Salzgitter Reports Wider Loss on Economic Slowdown, Impairments

Salzgitter AG, Germany’s second-largest steelmaker, reported a wider full-year loss as the economic slowdown eroded demand and impairments affected its Peiner Traeger unit.

The loss before taxes grew to 477.8 million euros ($655 million) in 2013 from 29.4 million euros, Salzgitter said today in a statement. Analysts had expected a loss of 484.8 million euros, according to the average of 10 estimates compiled by Bloomberg. Sales fell 11 percent to 9.24 billion euros.

“Increasingly fierce price-led competition in the European market, combined with the drastic capacity underutilization of the large-diameter tubes business, incurred a significant impact on earnings,” the company said. “Impairment at Peiner Traeger GmbH, along with non-recurrent restructuring expenses, burdened earnings before taxes in an amount of 240 million euros.”

Larger competitor ThyssenKrupp AG (TKA) earlier this month said quarterly earnings more than doubled, even as its Steel Europe unit recorded a 37 percent slump in profit. Steelmakers including ArcelorMittal, the world’s largest, and Asia’s Posco have forecast a rebound in consumption of the metal in the U.S. and Europe as an economic recovery boosts demand from industry.

Salzgitter, based in the town of the same name, said its net loss widened to 489.6 million euros from 99.8 million euros. The state of Lower Saxony holds a 26.5 percent stake in the company.

It forecast a gain in pretax earnings for this year, nearing break-even, on sales of about 10 billion euros.

To contact the reporter on this story: Tino Andresen in Dusseldorf at tandresen1@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

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