Report for the first quarter of 2009
The quarter • Sales fell by 38% to SEK 8,035 (12,910) million • Operating profit of SEK -134 (2,748) million • Profit after financial items of SEK -215 (2,372) million • Profit after tax of SEK 153 (1,701) million, entailing earnings per share of SEK 0.50 (5.17) • Operating cash flow of SEK 924 (2,790) million and cash flow from current operations of SEK -376 (1,739) million • Net debt/equity ratio increased during the quarter from 48% to 52% • The return on capital employed for the most recent twelve-month period was 13 (17)% and the return on equity was 17 (22)%
Comments by the CEO
As a result of the severe downturn in the steel market, SSAB’s earnings were much weaker and the quarter ended with a small loss. The cost savings program which we initiated towards the end of last year has had a positive effect, but on the other hand the market has weakened further.
In light of the weak demand, the savings program will be implemented with continued high intensity and focus on cash flow. During the quarter, we announced that we will extend the normal production outages at our Swedish plants during the summer in order to avoid build up of large inventories of primarily slabs. We are regularly monitoring market trends and we maintain full flexibility in order to adjust the rate of production to changes in demand.
The prospects for the economy in general remain bleak. No real bright spots in the global economy have been reported. The steel market also continues to perform extremely weakly. This is particularly the case in Europe and the US in sectors such as heavy vehicles, mining and construction machinery. Production during the coming quarter will continue to be at a low level, driven by both low consumption of steel and a continued liquidation of inventories by our customers. It appears that the price trend will be weak and prices are now at a significantly lower level than last year. However, it appears as though the prices for our most important raw materials, iron ore and coal, will be lower than last year.
In the shadow of the economic crisis, our customers are continuing to demonstrate great interest in developing new products using high-strength steels and we are enjoying a high level of activity in development projects together with our customers. In the somewhat longer term, I remain optimistic as regards the trend in the steel market. There are many countries that need to develop infrastructure, housing and transportation systems. Increased demand for sustainability, reduced emissions and energy savings will benefit demand for SSAB's steel.
Our employees have demonstrated great flexibility when it comes to quickly adapting staffing and types of operation to the new market situation.
President and CEO
The briefing will be live webcasted on SSAB’s website at www.ssab.com. Instructions how to participate in the webcast will be available on SSAB’s website, including presentation material for downloading. If you want to participate in the briefing via telephone or if you want to ask questions during the briefing, please dial the following numbers: +46 (0)8 505 598 53 (Sweden), +44 (0)20 3043 2436 (UK), +1 866 458 40 87 (USA). Should you have questions regarding the webcast, please contact Heidi Wendt, phone: +46 (8) 45 45 756.
The webcast will be available on www.ssab.com/en/Investors/Webcast