Swiss Steel eyes recovery, but shipments still low

Swiss Steel Holding, formerly Schmolz+Bickenbach, registered a cautiously positive recovery in the third quarter after two disappointing quarters due to the Covid-19 pandemic impact. But higher steel demand did not translate into increased sales volumes and revenue.

“Sales normalised in the second half of August after production capacities were ramped up smoothly following the summer break,” says chief executive Clemens Iller. “The first signs of improvement have come from the automotive industry, while the recovery in mechanical and plant engineering as well as in the energy segment, especially with oil and gas, remains sluggish.”

However, the company reported an -18% on-year decrease in Q3 sales to 332,000 tonnes, Kallanish notes. This was especially pronounced in quality and engineering steel, whose shipments fell -19.8% as the automotive demand recovery filters through to sales volumes with a delay. In addition, the fall in demand in mechanical and plant engineering continued in Q3.

Volumes also fell in the stainless steel and tool steel segments, but with less sharp declines of -13.9% and -12.5% respectively. The average sales price/tonne of steel was €1,534/tonne ($1,805) versus €1,654 in Q3 2019. This was despite the slightly positive movement in prices for scrap and alloy surcharges following the pandemic-related slump.

Swiss Steel’s Q3 revenue declined -24% on-year to €509.4 million. The decrease was most pronounced in the quality and engineering segment, at -27.5%. Revenue from stainless steel was down by -21.3%, and for tool steel by -19.9%. Geographically, all regions and countries suffered a double-digit decline in revenue, except for China which saw growth of 10.6% on-year. Adjusted Ebitda was negative €21.1m, against positive €32.9m a year earlier.

“We expect that automotive will continue to recover in the fourth quarter,” a company executive concludes. “The will narrow the gap to the prior-year level, while recovery will be sluggish in the mechanical and plant engineering as well as energy sectors.”