SSAB’s strategy aims to secure the company’s long-term development to create value for shareholders and other stakeholders. SSAB’s main financial objective is to reach industry leading profitability and to generate solid cash flows, enabling further debt reduction and shareholder dividends.
Strong offering and market positions
SSAB has a strong global position in high-strength steels and value-added services, and holds leading positions in its Nordic and North American home markets. After the combination with Rautaruukki, SSAB has an overall market share of around 45% for flat carbon steels in the Nordic region. In North America, SSAB is the largest producer of plate, with more than 25% of the total market.
Requirements and demand for improved material and energy efficiency are important drivers leading to the growing use of high-strength steels, which provide advantages in the form of stronger, lighter and more durable steel applications. With its leading products, assets, brands, knowledge and well-invested asset base, SSAB continues to be well placed to take advantage of growth opportunities in high-strength steels. Growth in high-strength steels, services and other premium grades will mean better returns for SSAB since profitability is relatively higher in these areas.
Stronger balance sheet
SSAB aims to reduce net debt by SEK 10 billion between the start of the first quarter of 2016 and the end of 2017. The rights issue during the second quarter of 2016 raised SEK 4.9 billion net and the net cash flow during the second, third and fourth quarters amounted to approximately SEK 2.2 billion. The remaining amount will be achieved through cash flow generated from operations, a structural reduction in working capital and through possible divestment of non-core assets.
Synergies and other cost savings
The integration with Rautaruukki has been completed and the synergy program concluded at the end of the second quarter of 2016. The annual run rate of SEK 2.0 billion in synergies achieved significantly exceeded the original target of SEK 1.0-1.35 billion and the synergies were also realized one year earlier than originally planned. The subsequently announced target to reduce the total cost level (including synergies) by SEK 2.8 billion on an annual basis compared with the cost level at time of the acquisition of Rautaruukki, was exceeded by the end of 2016. The annual run rate in cost reduction achieved is SEK 3.0 billion.
Stronger competitive platform going forward
With the actions taken, we have created a stronger competitive platform to achieve our “Taking the Lead” strategy, aiming for growth and industry leading profitability. We will do this by continuing to drive efficiency through continuous improvement in all our operations, by driving growth within chosen initiatives and by increased focus on the after-market.
Read more about SSAB's business from Annual Report 2015