08 Oct 2021

Steel: 2021 stands for recovery, 2022 for uncertainty

At Made in Steel, a preview of Bilanci d’Acciaio 2021, the economic and financial analysis of corporate results in the steel industry by siderweb – The steel community.
Emanuele Morandi, siderweb President and Made in Steel CEO: «On the international steel stage, Bilanci d’Acciaio is a unique brand that other steel value chains would love to have”

  • Turnover drop in 2020, with profits in the upward trajectory.
  • Siderweb survey, in collaboration with BPER Banca: in 2021, 90% of companies expect better financial results and an increase in their turnover.
  • More conservative forecasts for 2022

Milan, 7 October 2021 – Following a widespread slowdown in 2019, in 2020, the turnover of steel companies in Italy decreased, leading to a proportional added value decline. Profitability was positive in all segments; the Covid-19 pandemic hit producers more than downstream players.

This is what emerged from the preview presentation of Bilanci d’Acciaio 2021, a report by the siderweb Research Office, in collaboration with Prof Claudio Teodori and Prof Cristian Carini from the University of Brescia and sponsored by BPER Banca, Coface and Regesta. The analysis looks at the financial statements of Italian steel companies and provides data concerning their income, financial and equity situation.

The study’s preliminary results were presented today at Made in Steel, the leading Southern European Conference & Exhibition for the steel industry, organized by siderweb – The steel community, ending today at fieramilano Rho. The full analysis will be presented during a dedicated event next November.

«For the first time, we are bringing Bilanci d’Acciaio to Made in Steel» said Emanuele Morandi, President of Made in Steel and CEO of siderweb. The content, i.e. data and what financial statements tell us about the industry, fits nicely with the container. Bilanci d’Acciaio, now in its thirteenth edition, is a unique product in the international steel industry. It’s an Italian brand that other steel value chains would love to have”. The report gives us a full picture of the health, robustness, and resilience of the various supply chain elements as of 31 December 2020. Furthermore, we have summarised the results of a recent survey among industry players highlighting some positive results and showing an unexpected industry rebound”.

TURNOVER IS DOWN, BUT PROFITS ARE UP –  During the preliminary phase, the study analyzed the financial statements of over 2,200 companies accounting for the “upper” part of the steel industry: steel producers and initial processors, service centres, distributors, scrap and ferro-alloys trader and sheet metal cutting and processing companies.  The complete analysis, which will also include data relating to steel users, traditionally incorporated in the Bilanci d’Acciaio report, will be presented in November during a dedicated event.

2020 was a year of regression, affected by the constraints to economic activities due to the Covid-19 pandemic. In particular, during the first half of the year, the steel sector experienced a severe slowdown. However, the following recovery was not enough to compensate for the losses.

The total turnover of companies in the upper part of the steel industry (excluding users) was € 47.32 billion in 2020 (down 15.5% compared to 2019). Ebitda was 2,568 billion euros (-15.0%). Profits were up 22.4% thanks to lower taxes compared to 2019 at 330,035 million euros(696,000 euros against 395 million). The bottom line, however, was significantly lower than in 2018 (-79.0%).

 SalesEbidtaProfits
201857,8514,3361,573
201956,0273,021270
202047,3192,568331
% Variation 2020/19-15.5%-15.0%+22.4%
Source: Bilanci d’Acciaio 2021. Data in million €

The added value impact on turnover (€ 6.77 billion) is 14.3%, slightly higher than in 2019 but lower than in 2018 (13.8% and 14.8% respectively).

Indicators202020192018
ROA (Return on assets)1.3%2,1%5.0%
ROS (Return On Sales)1.5%1.9%4.4%
ROE (Return On Equity)1.5%1.4%8.6%
EBITDA / Turnover5.4%5.4%7.5%
Added value / turnover14.3%13.8%14.8%
Source: Bilanci d’Acciaio 2021. Data relating to the entire industry.

THE SENTIMENT OF THE STEEL INDUSTRY BETWEEN THE PANDEMIC AND THE PNRR – Siderweb, in collaboration with BPER Banca, submitted a questionnaire to a representative sample of companies operating in the steel industry (a total of 100 companies: 35% production, 25% service centres, 21% distribution). Questions aimed at exploring expectations for the 2021 budget results and the outlook for 2022. These are the results.

Turnover: For 2021, 90% of the respondents expect their turnover to increase, and a third of them by more than 50%. For 2022, companies forecast a marked slowdown: 35% expect their turnover to stabilise; only 37% expect further growth.

Financial results: for 2021, 90% of the respondents expect their financial results will improve, a quarter of them by more than 100%. According to 59% of the respondents, the incidence of EBITDA on turnover will be lower than 10%. Only a tenth of the companies report more than satisfactory results, ie higher than 15%.

The picture is not brighter for 2022: the number of companies expecting a further increase in their financial results is decreasing (59%) whilst more people anticipate a decline (39%).

Investments: 54% of the respondents confirmed or increased (23%) their budgets. Firstly in new technologies and innovation.

PNRR: 68% of the surveyed companies expect a positive or extremely positive impact.

Costs of raw materials and transport: As for the costs of raw materials, 42% of the companies report increases exciding 50%; 37% between 30 and 50%. As to the outlook, respondents share a sense of unease: 58% believe that costs will go down, but they believe part of the recent rise will be consolidated; only 10% argue that the current increase is temporary and they expect a return to the pre-existing situation.

As to transport costs, 49% believe part of the increase will remain; 40% do not envisage significant changes for 2022.

“Thanks to the EU and Italian support schemes, companies are responding decisively to the pandemic while keeping a sharp eye on how the economy will evolve. In Italy, after many years of economic stagnation, we see a nice pick-up. This is not enough, however, to compensate for the delay of the last 20 years. The report results show a great deal of confidence despite a shared sense of caution: there are still many doubts about 2022, as evidenced by the respondents’ forecasts about their turnover and financial results. Financial results in fact are not satisfactory yet, especially EBITDA levels which remain very low” explained Claudio Teodori, full professor at the University of Brescia.

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