MR. VICTORIANO MUÑOZ CAVA

Transcription

1 SPEECH OF MR. VICTORIANO MUÑOZ CAVA CHAIRMAN AND CHIEF EXECUTIVE OFFICER GENERAL SHAREHOLDERS MEETING Madrid, 14th June 27

2 Dear shareholders: I am pleased to inform you about the economic results of year 26, which has been a record year in many aspects for ACERINOX Group and a very special year for me. Firstly, I am going to describe the framework, where our activities have been developed. GROSS DOMESTIC PRODUCT (GDP) The world economy growth, 5.4%, has been very satisfactory according to the International Monetary Fund (IMF), in fact, it has been the highest in this decade. China is the leading country with 1.7% growth, followed by the United States with 3.3%, the Euro Zone with 2.6%, where Spain stands out with 3.9%, and Japan with 2.2%. EVOLUTION OF GROSS DOMESTIC PRODUCT (22 26) GDP (%) China Spain USA Euro Zone Source: IMF EVOLUTION OF INDUSTRIAL PRODUCTION INDEX (22 26) IPI (%) China Euro Zone Spain USA Source: IMF, ODCE and EUROSTAT INDUSTRIAL PRODUCTION INDEX (IPI) The growth of the Industrial Production Index, so related to the stainless steel consumption, has also been very important: 16.6% in China, 4.% in the United States, 4.2% in Japan, 4.% in the Euro Zone, where Germany stands out with 4.7%, which reflects an encouraging recovery of its industry, while in Spain it has been slightly lower, 3.8%. COMPETITIVENESS EVOLUTION OF INFLATION (22 26) Although the Spanish economy growth is excellent, the loss of competitiveness of its Industry and of the economy, in general, is alarming. The 2.7% inflation in 26, although it was a point lower than the previous year due to lower oil prices, is far higher than the 1.9% of the Euro Zone and due to the fact that this occurs year after year, there is an cumulative effect, which is untenable indefinitely. On the other hand, during 26 the Euro has appreciated by 11.6% against the USD INFLATION (%) and most of Far East currencies. These factors have resulted in a competitiveness loss of the Spanish economy, which is reflected in the Balance of Trade, which shows a 15.3% deficit, with a record of 89,687 million euros Spain Euro Zone Source: EUROSTAT 1

3 ENERGY Our cost for natural gas has doubled during 26. This increase is far higher than the cost in the neighbouring countries. The kilowatt-hour effective cost has increased by 9.2% during 26 and we are afraid that the worst is still to come when the electric tariffs will be removed in 28 (we only have to think about what happened in 25 when natural gas industrial tariffs disappeared) and the less importance of hydraulic and nuclear energy production in the Spanish electric system, the only competitive systems and respectful with the environment, as we have been asserting for several years. I believe that the energy costs will be decisive for the Spanish industry competitiveness in the next years. KYOTO PROTOCOL Nuclear plant of Almaraz, Caceres (Spain) Our factories are carrying out investments and great efforts to reduce CO 2 emissions. During 26 our factory in Campo de Gibraltar has achieved a 2.1% reduction in spite of its production increases. We hope that the new allowances and investments will allow us to carry out the production increases forecasted until year 211 without problems. This does not mean that the Kyoto protocol is not having impact on our costs, because it affects the cost of Kilowatt-hour. The situation will be much worse from 212, although I think that at that time, United States and China adhesion will have already taken place, which are the countries of higher emissions, so that the Kyoto Protocol achieved the desired targets. Royan-ji gardens, Kyoto 2

4 RAW MATERIALS The influence of raw material prices has an importance, which year by year is more decisive in our activities, and that is the reason why I will expand on this chapter. Nickel In spite of the bad situation of the stainless steel market at the end of 25, from the first days of year 26 LME nickel quotations started an unprecedented sharp rise, from 13,6 USD/Mt to 33,75 USD/Mt at the end of the year. This upward trend continues during the first months of 27 and on the 16 th May a new all-time high of 54,2 USD/Mt has been reached. In the last 18 months nickel prices have more than quadrupled and in the last six years they are twelve times higher. The difference between the world production, 1,31, Mt and the apparent consumption, which is lower than 3%, does not explain this increase. An unusual shortage of stainless steel scrap during the first quarter because of the avidity of the Far East producers and particularly of China, contributed to create a certain psychosis of nickel shortage, which later on was not confirmed. In fact, the stainless steel producers never had any difficulty in being supplied of nickel. Every year I refer to the growing finance especulation in the London Metal Exchange. I would like to highlight the backwardation, which is the difference between the cash value and the three-month value, which in some occasions has been close to 4, USD. 3

