SKW Metallurgie expects its business to recover in 2017 and beyond

  • 2015 results: revenues of EUR 285.5 million and operating EBITDA of EUR 14.8 million, slightly over guidance
  • Revenues and earnings to be adversely impacted by the steel crisis also in 2016
  • Revenues expected to rise to roughly EUR 300 million and EBITDA to roughly EUR 20 million in 2017
  • General meeting of shareholders to be held in Munich on May 10, 2016

Unterneukirchen (Germany), March 24, 2016. Due to the sharp decline of the global steel market, the specialty chemicals group SKW Metallurgie posted lower revenues and earnings in 2015, as previously announced. Under the ReMaKe 2.0 program, which is an extended version of the initial profitability enhancement program ReMaKe, the Group initiated additional steps already at the start of 2016 to permanently secure the future of SKW Metallurgie. Based on the expectation that market conditions will deteriorate further in the short term, the Group expects that revenues and earnings in 2016 will be even lower than the respective numbers for 2015. According to the medium-term guidance published on today’s date, the Group expects the steel industry to stage a modest recovery in 2017 and beyond, leading to a successive improvement of the Group’s business performance.

“The storm that is buffeting the steel industry will get worse in 2016,” said Dr. Kay Michel, CEO of SKW Stahl-Metallurgie Holding AG. “Therefore, significant efforts will be required of us in the current fiscal year. Under ReMaKe 2.0, however, we have initiated the necessary strategic measures that will enable us to safely navigate SKW Metallurgie through these turbulent waters. And yet, we do not only want to survive the storm, but to optimize the company’s positioning as well. SKW Metallurgie expects that revenues and earnings will exhibit a positive development again next year.”

Steel crisis causes massive drop in demand, particularly in the United States

SKW Metallurgie was hit very hard in 2015 by the crisis affecting the steel industry, with which it generates about 90 percent of its consolidated revenues. According to the World Steel Association, steel production in the U.S. market, which is extremely important for SKW Metallurgie, plunged by more than 10 percent. Due to the strong U.S. dollar in particular, local buyers increasingly substituted steel imports (particularly from China) for local products. Furthermore, falling commodity prices led to much lower demand in the oil, gas and fracking industry, especially for the high-grade pipes that require the use of more SKW Metallurgie products than average in the production process. Consequently, SKW Metallurgie subsidiaries operating in this sub-market encountered volume declines of up to 30 percent.

SKW Metallurgie generated consolidated revenues of EUR 285.5 million in 2015 (2014: EUR 306.3 million), which was slightly higher than the adjusted forecast published in August. However, this figure was 7 percent less than consolidated revenues in 2014. Without the sales-boosting measures of the ReMaKe program, this decline would have been more than twice as great.

Operating EBITDA slightly less than in 2014, but higher than forecast

Despite the stiff headwinds, SKW Metallurgie generated a better operating result than predicted in the updated full-year forecast. Although operating EBITDA was slightly less than the corresponding figure for 2014, the magnitude of the decline was less than forecast. This development can be credited primarily to the stepped-up implementation of the ReMaKe program, which was upgraded to ReMaKe 2.0 at the start of 2016.

Adjusted earnings before interest, taxes, depreciation, and amortization (“operating EBITDA”) amounted to EUR 14.8 million (2014: EUR 15.5 million). This figure does not include the various positive and negative, non-cash exceptional effects contained in the stated EBITDA of EUR 18.8 million (2014: EUR 18.4 million). These effects mainly consisted of unrealized currency translation effects, income from the deconsolidation of the insolvent subsidiary in Bhutan, and the already announced increase in the provision for the ongoing antitrust proceeding to account for heightened risks.

After interest, taxes, depreciation and amortization (including impairment losses, particularly in the comparison year 2014), the consolidated net loss narrowed considerably to EUR 8.7 million (2014: net loss of EUR 81.0 million). Adjusted for extraordinary factors, the net result amounted to EUR 4.4 million (2014: EUR 7.8 million).

