First quarter 2007 Olof Faxander (CEO) Martin Lindqvist (CFO) - - PowerPoint PPT Presentation

First quarter 2007

Olof Faxander (CEO) Martin Lindqvist (CFO) April 2007

• Favorable conditions in the world steel market
• Continued strong demand in our main markets
• Steel prices continue to increase
• Product mix in SSAB improved further
• Strong earnings growth
• Investment programs on track
• SSAB 2010 – projects are running

SSAB – Highlights first quarter 2007

SSAB – Core niche products

50 100 150 200 250 300 350 400

1 Q 2 3 Q 2 1 Q 3 3 Q 3 1 Q 4 3 Q 4 1 Q 5 3 Q 5 1 Q 6 3 Q 6 1 Q 7

Ktonnes 5 10 15 20 25 30 35 40 45 50 (%) Core niche products - shipments Share of shipments (%)

• Mix improvement continued
• 43% of shipments in Q107 (37%)
• 41% 12 months rolling
• Continued strong growth
• +17% in Q107 (+18%)
• Investment driven markets
• Prices increased in Q107

+17 +18 +24 Core niche products 2006 1Q06 1Q07 Growth (%)

43% 19%

SSAB – Key drivers in our business

Strength Weight Durability

Productivity Use of steel Energy consumption Safety

SSAB – Steel Sheet Division

• EHS/UHS 32% (26%) of shipments
• Growth in EHS/UHS mainly in heavy

transport in North America and Asia

• Strong demand in Nordic countries but

lower growth than in 2006

• Very strong construction market in

Sweden – some lagging effects from Q406

• Continued reduction in sales of
• rdinary material outside Nordic region

20% 10% 21% 10% 39%

Heavy transport Light transport Nordic Building Ordinary outside Nordic

+38 2006 +25 1Q06 1Q07 Growth (%) +25 EHS/UHS steel sheet

2006

SSAB – Heavy Plate Division

30% 20% 20% 20% 10%

OEM-Yellow goods OEM-Mining Recycling Aftermarket Other

• Q&T heavy plate 88% (80) of

shipments – 100% in 2009

• Still capacity constrained – more

capacity added after the summer

• Southern Europe - Strong demand

dumpers for heavy trucks and aftermarket

• Central Europe – Strong demand

infrastructure and export industry focused on eastern Europe

+8 2006 +11 1Q06 1Q07 Growth (%) +8 Q&T heavy plate

SSAB – Tibnor

19% 30% 5% 15% 12% 13%6%

Steel Steel sheet Heavy plate Specialty steel Stainless steel Metals Reinforcing

• Strong demand in Swedish

engineering and construction sectors

• Indications of investment projects in

energy and petrochemical industries

• Long products (Steel) – demand

remains strong – shortage of material

• Reinforcing – market boom, prices

have increased rapidly

+11 +9 +11 Tibnor shipments 2006 1Q06 1Q07 Growth (%)

Steel market – Production and demand growth 1Q07

EU27 1,5 ~5

5

China

22 13 13

South America 7 6 Japan 5 1 1 C.I.S. 10 6

World

10 6

Production growth Q107a (%) Demand growth Q107e (%) Demand figures Q107 and FY2007 are estimates USA

• 7
• 4
• 6

Asia total

16 9

Demand growth 2007e (%)

Source: IISI, Eurofer, SSAB

Steel market – Trade flow first quarter 2007 (million tonnes)

EU27 5 USA 5 4

China

• 1
• 7

Japan

• 7
• 8

Net flow 1Q2006 Net flow 1Q2007e

(+) Net imports (-) Net exports (all estimates)

120 185 356 79

Steel market demand 2006

88 186 379 104

Production 2006 (10% yield loss)

Source: IISI, Eurofer, SSAB

• Trade flows
• High export levels from China to Europe
• Somewhat lower imports into the US
• Demand
• Strong demand growth in Europe and Asia
• Weaker demand in North America – housing construction and automotive down
• IISI predict about + 6% growth in world demand 2007
• Lower world demand growth than in 2006, but remains at historically high levels
• Customers in our core niche markets have strong order books
• Infrastructure, mining, heavy transport
• Demand for core niche products from SSAB is expected to remain strong

Steel market update - Summary

SSAB 2010 – The Vision

SSAB 2010 – Our vision

Productivity Fixed costs Working capital Purchasing

Corporate governance Supporting functions Key competence

Market concept Expansion Product portfolio

• Strongest quarter in the history of SSAB
• Gross margins improved
• Core niche products grew
• Stable raw materials costs
• Somewhat higher fixed costs

