has been explained. First of all, we are proud of presenting today an EBITDA of EUR 199 million in the current circumstances, with all the uncertainties and with all the challenges and low demand. So, for us, this is a fact of pride, no doubt. We are taking the best for the solid performance of specific sectors in the States. Regarding Europe, still the expected recovery in demand that could have been taking place in the third quarter still is not coming, but there are some signs that maybe for 2027, we could see a gradual recovery in the European demand. At the end, the bases are there, the imports are being reducing, the inventories also remain low. So, we think that this may come, but still we have not seen in the third quarter.
Having said that, we have reached a new level of efficiency, and we are almost in breakeven in Acerinox Europa, even in the current days where base prices are in the range of EUR 500. This could be unimaginable some years ago. In our long-term strategy, at the end, it is obvious that the diversification in regions and in sectors allow us to take the best of the opportunities that are coming, and this is the driver of the high profitability we have been achieving in this quarter. Then thinking from now to the future, regarding the outlook on the short-term basis of the outlook for the Q4, we normally experience in the Q4 the seasonal slowdown of our main market, which is the States. So, on that basis, we just indicate that probably the EBITDA of the Q4 is going to be lower than the Q3.
The Q3 is going to be the peak of this year, no doubt. In the HPA, we take the best of the sectors that are doing good, and this has come, and this has come to remain. So, all the evidences for the coming future in the aerospace, in the industrial gas turbine remains very robust. Fortunately, as we have said, probably the worst is over in the sectors of oil and gas and chemical process industry. The sector of oil and gas, for us, especially through VDM, is very relevant. We are world leaders in that sector, and at the end, it is a matter of time that this sector may come back.
When it come backs, not only recovering all the projects and expansions that have been put on pause, but in addition, the reconstruction of all the damaged infrastructure probably shall create an incredible momentum for the oil and gas in HPA. This is a sector to be patient and remain. We have that clear. In the sector of chemical process industries, as has been expressed, we are moving ourselves to those specific parts, for example, like the nuclear, in which clearly also the trend is positive, and we are growing there. On that basis also, we are confident, and this drives part of these green shoots that we are seeing. As general guidance, I repeat again, Q4 shall be lower. It is a quarter of two months in America, which is the great contributor to our profits. This is clear.
As a consequence of that, as a consequence of the reduction in working capital that we shall experience, as a consequence of the more or less seasonal slowdown, but as a consequence of the programs that has been explained by Esther, the maintenance and so on, this shall be reduced, and consequently, the net financial debt obviously shall be also reduced for the third quarter. I remember now that the fourth quarter last year, the working capital reduction has been in a range of EUR 200 million. More or less, we understand that this year, depending on how is the visibility of the starting of the year, we shall precise, but we are obviously not only consistent, but focused on the strong reduction in working capital for achieving the fourth quarter. Thank you very much, and now absolutely open to answer any question coming from your side.
Now we start with the Q&A session, and please, operator, go ahead.
Ladies and gentlemen, we will now begin the Q&A session. If you would like to ask a question, please press star five on your telephone keypad. If you change your mind, please press star five again. Please ensure that your device is unmuted locally before proceeding with your question. Our first question comes from Enrique Yáguez from Bestinver Securities. Your line is open. Please go ahead.
Good morning. I have three questions. The first one is if you could provide an update about the potential U.S. listing. I noticed that in your first half results, you integrated the accounts of Haynes in NAS while VDM was transferred at group level. Second, I would also like to have an update about Columbus situation, which breached its covenants in the first half, but affected by the delay of the implementation of the measures by the government. I would like to know what has been the performance, and what do you expect about this business unit, and if you might consider a capital injection on it. Finally, the third question, I know that it is a tough question, but how big should be the working capital reversal in Q4? Just the EUR 150 million outflow of Q3 or more? Thank you very much.
Let's start by the last one, of the working capital reversal. It is always difficult to predict because it very much depend on the raw material costs, but I think that Miguel also gave an indication of what happened in the fourth quarter of 2025, with constant raw materials in which we were able to reduce it by the EUR 200 million. So, of course, it will depend on raw material cost. It will also depend on the order book. We think that because of the order book, we will not be raising much more inventories because it has already been done on the Q3. On the side of trade receivables and payables, we think that we will compensate these two effects.
