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Stemcor issues 2007 financial and performance results

Thursday, 10 April 2008 13:09:18 (GMT+3)   |  

The UK-based world's largest independent steel trader Stemcor has issued its financial and performance results for 2007.

According to the company's statement, in 2007 Stemcor's turnover went up by 29 percent to ₤4.254 million, its operating profit increased by 16 percent to ₤92 million and its pre-tax profit rose by 27 percent to ₤65 million, all compared to 2006. Meanwhile, the company's steel sales in the period in question went up by three percent to 9.8 million mt and its raw material sales increased by 11 percent to 10.5 million mt.

Stemcor's chairman Ralph Oppenheimer stated that Stemcor was able to achieve growth thanks to the adoption of new strategies. Such important strategies included the provision of more value-added services, including the development of a good stock network.

In 2007, Stemcor also acquired well-established steel stockholder and processor SPS which is located in England, but has a business focused on the offshore oil and gas industry. Commenting on future acquisition plans, Stemcor‘s chairman stated that the company plans further acquisitions focused on building up a strong base in the developed world.

Speaking about the 2007 steel market, Mr. Oppenheimer said that 2007 was in general a good year for steel trading, with the only negative impact on Stemcor's profitability coming from the rise in freight costs. As market volatility becomes more pronounced, steel trading companies should hedge their risk exposure both to steel and freight prices.

Regarding the situation in the raw materials market, Mr. Oppenheimer said the market saw strong growth in 2007. Although the disposal of Stemcor's shares in Australia's Savage River could be seen as premature, especially in the light of the recently announced steep rise in iron ore prices, the reinvesting in the iron ore project in Orissa in India is believed by Stemcor to be likely to bring better long-term returns.

Overall, 2007 was a mixed year for the global steel industry characterized by the arrival of increased Chinese exports affecting prices in the second half of the year, despite increased construction and steel consumption worldwide. At the beginning of 2008, it was clear that China's measures to reduce steel exports had started an upward spike in steel prices, which has continued since then.

As for the future development of the steel market, Mr. Oppenheimer stated that, as history shows, steel prices cannot rise forever. If the credit crisis continues, it will impact both the buying ability of customers and the requirements for new retail and commercial construction. There will be an adverse impact on investment and therefore on demand for steel. As far as Stemcor's prospects are concerned, the company's feels confident of continued success and expects another good year in 2008, based on strong current trading and a substantial forward order book.


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