SSAB Report for the Third Quarter of 2012
· Sales of SEK 8,730 (10,917) million
· Operating profit/loss of SEK -665 (511) million
· Profit/loss after financial items of SEK -789 (401) million
· Earnings per share of SEK -1.60 (1.19)
· Operating cash flow improved to SEK 843 (311) million and cash flow from current operations to SEK 697 (16) million
· Niche products accounted for 38 (37) % of steel shipments
· Earnings were negatively affected in the amount of SEK 55 million with respect to SSAB EMEA's efficiency program
(In the report, amounts in brackets refer to the corresponding period of last year.)
Comments by the CEO
The weak demand and destocking in the marketplace affected SSAB's earnings for the third quarter as earlier communicated at mid September. In particular, within strip products in Europe, the trend was much weaker than expected. As a consequence, capacity utilization was just below 60% in the Swedish strip operations, in addition to the normal maintenance outages. The costs for the summer outage in the Swedish operations, amounting to approximately SEK 100 million, were incurred in the third quarter. As anticipated, the Americas and APAC business areas also experienced weaker development than in the preceding quarter. The rolling of plate in the US and in Sweden had a capacity utilization of 85-90%.
We are continuing with our efficiency program within EMEA with the aim of improving our competitiveness and increasing flexibility, in order to better address fluctuations in the market. The implementation of this program has been accelerated and the activities will now be implemented during the first quarter of 2013. The positive effects on earnings will be realized gradually during 2013 and the full cost savings are expected to amount to SEK 800 million on an annual basis. As part of the program, 450 employees were given notice of redundancy after the end of the third quarter. Our employees have shown great understanding for the prevailing situation. As previously announced some 160 white collar positions are removed and earnings in the third quarter were negatively affected by SEK 55 million with respect to the efficiency program.
The declining spot prices for iron ore have resulted in a renegotiation of our contract for iron ore pellets – effective for deliveries as from the fourth quarter – at a level which is 23% lower in USD than in the original contract. The impact of this on our earnings will not be felt until the first quarter of next year.
We do not anticipate any major change in demand during the fourth quarter and the pressure on prices for standard steels that we witnessed during the third quarter is expected to continue. On the other hand, the price for our quenched steels is expected to be more stable.
Despite a tough market, we are continuing to pursue an increasing number of development projects together with our customers. It is this close technical cooperation with the customers, combined with a unique range in our product offering, which distinguishes SSAB from most other steel companies. With the strategic investments now finalized, we are well-positioned to rapidly meet an increase in demand when the market recovers.
Martin Lindqvist, President and CEO
Presentation of the half-year report SSAB invites to a presentation of the half-year report today October 24, 2012. Venue and time of briefing: World Trade Center (WTC) Stockholm, Kungsbron 1, Conference room Manhattan, 09:30 a.m. CET. The press conference will be held in English and live webcasted on SSAB's website www.ssab.com. Instructions on how to participate in the webcast will be available on SSAB's website, including presentation material for downloading. This information is such that SSAB must disclose in accordance with the Securities Markets Act. The information was submitted for publication on October 24, 2012 at 08.00 am.
SSAB is a global leader in value added, high strength steel. SSAB offers products developed in close cooperation with its customers to create a stronger, lighter and more sustainable world.SSAB has employees in over 45 countries and operates production facilities in Sweden and the US. SSAB is listed on the NASDAQ OMX Nordic Exchange, Stockholm. www.ssab.com
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Helena Stålnert, Executive Vice President, Communications
+46 8 45 45 734
Catarina Ihre, Director, Investor Relations
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