INTERIM REPORT Q4/2018 - Cision · 2019-02-14 · LKAB INTERIM REPORT Q4/2018 1 OPERATIONS – FOURTH QUARTER MSEK Note Q4 2018 Q4 2017 Full year 2018 Full year 2017 Net sales 4,

LKAB INTERIM REPORT Q4/2018 1

OPERATIONS – FOURTH QUARTER

MSEK NoteQ4

2018Q4

2017Full year

2018Full year

2017

Net sales 4, 5 6,911 6,208 25,892 23,367

Underlying operating profit 12 2,189 1,691 8,975 7,148

Costs for urban transformation provisions -289 -353 -2,106 -1,147

Impairment of property, plant and equipment -14 -26

Operating profit/loss 1,900 1,324 6,869 5,975

Net financial income/expense -790 47 -185 290

Profit/loss before tax 1,110 1,371 6,685 6,266

Profit/loss for the period 879 979 5,274 4,803

Operating cash flow -1,529 587 3,126 7,136

Investments in property, plant and equipment 624 600 2,455 2,008

Depreciation -730 -797 -2,857 -2,887

Deliveries of iron ore products, Mt 6.8 7.3 26.8 27.6

Proportion of pellets, % 79 81 82 83

Production of iron ore products, Mt 6.7 7.2 26.9 27.2

Return on equity, % 12 14.1 14.4 14.1 14.4

Net debt/equity ratio, % 12 9.2 -6.6 9.2 -6.6

GROUP |

6.7 MtProduced during the quarter

6.8 MtDelivered during the quarter

79%Percentage of pellets for the quarter

IMPROVED OPERATING PROFIT DESPITE PRODUCTION LOSS

INTERIM REPORT Q4/2018

LKAB is benefiting from the current global market prices and from the fact that steel companies are prioritizing resource efficiency and sustainability. Going forward, the focus will be on stable production, expanded exploration and driving ahead with our development programmes.

• Production volumes in the fourth quarter were lower than in the same quarter the previous year, mainly due to extensive maintenance work at the pelletizing plant in Svappavaara. Delivery volumes were also lower than in the same period last year because of the lower production.

• Operating profit for the fourth quarter was 44 percent higher than in the same period last year, mainly as a result of higher prices for highly upgraded iron ore products and a stronger dollar exchange rate for the period.

• The average global spot price1 for iron ore products in the fourth quarter was USD 72 (66)/tonne compared with USD 67/tonne in the third quarter 2018. The global spot price at the end of the year was USD 73/tonne. The premium for pellet sales stayed at a high level.

• Operating cash flow for the fourth quarter was MSEK -1,529 (587) and was affected mainly by the acquisition of Francis Flower in December and by higher expenditure on urban transformation.

• The return on equity was 14.1 (14.4) percent.

• The net debt/equity ratio was 9.2 (-6.6) percent.

• The Board of Directors is proposing to the Annual General Meeting that an ordinary dividend is paid amounting to MSEK 3,164.

1Platts IODEX 62% Fe CFR North China

Market conditions remained good in the last quarter of 2018, with strong demand for highly upgraded iron ore products and a favourable dollar exchange rate. Although the pelletizing plant in Svappavaara was out of operation for the entire quarter, LKAB is reporting improved operating profit both for the quarter and for the full year.

LKAB INTERIM REPORT Q4/2018 2 GROUP |

THE LKAB GROUP

NET SALES AND OPERATING PROFIT/LOSS

ANALYSIS OF CHANGE IN OPERATING PROFITMSEK

Q42018

Full year 2018

Operating profit 2017 1,324 5,975

Prices, iron ore 735 1,567

Currency effect, iron ore incl. hedging of accounts receivable 461 642

Hedging of currency and iron ore price 0 1,220

Volume and mix, iron ore -421 -396

Volume, price and currency, industrial minerals -39 -60

Costs for urban transformation provisions 64 -959

Impairment of property, plant and equipment 14 26

Depreciation 67 30

Other income and expenses -305 -1,176

Operating profit 2018 1,900 6,869

Net sales for the fourth quarter were 11 percent higher when compared year-on-year. The improvement is mainly due to higher prices for highly upgraded iron ore products and a stronger dollar exchange rate. The average spot price for iron ore for the quarter was USD 72 (66)/tonne and the pellet premium remained at a high level, increasing further during the quarter.

The cost level for the quarter was higher than in the same period last year, mainly caused by higher energy prices and increased costs for maintenance work.

Sales for the year increased by 11 percent compared with the previous year, mainly as a result of higher market prices for iron ore, a better result from price and currency hedging and a stronger dollar exchange rate. This was countered by lower delivery volumes for the year.

Operating profit for the year increased by 15 percent when compared year-on-year. The increase in sales was countered by higher costs for urban transformation provisions of MSEK 959. Higher energy prices, higher employee benefit expenses, production disruption, higher costs for the supply of crushed ore and increased exploration also had a negative impact on profit for the year. The sale of some of the machinery fleet in Mertainen in the third quarter of 2017 affects comparability between the years by MSEK 202.

CASH FLOW

MSEKQ4

2018Q4

2017Full year

2018Full year

2017

Cash flow from operating activities before changes in working capital 754 1,248 7,559 6,970

Change in working capital -506 -66 -831 1,890

Capital expenditures (net) -621 -595 -2,446 -1,724

Acquisition of subsidiaries -1,146 -1,146

Acquisition of financial assets -11 -11

Operating cash flow -1,529 587 3,126 7,136

Operating cash flow for the fourth quarter amounted to MSEK -1,529 (587) and was affected mainly by the acquisition of Francis Flower in December and by higher expenditure on urban transformation.

Operating cash flow for full-year 2018 was MSEK 3,126 (7,136). Improved earnings and lower expenditure on urban transformation had a positive effect. The acquisition of Francis Flower, increased capital tied up in inventories and accounts receivable, and also last year’s result from assets pledged for outstanding hedging positions had a negative effect. Higher expenditure on investments also contributed to the lower cash flow for the year.

NET SALES AND OPERATING PROFIT

Net sales 2018 Net sales Operating profit

RETURN ON EQUITY

Rolling 12 months Target return on equity

OPERATING CASH FLOW

Operating cash flow 2018 Operating cash flow

-2,000-1,500-1,000

-5000

5001,0001,5002,0002,5003,0003,500

Q4Q3Q2Q1Q4Q3Q2Q1Q4Q3Q2Q1

MSEK

2016 2017 2018

-2,400

-1,200

0

1,200

2,400

3,600

4,800

6,000

7,200


MSEK

2016 2017 2018

-20

-15

-10

-5

0

5

10

15

20

25

30


%

2016 2017 2018

LKAB INTERIM REPORT Q4/2018 3 GROUP |

THE LKAB GROUP

NET FINANCIAL INCOME/EXPENSE AND NET FINANCIAL INDEBTEDNESSNet financial income/expense for the fourth quarter was MSEK -790 (47) and for full-year 2018 was MSEK -185 (290), with negative stock market development towards the end of the year having a particular impact on the return on financial investments when compared year-on-year.

