SSAB : Results for 2021

YEAR-END REPORT 2021

Strong finish to a record year

January 28, 2022

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YEAR-END REPORT 2021

The fourth quarter

• Revenue was SEK 27,337 (16,988) million
• EBITDA was SEK 7,753 (1,439) million
• Operating profit was SEK 6,961 (557) million
• Earnings per share were SEK 5.30 (0.33)
• Net cash was SEK 2.3 billion (net debt of SEK 10.3 billion)
• The Board proposes a dividend of SEK 5.25 (0.00) per share for 2021

Key figures

	2021	2020	2021	2021	2020
SEK millions	Q4	Q4	Q3	Full-year	Full-year
Revenue	27,337	16,988	25,220	95,891	65,396
EBITDA	7,753	1,439	6,582	22,094	3,364
Operating profit/loss	6,961	557	5,800	18,837	-325
Profit/loss after financial items	6,859	418	5,689	18,416	-802
Profit/loss after tax	5,460	346	4,481	14,673	-490
Earnings per share (SEK)	5.30	0.33	4.35	14.24	-0.50
Operating cash flow	6,479	2,930	3,478	15,296	3,460
Net debt	-2,346	10,278	3,370	-2,346	10,278
Net debt/equity ratio (%)	-3	19	5	-3	19

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

Comments by the CEO - strong finish to a record year

The full year 2021 was the best in SSAB's history with record results posted by all divisions. Most of this improvement was driven by high steel prices. Internal performance was good during the year, with high production stability and improved safety results. During the year, SSAB strengthened its position as the driving force in the green transition in the steel industry.

Operating profit for the fourth quarter of 2021 increased to SEK 6,961 (557) and full-year earnings rose to a record high SEK 18,837 (-325) million. Net cash flow was strong and amounted to SEK 12.4 (2.2) billion for the full year and with net cash of SEK 2.3 billion, the Group is now debt free. The product mix was improved during the year in line with our strategic targets. SSAB Special Steels increased shipments to 1.46 (1.13) million tonnes and SSAB Europe increased its share of premium products to 43% (38%).

SSAB Special Steels' operating profit for the fourth quarter increased to SEK 1,540 (518) million and the operating margin to 23.5% (12.7%). SSAB's high-strength steels support, among other things, our customers' sustainability strategies and their aim to improve productivity and sustainability performance in machinery and other equipment.

SSAB Europe's operating result for the fourth quarter increased to SEK 3,301 (83) million and the operating margin to 26.5% (1.1%). SSAB Americas' operating result increased to SEK 2,188 (18) million and the operating margin increased to 35.6% (0.5%).

Our focus on health and safety work and a stable production level have delivered good results and LTIF decreased to

1.8 (3.7) during 2021. Covid-19 continues to cause problems and we have introduced further measures since the turn of the year to limit the spread.

The outlook for the first quarter of 2022 is basically positive, albeit with continued uncertainty due to a shortage of components at several of our customers, as well as bottlenecks in logistics chains, not least in the light of the growing spread of Covid-19.

SSAB is leading the green transition of the steel industry through the unique HYBRIT initiative, which SSAB is driving forward together with its partners. Demand for fossil-free steel is showing strong growth and it is against this

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background that SSAB's Board took a strategic decision to transform the Nordic strip production and accelerate the company's green transition. The plan is to replace the existing production system with so-calledmini-mills, which will result in a broader product program and improved cost position. The ambition is to eliminate virtually all carbon dioxide emissions 15 years earlier than the original plan announced earlier. However, for this to be done, the necessary infrastructure must be in place in time, as well as access to fossil-free electricity.

Outlook for the first quarter of 2022

Demand for steel during the first quarter of 2022 is estimated to be good, albeit with continued uncertainty associated with a shortage of components as well as bottlenecks in logistics chains, not least in the light of the growing spread of Covid-19. Global demand for high-strength steel is estimated to be good during the first quarter in more or less all markets.

SSAB Special Steels' shipments are expected to be higher during the first quarter of 2022 compared to the fourth quarter of 2021, whereas realized prices are expected to be stable.

SSAB Europe's shipments are expected to be higher during the first quarter of 2022 compared to the prior quarter, whereas prices are expected to be somewhat lower.

SSAB Americas' shipments are expected to be higher during the first quarter of 2022 compared to the prior quarter, whereas prices are expected to be stable.

Outlook for steel divisions

	Q1 2022 vs. Q4 2021
	Shipments	Realized prices
SSAB Special Steels	Higher	Stable
SSAB Europe	Higher	Somewhat lower
SSAB Americas	Higher	Stable

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 2022

The Group's total maintenance costs for the full year 2022 are expected to be SEK 1,040 million, compared to SEK 1,270 million in 2021. The lower figure for 2022 is explained primarily by SSAB Special Steels, where the steel mill in Mobile has a maintenance outage only every other year. The table below shows the major planned maintenance outages for 2022 and the costs of outages completed during 2021. 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 2022

	2022	2022	2022	2022	2022	2021	2020
SEK millions	Q1	Q2	Q3	Q4	Full-year	Full-year	Full-year
SSAB Special Steels	-	-	-	320	320	590	250
SSAB Europe	-	-	230	120	350	430	335
SSAB Americas	-	-	-	370	370	250	220
Total	-	-	230	810	1,040	1,270	805

The market

According to the World Steel Association, global crude steel production for the first eleven months of 2021 amounted to 1,753 (1,677) million tonnes, up 4.5% compared to the same period in 2020. Chinese steel production contracted by just under 5%. Steel production increased in North America by 18% and in the EU-27 by 17%.

