SWISS STEEL HOLDING AG
Emmenbrücke, 21 August 2014 - SCHMOLZ + BICKENBACH AG, a global market leader in special steel (such as tool steel, stainless steel, and engineering steel) listed on the SIX Swiss Exchange (SIX: STLN), once again generated a clearly positive net income in the second quarter of 2014 in a market environment that remains challenging. Following losses in the same quarter of the prior year and for the fiscal year 2013 as a whole, the Group has built on the positive result of the first quarter of 2014 and achieved with a net income of EUR 22.8 million in the second quarter of 2014 a positive result again.
Following a particularly high order intake at SCHMOLZ + BICKENBACH in the first quarter of 2014, the situation settled down in the second quarter and figures stabilised at around the prior-year level. At 539 kilotonnes, the order backlog as at 30 June 2014 fell 5.6% short of the level recorded as at 31 March
2014 (571 kilotonnes) but was nevertheless up 19.2% on the order backlog of 31 December 2013 (452
kilotonnes) and as much as 34.1% on the figure for 30 June 2013 (402 kilotonnes).
Compared to the second quarter of 2013, the sales volume improved by 24 kilotonnes or 4.5% to 557 kilotonnes (Q2 2013: 533 kilotonnes), while revenue decreased by EUR 15.1 million or 1.7% to EUR
858.0 million (Q2: EUR 873.1 million). In a year-on-year comparison of the full six months, however, the sales volume was up 7.1% to 1 138 kilotonnes (H1 2013: 1 063 kilotonnes), while revenue decreased by
0.6% to EUR 1 729.6 million (H1 2013: EUR 1 740.5 million). The fall in revenue despite a higher sales
volume was mainly attributable to lower scrap prices and continued pressure on base prices. Alloy prices, in particular nickel, increased significantly again compared to the first half of the prior year, however.
The percentage gross margin of 35.8% represents a renewed improvement in the second quarter of 2014 (Q1 2014: 34.1%, Q2 2013: 31.7%), giving an overall percentage growth margin for the first half year of
34.9% (H1 2013: 31.8%). Adjusted EBITDA saw a 51.2% increase to EUR 73.8 million (Q2 2013: EUR
48.8 million). Compared to first half of the prior year, it was up EUR 43.4 million or 45.2% to EUR 139.4 million (H1 2013: EUR 96.0 million).
SCHMOLZ+BICKENBACH AG, P.O.Box, CH-6021 Emmenbrücke, phone +41 (0)41 209 50 00, www.schmolz-bickenbach.com
Having reduced debt using funds raised from the capital increase in the fourth quarter of 2013 and exploiting better interest rates, SCHMOLZ + BICKENBACH managed to more than halve the net financial expense compared to the same quarter of the prior year, reducing it to EUR 9.3 million (Q2 2013: EUR
23.2 million). At EUR 24.3 million, the figure for the first six months was also almost half that reported for
the first half of the prior year (H1 2013: EUR 45.0 million).
Earnings before tax (EBT) came to EUR 33.2 million - a marked improvement once again on both the first quarter of 2014 and the same quarter of the prior year (Q1 2014: EUR 19.0 million, Q2 2013: EUR
-10.1 million). Overall, SCHMOLZ + BICKENBACH generated an EBT of EUR 52.2 million in first half of
2014 - an increase of EUR 66.8 million on the same period of the prior year (H1 2013: EUR -14.6 million). Net income (EAT) of EUR 22.8 million in the second quarter of 2014 represents an improvement of EUR 34.0 million on the same period of the prior year (Q2 2013: net loss of EUR 11.2 million). Net income for the first six months came to EUR 35.2 million - up EUR 54.1 million on the first half of the prior year (H1 2013: EUR net loss of 18.9 million).
SCHMOLZ + BICKENBACH expects the recovery of the global economy to continue, albeit at a somewhat slower pace. The latest forecasts of the World Bank, OECD and IMF project growth of between 2.5% and 3.6%. In its April forecast, the World Steel Association predicts a 3.1% rise in global steel consumption for 2014. This breaks down into an increase of 3.1% for the EU, 3.8% for the NAFTA region and 2.8% for Asia. Recently published economic data does not reflect these rather optimistic expectations, however. For instance, Germany's industrial order intake was in some cases down significantly in May and June, while Italy slipped back into recession. Mounting concern around geopolitical developments, e.g. in Ukraine, is also a factor to consider as these might dampen the economic mood - including demand for steel - over the coming months.
SCHMOLZ + BICKENBACH remains cautiously optimistic for the fiscal year 2014. The 539-kilotonnes order backlog achieved in the second quarter of 2014 will ensure good capacity utilisation for the Company in the third quarter and leading into the fourth. Customers' purchasing patterns after the summer break will be decisive in determining how the development continues. The Group stands by its prediction that the sales volume for the entire year will increase by around 2% to 5% compared to the prior-year level of 2 045 kilotonnes.