5 It was mainly due to the LME low inventories, at levels lower than 7, Mt, equivalent to two days of world consumption. Meanwhile, the transactions carried out in the LME amounted to 26.1 million Mt, equivalent to 2 times the physical nickel volume. The need of investment funds to undo purchase-sale positions to fixed dates, increased the purchase price, which are referred to cash quotations. The nickel producers concentration has continued. In 1999 the first three represented 46% of world nickel production and the first five represented 56%. This last percentage has increased to 66% in 26. CONCENTRATION OF THE NICKEL MARKET Year 26 : Top five producers represent 66% of the market supply Others 44% Year 1999: 56% Year 26: 66% Norilsk 21% Inco 16% Others 34% Norilsk 18% CVRD/Inco 18% WMC 5% SLN 5% Falconbridge 9% BHP Billiton 13% Jinchuan 7% Xstrata/Falconbridge 1% SOURCE: INSG, LME The new capacity increases which are under way, although delayed, make us feel more optimistic for the next years. NICKEL COST IN AUSTENITIC STAINLESS STEEL PRODUCTION USD 4, 4. 3, , 3. 2, , 2. 1, , % 72.5% 85.9% Iron Chrome Nickel Raw material other than iron, nickel and chrome are excluded in the calculation Source: Mitsui In 1999 nickel price was 69.3% of the stainless steel cost and in 27 its share in the stainless steel cost has increased to 85.9%, according to a study presented by MITSUI in the 11th Annual Meeting of the International Stainless Steel Forum (ISSF) in May. During the current month of June we are facing a weakening in the nickel quotations, but it is too early to think of a confirmation of this change of trend. 4

6 Ferrochrome CONCENTRATION OF THE FERROCHROME MARKET Year 26 According to producer : 47% According to country : 73% Others 53% Xstrata 19% Kazchrome 15% Others 27% Kazakhstan 15% China 15% Despite the fact that the ferrochrome producers concentration has been similar to that of the nickel producers, the first three mean 47% of the world production. The concentration by countries is steel higher: South Africa, Kazakhstan and China make 73% of the world production. Samancor 13% South Africa 43% SOURCE: Mitsui, JOGMEC The evolution of ferrochrome prices not quoting in LME has been very different and it has followed the stainless steels evolution. They dropped to 63ct/lb during the first quarter, starting a recovery and reaching 7 ct/lb during the second quarter, 75 ct/lb during the fourth quarter, which is 15% higher than the price at the end of 25. FERROCHROME QUARTERLY AVERAGE PRICES US / Lb. Cr Source: Metal Bulletin Molybdenum MOLYBDENUM PRICE Weekly average values (USD / Lb. Mo.) Source: Metals Week Molybdenum prices have fluctuated between 22 and 27 UD/Lb, lower than the prices of the previous year but far higher than 4 USD/Lb, which was its price during the nineties

