SSAB’s operating profit for Q1 2018 was SEK 916 million, up SEK 214 million compared with Q1 2017. Earnings were also up compared with the prior quarter, however earnings were negatively affected by some operational issues. There was a two weeks production disruption in the blast furnace in Oxelösund that affected SSAB Special Steels. During the quarter, it also had capacity problems in rail transport of slabs which resulted in both output and shipment losses in SSAB Europe. Both issues were resolved by the end of the quarter. Demand is still good in its markets and SSAB’s growth initiatives developed well during the quarter.
Customer needs for increasingly lighter and stronger products continue to drive structural growth in SSAB Special Steels, while demand is also supported by cyclical recovery in several segments. SSAB Special Steels’ shipments were 346,000 tonnes, up 25% compared with Q1 2017 and operating profit increased by SEK 191 million to SEK 434 million. The result was negatively affected by the blast furnace production disruption mentioned above.
SSAB Europe's operating profit was SEK 657 million, somewhat lower than in Q1 2017. Demand continued to be at a good level, but SSAB’s shipments were down 4%. This was primarily due to the capacity problems in rail transport mentioned above. Shipments of high-strength steel in the Automotive segment were 11% higher than in Q1 2017.
SSAB Americas’ Q1 operating profit rose with SEK 286 million to SEK 129 million. Heavy plate spot prices in North America have risen sharply since November last year. However, contract prices and longer lead times mean a certain delay before these higher prices are reflected in SSAB’s earnings and margins only began to improve towards the end of Q1. The steel tariffs introduced during Q1 have so far had limited impact.
During Q1 SSAB presented its conclusions from the pre-feasibility study for the fossil-free steel initiative, HYBRIT, and it is now planning a globally-unique pilot plant for fossil-free steel production in northern Sweden, with the first ground to be taken during the summer.
The outlook remains good for 2018. SSAB has strong market positions in our home markets and in our global niches. All in all, we have good opportunities for continued profitable growth and to generate strong cash flow. We have strengthened the balance sheet significantly and the AGM held in April resolved to pay a dividend of SEK 1.00 per share.
