· Impact of weakening global economy clearly noticeable on revenue and net income.
· Restructuring measures with positive effects from 2013 being implemented.
· Successful amendment of credit agreements with lending banks.
· Measures for strengthening the capital structure being evaluated.
Emmenbrücke, 14 March 2013
In 2012, Swiss publicly listed company SCHMOLZ+BICKENBACH AG (SIX: STLN), a world market-leading company for special steel that includes tool steel, stainless steel and engineering steel, could not remain immune from the weakening global economy and generated revenue that was below the previous year. It declined by 9.2% to EUR 3’581.4 million (2011: EUR 3’942.9 million). Adjusted EBITDA decreased overproportionally by 48.8%, to EUR 151.8 million (2011: EUR 296.2 million).
The development of revenue in the individual regions differed widely. In Europe, total revenue declined by 12.9%. By contrast, in North America and the rest of the world there were substantial increases in revenue of 15.5% and 7.0% respectively, although here, too, growth weakened noticeably in the second half-year. There was an equally mixed development of sales volume and revenue in the individual product groups. As a result of the subdued demand from the mechanical engineering segment in Europe, the sales volume of tool steel declined by 9.5%.
However, because of an improved product mix, revenue from tool steel fell by only 2.4%
compared to the same period last year. In comparison to the other product groups, the decline of 4.6% in the sales volume of stainless steel was relatively moderate. On the other hand, as a result of the fall in prices of alloying elements, revenue from stainless steel declined by 7.4%. In engineering steel, both sales volume (-11.6%) and sales revenue (-13.2%) declined substantially compared to the previous year.
Operating profit before depreciation and amortisation and net of restructuring costs (adjusted EBITDA) declined by 48.8% to EUR 151.8 million (2011: EUR 296.2 million), which represents an adjusted EBITDA margin of 4.2% (2011: 7.5%).
Net income (EAT) fell by EUR 200.6 million to EUR -157.9 million (2011: EUR 42.7 million). This included non-recurring effects of EUR 95.5 million from restructuring measures, impairment on goodwill as well as on property, plant and equipment, and impairment on deferred tax assets that were recognised in previous years.
Restructuring measures being implemented In response to the unsatisfactory sales volume and earnings development, at some companies, besides continuing the existing cost-reduction programme, extensive restructuring measures were initiated in 2012 and are now being implemented. From reported restructuring costs of EUR 29.3 million in 2012, future cost savings of around EUR 35 million are expected, of which around
two thirds will already occur in 2013.
Financing and measures for strengthening the capital structure
On 7 March 2013, SCHMOLZ+BICKENBACH AG agreed amendments to the existing credit contracts with the lending banks. The agreements are for financing lines with a total value of around EUR 930 million with fixed durations until March and April 2015 respectively. With the goal of strengthening the capital base and improving the balance-sheet structure, the Board of Directors and Executive Board are currently evaluating various strategic options. These specifically include equity measures as well as other suitable measures to permanently reduce the leverage.
Outlook
Overall in 2013, SCHMOLZ+BICKENBACH expects sales volume and revenue to be at the level of the previous year. However, in the first quarter of 2013, the difficult market conditions of the second half of 2012 are expected to continue. A recovery of demand is only expected from the second quarter of 2013, which should then become stronger in the second half of the year.
Operating profit before depreciation, amortisation and restructuring costs (adjusted EBITDA) in 2013 should be at least as high as the adjusted EBITDA of EUR 151.8 million of the previous year. This is on condition that the economic development forecasts materialise, raw-material prices and currency exchange rates remain stable, and no other unexpected events occur that negatively influence our business activity.
Reduced for the expected investment grants, the investment requirement in 2013 is expected to be around EUR 100 million (2012: EUR 141 million).
Key figures 2012 2011
Sales volume kilotonnes 2’044 2’274
Revenue million EUR 3’581.4 3’942.9
EBITDA before restructuring costs million EUR 151.8 296.2
Operating profit before depreciation and amortisation
(EBITDA) million EUR 122.5 296.2
Operating profit (EBIT) million EUR -13.8 179.6
Earnings before taxes (EBT) million EUR -83.3 67.6
Net income (loss) (EAT) million EUR -157.9 42.7
Investments million EUR 141.0 125.6
Cash flow before changes in net working capital million EUR 103.6 330.6
Capital employed million EUR 1’937.5 2’002.8
ROCE % 6.3 14.8
Total assets million EUR 2’415.6 2’730.6
Shareholders’ equity million EUR 640.1 844.2
Net debt million EUR 902.8 860.4
Employees per closing date Employees 10’278 10’332
Earnings per share (basic) EUR -1.34 0.33
About SCHMOLZ+BICKENBACH
SCHMOLZ+BICKENBACH was established in 1919 in Düsseldorf by Arthur Schmolz and Oswald Bickenbach and since 1937 the company bearing their joint names has been a synonym for tradition in steel. Since the acquisition of the former Swiss Steel AG in 2003, SCHMOLZ+BICKENBACH has been listed on the SIX Swiss Exchange (STLN).
Today, the SCHMOLZ+BICKENBACH Group is the world’s largest manufacturer, processor and distributor of special steel long products. The Group has a total of approximately 10 000 employees. SCHMOLZ+BICKENBACH is the world’s Number 1 producer of stainless long steels as well as tool steels, and one of the ten largest companies for alloy and high-alloy special and engineering steels.