7 Scrap Steel scrap prices had a certain recovery while the stainless steel prices increased significantly due to the high demand from the Far East stainless steel producers and the increased use of stainless steel scrap by the European producers. PRICE OF STEEL & STAINLESS STEEL SCRAP USD/Mt Mt. 4, 4. 3, , 3. 2, , 2. 1, , , Stainless steel scrap Solids of stainless steel scrap 18/8 CIF Europe Carbon steel scrap HMS 1 United States Iron Age composite Source : Metal Bulletin THE STAINLESS STEEL MARKET STAINLESS STEEL COLD ROLLED SHEET PRICES AISI mm USD/Mt, final price, alloy surcharge included 5.5 5,5 5. 5, 4.5 4,5 4. 4, 3.5 3,5 3. 3, 2.5 2,5 2. 2, 1.5 1,5 1. 1, USA GERMANY HONG KONG SOURCE: Metal Bulletin Research Stainless Steel Monthly After the second quarter 25, the worst I can remember in the stainless steels history, characterized by an international price drop and stock reduction, from the second quarter of 26 there was a progressive reaction in all the markets and stock recovery, which was enhanced by its low levels and catalysed by the nickel price increases, with a fourth quarter undoubtedly the best of last years. STAINLESS STEEL COLD ROLLED SHEET PRICES AISI mm This improvement in demand allowed to increase the base prices at the same time that all the price increases of raw materials could be introduced in the European and North American markets through the allow surcharges /Mt 4, 4. 3, , 3. 2, , 2. 1, , 1. 5 GERMAN MARKET Base Price Alloy Surcharge SOURCE: MBR 6

8 EVOLUTION OF THE STAINLESS STEEL WORLD PRODUCTION Million Mt. YEAR 23 YEAR 24 YEAR 25 YEAR 26 YEAR 27F % -1.% +16.7% % 29.8 Europe and Africa Asia America Statistical source : International Stainless Steel Forum (ISSF) STAINLESS STEEL WORLD PRODUCTION In spite of these increases of the stainless steels effective prices, the world stainless steel production grew by 16.7% in 26, reaching a total output of 28.4 million Mt, with an average annual growth rate of 6.14% in the last 5 years. Despite the high prices of raw materials, in the next six years this average rate will be 6.24%, according to ISSF forecasts, reaching a total production of 38.1 million Mt in 212. Thousand Mt. 3, 3. 28, Million Mt 26, , 24. Recession 21 22, 22. 2, 2. 18, , , Asian crisis , 12. Gulf War 1, 1. 8, 8. 6, 6. 2 nd Oil Crisis 4, 4. 1 st Oil Crisis 2, Compound annual growth rate % Statistical source : International Stainless Steel Forum (ISSF) In 26 no important concentration operation has taken place in the stainless steel sector, although they are likely to occur in the future, particularly in Asia, where they have hardly started yet. STAINLESS STEEL WORLD PRODUCTION FORECAST Million Mt Compound annual growth rate % Compound annual growth rate % Statistical source : International Stainless Steel Forum (ISSF) 7

9 In the past 16 years, the annual average growth rate of the stainless steels, 6.24%, is far higher than the rate of other alternative materials, such as the aluminium with 3.6%, copper with 3.2%, steel and zinc with 3%. GROWTH OF ALTERNATIVE METALIC MATERIALS Compound annual growth rate (%) Stainless Steel 6.24 Aluminium 3.6 Cooper 3.24 Steel (exc. Inox.) 3.3 Zinc 3. Lead 2.33 Source: International Stainless Steel Forum (ISSF) Nickel prices led to a decrease in the use of the chrome nickel grades from 72.2% in 22 to 63.1% in 25, in favour of chrome and chrome-manganese grades. In 26 the situation has been different mainly due to two reasons: STAINLESS CRUDE STEEL BY CATEGORIES % CrNi 4 CrMn Cr (e) Statistical source: International Stainless Steel Forum (ISSF) 8

10 - The stock recovery is far higher for chrome-nickel grades in stockists and tubists. - High level of activity in the world sector of capital goods. In view of the danger of these nickel high quotations, reaching unreasonable levels, the ISSF together with ICDA (Association of the world ferro-chrome producers), agreed to carry out a promotion and marketing campaign of the chrome grades, under the slogan Ferritic solution, which we hope will help to increase the consumption of these stainless types for those applications not requiring anticorrosive properties. THE ALTERNATIVE OF FERRITIC STAINLESS STEEL 9

