SSAB Half-Year Report 2012
- Sales of SEK 10,816 (11,769) million
- Operating profit of SEK 755 (1,330) million
- Profit after financial items of SEK 609 (1,186) million
- Earnings per share of SEK 1.48 (2.70)
- The operating cash flow improved to SEK 948 (597) million and cash flow from current operations to SEK 495 (445) million
- Niche products accounted for 37 (37)% of steel shipments
(In the report, amounts in brackets refer to the corresponding period of last year. The comparison period has been adjusted as a consequence of changed accounting principles.)
Comments by the CEO
The economic uncertainty in Europe continued during the second quarter and the rate of growth in China slowed down somewhat. The recovery in the US economy weakened towards the end of the quarter, in part due to seasonal factors. The aggregated effect of these factors was to dampen demand for steel.
SSAB's earnings for the second quarter were better than for the preceding quarter, primarily due to the impact of the price increases we had announced. This affected first and foremost our EMEA business area which, as a consequence and thanks to the ongoing efficiency program reported a positive result. Earnings for the Americas business area were somewhat lower than in the first quarter, primarily due to the fact that declining scrap metal prices dragged down steel prices, at the same time as demand softened towards the end of the quarter. The APAC business area also reported lower earnings than in the preceding quarter.
The operating cash flow remained strong and the net debt/equity ratio was further reduced during the quarter.
The strongest segments on the American markets were Material Handling (primarily the mining industry), as well as Energy and, in part, Construction Machinery. In APAC, too, the mining sector performed strongly and the mobile crane sector also showed signs of recovery. Within EMEA, segments linked to quenched steels were stable, while demand for strip products was weaker.
Capacity utilization during the quarter was normal at our American plants, while it was at approximately 80 percent at our Swedish production plants. As estimated in the first quarter, the production outage resulting from the gas pipe damage in Oxelösund led to a shortfall in quenched steel production of 10 thousand tonnes.
The third quarter will be affected by the scheduled maintenance outages at our Swedish plants. Production will otherwise be regularly adjusted to demand. At present, it is difficult to assess the development in the steel markets. There is much to indicate continuing excess capacity, primarily within strip products in Europe. Demand for quenched steels is expected to be stable. We are witnessing a weakening of demand on the American markets, partially due to extended summer outages at end-customers, and partially attributable to a wait-and-see approach at Steel Service Centers. Despite a somewhat lower rate of growth in China, we perceive great possibilities for our high strength steels and development projects, both there and in the rest of Asia.
Our major capital expenditure projects are now in place and the introduction of steels from the new production lines is taking place at our customers. Globally, we are continuing to increase the number of development projects together with customers, and the reported efficiency program within EMEA is proceeding according to plan. A lower capital expenditure level together with continued efficiency work throughout the Group will support a strong cash flow generation going forward. Despite the somewhat uncertain economic climate, we perceive continued great possibilities in the unique range and quality of our product offering.
Martin Lindqvist, President and CEO
SSAB is a global leader in value added, high strength steel. SSAB offers products developed in close cooperation with its customers to create a stronger, lighter and more sustainable world.SSAB has employees in over 45 countries and operates production facilities in Sweden and the US.