Strong cash flow despite somewhat lower result in Q 2
- Sales were SEK 15,303 (9,717) million
- Operating profit, excluding items affecting comparability, was SEK 301 (267) million
- The profit after financial items, excluding items affecting comparability, was SEK 88 (80) million
- Earnings per share were SEK 0.31 (0.41)
- Items affecting comparability had an impact of SEK -8 (-6) million on profit after tax
- Operating cash flow was SEK 1,462 (528) million
- Currency effects impacted sales positively with over SEK 1.1 billion compared with pro forma 2014, while operating profit was impacted positively with around SEK 70 million
Comments by the CEO
SSAB’s operating profit for the second quarter of 2015 was SEK 301 million (excluding items affecting comparability), down by SEK 263 million compared with the first quarter of 2015 and at the same level as the second quarter last year. Lower earnings compared to the first quarter are primarily due to lower prices for heavy plate in North America and costs incurred by relining of the blast furnace in Luleå. Production difficulties experienced by the Swedish mills during the quarter impacted negatively on second-quarter shipments. Actions have been taken to address these problems and we expect to be able to return to normal deliveries during the third quarter. Cash flow remained strong and was SEK 1,462 (528) million, which was largely driven by lower working capital despite a certain build-up of slab inventories ahead of the relining work in Luleå which began on June 1. The blast furnace is expected to be back in operation in early September.
In North America, the quarter was marked by continued destocking at distributors, which resulted in heavy pressure on prices. High import volumes of heavy plate during 2014 and the first half of 2015 have impacted negatively on the situation in North America. In the Nordic region and rest of Europe, demand for standard steel showed some growth, albeit from low levels. However, prices have shown a slightly downward trend. Global demand for high-strength steel continued to be at a low level during the second quarter and some pressure on prices was noted.
Work on achieving synergies from the acquisition of Rautaruukki is progressing according to plan. During the second quarter, we achieved synergies of SEK 125 million and at the end of the second quarter; the annual run rate amounted to around SEK 525 million. As we announced earlier, we will achieve the full run rate of SEK 1.4 billion in synergies on an annual basis from the second half of 2016 onwards.
During the second quarter, we launched a number of concrete sustainability targets which, among other things, mean we will cut carbon dioxide emissions, use less energy sourced externally and further improve the monitoring of our suppliers’ sustainability work. We will also increase the share of renewable energy we consume since we have taken the decision that at least 50% of the electricity we purchase externally in the Nordic region must be derived from wind and hydro power.
This information is such that SSAB must disclose in accordance with the Securities Markets Act. The information was submitted for publication on July 22, 2015 at 07.30 am.
SSAB is a Nordic and US-based steel company. SSAB offers value added products and services developed in close cooperation with its customers to create a stronger, lighter and more sustainable world. SSAB has employees in over 50 countries. SSAB has production facilities in Sweden, Finland and the US. SSAB is listed on the Nasdaq OMX Nordic Exchange in Stockholm and has a secondary listing on the Nasdaq OMX in Helsinki. www.ssab.com.