Cash flow continued to be strong amounting to SEK 150 M (152) and increased to SEK 491 M (204) for the full-year. Lower material prices and pressured market conditions, primarily in the construction sector, caused net sales to drop 20%. This, combined with pressured gross margins, resulted in the underlying operating result amounting to SEK -17 M (-50). For the full year, sales decreased by 23% and the underlying operating result amounted to SEK 30 M, corresponding to an operating margin of 0.6 percent. The savings and efficiency improvement programme announced in the third quarter is proceeding according to plan and is expected to provide savings of approximately SEK 50 M on an annual basis.

In total, tonnage decline was -6% in the quarter and -12% for the full-year. The decline is somewhat larger within business area Sweden & Poland which is explained by a greater exposure to the construction sector.

The joint venture ArcelorMittal BE Group SSC AB delivered a better result than the quarter last year but slightly less than the full-year. As a whole, the company has increased in tonnage and taken market shares with a basically sustained gross margin.

Outlook

Now, a bit into January, the industrial sector is doing better in terms of tonnage than previous year, while the construction sector remains under pressure and is expected to continue with a low level of activity.

Material prices are, at least for the time being, believed to have bottomed out. Sheet metal producers say that they have a good utilisation and longer lead times indicate that this is the case. Many of the producers that previously have had capacity reductions are now beginning to open up production again. It seems likely that demand will increase during the spring, which would reasonably mean that prices will increase. The supply chain and with it the lead times for long products are shorter than for ore-based sheet metal items and consequently the prices are more “from hand to mouth” and the changes are lower.

Our focus

The market situation remains tough. After close to 20 months of continuous drops in material prices, the price level must be stabilised for margins to return to reasonable levels. The steel industry is cyclic and material prices go up and down. Even though demand varies, a great deal of steel is used even in worse times. Our most important focus is to increase and deepen the collaboration with our customers to win as many new deals as possible, streamline the supply chain and continuing to work with the cost side to achieve a healthy margin for the entire business.

Peter Andersson
President and CEO