So, it will mainly be driven by an inventory reduction, and we think it is difficult to predict because of the nickel and the raw material, but I think anything about what we achieved last year could be achievable.
Thank you.
In regard to the potential U.S. listing, well, I think this issue was well explained by our Chairman and our CEO in the shareholders meeting, which is at the end obviously consequence of our studying of all the possibilities that bring value and being prepared for as we are making in every sector capitalizing opportunities. As has been explained, for us clearly, understanding that we are North American more than every other region. We are growing in America, we are investing in America because it's obvious where we are obtaining more satisfactory and quick result. As a consequence of that strategy of growing in North America, it makes sense to make the homework for being prepared if any time in the future appears convenient or the Board consider that it's valuable to obtain a certain listing in the States.
What we are making internally is the homework for being prepared for a possible U.S. listing if the circumstances recommend that. On that, exploring that possibility and that homework obviously means that we need to integrate the divisions that previously have been performing separately and even some of them have been recently acquired. We are involved in that process. We are involved in the integration of the different business units, but nothing new is coming since all this explanation was done at our shareholders meeting. We are keeping that homework for making the group be prepared for that if this is decided any time in the future.
In regard to Columbus, at the end, in the current challenging days for the markets everywhere, we have mentioned that in America, the market is stable and steady and robust as a consequence of continuous support of the American administration since several years ago, and in different administration periods. This clearly benefits the market. Fortunately, Europe has been following the trend. Unfortunately, during 2026, several measures have been putting on place also for supporting the European industry, and these improvements shall be gradually appreciating in the coming years. But in South Africa, still is a market that has become a open highway for all the Asian exports that are now able to enter in Europe or enter in America, and those are being moved to South Africa.
This is something that the local industry has been clearly working and also pushing for obtain equivalent measures to protect the local market in South Africa, but still that measures are not in place. This has been spoiling the local market. At the end, the circumstance obviously is on this basis for Columbus is that it's not easy in the current circumstances to have an active presence overseas, and still the local market is suffering the tsunami of the Asian imports that are not finding place in other markets. We remain now confident that maybe that mechanisms are more close to appear.
In the last days, we have been reading that finally appears to be an agreement between ArcelorMittal and the South African government through the IDC, and this maybe could make that at the end, having solved all the negotiations for the acquisition of the ArcelorMittal business by the government, maybe could have the consequence that at the end, finally, the tariffs that the industry is claiming for are finally coming. But still, we have not seen that. We hope that this may come, and by far, this is absolutely critical for the industry to have that protections in place in line with the protections that other markets are experiencing. But still, this is not there. We are not contemplating further capital injection in Columbus. At the end, our strategy is making the necessary investments where there is a visible return, and still this is not the situation in South Africa.
As I said before, some of the circumstances may change, and we are waiting on that. On the time being, we shall not make any further injection or capital injection in Columbus.
Thank you very much.
Our next question comes from Tristan Gresser from BNP Paribas. Your line is now open. Please go ahead.
Yes, hi. Thank you for taking my questions. The first one is on the Q3 performance that was really strong for Stainless Steel. What drove the higher Stainless Steel margins? I think you mentioned production was down 7% quarter-on-quarter. Sales were flat Europe, so additional energy and logistic costs. What drove really the performance? What am I missing?
Thank you, Tristan, for your question. I think in this case, the Q3 performance strong is easy to explain. As you know, Q3 in Europe is mainly affected by seasonality. So, there is a less contribution in Europe, and less activity, which is mainly focused in Europe, not in the U.S. Our stronger market continues being positive, and it has had better volumes than Q2, higher activity. Therefore, in the end, the contribution to the group is being higher because of the two effects. On one side, we have less contribution from Europe, and on the other side, we have higher contribution of the most profitable markets in this case, which is our Stainless Steel position in the U.S. So, all in is what is making our best performance.
To what regards to HPA, we have been announcing also the increase on the order book that we are having, especially in sectors which are more profitable, like the aerospace. Therefore, you have seen that there is a slight better contribution also from HPA to the group. But to what regards to Stainless Steel, it is basically because of the good momentum of the U.S. You have seen that there has been also an increase in the apparent consumption in the States in the quarter. It continues the reduction of the imports as well, and all this is making us to get these better margins.
Okay. So, if I understand correctly, that is mainly higher shipments in the U.S. that drove the better performance and margins, because my understanding was that base prices in the U.S. have been relatively steady since the pickup last year and the implementation of all those price hikes in the contracts in Q1. So, margin have been pretty steady and adjust higher shipments volumes in the U.S.
