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    SSAB A   SE0000171100

SSAB AB

(SSAB A)
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SSAB : Report for the second quarter 2021

07/21/2021 | 03:28am EDT

INTERIM REPORT

JANUARY - JUNE 2021

Historical quarter - Solid internal performance in a strong market

21 July, 2021

I N T E R I M R E P O R T J A N U A R Y - J U N E 2 0 2 1

Interim report January-June 2021

The second quarter

Revenue was SEK 23,673 (15,155) million EBITDA was SEK 4,899 (705) million

Operating profit was SEK 4,083 (-251) million Earnings per share were SEK 3.13 (-0.28)

Key figures

2021

2020

2021

2021

2020

2020

SEK millions

Q2

Q2

Q1

Jan-Jun

Jan-JunFull-year

Revenue

23,673

15,155

19,661

43,334

33,927

65,396

EBITDA

4,899

705

2,860

7,759

1,991

3,364

Operating profit/loss

4,083

-251

1,993

6,076

92

-325

Profit/loss after financial items

3,981

-365

1,887

5,869

-145

-802

Profit/loss after tax

3,221

-280

1,510

4,732

-102

-490

Earnings per share (SEK)

3.13

-0.28

1.46

4.59

-0.11

-0.50

Operating cash flow

3,910

629

1,429

5,339

218

3,460

Net debt

6,461

12,782

8,896

6,461

12,782

10,278

Net debt/equity ratio (%)

11

21

15

11

21

19

(In the report, the figures in parentheses refer to the corresponding period for the previous year.)

Comments by the CEO - a historical quarter for SSAB

For Q2 2021, we report the highest quarterly operating profit ever, driven by strong demand, high steel prices and stable production. At the same time, we consolidated our position as the leading force in the green transition of the steel industry. The quarter saw us take groundbreaking steps towards full-scalefossil-free steelmaking and enter into new collaboration agreements, which will enable also our customers to reduce their climate footprint.

The result for Q2 2021 increased to SEK 4,083 (-251) million, a historic high for a single quarter. Net cash flow was strong and amounted to SEK 3,024 (48) million.

SSAB Special Steels' shipments remained high and rose to 388 (266) ktonnes. Operating profit increased to SEK 1,109

  1. million and the operating margin to 19% (12%). Growth in high-strength steel is a key element in our strategy for improved profitability. Our special steels are also important for the sustainability strategies of our customers to reduce their climate footprint, since our steels contribute to lighter weight and a longer useful life in many applications.

SSAB Europe's operating profit rose to SEK 1,512 (-566) million and the operating margin increased to 15% (-9%), driven by a strong market, stable production and an improved product mix. SSAB America's operating profit increased to SEK 1,151 (-10) million, driven by rising market prices for plate. The operating margin rose to 24% (0%).

The spread of Covid-19 has decreased at SSAB's production sites. We continue with a number of measures to limit the risks of infection and production has run without impact. Looking ahead, the market outlook is positive. During Q3, SSAB Special Steels and SSAB Europe will complete planned maintenance and we expect seasonally lower activity on the European market.

SSAB has long been at the forefront of the green transition in the steel industry. During Q2, we took further steps towards being first in the world to get fossil-free steel on the market. For the first time ever, iron ore has been directly reduced at a pilot scale using hydrogen made from fossil-free electricity. This groundbreaking step took place at HYBRIT's plant in Luleå. So far, over 100 tonnes of sponge iron of good quality have been produced. We have also initiated a strategic collaboration with Volvo Cars, which will be the first carmaker to secure SSAB steel made from hydrogen-reduced iron ore. The great interest shown by customers means that we are exploring the prerequisites to convert to fossil-free production in Luleå earlier than the original plan. We see positive effects from our leading position in sustainability and in June, we issued a five-yearsustainability-linked (SLBP) bond of SEK 2bn. This gives us better conditions to finance activities and to reach our sustainability goals.

2 | S S A B A B ( p u b l ) , P . O . B o x 7 0 , S E - 1 0 1 2 1 S t o c k h o l m , S w e d e n . w w w . s s a b . c o m . R e g . n o . 5 5 6 0 1 6 - 3 4 2 9

I N T E R I M R E P O R T J A N U A R Y - J U N E 2 0 2 1

Outlook for the third quarter of 2021

Demand for steel during the third quarter of 2021 is estimated to be strong, driven both by underlying demand and by customer restocking. Albeit a seasonal slowdown, especially in Europe, is expected. Global demand for high-strength steel is expected to be very strong during the third quarter in more or less all geographical markets.

