Scholz sees performance suffer due to weak demand

Restrictions on scrap imports to China
made a dent in Scholz's performance
29.08.2019 − 

The German ferrous scrap recycler Scholz suffered a significant drop in revenues and profits in the first half of the current financial year. According to a new financial report from the company's Chinese parent Chiho Environmental Group, Scholz generated turnover of HKD6.9bn in European trading. At the current exchange rate, this is approximately €800m. The revenue figure in Hong Kong dollars had dropped by 13 per cent, while the decline in local currencies was just under 7 per cent, the Chinese metals recycler reported.

The volume of scrap sold by Scholz in Europe fell by 5 per cent to 2.17 million tonnes in the first six months of this year. According to the Chiho Environmental Group, demand was strongly influenced by weakness in the European automotive and machine building industries as well as by the Chinese restrictions on imports of several scrap metal grades that went into effect this year.

At the same time, scrap prices in Europe had fallen by about 12 per cent and freight costs had risen due to the scarcity of transport capacity and increases in road tolls. As a result, Chiho's business in Europe booked a profit of only around HKD180m for the first half - currently around €20m. Profits in Chiho’s reporting currency were down by 37 per cent, while at constant rates of exchange earnings were off by 33 per cent.

You can read more on Chiho Environmental Group's first-half performance as well as on the group’s strategy regarding Chinese import restrictions in EUWID 18/2019, out next week.

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