Strengthened gross margin in the first quarter

Net sales fell by 16 percent to SEK 1,305 M (1,558). The decline is largely equally divided between lower prices and decreased tonnage. However, the strengthened gross margin and good cost control mean that the underlying operating result increased to SEK 42 M (10), corresponding to an operating margin of 3.2 percent (0.6). The operating result, including inventory losses but cleared of non-recurring costs, amounted to SEK 31 M (1). Cash flow remained positive at SEK 44 M (226).

The decline in tonnage is primarily related to the construction segment but was also affected negatively by a three-day political strike that affected all our Finnish units and many of the customers in February. In mid-March a four week long strike targeted at the process industry and transportation on rails and in harbours followed which continued to affect the Finnish market.

The closure of the Baltic operations announced at the end of March is proceeding according to plan and is affecting the operating result by SEK -27 M in the quarter, which is somewhat lower than previously announced. The closure is estimated to generate a positive cash flow of approximately SEK 30 M and will have a positive impact on the company’s future results.

Outlook

The industry sector is expected to continue at a good level in the near future. In general, the Finnish market is currently under more pressure than the Swedish right now because of the political strikes. When the situation calms down demand will reasonably increase at least in the short term. The construction sector remains under pressure and is expected to continue at low levels. In total, the construction sector constitutes approximately 15% of the turnover.

The price of sheet metal, which is mainly delivered to the industry, is expected to be relatively stable in the second quarter. Beams and rebar normally increase somewhat in the spring, but the price is now expected to remain relatively unchanged as a result of the challenges in the construction sector. The smaller price variations can reasonably be attributed to the return to a better balance between supply and demand.

Our focus

Our most important focus continues to be to increase and deepen our cooperation with our customers to win as much new business as possible, streamline the supply chain and continue to work with the cost side in order to achieve a healthy margin throughout the business. The ambition for the company is to be profitable regardless of economic trends and external factors. During the first quarter, we show a positive result despite both recession and strike hustle.

Peter Andersson
President and CEO