SSAB – Financial highlights first quarter 2007

SSAB – Strongest quarterly result in the history

• 500

500 1000 1500 2000 2500

1 9 9 2 1 9 9 3 1 9 9 4 1 9 9 5 1 9 9 6 1 9 9 7 1 9 9 8 1 9 9 9 2 2 1 2 2 2 3 2 4 2 5 2 6 2 7

SEKm

• Strongest quarter in the history of SSAB
• Gross margins improved
• Core niche products grew
• Stable raw materials costs
• Somewhat higher fixed costs
• Steel prices increased from Q406
• + 5 % total steel operation

SSAB – Financial highlights first quarter 2007

+ 4% steel sheet + 4% Q&T + 4% mix in heavy plate

SSAB – Steel price development (average steel operation)

Jan Feb Mars April Maj Juni Jul Aug Sep Okt Nov Dec Jan Feb Mars

Steel prices in SEK

Q106 100 Q206 100 Q306 108 Q406 109 Q107 114

FY 2006 103 + 11%

• Strongest quarter in the history of SSAB
• Gross margins improved
• Core niche products grew
• Stable raw materials costs
• Somewhat higher fixed costs
• Steel prices increased from Q406
• + 5 % total steel operation
• Shipments increased from Q106
• Total steel operation + 2%
• Tibnor + 11%
• Plannja + 29%
• Oxygen plant explosion Q406 – negative effect of SEK 100m

SSAB – Financial highlights first quarter 2007

+ 4% steel sheet + 4% Q&T + 4% mix in heavy plate

SSAB – Profit and loss account

• Non-recurring

38 2,147 1,558 Profit before tax - adjusted 28 33 4.02 1,113 1,558

20.4

1,557 7,622 1Q06

• 31

ROE (%) – Post tax 45 5.84 EPS 39 1,544 Profit after tax

• 38

ROCE (%)– Pre-tax (%) ch 1Q07 (SEKm) 2,147

24.4

2,145 8,780 38 Profit before tax

• EBIT margin (%)

38 EBIT 15 Sales

Price/mix +12%, Volume +3% Gross margins and core niche

SSAB – Divisions and Subsidiaries

9.6 267 2,774 0.9 3 318 27.4 783 2,856 23.3 1,023 4,389 1Q07 n.a.

• 14

EBIT 6.7 141 2,109

• 6.2

226 26.9 752 2,792 17.7 662 3,735 1Q06

• EBIT margin (%)

Tibnor +32 Sales +89 EBIT Plannja +41 Sales

• EBIT margin (%)

Division Heavy Plate

• EBIT margin (%)

+4 EBIT +2 Sales

• +55

+18 % ch (SEKm) EBIT margin (%) EBIT Sales Division Steel Sheet

Price/volume/mix Price/mix Volume Price/volume

SSAB – Change in EBIT

• 82

Fixed costs +5 Other + 588 Change in EBIT Tibnor +35

• Higher gross margins

+100

• Higher volumes/improved mix

Plannja +10

• Higher gross margins

+20

• Higher volumes/improved mix

Division Heavy Plate +35

• Increased share of Q & T heavy plate
• 20
• Lower gross margins

+70 +415 1Q06 to 1Q07 (SEKm)

• Increased share of EHS/UHS
• Higher gross margins

Division Steel Sheet Price change in inventory + 23.0m (+8.6)

SSAB – Profitability

30 34 20 27 39 40 2005 29 36 30 50 40 34 2006 31 33 Group ROE 34 21 36 17 37 2004 38 Group 1Q07 ROCE - (%) 34 56 39 48 Plannja Tibnor Heavy Plate Division Steel Sheet Division

SSAB – Cash flow and financial position

+ 545 + 955 Cash flow before dividend and financing + 26 + 1 Divestments

• 264
• 77

Expansion investments + 783 + 1,031 Cash flow from operations + 432 + 435 Heavy Plate

• 54

Plannja + 13 + 38 Tibnor 60.67 56.01 Equity per share (SEK) 514

• 521

Net debt (SEKm)

1Q07 1Q06

3

• 3

Net gearing (net debt / equity) (%)

Cash flow (SEKm)

69

• 58

+ 616 66 + 47 + 345 Equity ratio incl. minority (%)

Financial position

Other Steel Sheet

• Based on contracts closed so far -

marginally higher steel prices in local currency compared to the first quarter

SSAB - Guidance

• Shipments of core niche products –

Q&T heavy plate and EHS/UHS steel sheet – are expected to continue to increase

• Fixed costs during 2007 will be

affected negatively by the planned redundancies – approx. SEK 200m

• Steel prices in the first quarter of 2007

where 11% higher compared to the average for the full year 2006

• Iron ore +7% in USD and +2% in SEK
• Coal -13% in USD and -15% in SEK
• (New contract from April 1)

Second Quarter 2007 Full year 2007

Q&A