solid earnings improvement driven by ssab...
TRANSCRIPT
Solid earnings improvement driven by SSAB EuropePresentation of the Q1/2017 result Martin Lindqvist, President & CEOHåkan Folin, CFO
April 21, 2017
Highlights in Q1/2017
4
New products and progress in sustainability
Improved production flexibility
• High deliveries and production level, better prices and mix
• Automotive premium volumes up ~20%
• Good level of deliveries in SSAB Special Steels despite the Oxelösundbreakdown
• SSAB Europe and SSAB Americas mills produced high-strength steels above expectations
Strong performance from SSAB Europe
• New wear plate Hardox500 Tuf launched
• HYBRIT project gained support from The Swedish Energy Agency
Improved market situation both in Europe and North America
5
Spot price development: Hot Rolled Coil (HRC) in Northern Europe, Plate in US, HRC in China
Indexed (Jan 2015 =100)
Q1
Northern Europe/HRC
US/Plate
50
60
70
80
90
100
110
120
130
140
150
Jan
15
Feb
15
Mar
15
Apr 1
5
May
15
Jun
15
Jul 1
5
Aug
15
Sep
15
Oct
15
Nov
15
Dec 1
5
Jan
16
Feb
16
Mar
16
Apr 1
6
May
16
Jun
16
Jul 1
6
Aug
16
Sep
16
Oct
16
Nov
16
Dec 1
6
Jan
17
Feb
17
Mar
17
Apr 1
7
Northern Europe HRC US Plate China HRC
Improving demand, lower
imports, low inventories, plate
spot prices increased
Stable demand,inventories in
balance, spot prices levelling off
Anti-dumping measures are in placeand under preparation in EU and the US
Cold-rolled carbon steels (China, Russia)Hot-Rolled flat carbon steels (China) • Final AD duties for strip 18%-36% in April
2017• Final AD duties 65%-74% for plate in Feb
2017
Under preparationIn place
Europe
US
Hot-rolled sheet and coils (China, Russia, India, Ukraine, Indonesia, Taiwan, Thailand)Hot-rolled sheet and coils (Australia, Brazil, Japan, Korea, Netherlands, Turkey)Heavy plate (China, India, Indonesia, Russia, Ukraine)
Heavy plate (China, Austria, Belgium, Taiwan, France, Germany, Italy, Japan, South Korea)• Final AD decision for the 8 countries in
March 2017 – increased duties vs. preliminary duties
• Final AD and CVD decision on Chinese plate AD margin of 68% and a subsidy (CVD) margin of 251%
Hot-Rolled flat carbon steels (Brazil, Russia, Iran, Serbia and Ukraine)• EU decided not impose preliminary
duties, final decision expected in Oct 2017
Corrosion Resistant Steel (China)
Cold-rolled sheet and coils (Brazil, India, Korea, Russia, United Kingdom)Heavy plate (Turkey, Brazil, South Africa)
Preliminary AD decision in place for Turkey, Brazil, South Africa
6
Summary of Q1/2017Solid earnings improvement driven by higher prices and volumes
EBIT of SEK 702m, upSEK 595m compared with Q4/16+ Higher prices+ Higher volumes- Maintenance outage in Mobile- Higher costs of raw materials
EBIT up SEK 895m vs. Q1/16
Operating cash flow at SEK 876m
Gearing at 32% (34%)
SEKm Q1/2017 Q1/2016 Q4/2016 FY 2016
Sales 15,739 12,964 14,442 55,354
EBITDA 1,627 741 1,066 4,951
EBIT 702 -193 107 1,213
Operating cash flow
876 77 1,053 3,207
Key figures
7
Sales and EBITDA marginSEKm
1) Excluding depreciation/amortization on surplus values on intangible and tangible fixed assets related to the acquisition of Rautaruukki
8
SSAB Special SteelsImproved result despite the breakdown
Shipments increased 8% vs. Q1/2016 despite the breakdown • Improving demand in several
segments• Flexible production system EBIT was SEK 243m, up SEK 272m vs. Q4/2016+ Higher volumes+ Lower fixed costs- Breakdown in Oxelösund- Higher raw material costs
SEKm Q1/2017 Q1/2016 Q4/2016 2016
Sales 3,925 3,132 3,066 12,582
EBITDA 377 345 111 1,453
EBIT1 243 202 -29 902
Shipments,ktonnes 277 256 233 1,008
-5%
0%
5%
10%
15%
20%
25%
-500
500
1,500
2,500
3,500
4,500
5,500
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2015 2016 2017
Sales EBITDA %
SEKm
9
SSAB Europe Strong result improvement due to higher prices and volumes
Shipments +9% vs. Q4/16• Good demand in all
segments• Automotive continued at
high levelEBIT in Q1 was SEK 826m, up SEK 450m vs. Q4/2016+ Higher volumes+ Higher prices- Higher raw material costs
9 1) Excluding depreciation/amortization on surplus values on intangible and tangible fixed assets related to the acquisition of Rautaruukki
SEKm Q1/2017 Q1/2016 Q4/2016 2016
Sales 7,657 6,040 7,001 25,831
EBITDA 1,182 244 746 2,458
EBIT1 826 -118 376 1,000
