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8. noviembre 2018

SCHMOLZ + BICKENBACH increased EBITDA in the third quarter

  • Adjusted EBITDA of EUR 41.8 million was 10.0% higher than in Q3 2017 with EUR 38.0 million
  • Productivity at Ascometal significantly improved, seamless integration into the Group progressing, turnaround proceeding according to plan
  • Sales volume increased by 16.0% to 470 kilotons in Q3 2018, up from 405 kilotons in Q3 2017, driven by Ascometal and solid demand in most end markets and regions
  • Average sales price per ton increased to EUR 1,660 from EUR 1,509 in Q3 2017 and EUR 1,566 in Q2 2018
  • Free cash flow of EUR –2.6 million compared to EUR 27.0 million one year ago, lower due to an increase in net working capital
  • Net debt increased to EUR 651 million due to the integration of Ascometal and a lower free cash flow, from EUR 626 million at the end of Q2 2018
  • Outlook 2018 confirmed: SCHMOLZ + BICKENBACH expects an adjusted EBITDA between EUR 230 million and EUR 250 million

 

CEO Clemens Iller commented: "As in the first half-year, our end markets proved to be resilient overall to the numerous political turbulences. As a result of this market situation and building on our stable business base, we were able to improve our results in the third quarter compared with the same period of the previous year. We expect market growth to continue in the final quarter despite initial signs of a slowdown in momentum compared to the first half-year. This is although macroeconomic risks have increased recently. Based on these assumptions we confirm our forecast for fiscal year 2018."

 

Financial key figures

 

SCHMOLZ + BICKENBACH Group

Unit

9M 20181)

9M 2017

Δ in %

Q3 20181)

Q3 2017

Δ in %

 

 

 

 

 

 

 

 

Sales volume

kilotons

1,595

1,364

16.9

470

405

16.0

Revenue

million EUR

2,517.2

2,018.4

24.7

780.0

611.0

27.7

Average sales price

EUR/t

1,578.2

1,479.8

6.7

1,659.6

1,508.6

10.0

Adjusted EBITDA

million EUR

197.0

174.2

13.1

41.8

38.0

10.0

EBITDA

million EUR

223.4

171.1

30.6

38.5

37.1

3.8

Adjusted EBITDA margin

%

7.8

8.6

5.4

6.2

EBITDA margin

%

8.9

8.5

4.9

6.1

EBIT

million EUR

142.7

75.1

90.0

11.7

4.5

Earnings before taxes

million EUR

113.7

37.5

3.2

–3.8

Group result

million EUR

92.4

19.5

–3.7

–7.0

Investments

million EUR

67.6

53.3

26.8

31.7

28.3

12.0

Free cash flow

million EUR

–173.4

2.7

–2.6

27.0

 

Unit

30.9.20181)

31.12.2017

Δ in %

30.6.20181)

 

 

 

 

 

 

 

 

 

 

Net debt

million EUR

651.0

442.0

47.3

625.9

 

 

Shareholders’ equity

million EUR

818.6

717.5

14.1

818.7

 

 

Gearing

%

79.5

61.6

69.0

 

 

Leverage

x

2.7

2.0

32.6

2.6

 

 

Balance sheet total

million EUR

2‘617.4

2‘113.1

23.9

2‘642.2

 

 

Equity ratio

%

31.3

34.0

31.0

 

 

Capital employed

million EUR

1‘891.9

1‘535.1

23.2

1‘876.0

 

 

Employees at closing date

positions

10‘424

8‘939

16.6

10‘318

 

 

 

Unit

9M 20181)

9M 2017

 

Q3 20181)

Q3 2017

 

 

 

 

 

 

 

 

 

Earnings/share2)

EUR/CHF

0.10/0.12

0.02/0.02

 

0.00/0.00

–0.01/–0.01

 

Shareholders’ equity/share3)

EUR/CHF

0.87/1.02

0.76/0.89

 

0.87/1.02

0.76/0.89

 

Share price high/low

CHF

0.886/0.700

0.960/0.660

 

