Continued earnings improvement - SSAB · PDF fileContinued earnings improvement Presentation of the Q2/2017 result ... Result improved year-on-year, ... Q4 2015 Q1 2016 Q2 2016 Q3

Continued earnings improvement Presentation of the Q2/2017 result Martin Lindqvist, President & CEOHåkan Folin, CFO

July 20, 2017

Agenda

Q2/2017 and performanceby division

Financials

Summary & outlook

Q&A

2

Q2/2017 and performance by division

3

Stable market situation both in Europe and North America

4

Spot price development: Hot Rolled Coil (HRC) in Northern Europe, Plate in US, HRC in China

Indexed (Jan 2015 =100)

Q2

Northern Europe/HRC

US/Plate

Stable demand, lower imports,

low inventories, plate spot prices

decreased slightly

Good demand, higher imports,inventories somewhat high, spot

prices decreased

50

60

70

80

90

100

110

120

130

140

150

Jan

15Fe

b 15

Mar

15

Apr 1

5M

ay 1

5Ju

n 15

Jul 1

5Au

g 15

Sep

15O

ct 1

5No

v 15

Dec 1

5Ja

n 16

Feb

16M

ar 1

6Ap

r 16

May

16

Jun

16Ju

l 16

Aug

16Se

p 16

Oct

16

Nov

16De

c 16

Jan

17Fe

b 17

Mar

17

Apr 1

7M

ay 1

7Ju

n 17

Jul 1

7

Northern Europe HRC US Plate China HRC

Summary of Q2/2017Significant earnings improvement

EBIT of SEK 1,205m, upSEK 503m compared with Q1/17+ Higher prices+ Improved capacity utilization- Higher costs of raw materials

EBIT up SEK 613m vs. Q2/16

Operating cash flow at SEK 1,069m

Gearing down to 30% (32%)

SEKm Q2/2017 Q2/2016 Q1/2017 FY 2016

Sales 17,115 14,471 15,739 55,354

EBITDA 2,167 1,509 1,627 4,951

EBIT 1,205 592 702 1,213

Operating cash flow

1,069 1,151 876 3,207

Key figures

5

Sales and EBITDA marginSEKm

1) Excluding depreciation/amortization on surplus values on intangible and tangible fixed assets related to the acquisition of Rautaruukki

6

SSAB Special SteelsBetter capacity utilization and growing volumes

Shipments increased 10% vs. Q1/17 • Growing demand especially in

Heavy Transport and Construction Machinery segments

EBIT was SEK 362m, up SEK 119m vs. Q1/17+ Higher volumes+ Better capacity utilization- Production issues in steel mill

and higher cost for logistics

SEKm Q2/2017 Q2/2016 Q1/2017 2016

Sales 4,133 3,398 3,925 12,582

EBITDA 495 437 377 1,453

EBIT1 362 303 243 902

Shipments,ktonnes 304 256 277 1,008

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 Q2

2015 2016 2017

Sales EBITDA %

SEKm

7

SSAB Europe Continued strong profitability improvement

Shipments +1% vs. Q1/17• Strong demand in

Construction Material• Automotive premium

continued at good levelEBIT in Q2 was SEK 1,022m, up SEK 196m vs. Q1/17+ Higher prices+ Better mix- Higher raw material costs

7 1) Excluding depreciation/amortization on surplus values on intangible and tangible fixed assets related to the acquisition of Rautaruukki

SEKm Q2/2017 Q2/2016 Q1/2017 2016

Sales 8,378 6,668 7,657 25,831

EBITDA 1,381 728 1,182 2,458

EBIT1 1,022 366 826 1,000


Sales and EBITDA margin

0%2%4%6%8%10%12%14%16%18%

01,0002,0003,0004,0005,0006,0007,0008,0009,000

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

2015 2016 2017

Sales EBITDA %

SSAB Americas Profitability improved due to higher prices

Demand was stable during Q2• Steel Service Centers in wait-

and-see modeShipments were down 7% vs. Q1/17 due to Mobile outageEBIT was SEK 39m, up SEK 196m from Q1/17+ Higher prices- Maintenance outage- Lower volumes

