Shares in Voestalpine have taken a hit after the company released an update on its performance for the first nine months of fiscal year 2024, suggesting a decline in underlying earnings.
As of 0850 GMT, shares were down 2.4% at EUR26.70, reaching a low of 9.4% earlier in the session.
Between April and December, the Austrian steel product manufacturer reported sales of 12.39 billion euros ($13.32 billion), a decrease from EUR13.59 billion during the same period the previous year.
In addition, the company saw a 32% decrease in earnings before interest, taxes, depreciation, and amortization (EBITDA), amounting to EUR1.28 billion. This implies an EBITDA of EUR368.3 million for the third quarter alone, aligning with consensus estimates of EUR367.1 million compiled by the company.
However, it appears that Voestalpine’s third-quarter earnings were buoyed by one-off items amounting to EUR44 million. The majority of these items were derived from an energy cost subsidy provided by the Austrian government, according to Citi analysts. Excluding this one-off, there would have been a decline in underlying EBITDA.
Despite the decline in share value, Baader Helvea believes there is potential for improvement. In a research note, Baader Helvea analyst Christian Obst stated that steel stocks could benefit from a more positive environment over the next three to nine months if central banks decide to reduce interest rates.
“There is a chance for the steel price to stabilize and show some improvement into the second half of the year,” added Baader Helvea.
Voestalpine has maintained its EBITDA target for fiscal year 2024, which was previously adjusted in November to the lower end of the range between EUR1.7 billion and EUR1.9 billion.
Citi analysts note that consensus estimates are already leaning towards the lower end, leaving little room for further downward movement.