The net debt/equity ratio was 9.2 (-6.6) percent, an increase compared with the same period last year, mainly as a result of increased provisions for urban transformation.

PROPOSED DIVIDENDThe Board of Directors is proposing to the Annual General Meeting that an ordinary dividend is paid amounting to MSEK 3,164. The dividend is in accordance with the group’s dividend policy.

CREDIT FACILITIES

MSEK NominalUtilized

(nominal) Available

Commercial paper programme, maturing within one year 5,000 200 4,800

Bond programme 7,000 4,009

Maturing December 2019 1,991

Maturing June 2021 1,000

Other bond financing, maturing 2022 250 250

Credit facility 5,000 5,000

Total 17,250 3,441 13,809

There were no changes to nominal credit facilities during the quarter. All credit facilities are subject to 100 percent retention of title.

SIGNIFICANT EVENTS IN THE FOURTH QUARTERDuring a scheduled maintenance shutdown in September it was found that support structures under the cooler at the pelletizing plant in Svappavaara need to be replaced earlier than planned. The pelletizing plant was therefore taken out of operation until 6 February 2019, which had a negative impact on delivery volumes for the fourth quarter of 1.3 Mt.

During the fourth quarter LKAB Minerals acquired all the shares in Francis Flower Limited and Gurney Slade Lime & Stone Co. Limited. The acquisition generates growth in the area of industrial minerals which, in line with LKAB’s strategic plan, produces a better balance between LKAB’s business areas and makes the Group less sensitive to fluctuations in the iron ore market.

OUTLOOK FOR 2019 LKAB assesses that the oversupply situation within iron ore fines will continue, which is putting pressure on iron ore prices; at the same time, the premium for highly upgraded iron ore products is expected to remain high. Demand for LKAB’s pellets remains strong. LKAB is continuing to focus on stability, profitability and productivity improvements in order to enhance competitiveness. Work on the urban transformation is in an intensive phase with an increased number of acquisitions, which will mean increased expenditure over the coming year.

Securing access to ore after 2030, when the current main haulage levels are expected to be mined out, is the basis for the next generation of LKAB, which is why exploration work is being further intensified. In parallel with the increased explora-tion work, LKAB is continuing its extensive development work for the next-genera-tion production system.

NET FINANCIAL INDEBTEDNESS

Net financial indebtedness

NET DEBT/EQUITY RATIO

Net debt/equity ratio

MSEK

%

-4,000

-2,000

0

2,000

4,000

6,000

8,000

10,000


2016 2017 2018

-10

-5

0

5

10

15

20

25


2016 2017 2018

LKAB INTERIM REPORT Q4/2018 4 MARKET DEVELOPMENT |

MARKET DEVELOPMENT

THE STEEL AND IRON ORE MARKET

THE GLOBAL STEEL AND IRON ORE INDUSTRYGlobal production of crude steel increased in the fourth quarter by 5 percent com-pared with the same period last year. During the quarter steel prices fell, squeezing steelmakers’ margins. China’s steel exports decreased compared with the previous quarter. The ongoing trade war between the USA and China continues to create uncertainty in the market.

Demand for LKAB’s iron ore products remains high.

EuropeProduction of crude steel within the EU28 increased by nearly 1 percent during the fourth quarter compared with the same period last year. Overall, crude steel pro-duction in the EU decreased by 0.3 percent in 2018. Growth of 1 percent is expected in 2019.

Middle East and North Africa (MENA)Production of crude steel increased by 11 percent during the fourth quarter compared with the same period last year. Overall, production of crude steel in the MENA region increased by 13 percent in 2018. A downturn in the price of oil during the quarter is having a negative impact on the region. Demand for DR pellets remains higher than supply on the market.

USAIn the USA production of crude steel increased by 11 percent during the fourth quarter compared with the same period last year. Overall, crude steel production in the USA increased by 6 percent in 2018. Demand for steel is expected to weaken in 2019 unless the government comes up with a substantial infrastructure package. Steel prices are also expected to continue their downward trend at the beginning of 2019.

ChinaChina’s production of crude steel increased by 9 percent during the fourth quarter compared with the same period last year. Overall, crude steel production in China increased by 7 percent in 2018. Iron ore imports into China increased by 1 percent during the quarter, to 261 Mt. Overall China’s iron ore imports decreased in 2018, which has not happened since 2010. One of the main reasons was increased running down of port inventories of iron ore in China.

Port inventories of iron ore decreased to just below 139 Mt at the end of the quarter.

Iron ore spot price developmentsAt the beginning of the fourth quarter the spot price was USD 70/tonne. The spot price then increased and peaked at USD 77/tonne in mid-November before embarking on a downward trend. Towards the end of the quarter the spot price began moving upwards again, ending at USD 73/tonne after a strong end to December. The average

price for the quarter was USD 72/tonne, which was USD 5/tonne higher than in the preceding quarter. The average spotprice for year of 2018 was USD 69/tonne to be compared with USD 71/tonne for 2017. Quoted pellet premiums for blast furnace pellets and DR pellets increased in the middle of the quarter to USD 62/tonne and USD 68/tonne respectively. The pellet premium in China decreased substantially and ended the quarter at USD 44/tonne, a decrease of USD 45/tonne from its earlier record high in September. The price difference between Platts IODEX 65% Fe and 62% Fe decreased substantially during the quarter, form USD 27/tonne to USD 15/tonne; the average for the quarter was USD 20/tonne, a decrease of USD 12/tonne compared with the previous quarter.

THE DEVELOPMENT OF THE SPOT PRICE FOR IRON ORE AND QUOTED PELLET PREMIUMS

1 September 2012 – 31 December 2018

USD/tonne

1Platts IODEX 62% Fe CFR North China

Source: PLATTS IODEX 62% Fe CFR North China

0

50

100

150

200

201820172016201520142013

Price 62% Fe DR pellet premium Atlantic basin bf pellet premium


The Northern Division comprises mines and processing plants in Kiruna.

OPERATIONS SUMMARY

MSEK NoteQ4

2018Q4

2017Full year

2018Full year

2017

Net sales* 4.5 3,804 3,094 14,278 13,473

Underlying operating profit* 12 1,482 984 6,016 5,241


Operating profit* 1,182 642 4,102 4,181

Investments in property, plant and equipment 133 312 616 748

Depreciation -305 -409 -1,229 -1,344

Deliveries of iron ore products, Mt* 4.1 3.6 15.2 15.2

Proportion of pellets,%* 80 82 85 86

Production of iron ore products, Mt* 4.1 3.6 15.0 14.8

* Effective from 2018, a new model is being used for internal distribution between the Northern Division and the Southern Division. Earlier periods have been restated in accordance with the change.

