Weak European steel demand, along with lower selling prices and higher US maintenance costs, left Swedish steelmaker SSAB with a Q4 2019 operating loss.
However, increased order intake late in the quarter, a rise in shipments in Q1-2020, and the resumption of a Finnish blast furnace to start the year should improve conditions through the first three months of 2020.
In Q4 2019, the company posted sales of SEK16.97bn ($1.76bn), down from SEK 19.25bn in the comparable quarter in 2018.
SSAB reported operating earnings of SEK -1.13bn in Q4 2019, down SEK 2.17bn from the same quarter in 2018. The decreased earnings were attributed to the steelmaker’s European and Americas operations. The company’s operating profits for 2019 were SEK 2.16bn.
The company’s special steel shipments were low last quarter, largely because of a weak business cycle and European stock adjustments. Moreover, planned maintenance expenses further affected the company’s operating results of SEK -126mn.
SSAB Europe’s shipments dropped to 752,000mt as a result of customer and distributor destocking. Margin pressure and the costs of labor strikes in Finland—totaling about SEK 250mn—also impacted Q4 earnings of SEK -609mn.
SSAB America’s Q4 operating figures decreased to SEK -222mn, mainly due to reduced finalized prices and increased costs for planned maintenance. Demand was consistent, but a planned maintenance outage in Mobile resulted in fewer shipments.
The steelmaker’s cost savings improved in Q4, while production at its European steel mills was adjusted for decreased demand, with one Finnish blast furnace halted. The idling caused less working capital during the quarter with operating cash flow at SEK 1.31bn. Customer stock adjustments in Europe are projected to be above expectation because order intake rose near the end of last quarter.
The company’s strong balance sheet allowed for the completion of several bolt-on acquisitions throughout the year. During Q4, SSAB introduced strategic targets to display its goal of expanding into special products and developing new routes in the market. Its intention is to build a stronger company capable of withstanding business cycle fluctuations.
1 Swedish Krona = 0.10 US Dollar (as on Jan 28, 2020).