Swiss Steel Group rebounded with significantly improved results in 2021

• Sales volume increased by 21 % from 1,535 to 1,863 kilotons in 2021 despite a softening of demand from the automotive industry in the last quarter
• Revenue for the full-year 2021 rose strongly by 40 % from EUR 2,288.4 million to EUR 3,192.8 million supported by higher raw material prices
• Adjusted EBITDA in 2021 came in at EUR 191.6 million versus EUR - 68.9 million in 2020
• Net debt increased year over year from EUR 639.9 million to EUR 720.5 million largely due to the ongoing high raw material prices and the sharp rise in energy prices. This was only partly outweighed by the capital increase in Q1 2021 of EUR 223.5 million
• Outlook for 2022: Swiss Steel Group is despite the burden of the unforeseen accident in Ugine  cautiously optimistic to affirm the rebound seen in 2021 and expects an adjusted EBITDA between EUR 160 and 200 million. It assumes immaterial disruption due to current geopolitical instability

CEO Frank Koch: 'We are pleased to report a strong rebound of activity and profitability in 2021. After a difficult prior year that saw a massive COVID-19 related drop in demand, we were able to come back and post significantly better results. Sales began to normalize in the first quarter of 2021, primarily driven by a recovery from the automotive industry. Mechanical and plant engineering followed in the subsequent quarter whilst prices overall increased steadily. At the end of the third quarter we saw a sharp and sudden drop in demand from the automotive industry due to the global semiconductor shortage and at the same time turbulences in the energy sector resulting in extremely high and volatile pricings. We responded with an immediate adaptation of our production. With the support of a continuous positive price and margin development, we were still able to announce solid results for the last quarter and the full year.

I am also pleased that we have strengthened our Executive Board with three experienced steel managers in December 2021 who will support and steer our growth strategy in our core products - engineering, tool and stainless steel, our operational excellence and lead the path to carbon-neutral steelmaking. We are in an excellent position to lead the green transition with our electric arc furnace technology. Circular economy and recycling is part of our DNA. It is our way to differentiate ourselves with technological excellence and customer focus that will foster Swiss Steel Group's success in the coming years.

On the other hand, we are also facing challenges. Unfortunately, at the beginning of the year we had a tragic accident at our Ugine plant. As a result, our melting and casting operations are currently not in operation and only planned to restart at the end of the second quarter 2022. The rolling mill and further downstream activities have shortly thereafter resumed normal production, though limited in capacity to available material.'

Key figures

¹⁾  Earnings per share are based on the result of the Group after deduction of the portions attributable to non-controlling interests.

²⁾  As of December 31, 2021 and as of December 31, 2020

Lucerne, March 8, 2022 - Swiss Steel Group, a world leader in special long steel, today reported a 21 % increase in sales volumes for 2021 to 1,863 kilotons from 1,535 kilotons in 2020. Revenue of EUR 3,192.8 million was 40 % higher compared to EUR 2,288.4 million in the prior year. Adjusted EBITDA came to EUR 191.6 million, compared to EUR - 68.9 million in 2020. Net debt amounted to EUR 720.5 million, which is an increase by EUR 80.6 million from EUR 639.9 million recorded at the end of 2020.

Business performance in full-year 2021

Following a difficult financial year 2020 with a massive pandemic-related drop in demand, Swiss Steel Group benefited from the strong post COVID-19 market recovery in its main customer industries. Sales began to normalize in the first quarter of 2021, primarily driven by the recovery in demand from the automotive industry. In the first half of 2021 this trend extended to mechanical and plant engineering and increased sales across the entire Group. Not only did the sales volume increase substantially, prices also rose significantly, leading to high margin realization and strong profitability. In the second half of 2021, however, economic uncertainties started to reemerge. Supply chain disruptions in the automotive industry triggered by the semiconductor shortages affected our order volumes. Additionally, the recent strong price level of raw materials and energy put pressure on the Group's operational performance and profitability. Swiss Steel Group responded to these developments by adjusting production volumes in the fourth quarter 2021. Despite volatility and a softening of demand towards year-end, Swiss Steel Group was able to increase its profitability to a significant degree, reaching an adjusted EBITDA of EUR 191.6 million.

At 1,863 kilotons, 21.4 % more steel was sold in 2021 than in the previous year (2020: 1,535 kilotons), reflecting the upswing in market demand after the COVID-19 related drop in the previous year. At 25.8 %, the increase was strongest in the quality and engineering product group, resulting from strong demand from the automotive industry at the beginning of the year. As this positive market sentiment extended to mechanical and plant engineering and oil & gas, sales could be improved across all product groups.

For the full-year 2021, the average sales price of EUR 1,716 per ton was 15.1 % above the previous year (2020 EUR 1,491 per ton) driven by higher base prices but also due to an increase of raw material surcharges. The price increase in all product groups outweighed the negative impact from the product mix with a continuing high share of quality & engineering steel at a comparatively lower average sales price.

Revenue increased by 39.5 % year on year to EUR 3,192.8 million driven by all product groups with the strongest increase in quality and engineering steel at 55.4 %. This product group was particularly impacted by the COVID-19 related drop in demand from the automotive industry and mechanical and plant engineering in the previous year. By region, revenue increased in all our sales markets. In particular, revenue in Europe, our largest sales market, was up 42.6 %. This region was particularly affected by the COVID-19 pandemic containment measures in the prior year.