The production volume for the fourth quarter increased by 0.5 Mt in a year-on-year comparison. Deliveries increased by 0.5 Mt and amounted to 4.1 (3.6) Mt, with the proportion of pellets at 80 (82) percent. The increased volumes are mainly due to increased production from the pelletizing plants in a year-on-year comparison.

Sales for the fourth quarter were higher than in the same period last year, mainly as a result of higher prices for highly upgraded iron ore products, a higher dollar exchange rate and higher delivery volumes.

Costs, excluding provisions for urban transformation, were higher than in the same period last year, which was primarily an effect of decreased inventories of crushed ore, higher energy costs and increased maintenance costs. Operating profit for the fourth quarter increased by 84 percent to MSEK 1,182 (642).

For full-year 2018, 15.0 (14.8) Mt of finished products were produced. The increase is mainly due to improvements in production stability, with fewer interrup-tions than in the previous year. Delivery volumes were at the same level as in the previous year and amounted to 15.2 (15.2) Mt.

Sales for the full year were higher than in the same period last year, mainly as a result of higher market prices for iron ore and a stronger dollar exchange rate. Operating profit for the year was lower than last year, mainly due to the impact of higher costs for urban transformation provisions. Underlying operating profit increased by 15 percent to MSEK 6,016 (5,241).

NORTHERN DIVISION |

NORTHERN DIVISION

• The Northern Division mines and pro-cesses iron ore products in Kiruna.

• The mining takes place in the Kiruna underground mine, which has an inclined slab of magnetite that is around 80 metres wide and four kilometres long. The current main haulage level is 1,365 metres underground.

• The ore is processed above ground in three concentrating plants and three pelletizing plants.

• The Northern Division produces both blast furnace pellets and pellets for steelmaking via direct reduction, known as DR pellets.

• The processed iron ore products are transported along the Malmbanan and Ofotbanen ore railway to the port in Narvik, for shipment to steel mill customers around the world.

• The iron ore operations have a sales organization for the markets in Europe, Asia and the Middle East.

FACTS

Production of iron ore products (k tonnes)Northern Division

2018 2017

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

Q4Q3Q2Q1

LKAB INTERIM REPORT Q4/2018 6 SOUTHERN DIVISION |

SOUTHERN DIVISION

The Southern Division covers mines and processing plants in Malmberget and Svappavaara.

OPERATIONS SUMMARY

MSEK NoteQ4

2018Q4

2017Full year

2018Full year

2017

Net sales* 4.5 2,620 2,780 10,534 9,999

Underlying operating profit* 12 675 616 2,991 2,746

Costs for urban transformation provisions 11 -11 -192 -87

Operating profit* 686 605 2,799 2,659

Investments in property, plant and equipment 283 225 1,151 956

Depreciation -240 -207 -903 -868

Deliveries of iron ore products, Mt* 2.7 3.8 11.6 12.4

Proportion of pellets,%* 79 80 80 80

Production of iron ore products, Mt* 2.6 3.6 11.9 12.4

* Effective from 2018, a new model is being used for internal distribution between the Northern Division and the Southern Division. Earlier periods have been restated in accordance with the change.

Production volumes in the fourth quarter were 1.0 Mt lower than in the same quarter in the previous year, mainly due to extensive maintenance work at the pelletizing plant in Svappavaara during the quarter. Deliveries for the quarter amounted to 2.7 (3.8) Mt, with pellets accounting for 79 (80) percent of this.

Sales for the quarter were lower when compared year-on-year, which was mainly an effect of lower deliveries. The lower delivery volumes were countered by higher prices for highly upgraded iron ore products and a stronger dollar exchange rate.

Costs for the quarter decreased compared with the same period last year, which was mainly due to lower volumes of crushed ore from the Northern Division because of the maintenance shutdown at the pelletizing plant in Svappavaara. Lower costs for urban transformation provisions also had a positive impact on the quarter. Operating profit increased by 13 percent to MSEK 686 (605).

The production volume for the full year decreased to 11.9 (12.4) Mt. Delivery volumes also decreased and amounted to 11.6 (12.4) Mt, with pellets accounting for 80 (80) percent.

Sales for the full year increased by 5 percent, mainly as a result of higher market prices for iron ore and a stronger dollar exchange rate. Costs were higher because of price increases for energy, increased employee benefit expenses and higher costs for the supply of crushed ore. Underlying operating profit increased by 9 percent to MSEK 2,991 (2,746).

• The Southern Division mines and pro-cesses iron ore products in Malmberget and Svappavaara.

• The mining takes place in Malmberget’s underground mine and the Svappavaara open-pit mines.

• Magnetite is mainly mined in the Malm-berget mine, but also hematite. The mine has around 20 orebodies, of which around 10 are currently mined.

• In Svappavaara ore is mined in the Leveäniemi open-pit mine. Mining at Gruvberget ended in March 2018.

• The ore is processed above ground in two concentrating and pelletizing plants in Malmberget and in one concentrating and pelletizing plant in Svappavaara.

• The Southern Division produces both blast furnace pellets and pellets for steelmaking via direct reduction, known as DR pellets, as well as fines.

• The processed iron ore products are transported along the Malmbanan ore railway, mainly to the port in Luleå and on to European steel mill customers.

• The iron ore operations have a sales organization for the markets in Europe, Asia and the Middle East.

FACTS

Production of iron ore products (k tonnes)Southern Division

2018 2017

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

Q4Q3Q2Q1

LKAB INTERIM REPORT Q4/2018 7 SPECIAL PRODUCTS DIVISION |

SPECIAL PRODUCTS DIVISION

The Special Products Division is a leading global supplier of industrial minerals, with a major focus on LKAB’s own minerals of magnetite, mica and huntite. The division also provides products and services to LKAB such as drilling systems, mechanical services, concrete production, contract work and rockwork. These products and services are also marketed to external customers.

OPERATIONS SUMMARY

MSEK Note Q4

2018Q4

2017 Full year

2018Full year

2017

Net sales 4.5 1,091 1,083 3,806 3,936

Underlying operating profit 12 76 124 330 417


Operating profit/loss 76 110 330 391


Depreciation -20 -12 -62 -57

Net sales for the fourth quarter were somewhat higher than in the same period last year, amounting to MSEK 1,091 (1,083). The increase relates mainly to the acquisition in December of UK industrial minerals company Francis Flower, but the division’s involvement in the ongoing maintenance work at Svappavaara also made a positive contribution. Lower sales of magnetite for offshore gas pipeline projects had a negative effect on sales.

