Positive fourth quarter of 2022 for Italian foundries and analysis of their performance in the first quarter of 2023
According to what emerged 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.
In the last three months of last year, the revenues of companies in the sector grew by +13% compared to the third quarter: a figure which, as has already happened in previous periods, is mainly explained by the race in sales prices, which many companies have had to increase to defend itself from the long inflationary wave that characterizes the costs of raw materials, ancillaries and outsourcing.
If the weighted change in operating costs (VPC) shows a first, timid drop (-6%) in the last part of 2022 after many months of continuous growth, the detailed data in fact show how the compression of foundry energy costs (-17% on the third quarter), offset by an upward trend in the costs of raw materials (+2%) and, above all, of auxiliary materials and outsourced manufacturing, affected by a still very marked inflation dynamic.
Increasing turnover in 2022 and increased budgets for 2023 of Italian foundries
The weighted change in turnover (VPF) reaches +13% on the previous quarter, with 65% of the foundries that responded to the survey 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.
The foundry budgets for 2023 predict 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 decrease by -10% with the two underlying components, raw materials and energy, which in the forecasts of the companies in the sample should contribute in a similar way to the overall decline.
The performance of Italian foundries in 2023
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.
The visibility of orders for 2023 is slightly increasing
The visibility of orders is on average equal to 2.9 months, slightly up (+1.5%) compared to the previous quarter. The GVO Index (which measures the judgment on the visibility of orders achieved in the reference quarter) remains below 50 points (46.9) on a scale of 100. The majority of foundries express a satisfactory judgment (63%), but the incidence of those who consider visibility still poor weighs on it (21%). Finally, 10.5% of the companies that responded consider it optimal.
Analysis by sector: both turnover and confidence in the foundry market are growing
In the fourth quarter of 2022, all sectors report a growth in turnover and a decrease in energy costs of foundries: these are compressed up to -20% for steel foundries over the third quarter, while the decreases for those of cast iron (-5 %) and non-ferrous metals (-3%) are smaller.
The sentiment for the next few months of 2023 reaches the highest value in the last four quarters for all sectors. The SIX index of steel foundries reaches 67 points (+23 on the third quarter), signifying very positive expectations for the first months of 2023. Significant increases also for cast iron foundries (+16 points) and non-metals ferrous (+19 points), whose indices however stop at 48 and 47 respectively and therefore indicate a picture that is not yet fully stable.
Zanardi: the drop in foundry energy costs is positive, but there are still too many unknowns
"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 sales prices. 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 energy costs for foundries, but with many unknowns: the geopolitical knots that caused the difficulties of 2022 have not yet been resolved, the volatility of the energy markets remains very high and the other main cost items for companies in the sector are still growing. 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".
Source: In Fonderia – ll magazine dell’industria fusoria italiana