Correct. That is correct. It's mainly these higher contribution and volumes in the U.S., and the momentum of the seasonality of Europe.
Okay. Just a quick follow-up on that. How big is consumer goods appliances for your U.S. business, and similarly, how big it is for your European operation?
Can be very similar, are important sectors for us that are not in the best times, and can be about 15%-20% of the total order book.
Okay. That's clear. Last question on the Q4 guidance. How we should think about maybe HPA into Q4? You mentioned that you see some signs of faint sign of recovery, so might be more of a kind of steady outlook. Usually, what kind of shipment decline that could be used as a proxy a bit maybe for the division you see quarter-on-quarter into Q4? Also, if you could comment on Europe. I don't think Stainless Steel prices are moving up. It feels it could be more energy cost pressure. I don't know. Would you expect some stability from European operations or even heading lower into Q4? Any color on the Q4 will be greatly appreciated. Thank you.
Well, for the HPA, what we are having currently is, as has been explained, a very strong track on America aerospace and industrial gas turbine. This is making us having a high capacity utilization now. Our order book is full. But the evidence of this good momentum on the P&L shall come more for 2027. So we are benefiting, obviously, for the high capacity utilization and what that implies in the efficiency of our American business. But the main contribution of this sector in profits is to come in 2027, still not in 2026. In addition, as occurs in NAS, in our Stainless Steel business, the seasonal slowdown in America takes place in the fourth quarter. So this is mostly to be appreciated in the coming year. As is the same in the European division for VDM.
We are seeing green shoots now, and this is clearly for us a fact of optimism, but the maturity of the process of the HPA creates that it takes substantial months until that is finally a drop to the P&L in a strong recovery. So, we understand that the worst is over. In terms of the oil and gas, still we are patient, as we have mentioned, but we have seen now some more interest on the ordering side as we are moving also more to the nuclear. But this is a gradual movement that at the end may come more for the next year. So, we understand that the worst year for VDM is going to be 2026. Shall be a gradual recovery in 2027. But it takes several months from when these green shoots are appreciated to when it's materialized in the higher contribution.
This is more to come in 2027. As I said before, when we are used that in the Stainless Steel, the trends in the demand come follow by profits movements in two, three months. In the case of the HPA, this takes at least nine, 10 months. So this is something to come more for 2027, highly visible and appreciated in the second half of 2027, and more evident probably for 2028. So it's a recovery, but it's a slow recovery. Having said that, I repeat, the worst is over.
Just a quick follow. It's very clear on HPA, but the sequential decline you usually see in NAS shipment in Q4, is that what? 15% quarter-on-quarter or a bit lower, a bit higher? Just trying to calibrate a bit Q4 expectation.
We cannot give too many precise details, but let's make a simple arithmetic. The great contributor to our profits is in North America. The fourth quarter is a quarter of two months. If you bring that in your model, the deviation shall not be high.
Okay. All right. Thank you. Thanks a lot.
Our next question comes from Maxime Kogge from Oddo BHF. Your line is now open. Please go ahead.
Yeah. Good morning, team. First question is to push a little bit on the guidance. You are guiding for lower quarter-on-quarter EBITDA into Q4, but that's relatively imprecise. If I may say, can we expect a similar amount as in Q2? I guess you will have lower seasonality in the U.S., that's true, but on the other hand, you will have a better seasonality in Europe and slightly more supportive market conditions overall. So that would be my first question.
Okay. The second quarter of this year, I think that they had good volumes in the U.S. Okay. What we are insisting, and also Miguel explained, is that the one or the region that is going to be more affected, as it is every year, in the fourth quarter is U.S. Okay. So, we won't be having the similar volumes as we have had in the Q2. Q2, in terms of volumes, was also higher in Europe, so definitely the volumes will not be that. If you look, and I think that this is the math that Miguel was trying to do, if you look at the third quarter and you just think that the fourth quarter, instead of being three months, is going to be two months, because the higher contributor is going to have two months.
I think that we are giving more or less an indication of what could be the range of results. We don't think the prices will continue being as it is. We don't think there's going to be an increase of prices. So, the margins will be kept stable in all the markets. The only thing that will happen is that we will have this less activity. So, it's a question of one month of activity, and if more or less the three months are keeping constant, this is more or less the best indication that we can give.
