Salzgitter in Q3 loss of euro67 million

By GEORGE FREY

posted: 90 DAYS 1 HOUR AGO

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FRANKFURT -German steelmaker Salzgitter AG reported a loss for the third quarter Thursday due to a sharp drop in steel demand and sales amid the economic downturn.

The company, based in the town of the same name, said it lost euro67 million ($101 million) in the July-September period compared with net income of euro252 million in the third quarter a year ago.

Revenue for the third quarter fell 47 percent to euro1.8 billion from euro3.4 billion a year ago.

Salzgitter, Germany's second largest steelmaker after ThyssenKrupp AG, predicted income for the year as a whole will be satisfactory, but not at the record level of 2008. In 2008, the company reported net income of euro667 million on revenue of euro12.5 billion.

"We anticipate that the European steel market will continue to stabilize moderately, to varying degrees depending on the product group," for the rest of the year, Salzgitter said in its report.

It noted, however, that the "recovery is fragile and might come to a halt if there is a renewed incidence of an oversupply in the market as a result of the reactivation of temporarily unused capacity."

Shares of Salzgitter were 2.2 percent lower at euro61.74 in Frankfurt afternoon trading.

"The next few months hold the risk of conflicting data from the iron ore and steel sectors," Citibank European steel analyst Johan Rode said in a research note.

"On the whole, we believe the news flow will be incrementally supportive of our more bullish call on European steel," he said.

The net loss for the January-September period fell to euro232 million from net income of euro689 million in the first nine months of 2008. Revenue fell 37 percent to euro6 billion.

The company said for the first nine months of the year, the steel division saw a sharp 50 percent drop in revenue to euro1.2 billion. The division's operating loss measured by earnings before interest and taxes amounted to euro175 million.

"The steel division expects the monthly results to improve in the fourth quarter mainly owing to better capacity utilization of the plant," the company said. "In addition, the more favorable selling price situation in flat steel will exert a positive impact on the result."

The trading division, which deals in the company's products, saw revenue decline a steep 44 percent in the January-September period, to euro2.4 billion. The operating loss was euro72.4 million.

Salzgitter also produces a complete range of precision steel tubing and pipes for industry.

The tubes division's revenue fell slightly to euro1.54 billion from euro1.6 billion, while operating profit dropped to euro133 million from euro247 million.

The technology division, which builds packaging and processing machinery for the food and plastics industry, saw nine month sales fall 32 percent and operating profit rise to euro73 million from euro23 million.

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On the Net:

http://www.salzgitter-ag.de

2009-11-12 10:00:45