Third quarter report 2008 Olof Faxander, President & CEO Marco - - PowerPoint PPT Presentation

Third quarter report 2008

Olof Faxander, President & CEO Marco Wirén, acting CFO

October 28th, 2008

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• Continued strong earnings growth in Q3
• North American Division’s contribution significant
• Price increases have compensated for higher raw

material costs

• Announced SEK 5.3bn capex to upgrade product mix

Highlights – Q3 2008

Forward-looking statements

The presentation and the materials constituting it contain certain statements that are forward-looking statements within the meaning of the U.S. federal securities laws. Actual results could differ materially from the future results expressed

• r implied by these forward-looking statements due to factors that are beyond SSAB’s ability to control or estimate

precisely, such as the effect of general economic or political conditions, fluctuations in interest or exchange rates, changes in competition, the actions of courts, regulators, government agencies, competitors, customers, employees and other third parties, SSAB’s ability to implement successfully its plans and the timing thereof, the benefits from SSAB’s plans being less than anticipated, and other factors. These forward-looking statements speak only as of the date of this presentation. SSAB does not undertake any obligation to publicly release any revisions to these forward- looking statements to reflect events or circumstances after the date of this presentation, except as may be required by applicable securities laws. This presentation contains unaudited non-IFRS financial measures, including EBITDA, EBIT, net debt and free cash

• flow. These non-IFRS financial measures should be considered in addition to, but not as substitutes for, the most

directly comparable measures under generally accepted accounting principles. This presentation is for information only and is not for distribution in, nor does it constitute an offer of securities in the United States, Australia, Canada, Hong Kong or Japan. Neither the presentation nor any copy of it may be taken or transmitted into the United States of America, its territories or possessions, or distributed, directly or indirectly, in the United States of America, its territories or possessions or to any US person as defined in Regulation S under the US Securities Act 1933 (the "Securities Act"). 2 Securities Act 1933 (the "Securities Act"). The material set forth herein is for informational purposes only and is not intended, and should not be construed, as an

• ffer to sell, or as a solicitation of an offer to purchase, any securities. The securities described herein have not been

and will not be registered under the Securities Act, or the laws of any state, and may not be offered or sold within the United States, except pursuant to an exemption from, or in a transaction not subject to, the registration requirements

• f the Securities Act and applicable state laws.

This presentation is made to and directed only at (i) persons outside the United Kingdom, (ii) qualified investors or investment professionals falling within Article 19(5) and Article 49(2) (a) to (d) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order"), and (iii) high net worth individuals, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (such persons collectively being referred to as "Relevant Persons"). This presentation and its contents are confidential and must not be distributed, published or reproduced (in whole or in part) or disclosed by recipients to any other person, whether or not such person is a Relevant Person. Failure to comply with this restriction may constitute a violation of applicable securities laws. If you have received this presentation and you are not a Relevant Person you must return it immediately to the Company. This presentation does not constitute a recommendation regarding the securities of SSAB.

Q3 2008 – Continued strong earnings growth

SEK million 500 1 000 1 500 2 000 2 500 3 000 4 000 6 000 8 000 10 000 12 000 14 000 16 000 Sales EBIT Sales EBIT 3 500 2 000 Q3-04 Q3-05 Q3-06 Q3-07 Q3-08

MSEK (except per share) Q3-08 Q3-07 Chge, % Sales 13,399 10,358 29 EBIT 2,640 1,380 91 Cash flow from operations 903 557 62 EPS, SEK 5.91 2.11 180

Q3 2008 - Highlights by Division

Strip Products Division Prices increased 17%

• vs. Q2-08

Plate Division High demand for Q&T

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Tibnor Slightly lower deliveries quarter-on-quarter North America Division Synergies advancing according to plan

Strip Products Division

Leading supplier of AHSS

Production and Deliveries

• Decision to invest in Q&T strip production

27% 10% 10%

Growth drivers

• Heavy and light transport
• Nordic market

Market exposure

MSEK Q3-08 Q3-07 Chge, % Sales 4,530 3,756 21 EBIT 1,080 682 58 EBIT-margin, % 24 18

5

• AHSS deliveries 6% higher in Q3-08 vs. Q3-07
• AHSS 37% (35%) of total shipments in Q3-08
• Record quarter for crude steel production in Luleå

Market conditions

• Average prices up 17% from previous quarter
• Higher costs (iron, coking coal) have been compensated for

10% 43% 10%

Heavy transport Light transport Nordic Building Ordinary products outside Nordic

Plate Division

Global leader within Q&T steels

Production and Deliveries

• Deliveries of Q&T increased 5% in Q3-08 vs. Q3-07

30% 20% 10% 20% 20%

Key segments

MSEK Q3-08 Q3-07 Chge, % Sales 2,995 2,443 23 EBIT 590 499 18 EBIT-margin, % 20 20

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• Q&T 95% (94%) of total shipments in Q3-08
• Decision taken to increase Q&T volumes by 80,000 t,

mainly through de-bottlenecking

• Slab production affected by disruptions

Market conditions

• Prices increased 8% for Q&T from previous quarter
• Demand for niche products was strong

OEM Yellow goods OEM Mining Recycling Aftermarket Other

Production and Deliveries

• Plate deliveries were 9% lower in Q3-08 vs. Q3-07 mainly

due to a planned production outage

North American Division - NAD

Leading plate supplier in North America

48% 52%

Market exposure

MSEK Q3-08 Q3-07 Chge, % Sales 4,244 2,510 69 EBIT 1,025 808 27 EBIT-margin, % 24 32

