Comments on the report

First quarter

The Group’s consolidated net sales for the period decreased by 15 percent compared to last year and amounted to SEK 1,105 M (1,305). The decline is explained by negative price and mix effects of -6 percent, closure of the units in Baltics and Poland of -6 percent and negative organic tonnage growth of -3 percent. Exchange rates remained unchanged. Steel prices for sheet metal were relatively stable compared with the fourth quarter, while contracted semi-annual prices decreased by about 5 percent. The threat of the introduction of trade tariffs contributed to steel prices beginning to rise in the second half of the quarter, but the increase was dampened as a result of the strengthened SEK.

The decline in tonnage is related to the manufacturing industry and a decline in the automotive sector. But was also negatively influenced by a political strike that impacted our Finnish units and some of their customers during the quarter. Sales of the Finnish operations has also been negatively affected by the transition to a new business system in the beginning of March. Tonnage decreased organically to the manufacturing industry by -8 percent, where deliveries to OEM customers decreased by -9 percent. However, the construction sector is showing signs of recovery. Tonnage to the construction segment increased organically by 19 percent and demand mainly increased on rebar, which primarily affects the Swedish operations.

Lower steel prices and weaker demand from the manufacturing industry, with relatively higher prices and margins compared to the construction segment, contributed to gross profit decreasing to SEK 115 M (165) which led to a gross margin of 10.4 percent (12.6). The operating result amounted to SEK -12 M (4), corresponding to an operating margin of -1.1 percent (0.3). Adjusted for inventory losses of SEK -10 M (-11), the underlying operating result amounted to SEK -2 M (42) and the underlying operating margin was -0.2 percent (3.2).