Paragraph entered by Atlantic migration, in order for SteelFirst articles to display correctly on Metal Bulletin.
The writedowns relate “to goodwill in the Ruukki Construction business area and to expected capital losses arising from units to be divested as a result of the European Commission’s conditions for approval of the combination with Rautaruukki [Ruukki]”.
Shareholder loans to part-owned component manufacturer Fortaco are included in the writedowns.
The impairment charges will negatively affect SSAB’s fourth-quarter pre-tax results, but not cash flow, as SKr700 million ($86 million) will be written down from the operating result and SKr600 million ($74 million) from the financial items.
Excluding items affecting comparability, the operating result for the October-December period will be a profit of SKr100-150 million ($12-18 million), based on the steelmaker’s preliminary estimates.
SSAB will publish its fourth-quarter and 2014 annual accounts on February 10.
SSAB finalised the purchase of Finnish steelmaker Ruukki on July 29 last year through a share exchange offer.
Based on an end-of-year calculation of the value of SSAB’s net assets, the goodwill arising from the acquisition has amounted to SKr5.2 billion ($641 million). The writedowns will reduce this by SKr300 million ($37 million).
A key motivation for the combination of SSAB and Ruukki was to achieve annual cost savings through synergies.
SSAB has so far achieved SKr300 million ($37 million) in annual savings, which will show in the first-quarter results of 2015 and thereafter. It expects to achieve annual savings of SKr350 million ($43 million) in 2015.
“The current assessment is that it will be possible to carry out the cost synergies more quickly than announced earlier,” SSAB said on Tuesday, “and that [we] will be able to achieve annualised savings of SKr1.4 billion [$173 million] from the second half of 2016 onwards, which is one year faster than announced earlier.”
Swedish steelmaker SSAB will write down SKr1.3 billion ($160 million) in its results for the fourth quarter of 2014 following an end-of-year review of its assets, it said on Tuesday January 20.