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 leading market positions
SSAB has four core markets:
1. Flat carbon steel and tubes in the Nordics
2. Heavy plate in North America
3. Automotive premium steel (AHSS) globally
4. Special steels (Q&T) globally
SSAB has leading positions in its Nordic and North American home markets. 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 heavy plate, with more than 25% of the total market.
With its leading products, brands, knowledge and well-invested asset base, SSAB also holds the number one position in the global market for high-strength plate and strip (Q&T) and in selected Advanced High-Strength Steels (AHSS) segments. Demand for higher productivity and improved energy efficiency are important drivers in the use of high-strength steels, which provide advantages in the form of stronger, lighter and more durable steel applications. Growth in high-strength steels, services and other premium grades will mean better returns for SSAB since profitability is relatively higher in these areas compared to more standardized products.
Strategic growth targets for 2020
• SSAB Special Steels aims to deliver 1.35 million tonnes of high-strength steels by 2020. In 2017, shipments were 1.2 million tonnes compared to 1.0 million tonnes in 2016
• SSAB Europe aims to improve the product mix to 40% of premium products by 2020. In 2017, premium products constituted 32% of the total volume compared to 30% in 2016
• As part of the mix improvement, SSAB Europe aims to deliver 750 thousand tonnes of Automotive premium products by 2020. In 2017, shipments amounted to 537 thousand tonnes compared to 442 thousand tonnes in 2016
• SSAB Americas aims for a market share of 30% over time on the North American plate market. SSAB estimates that in 2017 its market share amounted to around 28%
• For services, SSAB aims to grow the members in the Hardox Wearparts network to more than 500 by 2020. At the end of 2017, the network had 360 members compared to 265 at the end of 2016
Strong balance sheet
During 2016-2017, SSAB significantly strengthened its balance sheet. A combination of the rights issue and strong cash flow generation has resulted in a net debt reduction of around SEK 12.2 billion and a gearing ratio of 22% at the end of 2017. SSAB has a well-invested production system with capacity to reach the strategic growth targets for 2020. The reduction in debt will have a positive impact on interest costs and enable future strategic initiatives.
Cost efficiency
The synergies from the integration with Rautaruukki and the additional cost saving program were fully realized by the end of 2016, with an annual run rate of SEK 3.0 billion. Going forward, the efficiency efforts will be driven through continuous improvement. This includes smaller daily improvements as well as larger projects. Several initiatives started to yield results during 2017.
Industry-leading profitability
Realization of the strategic growth targets combined with the improved efficiency as a result of continuous improvement is the platform to achieve our financial target of industry-leading profitability. This is defined as the highest EBITDA margin compared to the following peers; ArcelorMittal, AK Steel, Nucor, Salzgitter, Tata Steel Europe, Thyssenkrupp and US Steel. The improvement potential in profitability, relatively low investment needs and a strong balance sheet create a solid foundation for cash flow generation during the coming years.
SSAB and sustainability
SSAB’s objective is to become one of the world’s most sustainable steel companies. We are convinced that by managing our business in a sustainable way we will increase the possibilities to deliver strong financial and operational results. Read more about sustainability in SSAB.
