Salzgitter: Successful start to the financial year 2011

On May 12, Austria-based steel producer Salzgitter said that, backed by the continued favorable economic environment and the resulting recovery in the business activities of almost all its subsidiaries, it got off to a good start to the new financial year in the first quarter of 2011.
 
Salzgitter's total external sales climbed by almost 20 percent to €2.31 billion in the first quarter of 2011, mainly due to the substantial increase in the selling prices of products manufactured by its steel and trading divisions. In the given quarter, Salzgitter recorded a profit after tax of €44.0 million, compared to a loss of €13.3 million in the corresponding period of the previous year.
 
In the first three months of 2011, the development of Salzgitter's steel division continued to show two sides: whereas the flat steel and plate segments enjoyed persistently high capacity utilization due to the healthy order situation, demand in the construction sector continued at modest levels which prevented a return to satisfactory capacity utilization in sections production. Underpinned by growth of 11 percent in shipments of rolled steel, Salzgitter managed to increase its steel division's external sales by 35 on the back of significantly higher selling prices in comparison with a year ago.
 
On the other hand, the stable macroeconomic environment and the resulting demand for steel in most industrial sectors had a favorable impact on the activities of Salzgitter's trading division, which increased its external sales by almost 20 percent, as compared to Q1 2010.
 
Salzgitter said that the outlook for the capacity utilization of most steel processors can be deemed positive. As opposed to the previous year, steel requirements are supported by real demand - with the exception of the construction industry - rather than inventory replenishments. However, given the greater volatility in steel prices, many customers are likely to apply caution when placing orders. This will probably act as a brake on consumers and traders replenishing inventories and thus help to stabilize the market, Salzgitter stated.