SSAB Report for the third quarter of 2014
• Sales of SEK 13,314 (8,695) million, of which SEK 3,534 million come from Rautaruukki
• Excluding items affecting comparability, operating profit/loss of SEK 510 (-602) million
• Excluding items affecting comparability, profit/loss after financial items of SEK 433 (-745) million
• Earnings per share of SEK -0.26 (-1.61)
• Items affecting comparability related to the acquisition of Rautaruukki affected profit/loss after tax by SEK -450 million and earnings per share by SEK -0.94
• Operating cash flow of SEK 77 (500) million
• On July 29, the share exchange offer to Rautaruukki’s shareholders was completed, whereupon Rautaruukki’s shareholders received newly issued shares in SSAB in exchange for their shares in Rautaruukki
• Rautaruukki is consolidated in SSAB as from July 29. Pro forma accounts for the Group, if Rautaruukki had been owned during the entire third quarter, would (excluding items affecting comparability) have yielded an operating profit/loss of SEK 409 (-521) million
• The acquisition analysis of Rautaruukki is only preliminary and will be concluded during the fourth quarter. In principle, only depreciation/amortization on surplus values in inventory and order books has been incurred in the quarter
• From September 1, the Group has been reorganized into five divisions and new segment reporting has been introduced
Comments by the CEO
The pro forma underlying operating profit for the third quarter was SEK 409 million, an improvement of almost SEK 1 billion compared with the third quarter of 2013, driven primarily by significantly higher earnings in the North American operations, due primarily to higher prices and improved productivity. The improvement in earnings in the European operations is due primarily to higher volumes and lower raw materials costs.
Demand in North America has remained good and we operated at full capacity utilization at both of our North American mills during the third quarter. The European market has been relatively stable when adjusted for customary seasonal effects. The global market for high strength steels has demonstrated a mixed trend: good in the US, stable in Europe, and still challenging in Asia. In total, shipments for the Group during the third quarter were somewhat lower than during the second quarter.
Inventory levels at distributors have increased somewhat in the US due to high import volumes, while inventory levels in Europe are in balance. The market for construction materials is normally seasonally good during the third quarter, but developments in Eastern Europe and Russia have dampened demand this year.
We anticipate that our North American operations will continue to develop positively, driven by continued good demand from end-customers. However, as usual we expect a seasonal slowdown in demand towards the end of the year, primarily in demand from Steel Service Centers. The trend in Europe is difficult to assess due, among other things, to the complicated situation in Russia and Ukraine, but prices and volumes are expected to be relatively stable during the fourth quarter. The market for high strength steels is expected to remain unchanged, with continued good demand in North America but weak demand on several emerging markets.
On July 29, the combination with Rautaruukki was completed. The combination provides clear benefits as we will be able to structurally reduce the annual cost base by SEK 1.4 billion and release working capital, and also avoid capital expenditures costing approximately SEK 2 billion. Furthermore, we have obtained a product portfolio which is absolutely unique in the world and, with even greater resources to develop our offerings to the customers; we will ensure that SSAB continues to be the world leader within high strength steels.
The new organization, comprising five divisions, has been in place since September 1 and the integration work is proceeding well and according to plan. The segment reporting connected thereto is described on page 10. The organization has been structured to maximize cost synergies and flexibility and to achieve a stronger focus on the global high strength steels market, as well as our two important domestic markets – the Nordic region and North America.
The new SSAB has achieved an improved cost position, a stronger product portfolio, and a greater possibility to handle periods of weak demand as well as strong demand in a cost-efficient manner.
Invitation to SSAB’s third quarter 2014 results briefing
SSAB invites you to a presentation of the report for the third quarter on Monday, October 27, 2014.
The interim report for the third quarter of 2014 will be presented by SSAB’s President and CEO Martin Lindqvist and CFO Håkan Folin.
The press conference will be held in English and live webcasted 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, 09:30 a.m. CET.
Telephone numbers: +46 8 505 564 74 (Sweden), +44 203 364 53 74 (UK), +1 855 753 22 30 (USA).
Link to webcast: Go to webcast
This information is such that SSAB must disclose in accordance with the Securities Markets Act. The information was submitted for publication on October 27, 2014 at 07.30 am.
For further information:
Andreas Koch, Director IR and Financial Communications, Tel. +46 (0)70 – 509 77 61
Marie Elfstrand, Director Media Relations and PR, Tel. +46 8 45 45 734