SEKm

8 1) Excluding depreciation/amortization on surplus values on intangible and tangible fixed assets related to the acquisition of IPSCO

SEKm Q2/2017 Q2/2016 Q1/2017 2016

Sales 3,138 2,841 3,019 10,639

EBITDA 201 309 8 737

EBIT1 39 162 -157 110



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 Q2

2015 2016 2017

Sales EBITDA %

TibnorResult improved year-on-year, but was lower than in Q1/17

Shipments at the same level as in Q1/17Sales increased 2% vs. Q1/17EBIT was SEK 67m, down SEK 32m vs. Q1/17- Lower marginsEBIT improved by SEK 25m vs. Q2/16

9

SEKm

SEKm Q2/2017 Q2/2016 Q1/2017 2016

Sales 2,057 1,820 2,019 6 879

EBITDA 88 63 118 191

EBIT1 67 42 99 106



-3%-2%-1%0%1%2%3%4%5%6%7%

0

500

1000

1500

2000

2500

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

2015 2016 2017

Sales EBITDA %

Ruukki ConstructionResult below last year’s level due to lower margins

Seasonally higher demandSales +6% vs. Q2/16• Growth in Building

ComponentsEBIT was SEK 63m, down SEK 12m vs. Q2/16 - Lower margins due to higher

input costs

10

SEKm


SEKm Q2/2017 Q2/2016 Q1/2017 2016

Sales 1,531 1,444 1,131 5,304

EBITDA 97 114 8 322

EBIT1 63 75 -29 171


-5%

0%

5%

10%

15%

20%

25%

0

500

1000

1500

2000

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

2015 2016 2017

Sales EBITDA %

Financials

Profitability continued to improveEBITDA margin above 12%

12

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 Q2

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 Q2

2015 2016 2017

SEK

mill

ion

0 %2 %4 %6 %8 %10 %12 %14 %

0

500

1,000

1,500

2,000

2,500

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

2015 2016 2017

SEK

mill

ion

EBITDA EBITDA %

0

200

400

600

800

1,000

1,200

1,400

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

2015 2016 2017

SEK/

tonn

e

Change in operating profit Q2/2017 vs. Q2/2016

SEKm

13

592

2017 Q2

1,205

Other

58

FX

85

Fixed cost

-20

Var COGS

-1,280

Volume

-120

Price

1,890

2016 Q2

Change in operating profit Q2/2017 vs. Q1/2017

SEKm

14

805

115

164

701

90

FXFixed cost

-185

Var COGS

-485

VolumePrice2017 Q1

1,205

Other 2017 Q2

Cash flow - Improved earnings offset by higher working capitalSEKm Q2/2017 Q2/2016 Q1/2017 2016

Operating profit before depreciation/amortization 2,167 1,509 1,627 4,951

Change in working capital -869 -66 -526 -661

Maintenance expenditure -242 -263 -215 -1,053

Other 13 -29 -10 -30

Operating cash flow 1,069 1,151 876 3,207

Financial items -344 -359 -222 -994

Taxes -73 -50 -21 80

Cash flow from current operations 652 742 633 2,293

Strategic capital expenditure in plant and machinery -40 -69 -44 -273

Acquisitions of shares and operations -11 -14 0 -46

Divestments of shares and operations 0 0 0 -

Cash flow before dividend 601 659 589 1,974

15

Net debt and gearing continued to decrease

16

Net gearing ratio decreased from 32% at the end of Q1/17 to 30%

Net debt decreased by SEK 1.3bn and amounted to SEK 15.7bn

%SEKbn

Net debt and net debt/equity ratio

0

10

20

30

40

50

60

2012 2013 2014 2015 2016 Q2/20170

5,000

10,000

15,000

20,000

25,000

30,000

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

8.3

TargetRemaining in 2017

1.7

3.4

Realized so farRights issue (net) Net cash flow Q2/16-Q2/17

17

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

Cash andback-upfacilities

2017 2018 2019 2020 2021 2022-

Balanced maturity profile in coming years

18

Loans maturing in 2017-2018 amounts to SEK 5.4bnOf the total maturities in 2017, commercial paper accounts for SEK 0.6bnBond issue of SEK 1bn and buy-back of 1.2bn outstanding bonds 2017 and 2019, effective in Q2

