DGAP-News: SKW Stahl-Metallurgie Holding AG / Key word(s): Quarter Results
SKW Stahl-Metallurgie Holding AG: SKW Metallurgie under strain from the
global steel crisis-
10.05.2016 / 06:12
The issuer is solely responsible for the content of this announcement.
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SKW Metallurgie under strain from the global steel crisis-
Solid Q1-2016 below strong Q1-2015, as expected
* Positive EBITDA (operating: EUR 3.0 million) and positive operating cash
flow (EUR 2.3 million) despite the steel crisis
* Forecast confirmed for fiscal year 2016
* Confidence in successful conclusion of ongoing bank talks
Unterneukirchen (Germany), May 10, 2016. The global steel crisis put a
continuing strain on the specialty chemicals company SKW Metallurgie in the
first quarter of the year and as expected led to declines in revenues and
earnings compared to the unusually strong performance in the first quarter
of last year. To counteract the consequences of the steel crisis, the
company consistently implemented the extended restructuring program ReMaKe
2.0 that was initiated at the beginning of this year and has since been
advanced to a continuous improvement program. Strict cost management is a
key theme of the short-term measures being implemented under this program.
By generating a positive free cash flow in the first quarter, SKW
Metallurgie proved its operational and financial strength even under
difficult operating conditions. The company confirms its guidance for the
full year and is also on track to attaining its medium-term targets. With
regard to the ongoing bank talks, SKW Metallurgie is confident that a
satisfactory solution for all parties can be reached also for the time
after May 31, 2016.
"The storm in the steel industry is hitting us hard, but did not find us
unprepared," said Dr. Kay Michel, CEO of SKW Stahl-Metallurgie Holding AG.
"The weaker performance in the first quarter compared to the first quarter
of last year was in line with our forecast. We continue to focus on ReMaKe
2.0 and are setting the course for sustainably securing the future of SKW
Metallurgie. We are confirming our short-term and medium-term forecasts and
we still expect to resume positive revenue and earnings growth in the next
year and beyond."
Steel crisis causes revenue decline
The company's performance in the first quarter was very much influenced by
the still tense situation of the global steel industry. Largely due to weak
demand volumes, the consolidated revenues of EUR 64.2 million were 20% less
than the revenues reported in the extremely positive first quarter of 2015
(Q1-2015: EUR 80.7 million).
Consequently, the operating result before interest, taxes, depreciation and
amortization (EBITDA) declined to EUR 3.0 million from the unusually strong
EBITDA reported in Q1-2015 (EUR 6.2 million). This decline would have been
much greater without the earnings contributions of ReMaKe 2.0.
Without the sales volume-increasing effects and contributions from ReMaKe
2.0, the development in Q1-2016 would have scored even more negative.
Positive cash flow
The company reported a positive development in terms of liquidity. Despite
the difficult operating environment, the company generated a positive cash
flow from operating activities of EUR 2.3 million, as compared to the
negative cash flow of EUR -7.6 million in the first quarter of last year.
This change reflects the further optimization of current assets, in
particular.
Steel crisis impacts the important US business
Already in the consolidated financial statements for 2015, SKW Metallurgie
increased transparency by adapting its segment report to its internal
management system. First, the regional management system introduced as part
of ReMaKe will considerably improve the potential for cross-selling,
leading to additional revenues. Second, it increases the visibility of
regional market developments.
The U.S. market, which makes the biggest contribution to consolidated
revenues by far, was especially hard hit by the steel crisis, as expected.
First, local production volumes are being adversely affected by low-cost
steel imports. Second, the persistent pressure on global commodity prices
led to a massive drop in demand, especially for tube products, from the
oil, gas, and fracking industry, which requires high-grade steel varieties
produced with an especially high proportion of SKW products.
Consequently, revenues generated in the North America segment in the first
three months of 2016 fell to EUR 34.3 million (Q1-2015: EUR 43.2 million).
EBITDA declined to EUR 1.0 million from the very strong figure for Q1-2015
(EUR 3.4 million).
In the operating segment of South America, first-quarter revenues amounted
to EUR 4.8 million (Q1-2015: EUR 7.7 million), while EBITDA fell to EUR 1.0
million (Q1-2015: EUR 2.1 million). This development is a reflection of the
clearly negative development of the macroeconomic situation in Brazil, the
drastic decline in local steel production, and the related exchange rate
developments.
The Europa & Asia segment also suffered a significant drop in revenues to
EUR 18.0 million (Q1-2015: EUR 22.8 million). Segment EBITDA declined to
EUR 1.0 million (Q1-2015: EUR 1.3 million), mainly due to an unexpectedly
sharp decline in steel production.
Short-term and medium-term forecasts confirmed
As announced earlier, SKW Metallurgie is currently negotiating with the
banks participating in the syndicated loan agreement on an adjustment of
credit terms. SKW Metallurgie remains confident that these talks will be
quickly brought to a successful conclusion with an agreement covering the
period after May 31, 2016.
The weaker performance in the first quarter was in line with expectations.