SSAB Special Steels' shipments are expected to remain at a high level, considering the seasonality during the third quarter, albeit significantly lower than the record high level seen in the second quarter of 2021, primarily because of the planned annual maintenance outage in Oxelösund during the quarter. Also SSAB Europe's shipments are expected to be significantly lower during the third quarter than in the second quarter, due to planned annual maintenance outages and a seasonal slowdown. SSAB Americas' shipments are expected to be stable during the third quarter compared with the second quarter of 2021.

Prices realized by SSAB Americas and SSAB Europe are expected to be significantly higher on average than in the second quarter of 2021. For SSAB Special Steels, prices are expected to be higher in the third quarter than in the second quarter of 2021. Improved prices will be partly counteracted by higher costs of raw materials, primarily iron ore, in the third quarter.

Outlook for steel divisions

Q3 2021 vs. Q2 2021

Shipments

Realized prices

SSAB Special Steels

Significantly lower

Higher

SSAB Europe

Significantly lower

Significantly higher

SSAB Americas

Stable

Significantly higher

Definitions: Significantly lower (>10 %), Lower (5-10 %), Somewhat lower (0-5 %), Stable (~0 %), Somewhat higher (0-5 %), Higher (5-10 %), Significantly higher (>10 %)

Major planned maintenance outages 2021

The Group's total maintenance costs for the full year 2021 are expected to be SEK 1,210 million, compared to the earlier forecast of SEK 1,165 million communicated in the report for the first quarter. The somewhat higher figure can be explained by higher estimated costs for SSAB Special Steels. The table below shows the major planned maintenance outages for 2021 and the costs of outages completed during 2020. The figures include the impact of the direct maintenance cost and the cost of lower capacity utilization (underabsorption), but exclude lost margins.

Expected maintenance costs for 2021

2021

2020

2021

2020

2021

2020

2021

2020

2021

2020

SEK millions

Q1

Q1

Q2

Q2

Q3

Q3

Q4

Q4

Full-year

Full-year

SSAB Special Steels

-

-

-

-

370

250

-

-

370

250

SSAB Europe

-

-

-

-

275

250

145

85

420

335

SSAB Americas

-

-

-

50

-

170

420

-

420

220

Total

-

-

-

50

645

670

565

85

1,210

805

The market

According to the World Steel Association, global crude steel production for the first five months of 2021 amounted to 838 (731) million tonnes, up 14.6% compared to the same period in 2020. Chinese steel production increased by just under 14%. Steel production increased in North America by 11% and in the EU-27 by 15%.

In North America, demand for heavy plate was strong in most customer segments during the second quarter. Inventory levels are generally still low, including at distributors.

In Europe, demand was also strong during the second quarter. The shortage of semiconductors somewhat muted demand from the vehicle industry. Imports into Europe increased somewhat during the quarter, but a shortage of steel still prevails on the market.

Global demand for high-strength steel was strong during the quarter. In principle, markets in all geographies are showing good demand, which is exceeding supply.

3 | S S A B A B ( p u b l ) , P . O . B o x 7 0 , S E - 1 0 1 2 1 S t o c k h o l m , S w e d e n . w w w . s s a b . c o m . R e g . n o . 5 5 6 0 1 6 - 3 4 2 9

I N T E R I M R E P O R T J A N U A R Y - J U N E 2 0 2 1

In North America, the sharp increase in market prices for heavy plate continued during the second quarter. In Europe, market prices for strip and heavy plate rose sharply during the second quarter. In China, prices for strip and heavy plate rose during the second quarter, albeit to a lesser extent than in North America and Europe.

SSAB Group - First half year of 2021

Revenue and operating result

Revenue for the first half of 2021 was SEK 43,334 (33,927) million, up 28% compared to the first half of 2020. The first half of 2020 was characterized by the outbreak of Covid-19 and if revenue is compared to the first half of 2019, the increase amounts to 7%.

Operating result for the first half of 2021 was SEK 6,076 (92) million, up SEK 5,984 million compared to the first half of 2020. All business segments contributed to the improvement. If the operating result is compared to the first half of 2019, the increase is SEK 3,086 million.

Revenue and operating profit/loss by business segment

Revenue

Operating profit/loss

2021

2020

2021

2020

SEK millions

Jan-Jun

Jan-Jun

Change

Jan-Jun

Jan-Jun

Change

SSAB Special Steels

10,929

8,519

2,411

2,012

942

1,070

SSAB Europe

19,075

14,328

4,747

2,270

-566

2,836

SSAB Americas

8,482

7,097

1,385

1,419

96

1,323

Tibnor

5,870

4,457

1,413

667

41

626

Ruukki Construction

2,715

2,919

-203

210

97

113

Other

-

-

-

-338

-339

1

Depr. surplus values

-

-

-

-164

-180

16

Group adjustments

-3,738

-3,393

-345

-

-

-

Total

43,334

33,927

9,407

6,076

92

5,984

Result after tax and earnings per share

The result after tax (attributable to shareholders in the parent company) for the first half of 2021 was SEK 4,726 (-111) million, equating to SEK 4.59 (-0.11) per share. Tax was SEK -1,137 (43)million.

