High strength steel maker SSAB Swedish Steel AB (OMX: SSAB A) reported first quarter sales almost in line with Q1 last year at just over 11 billion Swedish kronor this Friday. Operating profit of 479 million is lower than last year but as could be expected largely better than in the previous quarter. After tax profit of 287 million means EPS of 0.87 SEK. The profit numbers were far better than expected and helped the share to jump almost 10% on Friday.
The increase in demand could be attributed to restocking among distributors but while there was an increase in spot market prices, SSAB’s contract prices signed towards the end of Q4 were lower. Due to the spot price increases, SSAB also expects price increases during Q2, especially for SSAB EMEA. Most of SSAB’s sales come from SSAB EMEA, which manufactures steel in Sweden and SSAB Americas which produces heavy plate and strip products in North America
Cost efficiency programme and new quenching capacity commissioning are going according to plan. It seems to the company, that recovery in North America, including that in the local steel market, continues but uncertainty remains in Europe. Despite lower observed growth in China, SSAB foresees major opportunities there and in the rest of the region as well.
In the USA individual sectors that performed well included energy sector, which ordered large parts and railcar builders, which are asking for more steel. Automotive demand from China continues to be good but competition is increasing. Chinese lifting industry has increased production. SSAB also says that Chinese original equipment manufacturers are moving into European market.
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