GrafTech stock slides after it issues grim 2023 outlook

GrafTech EAF shares fell over 17% on Friday after the graphite electrode manufacturer reported mixed fourth quarter results and issued an outlook that reflects near-term challenges in the operating environment.

The company generated adjusted earnings of $0.17/share that fell short of analysts estimates, while revenue fell 31.9% Y/Y to $247.52M. 

"Our year-over-year performance for the fourth quarter was impacted by higher costs, softer industry demand and the impact of the temporary suspension of our operations in Mexico," said CEO Marcel Kessler.

Q4 sales volume was 28 thousand MT, down 37% Y/Y, consisting of 19 thousand MT of LTA volume and 9 thousand MT of non-LTA volume. For the year ended December 31, 2022, sales volume decreased 11% and production volume decreased 5% compared to the prior year.

Adjusted EBITDA fell from $183M last year to $80M, with the decline primarily reflecting lower sales volume and higher costs.

Outlook: The company expects the negative impact of the suspension, ongoing inflationary pressures and the effects of slowing global economic growth on its operating performance in 2023 to be significant, particularly in the first half of the year.

It added: "We estimate our sales volume for the first six months of 2023 will be approximately half of the level reported in the same period of 2022, with the largest impact occurring in the first quarter."