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Second quarter 2021: Swiss Steel significantly increases profitability

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Autor: Redaktion

Datum: 12. Aug. 2021

12.08.2021. Swiss Steel Group has presented its results for the second quarter 2021. Therefore, it has significantly increased profitability in the second quarter.

Business performance in the second quarter of 2021

At 518 kt, 72.1 % more steel was sold in the second quarter of 2021 than in the same quarter of the previous year (Q2 2020: 301 kt) reflecting the ongoing past Covid-19 recovery in all relevant end markets. The average sales price per t of steel continued to rise in the second quarter of 2021 and, at 1,621.0 €, was higher than the average price achieved in the same quarter of the previous year (Q2 2020: 1,561.1 € per t). This is mostly due to the increase in commodity prices, where the widespread use of surcharge mechanisms led to higher sales prices.

The increased sales volumes and positive price development led to revenue of 839.1 million €, an increase of 78.6 % to the prior-year quarter (Q2 2020: 469.9 million €). The increase in revenue was spread across all product groups, with the strongest growth in the quality & engineering steel product group. By region, revenue increased in all sales markets. In Europe, the largest sales market, which was hit particularly hard by the measures to contain the Covid-19 pandemic in the prior-year quarter, sales increased by 87.2 %.

At 65.4 million € in the second quarter of 2021, adjusted EBITDA was considerably higher than in the prior-year quarter (Q2 2020: -45.8 million €). One-time effects amounted to 1.9 million € and included, among other things, costs for the efficiency improvement program and Covid-19 protection materials. Including these one-time effects, EBITDA amounted to 63.5 million €. (Q2 2020: -53.7 million €). In the second quarter the adjusted EBITDA margin rose to 7.8 % (Q2 2020: -9.7 %) and the EBITDA margin to 7.6 % (Q2 2020: -11.4 %).

Net debt, comprising current and non-current financial liabilities less cash and cash equivalents, came to 605.4 million €, a decrease to the figure as of 31 December 2020 (639.9 million €). This was due to the capital increase in the first quarter and compensated by investments in net working capital. In Q2 2021, free cash flow was negative at -65.2 million € due to investments in net working capital resulting from increased market activity and higher production volumes as well as raw material price increases.

Outlook for fiscal year 2021

The focus for the balance of 2021 will be on capturing market opportunities and responding to it with the necessary personnel and financial resources. The implementation of the transformation program is currently on track and will remain our key focus.

Under the assumption that the end markets remain robust and taking into consideration the seasonal effects of the third and fourth quarter, Swiss Steel expects to achieve adjusted EBITDA in the range of 150 to 180 million €.

Statements

CEO Frank Koch: “I am delighted to be finally on board. From my past experience in the industry I was well aware of the strong industrial core, the technological capabilities and the dedicated workforce of the group. Since joining, I was able to confirm my expectations with a number of site visits and interactions with our team members. In line with the execution of our transformation program, where we are making good progress, and the post Covid-19 market recovery, which continued in the second quarter of 2021, our financial performance has improved significantly. Our outlook for the year 2021 confirms a continuing trend of post Covid-19 recovery in our main end markets automotive, mechanical and plant engineering as well as energy.

 

However, the overall economic environment is still fragile. In the automotive industry, the semiconductor supply shortage is persisting, thereby affecting the order volumes of our customers. Additionally, the supply situation on the raw material markets remains volatile. In particular on the scrap market we see a continuing trend of price increases combined with supply shortages. Finally, the Covid-19 infection rates are currently rising in most parts of the world potentially leading to a new wave of restrictions and shutdown measures. Under the assumption that our end markets remain stable and taking into consideration the seasonal effects of the third and fourth quarter, we expect to achieve adjusted EBITDA in the range of 150 to 180 million €.”

Jörg Walther, member of the Board of Directors and Vice Chairman, resigns for personal reasons with immediate effect from the Board of Directors. Chairman Jens Alder states: “We thank Jörg Walther for his services in his function as Vice Chairman and wish him all the best for the future.”

 

(Source: Swiss Steel)