Operating profit for the quarter was MSEK 76 (110), being mainly affected by lower sales volumes for magnetite.

Net sales for the year were 3 percent lower than in the previous year, mainly due to lower sales of industrial minerals. Operating profit for the year was 16 percent lower than in the previous year at MSEK 330 (391), mainly due to lower sales of magnetite. Increased costs as a result of new acquisitions and ongoing research and development projects also had a negative impact on earnings for the year.

• The Special Products Division covers LKAB Minerals, LKAB Wassara, LKAB Berg & Betong, LKAB Kimit and LKAB Mekaniska.

• LKAB Minerals mines and sells minerals and also processes and sells iron ore for applications outside the steel industry. The business has sales offices and production units in Europe, the US and Asia.

• LKAB Wassara develops and manufac-tures water-powered precision drilling systems for mining, construction and exploration drilling as well as dam building and geothermal energy. Customers are located throughout the world.

• LKAB Berg & Betong is a leading provider of full service solutions for the mining and construction industries. LKAB Berg & Betong is also the world’s largest producer of sprayed concrete.

• LKAB Kimit supplies explosives to the mining and construction industries.

• LKAB Mekaniska is a quality-conscious engineering company offering services throughout the supply chain, from planning and design to final inspection.

FACTS

LKAB INTERIM REPORT Q4/2018 8 OTHER SEGMENTS AND PARENT COMPANY |

OTHER SEGMENTS

OPERATIONS SUMMARY

MSEK NoteQ4

2018Q4

2017Full year

2018Full year

2017

Net sales excl. hedging 74 40 196 157

Net sales hedging -11 51 -80 -1,119

Total net sales 4, 5 63 91 116 -962

Operating profit/loss -45 -71 -378 -1,315


Depreciation -165 -171 -663 -620

The improvement in earnings for the year is mainly due to a better result for hedging activities com-pared with the previous year. Under LKAB’s hedging strategy, price and currency risk in the Group’s forecast sales are not normally hedged. Outstanding accounts receivable are hedged, however. Costs for the year increased somewhat, partly as a result of increased exploration as well as the intensification during the year of work on the strategic development programmes aimed at securing long-term competitiveness.

1. Group-wide functions within Other Segments mainly refers to the Group functions for HR, communication and finance, as well as strategic R&D and exploration.

PARENT COMPANY

The Parent Company LKAB consists of the Northern Division and the Southern Division and the group-wide functions reported under Other Segments. The Parent Company includes the majority of LKAB’s operating activities as well as the Group’s financial activities.

OPERATIONS SUMMARY

MSEK NoteQ4

2018Q4

2017Full year

2018Full year

2017

Net sales 6,422 5,744 24,194 21,489

Underlying operating profit 12 1,976 1,458 8,269 6,373



Investments in property, plant and equipment 541 572 2,256 1,860

Depreciation -569 -661 -2,272 -2,365

Deliveries of iron ore products, Mt 6.8 7.3 26.8 27.6

Production of iron ore products, Mt 6.7 7.2 26.9 27.2

Other Segments covers supporting operations such as Group-wide functions1 and certain operations that are run as subsidiaries. Other Segments also covers financial operations, including transactions and gains/losses relating to financial hedging of iron ore prices, foreign currency effects and purchases of electricity.

LKAB INTERIM REPORT Q4/2018 9 SIGNATURES |

SIGNATURES

FINANCIAL INFORMATION

Annual and Sustainability Report 2018 30 March 2019

Interim Report Q1 2019 25 April 2019

Annual General Meeting 25 April 2019

Interim Report Q2 2019 10 August 2019

Interim Report Q3 2019 26 October 2019

Interim Report Q4 2019 (together with Year End Report) 14 February 2020

This report was not subject to review by the company’s auditors.

Luleå, 15 February 2019Luossavaara-Kiirunavaara AB (publ)

Jan MoströmPresident and CEO

Reports are available at www.lkab.com

Any questions concerning the Interim Report may be directed to Jan Moström, President and CEO, or to Peter Hansson, Senior Vice President, Finance, +46 920 381 00.

LKAB INTERIM REPORT Q4/2018 10 LKAB – GROUP |

LKAB – GROUP

CONDENSED INCOME STATEMENT

MSEK NoteQ4

2018Q4

2017Full year

2018Full year

2017

Net sales 4, 5 6,911 6,208 25,892 23,367

Cost of goods sold -4,795 -4,514 -17,989 -16,563

Gross profit/loss 2,116 1,693 7,903 6,804

Selling expenses -19 -40 -135 -124

Administrative expenses -106 -143 -478 -440

Research and development expenses -120 -156 -386 -398

Other operating income 157 78 382 486

Other operating expenses -128 -108 -416 -352

Operating profit/loss 4 1,900 1,324 6,869 5,975

Financial income 16 97 429 515

Financial expense -806 -50 -614 -225

Net financial income/expense -790 47 -185 290


Tax -232 -392 -1,411* -1,462


Attributable to Parent Company shareholders 879 979 5,274 4,803

Earnings per share before and after dilution (SEK) 1,255 1,398 7,534 6,862

Number of shares 700,000 700,000 700,000 700,000

CONDENSED STATEMENT OF COMPREHENSIVE INCOME

MSEK NoteQ4

2018Q4

2017Full year

2018Full year

2017


Other comprehensive income for the period

Items that will not be reclassified to profit for the year

Remeasurement of defined benefit pension plans -81 187 -20 123

Tax attributable to actuarial gains and losses 4 -40 -9 -27

Total items that will not be reclassified to profit for the year -77 147 -29 96

Items that have been or may be reclassified subsequently to profit for the year

Gains/losses on translation of foreign entities for the period -185 -62 60 -139

Change in fair value of available-for-sale financial assets for the period -295 116 -304 212

Changes in fair value of cash flow hedges for the period 57 25 140 40

Changes in fair value of cash flow hedges transferred to profit/loss for the year -29 -22 -6 1,017

Tax attributable to components of cash flow hedges 6 -29 -232

Total items reclassified to profit or loss -458 57 -139 898

Other comprehensive income for the period -535 204 -168 994

Total comprehensive income for the period attributable to the Parent Company shareholders 344 1,183 5,106 5,797

*Includes positive remeasurement effects of MSEK 78 resulting from the decision to change the corporate tax rate in Sweden with effect from 2019


