For 2022, Swiss Steel Group reports a decrease in sales volume of - 11% to 1663 kilotons compared to 1863 kilotons in 2021. Compared to the previous year, sales of EUR 4051.4 million were 27% higher (EUR 3192.8 million in 2021). Adjusted EBITDA was EUR 217.0 million compared to EUR 191.6 million, with net debt of EUR 848.2 million, an increase of EUR 127.7 million compared to EUR 720.5 million at year-end 2021.
Business development 2022
Swiss Steel Group's business environment was impacted in 2022 despite the market recovery after the Corona pandemic in 2021 in key customer industries. This was due to distortions in the global economic recovery caused by the impact of the war in Ukraine, ongoing supply chain issues exacerbated by lockdowns in China, and rising energy prices in Europe.
These developments had a negative impact on demand from the main customer segments, the automotive industry and the plant and machinery sector. The operating business of the Swiss Steel Group was also impacted by the shutdown of the steel mill in Ugine due to a crane collapse at the beginning of January 2022. This had a serious negative impact on the Group's profitability and cash flow for the full year. Although production at the steel mill was ramped up to around 65% of capacity in June, it did not return to full capacity until the first quarter of 2023.
High raw material and energy prices also weighed on the Group's operating performance in 2022. Swiss Steel Group responded to these developments by adjusting production volumes to the high energy costs and lower market demand with regular production adjustments at most European sites. The resulting price increases were largely passed on to the market via energy surcharges. Thanks to these efforts, the Group achieved adjusted EBITDA of EUR 217.0 million despite the overall lower sales volumes. For the full year 2022, the Group generated positive consolidated earnings of EUR 9.4 million.
Global market uncertainties
The financials for 2022 were impacted by global market uncertainties. Fluctuations in demand were reflected in - 10.7% lower sales volumes of 1,663 kilotons across all product groups, compared to 1,863 kilotons in the previous year. Due to the introduction of the energy surcharge combined with high raw material prices, the average selling price in 2022 increased significantly by 42.1% to EUR 2438 per ton, resulting in sales of EUR 4,051.4 million, up 26.9% year-on-year (2021: EUR 3192.8 million).
The increase in sales was recorded in all product groups. Sales increased in all sales markets. The strongest increase was recorded in the American market with 48.9%, supported by a favorable environment for production costs and products.
Negatively, this year free cash flow amounted to EUR - 53.7 million, due to the significant increase in net working capital, caused in particular by higher inventory valuations per ton as a result of the strong increase in energy prices. The volume of inventories in tons decreased.
Net debt, which consists of current and non-current financial liabilities net of cash and cash equivalents, amounted to EUR 848.2 million, an increase compared to December 31, 2021 (EUR 720.5 million).
Fourth quarter 2022
In the fourth quarter of 2022, the Swiss Steel Group was confronted with lower demand from almost all markets and a general restraint. This was caused by ongoing macroeconomic uncertainties such as rising inflation, high energy costs and persistent supply chain issues. In response, the Group adjusted production volumes and implemented strict cost control, resulting in lower inventories across the value chain and reduced shipments.
At 362 kilotons, steel sales in the fourth quarter of 2022 were - 14.8% lower than in the same quarter of the previous year. The average selling price per ton of steel was EUR 2654 per ton. Thus, the upward trend continued compared to EUR 1972 per ton in the same period of the previous year. The price increase is still primarily attributable to higher raw material prices, which resulted in higher selling prices due to the widespread use of surcharge mechanisms.
Sales in the fourth quarter increased by 14.7% to EUR 960.0 million compared to EUR 837.1 million in the same quarter last year, driven by higher average selling prices, despite lower volumes. Adjusted EBITDA was EUR 36.5 million, only slightly below the prior-year quarter (Q4 2021: EUR 39.9 million). Free cash flow amounted to EUR 68.2 million.
Outlook for fiscal year 2023
The Swiss Steel Group is observing a weaker start to 2023 compared with the previous year. In the fourth quarter of 2022 and the beginning of 2023, an economic slowdown resulted in a lower but acceptable order backlog and shorter lead times. This will allow the company to respond more quickly and flexibly to market opportunities. The expected decline in energy prices is likely to improve cash flow due to lower working capital, but at the same time it should lead to lower sales and margins. On this basis, Swiss Steel Group expects adjusted EBITDA to be in the range of EUR 160 and 200 million.
