Sweden’s Ovako sees Q2 earnings fall 40% year-on-year as European turmoil continues
Swedish special steel producer Ovako’s earnings fell by 40% as sales were hit by economic uncertainty across Europe, the company said on Tuesday July 24.
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The group posted earnings before interest, taxes, depreciation and amortisation (Ebitda) of €29.8 million ($36.1 million) for April-June, 2012, compared with €49.9 million in the second quarter of 2011.
The drop in earnings was mainly due to an 18% year-on-year fall in sales.
Demand in the quarter was affected by negative sentiment across Europe, driving last-minute buying.
“The demand pattern in the second quarter, as in the first, was characterised by late orders with requests for short delivery times,” Ovako’s president and ceo Tom Erixon said.
Production was cut to 256,000 tonnes during the second quarter of 2012, down 19% compared with the same period in 2011.
Looking at the first half of 2012, the company said a 17% year-on-year reduction in output in the first six months of 2012 was partly due to market conditions and a strong performance during the January-June period in 2011, as well as a lower build-up of inventories ahead of summer maintenance breaks.
“Production capacity has been largely in balance with demand in the first half,” Erixon, added.
Net sales in April-June 2012 fell by 14% year-on-year to €263.3 million, down from €307.2 million in the second quarter of 2011.
“Ovako’s sales and profits during the second quarter were at the same level as in the first quarter, which was in line with expectations,” Erixon, said.