Increased result and improvement measures

Statement from the CEO

During the second quarter of 2018, the Group delivered an underlying operating result that was 20 percent stronger than the same period in 2017. Adjusted for one-off costs in the Baltic operations of SEK -12 M during the quarter, the underlying operations result increased by 77 percent and amounted to SEK 38 M (21).

When excluding the measures taken in the Baltics and adding back items affecting comparability of SEK -16 M related to the exit of the remaining part of the operations in Prerov, Czech Republic, the result from the operating activities corresponds to SEK 50 M (29). The improvement is due to a mix of tonnage growth, price development, implemented improvement measures and a continuing focus on costs.

I can now confirm that we have reviewed all units and the employees have shown strong commitment and determination in this work. However, we remain focused on continuous improvements and still see potential in efficiency measures.

Tonnage and sales growth

Demand in our main markets remains strong. During the quarter, tonnage in business area Sweden & Poland grew by 14 percent and sales increased by 28 percent. In business area Finland & Baltics, the tough competition has continued, mainly in thin sheets, which constitutes a significant part of the business.

In spite of this, the tonnage delivered increased by 2 percent during the quarter and net sales increased by 9 percent, compared to last year. The positive earnings trend compensates for a marginal increase in working capital during the quarter and led to positive cash flow in the period.

Structural and organisational change

As mentioned above, we have decided to make an exit from the remaining part of the business in Prerov, Czech Republic. The market situation has now led us to the end of the road for this operation. It is anticipated that the exit will be completed before year end.

Outlook

Demand and price trends are expected to remain strong in the company’s main markets in the next quarters. Customs duties on steel and the announced European protective measures have led to continuing price increases. We strongly believe that our ongoing improvement measures will continue to strengthen the Group.

Anders Martinsson
President and CEO

Bridge 2017-2018 operating result SEK M
Q1 Q2 Q3 Q4 Jan-Jun
Brygga resultatutveckling 2017–2018. MSEK Q1 Q2 Q3 Q4 jan-jun
Operating result 2017 Rörelseresultat 2017 46 -13 19 5 33
Reversal of inventory gains (-)/losses (+)
Återläggning lagervinster (-)/förluster (+)
-16 -8 3 -6 -24
Items affecting comparability Jämförelsestörande poster 42 10 42
Underlying operating result 2017
Underliggande rörelseresultat 2017
30 21 22 9 51
Change in sales Försäljningsförändring 13 22 35
Change in underlying gross margin
Underliggande bruttomarginalförändring
4 -7 -3
Change in overhead costs Omkostnadsförändring 1 -10 -9
Underlying operating result 2018
Underliggande rörelseresultat 2018
48 26 74
Reversal of inventory gains (+)/losses (-)
Återläggning lagervinster (+)/förluster (-)
7 12 19
Items affecting comparability Jämförelsestörande poster -16 -16
Operating result 2018 Rörelseresultat 2018 55 22 77

The “change in underlying gross margin” and “change in overhead costs” have been impacted by a total of SEK -12 M due to a provision for an anticipated bad debt and adjustment of inventory in the Baltics during the second quarter 2018.
Items affecting comparability is related to the exit of the operations in Prerov, Czech Republic, SEK -9 M is affecting the Group’s consolidated statement of comprehensive income while SEK -7 M refers to translation differences from previous fiscal years.