Ljubljana, Tuesday, 10 November 2015
In the first nine months of 2015, SIJ – Slovenian Steel Group generated EUR 529.1 million in revenues (a 5.7% decrease compared to the same period last year), an operating profit (EBITDA) of EUR 55.9 million, and a net profit of EUR 16 million. We continue to maintain a high level of operational earnings, as the EBITDA margin amounted to a decent 10.6% in the first nine months of this year, which is considerably – by several percentage points – higher than the global steel market average.
The latter continues to be affected by the low utilization of production capacities and the price pressures on the raw materials markets (e.g. the drop in nickel prices in the third quarter of 2015), causing a reduction in the basic prices of mass steel products. As a niche producer of steel products with high added value for known customers, the SIJ Group feels these negative market conditions to a certain extent in the form of price pressures; nevertheless, we continue to maintain the maximum utilization of our production capacity and a high operational profitability. For instance, our EBITDA per ton in the Steel Division has remained at virtually the same level as last year, while we actively continue to adapt and optimize our product mix.
The export share in the structure of revenues has continued to increase, reaching 88.0% in the first nine months. We have continued to record the highest growth of exports on the US market, which totals just under 10% of the total SIJ Group income. Germany and Italy remain our key markets. Outflows for investments in the first nine months of 2015 have increased to EUR 45.8 million (EUR 25.3 million in the same period last year): this year we are entering a new investment and development cycle up to 2020.
"In recent months the global steel industry has been faced with a number of challenges concerning not just the issue of production capacity utilization, but also considerable pressure on raw materials markets, which have caused falls in the basic prices of steel products. The price of nickel as a key reference for determining steel product prices is close to its all-time low. Despite these challenges, we have been able to continue stable and successful operations thanks to our robust operating model, pass-through pricing policy (the transfer of the input prices of raw materials to the end products), and orientation towards niche market segments with custom solutions for the end buyer. The SIJ Group continues to maintain a high level of operational earnings (EBITDA margin) and is actively entering a new investment cycle," Anton Chernykh, President of the Board of Directors of SIJ, said of the Group's business results.
Igor Malevanov, Member of the Board of Directors for Economics and Finance, added: "Looking at the results for the first nine months, it is clear that some one-off extraordinary items have had a considerable impact: the replacement of the entire information system (ERP), and three lengthy halts of individual production processes due to technical malfunctions in the Steel Division – their negative impact on EBITDA was EUR 5.6 million. Added to this were problems with the start-up of new equipment, which caused disruptions in the production processes of individual Steel Division programs. The total negative impact of one-off extraordinary items in the first nine months on EBITDA is estimated at EUR 7.3 million. What is important is that we have continued to maintain an effective product mix, consequently generating a high EBITDA margin, which demonstrates our global competitiveness even in the difficult macro conditions of the global markets of raw materials."
The SIJ Group is the largest Slovenian vertically integrated metallurgist group, ranked among the top market positions in the European and world niche steel markets. The Group comprises five business areas, has 23 affiliated companies in Europe, the USA and Asia, and employs some 3,200 people.
In 2014 the SIJ Group generated EUR 707.8 million in revenues, a 7% increase in comparison with 2013. Profitability also significantly increased, since the EBITDA increased by 91% reaching EUR 77.8 million. The 11% EBITDA margin that was achieved put the SIJ Group among the most successful world steel producing groups in 2014. The EBIT amounted to EUR 39.6 million and increased by 18 times in comparison with 2013, and net profit was slightly less than EUR 25 million.
Dr. Denis Mancevič, Director of Corporate Communications