Konsorcjum Stali (KS) reported an -8% on-year decline in revenue in the first quarter to PLN 425.7 million ($110.3m), while net profit plummeted -90% to PLN 1.1m, Kallanish learns from the top-three Polish distributor.
Although the quarter occurred in winter, during which selling activity usually quietens, it was characterised by good demand, KS observes. However, due to high stocks partly on account of increased influence from imports, transaction prices declined.
After a very good 2018 in which Polish GDP grew by 5.1%, the current year is forecast to register 4% growth. The main cause of this is weakening external demand resulting from the uncertain global economic situation. Exporters are likely to be the worst hit, KS says. “The worsening mood among entrepreneurs and investors is translating into delayed investment and purchasing decisions,” KS says in its report.
Steel-using sectors, such as automotive, machine-building and pipemaking, registered a demand decline in Q1, with Polish apparent steel consumption declining -6% on-year in January-February. Despite the weaker demand forecast, KS is optimistic about maintaining sales volumes as a leader in the processing and distribution market. This is thanks in part to the continued high level of rail and road infrastructure investment, KS says.
KS’ board has also approved the 2019-2021 investment plan that envisages PLN 39m spending into increasing processing and distribution capacity. The firm says this should strengthen its market position thanks to increased quality and cost optimisation. It is now seeking supervisory board approval.
In 2018 KS increased sales 7% on-year to 682,000 tonnes. Rebar sales rose 20% to 201,000t and sheet sales were up 7% to 74,000t. Z and G sections sales were flat at 60,000t. Sales of KS-produced or processed products, meanwhile, fell -2% to 236,000t.
