After a slump, SIJ group upbeat about business in 2021

Ljubljana – The steel group SIJ estimates that its sales revenue declined by a good 10% last year as a result of the Covid-19 pandemic, however with an increase in orders the group is upbeat about the future.

Talking with the STA, Tibor Šimonka, senior vice-president of the Russian-owned group, said crisis in the steel industry, brought on by the US’s trade wars with the rest of the world and a slump in the automotive sector, begun as early as the second half of 2019.

The crisis was aggravated further by the Covid-19 pandemic and through increased steel imports from third countries: “While Europe recorded a nearly 12% decline in steel industry, China increased its exports to the EU by almost 15%.”

Due to its focus on niche products, SIJ weathered the crisis well for a while, but after the first quarter, the crisis began to deepen with order books and profitability worsening by each quarter, “so that by initial estimates we generated about 10% less revenue last year than in 2019”, said Šimonka.

Still, he says the group’s results are “substantially above the average for the European steel industry”. Despite the difficulties, SIJ stuck to the strategy of preserving leading market shares and the level of exports in its key European and US markets.

Acroni as the biggest steel company in the group faced problems last year with coronavirus interrupting its production, but Šimonka said it was now doing well, posting records in terms of productivity and energy use per unit.

“We’re happy with SIJ Acroni’s performance at the moment and given normal conditions on the market in terms of commodity prices and sales prices, SIJ Acroni will definitely post good results this year,” said Šimonka.

Branko Žerdoner, managing director of SIJ Acroni, said initial estimates indicated revenue in 2020 was 13% below the 2019 figure, which was equal to the slump in demand for steel in the EU as their main market.

Orders picked up in the final four months of 2020 to what Žeronder described as a solid level. “By adapting activities fast we expanded our sale options and increased the share of sales of the highest-end products,” he said, adding that Acroni remained one of three leading producers of thick stainless steel in the EU.

The outlook for 2021 is that demand, sparked in part by stimulus measures, will increase at a faster pace than production will be able to keep up with, while stocks in some steel segments are at decades low, Žerdoner said, adding that orders for more demanding products were up as well.

“All analysts are projecting a major recovery only in the second half of the year, while we have already attained a pretty good level of orders which are already at the 2019 level,” Šimonka said about the group, adding that this inspired hope for this year and the future.

The group reported a net profit of EUR 44.9 million for 2019, a 816% increase on year before that was largely the result of the sale of poultry producer Perutnina Ptuj to the Ukrainian group MHP.

Group sales revenue declined by 3.3% to EUR 767.4 million and profit before income tax, depreciation and amortisation was up 4.7% to EUR 58.8 million.