SSAB Q4 2014 loss grows on Ruukki writedowns

Swedish steelmaker SSAB has reported a heavy loss in its fourth-quarter 2014 results following writedowns related to its merger with Finnish steelmaker Rautaruukki (Ruukki) last year.

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SSAB’s loss after tax, including items affecting comparability, fell to SKr1.170 billion ($140 million) in the October-December quarter, compared with a loss of SKr15 million ($1.8 million) the year before, it said on Tuesday February 10.

All figures reported here are on a pro forma basis, calculated as if Ruukki – which became part of SSAB on July 29 last year – had been owned by the Swedish steelmaker throughout 2013 and 2014.

The items affecting comparability in the fourth-quarter result amounted to a loss of SKr1.322 billion ($159 million) following writedowns mainly related to the merger with Ruukki, which SSAB had already noted in January.

The writedowns relate, among others, to goodwill from the merger, to assets held for sale to comply with European Commission conditions for approval of the merger, to Ruukki Construction subsidiary’s assets in Eastern Europe given the deteriorating outlook in the region, and to a shareholder loan to Fortaco.

SSAB has announced a string of divestments in the past week. It has yet to divest one steel service centre in Sweden and one in Finland, and its 50% interest in Norwegian steel and metal distributor Norsk Stål Tynnplater.

The company signed agreements to sell the above-named assets at the end of last year, and expects to receive approval for the divestments from the European Commission by the end of February, it said.

SSAB’s sales in the fourth quarter were up by 5% year-on-year to SKr15.267 billion ($1.8 billion), with shipments down by 5% to 1.636 million tonnes in the same period.

Full-year results
On a full-year basis, the steelmaker reported earnings before interest, taxes, depreciation and amortisation (Ebitda), excluding items affecting comparability, of SKr4.419 billion ($527 million) in 2014, up by 63% year-on-year.

The improvement was mainly due to higher prices and higher efficiency at SSAB’s North American operations, as well as higher volumes and lower costs at its mills in Europe, it said.

Total sales rose to SKr60.112 billion ($7.2 billion) last year, compared with SKr57.013 billion ($6.8 billion) the year before, while shipment volumes were up by 207,000 tonnes in the year to total 6.744 million tonnes in 2014.

Divisional results
Looking at the pro forma fourth-quarter results, excluding items affecting comparability, on a division-by-division basis, a mixed picture emerges with North America showing the strongest performance.

SSAB Americas, with its two heavy plate mills in Alabama, USA, saw Ebitda jump by 59% year-on-year to SKr438 million ($52.2 million) in the fourth quarter on higher prices, and despite lower shipments and import pressure. Sales in the segment rose by 17% year-on-year to SKr3.508 billion ($418.4 million) in the same period.

SSAB Europe, which produces strip, plate and tubular goods in Sweden and Finland, reported a strong growth in Ebitda to SKr369 million ($44 million) in the last quarter of 2014, given lower costs and a better mix, and compared with a negative Ebitda of SKr21 million ($2.5 million) in the corresponding period the year before.

Sales from the European mills rose by 7% year-on-year to SKr6.634 billion ($791 million) in the three months ending December 31, 2014.

External steel shipments fell by 13% year-on-year to 488,000 tonnes at SSAB Americas, while rising by 1% to 913,000 tonnes at SSAB Europe in the fourth quarter.

The SSAB Special Steels division, producing quenched and tempered steels and hot rolled high strength steels in Sweden, Finland and the USA, reported a 5% year-on-year drop in Ebitda to SKr345 million ($41 million) on lower shipments, compensated partly by lower input costs.

Special steel sales were down by 1% year-on-year to SKr3.198 billion ($381 million) in the fourth quarter, with shipments down by 9% to 235,000 tonnes in the same period.

Tibnor, the group’s metals distribution business, saw December-quarter Ebitda rise by SKr1 million ($119,000) year-on-year to SKr6 million ($716,000), while sales were down by 3% year-on-year to SKr1.910 billion ($228 million).

Ruukki Construction, focused on the Northern and Eastern European construction markets, saw its performance slip amid weaker demand, particularly in Russia and Ukraine.

The division reported a negative Ebitda of SKr4 million ($477,000) in the fourth quarter, compared with a positive result of SKr96 million ($11 million) a year earlier, as well as an 11% year-on-year fall in sales to SKr1.532 billion ($183 million).