Higher level of activity and tonnage growth

During the second quarter net sales decreased by 10 percent to SEK 1,272 M (1,406), which is mainly explained by lower market prices. The lower pricing has affected the gross margin and together this led to the underlying operating result amounting to SEK 18 M (33), corresponding to an operating margin of 1.4 percent (2.4). Operating result, including inventory losses, amounted to SEK 11 M (26). Cash flow remained positive at SEK 21 M (132).

For the first six months, the operating result including inventory losses, but adjusted for the Baltic operations that are being phased out, amounted to SEK 41 M (25), corresponding to an operating margin of 1.7 percent (0.9).

In the main markets Sweden and Finland, sales in terms of tonnage increased by 6 percent which can largely be related to success of our own efforts and our sales initiatives.

The closure of the operations in the Baltics that was announced at the end of March has progressed according to plan and will, in all material aspects, be concluded in the third quarter. The closure is expected to generate a positive cash flow of about SEK 30 M and will have a positive impact on the Group’s future earnings.

Outlook

In the near future, the industrial sector is expected to continue at the same level. In general, the Finnish market has been under more pressure than the Swedish market due to political strikes in the first half of the year. This problem has now been resolved. The construction sector remains under pressure and is expected to continue at low levels. In total, the construction sector accounts for about 20 percent of sales in the main markets.

Sheet metal producers in Europe have varying levels of capacity utilisation, which is attributable to different distributions of customers in the automotive and construction sectors. The effect of some mills having low capacity utilisation is that prices in new quarterly and half-yearly contracts have been slightly pushed down. In contrast, there is an expectation of a small increase in spot prices when continental stockholders once again begin to fill their inventories in the autumn.

Our focus

Our most important focus is to increase and deepen the 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. It is pleasing to see that some of our initiatives are beginning to show success and the ambition is for the company to be profitable regardless of the economic cycle and external factors.

With that said, we wish our customers, suppliers, employees, owners and other stakeholders a nice summer!

Peter Andersson
President and CEO