UPDATE 2-Salzgitter swings to unexpected quarterly profit
* Q2 pretax profit 4.5 mln eur vs poll avg for loss
* Earnings bolstered by one-off gain from Aurubis holding
* Affirms outlook for pretax earnings approaching breakeven
* Shares pare early gains, trade 0.1 pct lower (Adds details on Aurubis holding)
FRANKFURT, Aug 13 (Reuters) - Germany's second-largest steelmaker Salzgitter reported an unexpected second-quarter pretax profit on Wednesday as income from its holding in copper smelter Aurubis and cost cuts bolstered earnings.
The company swung to a profit of 4.5 million euros ($6 million) for the three months through June, from a loss of 285 million euros in the year-earlier period, exceeding the consensus forecast for a 4.3 million loss in a Reuters poll.
Salzgitter's strip steel and plate businesses remained in the red in the second quarter, albeit with smaller losses than a year earlier, and the loss was more than offset by income related to the group's 25 percent holding in Aurubis.
Its shares rose as much as 3.3 percent in early trade but later turned negative to trade 0.1 percent lower at 26.68 euros by 1057 GMT on disappointment that the earnings surprise was mostly due to a one-time effect.
"Despite the headline beat, we think the market is likely to be underwhelmed by the relatively poor performance of the core steel businesses compared with peers," Citi analysts said in a note. They have a "buy" rating on Salzgitter's stock.
The $500 billion-a-year global steel industry, a gauge of economic health, has suffered from a drop in demand in Europe and worries over Chinese growth prospects.
But lobby group Eurofer said last month that data on steel demand showed a recovery of the auto and construction sectors was finally feeding through to steelmakers this year.
Salzgitter affirmed its outlook for 2014 pretax earnings to approach breakeven as it cuts more than 1,500 jobs, or 6 percent of its workforce, to reduce expenses. That compares with a consensus forecast for a 10 million euro loss for the year.
"We are expecting improvements in the steel divisions as well, and even as the company has confirmed its full-year outlook, we clearly see Salzgitter on the mend," said Bankhaus Lampe analyst Marc Gabriel, who recommends investors buy the stock.
ArcelorMittal, the world's largest steelmaker, cut its guidance this month after lower-than-anticipated iron ore prices ate into the profit of its mining business.
Germany's top steelmaker ThyssenKrupp is due to publish quarterly results on Thursday.
- Canada's parliament attacked, soldier fatally shot nearby |
- NOAA employee charged with stealing U.S. dam information
- Sweden gets two new sightings, as hunt for undersea intruder goes on
- Special Report: Traffickers use abductions, prison ships to feed Asian slave trade
- Autopsy of slain Missouri teen shows close-range gunshot