Bloomberg News

Voestalpine Rises as Positive Outlook Trumps ‘Bad Numbers’

February 15, 2012

(Updates with shares in second paragraph.)

Feb. 15 (Bloomberg) -- Voestalpine AG, Austria’s largest steelmaker, advanced in Vienna trading after a positive outlook trumped third-quarter profit that missed estimates.

Shares rose as much as 4.7 percent to 26.83 euros and were trading up 3.9 percent at 26.635 euros at 1:18 p.m., the biggest intraday increase since Feb. 3.

“The bad numbers weren’t a big surprise -- ArcelorMittal and ThyssenKrupp also were disappointing -- and the outlook is very positive,” Franz Hoerl, an analyst at Erste Group Bank AG in Vienna, said in an e-mail. Hoerl rates Voestalpine “accumulate.”

Steelmakers have been struggling to escape the worst slump in 60 years as weakening growth in China and Europe saps demand and pushes prices lower. ArcelorMittal, the biggest producer, posted its lowest quarterly profit in two years last week, while Germany’s ThyssenKrupp AG yesterday reported a loss and said it was unable to offer a “reliable” outlook given the sovereign debt crisis.

By contrast, Linz-based Voestalpine said today that a negative trend in its steel unit reversed at the start of 2012 and that fourth-quarter earnings, while falling short of those a year earlier, are “expected to exceed those in the third quarter.”

November Forecast

The company reiterated its November forecast that it anticipates a “somewhat weaker operating result compared to the previous year,” according to the statement. Chief Executive Officer Wolfgang Eder said Nov. 17 that earnings before interest and tax for the year through March will probably slump by about 10 percent to around 900 million euros.

Profit for the three months through December fell 65 percent and missed analyst estimates on declining steel prices and after Voestalpine used less of the available capacity at its steel plants.

Net income after payments to hybrid bondholders fell to 46.4 million euros ($61 million) from 131.2 million euros a year earlier. The company was expected to report a profit of 59.5 million euros, according to the average estimate of six analysts surveyed by Bloomberg.

“From late summer 2011 on, severe consumer reticence led to lower capacity utilization throughout Europe and, in combination with significant declines in raw materials prices, led to sharply declining steel prices,” the company said in a statement today, referring to its steel unit. Earnings at its other four units were “largely stable.”

Prices for hot-rolled steel coil, a benchmark product used in vehicles and buildings, have fallen for three straight quarters and slumped to the lowest in 13 months in December, according to Steel Business Briefing’s global price index.

--With assistance from Francesca Cinelli in Milan. Editors: Alex Devine, Randall Hackley

To contact the reporter on this story: Zoe Schneeweiss in Vienna at zschneeweiss@bloomberg.net

To contact the editor responsible for this story: Stephen Foxwell at sfoxwell@bloomberg.net


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