Swiss Steel Q2 sales volume falls 12% on year, revenue rises 33%

Swiss manufacturer of tool steel and non-corrosive long rolled steel Swiss Steel reported a 12% year on year decrease in sales volumes over April-June, but revenues grew sharply thanks to achieved prices being 50% more than in the same quarter last year.

Swiss Steel sold 11.8% less steel — 457,000 mt — in the second quarter of 2022 compared with 518,000 mt in the same quarter of the previous year. This is attributable to an almost 8% decrease in the sales volume for quality and engineering steel and a 33% fall in stainless steel sales, although tool steel shipments gained 3%.

Meanwhile, the lower sales volume was compensated by considerably higher sales prices reflective of higher prices for raw materials and energy.

In April-June, the company’s average sales price at Eur2,442 ($2,475)/mt was 50% higher than in the same quarter last year, when it stood at Eur1,621/mt. Aside from increasing its base price, the steelmaker implemented an energy surcharge to pass on inflated energy costs to consumers.

As a result, Q2 revenue increased by 33% to Eur1.1 billion ($1.13 billion) versus Eur839 million in the prior-year quarter. It climbed in all of its markets, with the strongest gains in the US due to higher activity in the oil and gas industry.

Adjusted EBITDA for the second quarter was 47% higher, at Eur96 million.

In January-June, Swiss Steel sold 937,000 mt of steel, with the volume being 8.9% lower year on year, and at 48% higher average price of Eur2,290/mt. Its H1 revenue and adjusted EBITDA grew by 35% and 55.6%, respectively.

Geopolitical instability, inflation and potential economic slowdown confront companies with considerable challenges and are going to cause immaterial disruptions in the remainder of 2022.

“As we look to the second half of 2022, volatilities and uncertainties have increased,” said its CEO Frank Koch. “The unstable geopolitical situation persists, energy prices continue to skyrocket, and energy availability has become increasingly uncertain.”

As a consequence and faced with reduced growth forecasts in its end-industry markets, Swiss Steel expects lower market demand and a resulting decline in margins, amplifying the usual seasonal slow-down in activity in the second half-year.

The company is being reshaped toward consolidating operations into an integrated Swiss Steel Group under one brand.

It has reorganized its sales around the three divisions — Stainless Steel, Engineering Steel and Tool Steel with the new organization going into operation in September 2022.

Electric arc furnace-based Swiss Steel also aims to consolidate its position as a producer of CO2-reduced steel: the company has joined the Science Based Target initiative that promotes a reduction of carbon emissions by 42% over the next 10 years.

— Ekaterina Bouckley