Results for 2017: Improved earnings and strong cash flow, net debt reduction target exceeded
January 26, 2018 7:30 CET 6 min read
The quarter · Sales were SEK 17,017 (14,442) million · Operating profit before depreciation/amortization was SEK 1,782 (1,066) million · Operating profit was SEK 843 (107) million · The result after financial items was SEK 636 (-139) million · The result includes SEK 265 million compensation for the breakdown in Oxelösund · Earnings per share were SEK 0.32 (0.07) · Operating cash flow was SEK 2,976 (1,053) million The full year · Sales were SEK 66,059 (55,354) million · Operating profit before depreciation/amortization was SEK 7,591 (4,951) million · Operating profit was SEK 3 838 (1,213) million · The result after financial items was SEK 2,863 (324) million · Earnings per share were SEK 2.23 (1.04) · Operating cash flow was SEK 6,511 (3,207) million · Net debt/equity ratio was 22% (34%) · The Board proposes a dividend of SEK 1.00 per share
Comments by the CEO
SSAB’s full-year operating profit amounted to SEK 3,838 million, up by SEK 2,625 million. Improved earnings were primarily driven by higher prices and continued growth for high-strength steels in the Automotive segment within SSAB Europe, and significantly higher shipments within SSAB Special Steels. Operating profit for the fourth quarter increased to SEK 843 (107) million. Cash flow showed a strong improvement during 2017 and we exceeded by SEK 2.2 billion our target to reduce net debt by SEK 10 billion. Since the end of the first quarter of 2016, net debt has been reduced by SEK 12.2 billion.
Customer needs for increasingly lighter and stronger products continues to drive structural growth in SSAB Special Steels, and demand recovered from, among others, the Mining and Construction Machinery segments. The positive trend in demand is expected to continue during the first quarter. For SSAB Special Steels, operating profit for the fourth quarter increased to SEK 641 million, which includes SEK 265 million in compensation for the breakdown that occurred in Oxelösund in December 2016 and also impacted the first quarter of 2017. The production breakdown was related to a faulty design in a newly installed control system, resulting in damaged transformers.
The market remained good for SSAB Europe, with a normal seasonal slowdown towards the end of the year. Higher prices boosted earnings compared with the fourth quarter of 2016, whereas a weaker product mix and more planned maintenance resulted in lower earnings compared with the previous quarter. Demand is expected to continue at a good level, with a seasonal improvement during the first quarter.
The heavy plate market in North America deteriorated during the fall, leading to lower realized prices and lower operating profit compared with the previous quarter. Nevertheless, demand picked up towards the end of the year and market prices for heavy plate rose sharply. These higher prices will gradually reflect earnings from the first quarter onwards and demand is expected to continue at a good level.
SSAB made good progress with the growth initiatives during 2017. SSAB Special Steels’ shipments increased by 18% to 1.2 million tonnes. Shipments of high-strength steel in the Automotive segment rose 21%, an important contributory factor why SSAB Europe’s share of premium products increased to 32% (from 30% in 2016). The number of Hardox Wearparts members was 360 (265) at the end of 2017.
During 2017, we updated the Group’s financial targets and are also raising our environmental targets. We also presented long-term sustainability objectives during 2017. These included operating completely fossil-free production across the group in 2045, with the HYBRIT initiative playing a key role.
Overall, I have a positive view of 2018. SSAB has strong market positions on our home markets and in our global niches. We have strengthened our balance sheet considerably and have good opportunities to continue to deliver good cash flow. SSAB has thus built a strong platform to continue to drive initiatives for profitable growth.
Invitation to SSAB’s year-end report 2017 results briefing
SSAB invites you a presentation of the year-end report 2017 at 09.30am CET on Friday January 26, 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 CET.
+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 CET on January 26, 2018.