Steel firm reports continued on Friday with SSAB Swedish Steel AB (OMX: SSAB A) releasing its earnings. The global leader in value added high strength steel grew sales by 8% in Swedish kronor to 11,769 million. Currency effects from the strong Swedish krona were large. Profit after financial items was around 1.18 billion and operating cash flow positive at 590 million.
President and CEO Martin Lindqvist said the company noticed a slowdown towards the end of second quarter particularly with downward pressure on strip product prices. Demand for niche products, for example that of Hardox steel wear plates, improved significantly.
SSAB renegotiated price for iron ore pellets in USD for Q2 and Q3 at nearly 20% higher price level than seen on Q1, which will show in earnings on Q3. Maintenance work and seasonally lower level of activity along with the aforementioned price pressure and increased raw material costs indicate that the third quarter will be weaker than the second quarter but still stronger than the corresponding quarter in 2010.
SSAB will continue quenched steel investment projects in Mobile, Alabama and in Borlänge, Sweden. The investments will come online towards the end of the year and will increase SSAB’s quenched steel capacity from 800 thousand tonnes to approximately 1300. Logistics investment are taking place in Oxelösund, Sweden and in Kunshan, China. One blast furnace in Oxelösund will undergo a relining in Q3.
In addition to the work done in the factories with investment build-up, SSAB is planning a lengthy maintenance outage for rolling mill’s main engine and on the re-heat furnace in Montpelier, Iowa plant. This outage is scheduled to take place from middle of September to the end of October. SSAB’s report was a major positive surprise to investors and its share strengthened 7.3% on Friday. Here is the direct link for the interim report in pdf format.
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