Okay. No, no, but that's clear. Yeah, yeah. Second one, yeah, is on utilization rates across divisions. Can you comment a little bit on those, and specifically for NAS, as far as the new cold rolling line is concerned, which has been ramping up since the beginning of this year?
The capacity utilization in Europe in the year is about 70%. Okay. In NAS, the ramp-up of the new cold rolling is going progressively. You know that we don't use to put pressure in the market. We try to take care of the market in this sense. Without the new line, we can be at 90%? 90% capacity utilization, and with this new line, a bit below, 80-something percent capacity utilization. And in Columbus, we can be at 60%, 65%. In any case, Maxime, keep in mind that we are switching a bit in our strategy. In general sense, we are not focusing volumes. We try to prioritize margin and product mix. So, let's say that it's time the capacity utilization is less important.
We can be at 70% or 75%, 80% capacity utilization with very high margins, or we could be at full capacity with lower margins. We will try to prioritize margins in this sense rather than volumes.
Okay. That is clear. The last one is on the nuclear business because this is, I think, the first time you are really highlighting this opportunity. How big is it for HPA, and is there any CapEx involved with breaking into this segment or homologation process to really make it significant?
We have been clearly working on that for several months, and at the end, more or less, our focus clearly is in the case of the general sector of the chemical process. We cannot wait for a full recovery. There are bases for us to be very confident on the oil and gas in order to be patient there. In the CPI, which is a very widespread sector, at the end, there are some of the traditional customers that maybe now shall be more open to bring more commodities imported HPA. What we want is to focus ourselves in the sectors more, let us say, complex, more sophisticated, with more homologation request. On that basis, we already were there. For certain customers, this sector is growing, and we are making, obviously, our best and approaching for additional customers. We are in that process.
It is a sector that the prospects are very good, but it shall be obviously a gradual introduction. For us, as I say, it is a sector to be in, especially it is a sector that in Europe is a relevant sector to be in, but the effect shall be more gradual.
All right. Well, thank you. I will jump back.
Our next question comes from Bastian Synagowitz from Deutsche Bank. Your line is now open. Please go ahead.
Good morning, and thanks for taking my questions. Just a couple of follow-ups from Kogge. You talk about a maintenance shutdown in Q4. I guess that is probably just the regular, but can you please tell us when it is, and is there any meaningful cost item which you expect in the fourth quarter? If so, could you please quantify that? That is my first one.
Thank you, Bastian. The maintenance shutdown that we mentioned is a regular maintenance shutdown, okay? It is true that in the case of the U.S. in this year, we have an additional shutdown because of the startup of the cokes that we mentioned on the long products. It will not have an impact different to what we have seen in previous years, as this maintenance is a regular thing that we are doing every single year. So the impact would be, as mentioned, as it is every year. Just considering that in the end, it is one month in total less of activity with this maintenance and Thanksgiving, and Thanksgiving between Thanksgiving and Christmas. Everything in the market normally is with low activity, and this is the time of the year that we use for these normal maintenance shutdowns.
Okay. Thanks, Esther. Very clear. My second one is just on HPA. I guess looking at the strong performance of your U.S. peers, I suppose Haynes must have been doing very well in the third quarter already. Can you please share with us, VDM, is it still profitable, actually? Just to double-check, from all of what you've been saying in the previous comments, I guess, the improving order book and also the cash out for the working capital you talked about, I suppose that's pretty much all related to Haynes still, rather than VDM, even though VDM is starting to see the turning point, as you said. But I suppose not so much in the order book yet in terms of the actual EUR numbers here, which you're seeing. Is that correct?
Well, VDM is profitable. Its profitability in this year has been substantially reduced. The most relevant sectors for VDM, as you know, is the oil and gas and the chemical process, obviously. Oil and gas has been the full year on standby. The chemical process industry, most traditional end users, as has been explained, are absolutely dormant. We are growing, and we are moving more and using our possibilities to grow more, as mentioned, in the nuclear. We are also growing in the aerospace. We still are in the electronic. We still are in the car industry. There are some sectors that provide the stability, compensating from the strong correction we have experienced in the others. VDM is profitable, remains being profitable, but it's under pressure.
