SSAB Results for 2016: Lower cost level and stronger financial position lay foundation for profitable growth
The quarter · Sales were SEK 14,442 (12,499) million · Operating profit before depreciation/amortization was SEK 1,066 (134) million · Operating profit/loss was SEK 107 (-878) million · The result after financial items was SEK -139 (-1,127) million · Earnings per share were SEK 0.07 (-0.88) · Operating cash flow was SEK 1,053 (1,788) million The full year · Sales were SEK 55,354 (56,864) million · Operating profit before depreciation/amortization was SEK 4,951 (3,593) million · Operating profit/loss was SEK 1,213 (-243) million · The result after financial items was SEK 324 (-1,171) million · Earnings per share were SEK 1.04 (-0.66) · Operating cash flow was SEK 3,207 (3,874) million · The Board proposes that no dividend will be paid for 2016
Comments by the CEO
SSAB posted a full year operating profit of SEK 1,213 million, up by SEK 1,456 million compared with full year 2015. Improved earnings were driven primarily by the cost reduction program, including synergies from the acquisition of Rautaruukki. Cost reductions were achieved faster than planned and amount to a full annual run rate of SEK 3 billion. Higher volumes and better capacity utilization also contributed to improved earnings for the full year. Our strategic growth initiatives in SSAB Special Steels and Automotive resulted in increased volumes and we continued launching new products at a high pace.
Operating profit for the fourth quarter of 2016 was SEK 107 million, down by SEK 600 million compared with the third quarter of 2016. This was largely attributable to SSAB Special Steels, where there was a scheduled maintenance outage in Oxelösund and a production breakdown occurring when restarting the rolling mill in Oxelösund after the outage. The production breakdown was related to a faulty design in the newly installed control system resulting in damaged transformers. The rolling mill is up and running since the beginning of February and discussions have been initiated with the insurance company regarding potential compensation. Lower prices and lower margins in North America also impacted negatively on the fourth quarter.
Global demand for high-strength steel remained stable during the fourth quarter. SSAB Special Steels’ shipments for the full year were up by 8% at 1 million tonnes. SSAB Special Steels is growing structurally in the market as a result of customers’ needs for increasingly lighter and stronger products.
For SSAB Europe, underlying demand was stable. Market prices rose during the quarter and realized prices for SSAB Europe improved. Import restrictions on Chinese steel have resulted in lower imports and better pricing in Europe.
In North America the fourth quarter was adversely affected by lower realized prices. Market prices, however, rose during the quarter, which is expected to impact positively on SSAB’s realized prices and margins from the first quarter of 2017 onwards.
SSAB aims to reduce net debt by SEK 10 billion between the start of the first quarter of 2016 and the end of 2017. The rights issue during the second quarter of 2016 raised SEK 4.9 billion net and the net cash flow during the second, third and fourth quarters amounted to approximately SEK 2.2 billion. The remaining amount will be achieved through cash flow generated from operations, a structural reduction in working capital and through possible divestment of non-core assets.
The integration between SSAB and Rautaruukki has been completed and the cost reduction program has ended, which resulted in savings of over SEK 3.0 billion and a reduction of over 2,500 employees. Together with our improved financial position, we have created a platform to continue to execute our “Taking the Lead” strategy with the goal to reach industry-leading profitability. We will do this by continuing to drive efficiency through continuous improvement in all our operations, by driving growth within chosen initiatives and by increased focus on the aftermarket. Against this background, I am convinced that we will continue to strengthen our position during 2017.
Invitation to SSAB’s year-end report 2016 results briefing
SSAB invites you to a presentation of the year-end report 2016 at 09.30am CET on Wednesday February 15, 2017.
The press conference will be held in English and webcast live on 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 information that SSAB AB is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Markets Act. The information was submitted for publication, through the agency of the contact persons set out above, at 7.30 am CET on February 15, 2017.