Base prices seem to have bottomed out, bringing the prospect of price increases in some areas. However, in general base prices remain very low and have yet to reach the level of the prior year. SCHMOLZ + BICKENBACH does not currently anticipate a recovery in base prices across the board. The sharp rise in the nickel price should push up alloy surcharges over the coming months and have a positive impact on revenue. The Company expects scrap prices to stay low. Based on the above, SCHMOLZ + BICKENBACH continues to assume that revenue will exceed the prior-year level by 2%-
5%, although there is considerable uncertainty surrounding this forecast due to the unpredictability of
changes in scrap and alloy surcharges and the currency exchange rate development. The Group could see typical cyclical patterns, with sales volume and revenue lower in the second half of the year than the first due to customers' holiday periods in July, August and the second half of December. All assumptions are based on more or less stable exchange rates for the currencies of relevance for SCHMOLZ + BICKENBACH - CHF/EUR and USD/EUR.
SCHMOLZ+BICKENBACH AG, P.O.Box, CH-6021 Emmenbrücke, phone +41 (0)41 209 50 00, www.schmolz-bickenbach.com
The Group will press ahead in 2014 with the cost-cutting and efficiency improvement programme launched in 2012 and significantly expanded in 2013. Its results should be reflected in better earnings. SCHMOLZ + BICKENBACH only anticipates further non-recurring expenses in the low to mid single-digit millions for these measures in 2014. The Company is satisfied with the way earnings have developed in the first half of the year. As described above, there are a number of uncertain factors and the picture will not be clearer until after the summer break. From a current perspective and based on our cautiously optimistic estimate for the fiscal year 2014 as a whole - taking account of the uncertainty - we anticipate adjusted EBITDA of between EUR 210 million and EUR 230 million (hitherto: between EUR 190 million and EUR 230 million).
Investments planned for 2014 match the prior-year level, and are once again well below the level of depreciation.
H1 2014 H1 2013 Q2 Q2
2014 2013
Sales volume kilotonnes 1 138 1 063 557 533
Revenue million EUR 1 729.6 1 740.5 858.0 873.1
Adjusted EBITDA million EUR 139.4 96.0 73.8 48.8
Operating profit before depreciation and
amortisation (EBITDA) million EUR 136.3 90.4 72.5 43.8
Operating profit (EBIT) million EUR 76.5 30.4 42.5 13.1
Earnings before taxes (EBT) million EUR 52.2 -14.6 33.2 -10.1
Net income (loss) (EAT) million EUR 35.2 -18.9 22.8 -11.2
Investments million EUR 31.6 32.3 19.3 18.8
Free cash flow million EUR 6.4 -2.7 -72.1 -6.8
Total assets million EUR 2 522.9 2 553.0 - - Shareholders' equity million EUR 900.7 625.7 - - Net debt million EUR 633.7 952.7 - - Employees as at closing date positions 10 018 10 038 - -
Earnings per share (basic) EUR 0.04 -0.17 - -
For further information please contact:
Stefanie Steiner, Director Investor Relations, phone +41 41 209 50 42
The interim report as at 30 June 2014 can be found here:
http://www1.schmolz-bickenbach.com/en/investor-relations/reports/financial-reports/2014/
SCHMOLZ+BICKENBACH AG, P.O.Box, CH-6021 Emmenbrücke, phone +41 (0)41 209 50 00, www.schmolz-bickenbach.com
About SCHMOLZ+BICKENBACH
Today, the SCHMOLZ + BICKENBACH Group is one of the world's leading providers of customised solutions in the special long steel products business. A global name in tool steel and stainless long steel, the Group is one of three largest companies in Europe for alloy and high-alloy special and engineering steel. With around 10 000 employees at its own production and distribution companies in over 35 countries across five continents, the Company supports and supplies customers wherever they operate. Besides a comprehensive Production and Sales & Services portfolio, customers benefit from the Company's technological expertise, consistent high quality worldwide and in-depth knowledge of local markets.
Forward-looking statements
Information in this release may contain forward-looking statements, including presentations of developments, plans, intentions, assumptions, expectations, beliefs and potential impacts as well as descriptions of future events, income, results, situations or outlook. They are based on the Company's current expectations, beliefs and assumptions, which are subject to uncertainty and may differ materially from the current facts, situation, impact or developments.
Disclaimer
This publication constitutes neither a prospectus within the meaning of article 652a and/or 1156 of the Swiss Code of Obligations nor a listing prospectus within the meaning of the listing rules of the SIX Swiss Exchange. This publication constitutes neither an offer to sell nor a solicitation to buy securities of SCHMOLZ + BICKENBACH. The securities have already been sold.
This document shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of securities referred to herein in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration, exemption from registration or qualification under the securities laws of any such jurisdiction. The securities referred to herein have not been and will not be registered under the United States Securities Act of 1933, as amended (the "Securities Act"), and may not be offered or sold in the United States or to U.S. persons (as such term is defined in Regulation S under the Securities Act) absent registration or an exemption from registration under the Securities Act. The issuer of the securities has not registered, and does not intend to register, any portion of the offering in the United States, and does not intend to conduct a public offering of securities in the United States.
SCHMOLZ+BICKENBACH AG, P.O.Box, CH-6021 Emmenbrücke, phone +41 (0)41 209 50 00, www.schmolz-bickenbach.com
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