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Swiss Steel’s sales will fall by almost a fifth to 3.2 billion euros in 2023, the company announced on Thursday. Last year, a sharp rise in steel prices increased sales by more than a quarter.
Demand for Swiss Steel’s products fell: sales volume fell by 17.3% to 1,375 kilotonnes. The average selling price decreased by 3.1 percent to 2,363 euros per ton. Last year customers had to pay 2,438 euros per tonne.
Operationally, the group had to accept loss before depreciation and amortization (EBITDA) of 40.9 million. Last year Swiss Steel made a profit of 217 million euros.
As a result, the company fell into the red with a loss of 294.8 million euros, following a small net profit of 9.4 million euros the previous year. CEO Frank Koch announced that 2023 will be disappointing.
300 million euro capital increase
A capital increase of at least 300 million euros (286.8 million Swiss francs) will now be carried out to help the group get out of trouble. This was secured by the company Bigpoint and the major shareholder Martin Haefner, which according to the latest information holds 32.73% of Swiss Steel. In his statement, Haefner stated that he is convinced of the future viability of Swiss Steel’s business model.
Additionally, key financial agreements with lenders have been extended until September 2028. This is said to include Bigpoint’s shareholder loans.
The capital increase will be approved by shareholders at the extraordinary general assembly meeting to be held on April 4. Swiss wrote that it should be assumed that a capital increase will only be successful if one or all of the main shareholders (i.e. the shareholder group consisting of Bigpoint, Peter Spuhler’s PCS Holding and Viktor Vekselberg’s Liwet Holding AG and ComplexProm Joint Stock Company) make further commitments . Çelik is invited to the extraordinary general assembly meeting.
Haefner exception clause
It is possible that the shares of the main shareholders will increase as a result of the capital increase. This means Bigpoint runs the risk of exceeding the one-third shareholding threshold and having to submit a takeover offer to all shareholders under the law.
Haefner wants to prevent this and has therefore applied for an exception clause (option) with the Takeovers Commission (UEK). This has now confirmed it.
This means that Bigpoint does not need to make a takeover offer if it exceeds the legal threshold of one-third of the shares as part of a restructuring capital increase. Based on discussions with the three main Swiss Steel shareholders, the board assumed that Bigpoint Holding (and possibly another main shareholder) would exceed the one-third limit of voting rights during the capital increase.
Bigpoint wants to move a member to the board of directors after the capital increase is completed. The company explained this to the Swiss Steel Board of Directors. Bigpoint is not currently represented on the supervisory board.
Forward reconstruction
At the same time, Swiss Steel continues its restructuring efforts. Seven sales companies in Eastern Europe, a sales unit in Chile and the group’s shares in its Chinese joint venture Shanghai Xinzhen Precision Metalwork were sold.
As Swiss Steel also noted, the sale of parts of Ascometal France, announced last December, has not yet materialized as the parties involved are still discussing options and have not yet reached a final agreement.
Ascometal France Holding also continues to examine all strategic options for the future of all its organizations. “In the current very difficult circumstances this may require a judicial reorganization of all or part of the Ascometal France companies.” The sale of Finkl Steel was also said to be under consideration.
1000 fewer jobs
Additionally, the largest production unit, Deutsche Edelstahlwerke (DEW), was reorganized and legally divided into two separate production units. 350 people were laid off. More than 130 million Euros of cost savings will be achieved by 2025. Overall, the steel group cut its workforce by more than 1,000 jobs, reducing it to 8,812 employees. The company’s sales in Eastern Europe also contributed to this.
It won’t be easy in 2024 either. «We have received more requests for proposals since the beginning of the year. But markets as a whole have not yet returned to normal,” Swiss Steel wrote. “We expect a gradual improvement in earnings in the first half of 2024, followed by a stronger second half.”
Source :Blick
I’m Tim David and I work as an author for 24 Instant News, covering the Market section. With a Bachelor’s Degree in Journalism, my mission is to provide accurate, timely and insightful news coverage that helps our readers stay informed about the latest trends in the market. My writing style is focused on making complex economic topics easy to understand for everyone.
