(Adds details on outlook, CEO quote)
VIENNA, Aug 9 (Reuters) - Austrian specialty steel maker Voestalpine on Tuesday said it expects earnings to increase towards the end of its business year, helped by higher prices in its longer-term steel contracts and increasing orders from the oil and gas sector.
Despite the group’s focus on premium metal products, the Linz-based company like its rivals has to cope with the effects of sharp price falls, strong international competition and overcapacity in the sector.
Voestalpine on Tuesday reported a 55 percent drop in earnings before interest and tax (EBIT) for its April-June first quarter to 168 million euros ($186 million) which was partly due to one-off effects and in line with analysts forecasts.
Although global economic conditions became more challenging in the first quarter, a marked increase in its operating result was expected in the course of 2016/17, the group said in a statement.
In addition to a delayed effect of higher prices in its longer-term contract-based steel business and a tapering off of start-up costs for its new plant in Texas, Voestalpine forecasts an upward trend for the oil and natural gas sector.
Due to these factors as well as cost and efficiency optimisation programs, the company “continues to aim for an operating result and profit from operations that are approximately equal to the adjusted figures in the last business year,” Chief Executive Wolfgang Eder said in a statement.
$1 = 0.9029 euros Reporting by Kirsti Knolle; editing by Shadia Nasralla and Jason Neely