Klöckner upgrades 2020 full-year outlook on steel market recovery
German metals distributor Klöckner & Co has improved its earnings forecasts for the fourth quarter and full year of 2020 due to the ongoing steel market recovery, the company said on Tuesday December 15.
Klöckner expects the gradual recovery in demand for steel in the company’s core markets in Europe and the United States, along with improved pricing environment, will have a positive effect on its earnings in the October-December quarter.
“In the course of the fourth quarter, the recovery in steel demand continued more strongly than previously expected. At the same time, the improved price level has already had a positive effect on the operating result (Ebitda) before major special items at Klöckner & Co SE,” the company said.
In Europe, demand for flat steel products, which account for about 50% of Klöckner’s sales, has been gradually improving during the course of the third and fourth quarter.
Domestic hot-rolled coil prices have been rising in Europe since the beginning of November amid persistently tight supplies and good demand.
Northern European mills have already been offering April-May production HRC and the volumes available for the second quarter of 2021 will be limited, sources said.
Fastmarkets calculated its daily steel hot-rolled coil index, domestic, exw Northern Europe at €623.33 ($754.87) per tonne on Monday, up by €17.08 per tonne day on day from €606.25 per tonne on December 11.
The index was also up by €46.66 per tonne week on week and by €98.23 per tonne month on month.
Consequently, the company’s outlook for the fourth quarter and the full year of 2020, published in its third-quarter report on November 3, was no longer valid, it said.
The company now expects to achieve earnings before interest, taxes, depreciation and amortization (Ebitda) before major special items of €105-115 million for the full-year 2020, up from the earlier projection of €75-95 million. Klöckner’s Ebitda for the full year of 2019 was at €139 million.
“In addition, it is expected that the market recovery will continue at the beginning of the new year and,” the company said.
The company will publish its full-year report for 2020 on March 10, 2021.