Damstahl Stainless Steel Briefing November 2016

Transcription

1 1 Damstahl Damstahl - a member of the NEUMO-Ehrenberg-Group Damstahl Stainless Steel Briefing November 2016

2 Contents Stainless Steel at a Glance 3 European Industry News 6 Where do we Stand in the Business Cycle? (PMI) 8 China Monthly Exports 9 Relevant Issues in Damstahl Land 10 Germany The Netherlands Denmark Sweden Norway Slovenia Finland 2 Damstahl Damstahl - a member of the NEUMO-Ehrenberg-Group

3 Stainless Steel at a Glance Market: Stability but no momentum to expect The stainless steel market remains stable without strong momentum in the second half of Price increases (base prices and surcharges) haven t resulted in increased order activity at distributors. For the time being, distributors have to accept higher prices, even though there is scepticism about whether mills can achieve base price increases. Distributors with low inventories are better off restocking early enough before prices rise further. Protectionism everywhere! Everybody is against imports of everything and trade agreements like TTIP and CETA. We seem to have forgotten that our (European) wealth is the result of our many export successes in all corners of the world. Rising 'Trumpism' erodes our ability to stay competitive for which reason an increased amount of stakeholders cry for quick and simple fixes like more trade barriers. (Markus Moll, MD of Steel and Metals Market Research, SMR GmbH) Alloy Surcharge: Monthly alloy surcharges rebounded in November. Outokumpu set the surcharges for type 304 (1.4301) to 1,101 EUR/t (+7.2% mom) for November 2016, up from 1,027 EUR/t in October, marking the highest level since August For type 316 (1.4401), Outokumpu set the November surcharges to a 15-month high of 1,571 EUR/t (+6.7% mom), up from 1,473 EUR/t in October Damstahl - a member Damstahl of the NEUMO-Ehrenberg-Group - a member of the NEUMO-Ehrenberg-Group

4 Stainless Steel at a Glance Building & Construction: According to the statistical office Eurostat, in August 2016 activity in construction in the euro area increased by 0.9% yoy compared with August 2015 while it declined in the EU28 by around 0.5% yoy. The increase in the euro area was mainly due to civil engineering rising by 1.5% yoy and building construction improving by 0.4% yoy. The decline in the EU28 was mainly due to civil engineering falling by 4.5% yoy, while building construction grew by 0.4% yoy. Highest increases were seen in: The Netherlands (+13.6%) Sweden (+12.0%) Italy (+ 4.2%) Largest decreases were recorded in: Poland (-21.8%) Slovenia (-14.5%) Bulgaria (-10.2%) Consumer Goods: The German Association representing the appliance industry (ZVEI) saw a strong August 2016 balancing out the weak July 2016, when orders in the German electronics industry increased by around 5.6% yoy. Both domestic orders (+3.8% yoy) and orders from abroad (+7.1% yoy) improved. When cumulated from January to August 2016 orders failed to match the prior-year level by around 1.1%. The branch revenue for the eight months ending August 2016 totalled bn EUR, which corresponds with an increase of around 1.3% yoy. 4 Damstahl - a member Damstahl of the NEUMO-Ehrenberg-Group - a member of the NEUMO-Ehrenberg-Group

5 Stainless Steel at a Glance Automotive: European passenger car new registrations in September 2016 continued to increase by 7.2% yoy, totalling 1,455,180 cars. For the first nine months of 2016 the European passenger car market saw an increase of 8.0% yoy, counting 11,243,263 new registrations. Italy (+17.4% yoy) once again recorded the highest growth rates, followed by Spain (+13.9% yoy) and Germany (+9.4% yoy). Declines were only reported in the Netherlands (-4.2% yoy) and Ireland (-1.6% yoy). Process Industry: For September 2016 the German engineering association VDMA reports a stagnating production in the German mechanical engineering industry at zero growth compared with September In Q3/16 the weak summer period was visible as orders declined by 7% yoy. Domestic orders fell by 12% yoy while orders from abroad decreased by 4%. Also for Q1-Q3/16 the quarterly results add up to a break even with Q1-Q3/15 as demand is too weak to generate growth. 5 Damstahl - a member Damstahl of the NEUMO-Ehrenberg-Group - a member of the NEUMO-Ehrenberg-Group

6 European Industry News / PMI Status European Industry News Where do we stand in the Business Cycle? PMI Status China Monthly Exports 6 Damstahl Damstahl - a member of the NEUMO-Ehrenberg-Group

