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Salzgitter Posts Wider 2013 Loss on Slowdown, Writedowns

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 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’s 25 percent stake in refined copper producer Aurubis AG contributed a 55.4 million euro pretax loss, compared with profit of 55.5 million euros a year earlier.

Lower Saxony

“Aurubis also put pressure on Salzgitter,” Ingo-Martin Schachel, an analyst at Commerzbank AG, said by phone from Frankfurt. “I expect that will change from the second quarter.”

Salzgitter dropped 1.5 percent to 30.625 euros in Frankfurt trading. The benchmark DAX Index advanced 1.1 percent.

The pretax loss in the three months ended December was 114.8 million euros compared with a profit of 13.2 million euros a year earlier, according to Bloomberg calculations using the full-year and nine-month earnings figures.

Salzgitter, based in the town of the same name, said its 2013 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, which forecast a gain in pretax earnings for this year, nearing break-even, on sales of about 10 billion euros.

The performance in the final quarter of 2013 and the outlook for 2014 were “as expected,” Commerzbank’s Schachel said.

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