Salzgitter’s crude steel production declined to 1.644mn mt in Q1 FY2021 (January to March), down by 2pc from the prior year. The company expects demand to support the full utilization of its strip steel capacity in H1.
With a good set of numbers in Q1 and the stable uptrend in rolled steel prices, Salzgitter forecasts sales to increase to over €8.5bn ($10.29bn) in FY2021 with a pre-tax profit of €300-400mn.
Given the high level of orders on hand, the strip steel business anticipates fully capacity utilization in H1, despite the pandemic situation. The positive trend in steel prices is expected to continue in H2. The company also expects significantly high operating costs as iron ore prices are forecast to be higher.
Salzgitter’s plate/section has a positive start in Q1 supported by historically low inventories at stockholders and a substantial short supply in the market. Withdrawal of competitor steel capacities also aided sales, but the company does not interpret this as a trend reversal and a lack of orders from pipes manufacturers is expected to burden capacities in Mülheim.
A volatile market for the section steel business segment is expected to continue for the short term but the market situation is expected to gradually improve during the year.
For the Mannesmann unit, the market for the precision tubes segment has improved but demand for large-dia tubes remains subdued. Despite the Qatar gas project win, the Europipe group continues to grapple with low capacity utilization. The booking situation at Mannesmann is insufficient. Salzgitter expects an uptrend in the medium-dia line pipe segment. Precision tubes demand from the automotive industry is expected to continue its recovery. Also, demand from the stainless steel segment is anticipated to grow
Salzgitter assumes selling price growth to slow for its trading business segment but prices are expected to remain high. Despite difficult market conditions for international trading, shipments are expected to rise.
In Q1, Salzgitter Group reported pre-tax profit of €117.3mn compared to a loss of 31.4mn in Q1 FY2020. A sustained recovery in demand and an uptrend in steel prices improved earnings in Salzgitter’s strip steel and trading business segments. The company’s pre-tax profits also include a contribution of €42.5mn from Aurubis AG investment.
External sales decreased to €2,094.1mn in Q1, down by 14.2pc from Q1 FY2020. Strip steel and plate/section sales improved by 40.2pc and 19.9pc, respectively, while Mannesmann, trading and technology business segments dipped by 39.3pc, 30.1pc and 9.4pc, respectively, in Q1 from the prior-year quarter. Consolidated after-tax results improved to €76.6mn compared to a loss of 43.7mn in the prior year.
($1 = €0.825)