(Reuters) -Swedish steelmaker SSAB said on Friday its operating profit halved in the second quarter, sending its shares down more than 15%, as demand weakened in Europe and global steel prices declined.
The group, which competes with Salzgitter, ArcelorMittal and ThyssenKrupp among others, also missed analysts’ profit forecasts, kicking off European steelmakers’ quarterly earnings on a low note.
Its April-June operating profit fell 52% to 4.96 billion Swedish crowns ($479.35 million), below the 5.51 billion expected by analysts in a Refinitiv Eikon poll.
“Demand on the European market has weakened and we continued to initiate measures to adjust production, costs and staffing,” CEO Martin Lindqvist said in a statement.
The company last month started furlough talks at two Finnish units due to weak demand in the construction sector.
SSAB, which operates steel businesses on both sides of the Atlantic, also warned of a further downturn in European demand in the third quarter, with “significantly lower” shipments in the region.
“In aggregate, Q3 guidance points to lower profitability QoQ,” J.P.Morgan analysts said in a research note, adding the outlook read negatively for European peers.
Shares in Salzgitter, ArcelorMittal and ThyssenKrupp were down by between 1.3% and 2.6% in early trading.
On Thursday, Salzgitter said its preliminary figures showed quarterly core earnings below market expectations, but affirmed its annual guidance.
SSAB said the North American heavy plate market was stable during the second quarter, and demand was expected to continue at a good level in the third quarter.
Shipments in SSAB’s Special Steels division will be “somewhat lower” in the current quarter compared to the previous one, while shipments should be “somewhat higher” for the Americas unit, it said.
($1 = 10.3473 Swedish crowns)
(Reporting by Marta Frackowiak in Gdansk; editing by Milla Nissi and Jason Neely)
