* FY outlook maintained for stable operating and core profit
* Q2 EBIT down 15 pct to 177 mln eur vs Reuters poll avg 195
* Shares fall 1.7 percent
(Adds details, shares, analyst comment)
By Georgina Prodhan
VIENNA, Nov 6 Steelmaker Voestalpine
said it was counting on an economic upturn to help it reach its
full-year profit goals and offset an unexpectedly weak second
quarter marked by subdued demand.
The Austrian company missed analysts' forecasts for
operating and core earnings in the quarter to end-September but
said it expected a improvement in the second half thanks to
growing momentum in Europe, China and North America.
Voestalpine - which has escaped the worst of a steel
industry slump by focusing on specialised and high-technology
products - said its biggest division, Steel, had suffered from
weak demand, especially in Europe, and lower sales prices.
The division, which accounts for about a third of its
revenue, supplies regular steel for the automotive, home
appliance and building industries.
Special Steel, which accounts for about a quarter of sales
and makes steel for tools, oil and gas exploration and turbine
blades, was also hurt by subdued demand, the company said on
"The second quarter was marked by weaker revenues and
profits in the individual business segments that had not been
foreseen at the beginning of the summer," said Voestalpine,
whose current fiscal year ends in March 2014.
However it stuck to its full-year outlook for core and
operating profit at close to the last fiscal year's levels.
"The prospects of growing global economic momentum in the
course of 2014 seem to be sound," it said citing successful
budget restructuring in some European countries, stabilisation
of growth in China and an upturn in North America.
Shares in Voestalpine had slipped 1.7 percent to 35.11 euros
($47.31) by 0941 GMT, underperforming the European basic
resources index, which was flat.
The declines in Steel and Special Steel were partly offset
by stronger results in the higher-tech Metal Engineering and
Metal Forming divisions.
"2Q13/14 showed the strength of the Voestalpine business
model, despite a lower than expected operating profit," analyst
Christian Obst of Baader Bank wrote in a note.
Voestalpine has embarked on an ambitious programme of
expansion outside Europe to combat weak demand on its home
continent as austerity measures and low economic growth hurt its
key customers in the autos and construction industries.
Its gearing ratio, important as it ramps up investments, was
46.7 percent as of the end of September, down from 51.0 percent
a year earlier.
ArcelorMittal, the world's largest steelmaker, cut
its 2013 guidance in August on weaker-than-expected demand in
Europe and the United States, but is expected to report higher
third-quarter profits on Thursday.
German steelmaker Salzgitter, which has slashed
its full-year outlook twice this year on a drop in demand for
cars, appliances and new buildings, is due to report next week.
Voestalpine's earnings before interest, tax, depreciation
and amortisation (EBITDA) fell 9 percent to 320 million euros
($431 million) in the quarter to end-September, missing the
lowest estimate in a Reuters poll.
EBIT fell 15 percent to 177 million euros, hurt by a one-off
charge of 10 million euros for the early termination of an
unfavourable customer relationship in the Steel division, and
also missing all the Reuters poll estimates.
Voestalpine reiterated, however, it expected full-year
EBITDA and EBIT close to last year's levels, at around 1.4
billion euros and 850 million euros respectively.
($1 = 0.7421 euros)
(Editing by Michael Shields and Pravin Char)