* 2010 pretax profit 48.9 mln euros vs 44 mln in poll
* Sees 2011 sales growth of 15-20 pct
* Sees pretax profit doubling from 2010 level
* Shares down 3.6 percent, hit lowest in over 7 weeks
(Recasts, adds background and share price)
By Marilyn Gerlach
FRANKFURT, March 7 (Reuters) - Germany's No. 2 steelmaker Salzgitter AG (SZGG.DE: Quote) forecast earnings growing less than analysts had forecast this year, sending its shares down more than 3 percent to their lowest in nearly seven weeks.
Announcing a swing to pretax profit of 48.9 million euros ($68.6 million) in the past year versus an expected 44 million in a Reuters poll of banks and brokerages, the group said it saw pretax earnings more than doubling in the current year.
"The forecast of more than doubling the pretax profit was a disappointment and was weaker than expected," analyst Michael Broeker of Steubing said.
Broeker said it was also disappointing that Salzgitter's steel sections and sheet piling product segments -- which cater to the construction sector -- did not pick up last year.
Shares in the company, which has traditionally issued a conservative outlook for the year only to upgrade it in subsequent quarters, fell as much as 3.6 percent in early trade and were down 2.6 percent at 56.36 euros by 1124 GMT. Germany's midcap index was up 0.2 percent.
The stock hit a low of 56.53 euros, its lowest since late January.
ThyssenKrupp (TKAG.DE: Quote), the top steelmaker in Europe's biggest economy, has been upbeat for this year, expecting a 10 to 15 percent sales increase as orders from its home market helped it navigate global price pressures.
ArcelorMittal (ISPA.AS: Quote), the world's largest steelmaker, forecast a rebound in demand and prices at the start of 2011, signalling an end to a margin squeeze that hit the global steel industry late last year.
TUBES WEIGH
Salzgitter said its steel division -- which generates about a quarter of group sales -- will swing to a pretax profit this year from a year-earlier loss, boosted by economic recovery and a pickup in orders.
Also helping 2011 earnings, the technology business comprising mainly beverage bottling unit Kloeckner-Werke may break even this year.
But earnings growth is being limited by the tubes business, which generates about a fifth of group sales and is seen posting a decline in its result in this year.
Analysts have said contract prices for large diameter tubes used in the Nord Stream gas pipelines were fixed at lower prices at a time before spot prices of raw materials used in steelmaking soared to current levels.
Prices for coking coal, a key raw material for steel, rose by $150 last month to between $380 and $390 per tonne on a free on board (FOB) basis shipped from Australia, as devastating floods hit production from the world's top exporter.
Salzgitter said capacity utilisation at its plants was at a high level last year, particularly in the flat steel product segment, used mainly in the automotive sector, while selling prices of many products gradually recovered.
Germany's booming automotive and mechanical engineering industries have allowed steelmakers to pass on some of the high input costs to their end-clients.
According to StarMine, which weights analyst views by their track records, Salzgitter trades at around 21.2 times estimated 12-month forward earnings per share, a premium to ThyssenKrupp's 11.0 and ArcelorMittal's 12.3.
Salzgitter shares have fallen 11 percent over the past 12 months, underperforming ThyssenKrupp and the STOXX Europe 600 Industrial Goods and Services Index , which rose 22 percent and 32 percent, respectively, during the period. (Editing by David Holmes) ($1=.7131 Euro, sourced : Thomson Reuters)
FRANKFURT, March 7 (Reuters) - Germany's No. 2 steelmaker Salzgitter AG (SZGG.DE: Quote) forecast earnings growing less than analysts had forecast this year, sending its shares down more than 3 percent to their lowest in nearly seven weeks.
Announcing a swing to pretax profit of 48.9 million euros ($68.6 million) in the past year versus an expected 44 million in a Reuters poll of banks and brokerages, the group said it saw pretax earnings more than doubling in the current year.
"The forecast of more than doubling the pretax profit was a disappointment and was weaker than expected," analyst Michael Broeker of Steubing said.
Broeker said it was also disappointing that Salzgitter's steel sections and sheet piling product segments -- which cater to the construction sector -- did not pick up last year.
Shares in the company, which has traditionally issued a conservative outlook for the year only to upgrade it in subsequent quarters, fell as much as 3.6 percent in early trade and were down 2.6 percent at 56.36 euros by 1124 GMT. Germany's midcap index was up 0.2 percent.
The stock hit a low of 56.53 euros, its lowest since late January.
ThyssenKrupp (TKAG.DE: Quote), the top steelmaker in Europe's biggest economy, has been upbeat for this year, expecting a 10 to 15 percent sales increase as orders from its home market helped it navigate global price pressures.
ArcelorMittal (ISPA.AS: Quote), the world's largest steelmaker, forecast a rebound in demand and prices at the start of 2011, signalling an end to a margin squeeze that hit the global steel industry late last year.
TUBES WEIGH
Salzgitter said its steel division -- which generates about a quarter of group sales -- will swing to a pretax profit this year from a year-earlier loss, boosted by economic recovery and a pickup in orders.
Also helping 2011 earnings, the technology business comprising mainly beverage bottling unit Kloeckner-Werke may break even this year.
But earnings growth is being limited by the tubes business, which generates about a fifth of group sales and is seen posting a decline in its result in this year.
Analysts have said contract prices for large diameter tubes used in the Nord Stream gas pipelines were fixed at lower prices at a time before spot prices of raw materials used in steelmaking soared to current levels.
Prices for coking coal, a key raw material for steel, rose by $150 last month to between $380 and $390 per tonne on a free on board (FOB) basis shipped from Australia, as devastating floods hit production from the world's top exporter.
Salzgitter said capacity utilisation at its plants was at a high level last year, particularly in the flat steel product segment, used mainly in the automotive sector, while selling prices of many products gradually recovered.
Germany's booming automotive and mechanical engineering industries have allowed steelmakers to pass on some of the high input costs to their end-clients.
According to StarMine, which weights analyst views by their track records, Salzgitter trades at around 21.2 times estimated 12-month forward earnings per share, a premium to ThyssenKrupp's 11.0 and ArcelorMittal's 12.3.
Salzgitter shares have fallen 11 percent over the past 12 months, underperforming ThyssenKrupp and the STOXX Europe 600 Industrial Goods and Services Index , which rose 22 percent and 32 percent, respectively, during the period. (Editing by David Holmes) ($1=.7131 Euro, sourced : Thomson Reuters)
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