7 European Industry News Mill results further improve Stabilising raw material prices as well as increasing base prices alongside restructuring measurements finally reflect in mills financials: Acerinox Outokumpu Financials Q3/16 Q3/15 Variation Q3/16 Q3/15 Variation Financials [in mill. EUR] [ % ] [in mill. EUR] [ % ] Turnover % Turnover % EBITDA % EBITDA % EBIT 60 1 EBIT 32 (67) EAT 36 (8) EAT 13 (48) Aperam - Stainless & Electrical Steel* Sandvik Materials Technology** Financials Q3/16 Q3/15 Variation Q3/16 Q3/15 Variation Financials [in mill. USD] [ % ] [in mill. SEK] [ % ] Turnover % Turnover % EBITDA % EBITDA n.a. n.a. n.a. EBIT % EBIT % EAT n.a. n.a. n.a. EAT n.a. n.a. n.a. *EAT not available for Aperam's stainless segment **EBITDA and EAT not available for Sandvik Materials Technology 7 Damstahl Damstahl - a member of the NEUMO-Ehrenberg-Group

8 Index of 50 = Break Even Point Where do we Stand in the Business Cycle? PMI Status October 2016 Markets are set to expansion in October EU USA China Damstahl Damstahl - a member of the NEUMO-Ehrenberg-Group

9 China Monthly Exports China s exports of stainless Flat Products were continuously rising in the Summer period and also Long Products grew again in August Flat Products Long Products Damstahl Damstahl - a member of the NEUMO-Ehrenberg-Group

10 Relevant Issues in Damstahl-Land Germany The Netherlands Denmark Sweden Norway Slovenia Finland 10 Damstahl Damstahl - a member of the NEUMO-Ehrenberg-Group

11 Relevant Issues in Damstahl-Land Germany: End user demand in the German stainless steel market remained relatively stable in October. The battle for orders meanwhile increased, as mills try to skip the intermediate step via distribution and some material is sold ex-mill. Stocks at German distributors are sufficient and no main supply gap is visible yet. Krones, a leading supplier of filling and packaging technology, reports stable growth for Q1-Q3/16. The company s revenue improved from 2,271 mill. EUR in Q1-Q3/15 to 2,380 mill. EUR in Q1- Q3/16 (+4.8% yoy). Krones EBIT in Q1-Q3/16 was mill. EUR, corresponding to an increase of around 3.8% yoy (Q1-Q3/15: mill. EUR). Also the company s EAT in Q1-Q3/16 improved by 5.5% yoy to mill. EUR. For the full year 2016 Krones expects an increase in revenues of around 3%. Revenues of chemicals giant BASF totalled 42,704 mill. EUR in Q1-Q3/16, declining by 25% yoy compared to revenues of 56,569 mill. EUR in Q1-Q3/15. The company s EBIT declined by 15% yoy, amounting to 5,048 mill. EUR in Q1-Q3/16, down from 5,923 mill. EUR in Q1-Q3/15. BASF s EAT in Q1-Q3/16 was 3,367 mill. EUR, which is around 8% lower than the Q1-Q3/15 EAT of 3,648 mill. EUR. 11 Damstahl Damstahl - a member of the NEUMO-Ehrenberg-Group

12 Relevant Issues in Damstahl-Land The Netherlands: In spite of a good end user demand the Dutch stainless steel market remains stable with no real momentum. Orders are booked on the short term and the investment willingness for larger projects is still missing. Prices for stainless steel will further improve over the next months. Dutch Aalbert Industries has reached an agreement to buy 100% of the shares of Italian Vin Service. The Bergamo-based manufacturer of dispensing equipment generates an annual revenue of approximately 30 mill. USD. Vin Service s management team will remain in place. The acquisition will be financed from existing credit facilities. Chip industry equipment provider ASML announced to have agreed on a 24.9% minority stake purchase of Carl Zeiss SMT, a subsidiary of Carl Zeiss AG, for 1 bn. EUR cash. The main objective for this agreement is the facilitation of the development for higher performance products at lower production costs. Contrary to the oil price development, Dutch oil and gas giant Shell managed to turn its EAT from a 6.12 bn USD loss in Q3/15 into a 1.45 bn USD profit in Q3/16. To further improve its financial strength, Shell announced to divest parts of the company amounting to several billion USD. Also the capital expenditures for 2017 will be reduced to around 25 mill. USD down from 29 mill. USD (-14% yoy). 12 Damstahl Damstahl - a member of the NEUMO-Ehrenberg-Group

