New Market Report: Sweden Metals Report Q1 2015

The recent financial results reported by Sweden's largest steel producer, SSAB, are further evidence of an improving operating environment. After six consecutive quarters of negative results, the company returned to profitability in the first quarter of 2014 and has since shown further improvement in terms of its financial performance. The producer reported sales of SEK13.31bn (USD1.81bn) in Q314, up from SEK8.7bn (USD) in Q313. The firm posted operating profit, excluding items affecting comparability, of SEK510mn (USD69.31mn), operating cash flow of SEK77mn (USD10.46mn) and EBITDA of SEK1.25bn (USD169.86mn) in the reported quarter.

The recovery in SSAB's financial performance chimes with the stabilisation in Sweden's overall steel production volumes following the significant fluctuation in output seen in recent years. After contracting by 11.5% year-on-year (y-o-y) in 2012, output grew by 1.8% in 2013 and growth is forecast to accelerate to 2.8% in 2008. While the sector looks to have turned a corner, we caution that producers will continue to adopt cautious strategies over the coming months as they look for signs of a sustainable recovery in demand. Indeed, the country's steel exports contracted sharply in both 2012 and 2013, falling by 20% and 18% respectively.

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While sales have since started to recovery, we note that steel consumption remains weak both domestically and across the European Union, a scenario which have seen producers focus their sales strategies increasingly on the US market, where demand is relatively buoyant. We expect this trend to continue through 2015, with SSAB in particular concentrating on opportunities in the North American market and continuing to push through price increases on a number of its products.

That said, we expect the company, in combination with other producer, will retain a cautious stance with regard to managing its capacity levels as domestic demand continues to flatline. SSAB has yet to restart of...

The Sweden Metals Report has been researched at source, and features latest-available data for steel, aluminium and other major globally-traded commodities. Our analysis covers all primary indicators, including production, exports and price, with our forecasts underpinned by Business Monitor International (BMI)'s macroeconomists global economic outlook. The report analyses trends and prospects and critically evaluates latest industry news, trends and regulatory developments in Sweden.

BMI's Sweden Metals Report provides industry professionals and strategists, sector analysts, business investors, trade associations and regulatory bodies with independent forecasts and competitive intelligence on the metals industry in Sweden.

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