Regarding the working capital, some of the effects that are also taking place this year, and mostly in VDM, is as a consequence of a strategy. Esther mentioned this previously. For gaining efficiency, for doing our best, for avoiding dependence from third players, for reducing costs, we are trying to optimize as much as possible and process and having the possibilities that we have internally in Europe for processing HPA in Acerinox Europa, also in Roldán, in the long products. We are in the way for taking the best synergies and the more efficiency for processing that material. But this means, obviously, that you need working capital, that instead of remaining in Germany, working for German third players, now is sent to Spain, transform, and sent back again to Germany.
This obviously means increasing working capital, but it's something that at the end brings and has its consequence in a specific increase in working capital. Later on, when it's normalized, the volumes and the rhythm of that material, this process in the south of Europe for sending back again to the north shall be normalized. But on the time being, this working capital is increasing. But at the end, and as I mentioned, is obviously as a consequence of the improvements that are coming and the strategy of optimizing, obtaining the most synergies from that. We also, in view of the green shoots, we must be prepared for whenever, more or less, the market experience a reaction, take the most of it.
I said previously that VDM is the world leader in the oil and gas sector, no doubt, and by far. We shall be prepared not only for taking advantage, but also for drive the recuperation and take the best opportunities. All these issues are circumstances to take in place.
Okay. Thanks, Miguel. Lastly, can I follow up on Columbus, please? I see you got some trade protection on the carbon steel side, and that's been an operation you constantly build out over the recent past. Do you see a benefit from this already, and also the restarts of some of the local chrome smelters? Maybe you can give us a quick update on that side. You talked about the trade protection in Stainless Steel, which hopefully is coming, but just a quick update on the rest would be great.
Well, it's true that the South African market is under strong pressure, and there is no doubt on that. Mostly, obviously, the ones that we think are more critical to be quickly implemented as the other barriers for avoiding certain imports.
After several years in which more or less the value added in the transformation of all the mining sector has been moving out, and now, as you mentioned, we are seeing some restart of some smelters. But still, this is probably maybe not enough for us, and consequently, we still are not seeing good momentum. In most of the sectors, as you know, we have been transforming Columbus from a pure Stainless Steel plant to a Stainless Steel plus carbon steel plus electrical steel. We take the best from every steel sector doing, but still, this is not enough. Still, we are facing with very high energy cost. We are pushing, and we are trying to obtain better tariffs and so on. We are under negotiations and discussions for that.
Still, some of the support that these smelters have obtained from the government have not come to the steel industry, and consequently to ourselves. We hope that this may come, but not yet.
Okay, perfect. Thanks, Miguel.
Our next question comes from Tommaso Castello from Jefferies. Your line is now open. Please go ahead.
Good morning, everyone. Thanks for taking my last question. I have a curiosity. There has been an increasing discussion around Stainless Steel slabs imports into Europe, particularly as they remain outside the new import quotas. I wanted to know whether you see it as a risk that higher slab imports become an alternative route for external materials into Europe, and would partly dilute the benefit of tighter safeguards on finished products. Then, more specifically, how do you think about the economics of importing slab versus melting scrap domestically in Europe? Is there an electricity price level above which importing slabs become more attractive than domestic melting? Just wanted to have your view on that. Thank you.
Well, at the end of the day, we prefer to produce with scrap. It is the most efficient way to produce in our production process. At the end of the day, these slabs that you mentioned are coming from Asia. In Asia, they are mainly producing with NPI, with nickel pig iron, and we do not see a big difference in terms of prices in nickel pig iron and scrap. Consequently, we think that producing with scrap, at least for us, it is much more efficient. The producers that import slabs, well, probably this is a question for them. They probably may have their benefits, and, well, they can be impacted also by the EU measures. Let us see how this develops moving forward.
In addition, our strategy, as Carlos mentioned, we find the best for melting Stainless Steel scrap. Our most competitive nickel is coming from melting Stainless Steel scrap, and every time we have just made trials for exploring every possibility, this always has been the preferred one. Regarding the effect of the energy cost, in our case, keep in mind that the one which is hurting us more is the increase in gas. Consequently, this is not affecting the slabs that may come from outside because the higher cost increases is in transforming these slabs for the hot rolling operation. There is what is the concentration of higher energy costs, and it is more related to that part of the business. On that basis, it should not be a huge advantage. The electricity is high, and has remained more high.
