In its Interim Report 1 January – 31 March 2012 Swedish iron powder producer Höganäs AB has stated that it remains positive about the outlook for the year, despite volatile market conditions.
Commenting on first quarter earnings, Höganäs AB CEO Alrik Danielsson stated, “As expected, the market was fairly weak in Europe in the first quarter, while the recovery in Asia continued after a 2011 hit by the tsunami and flooding. On a volatile market, we succeeded in safeguarding sales, earnings and cash flow, despite a notable negative currency effect. Sales volumes were somewhat lower than 2011, but comparisons should consider that the first quarter of 2011 was exceptionally strong, when we reported an 11% volume growth on the first quarter of 2010. Meanwhile, we are pleased that the outlook for 2012 is somewhat more positive than the view we had last autumn.”
Commenting on products for the surface coating sector Danielsson stated, “Our investments in research and development are still generating results. Jointly with an Indian customer, we have extended the usage of lasers for surface coating to also function for valve seats. This opens new market segments for our surface coating powders, in the automotive and other industries. It also reinforces our conviction that our focus on building know-how in the laser surface coating segment is correct.”
First quarter 2012 results (compared to the corresponding period of previous year) showed net sales of MSEK 1,813 (1,770), up 2% year on year. Sales volumes were 3% lower. The company states that demand conditions were better than in the corresponding period of the previous year in Asia and North America, but worse in Europe. The sequential volume increase (in quarter-on-quarter terms) was, however, very positive in all regions.
Operating income was MSEK 282 (282) and income after tax was MSEK 203 (208). Lower sales volumes and lower currency hedging earnings had a negative impact on income, while price increases and savings measures had a positive effect.
Höganäs AB states that prospects have improved somewhat compared to the assessment made in its Year-end Report. Uncertainty regarding the immediate future has eased and a significant downturn in global industrial activity in 2012 due to the global debt crisis now appears unlikely, despite fundamental imbalances persisting.
Höganäs judges that demand conditions are expected to be weaker than last year in Europe, but fairly favourable in the rest of the world.