11 ACERINOX GROUP After this general introduction, I start reporting on the evolution of our Group companies during the year 26: Productions The whole production of the three melting shops of the Group, 2,588, Mt, was 15.5% higher than the output of the previous year and it places ACERINOX as the second world stainless steel producer, with a 9.1% share. PRODUCTION OF ACERINOX GROUP (Thousand Mt.) MELTING SHOP HOT ROLLING COLD ROLLING Long Products , ,75 2, , ,5 1, , ,25 1, , 2. 2, 1, , ,75 1, , ,5 1, , , , 1. 1, Total Acerinox, S.A. NAS Columbus Roldan The output achieved by the three hot rolling mills for flat products has increased by 11.7% and the three cold rolling mills production is 8.5% higher. The traditional continuous growth of our Group continues. Regarding long products, the hot rolling production, 252, Mt, increases even more, by 28%, due to the growth of ROLDAN production, 17%, but particularly due to NAS production increase of 5%. This production levels places ACERINOX as the second long products producer in the world. 1

12 Net Sales EVOLUTION OF NET SALES OF ACERINOX GROUP Million 6, 6. 5, , 5. 4, , 4. 3, , 3. 5,637 2,866 Consolidated Group Trading companies ACERINOX S.A. 2, , 2. 1, , ,279 1,991 1, N.A.S. COLUMBUS ROLDAN + INOXFIL For the last five years, ACERINOX Group has achieved record figures regarding net sales. In 26 they totalled 5,637 million euros. This is mainly due to the increase of prices, productions and the added value of products of all the companies in the Group. Net sales are 34% higher than the invoiced figure achieved during the previous year. The diversification of the production centres and our presence in almost every market is one of the most important assets of ACERINOX Group. The European market is still the most important one and represents 45.1% of ACERINOX net sales, followed by the American market with 39.1% and the Asian one with 11.2%. GEOGRAPHICAL DISTRIBUTION OF ACERINOX GROUP NET SALES Year 26 Oceania.1% Europe 45.1% Africa 4.5% Asia 11.2% Americas 39.1% 11

13 Commercial Network Our commercial network has been expanded during the year with two new service centres in North America: Guelph (Canada) and Atlanta (Georgia); and tree more warehouses, two of them in China: Shangai and Pohan and the third one in Houston (Texas). At present three more warehouses are being built in Warsaw, Oporto and Seville, as well as a new service centre in Pennsylvania. As a whole, our commercial network has 26 trading companies, 19 of them in foreign countries, 18 service centres plus one more in construction, 35 commercial warehouses, plus 3 under construction and 24 commercial offices. Human Resources At the end of the year the Group staff amounted to 7,24 employees, more than half are Spanish. We feel very proud to have been able to create jobs, direct or indirect in auxiliary companies for our factories. We feel even prouder of the quality of the employment we offer, which is continuously growing and without labour force adjustment plans during the 37 years of our company. I think we are one of the scarce steel companies in the world where such plans have not occurred. 12

14 COMPANIES OF THE GROUP Next, I will try to sum up the evolution of our main companies: ACERINOX, S.A. Acerinox, S.A. : Campo de Gibraltar Factory The melting Shop production in Campo de Gibraltar factory, 1,12, Mt, was 11% higher than the output achieved the year before. The hot rolling mill production increased by 8% and the cold rolling mill production, 626, Mt, was also 3% higher. EVOLUTION OF PRODUCTION AT CAMPO DE GIBRALTAR FACTORY ( ) Thousand Mt. 1.1, 1., , Melting Shop Hot Rolling Shop Cold Rolling Shop

15 Following the same policy of previous years, in 26 we have invested 4 million euros in this factory, so as to attain small production increases, to keep the facilities technologically updated, to automate production, to reduce energy consumption, to protect the environment and to improve safety at work. This year we will carry out Nº. 2 electric furnace total upgrading. Despite all these investments, 91.4% of all fixed assets has been depreciated, which is crucial for the factory competitiveness. The result after taxes of the parent company, 14 million euros, is 96% higher than the figure achieved the year before and net cash-flow, 173 million euros, increases by 72%. RESULTS AS OF 31 st DECEMBER 26 Million ACERINOX, S.A % over 25 NET SALES 2, , RESULT BEFORE TAXES DEPRECIATION RESULT AFTER TAXES NET CASH FLOW

