Stalprofil deliveries increase, seeks higher-margin sales

Stalprofil increased sales 30% on-year in the third quarter to 84,000 tonnes thanks to growth in hot rolled coil and pipe deliveries for the requirement of the firm’s gas infrastructure segment.

The Stalprofil subsidiary responsible for carrying out insulated pipe deliveries to the gas sector, Izostal, currently has a PLN 470 million ($120.3m) order-book which it will realise over the next 15 months. Around 30% of the order-book comprises work for pipeline operator Gaz-System.

Stalprofil reported a -3% on-year drop in consolidated revenue in Q3 to PLN 410.5 million ($105.1m), while net profit slumped -64% to PLN 3.8m. The revenue decline was driven by a -28% slump in infrastructure segment sales, while sales of steel products and services soared 29%. The infrastructure segment slump was not due to a drop in orders, but rather due to Gaz-System’s delivery schedule, the distributor says.

The steel segment’s lower margins were the result of a weaker market and gradual erosion of steel prices, as well as a shift to lower-margin HRC and gas-transmission pipe sales.

In the nine months through September revenue thus dropped -2% on-year to PLN 1.07 billion, while net profit fell -36% to PLN 16.2m. Steel product deliveries rose by 653t to 173,904t, while steel structures sales fell 644t to 1,663t.

The European steel industry has struggled this year with reduced consumption and steel prices, which have been pressured by imports despite safeguard measures. These have been coupled with stubbornly high iron ore and coking coal prices, Stalprofil observes in a report seen by Kallanish.

In order to mitigate the market impact on its performance, Stalprofil is targeting increased steel structures exports to markets such as Germany and Austria where quality demands are higher than in Poland. Moreover, the firm expects to complete by year-end the expansion of its machine construction line. These products are more profitable than building construction, Stalprofil observes.