SSAB Swedish Steel AB (OMX: SSAB A) posted a quarterly net loss of 76 million in Q4 2011. Operating profit was just slightly positive at 50 million with sales growth of 7% vs. Q4 2010 to 10.9 billion SEK. Operating cash flow was over 1.6 billion. Compared to the corresponding quarter last year, all these numbers represent some improvement but sequentially sales were down slightly and operating profit took a 90% dive. High strength steel prices held better but standard product prices were down in both Europe and North America. The performance of the SSAB Americas was nonetheless good. Niche products share of sales grew to 37%.
Full year sales were around 44.6 billion and operating profit around 2.5 billion. Earnings per share for 2011 are 4.82. The company is proposing a stable dividend of 2 SEK a share. New quenching line in Borlänge will be commissioned in Q1. After the investment package has been completed, SSAB’s quenched steels capacity will be 1.3 million tonnes. SSAB says that clear recovery of early 2011 levelled off and short-term prospects are unclear. In January some inventory re-stocking has led to some increased activity.
The company is ready to adjust production rate as needed. An efficiency program at SSAB EMEA (Luleå, Borlänge and Oxelösund, in Q4 one blast furnace in Oxelösund was idle whilst Luleå’s furnace operated at reduced capacity) will target lowering of the cost base by 800 million. The steel maker feels that European hot-rolled coil prices have bottomed out. The zero percent operating margin was a bitter disappointment to investors and the stock has shed nearly 8% to trade below 70 SEK.
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