November 6, 2019 / 8:35 AM / a month ago

Voestalpine cuts profit forecast as slow demand from car industry bites

FILE PHOTO: An illuminated logo of steelmaker Voestalpine stands in front of the steel plant Donawitz in Leoben, Austria, August 09, 2019. REUTERS/Lisi Niesner

VIENNA (Reuters) - Austrian specialty steelmaker Voestalpine (VOES.VI) on Wednesday lowered its full-year profit forecast amid continued weak demand from the car sector and low steel prices and now expects core profit to fall by around 17%.

“The slowdown in the momentum of the automotive industry has been both more intense and widespread than originally expected, even though the new emissions test that was introduced in September of this year did not trigger the distortions seen a year ago,” Voestalpine said in a statement.

The Linz-based group, which generates a third of its revenue from the auto industry, said earnings before interest, tax, depreciation and amortization (EBITDA) are seen at 1.3 billion euros ($1.44 billion) in 2019/20.

This is largely in line with analyst expectations of 1.39 billion euros, according to Refinitiv Eikon data. Voestalpine had previously guided for a roughly flat EBITDA of 1.56 billion euros.

The European steel sector is navigating choppy waters as the auto industry is slowing, pressure on oil prices dampens demand from the oil equipment industry, and steel imports increase in the wake of U.S. tariffs.

Apparent steel consumption fell by 7.7% year on year in the second quarter of 2019 and is likely to remain subdued next year, with a rebound not expected before the second quarter of 2020, according to European steel industry association Eurofer.

Voestalpine said second-quarter EBITDA fell 20.6% to 294.6 million euros. Revenue declined 3.9% to 3.21 billion euros.

Analysts had expected EBITDA of 292.5 million euros on revenue of 3.07 billion euros for the three months to September, according to Refinitiv Eikon data.

Reporting by Kirsti Knolle; Editing by Michelle Martin and Michael Shields

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