SSAB Reports on Third Quarter 2013 Results
Comments by the CEO
Sales of SEK 8,375 (8,730) million
Operating loss of SEK -598 (-665) million
Loss after financial items of SEK -741 (-789) million
Earnings per share of SEK -1.61 (-1.60)
Operating cash flow of SEK 500 (843) million and cash flow from current operations of SEK 373 (697) million
Earnings in the third quarter improved slightly by almost SEK 70 million compared with the same quarter of last year. The improvement is primarily attributable to lower fixed and variable costs, higher volumes and improved capacity utilization, in total SEK 900 million. At the same time, earnings were negatively affected by weaker prices, product mix and currency effects, in total SEK 830 million. Cash flow continued to be positive during the third quarter and, so far this year, we have generated operating cash flows of SEK 1.4 billion and reduced our net debt by approximately SEK 500 million.
Global demand for steel during the third quarter was on the same level as during the second quarter, and SSAB's shipments were unchanged compared with the previous quarter. However, the product mix changed somewhat towards a higher percentage of standard steels as demand for niche products within the mining industry and construction machinery was weakening. Otherwise, the quarter was characterized by extensive summer outages and scheduled maintenance outages which affected the earnings of EMEA and Americas by, in total, approximately SEK 300 million. The maintenance outage in Americas was originally scheduled for the fourth quarter, but was moved to the third quarter in order to better utilize production capacity in the fourth quarter.
The gradual recovery in the U.S. is beginning to impact on demand for steel and it has, to a certain extent, been possible to carry out the price increases previously announced in the third quarter. The trend as regards the European economy was unchanged during the quarter. The Chinese economy continues to grow, but we can note that our major customers still hold large stocks, a factor which has negatively affected demand for our products.
The efficiency program within EMEA has been carried out and we are continuing to focus strongly on cost efficiency. Also in Americas, work is taking place continuously to ensure that we maintain our position as the most cost-efficient plate producer in North America. In APAC, we are working actively to broaden the customer base and, so far this year, we have gained more than 500 new customers.
During the fourth quarter, we expect that the US economic recovery will have a positive impact on demand for steel. In the middle of October, SSAB Americas announced a price increase for plate of US$ 30 per tonne. In Europe, demand and prices for steel is expected to remain unchanged but in Asia, demand for steel is expected to grow positively.