ROUNDUP: Collapse in steel prices thwarts profit target of Klöckner & Co | news

ROUNDUP: Collapse in steel prices thwarts profit target of Klöckner & Co |  news

DUISBURG (dpa-AFX) – The steel trader Klöckner & Co (KlöcknerCo (KlöCo)) is cutting its profit expectations for the full year due to a sharp drop in steel prices. The operating result in the third quarter was significantly lower than expected. In the past year and in the first half of the year, the company had benefited massively from high prices.

The share lost around 11 percent on Wednesday morning, with the price falling by over 14 percent at its peak. The profit warning confirms a significantly slower earnings dynamic, commented a stockbroker. There is no sign of improvement in the coming year either. The other steel stocks also fell: Thyssenkrupp and Salzgitter shares were down almost four percent.

Earnings before interest, taxes, depreciation and significant special effects (Ebitda) should only reach around 400 million instead of more than 500 million euros, the SDAX-listed company announced on Tuesday evening in Duisburg. In the third quarter, this result was only 16 million euros and thus significantly lower than targeted. Here Klöckner had recently promised 50 to 100 million euros. In addition to the lower prices and the resulting inventory write-downs, the “extraordinarily negative” economic environment and weak demand had a negative impact. In response, Klöckner also significantly reduced its holdings.

Despite the “significant steel price correction” and the resulting “declining profit momentum” in the third and fourth quarters for 2022, the Klöckner management continues to expect one of the best annual results since the IPO in 2006. Due to ongoing supply bottlenecks in the steel sector, the company had in the first half of the year benefited from sharply increased prices, especially in the USA. However, CEO Guido Kerkhoff had already warned of falling prices and a deteriorating market environment in the second quarter.

The company intends to announce the final quarterly figures on November 3./nas/stw/mne/men

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