German steel maker Salzgitter AG (SZGPY.PK, SZGPF.PK) reported Tuesday a loss for the second quarter, reflecting higher raw material costs, despite better-than expected sales growth.
Salzgitter said its business activities in the first half of 2012 were influenced by an environment impacted by growing economic uncertainty. It added that severe problems from the European sovereign debt and currency crisis make economic outlook for the whole euro area subdued and it no longer expects a breakeven for Steel Division this year.
Salzgitter continues to anticipate stable sales at minimum and a positive pre-tax result for the Group. This is likely to be in the lower- to mid-double-digit million euro range, it added.
In the second quarter, the company posted a consolidated net loss of 7 million euros, compared to a profit of 49.7 million euros in the previous year. Earnings before tax dropped to 1.7 million euros from 73.7 million euros a year earlier, which also came below analysts' estimates.
Quarterly sales increased to 2.76 billion euros from 2.47 billion euros in the prior year and beat analysts' expectations. Cost of materials increased to 2.05 billion euros from 1.85 billion euros a year ago.
For the first half, the company's loss after tax was 22.5 million euros, compared to a profit of 93.7 million euros a year ago. Earnings Before Interest, Taxes, Depreciation and Amortization or EBITDA, a key earnings measure, declined to 199.8 million euros from 343.4 million euros a year ago. Sales climbed to 5.38 billion euros from 4.77 billion euros in the 2011 first half.
In the Steel Division, external sales increased to 1.41 billion euros from 1.37 billion euros last year. Shipment volumes were up 10 percent from the prior year.
In the division, pre-tax loss was 97.8 million euros, compared to a profit of 30.4 million euros in the prior year, hurt by "unsatisfactory" selling price trend and persistently high cost of raw materials, particularly in the flat steel product segment, the company said.
On Frankfurt's Xetra, the shares are currently trading at 31.65 euros, up 0.94 percent.
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