February 7, 2019 / 8:50 AM / 8 months ago

CORRECTED-(OFFICIAL)-UPDATE 2-Steelmaker Voestalpine tones down expectations after Q3 loss

(Company corrects to show it expects the cartel office to take its next steps (not reach a decision) in the first half of 2019, paragraph 12)

* Q3 net loss of 40.5 mln euro, EBIT down 82 pct

* Price pressure seen increasing

* CEO warns against protectionist measures

* Shares down 5.6 percent

By Kirsti Knolle

VIENNA, Feb 7 (Reuters) - Specialty steelmaker Voestalpine expects further downward pressure on earnings from a slowing European economy, it said on Thursday after a swing to a quarterly loss knocked 5 percent off its share price.

The European steel sector is navigating choppy waters as the car industry, one of its main customers, is slowing and pressure on oil prices has dampened demand from the oil equipment industry.

Voestalpine issued its second profit warning in four months in January and its statement on Thursday sent its shares down as much as 5.6 percent.

Finnish stainless steel maker Outokumpu and German steelmaker Salzgitter also warned of weaker profits.

Voestalpine, whose share price fell by nearly half last year, reported a net loss of 40.5 million euros ($46 million) for the October-December quarter. That compared to a net profit of 167 million euros in the same period a year earlier.

Besides overall weak sentiment, slower demand from the automotive industry, stand-stills at its plant in Texas, operating problems in another U.S. plant and provisions for a German cartel investigation added to its problems, the Austrian group said.

Chief Executive Wolfgang Eder, who bows out in July after 15 years in charge, sees Britain’s still unclear divorce procedure from the European Union and the trade dispute between the United States and China holding back growth.

He said he does not expect a major downturn in the steel sector but more pressure on prices, largely due to weakening demand in China.

“We will see more pressure again from imports ... from other countries into Europe,” he said on a media call, urging politicians not to intensify protectionist measures as this would worsen the situation.

The United States imposed tariffs of 25 percent on steel imports from the European Union, Canada and Mexico in June. In response, the EU decided to impose limits on steel coming into the bloc.


However, Eder said Voestalpine’s dividend for the current business year will not fall significantly from last year’s 1.40 euros per share.

He said he expects the German cartel office to take its next steps regarding a 2017 probe into alleged agreements relating to heavy plate in the first half 2019. Eder declined to say what Voestalpine’s provision for this was.

Difficulties with a new assembly line for auto components at a plant in Cartersville, in the U.S. state of Georgia, have been brought under control and all negative effects for the financial year have been booked, Eder said. Production at the group’s Texas plant had been stabilized.

Voestalpine’s shares were down 5.5 percent at 25.73 euros at 1137 GMT.

$1 = 0.8811 euros Reporting by Kirsti Knolle; Editing by David Goodman and Susan Fenton

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