16 NORTH AMERICAN STAINLESS North American Stainless. : Kentucky Factory(USA) The excellent situation of the market, previously discussed, has allowed NAS to give a new and important steps in all its activities, paying special attention to NAFTA markets. The melting shop production, 85, Mt, is 11% higher than the output of the previous year. In the last quarter, Nº.2 electric furnace was started and Nº 2 AOD of 15 Mt capacity was contracted and it will come into service at the end of 28, increasing the melting shop production capacity to 1,415, Mt, becoming the biggest in the American continent. The hot rolling mill for flat products increased its output by 2% and the cold rolling mill by 9%. Nº 4 Sendzimir cold rolling mill came into service in March, as scheduled. The hot rolling mill for long products had a very strong progression; its output, 1, Mt, increases by 5% in year

17 In the last five years, the melting shop production has tripled and the hot rolling output increased by 8%, while that of long products, which was started in year 23, has got a reputation and a remarkable share in NAFTA markets. EVOLUTION OF NAS PRODUCTION Thousand Mt % Melting Shop % 584 Hot Rolling Shop Flat Products 4 3 Hot Rolling Shop Long Products Cold Rolling Shop Net sales, 2,55 million USD, were 8% higher than the invoiced figure of 25. Results after taxes, 24 million euros, increased by 8% with regard to the figure of the previous year and the net cash-flow, 31 million USD, was 56% higher. RESULTS AS OF 31 st DECEMBER 26 Million USD NAS % over 25 NET SALES 2,55. 1, RESULT BEFORE TAXES AND MINORITIES DEPRECIATION RESULT AFTER TAXES AND MINORITIES NET CAH FLOW

18 The results evolution during the last five years has been very satisfactory. EVOLUTION OF NAS RESULTS AFTER TAXES AND MINORITIES Million USD The already discussed continuous expansion of the commercial network with two more service centres, in Atlanta and Canada during this year, is very important for the future. MINOOKA (ILLINOIS) AGUA MANSA (CALIFORNIA) ATLANTA (GEORGIA) TORONTO (CANADA) 17

19 COLUMBUS STAINLESS The efforts of COLUMBUS personnel since it joined our Group in 22 to assimilate ACERINOX technology and the investments carried out to balance and improve Middelburg factory, have allowed to reach a production in the melting shop of 727, Mt during this year. Said output increases by 29% with regard to the production of the year before. The hot rolling mill production, 682, Mt, was 3% higher and the cold rolling mill production, 385, Mt, increases by 19%. EVOLUTION OF COLUMBUS PRODUCTION Columbus Stainless. : Middelburg factory (South Africa) Thousand Mt % +35.9% Melting Shop Hot Rolling Shop 3 2 Cold Rolling Shop

20 Nº4 Sendzimir cold rolling mill has been contracted and it will come into service at the end of 28. It will balance much better the capacities different sections of the factory, increasing the cold rolled production to 55, Mt. In the last five year, the increases of the melting shop, hot rolling mill and cold rolling mill have been 41%, 36% and 76% respectively. Net sales, 1,459 million euros, have been 6% higher than the invoiced figure of the previous year. These increases have been reached thanks to the efficiency of ACERINOX Group trading companies in Europe, Far East and South America. Result after taxes was 111 million euros, while the year before the company registered a loss of 12 million euros. RESULTS AS OF 31 st DECEMBER 26 Million COLUMBUS % over 25 NET SALES 1, RESULT BEFORE TAXES DEPRECIATION RESULT AFTER TAXES NET CASH FLOW The evolution of results during the last 5 year has been very positive, although we started from a very bad situation in January 22. EVOLUTION OF COLUMBUS RESULTS AFTER TAXES Million

21 ROLDAN, S.A. Roldán, S.A. : Ponferrada factory (León, Spain) This subsidiary company, as you know, produces stainless steel long products in its Ponferrada factory. It has also achieved record figures in productions, sales and results during the year 26. The hot rolling facilities processed 151, Mt, 17% more than the year before and the finished shop, 14, Mt, which means 1% increase with an annual average growth of 1% in the last ten years. ROLDAN, S.A., ANNUAL PRODUCTION OF FINISHED PRODUCTS Thousand Mt. 15 Compound annual growth : 1.3%

