Report for the first quarter 2018: Continued improvement in earnings, despite temporary headwinds in operations
The quarter · Sales were SEK 17,388 (15,739) million · Operating profit before depreciation and amortization was SEK 1,836 (1,627) million · Operating profit was SEK 916 (702) million · Earnings per share were SEK 0.65 (0.49) · Operating cash flow was SEK 761 (876) million · Net debt/equity ratio was 21 (32) %
Comments by the CEO
SSAB’s operating profit for Q1 2018 was SEK 916 million, up SEK 214 million compared with Q1 2017. Earnings were also up compared with the prior quarter, however earnings were negatively affected by some operational issues. There was a two weeks production disruption in the blast furnace in Oxelösund that affected SSAB Special Steels. During the quarter, we also had capacity problems in rail transport of slabs which resulted in both output and shipment losses in SSAB Europe. Both issues were resolved by the end of the quarter. Demand is still good in our markets and SSAB’s growth initiatives developed well during the quarter.
Customer needs for increasingly lighter and stronger products continue to drive structural growth in SSAB Special Steels, while demand is also supported by cyclical recovery in several segments. SSAB Special Steels’ shipments were 346 thousand tonnes, up 25% compared with Q1 2017 and operating profit increased by SEK 191 million to SEK 434 million. The result was negatively affected by the blast furnace production disruption mentioned above.
SSAB Europe's operating profit was SEK 657 million, somewhat lower than in Q1 2017. Demand continued to be at a good level, but SSAB’s shipments were down 4%. This was primarily due to the capacity problems in rail transport mentioned above. Shipments of high-strength steel in the Automotive segment were 11% higher than in Q1 2017.
SSAB Americas’ Q1 operating profit rose with SEK 286 million to SEK 129 million. Heavy plate spot prices in North America have risen sharply since November last year. However, contract prices and longer lead times mean a certain delay before these higher prices are reflected in SSAB’s earnings and margins only began to improve towards the end of Q1. The steel tariffs introduced during Q1 have so far had limited impact.
During Q1 we presented our conclusions from the pre-feasibility study for the fossil-free steel initiative, HYBRIT, and we are now planning a globally-unique pilot plant for fossil-free steel production in northern Sweden, with the first ground to be taken during the summer.
The outlook remains good for 2018. SSAB has strong market positions in our home markets and in our global niches. All in all, we have good opportunities for continued profitable growth and to generate strong cash flow. We have strengthened the balance sheet significantly and the AGM held in April resolved to pay a dividend of SEK 1.00 per share.
Invitation to SSAB’s first quarter 2018 results briefing
SSAB invites you to a presentation of the quarterly report at 9.30am CEST on Friday April 20, 2018. The press conference will be held in English and live webcast on SSAB’s website www.ssab.com. It is also possible to participate in the briefing via telephone.
Venue and time of briefing: World Trade Center (WTC) Stockholm, Kungsbron 1, Conference room Manhattan, 09.30am CEST.
+46 8 505 564 74 (Sweden),
+44 203 364 5374 (UK),
+1 855 753 2230 (USA).
Link to webcast: Go to webcast
For further information, please contact:
Investor Relations: Per Hillström, Head of IR,
email@example.com, +46 70 2952 912
Media: Viktoria Karsberg, Head of Corporate Communications,
firstname.lastname@example.org, +46 8 454 5734
This information is inside information that SSAB AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above, at 7.30am CEST on April 20, 2018.