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    SSAB A   SE0000171100

SSAB AB

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

10/25/2021 | 02:04am EST

INTERIM REPORT

JANUARY - SEPTEMBER 2021

Another record quarter

October 25, 2021

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

Interim report January-September 2021

The third quarter

Revenue was SEK 25,220 (14,481) million EBITDA was SEK 6,582 (-66) million

Operating profit was SEK 5,800 (-973) million Earnings per share were SEK 4.35 (-0.72)

Key figures

2021

2020

2021

2021

2020

2020

SEK millions

Q3

Q3

Q2

Jan-Sep

Jan-SepFull-year

Revenue

25,220

14,481

23,673

68,554

48,409

65,396

EBITDA

6,582

-66

4,899

14,341

1,925

3,364

Operating profit/loss

5,800

-973

4,083

11,876

-881

-325

Profit/loss after financial items

5,689

-1,075

3,981

11,557

-1,220

-802

Profit/loss after tax

4,481

-734

3,221

9,213

-835

-490

Earnings per share (SEK)

4.35

-0.72

3.13

8.94

-0.83

-0.50

Operating cash flow

3,478

313

3,910

8,817

530

3,460

Net debt

3,370

12,926

6,461

3,370

12,926

10,278

Net debt/equity ratio (%)

5

22

11

5

22

19

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

Comments by the CEO - continued strong earnings trend

SSAB reports a continued strong earnings trend for Q3 2021. High steel prices in combination with a strong and stable internal performance saw us exceed the record in Q2, despite planned maintenance outages. During the quarter, SSAB made the world's first fossil-free steel and delivered it to Volvo Group. We also signed a number of new collaboration agreements for fossil-free steel, including one with Mercedes Benz.

Operating profit for Q3 2021 increased to SEK 5,800 (-973) million, a new record for a single quarter. Net cash flow was strong and amounted to SEK 2.8 (0) billion and net debt decreased to SEK 3.4 billion, equating to a net debt/equity ratio of 5% (22%).

SSAB Special Steels' shipments were 348 (259) thousand tonnes. Operating profit increased to SEK 1,006 (34) million and the operating margin to 17% (1%). Our special 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 result increased to SEK 2,524 (-631) million and the operating margin to 23% (-10%). The upswing was primarily explained by a high price level. SSAB Americas' result increased to SEK 1,871 (-395) million, driven by rising market prices for heavy plate. The operating margin increased to 31% (-15%).

The spread of Covid-19 is at a low level at SSAB's production sites and society's restrictions have largely been phased out. SSAB follows national and local recommendations in its operations. We have made progress with our focus on safety work and lost time injury frequency (LTIF) has decreased to 1.9 (4.0).

Looking ahead, we expect Q4 to show good development, partly because there is a certain lag in the realization of our steel prices, compared to the spot market. However, there is uncertainty in demand on the European market, among other things due to the shortage of semiconductors, which primarily affects the vehicle industry.

During the year, SSAB has strengthened its position as the driving force in the green transition in the steel industry. For the first time ever, iron ore has been reduced at a pilot scale using 100% fossil-free hydrogen. During Q3, the first fossil- free steel was rolled and delivered to Volvo Group. The great interest shown by customers means that we are exploring the prerequisites to convert to fossil-free production earlier than the original plan. However, this requires that society can ensure power transmission, effective permit processes and a level playing field within Europe and beyond.

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 - S E P T E M B E R 2 0 2 1

Outlook for the fourth quarter of 2021

Demand for steel during the fourth quarter of 2021 is estimated to be good, however, in Europe a softening of demand is expected primarily due to the shortage of semiconductors, which affects the vehicle industry. In addition, a seasonal slowdown is expected in Europe towards the end of the year. In North America, demand is expected to be strong during the fourth quarter and likewise, global demand for high-strength steel is estimated to be strong during the fourth quarter in more or less all markets.

SSAB Special Steels' shipments are expected to be stable during the fourth quarter compared to the third quarter because of a certain seasonal slowdown towards the end of the year. SSAB Europe's shipments are expected to be higher during the fourth quarter than in the third quarter. On the other hand, SSAB America's shipments are expected to be significantly lower during the fourth quarter compared to the third quarter since the three-week long planned maintenance outage in Mobile will affect shipments negatively.

For SSAB Special Steels, prices are estimated to be higher in the fourth quarter of 2021 than in the third quarter, whereas prices realized by SSAB Europe are expected to be somewhat higher. Prices realized by SSAB Americas are expected on average to be significantly higher than in the third quarter 2021.

Outlook for steel divisions

Q4 2021 vs. Q3 2021

Shipments

Realized prices

SSAB Special Steels

Stable

Higher

SSAB Europe

Higher

Somewhat higher

SSAB Americas

Significantly lower

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 1,265 million, compared with the earlier forecast of SEK 1,210 million communicated in the report for the second quarter. This higher figure is explained by extended maintenance work in SSAB Special Steels during the third quarter. 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

-

-

-

-

440

250

150

-

590

250

SSAB Europe

-

-

-

-

270

250

140

85

410

335

SSAB Americas

-

-

-

50

-

170

265

-

265

220

Total

-

-

-

50

710

670

555

85

1,265

805

The distribution of maintenance costs for the fourth quarter 2021 has been adjusted to reflect that the steel mill in Mobile is a part of SSAB Special Steels since the third quarter of 2021.

