February 8, 2018 / 7:25 AM / in 11 days

UPDATE 2-Voestalpine results disappoint as price pressures hit rail business

* Q3 net profit at 167 mln euros vs Rtrs avg poll of 163 mln

* Q3 revenue at 3.16 bln euros vs Rtrs avg poll of 3.03 bln

* Confirms full year forecast for operating profit (Adds details on rail business, analysts, shares)

VIENNA, Feb 8 (Reuters) - Austrian steelmaker Voestalpine confirmed its full-year forecast on Thursday after strong demand from carmakers and rising steel prices lifted its third-quarter core profit by more than 20 percent.

But the company’s shares fell as much as 3.8 percent in a flat market in early trade with analysts pointing to a disappointing performance at its rail business.

Formerly state-owned Voestalpine has specialised in finished parts for the automotive, aerospace and rail industries to help to compensate for the effects of price falls, strong competition and overcapacity in its traditional markets.

The Austrian group reported an 23 percent increase in its third-quarter earnings before interest, tax, depreciation and amortisation (EBITDA) to 436.6 million euros ($534.5 million).

Analysts at Morgan Stanley said this missed their forecast by 7 percent.

“We attribute the miss to the weaker pricing that the company referred to in the railway business,” Morgan Stanley analysts wrote in a note to clients, adding that the company’s outlook for the current fourth quarter was in line with their expectations.

Voestalpine produces premium rails and intelligent signalling technology for rail markets, but demand dropped more and more toward the end of the business year, the group said.

“Owing to the continued decline in investments in the maintenance and expansion of the European rail network, the few remaining projects triggered fierce price competition,” Voestalpine said.

The Austrian group’s business in the United States, where it opened a $1 billion plant in Texas late 2016 as part of its strategy to grow internationally, was supported by strong demand from European carmakers’ local plants.

Still, uncertainty about the future of the North American Free Trade Agreement (NAFTA) is increasingly putting a damper on investments, not just in the United States but also in all of North America, Voestalpine said.

“From the vantage point of Voestalpine, growth in the North American market during the first three quarters of 2017/18 was uneven,” it said.

Voestalpine has 69 sites and around 3,000 employees in the NAFTA region, where it generates annual revenue of around 1.3 billion euros.

Voestalpine said it would stick to its full-year forecast. The company has said that it expects to lift its full-year revenue by at least 6 percent and increase its operating profit “significantly”.

Voestalpine shares traded 3.5 percent lower at 47.72 euros at 0850 GMT. The stock gained around a third in 2017, outperforming rivals Arcelor Mittal and United States Steel which have seen their shares rise 29 and 7 percent respectively in the period. ($1 = 0.8168 euros) (Reporting by Kirsti Knolle; editing by Jason Neely and Jane Merriman)

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