February 5, 2019 / 1:45 PM / a year ago

Salzgitter shares hit two and a half year low on weak 2019 outlook

FILE PHOTO: Steel rolls are pictured at the plant of German steel company Salzgitter AG in Salzgitter, Lower Saxony on March 3, 2016. REUTERS/Fabian Bimmer/File Photo

FRANKFURT (Reuters) - Salzgitter on Tuesday said its pre-tax profit could fall by nearly two thirds this year, pointing to cooling demand for steel amid increasing signs of a global economic slowdown.

Citing “gloomier sentiment and numerous economic and political uncertainties”, Salzgitter expects pre-tax profit of 125 million to 175 million euros (109.65-153.50 million pounds) this year, down from a preliminary figure of 347 million in 2018.

Shares in the group, Germany’s second-largest steelmaker after Thyssenkrupp, fell as much as 10.8 percent hitting their lowest level since July 2016. They were down 9 percent at 1600 GMT.

JP Morgan analysts last month pointed to rising recession concerns for the steel sector, citing deteriorating investor sentiment and economic data and putting the chance of a global recession over the next 12 months at 43 percent.

Jefferies analysts said: “As the Euro steelmaker most exposed to short-term sales contracts ... Salzgitter’s disappointing FY19 guide clearly reflects recent metal spread compression sparked by weakening steel prices and surging iron ore.”

Salzgitter’s forecast for its 2019 pre-tax profit is significantly below an estimate of 286 million euros based on Refinitiv data.

The company said it expects 2019 sales of more than 9.5 billion euros, up from a preliminary 9.3 billion last year.

The group will release full preliminary results on Feb. 27.

Reporting by Christoph Steitz; editing by Thomas Seythal and Jane Merriman

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below