Improved profitability and cash flow in a gradually recovering market

Both the Swedish and Finnish business areas delivered positive underlying results during the second quarter. The improved earnings were driven by higher steel prices, stronger gross margins, and increased operational efficiency. At the same time, cash flow from operating activities improved compared with the previous year. The Group’s net sales increased to SEK 1,056 M (1,045). Operating result increased to SEK 20 M (-492), and underlying operating result increased to SEK 8 M (-36). Cash flow from operating activities increased to SEK 22 M (-4).

Market

During the quarter, the Nordic steel market showed signs of recovery following several weak years. The activity gradually increased within the manufacturing industry, while parts of the construction market developed positively, particularly infrastructure- and energy-related projects. Residential construction, however, remained at low levels, and pricing pressure persisted in parts of the distribution market. Steel prices developed positively during the quarter as a result of CBAM, trade protection measures, and higher cost levels among producers. At the same time, developments in the Middle East contributed to uncertainty in the energy, raw materials, and transportation markets.

During the for us seasonally weaker third quarter, the Swedish and Finnish steel markets are expected to continue recovering at a relatively modest pace. We expect to see increased demand from the manufacturing industry and continued stabilization in the construction sector. Residential construction is expected to remain at relatively low levels. Steel prices are expected to remain stable for thin sheets and long products, while increasing for heavy plate and stainless steel products.

Operations

The Finnish business area continued to develop positively during the quarter through improved operational efficiency, and stronger gross margins. This clearly demonstrates that we have successfully stabilized both the business and operations. The Swedish business area performed positively within the OEM segment and the construction market, particularly in industrial and infrastructure-related projects. The structural cost-efficiency initiatives have had the desired effect. The reinforcement business developed in the right direction, with targeted market initiatives combined with increased market activity generating positive effects during the quarter.

The joint venture ArcelorMittal BE Group SSC AB delivered yet again a stable and positive earnings contribution through strong operational performance and improved profitability.

Our focus going forward

During the third quarter, we will carry out planned investments in production equipment in Sweden, including the installation of a new blasting and grinding line. This investment will strengthen quality, capacity, and competitiveness in component manufacturing for the OEM segment. In Finland, during the coming six months, we will deliver customized steel solutions for industrial, energy, and data center-related projects, where our expertise in project management, processing, and logistics serves as a key competitive advantage. Through continued and consistent execution of our strategy, we will strengthen profitability, cash flow, our customer offering, and our competitiveness. This will be driven by focused sales and marketing activities, enhanced delivery capabilities, higher productivity, and continued strict capital discipline.

Johan Wiig
President and CEO