Austrian specialty steelmaker Voestalpine proposed a 21.4% dividend cut for its 2018/19 business year after operating profit fell by a third due to weak demand from carmakers, tough markets and problems at its U.S. plants.
The European steel sector is navigating choppy waters as the auto industry, one of its main customers, is slowing; pressure on oil prices dampens demand from the oil equipment industry, and steel imports increase in the wake of U.S. tariffs.
ArcelorMittal, the world’s largest steelmaker, underlined the problems when it cut production for the second time last month, blaming weak demand and high imports.
Voestalpine proposed a dividend of 1.10 euro ($1.24) per share for 2018/19, down from 1.40 euro the previous year, after earnings before interest and tax (EBIT) fell 33.9% to 779.4 million euros. Analysts had expected 765 million euros in a Reuters poll.
Revenues reached an all-time high of 13.6 billion euros last year, but the company shied away from a concrete forecast for the current year.
“The management board of Voestalpine AG is working hard to put the operating result (EBITDA) for the 2019/20 business year on a stable footing - compared with the previous year - despite growing economic uncertainties,” Herbert Eibensteiner, who will lead the group from next month, said in a statement.
The biggest internal challenge was fixing operational issues at the group’s U.S. plants, he added. Voestalpine has had difficulties with a new assembly line for auto components at a plant in Georgia and at the group’s Texas plant.