Shipments,ktonnes 982 946 898 3,720
Sales and EBITDA margin
0%2%4%6%8%10%12%14%16%18%20%
01,0002,0003,0004,0005,0006,0007,0008,0009,000
10,000
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2015 2016 2017
Sales EBITDA %
SSAB Americas Lower profitability due to the Mobile outage and higher scrap costs
Demand improved during Q1• Continued good demand from
Energy segmentEBIT was SEK -157m, down SEK 123m from Q4/16+ Higher prices- Mobile outage- Higher scrap costs SEKm
10 1) Excluding depreciation/amortization on surplus values on intangible and tangible fixed assets related to the acquisition of IPSCO
SEKm Q1/2017 Q1/2016 Q4/2016 2016
Sales 3,019 2,428 2,825 10,639
EBITDA 8 209 136 737
EBIT1 -157 55 -34 110
Shipments,ktonnes 486 475 502 1,924
Sales and EBITDA margin
0%2%4%6%8%10%12%14%16%18%20%
0
1000
2000
3000
4000
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2015 2016 2017
Sales EBITDA %
TibnorHigher volumes and better margins
Shipments +8% vs. Q4/2016 • Good level of demand in all
main market areasEBIT was SEK 99m, up SEK 119m vs. Q4/2016+ Better margins + Higher volumes
11
SEKm
SEKm Q1/2017 Q1/2016 Q4/2016 2016
Sales 2,019 1,707 1 813 6 879
EBITDA 118 1 57 191
EBIT1 99 -20 34 106
1) Excluding depreciation/amortization on surplus values on intangible and tangible fixed assets related to the acquisition of Rautaruukki
Sales and EBITDA margin
-4%
-2%
0%
2%
4%
6%
8%
10%
0
500
1,000
1,500
2,000
2,500
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2015 2016 2017
Sales EBITDA %
Ruukki ConstructionResult improvement due to higher sales volumes
Seasonally lower demandSales +22% vs. Q1/2016• Growth in Building
Components and Roofing segments
EBIT was SEK -29m, up SEK 19m vs. Q1/2016 + Higher volumes
12
SEKm
1) Excluding depreciation/amortization on surplus values on intangible and tangible fixed assets related to the acquisition of Rautaruukki
SEKm Q1/2017 Q1/2016 Q4/2016 2016
Sales 1,131 928 1,353 5,304
EBITDA 8 -10 45 322
EBIT1 -29 -48 7 171
Sales and EBITDA margin
-5%
0%
5%
10%
15%
20%
25%
0
500
1000
1500
2000
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2015 2016 2017
Sales EBITDA %
0%2%4%6%8%10%12%14%
0200400600800
1,0001,2001,4001,6001,800
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2015 2016 2017
SEK
mill
ion
EBITDA EBITDA %
Strong profitability improvementHigher sales due to both higher prices and volumes
14
Sales
EBITDA and EBITDA margin
Shipments1
EBITDA per tonne delivered steel
1) Including the steel operations: Special Steels, Europe and Americas
0200400600800
1,0001,2001,4001,6001,8002,000
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2015 2016 2017
kton
s
02,0004,0006,0008,000
10,00012,00014,00016,00018,000
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2015 2016 2017
SEK
mill
ion
0
200
400
600
800
1000
1200
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2015 2016
SEK/
tonn
e
Change in operating profit Q1/2017 vs. Q1/2016
SEKm
15
702
270
-193
2017 Q1
45
2016 Q1 Fixed costVar COGS Other
1 730
VolumePrice
-1 100
-100 50
FX
Change in operating profit Q1/2017 vs. Q4/2016
SEKm
16
745
435
90 180
107
702
2017 Q1OtherFX
-165
Fixed costVar COGS
-690
VolumePrice2016 Q4
Good operating cash flow despite higher inventories and accounts receivables SEKm Q1/2017 Q1/2016 Q4/2016 2016
Operating profit before depreciation/amortization 1,627 741 1,066 4,951
Change in working capital -526 -476 417 -661
Maintenance expenditure -215 -219 -365 -1,053
Other -10 31 -65 -30
Operating cash flow 876 77 1,053 3,207
Financial items -222 -178 -271 -994
Taxes -21 -48 244 80
Cash flow from current operations 633 -149 1,026 2,293
Strategic capital expenditure in plant and machinery -44 -88 -83 -273
Acquisitions of shares and operations 0 -7 - -46
Divestments of shares and operations 0 0 - -
Net cash flow 589 -244 943 1,974
17
Net debt and gearing decreased
18
Net gearing ratio decreased from 34% at the end of 2016 to 32%
Net debt decreased by SEK 0.9bn and amounted to SEK 17.0bn
SEKbn%
Net debt and net debt/equity ratio
0
10
20
30
40
50
60
2012 2013 2014 2015 2016 Q1/20170
5
10
15
20
25
30
Net interest bearing debt, SEKm Net gearing ratio, %
Net debt reduction according to planSEK 10 bn. between the end of Q1/16 and the end of 2017
SEK bn
10.0
4.9
7.7
TargetRemaining in 2017