In North America, demand for heavy plate was good in most customer segments during the fourth quarter. Inventory levels at distributors were still low.

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In Europe, demand was characterized by a shortage of components in the vehicle industry together with hesitancy by distributors, among others, ahead of the turn of the year. At the same time, the underlying demand remained good in many customer segments. Imports into Europe have increased and the supply of steel has improved during the fall and the assessment is that inventory levels have increased.

Global demand for high-strength steel was good, in principle in all markets, during the quarter.

In North America, prices for heavy plate rose somewhat during the first part of the fourth quarter before leveling out. In Europe, market prices for strip declined during the fourth quarter, whereas plate prices were relatively stable. In China, market prices for similar products contracted somewhat during the fourth quarter of 2021.

SSAB Group - Full-year summary

Revenue and operating result

Revenue for the full-year 2021 was SEK 95,891 (65,396) million, up 47% compared to the year earlier, which was characterized by the outbreak of Covid-19. If revenue is compared to the full-year 2019 instead, the increase amounts to SEK 19,406 million, corresponding to 25%.

Operating result for the full-year 2021 was SEK 18,837 (-325) million, up SEK 19,162 million compared to 2020. All business segments contributed to the improvement. If the operating result is compared to the full year 2019, the increase was SEK 16,678 million.

Revenue and operating profit/loss by business segment

		Revenue			Operating profit/loss
	2021	2020			2021	2020
SEK millions	Full-year	Full-year	Change		Full-year	Full-year	Change
SSAB Special Steels	23,510	16,201	7,309		4,624	1,470	3,154
SSAB Europe	42,311	27,954	14,357		8,095	-1,113	9,208
SSAB Americas	20,680	13,239	7,441		5,412	-257	5,669
Tibnor	12,377	8,241	4,136		1,533	96	1,438
Ruukki Construction	5,999	5,516	483		599	314	285
Other	-	-	-		-1,191	-489	-702
Depr. surplus values	-	-	-		-235	-346	111
Group adjustments	-8,986	-5,754	-3,231		-	-	-
Total	95,891	65,396	30,495		18,837	-325	19,162

Operating result for SSAB Special Steels and SSAB Americas has been restated taking into account the reorganization of Mobile, see page 9 for details.

Result after tax and earnings per share

The result after tax (attributable to shareholders in the parent company) for 2021 was SEK 14,662 (-510) million, equating to SEK 14.24 (-0.50) per share. Tax was SEK -3,743 (312) million.

Cash flow, financing and liquidity

Operating cash flow for the full-year 2021 amounted to SEK 15,296 (3,460) million. Compared with 2020, cash flow was impacted primarily by higher operating profit.

Net cash flow amounted to SEK 12,436 (2,180) million. Net cash at December 31, 2021 was SEK 2,346 (-10,278) million.

The term to maturity of the total loan portfolio at December 31, 2021 averaged 6.2 (4.7) years, with an average fixed interest period of 1.2 (0.9) years.

Cash and cash equivalents were SEK 13,796 (7,051) million and non-utilized credit facilities were SEK 8,605 (14,471) million, which combined corresponds to 23.4% (33%) of rolling 12-month revenue.

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Capital expenditure

Capital expenditure, including acquisitions and divestments of operations, for the full-year 2021 totaled SEK 3,018 (2,292) million. Strategic investments were SEK 835 (582) million. The increase compared to the full year 2020 is primarily related to the strategic investments in Mobile and Oxelösund. The assessment is that the sum of maintenance and strategic investments will amount to around SEK 5 billion for the full year 2022 (compared to SEK 2.9 billion in 2021). The increase compared to 2021 is primarily related to the strategic investments in Oxelösund to convert production to fossil-free steelmaking.

Major maintenance outages

During the fourth quarter of 2021, there were maintenance outages in all three steel divisions. The table below shows the major maintenance outages completed in 2021 and 2020. The figures include the impact of the direct maintenance cost and the cost of lower capacity utilization (underabsorption), but exclude lost margins.

Major maintenance outages

	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	-	-	-	-	440	250	150	-	590	250
SSAB Europe	-	-	-	-	270	250	160	85	430	335
SSAB Americas	-	-	-	50	-	170	250	-	250	220
Total	-	-	-	50	710	670	560	85	1,270	805

Assets with undeterminable useful life

During 2021, SSAB Special Steels assumed responsibility for the steel mill in Mobile from SSAB Americas, resulting in a reallocation of goodwill between SSAB Americas and SSAB Special Steels. Consolidated assets with undeterminable useful life are allocated to the Group's cash-generating units as shown in the table below:

Assets with an undeterminable useful life per cash-generating unit

	2021	2020
SEK millions	Dec 31	Dec 31
SSAB Special Steels	16,464	2,813
SSAB Americas	11,119	22,325
SSAB Europe	2,130	2,085
Tibnor	523	512
Ruukki Construction	140	140
Total goodwill	30,375	27,872
Ruukki Construction (Rautaruukki tradename)	405	397
Total assets with an undeterminable useful life	30,780	28,269

Assets with an undeterminable useful life are tested for impairment each year towards the end of the fourth quarter and in the case of an indication of decline in value. The impairment test showed no need for an impairment charge.

Return on capital employed/equity

Return on capital employed before tax for the full-year 2021 was 27% and return on equity after tax was 23%, whereas the figures for the full-year of 2020 were 2% and -1% respectively.

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