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Salzgitter Group Records Pre-Tax Profit in Q2 2010
08/19/2010 - In the second quarter of 2010, the Salzgitter Group generated an operating pre-tax profit of €18.6 million (Q2 2009 recorded a loss of €96.9 million), bringing the first half of 2010 to a close with an operating profit before tax of €21.2 million.
The consolidated external sales of the Salzgitter Group for the first half of 2010 came to €4,034.2 million, a little less than last year’s first-half figure of €4,125.7 million, mainly due to selling price effects.
In the second quarter of 2010, the Group generated an operating pre-tax profit of €18.6 million (Q2 2009 recorded a loss of €96.9 million), bringing the first half of 2010 to a close with an operating profit before tax of €21.2 million (first half of 2009 posted a loss of €158.6 million).
This half-yearly operating result includes €13.2 million in provisions for onerous contracts in connection with project orders booked and confirmed where the costs of production are presumably no longer covered due to the increases in raw material prices.
The reported pre-tax result of the first half-year came to €-5.1 million (first half of 2009: €195.2 million) and includes an additional €26.3 million in provisions for streamlining measures. Profit after tax stood at €-3.5 million compared to €-165.0 million for the same period of 2009, and earnings per share posted €-0.11 vs. €-3.07 in 2009. Return on capital employed of an annualized 0.4% was in the black again (first half of 2009: € -8.1%).
The production capacities of the Steel Division were sufficiently utilized in the first six months of the current financial year. The situation varied across the individual product segments, the company noted. Capacity utilization of flat steel was good and plate production showed a satisfactory level, but sections production was again weak due to the volatile situation in the construction industry.
Accordingly, the division's external sales rose by 35% to €1,081.6 million (first half of 2009: €799.9 million) against the backdrop of weaker average selling prices in comparison with the previous year and considerable growth in shipment tonnage. The operating result before tax stood at €-58.6 million, which was mainly attributable to the unsatisfactory selling price level measured against the raw materials price trend. Including provisions of €17.6 million for restructuring measures at Peiner Träger GmbH, the division disclosed a pre-tax loss of €-76.2 million compared to €-190.2 million in 2009.
The product segments of the Tubes Division recorded declines in selling prices accompanied by generally steady volumes, bringing external sales to €892.0 million, below last year’s €1,107.9 million. The division generated a positive operating profit of €21.8 million in the first half of the year. This result was achieved exclusively by the large-diameter tubes segment and includes provisions for onerous contracts of €13.2 million. Taking account of €8.7 million in restructuring expenses, the pre-tax result comes to €13.1 million (first half of 2009: € 96.0 million).
The results of the Services Division are a reflection of the Steel Division’s brisker production activities, according to Salzgitter. Segment sales were €520.0 million (vs. €340.9 million in 2009) and a profit before tax was €11.4 million (€-5.4 million last year). External sales climbed to €195.3 million, compared to €146.4 million for the first half of 2009.
The course of business of the Technology Division resulted in an increase of more than 40% in new orders booked in the first six months of the financial year, but was still affected by unsatisfactory selling price levels for beverage filling and packaging plants. KHS Group still delivered a positive pre-tax result in the second quarter due to extensive streamlining and a cost-cutting program.
In comparison with the year-ago figure, the external sales of the Technology Division rose by 17% to €429.7 million (vs. € 367.5 million in 2009), and the pre-tax result climbed to €-15.7 million compared to €-43.7 million last year.
