In This Article:
Release Date: August 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Swiss Steel Holding AG (XSWX:STLN) achieved a positive free cash flow of EUR 85 million for the full year 2023, compared to a negative EUR 54 million in 2022, primarily due to successful inventory reduction initiatives.
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The company has initiated a comprehensive restructuring program, SSG 2025, aimed at restoring a competitive cost structure and ensuring operational excellence.
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Swiss Steel Holding AG (XSWX:STLN) plans a capital increase of EUR 300 million, fully backstopped by its major shareholder, BigPoint Holding, to strengthen its financial position.
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The company is Europe's largest electric arc steel producer, giving it a competitive advantage in producing low-emission steel, which is crucial for global decarbonization efforts.
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Swiss Steel Holding AG (XSWX:STLN) has successfully divested non-core assets, including seven distribution entities in Eastern Europe, to focus on core activities and reduce complexity.
Negative Points
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Swiss Steel Holding AG (XSWX:STLN) experienced a significant decline in sales volume, down 17% to 1,375 kilotons, due to weak market demand and economic slowdown.
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The company's revenue fell by almost 20% to EUR 3.244 billion for the full year 2023, with a more significant drop in the second half of the year.
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Swiss Steel Holding AG (XSWX:STLN) reported a negative adjusted EBITDA of EUR 41 million, EUR 176 million lower compared to 2022, due to weak markets and inventory valuation losses.
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The equity of Swiss Steel Holding AG (XSWX:STLN) decreased from EUR 531 million to EUR 234 million, resulting in an equity ratio of 12.1%, due to a negative net income of EUR 295 million.
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The company faced challenges in the automotive and mechanical engineering sectors, with reduced capital investments and a decrease in order backlog by 22%.
Q & A Highlights
Q: Can you provide an overview of Swiss Steel's financial performance in 2023? A: Frank Koch, CEO, explained that Swiss Steel faced a challenging year with weak market demand, particularly in mechanical and plant engineering and the automotive industry. This led to a decline in sales volume and revenue, resulting in a negative EBITDA. The company had to rely on reserves, significantly diminishing shareholders' equity. However, they managed to achieve a positive free cash flow by reducing net working capital.
Q: What were the main factors affecting sales volumes and revenue in 2023? A: Marco Portmann, CFO, noted that sales volumes declined by 17% due to economic slowdown and reduced capital investments, especially in mechanical engineering. The European automotive production remained below pre-pandemic levels. The average sales price dropped slightly, and revenue fell by almost 20% to EUR 3.244 billion, with significant inventory valuation losses due to declining input costs and market pressures.