22 Net Sales, 412 million euros, was 28% higher than the invoiced figure of 25. Result after taxes, 16.5 million euros, was 2.4 times higher and it is almost the accounting value of our stake, which is 99.4%. Cash-flow, 22.1 million euros, increased by 66% with regard to the previous year. 79% of Ponferrada factory fixed assets have been already depreciated. RESULTS AS OF 31 st DECEMBER 26 Million ROLDAN, S.A % over 25 NET SALES RESULT BEFORE TAXES DEPRECIATION RESULT AFTER TAXES NET CASH FLOW This year ROLDAN, S.A. is investing 23.5 million euros so as to carry out a total upgrading of the two hot rolling mills. The coil weight increases from 1,5 kg to 2,4 kg, which will become, such as those in operation in NAS, the biggest in the world. Other additional facilities will also be enlarged to achieve significant productivity increases, energy savings, CO 2 emission reduction and in short, lower costs. Enlargement of the continuous profile mill section 21

23 This year is ROLDAN, S.A. 5th anniversary. It was the first Spanish company to produce stainless steel and its history can be read in a publication issued on this occasion. The company was founded by Mr. José Mª Aguirre Gonzalo and mi father, Mr. Victoriano Muñoz Oms. Their knowledge of the market and of the stainless steels possibilities, in the late sixties started their industrial boom together with the invention of the Sendzimir cold rolling mills, the AOD converter and the continuous casting was crucial to set up ACERINOX in September 197, by Mr. Jose Mª Aguirre, in the name of BANESTO and GUIPUZCOANO Bank, together with NISSHIN STEEL and NISSHO IWAI. CATHEDRALE DE CHARTRES Verrière de Charlemagne (XIII e siècle) 22

24 TRADING COMPANIES The whole of the 26 Spanish and foreign trading companies, selling the greatest part of the Group industrial companies productions, have achieved excellent results during 26, both regarding sales, 2,866 million euros and results after taxes, 18 million euros. Inoxcenter Logistic centre (Tarragona, Spain) CONSOLIDATED GROUP RESULTS The excellent evolution of the global stainless steel market, the world economy and efficiency of our Group companies, have allowed to achieve results after taxes and minorities of 53 million euros, which are three times higher than the figures of the year before, and increases by 66% with regard to the previous all-time high in 24. RESULTS AS OF 31 st DECEMBER 26 Thousand CONSOLIDATED GROUP Variation Net Sales 5,637,227 4,213, % EBITDA 957, , % EBIT 858, , % Profit before taxes and minorities 8, , % Depreciation 131, , % Gross Cash Flow 932, , % Profit after taxes and minorities 52, , % Net Cash Flow 634, , % 23

25 The evolution in the last five years show a clear upward tendency, within the cycles typical of our sector, in spite of the margins narrowing, offset by bigger productions and the various improvements continuously carried out in our production processes. EVOLUTION OF THE RESULT AFTER TAXES AND MINORITIES ACERINOX GROUP Million Spanish GAAP IAS To understand the current consolidated situation, we have to look back on the first years of the parent company. We started in 197 with an initial Share capital of only 6 million pesetas, 3.6 million euros. EVOLUTION OF PROFIT BEFORE TAXES, GROSS CASH FLOW AND SHARE CAPITAL Million Profit before taxes Gross cash flow Share capital The strong depreciations carried out every year and the re-investment of the greatest part of the steady profits, were only interrupted in 1977 with a token loss of 1, euros due to a 95 day-strike we had to face. All this and the small and always timely capital increases, allowed in first place to finance the continuous investment in the factory and later on, in the eighties to establish service centres, trading companies in Spain and abroad, ROLDAN, S.A. acquisition, start NAS project in 199 and COLUMBUS acquisition in 22. All this has been compatible with the payment of sensible but always higher dividends to the shareholders since

26 RETURN TO SHAREHOLDERS Million Quotation in the stock exchange market (since October 1986) Reduction of share capital Issue premium refund Dividends This is the third consecutive year, the profit contribution to the consolidated net result is headed by NAS with 38%, followed by the parent company with 27% and COLUMBUS with 17%. CONTRIBUTION TO THE RESULT AFTER TAXES AND MINORITIES CONSOLIDATED GROUP Year 26 Columbus Stainless Pty. Ltd. 16.9% Acerinox, S.A. 26.8% Overseas Trading Companies 9.1% Spanish Trading Companies 5.4% 3.4% Roldan, S.A. and Inoxfil, S.A. NAS Inc. 38.4% 25