LKAB – GROUP

CONDENSED STATEMENT OF FINANCIAL POSITION

MSEK Note 31 Dec 2018 31 Dec 2017

ASSETS

Non-current assets

Intangible assets 6 1,326 167

Property, plant and equipment for operations 6 30,776 30,882

Property, plant and equipment for urban transformation 7 7,376 1,890

Interests in associates and joint ventures 31 39

Financial investments 8 1,026 1,303

Non-current receivables 2

Deferred tax asset 25 28

Total non-current assets 40,562 34,309

Current assets

Inventories 3,344 2,602

Accounts receivable 2,217 1,948

Prepaid expenses and accrued income 251 145

Other current receivables 1,544 1,203

Current investments 8 18,753 18,041

Cash and cash equivalents 8 2,290 2,051

Total current assets 28,399 25,990

TOTAL ASSETS 68,961 60,298

EQUITY AND LIABILITIES

Equity

Share capital 700 700

Reserves 386 525

Retained earnings incl. profit for the year 37,487 35,124

Equity attributable to Parent Company shareholders 38,573 36,348

Total equity 38,573 36,348

Non-current liabilities

Non-current interest-bearing liabilities 1,247 3,235

Other non-current liabilities 11 3

Provisions for pensions and similar commitments 1,647 1,642

Provisions, urban transformation 7 14,378 9,198

Other provisions 1,219 1,211

Deferred tax liabilities 1,538 1,851

Total non-current liabilities 20,040 17,139

Current liabilities

Current interest-bearing liabilities 3,756 935

Trade payables 1,581 1,320

Tax liabilities 156 542

Other current liabilities 320 230

Accrued expenses and deferred income 1,087 926


Other provisions 199 147

Total current liabilities 10,347 6,811

Total liabilities 30,388 23,950

TOTAL EQUITY AND LIABILITIES 68,961 60,298


LKAB – GROUP

CONDENSED STATEMENT OF CHANGES IN EQUITY

Equity attributable to Parent Company shareholders

Reserves

2017MSEK Share capital

Translation reserve

Fair value reserve

Hedging reserve

Retained earnings

including profit/loss for the year

Total equity

Opening equity 1 Jan 2017 700 -83 542 -832 30,224 30,551

Profit/loss for the year 4,803 4,803

Other comprehensive income for the year -139 212 825 96 994

Comprehensive income for the year -139 212 825 4,900 5,797

Dividend

Closing equity 31 Dec 2017 700 -222 754 -7 35,124 36,348

Equity attributable to Parent Company shareholders

Reserves

2018MSEK Share capital

Translation reserve

Fair value reserve

Hedging reserve incl.

hedgingcost reserve

Retained earnings

including profit/loss for the year

Total equity

Opening equity 1 Jan 2018 700 -222 754 -7 35,124 36,348

Profit/loss for the year 5,274 5,274

Other comprehensive income for the year 60 -304 105 -29 -168

Comprehensive income for the year 60 -304 105 5,245 5,106

Dividend -2,882 -2,882

Closing equity 31 Dec 2018 700 -162 450 98 37,487 38,573


LKAB – GROUP

CONDENSED STATEMENT OF CASH FLOWS

MSEK NoteQ4

2018Q4

2017Full year

2018Full year

2017

Operating activities


Adjustment for items not included in cash flow 976 1,069 4,988 3,783

Income tax paid -540 -813 -2,228 -879

Expenditures, urban transformation -779 -357 -1,871 -2,178

Expenditures, other provisions -13 -22 -14 -22

Cash flow from operating activities before changes in working capital 754 1,248 7,559 6,970

Cash flow from changes in working capital

Increase (-)/Decrease (+) in inventories 83 93 -702 234

Increase (-)/Decrease (+) in operating receivables -432 -394 -331 1,648

Increase (+)/Decrease (-) in operating liabilities -158 235 202 8

Change in working capital -506 -66 -831 1,890

Cash flow from operating activities 248 1,182 6,729 8,860

Investing activities

Acquisition of property, plant and equipment -624 -600 -2,455 -2,008

Disposal of property, plant and equipment 3 5 9 284

Acquisition of subsidiaries 6 -1,146 -1,146

Disposals/acquisitions (net) in current investments 2,778 -2,981 -712 -6,770

Acquisition of other financial assets -11 -11

Cash flow from investing activities 1,000 -3,576 -4,315 -8,494

Financing activities

Repayments/borrowing repurchase agreements -4,696 -600 833 -337

Repayment of loans -323 -600

Redemption of loans upon business combination -128 -128

Dividends paid to Parent Company shareholders -2,882

Cash flow from financing activities -4,824 -923 -2,177 -937

Cash flow for the period -3,576 -3,317 237 -571

Cash and cash equivalents at start of period 5,866 5,367 2,051 2,624

Exchange difference in cash and cash equivalents 1 3 -2

Cash and cash equivalents at end of period 2,290 2,051 2,290 2,051

Change in cash and cash equivalents -3,576 -3,317 237 -571

Sub-components of cash and cash equivalents

Cash and bank balances 2,190 2,051 2,190 2,051

Current investments (maturity <90 days) 100 100

Cash and cash equivalents 2,290 2,051 2,290 2,051

Consolidated operating cash flow

Cash flow from operating activities 248 1,182 6,729 8,860

Acquisition of property, plant and equipment -624 -600 -2,455 -2,008

Disposal of property, plant and equipment 3 5 9 284

Acquisition of subsidiaries 6 -1,146 -1,146

Acquisition of other financial assets -11 -11

Operating cash flow (excluding current investments) -1,529 587 3,126 7,136

Disposals/acquisitions of financial assets (net) 2,778 -2,981 -712 -6,770

Cash flow after investing activities 1,249 -2,394 2,414 366

Cash flow from financing activities -4,824 -923 -2,177 -937

Cash flow for the period -3,576 -3,317 237 -571


MSEK NoteQ4

2018Q4

2017Full year

2018Full year

2017

Profit/loss for the period 2,688 2,955 7,376 6,406

Other comprehensive income for the period

Comprehensive income for the period 2,688 2,955 7,376 6,406

LKAB – PARENT COMPANY |

LKAB – PARENT COMPANY

CONDENSED INCOME STATEMENT

CONDENSED STATEMENT OF COMPREHENSIVE INCOME

MSEK NoteQ4

2018Q4

2017Full year

2018Full year

2017

Net sales 6,422 5,744 24,194 21,489

Cost of goods sold -4,550 -4,410 -17,309 -15,794

Gross profit/loss 1,872 1,334 6,885 5,695

Selling expenses 16 -11 -38 -33

Administrative expenses -68 -77 -305 -269

Research and development expenses -124 -151 -372 -381

Other operating income 6 9 29 231

Other operating expenses -15 -3 -37 -18


Profit/loss from financial items -291 -30 1,142 235

Profit/loss after financial items 1,396 1,071 7,304 5,460

Appropriations 2,093 2,842 2,093 2,842


Tax -801 -957 -2,022* -1,895

Profit/loss for the period 2,688 2,955 7,376 6,406

*Includes negative remeasurement effects of MSEK 93 resulting from the decision to change the corporate tax rate in Sweden with effect from 2019.

