Swiss Steel navigates difficult H1 2024

Swiss Steel Group, which owns recycled-content electric arc furnace (EAF) steel mills in Europe, the United States and Canada, experienced a 6 percent decline in sales volumes in the first half of this year, with the company citing depressed market demand as a factor.

The Swiss company saw its sales volume decrease from 610,000 metric tons in the first half of 2023 to 572,000 tons in the first half of this year even without including its up-for-sale Ascometal production facilities in France.

Its earnings before interest, taxes, depreciation and amortization (EBITDA), however, increased 58 percent in the first half of this year from 58.5 million euros ($64.6 million) last year to 92.6 million euros ($102.2 million) in the first half of 2024.

“The management of our French subsidiaries Ascometal sought court protection in March 2024,” Swiss Steel says. “As a consequence, the corresponding assets and liabilities were ‘derecognized’ from Swiss Steel Group’s balance sheet. For better comparability, certain financials will be disclosed on a pro forma basis, meaning without Ascometal.”

The company expects the second half of 2024 to remain subdued, adding, “Market demand from our main customer industries remained subdued in the first half of 2024 without indications of a notable recovery.”

The metals producer says the automotive sector, its largest customer segment, was faced with a softening environment, with production volumes in the European automotive industry declining compared with the first half of 2023 and remaining significantly below prepandemic levels of 2019.

“Nevertheless, the group’s order intake increased by 52,000 metric tons to 662,000 metric tons in the first half-year 2024," the company adds. "The group’s order backlog declined by 15.8 percent year over year,."

Swiss Steel says its scrap, alloy and energy surcharges form part of the group’s pricing mechanism to pass on raw material and energy price fluctuations to our customers. On the back of falling raw material and electricity prices in 2024, the average sales price decreased by 10.8 percent in the first half of this year.

“Revenue was down across all major geographical markets," Swiss Steel says. "Markets in the eurozone and the United States remained subdued. The change in the group’s scope of consolidation led to a reduction in headcount of 1,155 employees in the first half-year 2024.”

Recent cost-cutting measures have included the sale of Swiss Steel's former headquarters in Düsseldorf, Germany, and the divestment of its distribution entity in Portugal.

“After Ascometal's management had sought court protection in March 2024, Swiss Steel Group handed over responsibility for these entities, leading to the derecognition of the corresponding assets and liabilities from the balance sheet," the company says.

Swiss Steel notes it continues to drive its SSG 2025 strategy, focusing on strategic divestments and cost improvement initiatives. Finkl Steel, initially considered for potential divestment, will remain part of the group.

“To navigate [the] challenging market environment, we aim to focus on production excellence through quality, cost effectiveness, speed and operational efficiency," the company says. "Simultaneously, we will focus on capturing the potential of the green steel market and positioning ourselves to participate effectively in markets once recovery becomes imminent.”

Swiss Steel also has announced that board of directors member Michael Schwarzkopf has informed of his decision to resign from the board at the end of August. The board will thereafter consist of five members, which is sufficient according to the articles of association, it says.

“The first half of 2024 was marked by challenging market conditions and our efforts to optimize resources for our core business while implementing sustainable cost improvements across all levels of the organization," Swiss Steel CEO Frank Koch says. "We are in a phase of transforming the group from a loosely connected steel distributor of the past into a focused, leaner steel producer. Our goal is to regain lost market share by maintaining a clear strategic focus and lower fixed costs.”