The market

According to the World Steel Association, global crude steel production for the first eight months of 2021 amounted to 1,322 (1,195) million tonnes, up 10.6% compared to the same period in 2020. Chinese steel production increased by more than 5%. Steel production increased in North America by 19% and in the EU-27 by 21%.

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

In Europe, demand was good during the third quarter, albeit with the usual seasonal slowdown. The shortage of semiconductors somewhat muted demand from the vehicle industry. Imports into Europe increased during the quarter and the supply of steel has improved.

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 - S E P T E M B E R 2 0 2 1

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.

In North America, the sharp increase in prices for heavy plate continued during the third quarter. In Europe on the other hand, market prices for strip and heavy plate decreased during the third quarter, whereas in China, prices for similar products rose somewhat during the third quarter.

SSAB Group - nine month summary

Revenue and operating result

Revenue for the first nine months of 2021 was SEK 68,554 (48,409) million, up 42% compared to the same period a year earlier. However, the first nine months of 2020 were characterized by the outbreak of Covid-19 and if revenue is compared to the first nine months of 2019 instead, the increase amounts to SEK 9,042 million, or 15%.

Operating result for the first nine months of 2021 was SEK 11,876 (-881) million, up SEK 12,757 million compared to the same period a year earlier. All business segments contributed to the improvement. If the operating result is compared to the first nine months of 2019, the increase was SEK 8,586 million, or 261%.

Revenue and operating profit/loss by business segment

Revenue

Operating profit/loss

2021

2020

2021

2020

SEK millions

Jan-Sep

Jan-Sep

Change

Jan-Sep

Jan-Sep

Change

SSAB Special Steels

16,961

12,132

4,829

3,084

952

2,133

SSAB Europe

29,864

20,481

9,383

4,795

-1,196

5,991

SSAB Americas

14,527

9,791

4,736

3,224

-275

3,499

Tibnor

8,934

6,210

2,724

1,182

47

1,134

Ruukki Construction

4,481

4,310

171

439

242

197

Other

-

-

-

-639

-389

-250

Depr. surplus values

-

-

-

-209

-263

53

Group adjustments

-6,213

-4,515

-1,698

-

-

-

Total

68,554

48,409

20,146

11,876

-881

12,757

Operating result for SSAB Special Steels and SSAB Americas has been restated taking into account the reorganization of Mobile, see page 8 for details.

Result after tax and earnings per share

The result after tax (attributable to shareholders in the parent company) for the first nine months of 2021 was SEK 9,204 (-853) million, equating to SEK 8.94 (-0.83) per share. Tax was SEK -2,345 (385) million.

Cash flow, financing and liquidity

Operating cash flow for the first nine months of 2021 amounted to SEK 8,817 (530) million. Compared with the first nine months of 2020, cash flow was impacted primarily by higher operating profit.

Net cash flow amounted to SEK 7,039 (-675) million. Net debt at September 30, 2021 was SEK 3,370 (12,926) million.

The term to maturity of the total loan portfolio at September 30, 2021 averaged 6.7 (4.9) years, with an average fixed interest period of 1.2 (0.9) years.

Cash and cash equivalents were SEK 9,594 (5,412) million and non-utilized credit facilities were SEK 8,554 (14,804) million, which combined corresponds to 21.2% (30.9%) of rolling 12-month revenue.

Return on capital employed/equity

Return on capital employed before tax for the last 12 months was 19% and return on equity after tax was 16%, 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 - S E P T E M B E R 2 0 2 1

Equity

With earnings of SEK 9,204 (-853) million and other comprehensive income (mostly consisting of translation differences) of SEK 3,309 (-1,474) million, the parent company's shareholders' equity amounted to SEK 66,428 (57,987) million, equating to SEK 64.50 (56.31) per share.

SSAB Group - Third quarter of 2021

Revenue and operating result

Revenue for the third quarter of 2021 was SEK 25,220 (14,481) million, up 74% compared to the third quarter of 2020 and up 7% compared to the second quarter of 2021.

Operating result for the third quarter of 2021 was SEK 5,800 (-973) million, up SEK 6,773 million compared to the third quarter of 2020. All business segments contributed to the improvement. Compared with the second quarter of 2021, earnings were up SEK 1,717 million.

Revenue and operating profit/loss by business segment

Revenue

Operating profit/loss

2021

2020

2021

2020

SEK millions

Q3

Q3

Change

Q3

Q3

Change

SSAB Special Steels

5,993

3,581

2,412

1,006

34

972

SSAB Europe

10,789

6,153

4,636

2,524

-631

3,155

SSAB Americas

6,061

2,709

3,353

1,871

-395

2,267

Tibnor

3,063

1,752

1,311

515

6

509

Ruukki Construction

1,766

1,391

375

229

145

85

Other

-

-

-

-300

-50

-251

Depr. surplus values

-

-

-

-45

-82

37

Group adjustments

-2,452

-1,105

-1,346

-

-

-

Total

25,220

14,481

10,739

5,800

-973

6,773

Operating result for SSAB Special Steels and SSAB Americas has been restated taking into account the reorganization of Mobile, see page 8 for details.

Analysis of total change in revenue and operating profit/loss

Revenue

Operating profit/loss

Change vs

Change vs

Q3 2020

Q3 2020

%

Mkr

Volume

11

Price and product mix

8,660

Price

59

Volume

590

Product mix

2

Variable costs

-2,150

Currency effects

-2

Fixed costs

-850

Other sales

4

Currency effects

-120

Capacity utilization

585

Other

58

Total

74

Total

6,773

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 25 October 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 25 October 2021 06:03:04 UTC.


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