Operating profit and profit after financial items
Operating profit for the full year improved by SEK 2,676 million to SEK 1,084 (-1,592) million. The profit analysis is shown in the table below.
Exchange rate movements compared with 2009 had a negative impact of approximately SEK 1.5 billion on operating profit during the year.
Financial items amounted to SEK -402 (-469) million and profit after financial items amounted to SEK 682 (-2,061) million, an improvement of SEK 2,743 million compared with 2009.
Tax for the year amounted to SEK +82 (+1,182) million. The effective tax rate was +12(+57) percent. Tax for the year was positively impacted by 55 percentage points due to lower tax rates on positive earnings and higher tax rates on negative earnings in foreign subsidiaries.
Profit after tax and earnings per share
Profit after tax (attributable to the shareholders) excluding discontinued operations amounted to SEK 716 (-871) million, equal to SEK 2.21 (-2.69) per share.
Return on capital employed/equity
The return on capital employed before tax and return on equity after tax were 2 percent for the full year, whereas the figures for the full year of 2009 were negative.
Test of impairment for goodwill
On November 30, the annual impairment test was carried out regarding goodwill. At the end of the year there remained SEK 18,643 million in goodwill, of which in principle the entire amount relates to SSAB North America (former IPSCO and now part of SSAB Americas). The result of the impairment test indicated no impairment. For further information, see Note 6.
Divestment of the North American tubular business
The tubular business in SSAB North America was sold in 2008. In the income statement for 2010 an additional cost of SEK -164 (-131) million has been reported as “Result after tax for discontinued operations”. The cost relates to provisions for warranty undertakings to the buyer regarding tax for the period prior to the divestment.
|Change in operating profit between 2010 and 2009 (SEK millions)||
|Exchange rate impact on operating profit||-1,500|
|- Higher prices||100|
|- Higher volumes||2,500|
|- Higher variable production costs||-1,100|
|- Unabsorbed fixed costs 2009||2,500|
|- Higher sales of by-products and slabs||520|
|- Higher volumes, changed mix and margins||430|
|Higher fixed costs||-964|
|Lower provisions for anticipated bad debt losses||170|
|Change in operating profit||+2,676|
|Operating profit per business area||
|- SSAB EMEA||374||-1,693|
|- SSAB Americas||1,119||595|
|- SSAB APAC||232||70|
|Depreciation/amortization surplus values 1)||-870||-942|
|Earnings after financial items||682||-2,061|
|Earnings after tax for continuing operations||764||-879|
|Earnings after tax for discontinued operations 3)||-164||-131|
|Earnings after tax||600||-1,010|
|Operating margin (%)||3||-5|
|Return on capital employed before tax (%)||2||neg|
|Return on equity after tax (%)||2||neg|
|Earnings per share (SEK)||1.70||-3.09|
|of which for continuing operations (SEK)||2.21||-2.69|
|Net debt/equity ratio (%)||58||49|
1) Depreciation/amortization of surplus values on intangible and tangible fixed assets from the acquisition of IPSCO.
2) Profit includes a profit of SEK 0 (313) million on the sale of emission rights of which SEK 0 (13) million in SSAB EMEA. Earnings for 2009 also included a positive item regarding dissolution of a structural reserve in the amount of SEK +76 million.
3) The discontinued operations relate to the tubular business in North America which was divested in 2008. The cost for the year relates to a provision in respect of warranty obligations regarding tax to the buyer.
|The business areas/subsidiaries’ sales, profits and return on capital employed|
||Sales||Change||Change 3)||Operating profit||Return on capital employed 4)|
|Depreciation/amortization on surplus values 1)||
1) Depreciation/amortization of surplus values on intangible and tangible assets related to the acquisition of IPSCO.
2) The result includes a profit of SEK 0 (300) million on the sale of emission rights in Other and of SEK 0 (13) million in SSAB EMEA.
3) Adjusted for changes in exchange rates.
4) SSAB America’s return is calculated based on operating profit including depreciation and amortization on surplus values.