Swiss Steel Group continues to increase profitability in Q3 2021
by David Fleschen
At 410 kilotons, Swiss Steel sold 23.5 % more steel in the third quarter of 2021 than in the same quarter of the previous year (Q3 2020: 332 kilotons), reflecting the ongoing post COVID-19 recovery in the major end markets. The average sales proceeds per ton of steel continued to rise in the third quarter of 2021 on the back of climbing raw material prices and, at EUR 1,868, was significantly higher than the average sales proceeds achieved in the same quarter of the previous year (Q3 2020: EUR 1,534 per ton). The increased sales volumes and positive price development led to revenue of EUR 765.0 million, an increase of 50.2 % on the prior-year quarter (Q3 2020: EUR 509.4 million). The uptick in revenue was spread across all product groups, with the strongest growth in quality and engineering steel. By region, revenue increased in all of our sales markets. Europe, our largest sales market, which was hit particularly hard by the measures to contain the COVID-19 pandemic in the prior-year quarter, saw sales increase by 55.8 %.
At EUR 41.8 million in the third quarter of 2021, adjusted EBITDA was considerably higher than in the prior-year quarter (Q3 2020: EUR – 21.1 million). One-time effects amounted to EUR 0.3 million. Including these one-time effects, EBITDA was EUR 41.5 million (Q3 2020: EUR – 28.8 million). In the third quarter, the adjusted EBITDA margin rose to 5.5 % (Q3 2020: – 4.1 %) and the EBITDA margin to 5.4 % (Q3 2020: – 5.7 %).
Net debt, comprising current and non-current financial liabilities less cash and cash equivalents, came to EUR 644.9 million, an increase on the figure as of December 31, 2020 (EUR 639.9 million). Free cash flow was negative in the third quarter of 2021 at EUR – 18.2 million due to investments in net working capital from increased market activity, higher production volumes and significantly higher raw material prices.
CEO Frank Koch states: “My positive assessment has been confirmed: Swiss Steel Group has the potential over the coming months and years to recover markets and solidify its position. We will continue to drive forward the transformation of our corporation, building on the strong culture at the sites and across the Group as a whole. This is the basis for a successful future in our industry, and we have what it takes to prevail. With our electric arc furnaces, we are equipped with the technology of the future in steel production and thus have the very best conditions to achieve the European climate goals. Our strong result in the seasonally weak third quarter confirms the post COVID-19 market recovery across all regions and our end markets of automotive and mechanical and plant engineering.
However, we are increasingly feeling the effects of the semi-conductor shortage and the resulting supply chain disruptions in the automotive industry, which are having an adverse impact on the order volumes of our customers in this market segment, at least for the time being. In addition, ongoing cost inflation on the back of high raw material prices combined with extreme energy prices for electricity and gas have exacerbated volatility and led to significantly higher production costs. We have responded to these developments by adjusting production volumes in quality and engineering steel, especially in Germany and France. At the same time, we have been left with no choice but to pass cost increases in the energy sector on to our customers.”
Source: Swiss Steel, Photo: Fotolia