Ad hoc announcement pursuant to Art. 53 LR
┴˝┴ź╩ËĂÁ recorded a significant increase in earnings in Q2╠ř2022
CEO Frank Koch comments: ÔÇťBacked by the overall stable market situation in the second quarter we were able to achieve a result of EUR╠ř96.0╠řmillion for adjusted EBITDA, despite high volatilities. The lower sales volume was compensated by higher sales prices, comprising an increase in the prices for raw materials and energy.
After having been in charge of ┴˝┴ź╩ËĂÁ for a year now, I am pleased to see my initial expectations confirmed. Our Group has enormous potential ÔÇô potential that will be leveraged further in the course of reshaping the Group. Through this program, we are laying the basis for a fully integrated ┴˝┴ź╩ËĂÁ under one strong brand. We are making progress toward consolidating operations at the Group level. And we have reached a decisive milestone in reorganizing our sales around the three Divisions Stainless Steel, Engineering Steel and Tool Steel. This new organization, which will go into operation in September 2022, allows a more holistic market approach and more effective and tailored customer service.
With sustainable steel production based on EAF technology as part of our DNA, I see it as our duty to consolidate and expand our position as a leading producer of CO2-reduced steel. On our journey to further reduce our carbon footprint, we have also committed ourselves to the Science Based Target initiative (SBTi) that encompasses a reduction of carbon emissions by around 42╠ř% over the next ten years.
The unstable geopolitical situation persists, energy prices continue to skyrocket and energy availability has become increasingly uncertain. This has confronted us with considerable challenges that cannot be conclusively assessed. Furthermore, faced with reduced growth forecasts in our end-industry markets, we expect somewhat lower market demand going forward. We will continue to take appropriate measures as required and rely on our foresighted and flexible production planning.ÔÇŁ
Lucerne, August 16, 2022╠řÔÇô ┴˝┴ź╩ËĂÁ, a world leader in special long steel, today reported revenue of EUR╠ř1,116╠řmillion for the second quarter of 2022, compared with EUR╠ř839╠řmillion in the prior-year quarter. This constitutes an increase of 33╠ř%. The sales volume decreased by ÔÇô╠ř12╠ř% to 457╠řkilotons, from 518╠řkilotons in Q2╠ř2021. Adjusted EBITDA came to EUR╠ř96╠řmillion, up from EUR╠ř65╠řmillion in the prior-year quarter. Net debt amounted to EUR╠ř936.3╠řmillion, an increase of EUR╠ř129.1╠řmillion from EUR╠ř720.5╠řmillion recorded at the end of 2021.
Business performance in the second quarter of 2022
At 457 kilotons, ÔÇô╠ř11.8╠ř% less steel was sold in the second quarter of 2022 compared with the same quarter of the previous year (Q2╠ř2021: 518╠řkilotons). This is attributable to a ÔÇô╠ř7.9╠ř% decrease in the sales volume for quality and engineering steel and a ÔÇô╠ř33.0╠ř% decline in the sales volume for stainless steel. The tool steel sales volume, by contrast, increased by 2.9╠ř% quarter over quarter.
The average sales price per ton of steel was EUR╠ř2,442 in the second quarter of 2022 and therefore considerably higher than in the same quarter of the previous year, when it stood at EUR╠ř1,621 per ton. The transfer of higher prices for raw materials into our markets led to higher sales prices. Base prices were also raised and the Group implemented an energy surcharge to pass on volatile energy prices.
Due to these higher average sales prices, revenue in the second quarter of 2022 increased by 33.0╠ř% to EUR╠ř1,115.8╠řmillion compared to the same quarter in the previous year. The increase in revenue was spread across all product groups. By region, revenue climbed in all of our sales markets, with the strongest gains in the American market (+56.5╠ř%), supported by higher activity in the oil and gas industry.
Adjusted EBITDA was EUR╠ř96.0╠řmillion in the second quarter of 2022, a significant increase on the same quarter of the previous year (Q2╠ř2021: EUR╠ř65.4╠řmillion).
Free cash flow (cash flow from operating activities less cash flow from investing activities) in the second quarter of 2022 was EUR╠řÔÇô╠ř66.0╠řmillion. This is practically on par with the same period last year (Q2╠ř2021: EUR╠řÔÇô╠ř66.6╠řmillion) as prices for raw materials and energy increased further, leading to temporary investments in net working capital.
Outlook for financial year 2022
Based on our reported earnings in the first half of 2022, we are raising our guidance for adjusted EBITDA. As we look to the second half of 2022, volatilities and uncertainties have increased. The geopolitical situation remains unstable, supply chains continue to face manifold challenges, inflation is on the rise and a potential economic slowdown has become imminent. We cannot conclusively assess the material uncertainties facing the energy sector at this time, neither in terms of price developments nor availability. In consequence, we expect lower market demand and a resulting decline in margins, amplifying the usual seasonal slow-down in activity in the second half-year. Assuming only immaterial additional disruptions, we expect an adjusted EBITDA in a range between EUR╠ř220 and 260╠řmillion.
1)╠ř Earnings per share are based on the result of the Group after deduction of the portions attributable to non-controlling interests
2)╠ř As of June 30, 2022 and as of December 31, 2021
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┴˝┴ź╩ËĂÁ is today one of the world's leading providers of individual solutions in the special long steel products sector. The Group is one of the leading manufacturers of tool steel and non-corrosive long steel on the global market and one of the largest companies in Europe for alloyed and high-alloyed quality and engineering steels. With close to 10,000 employees and its own production and distribution companies in 30 countries on 5 continents, the company guarantees global support and supply for its customers and offers them a complete portfolio of production and sales & services around the world. Customers benefit from the company's technological expertise, consistently high product quality around the world as well as detailed knowledge of local markets.
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