SSAB Reports Positive Third Quarter Results

SSAB reports a positive third quarter, aided by higher prices and volumes, including an increase in shipments to North America.

SSAB's report for the third quarter 2017 shows a positive trend in earnings and strong cash flow.

The quarter:

  • Sales were SEK 16,188 (13,477) million
  • Operating profit before depreciation/amortization was SEK 2,016 (1,635) million
  • Operating profit was SEK 1,089 (707) million
  • The result after financial items was SEK 864 (461) million
  • Earnings per share were SEK 0.56 (0.57)
  • Operating cash flow was SEK 1,590 (926) million
  • Net debt/equity ratio was 27% (35%)

Comments by the CEO

SSAB’s operating profit for the third quarter increased to SEK 1,089 (707) million. Higher prices and volumes drove the improvement compared to the same period 2016. Earnings were down by SEK 116 million compared with the previous quarter, due to seasonally lower activity in Europe and the costs of planned maintenance outages. However, this impact was partly offset by higher realized prices and higher shipments in North America.

Despite a seasonal slowdown in Europe, SSAB Special Steels’ shipments were at a good level and higher than in previous year. Overall, demand was good, including the Mining and Construction Machinery segments. The outlook ahead is considered to be stable. Structural growth continues to be driven by customer needs for increasingly lighter and stronger products.

SSAB Europe’s operating profit increased by SEK 254 million to SEK 680 (426) million, compared to the third quarter 2016. Operating profit was lower compared to previous quarter, mainly due to seasonally lower shipments. Underlying demand is considered to be at a good level, albeit with a seasonally weaker product mix during the fourth quarter. In SSAB Europe’s focus area, high-strength steel for the Automotive segment, the growth continued, with a volume increase of 28% compared to the same period in 2016.

In North America, shipments increased during the quarter. This was partly attributable to a large order in the Energy segment. Together with higher realized prices, SSAB Americas significantly improved earnings. This improvement is also related to the maintenance outage in Mobile which adversely impacted the result during the second quarter. Market prices for heavy plate decreased during the quarter and the short-term outlook is somewhat uncertain.

SSAB’s target to reduce net debt by SEK 10 billion between the end of the first quarter of 2016 and the end of 2017 is progressing according to plan. Net cash flow during the quarter was SEK 1,281 million, which means that SEK 9.6 billion of the SEK 10 billion has been realized, including SEK 4.9 billion from the rights issue. Net debt has decreased and amounted to SEK 14 billion, and the net debt/equity ratio was 27%.   

During the second quarter, we set clear targets for 2020 for our growth initiatives for high-strength steels as well as after-market and service. We are now also presenting new long-term objectives within sustainability; sustainable offerings, sustainable operations and responsible partner. In 2045, SSAB aims to operate completely fossil-free production in which the HYBRIT initiative will play a key role. In the medium-term outlook, we will achieve the greatest impacts on sustainability through our sustainable offering, where we will achieve 10 million tonnes in annual carbon dioxide savings for our customers by 2025. These savings relate to the user phase of end products.