LKAB INTERIM REPORT Q4/2018 15 LKAB – PARENT COMPANY |


CONDENSED BALANCE SHEET


ASSETS

Non-current assets

Intangible assets 72 34

Property, plant and equipment for operations 25,624 25,688

Property, plant and equipment for urban transformation 7 7,376 1,890

Financial assets

Participations in subsidiaries 2,388 2,390

Interests in associates and jointly controlled entities 32 41

Receivables from subsidiaries 3,874 2,419

Other non-current securities 248 246

Other non-current receivables 115 112

Deferred tax asset 1,594 1,817

Total financial assets 8,251 7,026

Total non-current assets 41,323 34,637

Current assets

Inventories 2,622 2,119

Current receivables

Accounts receivable 1,848 1,596

Receivables from subsidiaries 619 161

Other current receivables 1,303 1,080

Prepaid expenses and accrued income 131 106

Total current receivables 3,901 2,942

Current investments 18,826 17,572

Cash and bank balances 1,767 1,719

Total current assets 27,115 24,352

TOTAL ASSETS 68,438 58,989

LKAB INTERIM REPORT Q4/2018 16 LKAB – PARENT COMPANY |


CONDENSED BALANCE SHEET


TOTAL EQUITY AND LIABILITIES

Equity

Restricted equity

Share capital (700,000 shares) 700 700

Statutory reserve 697 697

Non-restricted equity

Profit brought forward 17,684 14,160

Profit/loss for the period 7,376 6,406

Total equity 26,457 21,964

Untaxed reserves 13,650 15,263

Provisions


Other provisions 1,452 1,464

Total provisions 15,831 10,661

Non-current liabilities

Bond loans 1,247 3,235

Other non-current liabilities 3

Total non-current liabilities 1,247 3,238

Current liabilities

Liabilities to credit institutions 3,756 935

Trade payables 1,021 949

Liabilities to subsidiaries 1,896 1,765

Current tax liabilities 126 510

Other current liabilities 242 140

Accrued expenses and deferred income 766 706


Other provisions 199 147

Total current liabilities 11,253 7,864

TOTAL EQUITY AND LIABILITIES 68,438 58,989

LKAB INTERIM REPORT Q4/2018 17 NOTES |

NOTES

NOTE 1 Accounting principles This interim report was prepared in accordance with IAS 34, Interim Financial Reporting, and applicable regulations in the Annual Accounts Act. Disclosures in accordance with IAS 34 are provided both in notes and elsewhere in the interim report. The interim report for the Parent Company was prepared in accordance with Chapter 9 of the Annual Accounts Act, Interim Reporting.

All amounts are presented in SEK millions (MSEK) unless otherwise indicated. Rounding differences may occur.

Accounting principles changed due to new or amended IFRSDescribed below are changed accounting principles applied by the Group with effect from 1 January 2018. In other respects the accounting principles applied in this interim report conform to the accounting principles applied in the prepara-tion of the 2017 Annual Report. For further information concerning the Group’s accounting principles refer to LKAB’s Annual and Sustainability Report for 2017. Other amendments to IFRS effective from 1 January 2018 have had no impact on consolidated earnings, financial position or the formulation of the interim report.

IFRS 9 Financial InstrumentsClassification and measurementFinancial assets are classified into three categories: measurement either at amortized cost, at fair value through other comprehensive income or at fair value through profit or loss. The measurement category in which a financial asset is to be placed depends partly on the company’s business model (the purpose for which the company holds the asset) and partly on the financial asset’s contractual cash flows.

Other than certain changes in the designations used, there are no material effects on the classification of financial assets as of 1 January 2018.

ImpairmentThe model used for impairment of financial assets is based on expected credit losses, rather than incurred losses as previously. Under the new impairment model, a year’s expected losses are reserved already upon initial recognition. In the event of a significant increase in credit risk, the impairment amount must correspond to the credit losses that are expected to arise during the remaining term.

The new impairment model is applied to financial assets measured at amortized cost, which for LKAB means accounts receivable. Based on historical bad debts and forward-looking information, no impairment is reported as of 1 January 2018.

Hedge accountingIn accordance with IFRS 9, LKAB has decided that the forward points in forward exchange contracts when hedging cash flows for iron ore sales are to be reported separately as a cost of hedging. This means that the changes in forward points will be recognized in other comprehensive income and accumulated in a reserve for hedging costs within equity. Hedging costs are recognized in net sales.

The new reporting is being applied prospectively. As at 01 January 2018, hedging costs amounted to MSEK 5. The change also means that with effect from 2018, hedging costs are reported in net sales instead of as a financial expense.

The restatement of previous periods amounts to MSEK 49 for full-year 2017. The transition to IFRS 9 has not resulted in any adjustment items that are recog-nized in equity.

IFRS 15 Revenue from Contracts with CustomersRevenue from contracts with customers is recognized in profit/loss for the year when control over the goods or services is transferred to the customer. The basic principle is that an entity recognizes revenue relating to the transfer of promised goods or services to customers at an amount that reflects the remuneration that the company expects to be entitled to receive in exchange for the goods or services.

The recognition of revenue is determined according to a five-step model: Step 1 Identify the contract(s) with a customerStep 2 Identify the performance obligations (promises) in the contractStep 3 Determine the transaction priceStep 4 Allocate the transaction price to the performance obligations (promises)

in the contractStep 5 Recognize revenue when (or as) the entity satisfies a performance

obligation

The transition to IFRS 15 has meant that demurrage – i.e. the cost for delayed loading of vessels – is reported differently. Under IFRS 15 the cost affects the transaction price and is recognized as a part of the net sales that relate to sales of iron ore, rather than as cost of goods sold.

The restatement of previous periods amounts to MSEK 76 for full-year 2017. The transition has not resulted in any adjustment items that are recognized in equity.

New IFRS standards that have not yet begun to be appliedThe Group will apply IFRS 16 Leases with effect from 1 January 2019. For lessees, IFRS 16 means that almost all leases are to be recognized in the statement of financial position. The lessee recognizes a right-of-use asset, representing a right to use the underlying asset, and a lease liability, representing an obligation to make future lease payments. Leases with a term of 12 months or less or where the underlying asset has a low value are exempted. Depreciation of the asset and interest expenses for the liability are recognized in the income statement.

The Group will apply the modified retrospective approach, which means that the cumulative effect of the introduction of IFRS 16 will be recognized in retained earnings in the opening balance as of 1 January 2019 without restating comparative information.

Based on the information available, the Group expects to recognize lease liabilities of MSEK 404, right-of-use assets of MSEK 398 and deferred tax assets (net) of MSEK 1, the net effect of which will be to reduce equity by MSEK 5 as of 1 January 2019.

