Swedish steelmaker Ovako says 2015 began slowly for the engineering steel sector in Europe but the market picked up as the first quarter progressed. The outlook for Q2 15 is “stable”, the company says in its first operating report for 2015 sent to Kallanish.

Ovako is a good bellwether for the condition of the European manufacturing sector with its principal clients operating in the general manufacturing, transportation and bearings industry. “EU industrial production as a whole is recovering at a reasonable rate while the growth in Ovako’s core markets in Germany, Sweden and Finland seen together, is negative and is developing at a pace below the European average”, the company comments.

 ”The first quarter showed a significant recovery after a weak ending in 2014. The order intake was weak in the beginning of the quarter and improved gradually. Compared to the strong first quarter last year, sales volumes were down. Low industrial production in Sweden during the first quarter and weaknesses in some volume segments in Germany are two of the main reasons for the variation”, says ceo Tom Erixon.

In his short term outlook for Q2 15 the ceo says that “… demand is expected to remain stable compared to the first quarter this year and also compared to the second quarter last year.”

Ovako crude steel production in Q1 15 was 245,000 tonnes, a fall of -8% year-on-year. Sales volume was 188,000t, also down -8% on the same basis.

The steelmaker says that the acquisition on 31 March of the Tibnor distribution operation from SSAB will have a positive effect on the group’s cash flow and ebitda. “However, the ebitda margin for the group will be somewhat negatively affected by the lower margins in the distribution business”, Erixon cautions.

Consolidated sales fell by -7% y-on-y to €229 million generating a net profit of €8m, flat compared to that achieved in Q1 14.