Norwegian special steel maker Scana Industrier (OSE: SCI) has been promising a turnaround ever since the financial crisis subject to fair development in the global economy. Investors have been buying that as well. That is why yet another quarter in the red isn’t going down well. The stock has sold off almost 15% for the day.
First quarter 2012 revenue of 559 million NOK is 15% higher than last year. The negative EBITDA of 4 million is a slight improvement from a year ago. Profit before taxes was -35 million NOK. The company is now restructuring and still aims to provide larger, more advanced and more complete products, which would increase pricing power. Despite providing niche-oriented products, the company hasn’t been able to charge big mark-up compared to peers. Strengthening Norwegian and Swedish currencies make a big dent as well.
The company gathered more cash in a rights issue few months ago, and also renewed multi-currency loan. This now looks like it was done at a decent time. Marine market, particularly concerning offshore and advanced vessel deliveries, is now supposed to recover from 2013. This is important for earnings going forward. Last year the company was guiding for improvement in 2012. Scana is aiming to grow services business to dull the effect of business cycles.
Scana Leshan is reported separately. The company is located in Southern Sichuan, Southwestern China . It is quite normal that local officials in the region are involved in business decisions and this company is a joint-venture 80% owned by Scana. Scana said that ownership discussions have been ongoing and those have affected orders, showing some internal turmoil.
The location is somewhat unusual as well. Leshan is more of a tourist city known from its giant Buddha statue. While there is a river going through, it does not allow for shipping and the city is quite far off (several hour drive) logistically from the giant hubs in the region. The heavy industry concentrations in the province are in other places such as Panzhihua and Deyang. The company envisions itself as the leading manufacturer of rolls and has an annual capacity of 20,000 tonnes of rolls and cast products. It does have some nice references from years past.
No comments:
Post a Comment