Results for 2010
The full year
- Sales increased by 34% to SEK 39,883 (29,838) million
- Operating profit of SEK 1,084 (-1,592) million
- Profit after financial items of SEK 682 (-2,061) million
- Earnings per share of SEK 2.21 (-2.69)
- Operating cash flow of SEK -212 (4,868) million and cash flow from current operations of SEK -731 (3,387) million
- Net debt/equity ratio of 58 (49)%
- Return of 2% on both working capital and equity, while these figures were negative for 2009
- Proposed dividend of SEK 2.00 (1.00) per share, equal to SEK 648 (324) million.
- Sales increased by 23% to SEK 10,205 (8,284) million
- Operating profit of SEK -81 (430) million
- Profit after financial items of SEK -176 (348) million
- Earnings per share of SEK -0.39 (1.09)
- Operating cash flow of SEK -123 (799) million and cash flow from current operations of SEK -376 (856) million
Unless otherwise stated, the report relates to the continuing operations, i.e. excluding the tubular business. In the report, amounts within brackets refer to the same period last year.
Comments by the CEO
As a consequence of the recovery in 2010, operating profit improved by SEK 2.7 billion compared with 2009, to SEK 1.1 billion. Although the pace of the recovery slowed down somewhat towards the end of the year, we perceive a positive trend, among other things, in sales of niche products. Capacity utilization during the year was approx. 85 (55) per cent. We have not yet been able to fully compensate for increased raw material costs. During 2010, the strong Swedish krona negatively impacted on operating profit by approx. SEK 1.5 billion. We continue to focus on improving our cost efficiency.
The result for the fourth quarter is in line with the announcement published on December 23, 2010. Demand during the quarter was weaker than expected, particularly in Europe and North America, while Latin America and China demonstrated continued stable demand. The strongest segments during the fourth quarter were mining and heavy transports, while the lifting remained weak. Furthermore, earnings were negatively affected by a disruption in production at one of the blast furnaces in Oxelösund. In light of the weak market conditions during the quarter, the opportunity was taken to bring forward a maintenance outage at the plant in Mobile.
Having now entered the first quarter, the market picture is somewhat brighter than we experienced during the fourth quarter of 2010. It is believed that demand in Europe will generally continue to develop positively, although still slowly during the first quarter. The market for SSAB's strip products is expected to strengthen. The mining and heavy transports are the strongest segments within Europe, while the lifting segment has not yet shown any signs of recovery.
In North and Latin America, the mining segment and parts of the energy segment are expected to continue to be the strongest segments during the first quarter, but the heavy transport and automotive segments are recovering. Positive signals are being received from the wind power industry, and orders from that industry have begun to increase. Overall, the SSAB Americas business area now has a good order book and we are fully booked for the first quarter.
In Asia and Oceania, the mining and heavy transport segments are expected to continue to perform well, although the floods in Australia may temporarily dampen consumption of abrasion-resistant steel. The lifting and automotive segments began the year with a clear recovery, following a slowdown during the second half of 2010.
Market prices for raw materials are showing an upward trend, which in the case of coal is reinforced by the floods in Australia. Thanks to current stocks of coal, the floods will have no impact on our production capability during the first quarter. In regards to iron ore, our contracted prices in dollar terms are unchanged in the first quarter. Scrap metal prices in North America have risen.
Within EMEA, the fall in prices during the fourth quarter of 2010 is expected to have a somewhat negative impact on contracts signed for shipment during the first quarter, while prices on newly executed contracts for later shipment are increasing. Improved demand and higher scrap metal prices in North America are expected to lead to increased steel prices, but we will not, however, cover in full the in-creased scrap metal prices during the first quarter.
The cold winter weather and the large-scale stoppages in rail traffic in Sweden had a negative impact on our shipment capability at the beginning of the first quarter.
The capital expenditure programs to increase our production capacity of niche products are proceeding according to plan.
My assessment is that we are in a period of continued recovery. The objective is to continue to gradually compensate for increased raw materials costs.
Martin Lindqvist, President and CEO