SKW Metallurgie expects that conditions in the steel industry will continue
to be difficult in 2016. The company is confirming its forecast of
consolidated revenues of between EUR 250 million and EUR 270 million and an
operating EBITDA of slightly less than EUR 10 million. For 2017, the
company continues to expect that revenues will rise to about the level of
2014 (approximately EUR 300 million). For 2018, the company expects
revenues to rise by roughly 5 percent over 2017 revenues. The SKW
Metallurgie Group expects to generate an operating EBITDA of up to EUR 20
million in 2017, followed by a further increase in 2018. This positive
earnings development will be made possible above all by the effects of
ReMaKe 2.0, which will more than offset the expected continuation of margin
erosion and cost increases.
In accordance with the legislative changes (in the German Securities
Trading Act (WpHG) and the Frankfurt Stock Exchange Regulations (BörsO
FWB)) made in late 2015 with respect to quarterly reporting for Q1 and Q3,
the company has replaced the usual full-length quarterly report with
quarterly announcements since Q1-2016.
Selected Key Figures: SKW Group, First Quarter 2016
Numbers according to IFRS (not adjusted)
Consolidated Income Statement January 1 to March 31, 2016
In euro thousands Q1-2016 Q1-2015
Revenues 64,191 80,741
Earnings before interest, taxes, depreciation and amortization (EBITDA)
1,908 7,398
Earnings before interest and taxes (EBIT) 554 5,898
Earnings before taxes (EBT) -2,173 14,069
Earnings from continuing operations (after taxes) -2,465 11,908
Consolidated net loss/ income -2,465 11,987
Consolidated earnings per share (EUR)* -0.41 1.80
* Diluted earnings per share are equal to basic earnings per share.
Consolidated Statement of Financial Position as of March 31, 2016
In euro thousands March 31, 2016 March 31, 2015
Noncurrent assets 58,411 59,136
Current assets 88,381 92,064
Total assets 146,792 151,200
Equity 4,714 8,339
Noncurrent liabilities 22,237 20,782
Current liabilities 119,841 122,079
Total equity and liabilities 146,792 151,200
Consolidated Cash Flow Statement January 1 - March 31, 2016
In euro thousands Q1/2016 Q1/2015
Gross cash flow 661 3,035
Changes in working capital 1,634 -10,612
Cash flow from operating activities 2,295 -7,577
Cash flow from investing activities -1,274 -509
Cash flow from financing activities -109 6,155
Cash and cash equivalents, beginning of period 12,278 17,972
Cash and cash equivalents, end of period 13,356 16,287
Contact
SKW Stahl-Metallurgie Holding AG
Christian Schunck
Head of IR and Corporate Communication
Rathausplatz 11
84579 Unterneukirchen
Germany
Telephone IR/Press: +49 8634 62720-15
Fax: +49 8634 62720-16
E-mail: schunck@skw-steel.com
Internet: www.skw-steel.com
About SKW Stahl-Metallurgie Holding AG and the SKW Metallurgie Group
The SKW Metallurgie Group is a world market-leading supplier of chemical
additives for pig iron desulfurization, as well as cored wires and other
secondary metallurgy products. The Group's products enable steel makers to
efficiently produce high-quality steel varieties. Its customers include
world-leading steel industry companies. The SKW Metallurgie Group possesses
in-depth metallurgical expertise accumulated over more than 50 years of
experience and is active today in more than 40 countries of the world. The
company is also a leading supplier of Quab specialty chemicals, which are
used primarily in the worldwide production of industrial starch for the
papermaking industry.
The headquarters of the SKW Metallurgie Group are located in Germany;
production facilities are located in France, the United States, Canada,
Mexico, Brazil, South Korea, Russia, the People's Republic of China, and
India (joint venture). The Group generated total revenues of EUR 285.5
million in 2015 and has approximately 650 employees (as of December 31,
2015).
Since December 1, 2006, the shares of SKW Stahl-Metallurgie Holding AG have
been listed in the Prime Standard section of the Frankfurt Stock Exchange
(Germany), since 2011 (conversion to registered shares) under the Security
ID WKN SKWM02 and ISIN DE000SKWM021.
Disclaimer
This press release may contain certain forward-looking statements that are
based on the current assumptions and forecasts of the Management of the SKW
Metallurgie Group and other currently available information. As a result of
various known and unknown risks and uncertainties and other factors, the
company's actual results, liquidity situation, development, and performance
may differ considerably from the estimates expressed herein. SKW
Stahl-Metallurgie Holding AG does not intend and assumes no obligation to
update such forward-looking statements or adapt them to future events or
developments.
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10.05.2016 Dissemination of a Corporate News, transmitted by DGAP - a
service of EQS Group AG.
The issuer is solely responsible for the content of this announcement.
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Language: English
Company: SKW Stahl-Metallurgie Holding AG
Rathausplatz 11
84579 Unterneukirchen
Germany
Phone: +49 (0)8634 62720-15
Fax: +49 (0)8634 62720-16
E-mail: info@skw-steel.com
Internet: www.skw-steel.com
ISIN: DE000SKWM021
WKN: SKWM02
Listed: Regulated Market in Frankfurt (Prime Standard); Regulated
Unofficial Market in Berlin, Dusseldorf, Hamburg, Munich,
Stuttgart
End of News DGAP News Service
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461789 10.05.2016
DGAP-News: SKW Stahl-Metallurgie Holding AG: SKW Metallurgie under strain from the global steel crisis-
| Source: EQS Group AG