The Group expects operating profit for 2019 to increase by MSEK 11 compared with the outcome under the previously applied accounting principles since some of the lease expenses will be recognized as interest expense. The effect on profit after tax is not expected to be material.

Cash flow from operating activities is expected to increase and cash flow from financing activities to decrease by MSEK 83 since the repayment portion of lease payments will be recognized as an outgoing payment in financing activities.

NOTE 2 Risks and uncertainties LKAB is exposed to various risks. Risk management plays a vital part in minimizing the impact of factors that lie beyond the Group’s control. The Group employs methods for evaluating and limiting these risks by ensuring that they are managed according to approved guidelines and methods.

LKAB works actively to identify, analyze and control how various types of risks affect the business and how LKAB can best avoid or confront them. Effective risk management is a business-critical success factor.

Major risks are LKAB’s access to land for the mining operations, volume de-pendency, the price of iron ore products and transaction exposure in USD.

For further information concerning risks, refer to LKAB’s 2017 Annual Report.

NOTE 3 Significant assumptions and estimates The preparation of financial statements requires management and the Board of Directors to make assessments and assumptions that affect recognized assets, liabilities, income and expenses and other information provided, such as contin-gent liabilities. For further information concerning these, please refer to LKAB’s 2017 Annual Report.

For more information about the effects of assessments made in respect of provisions for urban transformation, see Note 7.


NOTES

NOTE 4Segment reporting Segment information is provided on pages 5–8 of the interim report.

The divisions in summary

Northern Southern Special Products OtherEliminations/

group adjustments Group

MSEK Full year2018

Full year2017

Full year2018

Full year2017

Full year2018

Full year2017

Full year2018

Full year 2017

Full year 2018

Full year2017

Full year 2018

Full year 2017

External income 13,190 13,180 10,280 8,563 2,371 2,634 51 -1,010 25,892 23,367

Internal income 1,088 293 254 1,436 1,434 1,302 65 48 -2,841 -3,079

Total net sales 14,278 13,473 10,534 9,999 3,805 3,936 116 -962 -2,841 -3,079 25,892 23,367

Operating profit/loss 4,102 4,181 2,799 2,659 330 391 -377 -1,315 16 59 6,869 5,975

Net financial income/ expense

-185 290

Profit/loss before tax 6,685 6,266

NOTE 5 Revenue breakdown Revenue from contracts with customers for the segments is reported below broken down by product/service area and region. The table also includes a reconciliation between the revenue breakdown and total external income according to Note 8.

Northern Southern Special Products Other Group

MSEK Full year 2018

Full year 2017

Full year 2018

Full year 2017

Full year 2018

Full year 2017

Full year 2018

Full year 2017

Full year 2018

Full year 2017

Product/service area

Pellets 12,117 12,230 8,813 7,318 20,930 19,548

Fines 903 803 1,456 1,231 2,359 2,034

Magnetite 1,032 1,102 1,032 1,102

Mineral sands 550 734 550 734

Other industrial minerals 600 581 600 581

Mining and construction services 189 217 189 217

Other 170 147 11 14 131 109 312 270

Total 13,190 13,180 10,280 8,563 2,371 2,634 131 109 25,972 24,486

Region

Europe 6,512 6,188 9,456 8,368 1,546 1,654 131 109 17,644 16,319

MENA 5,002 5,457 379 36 12 5,393 5,493

Rest of world 1,676 1,535 445 159 813 980 2,935 2,674

Total 13,190 13,180 10,280 8,563 2,371 2,634 131 109 25,972 24,486

Revenue from contracts with customers 13,190 13,180 10,280 8,563 2,371 2,634 131 109 25,972 24,486

Other income – financing activities -80 -1,119 -80 -1,119

Total external income 13,190 13,180 10,280 8,563 2,371 2,634 51 -1,010 25,892 23,367


NOTES

NOTE 7Urban transformation

Provisions are reported in compliance with IAS 37. These accounting principles are applied by LKAB such that a provision for urban transformation is reported where there is an agreement or a clear, constructive obligation that defines a commit-ment relating to future impact areas.

In view of the agreements with the Municipality of Kiruna concerning commitments within the area of Mine City Park 3 and following assessment of constructive obligations relating to the remaining part of the impact area of the

current main haulage level of the mine in Kiruna, an additional provision of MSEK 6,507 was recognized in the second quarter of 2018. The parts of the provision that relate to commitments for areas outside the impact boundary (the boundary of the impact of mining to date for which compensation is payable) were reported as mine assets relating to future mining. In the second quarter of 2018 an additional mine asset of MSEK 6,045 was reported.

NOTE 6Business combinations On 3 December 2018 the Group acquired 100% of the shares in the privately owned UK companies Francis Flower (Northern) Ltd and Gurney Slade Lime & Stone Co. Ltd for MSEK 1,277 and paid in cash. The companies process and distribute mineral products. The acquisition is expected to generate significant growth for the Group in the industrial minerals business area and to strengthen LKAB as a whole by broadening its product portfolio. The acquisition is also expected to result in synergies through the coordination of existing minerals operations in the UK and Sweden. During the month ending 31 December 2018 the subsidiary contributed MSEK 44 to consolidated revenue and MSEK -2 to consolidated profit after tax. If the acquisition had taken place as of 1 January 2018, the management estimates that the Group’s income would have increased by around MSEK 800 and profit for the year by around MSEK 50.

The acquired company’s net assets at the acquisition date (provisional):

MSEK 2018

Intangible assets 417

Property, plant and equipment 215

Inventories 40

Trade and other receivables 179

Cash and cash equivalents 131

Interest-bearing liabilities -139

Accounts payable and other operating liabilities -209

Deferred tax liability -85

Net identifiable assets and liabilities 549

Consolidated goodwill 728

Consideration transferred 1,277

The purchase price allocation is provisional pending final calculation of the fair values of acquired assets and liabilities at the acquisition date. Of the total purchase price, MSEK 34 has been held back and will be settled once the final values have been established.

The value for goodwill includes synergies from merging the acquired opera-tions with existing operations. No portion of the value for goodwill is expected to be tax-deductible.

Acquisition-related costs amount to MSEK 18 and relate to consultants’ fees. These costs are recognised as administrative expenses in the condensed income statements.


NOTE 8Disclosures regarding financial instruments The table below shows the financial instruments measured at fair value in the statement of financial position. Group, 31 Dec 2018

(MSEK) Level 1 Level 2 Level 3 Total

Shares, financial assets 646 646

Shares, current holdings 6,381 6,381

Interest-bearing instruments 12,476 12,476

Derivatives -4 170 166

Total 642 19,027 19,669 Group, 31 Dec 2017

(MSEK) Level 1 Level 2 Level 3 Total

Shares, financial assets 950 950

Shares, current holdings 4,964 4,964

Interest-bearing instruments 13,077 13,077

Derivatives 65 65

Total 950 18,106 19,056

Fair value calculationThe following summarizes the methods and assumptions mainly used in deter-mining the fair value of financial instruments reported in the table above.

