Half-year report 2016: Improved result, cash flow and financial position
- Sales were SEK 14,471 (15,303) million
- Operating profit before depreciation/amortization was SEK 1,509 (1,236) million and excluding items affecting comparability was SEK 1,585 (1,246) million
- Operating profit was SEK 592 (292) million and excluding items affecting comparability was SEK 668 (301) million
- Profit after financial items was SEK 349 (79) million and excluding items affecting comparability was SEK 425 (88) million
- Earnings per share were SEK 0.53 (0.22)
- Operating cash flow was SEK 1,151 (1,462) million
- The rights issue was oversubscribed and SSAB received proceeds of SEK 4,911 million in equity after transaction costs
Comments by the CEO
SSAB posted an operating profit, excluding items affecting comparability, of SEK 668 million for the second quarter of 2016, an improvement of SEK 858 million compared with the first quarter 2016. All divisions reported improved results, with SSAB Europe showing the strongest development between quarters. The improved result was driven primarily by higher volumes, higher prices and additional synergy capture. The operating cash flow was positive at SEK 1,151 million despite an increase in accounts receivable due to higher shipments and rising prices.
Shipments during the second quarter increased compared to prior quarter and were also at a higher level than a year ago. This was mostly due to lower steel imports to Europe and to increased purchases by Steel Service Centers in North America, with no fundamental change in underlying demand. At the beginning of the quarter, steel prices rose sharply in China. This, coupled with ongoing trade cases in the EU and USA, has lowered imports from China. Steel prices have gradually risen both in Europe and in North America, however from a very low level. During the third quarter, we expect stable underlying demand, although reflecting the normal seasonal slowdown.
Integration of the acquisition of Rautaruukki has now been completed. During the second quarter, we realized synergies of SEK 475 million and the annual run rate at the end of the quarter was SEK 2 billion. The synergy program was completed at the end of the second quarter, with significantly more synergies realized than the SEK 1.0-1.35 billion we had originally communicated in January 2014 and one year earlier than originally planned. We are also well on the way to deliver on our total cost savings target, which is to have reduced the cost level by SEK 2.8 billion on an annual basis in 2017 compared to the cost level at the time of the acquisition of Rautaruukki. The target to reduce the workforce by 2,400 is also proceeding according to plan.
The rights issue announced in April has now been successfully completed. Through the rights issue, SSAB has received proceeds of around SEK 5 billion and, in addition to this, the refinancing package we have in place will significantly reduce the amount of loans maturing during the next 3-5 years and extend the duration of our credit facilities. SSAB aims for a total reduction of SEK 10 billion in net debt by the end of 2017, through the rights issue, divestment of non-core assets and through cash flow generated from the operations.
The completion of the rights issue and the refinancing package secures SSAB’s long-term possibilities to continue to develop our business to achieve our goal of industry leading profitability. A strongly improved financial position makes us well placed to take advantage of the opportunities in the market while driving profitable growth in our well-defined focus areas.
Invitation to SSAB’s second quarter 2016 results briefing
SSAB invites you to a presentation of the results for the second quarter to be held at 09.30am CEST on Friday July 22, 2016.
The press conference will be held in English and webcast live on www.ssab.com. It is also possible to participate in the briefing via telephone.
Venue and time of briefing: World Trade Center (WTC) Stockholm, Kungsbron 1, Conference room Manhattan, 09.30am CEST.
+ 46 8 505 564 74 (Sweden),
+ 44 203 364 5374 (UK),
+ 1 855 753 2230 (USA).
Link to webcast: Go to webcast
For further information, please contact
Investor Relations: Liisa-Maija Seppänen, Investor Relations Manager,
email@example.com, +358 20 593 9232
Media: Viktoria Karsberg, Head of Corporate Communications,
firstname.lastname@example.org, +46 8 454 5734
This information is information that SSAB AB is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Markets Act. The information was submitted for publication, through the agency of the contact persons set out above, at 7.30 am CEST on July 22, 2016.