Two general meetings to be combined in the interest of lower costs

As announced already in late January 2016, the Group’s parent company SKW Stahl-Metallurgie Holding AG sustained a loss of more than half its capital due to non-cash, non-recurring effects in the separate financial statements (prepared in accordance with German Commercial Code (HGB) regulations – German GAAP). SKW Metallurgie then announced that it would call an extraordinary meeting of shareholders pursuant to Section 92 of the German Stock Corporations Act (AktG). Afterwards, the Supervisory Board and Executive Board announced that the regular meeting of shareholders that had originally been scheduled for June 21, 2016 will be combined with the previously announced extraordinary meeting, and set the date of May 10, 2016 for the combined meeting. The general meeting will be held in Munich, as usual. By combining the two meetings, the company can keep the cost to a minimum, which is an appropriate step given the Group’s strained financial situation. The current situation does not allow for the disbursement of a dividend for fiscal year 2015. However, restoring the company’s ability to pay dividends in the medium term remains a key objective of the Management.

EBITDA of roughly EUR 20 million expected in 2017, further increase planned for 2018

Conditions in the global steel market are expected to be persistently difficult in 2016. A recovery can be expected only in the following year. Based on the definitions and assumptions presented in the Forecast Report, SKW Metallurgie expects to generate revenues of between EUR 250 million and EUR 270 million in 2016. Despite positive effects of ReMaKe 2.0, operating EBITDA is expected to be only slightly more than EUR 10 million, with all operating entities making a positive EBITDA contribution.

After concretizing the extended profitability enhancement program ReMaKe 2.0 in January 2016, the SKW Metallurgie Group has prepared a medium-term forecast for the first time in a long time, and announced it on today’s date. The Group expects to generate revenues in 2017 that are roughly on the level of 2014 (approximately EUR 300 million). In 2018, revenues are expected to be around 5 percent higher than 2017 revenues. In 2017, the SKW Metallurgie Group expects to earn an operating EBITDA on the order of EUR 20 million. EBITDA should rise further in 2018. This positive earnings development will be made possible above all by the effects of the ReMaKe 2.0 program, which should more than offset the expected continued margin erosion and cost increases. As is customary, the Group’s medium-term forecasts are based on certain assumptions and definitions, particularly including the assumption of constant exchange rates; moreover, the forecasts do not include the additional potential resulting from the implementation of possible strategic growth measures.

An important precondition for the positive development of the SKW Metallurgie Group will be the willingness of the financing banks to support the restructuring program. As announced, the company is currently conducting negotiations with the banks participating in the syndicated loan agreement (maturity: 2018) to adjust the financing terms and conditions. The goal is to bring these negotiations to a successful conclusion by the end of May 2016.

SKW Stahl-Metallurgie Holding AG is also publishing the comprehensive Annual Report for fiscal year 2015 on today’s date. You will find detailed information on this subject by following this link.


SKW Stahl-Metallurgie Holding AG
Christian Schunck
Head of IR and Corporate Communication
Rathausplatz 11
84579 Unterneukirchen

Phone IR/Press: +49 8634 62720-15
Fax: +49 8634 62720-16
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About SKW Stahl-Metallurgie Holding AG and the SKW Metallurgie Group

The SKW Metallurgie Group is a global market leader for chemical additives for hot metal desulphurization and for cored wire and other products for secondary metallurgy. The Group’s products enable steel-makers to efficiently manufacture high-quality steel products. Clients include the world’s leading companies in the steel industry. The SKW Metallurgie Group has more than 50 years of metallurgical know how, and currently operates in more than 40 countries. What is more, the Group is a leading supplier of Quab specialty chemicals, which are mainly used in the global production of industrial starch for the paper industry. The SKW Metallurgie Group is headquartered in Germany with production facilities in France, the US, Canada, Mexico, Brazil, South Korea, Russia, the Peoples’ Republic of China and India (joint venture). The Group reached total revenues of EUR 285.5 million in 2015 and employs around 650 staff members (as of Dec. 31, 2015).

Shares of SKW Stahl-Metallurgie Holding AG have been listed in Frankfurt Stock Exchange’s Prime Standard since December 1, 2006; since 2011 (conversion to name shares) with ISIN DE000SKWM021.


This press release may include certain forward-looking statements which are based on currently available assumptions and predictions of the SKW Metallurgie Group‘s management as well as on other currently available information. Various identified as well as unidentified risks and uncertainties as well as other factors may result in a deviation of actual results, financial situation, development or achievement of the company compared to the assessments made herein. SKW Stahl-Metallurgie Holding AG does not intend and assumes no liability to update such forward-looking statements and to adjust them to future events and developments.