June 5, 2019 / 6:50 AM / 4 months ago

UPDATE 2-Voestalpine cuts dividend, aims for flat profit as slowdown bites

* Dividend to be cut to 1.10 eur/shr from 1.40 eur/shr

* Sees economic uncertainties growing

* 2018/19 EBIT falls 33.9%

* Working to fix operational issues at U.S. plant (Adds quotes, detail, shares)

VIENNA, June 5 (Reuters) - Austrian specialty steelmaker Voestalpine on Wednesday cut its dividend 21% and warned it was only aiming for flat profit in the upcoming fiscal year due to growing economic uncertainty, sending its shares down.

The European steel sector is navigating choppy waters as the auto industry, one of its main customers, is slowing, while pressure on oil prices dampens demand from the oil equipment industry, and steel imports increase in the wake of U.S. tariffs.

Linz-based Voestalpine, which produces flat steel products for the automotive, energy and railway industries, said earnings before interest, tax, depreciation and amortisation (EBITDA) fell 20% to 1.56 billion euros ($1.76 billion) for its 2018/19 fiscal year ending in March.

It said it was “working hard” to keep EBITDA at the same level for the 2019/2020 fiscal year.

“Due to the growing economic uncertainties, it is our goal to reach a stable EBITDA,” Herbert Eibensteiner, who will lead the group from next month, told a news conference, disappointing analysts.

Jefferies said the outlook was 6% below consensus analyst expectations, and JP Morgan noted that it included a 50 million euros benefit from the introduction of the regulatory standard IFRS 16. A Reuters poll showed four analysts expected the company to report EBITDA of 1.64 billion euros over the 2019/2020 fiscal year.

Voestalpine also proposed to cut its dividend to 1.10 euros per share from 1.40 euros per share the previous year, helping send its stock down as much as 2.7%. They were trading down 1.4% at 23.86 euros at 1127 GMT.

EU steel company shares are currently trading at their lowest in nearly three years, driven down by the weak demand from the car industry, high raw materials costs and cheap imports that can no longer reach the United States due to the trade tariffs.

European steel industry chiefs, including Voestalpine’s Eibensteiner, urged EU leaders and EU institutions this week to take action to prevent steel being dumped here.

ArcelorMittal, the world’s largest steelmaker, underlined the problems when it cut production for the second time last month, blaming weak demand and high imports.

Voestalpine’s revenues reached an all-time high of 13.6 billion euros last year, driven by price increases.

For future growth, the group will push on expanding in areas such as aviation and the rail industry globally, Eibensteiner said.

A big internal challenge for the months to come was fixing operational issues at a U.S. plant, he said. Voestalpine has had difficulties with a new assembly line for auto components at a plant in Georgia and said it plans to overcome the issues in the course of the year.

Asked how much that would weigh on earnings, Chief Executive Wolfgang Eder said it was hard to quantify as Voestalpine was using its global network to keep the negative impact as low as possible.

Eder will bow out as CEO after 15 years in charge next month and plans to move to the supervisory board. The 67-year-old led Voestalpine’s transformation from a traditional steelmaker into a global specialist supplying finished parts to the automotive and aerospace industries.

$1 = 0.8875 euros Reporting by Kirsti Knolle; Editing by Michael Shields and Deepa Babington

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