Level 1Quoted prices (unadjusted) on active markets for identical assets or liabilities.

Level 2Inputs other than quoted market prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Level 3Inputs for the asset or liability that are not based on observable market data (unobservable inputs).

Interest-bearing instrumentsThe value of interest-bearing instruments is calculated using data from the interest-bearing securities market, obtained from Bloomberg.

Shares and alternative investmentsThe value of these investments is calculated using data from the stock market or received directly from brokers.

DerivativesThe fair values of derivative contracts are calculated using official quotations obtained from Bloomberg.

No transfers have been made between Levels 1 and 2.

Fair value of other receivables and liabilitiesThe carrying amount of other receivables and liabilities is estimated to be a reasonable approximation of fair value.

NOTES

NOTES |

NOTE 10 Transactions with related parties No transactions that have significantly affected the company’s financial position and earnings took place between LKAB and related parties.

NOTE 9Pledged assets and contingent liabilities, Parent Company

Pledged assets

MSEK31 Dec

201831 Dec

2017

As pledged assets forown liabilities and provisions

Company-owned endowment insurance 112 112

Deposit of cash and cash equivalents 121 121

Collateral provided, derivatives 56 208

Pledged assets, bonds 1,567 733

Total pledged assets 1,856 1,174

Contingent liabilities

MSEK31 Dec

201831 Dec

2017

Guarantees, FPG/PRI 15 15

Guarantees, GP plan 4 4

Guarantees, Swedish Tax Agency 63 63

Surety given for subsidiaries 29 33

Collateral, remediation 63 68

Total contingent liabilities 174 183

NOTE 11 Events after the end of the reporting period There are no significant events after the end of the reporting period to report.


NOTES

NOTE 12 Key ratios – disclosures Alternative key ratiosThe company also presents certain non-IFRS financial benchmarks and key ratios in the interim report. The management considers this supplementary information to be important if readers of this report are to obtain an understanding of the company’s financial position and performance.

DefinitionsReturn on equity Profit/loss after tax as a percentage of average equity (rolling 12-month figures).

Underlying Operating profit excluding costs for urban operating profit transformation provisions and impairment of intangible assets and of property, plant and equipment.

Operating cash flow Cash flow from operating activities and investing activities relating to property, plant and equipment.

Net financial indebtedness Interest-bearing liabilities less interest-bearing assets.

Net debt/equity ratio Net financial indebtedness divided by equity

Reconciliation

Underlying operating profit

MSEKQ4

2018Q4

2017

Full year

2018

Full year

2017


Less:

Costs for urban transformation provisions 289 353 2,106 1,147

Impairment of property, plant and equipment 14 26

Underlying operating profit 2,189 1,701 8,975 7,148

Operating cash flow

A reconciliation of operating cash flow can be found in the section The LKAB Group in summary.

Net financial indebtedness

MSEK31 Dec

201831 Dec

2017

Loans payable 5,003 4,170

Provisions for pensions 1,647 1,642

Provisions, urban transformation 17,625 11,911

Provisions, remediation 1,346 1,290

Less:

Cash and cash equivalents -2,290 -2,051

Current investments -18,753 -18,041

Financial investments -1,026 -1,303

Net financial indebtedness 3,552 -2,382

Net debt/equity ratio

MSEK31 Dec

201831 Dec

2017

Net financial indebtedness, MSEK 3,552 -2,382

Equity, MSEK 38,573 36,348

Net debt/equity ratio, % 9.2 -6.6

NOTE 13 Quarterly data for the Group

MSEK NoteQ4

2018Q3

2018Q2

2018Q1

2018Q4

2017Q3

2017Q2

2017Q1

2017

Net sales 6,911 6,594 6,160 6,227 6,208 5,958 5,689 5,512

Underlying operating profit 7 2,189 2,764 1,666 2,357 1,691 2,083 1,454 1,920

Costs for urban transformation provisions 10 -289 -287 -735 -795 -353 -263 -300 -231


Operating profit/loss 1,900 2,477 931 1,561 1,324 1,808 1,154 1,689

Net financial income/expense -790 35 370 201 47 40 71 132

Profit/loss before tax 1,110 2,512 1,300 1,762 1,371 1,849 1,224 1,822

Operating cash flow -1,529 1,552 1,333 1,770 587 1,916 3,063 1,571

Investments in property, plant and equipment 624 475 762 594 600 489 547 372

Deliveries of iron ore products, Mt 6.8 6.9 6.4 6.8 7.3 7.1 6.6 6.6

Proportion of pellets, % 79 82 84 84 81 81 84 86

Production of iron ore products, Mt 6.7 6.8 6.1 7.3 7.2 6.5 6.3 7.2

Return on equity, % 7 14.1 14.6 13.9 13.4 14.4 6.6 4.0 0.4

Net debt/equity ratio, % 7 9.2 5.0 11.6 -9.4 -6.6 -4.4 2.1 12.6

LKAB INTERIM REPORT Q4/2018 22 LKAB IN BRIEF |

LKAB 2018 IN BRIEF

EUROPELKAB is the EU’s largest iron ore

producer and mines around 80 percent of all iron ore within the EU 2

LKAB is the world’s second- largest producer in the seaborne

pellet market

1890LKAB is one of Sweden’s oldest industrial companies and has customer relationships dating

back more than a century

100% LKAB is wholly owned by the Swedish state

SEK 25.9 bnLKAB’s total sales in 2018

4,202total number of employees

82%Iron ore pellets account for 82 percent

of LKAB’s iron ore deliveries

NORTHERN DIVISIONMine, processing and

support functions in Kiruna

SOUTHERN DIVISIONMine, processing and support functions in

Malmberget and Svappavaara

SPECIAL PRODUCTS DIVISIONDevelops and markets industrial minerals, drilling technology and

full service solutions for the mining and construction industries

LKAB IS ORGANIZED INTO THREE DIVISIONS

Luleå

Ore Railway

Malmberget

SvappavaaraKiruna

Narvik

ARCTIC CIRCLE

LKAB’s mines and processing plants are located in the Swedish orefields – in Kiruna, Malmberget and Svappavaara. The iron ore products are transported along the Ore Railway to the ports of Narvik and Luleå for shipment to customers around the world.

Documents

INTERIM REPORT Q4/2018 - Cision · 2019-02-14 · LKAB INTERIM REPORT Q4/2018 1 OPERATIONS – FOURTH QUARTER MSEK Note Q4 2018 Q4 2017 Full year 2018 Full year 2017 Net sales 4,