VIENNA (Reuters) - Specialty steelmaker Voestalpine said on Thursday a weak auto sector and high input costs had tipped it into a loss during the first nine months of its 2019/20 business year, although it was seeing signs of demand stabilizing.
The Austrian group has cut its full-year profit forecast twice in two months as it wrestles with ramp-up problems at a new plant in the United States, weak demand from the auto industry and excess supply in Europe.
“Aside from declining demand in the key automotive segment, globally rising iron ore prices in tandem with low steel prices put additional pressure on profit margins in the steel sector,” the Linz-based group, which produces flat steel products for the automotive, energy and railway industries, said in a statement.
Its hint of better to come was in line with an assessment of ArcelorMittal, the world’s largest steelmaker, which reported slightly higher profits and forecast increased steel consumption in its core markets in 2020.
“The cost-cutting and efficiency improvement measures that we are implementing are already bearing fruit,” Voestalpine Chief Executive Herbert Eibensteiner said.
“We are seeing first signs that demand might stabilize in some of the business segments.”
Voestalpine operates nine production sites in China, where it mainly manufactures parts for the car industry, and said it could not elaborate on the economic and financial fallout from the coronavirus yet.
The death toll from the new virus has risen to 563, and more than 28,000 cases mainly in China have been confirmed.
Voestalpine reported a loss of 160 million euros ($176 million) for the nine months through December after a profit of 281.3 million euros in the same period the previous year.
Revenues fell 3.8% to 9.58 billion euros. It now forecasts 2019/20 earnings before interest, tax, depreciation and amortization (EBITDA) of 1.2 billion euros.
Reporting by Kirsti Knolle; Editing by Michelle Martin and Alexander Smith