SSAB Reports Positive H1 Results, Provides Outlook for Remainder of Year
07/25/2014 - SSAB said it expects its North American operations to continue to develop positively during the second half of 2014, driven by an improved market and positive effects of previous price increases.
The quarter
Comments by the CEO:
“The positive trend from the first quarter is continuing and we are able to present an operating profit of SEK 260 million for the second quarter of 2014. The operating profit for the second quarter represents an improvement of SEK 234 million compared with the first quarter of 2014, driven primarily by higher prices in Americas and lower production costs in EMEA. Operating cash flow was also positive during the second quarter, at more than SEK 500 million.
“The improved demand in North America has continued within several segments and, following the maintenance outage at the plant in Mobile at the beginning of the quarter, we have had full capacity utilization at both of our North American plants. We have also announced two additional price increases during the quarter. The European steel market has continued to recover slowly from low levels. However, shipment volumes for EMEA were slightly lower than in the first quarter, during which the market was driven partially by a small inventory restocking following the winter season. The operations in Asia experienced a weak quarter in terms of earnings, with the market remaining challenging.
“We expect our North American operations to continue to develop positively during the second half of 2014, driven by an improved market and positive effects of previous price increases. Demand within EMEA during the second half of the year is expected to be approximately in line with the first half of the year, but we envisage continued uncertainly in Russia and Turkey. Steel prices in EMEA are expected to be stable or slightly weaker, while prices of input goods are demonstrating a downward trend. Customary maintenance outages will be carried out within EMEA during the seasonally weak third quarter. The Asian market remains weak and we do not anticipate any improvement during the second half of the year.
“In January this year, SSAB and Rautaruukki announced the ambition to combine. On July 14, approval for the combination was received from the EU Commission. The concessions required by the Commission are in line with what we had anticipated, and will not affect the industrial logic or size of the synergies. The time period for acceptance of the offer by Rautaruukki's shareholders expired on July 22, and we can note that more than 90 percent of Rautaruukki's shareholders have accepted the offer. We will thus be able to complete the combination shortly. Together, we will create an effective and stable steel company enjoying strong positions on our domestic markets and with a clear global leadership within high strength steels. I look forward to creating an even stronger steel company together with all of our employees.”
- Sales of SEK 9,323 (8,894) million
- Operating profit/loss of SEK 260 (-115) million
- Profit/loss after financial items of SEK 73 (-273) million
- Earnings per share of SEK 0.41 (-0.44)
- Operating cash flow of SEK 528 (796) million
- After the quarter end, approval from the EU and more than 90% of the shares in Rautaruukki were obtained
Comments by the CEO:
“The positive trend from the first quarter is continuing and we are able to present an operating profit of SEK 260 million for the second quarter of 2014. The operating profit for the second quarter represents an improvement of SEK 234 million compared with the first quarter of 2014, driven primarily by higher prices in Americas and lower production costs in EMEA. Operating cash flow was also positive during the second quarter, at more than SEK 500 million.
“The improved demand in North America has continued within several segments and, following the maintenance outage at the plant in Mobile at the beginning of the quarter, we have had full capacity utilization at both of our North American plants. We have also announced two additional price increases during the quarter. The European steel market has continued to recover slowly from low levels. However, shipment volumes for EMEA were slightly lower than in the first quarter, during which the market was driven partially by a small inventory restocking following the winter season. The operations in Asia experienced a weak quarter in terms of earnings, with the market remaining challenging.
“We expect our North American operations to continue to develop positively during the second half of 2014, driven by an improved market and positive effects of previous price increases. Demand within EMEA during the second half of the year is expected to be approximately in line with the first half of the year, but we envisage continued uncertainly in Russia and Turkey. Steel prices in EMEA are expected to be stable or slightly weaker, while prices of input goods are demonstrating a downward trend. Customary maintenance outages will be carried out within EMEA during the seasonally weak third quarter. The Asian market remains weak and we do not anticipate any improvement during the second half of the year.
“In January this year, SSAB and Rautaruukki announced the ambition to combine. On July 14, approval for the combination was received from the EU Commission. The concessions required by the Commission are in line with what we had anticipated, and will not affect the industrial logic or size of the synergies. The time period for acceptance of the offer by Rautaruukki's shareholders expired on July 22, and we can note that more than 90 percent of Rautaruukki's shareholders have accepted the offer. We will thus be able to complete the combination shortly. Together, we will create an effective and stable steel company enjoying strong positions on our domestic markets and with a clear global leadership within high strength steels. I look forward to creating an even stronger steel company together with all of our employees.”
