High steel prices Swiss Steel Group records significant increase in earnings
During the second quarter 2022, the revenue of Swiss Steel Group increased sharply by 33 percent to 1,115.8 million euros. At the same time, the sales volume declined from 518 kilotons to 457 kilotons.
Swiss Steel Group has revised its forecast of an adjusted Ebitda for the full year to a new range of 220 to 260 million euros. This assumes immaterial additional disruptions due to current geopolitical instability. CEO Frank Koch comments: “Backed by the overall stable market situation in the second quarter we were able to achieve a result of 96.0 million euros for adjusted Ebitda, despite high volatilities. The lower sales volume was compensated by higher sales prices, comprising an increase in the prices for raw materials and energy.”
At 457 kilotons, – 11.8 percent less steel was sold in the second quarter of 2022 compared with the same quarter of the previous year (Q2 2021: 518 kilotons). This is attributable to a — 7.9 percent decrease in the sales volume for quality and engineering steel and a — 33.0 percent decline in the sales volume for stainless steel. The tool steel sales volume, by contrast, increased by 2.9 percent quarter over quarter.
The average sales price per ton of steel was 2,442 euros in the second quarter of 2022 and therefore considerably higher than in the same quarter of the previous year, when it stood at 1,621 euros per ton. The transfer of higher prices for raw materials into the company’s markets led to higher sales prices. Base prices were also raised and the Group implemented an energy surcharge to pass on volatile energy prices.
Due to these higher average sales prices, revenue in the second quarter of 2022 increased by 33.0 percent to 1,115.8 million euros compared to the same quarter in the previous year. The increase in revenue was spread across all product groups. By region, revenue climbed in all of our sales markets, with the strongest gains in the American market (+56.5 percent), supported by higher activity in the oil and gas industry.
Adjusted Ebitda was 96.0 million euros in the second quarter of 2022, a significant increase on the same quarter of the previous year (Q2 2021: 65.4 million euros).
Based on the reported earnings in the first half of 2022, the group is raising its guidance for adjusted Ebitda. The geopolitical situation remains unstable, supply chains continue to face manifold challenges, inflation is on the rise and a potential economic slowdown has become imminent. The company cannot conclusively assess the material uncertainties facing the energy sector at this time, neither in terms of price developments nor availability. In consequence, they expect lower market demand and a resulting decline in margins, amplifying the usual seasonal slow-down in activity in the second half-year. Assuming only immaterial additional disruptions, Swiss Steel expects an adjusted Ebitda in a range between 220 and 260 million euros.