core sector communique

SSAB Report for the second quarter of 2011

The quarter

• Sales increased by 8% and amounted to SEK 11,769 (10,911) million
• Operating profit improved to SEK 1,323 (708) million. Currency affects earnings by SEK +100 million
• Profit after financial items improved to SEK 1,179 (624) million. Currency affects earnings by SEK +120 million
• Earnings per share of SEK 2.73 (1.64)
• Operating cash flow of SEK 590 (341) million and cash flow from current operations of SEK 445 (98) million
• Shipments of niche products increased by 17% compared with the second quarter of last year

The half-year

• Sales increased by 15% and amounted to SEK 22,825 (19,776) million
• Operating profit improved to SEK 1,939 (876) million. Currency affects earnings by SEK -200 million
• Profit after financial items improved to SEK 1,683 (707) million. Currency affects earnings by SEK -180 million
• Earnings per share of SEK 3.94 (2.09)
• Operating cash flow of SEK 827 (597) million and cash flow from current operations of SEK 356 (545) million
• Net debt/equity ratio of 65 (49)%
• Niche products now account for 37 (30)% of steel shipments

(In the report, amounts in brackets refer to the corresponding period of last year.)

Comments by the CEO

Demand was good at the beginning of the second quarter, but we also witnessed a degree of slowdown towards the end of the quarter. Operating profit for the quarter amounted to SEK 1,323 million, which is double that of the preceding quarter and the corresponding quarter last year.

The trend in our American operations continued to be positive. In accordance with the objectives that we established in conjunction with the acquisition of the operations in the US, one of our most important niche steels - Hardox - is now being produced and delivered from our plant in Mobile, Alabama.

Also, operations in Asia continued to grow strongly, while the market in Europe was characterized by the uncertainty resulting from the financial crises in several countries. Towards the end of the second quarter there was a downward pressure on strip product prices, while plate prices were more stable.

Late June, we signed a price agreement for iron ore pellets for the second and third quarters. The new agreement entails a price increase in USD of almost 20% compared with the price in the first quarter 2011. The impact of the price changes will be felt during the third quarter.

During the third quarter, implementation will continue of a number of projects aimed at strengthening our position as a leading supplier of quenched steels. In Borlänge, a new quenching line and cutting line are now being installed, while in Mobile, Alabama, work is underway on the new quenching line. In Oxelösund and Kunshan, investments are taking place to improve logistics, reduce lead times and improve the service level to our customers. Taken together, these investments will provide us with improved possibilities for meeting our customers’ demand for quenched steels. The investment projects will be brought into commission towards the end of the year and at the beginning of next year, and will increase our quenched steel capacity by 500 thousand tonnes to approximately 1,300 thousand tonnes. In addition, one of our blast furnaces in Oxelösund is undergoing a relining during the third quarter and there will be a major maintenance outage in Montpelier, Iowa towards the end of the quarter.

The maintenance work and a normal lower level of activity during the third quarter will have a negative impact on earnings. These factors, together with continued price pressure, increased raw materials costs, and uncertainty concerning developments in Europe, indicate that the third quarter will be weaker than the second quarter. However, the recovery is continuing and demand is expected to be stronger than in 2010.

Martin Lindqvist, President and CEO

SSAB is a world-leading producer of high strength steels. SSAB offers products developed in close cooperation with customers, in order to create a stronger, lighter, and more sustainable world. SSAB has employees in more than 45 countries, with production plants in Sweden and the United States. SSAB is listed on NASDAQ OMX Nordic, Stockholm.