DGAP-News: SKW Stahl-Metallurgie Holding AG: Weak steel

DGAP-News: SKW Stahl-Metallurgie Holding AG / Key word(s): Half Year Results SKW Stahl-Metallurgie Holding AG: Weak steel economy depresses revenues and earnings 13.08.2013 / 07:08 --------------------------------------------------------------------- Weak steel economy depresses revenues and earnings * Consolidated revenues down 20% to EUR 176.2 million in H1 2013 * EBITDA lower despite high cost variability from EUR 12.9 million to EUR 9.1 million (currency-adjusted) * Gross margin up to 31.3% * Positive free cash flow recorded * Outlook for 2013 as a whole adjusted to difficult market environment - program to increase earnings launched Unterneukirchen (Germany), August 13, 2013: In the first half of 2013, the SKW Metallurgie Group was hit by the downturn in steel production in the EU (-5.1%), the USA (-6.4%) and Brazil (-3.1%). In parallel, most raw materials prices fell, which as a rule are passed on to customers. As a result, consolidated revenues for the first six months decreased by 20% compared to the first half of 2012, by EUR 43.7 million to EUR 176.2 million. Due to the high proportion of variable costs, it was possible to mostly compensate for this downturn in revenues through cost cuts; however, currency-adjusted EBITDA was still significantly lower than the previous year's figure (EUR 12.9 million) at EUR 9.1 million. As business is not expected to recover notably in the second half of the year, the SKW Metallurgie Group has had to adjust its outlook and is now expecting consolidated revenues in 2013 as a whole to be lower than in the previous year. Despite improved contributions to earnings from the new plants, the increase in EBITDA that had been hoped for to date is thus no longer realistic without a substantial upturn in the economy. Given this background, the Executive Board has launched an extensive, group-wide program to increase earnings, which will have its full impact from 2014. 'In contrast to what was expected at the start of the year, no substantial business recovery in the steel industry is likely to occur in the second half of the year. Our new plants are enjoying positive growth; however, this is not enough to surpass last year's EBITDA. In order to adjust our global structure to the more difficult underlying conditions, the Executive Board has launched an extensive program to increase earnings,' commented Ines Kolmsee, SKW Metallurgie Group's CEO. Gross margin up further to 31.3% The Group increased its gross margin, or the ratio of total operating revenue and material costs to revenues, substantially year-on-year from 29.0% to 31.3%. In spite of this, however, the substantial reduction in revenues meant that EBITDA and thus also the other earnings indicators were lower than the previous year. The strategic expansion in the previous years has increased the level of amortization/depreciation and interest expenses slightly; together with a temporary increase in the tax rate this led to earnings per share in the first six months of EUR 0.07 compared to EUR 0.66 in H1 2012. Positive free cash flow thanks to conclusion of investment phase The conclusion of the strong phase of expansion and investment in the past few years has resulted in a turnaround in the free cash flow from EUR-2.0 million to a positive figure of EUR+2.6 million. The quality of the balance sheet indicators remains solid. For example, the equity ratio improved slightly compared to December 31, 2012 from 40.2% to 40.6%. Net financial debt totaled EUR 75.3 million (December 31, 2012: EUR 73.9 million) and thus remained practically constant; gearing (net financial debt to equity) is now 0.66. Outlook for 2013 adjusted to difficult market environment - program to increase earnings launched The economic insecurity observed in the first half of 2013 on the markets relevant for the SKW Metallurgie Group continued to make it difficult to forecast business. The expert opinions that are nevertheless available are no longer expecting a significant economic recovery this fiscal year, which will also have a substantially negative impact on forecasts for steel production. The increase in revenues that had been hoped for to date is thus no longer realistic without a substantial upturn in the economy. Despite the continued high cost variability, this anticipated downturn in revenues will also impact EBITDA. As a result, it will only be possible to reach the previous guidance of surpassing the previous year's figure of EUR 20.8 million, despite improved contributions to earnings from the new plants compared to 2012, if there is a substantial economic recovery. In order to combat