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Salzgitter Outlook

Steel News - Published on Thu, 28 Feb 2019

Image Source: Abwärmenutzung
The Strip Steel Business Unit expects a more muted development of business compared with the especially good previous year and anticipates stable sales and tangibly lower earnings before taxes due to margins. Import pressure on the European steel market is likely to remain high, on the one hand while, on the other, we assume that raw materials costs, especially for iron ore, will range notably above the 2018 level.

The heavy plate market continues to be characterized by particularly high import volumes from non-EU countries into the EU. In addition, the situation is aggravated by the lack of follow-up orders at the Mülheim-based company for the delivery of pipeline input material. In the sections steel segment, margins are expected to return to a normal level following a very gratifying previous year. Overall we assume sales that will be notably below the previous year’s figure and expect a pre-tax loss for the Plate / Section Steel Business Unit.

The development of the Mannesmann Business Unit will be impacted, at least in the first half of 2019, by the unsatisfactory capacity utilization of the German large-diameter pipe company belonging to the EUROPIPE Group. By contrast, the American Europipe companies will benefit from orders placed in the previous year and at the beginning of the year and, similar to Mannesmann Grossrohr GmbH, can expect further project bookings. After two very good years, the medium-diameter line pipe segment anticipates a normalization of demand. The precision tubes companies expect a generally stable situation, with the stainless steel segment seeing a moderate improvement in the market. With shipments and sales figures remaining virtually unchanged, we predict a marginally positive pre-tax result.

The Trading Business Unit anticipates an increase in shipments and therefore discernible sales growth in 2019. While achieving margins in international trading will remain under pressure due to the ongoing effects of ubiquitously restrictive trading policies, the declines predicted in margins in the stockholding steel trade should be at least partly compensated through business with additional value added. We anticipate earnings before taxes for the business unit that will once again be gratifying but nevertheless notably below the previous year.

Based on the high level of orders on hand and good order intake, the Technology Business Unit predicts a moderate increase in sales. The KHS Group will continue to operate on the basis of a selective order intake, expanding its service business and deriving additional positive effects from the measures introduced to enhance efficiency. The two specialist mechanical engineering companies of the DESMA Group anticipate that earnings will return to normal levels, with the assumption of a pre-tax profit overall that will exceed the average of previous years but will nevertheless fall short of the year-earlier figure.

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Posted By : Rabi Wangkhem on Thu, 28 Feb 2019
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