Ferroglobe to shut five plants and cut overhead 20% to lift profitability

what happened

According to Seeking Alpha, Ferroglobe shares dropped 6.7% after the bell on Tuesday. The decline followed quarterly results in which the figures came in larger than forecast, and revenue slipped 2.3% from the previous quarter. The company pointed to a tough operating backdrop, chiefly higher energy costs tied to the Middle East conflict and an excess of ferrosilicon imports into Europe.

Ferroglobe plans to close five plants and move output to its most competitive sites, aiming to lift capacity utilization to about 80%. Together with a 20% cut in overhead, the company expects the moves to add $85M to $115M to adjusted EBITDA at full run rate, with annual volumes barely changing.

By segment, silicon metal revenue fell 3.7% sequentially to $101.9M, with adjusted EBITDA at negative $2.3M. Silicon-based alloys dropped 6.6% to $116.7M and slipped into negative EBITDA of $2M, while manganese-based alloys rose 5.9% to $114M with EBITDA of $11.4M. CFO Beatriz García-Cos said, “Despite the negative third quarter adjusted EBITDA of $2.4M, we generated $5.6M of free cash flow with net debt slightly increasing to $42.1M. We maintain our financial discipline while we continue to rein in costs within our control.”

why it matters

The key question for investors is whether savings from the plant closures can offset weakness in the silicon-based business. Negative EBITDA in those segments shows that pressure persists. The stock will likely hinge on energy prices and on ferrosilicon imports into Europe, the two factors the company itself named as the main drags.

market impact

Ferroglobe shares: post-results drop and plant closure plan put pressure on the stock

• ▼Ferroglobe shares pressure down — after-hours drop following results with revenue down and weak silicon segments

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