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SSAB Announces 2012 Results and 2013 Outlook
02/11/2013 - As SSAB reported its results for 2012, CEO Martin Lindqvist commented on market conditions and expectations for the coming year, noting that the weak trend in order inflow pertains particularly to the European market, but North American and Asian customers also adopting a wait-and-see approach.
As SSAB reported its results for 2012, CEO Martin Lindqvist commented on market conditions and expectations for the coming year.
“The steel markets continued to perform negatively following the deterioration in order inflow we witnessed at the beginning of the autumn. The weak trend pertains particularly to the European market, but North American and Asian customers also adopted a wait-and-see approach. Prices of standard products fell during the quarter. Quenched steel prices continued to exhibit greater stability,” Lindqvist said.
“Many of our customers had longer than normal production outages during December and the beginning of January. At the same time at the customer level, the inventory reduction process which began during the third quarter continued. This also affected our order books for both standard steels and niche steels. Shipments during the fourth quarter were 1% lower than in the third quarter and 13% lower than in the fourth quarter 2011.
“Thanks to our continued work on improving inventory management and working capital, we were able to deliver a strong cash flow of SEK 1.2 billion, despite a weak earnings trend. Thus, our net debt/equity ratio was reduced even further, to 54%. At the beginning of 2012, the net debt/equity ratio was 60%.
“There are currently signs of a revival in economic activity in North America and Asia as compared with the fourth quarter of 2012. It is our assessment that volumes will continue to increase somewhat within SSAB Americas and SSAB APAC during the first quarter of 2013, as compared with the fourth quarter. The trend in Europe still remains weak and difficult to assess.
“Generally speaking, steel prices appear to have stabilized. We will also see certain easing on the cost side as the lower raw material prices will have a positive impact on earnings by approximately SEK 200 million during the first quarter.
“The efficiency program within SSAB EMEA is proceeding according to plan and we will achieve the previously announced cost savings of approximately SEK 800 million on an annual basis as from 2014. The entire efficiency program is aimed to improve our competitiveness and increasing flexibility, in order to better address fluctuations in the market. In addition to the efficiency program, a program involving a cut in work hours and pay has been introduced for both blue-collar employees and white-collar staff in SSAB Sweden. The program runs from December 2012 until the end of May 2013.
“Our major investments are now complete and we can now supply a range of products with unique breadth and quality when the market turns,” he stated.
Quarterly Results:
- Sales of SEK 8,354 (10,898) million
- Operating profit/loss of SEK -665 (50) million
- Loss after financial items of SEK -842 (-98) million
- Earnings per share of SEK -0.70 (-0.23)
- Operating cash flow of SEK 1,251 (1,671) million and cash flow from current operations of SEK 1,049 (1,828) million
Full Year Results:
- Sales of SEK 38,923 (44,640) million
- Operating profit/loss of SEK -96 (2,512) million
- Profit/loss after financial items of SEK -693 (1,998) million
- Earnings per share of SEK 0.05 (4.82)
- Operating cash flow of SEK 4,929 (2,821) million and cash flow from current operations of SEK 3,925 (2,200) million
- Niche products accounted for 38 (37)% of steel shipments
- A dividend is proposed of SEK 1.00 (2.00) per share, equal to SEK 324 (648) million
- A reduced tax rate in Sweden impacted, as a one-time item, positively on taxes with SEK 253 million
