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Salzgitter Group reports Q1 profit

Steel News - Published on Wed, 01 May 2019

Image Source: Salzgitter AG
Dgap reported that according to the still preliminary figures now available, the Salzgitter Group generated profit before taxes of EUR 125.9 million (Q1 2018: EUR 95.9 million) in the first quarter of 2019, thereby notably exceeding current market expectations. Along with the very satisfactory pre-tax profit of the Strip Steel Business Unit, all other business units strengthened this performance by delivering positive results, as did the investment in Aurubis AG, a company included at equity. The EUR50.2 million contribution of the Aurubis investment (Q1 2018: EUR 7.5 million) includes EUR 18.3 million in reporting-date related valuation effects (Q1 2018: EUR-6.3 million) emanating mainly from positive precious metal price developments, the continuation of which we cannot assume in light of their volatility. In addition, EUR 20.0 million (Q1 2018: EUR 0) in income from an accounting adjustment through profit and loss in connection with shares acquired in Aurubis AG in the first quarter of 2019 at average price below the market value of the pro rata equity capital were recorded herein. The external sales of the Salzgitter Group came in at EUR 2.3 billion, thus remaining stable compared with the first quarter of 2018 (EUR 2.3 billion).

Following the strong first quarter, we affirm our earnings forecast for profit before taxes of between EUR 125 million and EUR 175 million. With reference to the unstable economic situation, not only in the EU, and the associated impaired forecasting reliability for the upcoming three quarters of the financial year, we consider revising the forecast to be premature at present. At the same time, we are currently anticipating a result more in the upper end of the range.

The reference to the fact that imponderables, including changes in the cost of raw materials, precious metal prices and exchange rates, along with global trade policy measures, may still have a considerable impact over the course of the financial year 2019. The dimensions of this range become clear if one considers that, with around 9 million tonnes per annum of steel products to be sold by the Strip Steel, Plate / Section Steel, Mannesmann and Trading business units through to the end of the year, an average EUR 10 change in the margin per ton is sufficient to cause a variation in the annual result of EUR90 million.

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Posted By : Ratan Singh on Wed, 01 May 2019
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