VIENNA - Austrian speciality steelmaker Voestalpine reported a lower than expected net loss for its first quarter, hit by weak demand from the automotive, oil and gas, and mechanical engineering industries but cushioned by a recovery in China.
It posted a loss of 70 million euros ($83 million) for the April to June period on Wednesday following a profit of 90 million euros in the prior-year period. Analysts had expected a net loss of 136 million euros, according to Refinitiv data.
Revenues fell 28% to 2.4 billion euros, which was in line with expectations. The weakness of the industrial sector in Europe - where Voestalpine generates about two-thirds of its revenue - plus slow orders from carmakers and low steel prices hit business especially hard, the group said.
Global steel demand is expected to fall 6.4% this year due to the COVID-19 pandemic's impact on industrial and construction activity, before bouncing back next year, according to the World Steel Association. The automotive industry, from which Voestalpine generates a third of revenue, is expected to recover more slowly than the construction sector.
"Whereas the economies in North and South America experienced substantial downturns as well, the group's locations in China returned to pre-pandemic capacity utilisation during the reporting period," Voestalpine said.
Rival ArcelorMittal, the world's largest steelmaker, has reported higher than expected quarterly earnings and said its core markets were showing signs of recovery.
Voestalpine expects demand to further slow over the summer, partly due to seasonal shutdowns, and hopes to be better able to assess further order development after September.
For now it is sticking to its 2020/21 forecast for earnings before interest, tax, depreciation and amortisation to be in the range of 600 million to 1 billion euros, said Chief Executive Herbert Eibensteiner.
($1 = 0.8467 euros)
(Reporting by Kirsti Knolle; Editing by Michelle Martin)