Salzgitter's Loss Widens in 1Q, Expects No Significant Improvement
05/15/2013 - Germany-based steelmaker Salzgitter Group has issued its financial results data for the first quarter of the current year, stating that the performance of the company was overshadowed by persistently unfavorable general economic conditions in Europe.
Germany-based steelmaker Salzgitter Group has issued its financial results data for the first quarter of the current year, stating that the performance of the company was overshadowed by persistently unfavorable general economic conditions in Europe. The recovery in demand for steel at the beginning of the year proved to be short lived, while a renewed weakening of selling prices was not compensated by the more hesitant reduction in raw materials costs.
In the first quarter, Salzgitter reported a net loss of €16.6 million, compared to a €15.5 million loss in the first quarter of the previous year. The company's consolidated external sales amounted to €2.44 billion in the first quarter, falling by 6.42 percent year on year, due to weaker selling prices.
According to Salzgitter, its steel division's external sales decreased by 7.5 percent year on year to €670.5 million, while the steel shipment volume increased by four percent year on year. While the winter weather hampered construction activities in many regions, thereby placing an additional burden on the beams segment's performance that was already weak owing to economic conditions, the steel division's flat products reported generally robust demand. In the first quarter, Salzgitter produced 1.92 million mt of crude steel, increasing slightly by 0.5 percent compared to the corresponding quarter of the previous year.
Salzgitter anticipates no significant improvement in the general conditions for business activities in the coming months since a major economic recovery in the euro zone has still failed to materialize. With German steel demand at a more modest level, the European steel market is undergoing a severe structural crisis. There is a strong imbalance between excess supply and demand for several product groups in Europe, particularly in the case of southern European producers, which is exerting sustained pressure on margins across almost all steel products. For 2013, the steel division expects stable sales at best and a negative pre-tax result around the level of the previous year.
