Fourth quarter 2022 data from Italian foundries
According to what emerges from the latest quarterly survey carried out by the Assofond Study Center, in the fourth quarter of 2022 the foundry sector recorded overall satisfactory performances. The note that the Association released at the beginning of February 2023 highlights how in the last three months of last year the revenues of companies in the sector grew by +13% compared to the third quarter.
However, the most significant datum is the first drop, in many months now, in operating costs, equal to -6% on the previous period: if one observes the detailed data, the costs of raw materials are still on the rise, although not marked (+2%) against, however, a significant compression of energy costs (down by -17%).
The performance of Italian foundries in 2022
In the fourth quarter of 2022, the weighted change in turnover is positive and reaches +13% on the previous quarter, with 65% of the responding foundries reporting an increase. 45% of these highlight how they have managed to increase the prices of the products sold, but the share of companies (32%) which attributes the increase in turnover to the greater number of days worked in the fourth quarter compared to the third is equally important. Finally, in 16% of cases, it is in any case the increase in demand that has increased revenues.
"2022", underlines the president of Assofond Fabio Zanardi, "ended for the sector with a positive result in terms of turnover, mainly due to the soaring costs of raw materials and energy which forced us to increase prices of sale. The provisional data relating to production volumes, however, are not entirely satisfactory: in the most critical moments of the energy crisis, when electricity and gas prices have reached unsustainable peaks, many companies have preferred to stop or reduce production, and this weighed on overall output. Today we find ourselves having started the year with a finally downward trend in production costs, but with many unknowns: the geopolitical issues that caused the difficulties of 2022 have not yet been resolved and the volatility of the energy markets remains very high. For this reason we can say that the only certainties at the beginning of the year are inflation and volatility, which we will however face with more tools and awareness than 12 months ago. The data for the first quarter of 2023 are currently comforting".
Broadening the analysis to the different types of foundries, in the fourth quarter of 2022 all sectors report growth in turnover and a decrease in operating costs: these are compressed by up to -20% for steel foundries compared to the third quarter, while the decreases in costs for those of cast iron (-5%) and non-ferrous metals (-3%) are smaller.
In the fourth quarter of 2022, as many as 83% of the companies that responded to the survey were looking for new staff. 88% managed to hire, but only 18% of the foundries found all the desired professional figures. The most sought-after figures are skilled workers (80% of the sample) followed by general workers (58%) and office workers (58%).
Optimism for the coming months, despite the unknowns
Foundry budgets for 2023 forecast improving numbers, albeit with all the uncertainties associated with the period of strong volatility: the increase in turnover in 2023 over 2022 is estimated at +5%, while operating costs are expected to further decrease by -10%, with the two main components, raw materials and energy, contributing in a similar way to the overall decrease.
The Assofond survey interprets the sentiment of companies with respect to the market situation by processing the ACT and SIX indices. The ACT index measures the judgment on how companies spent the reference quarter and is weighted by turnover size: in the fourth quarter of 2022 the value of the indicator grows to 58 points and is therefore in positive territory, i.e. above 50 points. The foundries that improve the overall judgment increase: 48% define it as "good", while those who consider it "difficult" drastically decrease (21%). No company in the sample indicates the quarter as "very difficult" anymore.
The SIX index summarizes the responses on expectations for the six months following the survey: the value is at its highest level in the last four quarters, with an increase of 19 points compared to the previous quarter. The majority of foundries (65%) think of an economic framework that will remain stable, but the share of optimistic companies (17%) also increases significantly. The index, however, records levels that are not very high overall (49 points): entrepreneurs' confidence, while growing, does not go beyond a vision of stability of the economic framework in the short term.
A further element of confidence for the future is the increase in the visibility of orders, on average equal to 2.9 months and slightly up (+1.5%) compared to the previous quarter. The majority of foundries express a satisfactory judgment (63%), but the incidence of those who consider visibility still poor weighs heavily (21%). Finally, 10.5% of the companies that responded consider it optimal.
Source: A&L Aluminum Alloys Pressure Diecasting Foundry Tecniques