Adjusted EBITDA was EUR 191.6 million, a significant increase over the previous year (2020: EUR - 68.9 million). One-time effects amounted to EUR - 8.4 million and were attributable to costs for the efficiency improvement program, the reversal of restructuring provisions at the Business Units DEW and Ascometal and temporarily accounted insurance income from the flooding of the Hagen plant. EBITDA came to EUR 200.0 million versus EUR - 99.0 million in 2020.

For the full-year the Group result came in at EUR 50.3 million versus EUR - 310.2 million in 2020 that was besides the negative operating profitability also materially impacted by impairments.

Net debt, comprising of current and non-current financial liabilities less cash and cash equivalents, came to EUR 720.5 million, an increase compared to December 31, 2020 (EUR 639.9 million).

For the full-year 2021, free cash flow was EUR - 223.7 million, lower than the previous year (2020: EUR - 99.8 million) affected by higher raw material prices throughout the year and the sharp rise of energy prices in the fourth quarter 2021. This negative cash flow effect was offset by the capital increase of EUR 223.5 million in the first quarter of the year.

Business performance in the fourth quarter of 2021

At 425 kilotons, - 4.5 % less steel was sold in the fourth quarter of 2021 compared to the same quarter of the previous year (Q4 2020: 445 kilotons). This decrease was mainly attributable to a - 7.3 % decrease in sales volume for quality and engineering steel reflecting the lower demand from the automotive industry resulting from the current shortages of semiconductors. On the other hand, stainless steel sales volume increased by 8.6 % compared to the same quarter of the previous year.

The average sales price per ton of steel was EUR 1,972 per ton in the fourth quarter of 2021 and therefore considerably higher than the average price achieved in the same quarter of the previous year (Q4 2020: EUR 1,358 per ton). This is mainly due to the increase in raw material prices, where the widespread use of surcharge mechanisms led to higher prices. Moreover, base prices were increased and the Group started to implement energy surcharges toward the end of 2021 to pass on the energy price volatility and Inflation to customers.

Despite a lower sales volume, revenue in the fourth quarter increased by 38.5 % compared to the same quarter in the previous year of EUR 837.1 million, resulting from the higher average sales prices. The increase in revenue was spread across all product groups. By region, revenue increased in all our sales market with the strongest increase in the American market (+ 44.4 %), supported by the recovery from the oil and gas market.

Adjusted EBITDA was EUR 39.9 million in the fourth quarter of 2021; a significant increase on the same quarter of the previous year (Q4 2020: EUR 4.1 million). The one-time effects amounted to EUR - 13.2 million and included the reversal of restructuring accruals at the Business Units DEW and Ascometal, insurance compensation due to the flood in the Hagen plant for future expenses and cost for the reorganization and transformation program. Including these one-time effects, EBITDA increased to EUR 53.1 million (Q4 2020: EUR - 8.9 million).

Free cash flow (cash flow from operating activities less cash flow from investing activities) in the fourth quarter of 2021 was EUR - 53.8 million (Q4 2020: EUR - 19.0 million).

Outlook for financial year 2022

We have ended 2021 with a solid order book and respective price increases across end markets that will bode well for a good start into 2022. On the other hand, the year 2021 ended with rising uncertainties with regard to the emergence and the spread of the Omicron variant including worker absence. The effects of the current Russia/Ukraine conflict are not yet predictable. Temporary supply chain issues are likely to continue until at least the second half of 2022. In addition, extreme price turbulences and hikes in the energy and raw material markets have recently increased again. The severe accident at our Ugine plant led to a significant business interruption that will have a material effect on our operations. On this basis we expect adjusted EBITDA to be in a range between EUR 160 and 200 million.

For further information:

For media queries:
Stefan Zapfe, s.zapfe@swisssteelgroup.com, phone +41 41 581 4262

For analyst/investor inquiries:
Burkhard Wagner, b.wagner@swisssteelgroup.com, phone +41 41 581 4180

Media Release (PDF)

Annual Report 2021 (PDF)

Presentation (PDF)

Link to Audio Webcast

Key Figures Q4/FY 2021 (PDF)

About Swiss Steel Group

Swiss Steel Group is today one of the world's leading providers of individual solutions in the special long steel products sector. The Group is one of the leading manufacturers of tool steel and non-corrosive long steel on the global market and one of the two largest companies in Europe for alloyed and high-alloyed quality and engineering steels. With close to 10,000 employees and its own production and distribution companies in 30 countries on 5 continents, the company guarantees global support and supply for its customers and offers them a complete portfolio of production and sales & services around the world. Customers benefit from the company's technological expertise, consistently high product quality around the world as well as detailed knowledge of local markets.

Forward-looking statements

This media release contains forward-looking statements, including presentations of developments, plans, intentions, assumptions, expectations, beliefs and potential impact or descriptions of future events, income, results, situations or outlook. These are based on the Company's current expectations, beliefs, and assumptions, which may differ materially from future results, performance, or achievements. The information contained herein is provided with the publication of this document. The forward-looking statements contained herein are not updated as a result of new information, future events, or for any other reason.