But the most damaging fact for us in this year, with the circumstances in the Middle East, is mostly gas. This shall not be solved bringing slabs from Indonesia or other place. Apart, obviously, that it is fully, as Carlos mentioned, is not aligned with our sustainable and environmental policy.
Well, thanks for that. I just wonder, if gas price keeps going up and slabs are cheap enough, it would still make sense economically, even though it is against the sort of longer-term objective to import slab at a cheaper cost than producing and melting from scrap if the energy cost is incredibly high. However, I just wanted to double-check if we can expect into Q4 a similar impact from, yeah, the Middle East conflict as you recorded into Q3, and if that gets baked into the bridge that you were providing for the expectations of the EBITDA into Q4, so roughly 2/3 of Q3.
Well, in terms of the impacts that we expect of the gas and energy, we must take into consideration that it is mainly focusing in Europe. If we take the prices that we have had in September on electricity and we compare it to last year, we are having an increase in prices of 74%. In gas, the price, you can see it in the market, the price of September has been also 100% higher than what it was, the same as last year. With all of this, we are talking about an increase of 74% in electricity and 100% in the price of the gases. All of that, we are evaluating an impact of EUR 16 million. What I want to say with that is that despite the huge increase, in the end, the impact is limited, I would say.
Yes. Let me add also that we have in Acerinox Europa, some PPAs in order to cover from this very strong increase in energy prices. The PPAs more or less cover between 40% to 50% of our necessities. So this, as Esther mentioned, limit in some extent the impact of the huge price hike.
That is very clear. Thank you very much.
Our next question comes from Rosie Jia from JP Morgan. Your line is now open. Please go ahead.
Hi. Thank you for taking my question. I just have one quick follow-up on inventory build. Could you give us an idea of how much of the inventory build is actually related to the VDM shifting to internal processing? Does it mean it could be structural higher inventory going forward? If it is going to normalize, how long do you think it would take? Thank you.
Thank you, Rosie. The inventory build of VDM, of course, is not the one representing the higher of the inventory increase. Mostly, if you look at the volumes and the activity of the Stainless Steel, it is much more higher in this case than the HPA. Mostly the increase comes from the U.S., and it comes from both sides. One is on Stainless Steel in order to be able to continue serving the markets despite the closure on the maintenance shutdowns. The second main factor is, as we mentioned, on Haynes, because of the increase on the order book and the increase of the lead times and the higher capacity utilization. All of that is making our work in progress, so to increase.
The build of VDM has also had an impact, but it's less than what we are talking, and mainly because of the volumes that we are seeing this year, which are still weak in the year, although for the order book, it's getting better. Okay? More or less, the main of the impact is not with VDM, although it has had a slight impact as well.
The next question comes from Íñigo Egusquiza Castellanos from Kepler Cheuvreux. Your line is now open. Please go ahead.
Thank you. Good morning, all. Good morning, Miguel, Esther, and Carlos. Thanks for taking my questions. I have three questions. The first one, I'm going to ask you again on the outlook, but on a different way. Miguel, I don't know how do you see a consensus EBITDA of EUR 620 million in 2026, and how do you see the net debt consensus as for 2026, which I think is around EUR 1.2 billion? This is the first question. The second one would be on Acerinox Europa. I think it's quite remarkable that you have been almost break-even in Q3 with the summer, with the energy cost, as Esther was mentioning. My question is, what can we expect in Q4 this year versus Q3? You see a slightly better quarter in Acerinox Europa. Then a final question on the following year, 2027.
I mean, 2026 is going to be, I think, a good year, a good starting point with the company making this EBITDA of more than EUR 600. I don't know how do you see 2027 with this expected gradual recovery of Acerinox Europa, with the U.S. also performing quite well, and with more new capacity coming in the U.S., with a slightly more positive outlook for special alloys and especially for VDM. I don't know how do you see consensus or an EBITDA for 2027 closer to EUR 800. I know it's too soon, but I appreciate your thoughts. Thank you.
Thank you, Íñigo. Let's go step by step. First, outlook. The consensus EBITDA, I think, more or less, we have explained what is the expected profitability of the fourth quarter, keeping in mind that the driver of our profits is experiencing a reduced quarter. It is going to be 2/3 of the normal contribution from America. On that basis, we shall be not far from where is the consensus. I think, fortunately, the analysts and the active analysts that follow us are very accurate on their projections. We live comfortably with that. Obviously, still there are uncertainties on place. This comes more also to the second question that you are today placing. Fourth quarter in Europe, we should have been in the third quarter in break-even.
