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The Scholz recycling group developed in line with the industry sector in the first nine months of 2013
- A persistently difficult environment on the European market for scrap-metal and steel
- CEO Oliver Scholz: "In view of the adverse parameters, Scholz has put up a quite good performance"
- Sales of 2.97bn Euros for the first nine months are 20.0% down compared with the previous year
- EBITDA reaches 98.3mn Euros: of that 28.1mn Euros in the third quarter
- First successes in the realisation of the restructuring programs
In a difficult market environment Scholz AG, in the first nine months of the year 2013, had a development in line with the industry sector. "Especially the first half of the year the international scrap-metal market was characterised by declining volumes and prices as a consequence of the weak steel market and the recessionary environment in Europe", comments Oliver Scholz, CEO of the international recycling group. "Since the third quarter there have been signs of a stabilisation of profit margins. Against the background of this environment, the Scholz group has put up quite a good operational performance in these first nine months," Scholz continues.
Important Key Figures of the Group
- Group revenues after the first nine months of 2013, amounting to 2.97bn Euros, was 20.0% down on the corresponding previous year's value of 3.71bn Euros. Revenues in the third quarter amounted to 918.7mn Euros, a reduction of 17.8% compared to the figure for the corresponding quarter of the previous year (1.12bn Euros). The main cause of this reduction is the lower tonnage due to market conditions (9 months 2013: -12% to 6.79 mn tons). This factor as well as the still existing excess capacities on the steel and scrap-metal markets resulted in corresponding pressure upon the achievable prices and profit margins.
- Group profits before interest, taxes and depreciations (EBITDA) amounted to 98.3mn Euros and were thus 40.4% under the previous year's level (9 months 2012: 164.9mn Euros). However, the EBITDA-margin of 3.3% of turnover (9 months 2012: 4.4%) was well within the average for the industry. The EBITDA for the third quarter amounted to 28.1mn Euros (Q3 2012: 54.5mn Euros -48.4%).
- Scholz declared an operative result before taxes of -8.3mn Euros (9 months 2012: 43.2mn Euros). Of this, -5.1mn Euros were accounted for by the third quarter (Q3 2012: 18.2mn Euros) which, when compared to the previous quarters, had been influenced by seasonal factors.
- As in the first half-year, the declared pre-tax profits after nine months are also characterised by considerable burdens resulting from the on-going restructuring and realignment of the group. The extraordinary profits amounted after nine months to -108.4mn Euros, of which ca. 94mn Euros were accounted for by the withdrawal from the Australasian market. The third quarter also saw a book loss of 9.4mn Euros from the sale of a non-strategic share package. For the third quarter the extraordinary profits amounted to -32.9mn Euros.
- After taxes and non-recurring charges, the group declares a nine-month profit of -122.0mn Euros (9 months 2012: 16.3mn Euros).
As a consequence of the negative developments in profits, the equity of the Scholz group declined to 178.4mn Euros as of September 30th 2013 (December 31st 2012: 300.4mn Euros). This is equivalent to an equity capital ratio of 10.1% (December 31st 2012: 15.8%).
As announced on November 14th, the balance sheet charges resulting from the restructuring in the separate financial statement of Scholz AG led to the loss of half of the equity capital of 50.0mn Euros. As high non-recurring charges had been predictable at the time of the compilation of the restructuring concept, the strengthening of the equity capital basis by the acceptance of new shareholders into Scholz AG had been provided for at that time. This investors' process is currently being prepared and should lead to speedy results.
Restructuring Programme is being implemented
In the third quarter, Scholz AG created the basis for the turn for the better in the shape of the agreement with its creditors pursuant to the programme for the restructuring and realisation of the group. Initial successes have also been achieved with regard to the aim of disposing of non-strategic activities (in particular the business divisions aluminium production and trading in premium engineering steel), slimming down the group as a whole and considerably reducing financial indebtedness. These measures include the sale of the smelting plant in Tatabanya, Hungary, to the US group Scepter Inc. and the sale of the German recycling location Velbert to the Swiss Metallum group. The greater part of the planned disinvestment is to take place in the coming year.
Outlook for the overall year 2013
The market environment for the European steel and metal industry will continue to present a challenge in the coming months, even if the first signs for an improvement in the industry's environment are recognisable. The extent to which the emerging stabilisation will affect profit margins remains to be seen. The restructuring programme for the Scholz group will be continued unchanged and is currently running according to plan on the whole.
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