the macroeconomic challenges, the SKW Metallurgie Group's Executive Board has developed an extensive program to increase earnings, which will lead to both higher revenues and will also cut costs. The cost cuts relate, in particular, to spot increases in production capacity and cuts in the cost of materials. Some of the activities will bear fruit in the current fiscal year; the bulk of the additional contributions to revenues and earnings from this program is expected from 2014. The report on H1 2013 and further information on the Group can be found online at: www.skw-steel.com. Contact SKW Stahl-Metallurgie Holding AG Christian Schunck Head of IR and Corporate Communications Rathausplatz 11 84579 Unterneukirchen Germany Telephone IR/Press: +49 89 5998923-22 Fax: +49 89 5998923-29 E-mail: schunck@skw-steel.com Internet: www.skw-steel.com About SKW Stahl-Metallurgie Holding AG The SKW Metallurgie Group is the global market leader for chemical additives for hot metal desulphurization, and for cored wire used in secondary metallurgy. The Group's products enable steel-makers to efficiently manufacture high-quality steel products. Clients include the world's leading companies in the steel industry. The SKW Metallurgie Group has more than 50 years of metallurgical know how, and currently operates in more than 40 countries. What is more, the Group is a leading supplier of Quab specialty chemicals, which are mainly used in the global production of industrial starch for the paper industry. The company's operating business is broken down into the two core segments 'Cored Wire' and 'Powder and Granules', and the 'Other' segment. The SKW Metallurgie Group is headquartered in Germany with production facilities in France, the US (6), Canada, Mexico, Brazil, South Korea, Sweden, Bhutan, Russia, the Peoples' Republic of China (2) and India (2 via joint ventures). Shares of SKW Stahl-Metallurgie Holding AG have been listed in Frankfurt Stock Exchange's Prime Standard since December 1, 2006 with ISIN DE000SKWM013 /since August 15, 2011: DE000SKWM013), and have been included in the SDAX index from June 23, 2008. DISCLAIMER This press release contains statements on future developments that are based on currently available information and involve risks and uncertainties that could cause the actual results to differ from these forward-looking statements. These risks and uncertainties include, for example, unpredictable changes in political and economic conditions, particularly in the steel and paper industry, the competitive situation, interest and currency risks, technological development as well as other risks and unexpected circumstances. SKW Stahl-Metallurgie Holding AG and its Group companies accept no obligation to update such forward-looking statements. KPIs for the SKW Metallurgie Group for the first six months (in EUR million) <pre> H1-2013 H1-2012 External revenues 176.2 219.9 - thereof Cored Wire 81.0 102.0 - thereof Powder and Granules 83.3 103.4 Gross margin 31.3% 29.0% EBITDA 8.7 13.5 - thereof Cored Wire 4.2 2.6 - thereof Powder and Granules 4.2 10.2 EBITDA margin 4.9% 6.1% EBIT 3.2 8.6 Earnings before taxes 0.8 6.6 Consolidated net result for the period -0.6 3.7 Earnings per share in EUR 1 0.07 0.66 Cash flow from operating activities 4.1 6.3 Free cash flow 2.6 -2.0 June 30, 2013 Dec. 31, 2012 Total assets 280.2 299.6 Equity ratio (incl. non-controlling interests) 113.7 120.66 Net financial debt 75.3 73.9 Gearing 2 0.66 0.61 Equity ratio (incl. non-controlling interests) 40.6% 40.2% Employees 1,018 1,011 </pre> Taking the changes under IAS 19 into account, figures for 2012 adjusted accordingly (1) Based on 6,544,930 shares (2) Net financial debt to equity (incl. non-controlling interests) End of Corporate News --------------------------------------------------------------------- 13.08.2013 Dissemination of a Corporate News, transmitted by DGAP - a company of EQS Group AG. The issuer is solely responsible for the content of this announcement. DGAP's Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases. Media archive at www.dgap-medientreff.de and www.dgap.de --------------------------------------------------------------------- Language: English Company: SKW Stahl-Metallurgie Holding AG Rathausplatz 11 84579 Unterneukirchen Germany Phone: +49 (0)8634 62720-15 Fax: +49 (0)8634 62720-16 E-mail: info@skw-steel.com Internet: www.skw-steel.com ISIN: DE000SKWM021 WKN: SKWM02 Indices: SDAX Listed: Regulierter Markt in Frankfurt (Prime Standard); Freiverkehr in Berlin, Düsseldorf, Hamburg, München, Stuttgart End of News DGAP News-Service --------------------------------------------------------------------- 225468 13.08.2013