Voestalpine sees steel demand driving profit

Tue May 31, 2011 7:34am GMT
* Sees significant improvement in 2011/12
* Q4 EBIT 326.6 mln euros vs 254 mln euros poll forecast
* Dividend raised 60 percent to 0.80 euros a share
* Shares up 1.4 pct, outperform basic resources index (Adds analyst, detail, shares)

By Sylvia Westall

VIENNA, May 31 (Reuters) - Austrian steel group Voestalpine (VOES.VI: Quote) expects strong results this year after a recovery in all its markets helped operating profit beat forecasts in its final quarter.

The maker of steel used in cars, railways and pipelines said it was operating at full capacity and net sales were heading towards levels last seen before the economic downturn.

Strong demand for stainless steel and orders from the solar energy, bus and automotive sectors helped boost full-year revenues by almost a third, it said.

"Despite some planning uncertainties resulting from short-term fluctuations of raw material prices, another significant improvement of Voestalpine's results should be possible in 2011/12," the Linz-based group said.

Shares were 1.4 percent higher at 33.77 euros by 0732 GMT, the leading stock on the Austrian blue-chip index and higher than the STOXX Europe 600 Basic Resources index which was up 0.1 percent.

It has also been a strong quarter for Voestalpine's peers which have seen a gradual recovery since the end of 2008 when the $500 billion steel sector slumped.

Germany's ThyssenKrupp (TKAG.DE: Quote) posted better-than-expected profit earlier this month and the world's largest steelmaker ArcelorMittal (ISPA.AS: Quote) forecast a further improvement in earnings.

Voestalpine's earnings before interest and tax in the three months to March 31, its financial fourth quarter, rose 34 percent to 326.6 million euros ($466.5 million), ahead of the average forecast of 254 million euros given in a Reuters poll of analysts.

Full-year sales rose by almost a third to 10.95 billion euros, the second-highest in the company's history, driven by its special steel division which supplies welders, tool and turbine makers.

"The company delivers and continues to significantly outperform consensus expectations, but the stock trades in line with the sector. Mispriced," JP Morgan analyst Alessandro Abate said in a note to clients.

The company proposed a dividend for the year of 0.80 euros per share, up from 0.50 euros last time. ($1=.7000 euros) (Reporting by Sylvia Westall; Editing by Greg Mahlich and Erica Billingham, sourced Thomson Reuters)