Preliminary estimated financial results of STALPROFIL SA for the 1st quarter of 2021
The Management Board of STALPROFIL SA (the Company) informs about the estimated, standalone financial results of the Company for the first quarter of 2021:
1. sales revenues 198 430 thousand PLN, which is an increase of 12.3% compared to the first quarter of 2020,
2. operating profit PLN 16 128 thousand PLN, which is an increase of 551% compared to the first quarter of 2020,
3. net profit of PLN 12 749 thousand PLN, which is an increase of 306% compared to the first quarter of 2020.
Due to the long-term market strategy adopted by STALPROFIL SA, which is characterized by a very wide range of metallurgical products for the Company's customers and the related relatively high inventory, the Company's results are highly sensitive to changes in the prices of metallurgical products. Therefore, the increase in market prices of steel observed since December 2020, unprecedented in recent years, significantly influenced the increase in trade margins, and thus the increase in the operating profit generated by the Company and the net profit for the first quarter of 2021.
For example, the Steel Price Index published by the Polish Union of Steel Distributors for the last week of March 2021 indicates that the average price of selected basic steel products from the Company's commercial offer increased significantly y/y, that is: HEB 200 profiles by 40%, cold-rolled sections S235JRH by 58% and hot-rolled sheets S235JRH by 70%.
However, it is difficult to assess the durability of the price trend that developed on the market in the first quarter of 2021. The key parameter influencing the prices of steel products is the current demand for steel and the level of its production costs, including the costs of basic raw materials: iron ore, coking coal and scrap, as well as energy costs and CO2 emissions. Therefore, there is a risk that potential changes in the level of steel production costs or disturbing the current relationship between supply and demand for metallurgical products may be an obstacle to maintaining the price dynamics of steel products, and thus to the continuation of the Company's extraordinary results in the second half of 2021.
The company is able to finance the increased demand for working capital resulting from the increase in the prices of steel products.
The presented result takes into account the write-offs and provisions made, including provisions for low turnover goods and provisions for risks related to the implementation of contracts for the construction of gas pipelines, which are performed by the Stalprofil SA Branch in Zabrze.
The estimates of the level of revenues, operating profit and net profit for the 1st quarter of 2021 published by the Management Board of STALPROFIL SA will be monitored by the Company on an ongoing basis until the publication of the periodic report, which the Company intends to submit on May 28, 2021.