Swiss Steel Group: Sales volume decreased by 6.2 % in the first half of 2024

Swiss Steel Group has reported a significant decrease in both sales volume and revenue for the first half of 2024, reflecting the ongoing challenges in the market. The sales volume fell by 6.2% from 610 kilotons in the first half of 2023 to 572 kilotons in the same period in 2024, excluding the effects of the Ascometal subsidiary. This decline is attributed primarily to depressed market demand.

Revenue also saw a substantial drop, decreasing by 20% year-over-year from EUR 1,622 million to EUR 1,300 million, again excluding Ascometal. This decrease in revenue is a direct consequence of the reduced sales volume, coupled with lower average sales prices and changes in the Group’s scope of consolidation.

Despite these challenges, Swiss Steel Group has made strides in strengthening its resilience. The company reported an increase in EBITDA to EUR 71.7 million for the first half of 2024, up from EUR 58.5 million in the first half of 2023. This improvement was driven by several strategic milestones and one-time effects amounting to EUR 92.6 million. The Group also successfully reduced its net debt from EUR 829 million at the end of 2023 to EUR 631 million, largely due to a capital increase in April 2024, which brought in net proceeds of EUR 286 million.

In March 2024, the management of the French subsidiary Ascometal sought court protection, leading to the derecognition of the corresponding assets and liabilities from Swiss Steel Group’s balance sheet. For improved comparability, certain financial figures are now being reported on a pro forma basis, excluding Ascometal.

Looking ahead, Swiss Steel Group remains cautious, with expectations that the subdued market conditions will persist throughout the second half of 2024.

Market Performance and Strategic Adjustments

The first half of 2024 saw continued weakness in market demand from key customer industries. The automotive sector, which is Swiss Steel Group's largest customer segment, faced a challenging environment with declining production volumes in the European automotive industry compared to the first half of 2023. These production levels remain significantly below pre-pandemic levels. Similarly, the German mechanical and plant engineering sector experienced a decrease in order intake during the first six months of 2024.

Despite these market conditions, the Group’s order intake increased by 52 kilotons to 662 kilotons in the first half of 2024. Excluding Ascometal, the order intake rose by 100 kilotons to 602 kilotons, indicating some resilience in the broader market. However, the Group's order backlog declined by 15.8% year-over-year to 325 kilotons as of June 30, 2024.

The Group has responded to these market challenges by adapting its production schedule. Crude steel production in the first half of 2024 reached 765 kilotons, excluding Ascometal, while the total production volume, including Ascometal, was 821 kilotons. This marks a decline from 925 kilotons in the first half of 2023.

The sales volume for the first half of 2024 was 572 kilotons, a 6.2% decline from the previous year. Including Ascometal, the sales volume was 629 kilotons, representing a 16.8% decrease from the previous year. The drop in sales volume, combined with falling raw material and electricity prices, led to a 10.8% reduction in the average sales price to EUR 2,194 per ton.

Financial Performance and Strategic Initiatives

The reduced sales volume and average sales prices, along with changes in the Group’s scope of consolidation, contributed to a 19.9% contraction in revenue, which fell to EUR 1,300 million in the first half of 2024, excluding Ascometal. Including Ascometal, revenue declined by 25.7% to EUR 1,379 million.

Revenue decreased across all major geographical markets. The eurozone and the U.S. markets remained subdued, with Germany, Swiss Steel Group's main market, accounting for 37.0% of total revenue in the first half of 2024. Revenue in Germany fell by 18.4% to EUR 510 million. The Group’s exposure to the French market also decreased, reflecting the exclusion of Ascometal.

The Group’s headcount decreased by 1,247 employees, or 14.2%, to 7,565 by the end of the first half of 2024. This reduction was largely due to changes in the Group’s scope of consolidation.

Swiss Steel Group executed several significant transactions as part of its SSG 2025 strategy program. These included the sale of its former headquarters in Düsseldorf and the divestment of its distribution entity in Portugal. Following Ascometal's move to seek court protection, Swiss Steel Group derecognized the related assets and liabilities, further reducing its net debt. The capital increase in April 2024, which raised EUR 286 million, significantly improved the Group’s equity position, boosting its equity ratio to 26.6% as of June 30, 2024.

Despite the challenging market environment, the Group’s EBITDA increased to EUR 71.7 million in the first half of 2024, supported by gains from strategic transactions and insurance claim settlements. However, Free Cash Flow remained negative at EUR –112 million due to a net working capital ramp-up designed to enhance the Group’s flexibility in responding to customer demand.

Source and Photo: Swiss Steel Group