Report for the first quarter of 2017: Solid earnings improvement driven by SSAB Europe
The quarter · Sales were SEK 15,739 (12,964) million · Operating profit before depreciation/amortization was SEK 1,627 (741) million · Operating profit/loss was SEK 702 (-193) million · The result after financial items was SEK 449 (-347) million · Earnings per share were SEK 0.49 (-0.18) · Operating cash flow was SEK 876 (77) million
Comments by the CEO
SSAB posted an operating profit of SEK 702 million for the first quarter of 2017. This was a solid improvement compared with both the previous quarter and the same period a year earlier. Improved earnings were primarily driven by SSAB Europe through increased shipments and prices, and a high and stable production. SSAB Special Steels also improved earnings despite the rolling mill in Oxelösund being out of operation for more than five weeks at the start of the year following the breakdown occurring in late 2016. The division was able to maintain a good level of shipments since our production flexibility (which enables high-strength steels to be produced at several mills) outperformed expectations. A high rate of production in Oxelösund also contributed once the rolling mill was up and running again in the beginning of February.
SSAB Special Steels is growing structurally on the market driven by customer demand for increasingly lighter and stronger products. Demand improved in many segments during the first quarter. The breakdown in Oxelösund caused SSAB Special Steels to sustain a total production loss of around 70,000 tonnes during the first quarter. Discussions as to the extent this loss can be indemnified are ongoing with the insurance company.
SSAB Europe had a strong quarter, with good underlying demand and a 9% increase in shipments compared to the previous quarter. Realized prices also improved and production was at a high rate. Market prices increased slightly at the start of the year before stabilizing towards the end of the quarter.
In North America, SSAB Americas saw an increase in realized prices during the quarter. The price of scrap also rose, which meant a relatively modest strengthening of margins. The costs of the planned maintenance outage in Mobile impacted negatively on earnings and, despite steady underlying demand, resulted in somewhat lower shipments than during the previous quarter.
SSAB’s aim to reduce net debt by SEK 10 billion between the start of the first quarter of 2016 and the end of 2017 is progressing to plan, with a net cash flow of SEK 0.6 billion during the quarter. A further SEK 2.3 billion will be achieved during the three remaining quarters of the year through cash flow generated from operations, structural reduction in working capital and through possible divestment of non-core assets.
We have now entered the next phase in executing our “Taking the Lead” strategy, having last year created a platform for profitable growth through our cost reduction and efficiency programs, including synergies, together with the refinancing package put in place during the second quarter of 2016. Our goal is industry-leading profitability. One focus area is to continue to drive efficiency through continuous improvements in all our operations. At the same time, we will continue to grow in Special Steels and Automotive segment. During the year, we will also continue to further develop the aftermarket business by, among other things, signing up new members to our Hardox Wearparts network.
HYBRIT, our long-term initiative for a sustainable carbon-dioxide-free steel industry, received financial support during the first quarter from the Swedish Energy Agency and we are now setting up a joint venture with LKAB and Vattenfall to take the project forward.
Invitation to SSAB’s first quarter 2017 results briefing
SSAB invites you to a presentation of the quarterly report at 09.30am CEST on Friday April 21, 2017. The press conference will be held in English and live webcast on SSAB’s website www.ssab.com. It is also possible to participate in the briefing via telephone.
Venue and time of briefing: World Trade Center (WTC) Stockholm, Kungsbron 1, Conference room Manhattan, 09.30am CEST.
+46 8 505 564 74 (Sweden),
+44 203 364 5374 (UK),
+1 855 753 2230 (USA).
Link to webcast: Go to webcast
For further information, please contact:
Investor Relations: Per Hillström, Head of IR,
email@example.com, +46 70 2952 912
Media: Viktoria Karsberg, Head of Corporate Communications,
firstname.lastname@example.org, +46 8 454 5734
This information is inside information that SSAB AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above, at 7.30am CEST on April 21, 2017.