13 Relevant Issues in Damstahl-Land Denmark: The market activity level is at the same level as in the last few months. Alloy surcharge driven price rises are expected for the last two months of It is however uncertain whether this will have a substantial positive market effect as stock levels are still on comparatively high levels. Damstahl relevant end use segments such as flow control and pharmaceutical show signs of improvement. The Foodtech 2016 processing and packaging fair and exhibition in Herning (Jutland) was a success for Damstahl as exhibitor together with family companies AWH, Neumo, Egmo and Rieger. Damstahl s third book Surface Treatment of Stainless Steel Corrosion and Cleanability was released at the fair. SPX, global supplier of infrastructure equipment, reports a revenue of mill. USD in Q3/16 compared with mill. USD in Q3/15 (+3% yoy). The company s EBIT turned from a minus of mill. USD in Q3/15 into a plus of 7.1 mill. USD in Q3/16. For Q3/16 an EAT of 1.9 mill. USD was achieved, up from a loss of mill. USD in Q3/ Damstahl Damstahl - a member of the NEUMO-Ehrenberg-Group

14 Relevant Issues in Damstahl-Land Sweden: October in the Swedish stainless steel market was surprisingly slow and did not live up to expectations. The strong upturn in recent months came to an end in October, but activity is still on a rather OK level. Alfa Laval announced plans for restructuring measurements which will result in a leaner organisation to adapt to the developments in the oil & gas and marine sectors. In the course of the programme, some product groups will be separated from the new organisational structure and also the manufacturing footprint will be restructured. The initiatives will also lead to the loss of around 700 jobs. Revenues of the BE Group in Q3/16 were 892 mill. SEK, down by around 8% on the Q3/15 revenues of 966 mill. SEK. The company s EBIT improved from a minus of 117 mill. SEK in Q3/15 to a plus of 26 mill. SEK in Q3/16. Also the group s EAT turned from a loss of 133 mill. SEK in Q3/5 into a profit of 16 mill. SEK in Q3/ Damstahl Damstahl - a member of the NEUMO-Ehrenberg-Group

15 Relevant Issues in Damstahl-Land Norway: The decline in offshore activity weighs heavy on the Norwegian economy. According to official sources around 40,000 jobs in the Norwegian oil industry were lost due to the ongoing oil price slump. The stainless steel industry in Norway is a bit struggling, but good activity in the fish farming industry and housing construction keeps the market active. Statoil posted an EAT loss of 432 mill. USD for Q3/16, down further from a loss of 307 mill. USD in Q3/15. Due to extensive maintenance works on its operation Statoil was unable to meet the previous year s production level. In reaction to the second quarterly loss in a row the company further reduced its capital spending from 12 bn. USD to 11 bn. USD. Aker Solutions announced to have signed an agreement with Brazilian C.S.E. Mecânica e Instrumentação Ltda to buy 70% of the company s shares. The transaction is expected to be closed by the end of Q1/17 and includes the option to buy the remaining 30% three years later. Both parties agreed to not disclose the purchasing price. 15 Damstahl Damstahl - a member of the NEUMO-Ehrenberg-Group

16 Relevant Issues in Damstahl-Land Slovenia: End user demand in Slovenia somewhat declined in October which was reflected in lower market activity. Distributors are reported to have picked up restocking again. The outlook for the rest of the year 2016 remains positive as the Slovenian economy in general is enjoying an upwards trend. The European Bank for Reconstruction and Development (EBRD) recently lifted its forecast for Slovenia's economic growth to 2.2% in 2016 up from 2.0% announced in May For 2017 growth of 2.3% is predicted. Also the recovery of Slovenian banks has proceeded further. In the first eight months of 2016 the joint EAT of Slovenian banks, foreign and state-owned, strongly increased to a profit of 311 mill. EUR up from 175 mill. EUR in the same period of Damstahl Damstahl - a member of the NEUMO-Ehrenberg-Group

17 Relevant Issues in Damstahl-Land Finland: Market activity in the Finnish stainless industry in autumn was subdued and the demand remains flat. In spite of the missing momentum, the sentiment is positive. Especially in the ship building industry order books are well filled. On the other hand the architecture, building and construction industry is reporting a slowdown in production and profitability. Construction company Caverion posted sales of mill. EUR in Q3/16 up by 1% yoy on the company s sales of mill. EUR in Q3/15. Caverion s EBIT fell from 14.7 mill. EUR in Q3/15 to only 5.0 mill. EUR in Q3/16 (-66% yoy). The company s EAT in Q3/16 totalled 2.9 mill. EUR, corresponding to a decline of 70% set against the Q3/15 EAT of 9.9 mill. EUR. 17 Damstahl Damstahl - a member of the NEUMO-Ehrenberg-Group