0.830/0.733

0.950/0.850

 

 

1)       Including Ascometal, fully consolidated since February 1, 2018

2)       Earnings per share are based on the group result after deduction of the portions attributable to non-controlling interests

3)       As at September 30, 2018 and December 31, 2017, respectively

 

 

Lucerne, November 8, 2018 – SCHMOLZ + BICKENBACH, a global leader in special long steel, today reported a 16.0% increase in sales volume to 470 kilotons compared with 405 kilotons in the third quarter of the previous year. Revenue rose to EUR 780.0 million due to a further increase in sales prices and higher sales volume and was thus 27.7% higher than in the same quarter of the previous year (Q3 2017: EUR 611.0 million). Adjusted EBITDA improved by 10.0% to EUR 41.8 million from EUR 38.0 million and EBITDA by 3.8% to EUR 38.5 million compared to EUR 37.1 million in the prior-year period.

 

Effects of the acquisition of Ascometal on results

The results of Ascometal, recently acquired and managed as a Business Unit within the Group, have been included in the Group figures since February 2018. The figures for the relevant prior-year periods have not been adjusted, which has had significant effects when comparing these figures. This is reflected in higher sales volume, revenue and expenses. The contribution of Ascometal to EBITDA was slightly negative in the first quarter, slightly positive in the second quarter and negative in the third quarter due to seasonal effects. EBITDA for the first quarter and therefore for the first nine months was higher due to badwill, which will be offset by future restructuring and transformation expenses. The integration also had a significant impact on the balance sheet and cash flow figures. More detailed information is provided on pages 8 to 16 and in Note 7 of the Interim Report for the third quarter of 2018. The report can be accessed via the company's website.

 

Business development in the third quarter of 2018

Due to seasonal factors, business developed less dynamically in the summer months than in the first half of the year. Although the Ascometal Business Unit, which joined the Group at the beginning of 2018 and is strongly represented primarily in the French market, reinforced this customary effect, SCHMOLZ + BICKENBACH also achieved a pleasing result in the third quarter. Demand from the end markets remained satisfactory and the global economy robust. On a comparable basis, i.e. excluding Ascometal, sales volume declined slightly. This decline was mainly due to two market-related factors. On the one hand, the effects of the EU's provisional safeguard measures against imports of steel from non-EU countries had an unfavorable effect. This led to lower sales due to adjustments in production planning. On the other hand, the weak automotive market in Germany in September had a short-term effect on sales volume.

 

Although average prices for the most important of our raw materials fell compared to the second quarter of 2018, they were still at a significantly higher level compared to the previous year. In the third quarter average prices for scrap decreased by 7.5%, for nickel by 8.3% and for ferrochrome by round 2%. Compared with the prior-year period, prices increased by 2.3% (scrap), 26.0% (nickel) and 11.4% (ferrochrome), respectively. In addition to higher base prices, this had a favorable effect on average sales prices. The average sales price per ton in the third quarter of 2018 was EUR 1,660, 10.0% higher than the EUR 1,509 million recorded in the prior-year quarter. Despite seasonally weaker demand, sales prices were also higher than in the second quarter of 2018 (EUR 1,566 per ton).

 

The result was driven by robust, albeit less dynamic, demand from the most important end markets. The European automotive industry was volatile in the wake of the introduction of new emission tests and the effects of the diesel problem in Germany. While 31.2% more new passenger car registrations were counted in August, these fell by 23.5% in September. Mechanical and plant engineering as well as the oil and gas industry, which remained stable due to high crude oil prices of USD 70 to 80 per barrel, proved more stable. However, the Finkl Steel Business Unit was unable to benefit from this due to structural changes in the market.

 

All regions contributed to the revenue increase in the third quarter with high single-digit or double-digit growth rates. The buoyant, albeit somewhat weaker, economic growth and the contribution of Ascometal increased revenue in Europe by 30.4%. The base effect of Ascometal mainly impacted revenue in France, which more than doubled to EUR 83.3 million from EUR 36.8 million in the same period of the previous year. The Americas region recorded the second-strongest growth with a plus of 23.5%. In the Africa/Asia/Australia region, revenue rose by 9.1%.

