VIENNA, Feb 15 (Reuters) - Austrian specialty steel group Voestalpine stuck to its outlook for "somewhat weaker" fiscal-year operating profit as conditions for its key steel division picked up from the turn of the year after a "very difficult" October-December quarter.
Voestalpine cut steel capacity by a tenth late last year as consumers spooked by the weak economy bought fewer big-ticket items such as fridges and washing machines and the construction industry remained very weak.
But sentiment has improved in 2012 and the maker of special steels used in tools, turbines and cars is running at full steel capacity again since January, it said, adding demand should stay good for months as customers fill depleted inventories.
Its shares advanced 4.6 percent to 26.81 euros by 1111 GMT, the biggest gainer in the Stoxx Europe basic resources index , which rose 1.0 percent.
Voestalpine's stock has been trading at just over 8 times 12-month forward earnings versus 13 for ThyssenKrupp and nearly 11 for ArcelorMittal, according to Thomson Reuters StarMine, which weights estimates by analysts' track records.
BHF Bank analyst Hermann Reith reiterated his "overweight" recommendation on the stock.
"Voestalpine provides a defensive business model in the steel sector at a discount price compared to the steel companies in our coverage. The outlook contrasts positively to Voestalpine's peers," he told clients in a note.
Voestalpine forecast fiscal fourth-quarter earnings would beat those of the third quarter but would not be able to match those of a year before. Its fiscal year ends in March.
Third-quarter earnings before interest and tax (EBIT) dropped by a third to 145 million euros ($190.4 million), bang in line with a Reuters poll of analysts.
Voestalpine had forecast in November that full-year operating profit could fall 10 percent to 900 million euros as the debt crisis and troubles in the financial sector hit demand.
The market expected EBIT of 886 million on average, the poll showed.
ThyssenKrupp, Germany's biggest steel maker, swung to a surprise operating loss in the last quarter of 2011.
The group, which last month agreed to sell its struggling stainless steel unit, said on Tuesday it was unable to give a reliable forecast for its financial year that ends in September due to the uncertain economic outlook.
Its comments echoed those made by rivals such as world No. 1 Arcelor Mittal, No. 3 Posco and Tata Steel . All three have struggled with profitability, missed quarterly forecasts and cited Europe as a concern.
($1 = 0.7616 euros)