27 STOCK EXCHANGE MARKET REPORT In the first half of the year ACERINOX share quotation was in line with most of the stock exchange indexes. In July, from the publication of our second quarter results, ACERINOX share quotation began to take off and reached high levels in the last quarter of the year. In the whole of the year the appreciation was 88%, which was much higher than the indexes of the most important stock exchanges. COMPARISON OF THE MAIN WORLD INDEXES WITH ACERINOX QUOTATION Year 26 1% 8% +87.6% ACERINOX 6% 4% +31.8% IBEX-35 2% % +16.3% DOW JONES INDUSTRIALS +15.1% EURO STOXX % FTSE % NIKKEI 3-2% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec The appreciation of the last five years, 145%, is much higher than the 68% of the Ibex- 35, 64% of the Nikkei, 24% of the Dow Jones and 8% of the Euro Stoxx-5. COMPARISON OF THE MAIN WORLD INDEXES WITH ACERINOX QUOTATION Years % % ACERINOX, S.A. 13% 11% 9% 7% 5% +68.5% IBEX % NIKKEI 3 3% 1% -1% +24.4% DOW JONES INDUSTRIALS +8.4% FTSE % EURO STOXX 5-3% -5%

28 The capitalization at the end of the year amounted to 5,981 million euros, which is 2.6 times the capitalization reached tour years ago. MARKET CAPITALIZATION OF ACERINOX, S.A. DECEMBER, 31 st Million 7, 7. 5,981 6, 6. 5, 5. 4, 4. 3, 3. 2,32 2,459 3,18 3,189 2, 2. 1, RESULT APPLICATION PROPOSAL PROPOSAL OF APPLICATION OF RESULTS. ACERINOX, S.A. Million PROFIT AFTER TAXES OF THE YEAR 14.3 APPLICATION : * DIVIDENDS 9.8 * VOLUNTARY RESERVE 49.5 The Board of Directors, following its policy of consolidating the dividends in the years of lower results, as 25, and increasing them in the years of higher results, and this is the case of 26, will submit for approval the distribution of the parent company results after taxes, 14.3 million euros, as follows: To dividends: To voluntary reserve: 9.8 million euros 49.5 million euros 27

29 Two interim dividends of.1 euros per share, on account of year 26, were paid on the 4 th January and 4 th April 27. Now we propose to pay out a complementary dividend of.15 euros on the 4 th July. Likewise, we propose an issue premium refund of.1 euros per share, which will be effective in October. Consequently, the total retribution in 27, on account of year 26, will be.45 euros per share, an increase of 32.4% with regard to the previous year total retribution. The pay-out for year 26, including issue premium refund and the dividend, is 23.2% for the Consolidated Group. RETURN TO SHAREHOLDERS / Share % over 26 1 st interim dividend (January) % 2 nd interim dividend (April) % Complementary dividend (July) % Issue Premium Refund (October) % % The share profitability for year 26 varies depending on how it is considered the annual quotation of 25 or 26 between 3.7% and 1.95%. If we consider the share evolution and the refund to shareholders, totals 9.32%. PER at the end of the year was 11.9 against 15.2 of the Ibex-35. RETURN TO SHAREHOLDERS / share.5,5.45, ,4.1.35,35.3,3.25, Reduction of share capital Issue premium refund.2,2.15,15.1, Dividends.5, ,

