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Salzgitter Group Reports 20% Decline in H1 Sales

Steel News - Published on Thu, 13 Aug 2020

Image Source: Salzgitter COVID19
In line with expectations, the Salzgitter Group took a significantly greater hit from the economic impact of the Corona pandemic in the second quarter of 2020 than in the first three months of the year. The slump in demand from the automotive industry in particular placed a burden on our company, while the construction sector proved to be stable. Accordingly, compared with 2019, the Group’s subsidiaries reported capacity utilization that had dropped between 10 and 70 %. Moreover, the, even before the current crisis, excessively generous import quotas for duty-free steel imports into the European Union provided no protection whatsoever, as the percentage share of these imports was even higher in the second quarter due to slack demand for steel in the EU.

Against this backdrop, the Salzgitter Group’s external sales were down by 20% in the first half of 2020 compared with the year-earlier period (EUR 3,631.0 million; H1 2019: EUR 4,526.2 million), which was due in particular to lower volumes. The pre-tax result came in at minus EUR 127.8 million (H1 2019: EUR 145.3 million), essentially reflecting the decline in capacity utilization in the second quarter, and the resulting lower earnings contributions of all business units. A counter effect emanated from rigorous measures introduced at an early stage to reduce costs and secure liquidity, along with a contribution of EUR 34.0 million from Aurubis AG, an investment accounted for using the equity method (H1 2019: € 56.4 million). An after-tax result that stands at minus EUR 144.7 million (H1 2019: EUR 96.4 million)

Outlook - Salzgitter anticipates that the second and third quarter will likely mark the bottoming out of the current crisis. At the same time, the strength and the timescale of a feasible macroeconomic recovery in the second half of the year are subject to great uncertainty. In this volatile environment, the Salzgitter Group’s developments cannot be predicted in the usual way, meaning that only a rough estimate is possible. Against this backdrop, Salzgitter anticipates a negative pre-tax result in the low to mid-triple digit million euro ranges

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Posted By : Yogender Pancholi on Thu, 13 Aug 2020
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