Report for the first quarter of 2016: Improved result and higher shipments
- Sales were SEK 12,964 (15,468) million
- Operating profit, before depreciation/amortization, excluding items affecting comparability, was SEK 744 (1,501) million
- Operating profit/loss, excluding items affecting comparability, was SEK -190 (564) million
- Profit/loss after financial items, excluding items affecting comparability, was SEK -344 (350) million
- Earnings per share were SEK -0.24 (0.52)
- Items affecting comparability had an impact of SEK -2 (-31) million on the result after tax
- Operating cash flow was SEK 77 (784) million and net cash flow was SEK -244 (511) million
- The Board of Directors has announced a proposal of a preferential rights issue for existing shareholders of around SEK 5 billion. SSAB’s two largest shareholders, Industrivärden and Solidium, have undertaken to subscribe for their pro rata shares. A standby underwriting commitment has been issued by four banks for the remaining amount
Comments by the CEO
SSAB posted an operating loss, excluding items affecting profitability, of SEK 190 million for the first quarter of 2016, an improvement of SEK 612 million compared with the fourth quarter of 2015. This improvement was mostly driven by higher volumes, lower maintenance costs and positive synergy impacts, but was negatively impacted by lower average prices. Increased sales during the quarter resulted in increased working capital, which led to slightly negative net cash flow.
Shipments during the first quarter improved compared to the very weak trend during the fourth quarter. This was mostly because apparent demand during the first quarter was aligned with real demand. After a weak start to the quarter, steel prices have risen both in Europe and in North America, albeit from a very low level. We expect stable underlying demand in the company’s main markets and slightly higher prices during the second quarter.
Today, we have announced our intention to strengthen the balance sheet through a rights issue of SEK 5 billion in class B shares. SSAB’s two largest shareholders, Industrivärden and Solidium, have undertaken to subscribe for their pro rata shares of the rights issue. For the remaining amount, four banks have issued a standby underwriting commitment. In addition, Swedbank Robur and LKAB have expressed their support and their intention to vote in favour of the rights issue. Subject to the rights issue, SSAB has a refinancing package in place which gives significantly lower level of loans maturing during the next 3-5 years and extended duration of credit facilities. SSAB targets a reduction of the net debt by SEK 10 billion by the end of 2017, through the rights issue, divestment of non-core assets and through cash flow from operations.
SSAB are once again increasing our objective in the various ongoing cost savings programs, where synergies from the acquisition of Rautaruukki account for the largest share. Our new target is to have reduced the cost level by SEK 2.8 billion, an increase of SEK 300 million, on an annual basis during 2017 compared to the cost level at the time of the acquisition of Rautaruukki.
The measures taken will enable us to secure SSAB’s long-term possibilities to continue to develop our activities to achieve our goals. A strongly improved financial position will mean we are well placed to take advantage of the opportunities in the market while driving growth in our well-defined focus areas. At the same time, we are well prepared to sustain periods of low demand. SSAB has excellent opportunities to achieve our ambition of industry leading profitability through our unique position in high-strength steels and through our strong home market positions.
Sustainability is an area that is becoming increasingly important. SSAB currently already has highly carbon-dioxide-efficient production, but we have now set our sights even higher. SSAB, LKAB and Vattenfall have initiated a project to study the possibilities of a steelmaking process completely free of carbon-dioxide emissions. Sweden is uniquely placed to be able to achieve the vision of carbon-dioxide-free rolling production as a part of efforts to combat climate warming.
This information is such that SSAB must disclose in accordance with the Securities Markets Act. The information was submitted for publication on April 22, 2016 at 07.30 am.
Invitation to SSAB’s first quarter 2016 results briefing
SSAB invites you to a presentation of the quarterly report at 09.30am CEST on Friday April 22, 2016. .
The press conference will be held in English and webcast live 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: Andreas Koch, Head of Investor Relations, firstname.lastname@example.org, +46 8 454 57 29
Media: Viktoria Karsberg, Head of External Communications, email@example.com, +46 8 454 5734