ELG Haniel significantly reduces 2016 revenue forecast


Both income and turnover for the German stainless steel recycler ELG Haniel plunged sharply in the first half of 2016. ELG attributed the negative growth to "an ongoing difficult market environment" marked by considerably lower commodity prices for all relevant raw materials and reduced scrap material availability on the procurement market.

Since the company sees no signals for improvement on the market, it has corrected downwards the revenue forecast for 2016 it made at the beginning of the year. Instead of a slight uptick, corporate parent Franz Haniel & Cie now expects a significant drop in turnover due to retreating prices and volumes. However, the group said it continues to expect that ELG's operating profit will return to positive territory thanks to the year-on-year improvement in the gross margin, a strict cost management programme and the lack of adverse extraordinary items.

According to Haniel's half-year financial report, ELG recorded turnover of €707m in the first six months of 2016, a retreat of over a third compared with its revenue for the same period a year ago. In particular the stainless steel recycling division was impacted by the sharp fall in prices for nickel, iron and chrome. Overall, Haniel said the situation had a negative impact on ELG’s output tonnage, which fell by 15 per cent year-on-year. Utica Alloys, ELG’s division specialising in superalloys, also found itself under pressure due to the deterioration in the price of titanium. As a result of demand-related declines in shipping tonnage, the output tonnage of superalloys decreased. Toll processing agreements strengthened Utica Alloys’ business, however.

ELG's operating profit for the first six months of 2016 reached €2m, significantly below the previous year’s first-half figure of €11m, the parent company reported. The Duisburg-based stainless steel recycler's profit before taxes dipped into the red, with a loss of €7m after breaking even a year ago. However, the result for the first half of 2016 was significantly higher than in the second half of 2015.

- Ad -

Article categories
- Ad -