For us, being in break-even, as I said before, in Acerinox Europa at base prices of EUR 500 per ton is a great success. We have not been there just, or we have been slightly below, very slightly below, just because the energy costs. But the energy costs are expected to increase in the fourth quarter compared with the third, as Esther mentioned. Consequently, it seems now that it is not going to be the time. Keeping on mind that, in addition, the recovery or the expected unseasonal recovery that normally takes place in Europe after summer, this year has not been active. Still, the market is absorbing some of the inventories that were developed in the first semester in anticipation of the measures and so on. At the end, the performance of the market in the second half of the year in Europe has not been good.
On that basis, by far, we are not contemplating price increases in the fourth quarter compensating the high increases in cost. We understand that the fourth quarter contribution for Europa should be worse, non-relevant, but worse than that of the third quarter. In case we are close to be on break-even, even at current prices. But probably for that, we need to wait. Our commercial responsibles for Europe are confident on the 2027, and they start to see more interest on the buying side. So, there are some signs that maybe for the starting of 2027, we could experience some improvements in the European market. But more or less, this is the feeling. Still, we have not touched that. But in general, and this goes to the last question, 2026 is going to be a good year, as you mentioned.
2027, fortunately, I still have not the data, so I cannot talk openly about my impressions because I do not know the data. Our budgeting team is expecting to receive the figures for all our business units for next week, and we shall start working on the budget for 2027. But what we know from now is that the sectors that are doing good are going to remain good or even better. As we have explained, for example, everything related that construction of data center still is healthy. Aerospace is going to remain very healthy, and that shall be the time in which we shall start appreciating in results the good momentum of the aerospace. So, what is doing now good is going to keep on or even improving.
The worst performer, as we said before, we were seeing green shoots on VDM, on the HPA in Europe, so this may come. In Acerinox Europa, we understand that this may come also. Our instinct at this time of the year is that 2027 is going to be better than 2026, no doubt, because we are not seeing any specific clouds. The recuperation of the oil and gas, when it comes, shall be by far a great catalyzer for VDM. As I said before, most before second half or maybe for 2028. So, it is going to be gradual, the recovery on the HPA in Europe, but at the end, it may come. So, we think that the worst is over. Consequently, at this part of the year, we are confident on the prospects for 2027, improving the remarkable figures of 2026.
Okay. Thank you. Gracias, Miguel.
Our last question comes from Tristan Gresser from BNP Paribas. Your line is now open. Please go ahead.
Yes, thank you for taking the follow-up. Just on your comment on, I think, and tell me if I am wrong, I understood that you said that EUR 16 million of energy costs, is that for the year? Is that the figure we need to compare with the EUR 24 million that you had nine month, or it is more kind of annualized? So yeah, just wanted to confirm a bit the figure of EUR 60 million.
Sorry, Tristan, it was not EUR 60, but EUR 16, one six, is the impact of the energy cost on the third quarter. That is what I mentioned probably. I didn't pronounce it good. But it was EUR 16 and EUR 24 in the year.
Okay. No. Yeah, that happens all the time.
No, EUR 24 is nine months, of course.
Yeah. Okay. Second question, I know the quotas are working and imports are down, but do you think the CBAM is working? There was a EUROFER position paper put out recently that mentioned some pretty significant loopholes. From your understanding of the European market, is the CBAM working?
With CBAM, there are still big uncertainties. I think that it works at the beginning of the year. It is the first time that uncertainties benefit us. All of this creates that the local players, sorry, the distributors buy locally, instead that buy from imports. As we were commenting during this presentation, imports in Europe went down 42% in these first nine months of the year. Partially, it is due to the CBAM. We think that the real game changer is going to be the new trade measures. But no doubt that the effect of the CBAM in the first half of the year also was important. Moving forward, we think that probably Asian players, sooner or later, maybe certified by the companies that the EU assign. This will dilute the effect of the CBAM.
But as I mentioned, in the meantime, I think that in the first half of the year, imports moved down, and we benefit from this measure.
Okay. All right. That is clear. Thanks. Thanks a lot.
Okay. Thank you all for your questions. Thank you, Esther, Miguel, and Carlos, for the presentation. We hope you have a wonderful end of the year and enjoy spending time with your loved ones. Have a good day.