30 INVESTMENTS PROGRAM Our Group has undertaken an ambitious investments program of 437 million euros for the years 27-28, designed to enlarge and balance the factories and to face the approaching strong competence. The biggest investment is taking place in NAS for an amount of 335 million USD, equivalent to 257 million euros. It will increase the melting shop production capacity by 4% with a second AOD converter. A new annealing and pickling line for hot coils will be installed with an annual capacity of 1,226, Mt, becoming the biggest in the world. A new Sendzimir cold rolling mill will also be installed and the finishing section capacity for long products will be enlarged, apart from the above mentioned new service centre in Pennsylvania. INVESTMENT PLAN OF THE GROUP YEARS Million NAS... ACERINOX, S.A.... ROLDAN... COLUMBUS... TRADING COMPANIES... TOTAL In Campo de Gibraltar factory, 8 million euros will be invested in the upgrading of No. 2 and No. 3 annealing and pickling lines, which will allow to increase the production by 2%. Besides, other investments have been undertaken to modernize technology, save energy, protect the environment and for work safety purposes. In ROLDAN, as previously mentioned, 23 million euros are being invested in the upgrading of the hot rolling mill, pickling line and other facilities. In COLUMBUS, 6 million euros have been mainly invested in the fourth Sendzimir cold rolling mill. With this cold rolling mill, our technicians will have contracted 13 cold rolling mills, a record figure for just one generation. In the trading companies, 17 million euros are invested in the warehouses of Warsaw, Oporto and Seville. To finance said investments, on the 29 th May we have signed a loan contract with the Official Credit institute for an amount of 4 million euros for 1 years, with a 5 yearperiod free of obligations, which will allow to use the funds generated to dividends and financing the working capital increase derived from the higher productions. 29

31 PRODUCTION CAPACITY OF THE GROUP With this investments, at the beginning of year 29 the annual production capacity of the Group melting shops will increase to 3.5 million Mt. From said production, 3.1 million Mt will be devoted to flat products (2.1 million Mt for cold rolling and 1 million Mt for hot rolled coils and sheets) and 4, Mt to long products. ACERINOX GROUP PRODUCTION CAPACITY. YEAR 29 Thousand Mt. MELTING 3.5 Production 26: 2.6 Hot Rolling 3.1 Flat products.4 Hot Rolling Long Products 2.1 Cold Rolling 1. H.R. Products Acerinox Group investments = 437 million With this production, we could be considered by far as the first world stainless steel producer. BOARD OF DIRECTORS The Board of Directors, with the recommendation of the Appointments and Remmunerations Committee, proposes to appoint the following members: - Mr. Yukio Nariyoshi, NISSHIN STEEL Managing Directors, replacing Mr. Kazuo Hoshino from the same company. - Mr. Fernando Mayans Altaba, Board member of BANCA MARCH, representing CORPORACIÓN FINANCIERA ALBA, which has increased its share to 22.5%. - Mr. Clemente Cebrián Alba, representing CASA GRANDE DE CARTAGENA, which has acquired 5% share. I wish them all the best of success. I must thank Dr. Hoshino for the great help he has always given us from the very beginning, first in his position of director of NISSHIN Investigation Department and afterwards as Shunan Works Managing Director and lastly as NISSHIN STEEL Chairman 3

32 and ACERINOX Board member since Dr. Hoshino has always been a great adviser and friend for all of us. To finish, in this General Shareholders Meeting my mandate as member of the Board and Chief Executive officer comes to an end. As you will probably know, I have decided not to stand for re-election in spite of the Board unanimous request to remain as nonexecutive Chairman. I will remain attached to ACERINOX as honorary Chairman. Close to my 71 st anniversary and after 46 years of dedication to the stainless steel, I think it is the right time to give way to new generation after 37 years managing the company, 24 years as Chief Executive Officer and 19 years as Chairman. There have been 37 years of passionate work with the same team, to whom I would like to thank once more for their full dedication and devotion to ACERINOX project, because without them, it would not have been possible. I would also like to thank our partners, NISSHIN STEEL and NISSHO IWAI. In such a long time we have been able to achieve many accomplishments, some of which have been explained in detail in this report. We have built up, which is the maximum aspiration of an engineer, like me, and our dreams of creating profitable companies have come true. I leave with a feeling of nostalgia but with satisfaction for the work done, with the best results ever and good prospects for all the companies of the Group. I thank God for having gone beyond the targets, which seemed impossible at the age of 33, when I took on ACERINOX project. It is time to devote my life to my family, particularly my wife, Carmen, without her invaluable help I could not have accomplished my work. Thanks a lot to all of you, for your constant support, thanks to which ACERINOX is today a Spanish company, ranking the second in its sector worldwide and ready to become Nº. 1 in three years time. 31