CMC Poland saw a significant improvement in August-quarter profitability due to supply tightness expanding margin, while steel demand from both the construction and industrial end markets was solid, says US parent CMC. Residential construction and industrial activity should continue boosting volumes going forward.
CMC Poland grew steel shipments 21% on-year in the fourth fiscal quarter through August to a quarterly record 460,000 short tons. Merchant and other products shipments rose 24% to 286,000st, while rebar sales were up 16% to 174,000st, Kallanish notes.
The start-up of its third rolling line and the continuing manufacturing recovery boosted merchant and other steel products deliveries. “Production was ramped up more quickly than anticipated,” CMC chairman Barbara Smith said of the new Polish rolling mill during CMC’s earnings call. “This new asset ran at a high rate of production during the latter part of the fourth quarter and was a meaningful contributor to Europe’s segment earnings.” The line allows CMC Poland to produce each of its three major product groups simultaneously, she added.
Average August-quarter selling price surged 71% to $763/st, but cost of ferrous scrap utilised soared 79% to $448/st. Steel products metal margin grew 61% to $315/st. Net sales soared 105% to $368.3 million and adjusted Ebitda was up 195% to a record $67.7m. This was supported by tight supply conditions in Europe.
Asked about how the European energy crunch is affecting CMC Poland, CMC chief financial officer Paul Lawrence said: “Poland is much more coal-oriented and less natural gas-oriented in their electricity generation [than other EU nations], and their inflationary factors that we’ve seen thus far have been, as a result, reduced.” The firm expects to receive a CO2 credit in the November quarter that will offset much of the inflation expected for the full fiscal year, he added.
Energy prices are a factor for CMC Poland but “a lot less than the industry,” Lawrence continued. “And I think we will benefit as a result of the pricing environment, given that others have already introduced surcharges in energy that are far greater than the implication to us of the rising energy costs that we will see at our facility.”
In the fiscal year through August 2021 CMC Poland thus grew steel shipments 10% on-year to 1.61mst, led by a 17% growth in merchant and other products deliveries to 1.09mst. Net sales jumped 50% to $1.05 billon and adjusted Ebitda surged 139% to $148.3m.
Adam Smith Germany