Supply-side adjustments and the impact of increasing levels of residential and infrastructure construction should drive sequential improvements in financial results beginning in the spring construction season, CMC says of its European unit outlook.
Conditions in Europe are expected to remain challenging, but adjusted Ebitda excluding energy rebates should improve from the levels of the past two quarters.
In the fiscal quarter through November 2023, Polish construction activity decelerated and industrial production across Central Europe remained muted. The market saw weaker demand and lower product margins. “Encouragingly, selling prices and metal margins on long products began to improve midway through the quarter, and several green shoots have emerged that could bolster the Polish market in the quarters ahead,” CMC says in a note seen by Kallanish.
CMC Poland’s steel product shipments plunged 27% on-year in the November quarter to 343,000 short tons, with rebar down 40% to 122,000st and merchant and other products down 18% to 221,000st.
Average selling price was down 20% to $633/short ton, while cost of ferrous scrap utilised remained flat at $365/st. Steel product metal margin contracted 37% to $268/st.
Net sales fell 42% to $225.2 million and adjusted Ebitda was down 36% to $38.9m.
The results include two energy cost rebates totalling approximately $66m. Of these rebates, $27.7m is related to an annual CO2 credit under a government programme that extends to 2030, and the remaining $38.6m is structured as a reimbursement by the Polish government for elevated energy costs incurred during the European energy crisis, CMC says.
Adam Smith Poland