2.3
2.8
Realized so farRights issue (net) Net cash flow Q2/16-Q1/17
19
0
2,000
4,000
6,000
8,000
10,000
12,000
Cash andback-upfacilities
2017 2018 2019 2020 2021 2022-
Balanced maturity profile in coming years
20
Loans maturing in 2017-2018 amounted to SEK 6.0bnOf the total maturities in 2017, commercial paper accounts for SEK 0.75bnBond issue of SEK 1bn and buy-back of 1.2bn outstanding bonds 2017 and 2019, effective in Q2
SEKmQ1/2017
6.0bn
Debt cost and duration
Years
Duration on debt portfolio and interest rate
21
Duration of the loan portfolio was 4.9 years (5.1 at the end of 2016)Averaged fixed interest term was 0.7 years (0.8) Average interest rate was 3.05% (3.03 % in Q4/2016)
%
4.0
4.2
4.4
4.6
4.8
5.0
5.2
5.4
0.0
1.0
2.0
3.0
4.0
5.0
6.0
Q1 Q2 Q3 Q4 Q1
2016 2017
Avg. duration (rhs) Avg. interest rate
Higher raw material prices New contract with LKAB for iron ore pellets with monthly pricing
22
Coking coal
Iron ore
Average coking coal purchase price in Q1 was 2% higher in SEK vs. Q4/16
Average pellet purchase price in Q1 was 15% higher in SEK vs. Q4/16New contract with LKAB for the period April 1, 2017-March 31, 2018
• Prices are adjusted on monthly basis
50
75
100
125
150
175
200
225
250
Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017
Coal (SSAB's purchase price, indexed)
Iron ore (SSAB's purchase price, indexed)
SSAB’s purchase price, coking coal and iron ore
Index
0
50
100
150
200
250
300
350
Jan-
15Fe
b-15
Mar
-15
Apr-
15M
ay-1
5Ju
n-15
Jul-1
5Au
g-15
Sep-
15O
ct-1
5N
ov-1
5De
c-15
Jan-
16Fe
b-16
Mar
-16
Apr-
16M
ay-1
6Ju
n-16
Jul-1
6Au
g-16
Sep-
16O
ct-1
6N
ov-1
6De
c-16
Jan-
17Fe
b-17
Mar
-17
Apr-
17
Chicago #1HM Scrap (AMM) [USD/gross ton]
Scrap spot prices continued to increase in Q1 along with other raw materials
23
Scrap spot price
USD/gross ton
Q1
Source: AMM
Scrap spot prices in US at the end of Q1/17 were:
6% higher vs. Q4/1620% higher vs. Q1/16
SSAB’s outlook for Q2/2017In North America, demand for heavy plate is expected to be good both from Steel Service Centers and end customers
In Europe, demand is expected to be good
No major changes in inventory levels expected
Demand for high-strength steels is expected to develop positively
Overall, SSAB’s shipments are expected to be somewhat higher than during Q1
Realized prices are expected to be higher than in Q1, however mitigated by increased raw material costs
Work started on the major maintenance outage in Mobile during Q1 and was completed during the beginning of Q2
25
Swedish Steel Prize 2017 finalists lead the way with innovative design concepts
26
Fermel, South AfricaMINING VEHICLEFermel, South AfricaMINING VEHICLE
JMG Cranes, ItalyELECTRICAL PICK AND CARRY CRANE
JMG Cranes, ItalyELECTRICAL PICK AND CARRY CRANE
Wabash National, USAREAR IMPACT GUARDWabash National, USAREAR IMPACT GUARD
Kiruna Wagon, SwedenDUMPER WAGONKiruna Wagon, SwedenDUMPER WAGON
Maintenance outages in 2017
29
Costs were SEK 180m for Q1/2017 (incl. direct costs and under absorption)SSAB Americas SEK 160m, SSAB Europe SEK 20m
Q2/2017 costs are estimated to be SEK 250m - SSAB Americas SEK 230m, SSAB Europe SEK 20m
SEKm Q1/2017 Q2/2017 Q3/2017 Q4/2017 2017 2016
SSAB Special Steels 230 0 230 250
SSAB Europe 20 20 170 100 310 300
SSAB Americas 160 230 0 0 390 290
Total 180 250 400 100 930 840
Major, planned maintenance outages 2017
Note: The estimates shown in table includes direct maintenance cost and cost of lower capacity utilization (under absorption), but excludes lost margins.
SSAB’s key customer segments – outlook Segment Outlook for
Q2 vs. Q1 Comments on outlook
Heavy TransportGrowth in demand expected in Europe
Railcar production in US is expected to continue to decline
Automotive Automotive is expected to remain at high level in Europe and in the US
Construction Machinery
Demand in the main European markets is expected to pick-up somewhat
Demand in US is showing some signs of recovery from low level
Mining Higher repair and maintenance activity in the Mining sector
EnergyContinued solid demand in wind energy segment expected
Oil-related segments are expected to pick-up
Construction Material Demand expected to pick up seasonally
Service Centers (US) Demand from Service Centers is expected to be fairly stable in Q2, although inventories are still low
3030