SCHMOLZ + BICKENBACH with lower EBITDA in first quarter 2019

Adjusted EBITDA decreased by –40% to EUR 42.2 million from EUR 70.3 million in the same quarter one year ago. EBITDA of EUR 38.8 million was –62.4% lower than in the first quarter of 2018 (EUR 103.1 million). However, the previous year's result was positively influenced by the contribution of badwill of EUR 46.0 million from the acquisition of Ascometal.

The results of Ascometal, which was acquired and is managed as a Business Unit within the Group, have been included in the Group figures since February 2018. As a result, only two months of Ascometal's results are included in the first quarter of 2018. This has an impact on the comparison with those figures because Ascometal is fully included in the results of the first quarter of 2019. As a result, higher sales volumes, revenue and expense items were recorded. The integration also had a significant impact on the cash flow figures.

Following a significant decline in demand in the last two months of the previous year, the start into the 2019 financial year was also challenging. Although demand began to stabilize at a lower level, there was a lack of dynamics to improve the market environment in the steel industry. Accordingly, our production was cut back in order to adjust inventories to the current low demand, particularly from the automotive industry. At the structural improvement level, the focus was on implementing the first steps of Finkl Steel's turnaround plan and the continued integration of Ascometal.

At 551 kilotons, sales volume in the first quarter of 2019 was 1.1% higher than in the prior-year quarter (Q1 2018: 545 kilotons). This increase was driven by 2.9% higher sales volume of quality & engineering steel, fully attributable to Ascometal

The average sales price per ton of steel was 5.5% higher than in the prior year quarter and reached EUR 1,605 in the first quarter of 2019 compared to EUR 1,521/ton in the first quarter 2018. The increase is mainly attributable to higher scrap and alloy surcharges, with base prices remaining largely stable compared with the previous year. Thanks to the positive price development and higher sales volumes, revenue rose 6.7% to EUR 884.2 million after EUR 828.9 million in the same period of the previous year.

At EUR –13.6 million (Q1 2018: EUR –10.3 million), the financial result was lower than in the prior-year quarter due to debt-related higher interest expenses. As a result of the developments described above, earnings before taxes (EBT) amounted to EUR –0.3 million (Q1 2018: EUR 65.2 million). The negative EBT resulted in tax income of EUR 1.0 million compared to a tax expense of EUR –6.2 million in the same quarter of the previous year. Group result amounted to EUR 0.7 million after EUR 59.0 million in the same quarter last year.

CEO Clemens Iller commented: “As expected, the start to the 2019 financial year was restrained. After a significant decline in business activities towards the end of last year, the dip in growth in our sales markets continued in the first three months. From today's perspective, we expect demand to gradually normalize in the first half of 2019, with a continued recovery in the second half of the year.”

Source; Schmolz + Bickenbach / Photo: Fotolia