SCHMOLZ + BICKENBACH CEO Clemens Iller: "The second quarter of 2020 fell firmly in the grip of the COVID-19 crisis, resulting in a dramatic slump in sales and consolidated earnings. The biggest impact came from the extensive shutdowns of major European automobile manufacturers and their suppliers. From April, a negative trend materialized in the mechanical and plant engineering industry.
We had no other option but to carry out extensive and prolonged shutdowns in our plants. Despite the slight increase in customer activity from May, demand is returning extremely slowly. A cautious, very limited recovery will not emerge until the fourth quarter of 2020. However, it is becoming clear that the negative adjusted EBITDA will not be effectively offset until the end of 2020 due to seasonal and market-related factors. Given the many uncertainties, particularly as a result of the COVID-19 crisis, it is still difficult to make reliable forecasts for fiscal year 2020. It is therefore impossible at the present time to produce a reliable estimate of adjusted EBITDA due to current uncertainty. To further strengthen our transformation organization, we have appointed restructuring expert Josef Schultheis as CRO on the Executive Board."
Business performance in the second quarter of 2020
At 301 kilotons, 38.1% less steel was sold in the second quarter of 2020 than in the prior-year quarter (Q2 2019: 486 kilotons). The fall is attributable to the decrease of 42.3% in sales volumes for quality & engineering steel. Prompted by the sharp drop in demand from the automotive industry, which affected this product group in particular. Sales volumes also decreased compared with the prior-year quarter in the two other product groups – stainless steel and tool steel – but with less severe declines of 28.3% and 22.2 % respectively.
The average sales price per ton of steel was EUR 1,561.1 in the second quarter of 2020, 6.1% lower than in the prior-year quarter. This fall is mainly attributable to lower base prices as well as lower scrap and alloy surcharges than in the previous year.
The negative development in prices and the contraction in sales volume led to revenue of EUR 469.9 million, down 41.8% on the prior-year quarter. This decline was at its most pronounced in the quality & engineering steel product group, which posted a fall of 50.1%. Revenue from stainless steel was down by 33.6%, and from tool steel by 34.2%. Nearly all regions of the world posted a double-digit decline in revenue compared with the prior-year quarter.
At EUR –45.8 million, EBITDA adjusted for one-time effects was significantly lower than in the prior-year quarter. The one-time effects amounted to EUR 7.9 million and are attributable to consultancy services in connection with efficiency improvement programs and restructuring measures. Including the one-time effects, EBITDA fell to EUR –53.7 million, reducing the adjusted EBITDA margin to –9.7% and the EBITDA margin to –11.4%.
In the second quarter of 2020, an impairment of EUR 86.0 million on the net assets of the DEW and Ascometal business units was booked under Depreciation, amortization and impairments. At EUR –11.4 million, the financial result was slightly higher than in the prior-year quarter.
As a result of these developments, earnings before taxes (EBT) stood at EUR –171.0 million. Tax income of EUR 11.9 million was generated by the negative EBT. In the second quarter of 2020, the Group posted a negative result of EUR –159.1 million.
Free cash flow in the second quarter of 2020 was negative, at EUR –1.9 million.
Net debt, comprising current and non-current financial liabilities less cash and cash equivalents, came to EUR 624.9 million, a decrease on the figure as at December 31, 2019 (EUR 797.6 million). The main reason for this was the capital increase coupled with stringent liquidity management.