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due to a planned production outage

• Deliveries of Q&T and AHSS increased 38% vs. Q3-07
• Start-up of Montpelier in early October according to plan

Market conditions

• Prices increased by 17% compared with previous quarter
• Scrap prices fell towards the end of the period

NAD is consolidated in the SSAB group as of July 18, 2007 OEM Service Centers

NAD – Q&T expansion program

• Decision taken to install a new quenching line with advanced finishing facilities,

steering and roll shifting technology for the rolling mill, and a vacuum tank degasser in Mobile, Alabama

• The planned US$460 m program will allow an increase in Q&T capacity to 400,000 t,

from 100,000 t, as well as enhance capabilities in the melt shop and rolling mill

• Production start up is planned for 2011
• The projects will bring approximately 180 new jobs to the area
• Part of the strategic investment program announced in August 2008

The investment will significantly strengthen SSAB’s position as a global leader in high strength steel

Tibnor

leading supplier of steel in the Nordic region

Deliveries MSEK Q3-08 Q3-07 Chge, % Sales 2,489 2,283 9 EBIT 254 159 60 EBIT-margin, % 10 7

9

• Deliveries fell 5% in Q3-08 vs. Q3-07, but are up

3% year-to-date Market conditions

• Signs of weakness in the Nordic market, e.g.

construction and auto industry

Market outlook

• The economic outlook has become more uncertain

Recent turbulence in financial markets has reduced visibility World Steel Association has declined to provide a projection for 2009 Signs of weaker demand Major producers have announced production cuts to stabilize supply/demand In general, prices for commodity grades have started to come down

• High uncertainty within the raw material markets

Difficult to project 2009 trends for iron ore and coking coal

• Continued strong demand for SSAB’s niche products
• Continued strong demand for SSAB’s niche products

Substitution into Q&T and AHSS grades continues Prices for SSAB’s niche products expected to be stable The Nordic market shows a weakening in steel demand

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• Record high earnings for a third quarter
• North American mills strong contributors
• Cash flow in Q3 affected by the increase in costs

for raw materials

• The strengthening of the US$ had negative

impact on Debt/Equity

Financials

Key Figures for the Group

SEK million Oct '07 - (except for EPS) Q3-08 Q3-07 Sep '08 Sales 13,399 10,358 53,470 Operating profit 2,640 1,380 11,111 Pre-tax profit 2,734 885 10,205 Earnings per share, SEK 5.91 2.11 21.84 Cash-flow from operations (entire op.) 903 557 5,365 Debt/Equity, % 46 163 46 RoCE, % (entire op.)

• 19

12

RoCE, % (entire op.)

• 19

RoE, % (entire op.)

• 25

Change in operating profit, Q1-3 2008 vs. Q1-3 2007

5,870 8,423

• 126

187 1,862 430

• 1,510

1,645 308

5,000 6,000 7,000 8,000 9,000 SEK millions

• 243

13 1,000 2,000 3,000 4,000 2007 9m Prices COGS Core Niche NAD

• Depr. on

excess values Tibnor Fixed costs Other 2008 9m

1,619

• Excl. one-off items

Operating cash flow by Division

SEK million

2008 2007 2008 2007 Q3 Q3 Q1-3 Q1 - 3

Strip Products Division

• 110

560 2,320 2,133 Plate Division 53 469 1,567 1,958 North American Division 1,466 172 2,669 172 Tubular (until divestment) 900

• 160

900 Tibnor 92 1 582 54 Other

• 157
• 196
• 308
• 485

Operating cash flow 1,344 1,906 6,670 4,732

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Operating cash flow 1,344 1,906 6,670 4,732 Financial items

• 275
• 484
• 792
• 362

Taxes

• 166
• 865
• 1,857
• 2,140

Cash flow from operations 903 557 4,021 2,230 Expansion investments

• 117
• 50823
• 448
• 51715

Divestments 24,848 96 Dividends, Financing & other 4,620

• 803

3,454 Currency translation effects

• 3,135

696 351 641 Change in net debt

• 2,349
• 44,950

27,969

• 45,294

Sensitivity analysis

Change Effect on % pre-tax profit, SEK m

Steel prices, steel operations

10 1,225 2.70

Volumes, steel operations

10 285 0.65

Raw material, iron ore

10 135 0.30

Raw material, coal

10 125 0.30

Raw material, scrap

10 145 0.30

Effect on earning per share, SEK

15 The sensitivity analysis describes approximately the manner in which changes in stated factors during a quarter of the year will affect the profit before tax and earnings per share. Raw material calculated according to latest purchase

• agreements. Annual contracts for 2008 for iron ore and coal have been agreed. Scrap surcharges may be

implemented when costs for scrap increases.

Interest rates, %

1 %-pt 35 0.10

SEK Index

5 60 0.15

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Guidance for Q4-08

• Lower volumes expected
• Niche product prices stable
• Commercial grades show price

weakness

Summary

• Record earnings in Q3
• NAD integration proceeding well and

synergies developing as planned

• Price increases have compensated for

higher raw material costs

17

• Announced investments will double Q&T

volumes

• Lower volumes expected in Q4
• Q4 niche product prices stable, commercial

grades show weakness

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Questions

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