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 (Advanced High-Strength Steel, AHSS) globally
4. Special steels (Quenched and Tempered, Q&T and AHSS) globally
SSAB has leading positions in its Nordic and North American home markets. SSAB has an overall market share of 40-45% for flat carbon steels in the Nordic region. In North America, SSAB is the largest producer of heavy plate, with market share approaching 30%.
With its leading products, brands, knowledge and well-invested asset base, SSAB also holds the number one position in the global market for Quenched and Tempered (Q&T) plate and strip 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 targets for 2022
• SSAB Special Steels aims to deliver 1.6 million tonnes of high-strength steels in 2022. In 2018, shipments were 1.3 million tonnes
• SSAB Europe aims to deliver 800 thousand tonnes of advanced high-strength steel products (AHSS) to the automotive industry (2018: 562 thousand tonnes) and 900 thousand tonnes of premium steels (2018: 718 thousand tonnes). This means that the share of premium products will reach 46% in 2022 (2018: 36%)
• SSAB Europe aims to strengthen its market leadership in the Nordic home market and have 40-45% market share (over time)
• SSAB Americas aims to increase the share premium products to 39% during 2022 (2018: 29%)
• SSAB Services will increase sales to SEK 4.5 billion through a combination of organic growth and acquisitions (2018: SEK 2.4 billion)
In addition to these strategic targets, Tibnor aims to reach an EBITDA margin of more than 5% and a ROCE of more than 15% in 2022. Ruukki Construction aims to reach an EBITDA margin of more than 10% in 2022.
Strong balance sheet
During 2016-2018, SSAB significantly strengthened its balance sheet. A combination of the 2016 rights issue and strong cash flow generation has resulted in a gearing ratio of 14% at the end of 2018. 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.
Efficiency efforts are driven through continuous improvement using the SSAB One management philosophy. This includes smaller daily improvements as well as larger projects. SSAB has a yearly process with target setting for continuous improvement efforts as well as an ongoing follow-up process.
Realization of the strategic 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, a balanced investment level and a strong balance sheet create a solid foundation for cash flow generation during the coming years.
First in fossil-free steel
SSAB is undertaking a strategic roadmap to convert the iron- and steelmaking to new technology, and to be the world’s first steel company to deliver iron ore-based fossil-free steel to the market in 2026. This includes active leadership role in the HYBRIT joint venture initiative with LKAB and Vattenfall. The target is to be completely fossil-free as a company by 2045.
Read more about sustainability in SSAB.