SEKm

Q2/2017

5.4bn

Debt cost and duration

%

Duration on debt portfolio and interest rate

19

Duration of the loan portfolio was 5.2 years (4.9 at the end of Q1)Averaged fixed interest term was 0.8 years (0.7) Average interest rate was 3.27% (3.19 % in Q1)

Years

4.0

4.2

4.4

4.6

4.8

5.0

5.2

5.4

Q1 Q2 Q3 Q4 Q1 Q2

2016 2017

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

Avg. duration (rhs) Avg. interest rate

Higher raw material prices

20

Coking coal

Iron ore

Average coking coal purchase price in Q2 was 9% higher in SEK vs. Q1/17

Average pellet purchase price in Q2 was 1% higher in SEK vs. Q1/17Contract with LKAB for the period Apr 2017-Mar 2018

• Prices are adjusted on monthly basis

SSAB’s purchase price, coking coal and iron ore

Index

50

100

150

200

250

300

Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017

Coal (SSAB's purchase price, indexed)

Iron ore (SSAB's purchase price, indexed)

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-

17M

ay-1

7Ju

n-17

Chicago #1HM Scrap (AMM) [USD/gross ton]

Scrap spot prices decreased during Q2

21

Scrap spot priceUSD/gross ton Q2

Source: AMM

Scrap spot prices in US at the end of Q2/17 were:

2% lower vs. Q1/1719% higher vs. Q2/16

Outlook

SSAB’s outlook for Q3/2017In North America, demand for heavy plate is expected to be relatively stable, although with some seasonal slowdown

In Europe, demand is expected to be good, although with normal seasonal slowdown

Demand for high-strength steels is expected to continue to develop positively

Overall, SSAB’s shipments are expected to be seasonally somewhat lower than during Q2/17

Overall, realized prices are expected to be relatively stable vs. Q2/17

Maintenance outage in SSAB Special Steels and SSAB Europe

23

24

Develop SSAB Services

2016 Target

Strategic direction – Taking the lead!2020-targets presented at CMD in June

Grow Special Steels 1.35 MTON

2016 Target

1.35

1.0

Enhance premium mix in SSE

Wearpartsmembers

Leader North American plate

30%

Market share(over time)

Automotive premium 750 KTON

2016 Target

KTON

442

750MTONShare of Premium products

40%265

>500

24

1 2 3 4 5

Questions & Answers

Appendix

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

27

Maintenance outages in 2017

28

Costs were SEK 280m for Q2/17 (incl. direct costs and under absorption)SSAB Americas SEK 230m, SSAB Europe SEK 50m

Q3/17 costs are estimated to be SEK 350m - SSAB Special Steels SEK 230m, SSAB Europe SEK 120m

SEKm Q1/2017 Q2/2017 Q3/2017 Q4/2017 2017 2016

SSAB Special Steels 230 230 250

SSAB Europe 20 50 120 170 360 300

SSAB Americas 160 230 390 290

Total 180 280 350 170 980 840

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

Q3 vs. Q2 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

Construction Machinery

Demand in the main European markets is expected to continue at good level

Demand in US is showing some signs of recovery from low level

MiningHigher repair and maintenance activity in the Mining sector

First signs of pick-up also in investments of new machinery

EnergyContinued solid demand in wind energy segment expected

Oil-related segments are expected to pick-up

Construction Material Demand expected to continue at seasonally high level

Service Centers (US) Demand from Service Centers is expected to be fairly stable in Q3, although inventories are still low

2929

Documents

Continued earnings improvement - SSAB · PDF fileContinued earnings improvement Presentation of the Q2/2017 result ... Result improved year-on-year, ... Q4 2015 Q1 2016 Q2 2016 Q3