16. April 2019
Annual press conference 2019
• Dillinger Group continues to operate in a difficult market environment
• Good overall capacity utilization of plants despite fluctuations
• Consolidated sales rose from € 2.122 billion to € 2.202 billion
• Positive results in 2018 below expectations
For the Dillinger Group – Aktien-Gesellschaft der Dillinger Hüttenwerke (Dillinger) with its subsidiaries – the subdued outlook for 2018 has been confirmed: Demand in some key customer segments – such as the line pipe and the offshore wind power market – declined in 2018 but was partially offset by higher sales of normal plate in a wide variety of segments. Overall plant capacity utilization was good, although production and shipment volumes were unable to match the high level of the previous year.
At the annual press conference, Tim Hartmann, Dillinger's Chief Executive Officer and Chief Financial Officer, commented on the 2018 financial year: “The Dillinger Group is struggling mightily with the structural problems in the heavy plate market, coupled with strong pressure on volumes and prices. As a result, the financial year was marked by a decline in shipments. Nonetheless, thanks to the revenue increases achieved, it was possible to compensate for the pressure on margins and increase consolidated sales by 3.7 %. The Group achieved positive earnings figures in the 2018 financial year but these still fell short of our expectations.”
The heavy plate business continued in 2018 to be highly competitive for European manufacturers and capacity utilization at the Eurofer plants fell again (63 %), as did overall heavy plate production. The EU steel pipe sector suffered a significant decline in activity – especially in the large-diameter pipe industry, due to a lack of pipeline projects, and in the offshore wind sector, due to project postponements. In contrast, the business situation in the machine manufacturing and construction industries was very good. While exports to third countries declined, imports to the EU remained at a high level. Considering the level of the reference quantity (average of imports from 2015 to 2017), the safeguard measures introduced by the EU have remained rather ineffective for the heavy plate market in the current market situation.
The forecasts for the 2019 financial year currently underway are subject to numerous uncertainties. Based on lower worldwide growth in economic output, global demand for steel will also develop in an only slightly positive direction in 2019 and a significant weakening of steel demand is also expected in the EU. The effects of the worldwide economic slowdown and noticeably weaker economic activity in China have already made themselves felt in the last few months of 2018 and have led to a decline in some important customer segments.
The difficult conditions for the heavy plate market will continue in 2019: There will be no significant improvements in worldwide overcapacity in the near future. In addition, the many trade policy measures, up to and including protectionism, will continue to impact the international heavy plate business.
Dillinger finds itself under massive pressure from the ongoing overcapacities and the continuing high level of imports into the EU, both in terms of volumes and sales revenues. Given these circumstances, the company started the year 2019 with somewhat weaker capacity utilization. Raw material prices continue to show an upward trend. Whether it will be possible to adequately implement price adjustments remains to be seen. For 2019, Dillinger anticipates consistently good demand from various consumer segments such as offshore wind, with continued weak demand for pipe plate.
“The challenges in the heavy plate market continue to be seriuos and our forecasts for 2019 at Dillinger are cautious,” said Tim Hartmann, describing the outlook for the current financial year. "We therefore anticipate a slight decline in unit sales and Group sales. Systematic advancement and intensification of cost-cutting measures and efforts to increase efficiency are imperative if noticeable effects are to be generated already in 2019. Our customers value our know-how as well as our quality and service. The joint strategy process already initiated for Dillinger and Saarstahl will be used to ensure that we continue to develop in line with the needs of our customers worldwide and are consistent in our harnessing of new growth potential. Dillinger steel is making an important contribution to shaping the energy transition.”
Innovative top-quality steel products, total orientation around our customers' needs and unceasing technological development in close cooperation with our partners form the basis of our success - as they have for more than 333 years.
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