 

Excluding the contribution of Ascometal to the Quality & Engineering steel product group, sales volume declined slightly in all product groups. This was mainly due to the weakness in the German automotive industry and the EU's provisional safeguard measures. Including Ascometal, an increase of 24.3% to 353 kilotons in Quality & Engineering steel was achieved. Stainless steel sales volume declined by 4.9% to 77 kilotons in the third quarter (Q3 2017: 81 kilotons). Tool steel was stable. However, the lower sales volume was more than offset by significantly higher sales prices, so that revenue increased significantly in all product groups.

 

Higher sales prices and the consolidation of Ascometal were the drivers of the 27.7% revenue growth in the Group. This was particularly strong in the Quality & Engineering steel product group, where revenue rose by 49.0% to EUR 392.5 million, as Ascometal's products are fully allocated to this product group. Revenue in the product group stainless steel rose by 15.3% to EUR 259.9 million and in tool steel by 6.3% to EUR 111.3 million.

 

EBITDA adjusted for the one-time effect from the acquisition of Ascometal increased to EUR 41.8 million, up 10.0% from EUR 38.0 million in the prior-year quarter. The adjusted EBITDA margin of 5.4% was lower than in the prior-year quarter of 6.2% due to the dilutive effect of Ascometal. After the negative one-time effects of EUR 3.3 million, EBITDA improved by 3.8% to EUR 38.5 million compared to EUR 37.1 million in the third quarter of 2017. The corresponding margin was 4.9% compared to 6.1% in the same period of the previous year.

 

At EUR –8.5 million, the financial result was at the level of the previous year's period at EUR –8.3 million.

 

SCHMOLZ + BICKENBACH generated earnings before taxes (EBT) of EUR 3.2 million in the third quarter, compared with EUR –3.8 million in the same quarter of the previous year. At EUR 6.9 million, tax expenses were up on the previous year's figure of EUR 3.2 million. Group result improved to EUR –3.7 million after EUR –7.0 million in the same period of the previous year.

 

Free cash flow improved to EUR –2.6 million from EUR –68.2 million in the second quarter and EUR –102.7 million in the first quarter of fiscal year 2018, but was still lower than the EUR 27.0 million in the prior year period. The takeover of Ascometal, increased inventories due to weakness in the automotive sector, production adjustments at Swiss Steel to avoid EU tariffs, safety stocks related to the Ascometal integration, and higher inventories of graphite electrodes were the main reasons for this development.

 

At EUR 651.0 million, net debt was significantly higher than a year earlier due to the lower free cash flow generation. Net debt in relation to adjusted EBITDA (LTM, last twelve months) increased slightly to 2.7 from 2.6 at the end of the second quarter of 2018.

 

Outlook 2018

We assume that the special long steel industry will continue to grow in the final months of 2018, both in terms of sales volume and product value, as we expect a further shift towards more sophisticated production and steel applications.

 

We intend to consistently pursue the positive trend of the last two years and our strategy and make even better use of our strengths. At the same time, we are focusing on cost discipline, which is necessary to cushion rising raw material and personnel costs. However, a clear focus will be on the integration and operational improvement of Ascometal. To bring this acquisition to a successful conclusion, we will deploy considerable management capacity over the next two years.

 

The risks to global economic growth from international trade disputes and political intervention have increased since this summer. Although the growth momentum in some of SCHMOLZ + BICKENBACH's key end markets has slowed slightly, we do not yet see an end to the fundamentally favorable market environment. This is also reflected in the order books, which remain well-filled. These developments lead us to confirm our forecast for 2018. For fiscal-year 2018 we expect adjusted EBITDA of between EUR 230 million and EUR 250 million.

 

– END

 

For further information:

 

Dr Ulrich Steiner, Vice President Corporate Communications & Investor Relations

Telephone +41 (0)41 581 4120

u.steiner@schmolz-bickenbach.com