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German steelmaker Salzgitter warns losses set to quadruple
August 5, 2013 / 5:23 PM / 4 years ago

German steelmaker Salzgitter warns losses set to quadruple

Rolls of steel are loaded at the plant of German steel company Salzgitter AG in Salzgitter, Lower Saxony on March 21, 2012. REUTERS/Fabian Bimmer

FRANKFURT (Reuters) - Steelmaker Salzgitter (SZGG.DE) slashed its full-year outlook for the second time this year, blaming a deeper than expected drop in demand for cars, appliances and new buildings in austerity hit Europe.

“The direct and indirect consequences of this crisis have considerably burdened Salzgitter,” the company said in a statement.

Salzgitter said it now anticipates a pre-tax loss of around 400 million euros ($529.60 million) for the year.

Salzgitter had already lowered its outlook in May, saying at the time it expected a pretax loss of under 100 million euros for the full year. It had in February forecast a profit of tens of millions of euros.

The $500-billion-a-year steel industry, a gauge of the global economy, has suffered from a drop in demand from austerity hit Europe and worries about the prospects of Chinese economic growth.

Last week ArcelorMittal ISPA.AS, the world’s largest steelmaker, also cut its 2013 outlook, citing weak demand in Europe and the United States and lower raw material prices.

In the first half of 2013, Salzgitter posted a pre-tax loss of 298.7 million euros.

Salzgitter said it had to take a 60 million euro charge for its 25-percent stake in Aurubis (NAFG.DE), which last week announced writedowns on the value of its inventories and derivatives.

It added that it was also suffering from the “the persistent weakness of the French automotive market”, predicting a “notable pre-tax loss” for its precision steel tube division this year. Around 12 percent of group sales came from the auto business last year.

Salzgitter shares were down 5.9 percent by 1310 ET in Frankfurt after-hours trading (SZGG.F).

Reporting by Harro ten Wolde, editing by Louise Heavens

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