Cash flow, financing and liquidity

Operating cash flow for the first half of 2021 amounted to SEK 5,339 (218) million. Compared with the first half of 2020, cash flow was impacted primarily by higher operating profit.

Net cash flow amounted to SEK 4,229 (-703) million. Net debt at June 30, 2021 was SEK 6,461 (12,782) million.

The term to maturity of the total loan portfolio at June 30, 2021 averaged 6.1 (5.3) years, with an average fixed interest period of 1.2 (0.9) years.

Cash and cash equivalents were SEK 8,058 (5,559) million and non-utilized credit facilities were SEK 8,519 (14,757) million, which combined corresponds to 22% (29%) of rolling 12-month revenue.

Return on capital employed/equity

Return on capital employed before tax for the last 12 months was 10% and return on equity after tax was 8%, whereas the figures for the full year of 2020 were 2% and -1% respectively.

4 | S S A B A B ( p u b l ) , P . O . B o x 7 0 , S E - 1 0 1 2 1 S t o c k h o l m , S w e d e n . w w w . s s a b . c o m . R e g . n o . 5 5 6 0 1 6 - 3 4 2 9

I N T E R I M R E P O R T J A N U A R Y - J U N E 2 0 2 1

Equity

With earnings of SEK 4,726 million and other comprehensive income (mostly consisting of translation differences) of SEK 1,752 (-4,015) million, the parent company's shareholders' equity amounted to SEK 60,392 (60,146) million, equating to 58.64 (58.40) per share.

SSAB Group - Second quarter of 2021

Revenue and operating result

Revenue for the second quarter of 2021 was SEK 23,673 (15,155) million, up 56% compared to the second quarter of 2020 and up 20% compared to the first quarter of 2021.

Operating result for the second quarter of 2021 was SEK 4,083 (-251) million, up SEK 4,334 million compared to the second quarter of 2020. All business segments contributed to the improvement. Compared with the first quarter of 2021, earnings were up SEK 2,090 million.

Revenue and operating profit/loss by business segment

Revenue

Operating profit/loss

2021

2020

2021

2020

SEK millions

Q2

Q2

Change

Q2

Q2

Change

SSAB Special Steels

5,824

3,983

1,841

1,109

485

624

SSAB Europe

10,246

6,189

4,057

1,512

-566

2,078

SSAB Americas

4,831

3,219

1,612

1,151

-10

1,161

Tibnor

3,214

2,037

1,177

449

29

420

Ruukki Construction

1,593

1,439

154

162

86

76

Other

-

-

-

-218

-186

-32

Depr. surplus values

-

-

-

-81

-89

8

Group adjustments

-2,034

-1,712

-322

-

-

-

Total

23,673

15,155

8,518

4,083

-251

4,334

Analysis of total change in revenue and operating profit/loss*)

Revenue

Operating profit/loss

Change vs Q2 2020

Change vs Q2 2020

%

Mkr

Volume

31

Price and product mix

4,110

Price

31

Volume

1,550

Product mix

1

Variable costs

-1,630

Currency effects

-11

Fixed costs

-540

Other sales

4

Currency effects

150

Capacity utilization

650

Other

44

Total

56

Total

4,334

*) Estimated change, the figures in the table have been rounded.

Raw materials

SSAB sources iron ore from LKAB in Sweden and from Severstal in Russia, and prices vary depending on the market index. SSAB sources coking coal from Australia, the USA and Canada, usually on annual supply contracts with monthly pricing. SSAB Americas regularly purchases scrap metal on the spot market as a raw material for their production. The increase in purchase prices of iron ore during the second quarter will affect SSAB's earnings during the third quarter of 2021.

5 | S S A B A B ( p u b l ) , P . O . B o x 7 0 , S E - 1 0 1 2 1 S t o c k h o l m , S w e d e n . w w w . s s a b . c o m . R e g . n o . 5 5 6 0 1 6 - 3 4 2 9

This is an excerpt of the original content. To continue reading it, access the original document here.

Disclaimer

SSAB AB published this content on 21 July 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 21 July 2021 07:24:53 UTC.


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