October 23, 2019 / 5:53 AM / 21 days ago

Steelmaker SSAB misses third-quarer profit forecasts as weak Europe weighs

STOCKHOLM (Reuters) - Swedish steelmaker SSAB’s (SSABa.ST) third quarter operating earnings came in below market forecasts on Wednesday, as it cited “exceptional” margin pressure in Europe and said it expects demand to slow further in the current quarter.

SSAB, one of the largest steel plate producers in the United States while still generating the majority of its revenues in Europe, said quarterly operating earnings fell to 150 million Swedish crowns ($15.52 million) from 1.39 billion in the year-ago quarter.

Analysts had forecast an operating profit of 470 million crowns according to Refinitiv SmartEstimates.

“Results were as we expected underwhelming, particularly in Europe, where coking coal and iron ore prices started to decline but less than the steel prices,” Credit Suisse analysts said in a research note.

Results where hit by one-off items to the tune of 150 million crowns, SSAB said.

“Heading towards the end of the year, we see a more pronounced seasonal slowdown than normal,” SSAB Chief Executive Martin Lindqvist said in a statement.

The company in its results release said it expected underlying demand in Europe to be weaker especially towards the end of the year.

SSAB said it had implemented a range of cost-cutting measures in the third quarter, including reducing production rates on several lines, idling the smaller blast furnace at its plant in Oxelosund, Sweden, and a big cut in temporary staff.

“To achieve further reductions of cost and capacity, we will idle one of the blast furnaces in Raahe at the end of November”, the company said.

While SSAB Europe plunged to an adjusted 480 million operating loss in the quarter, squeezed by slumping demand, higher iron ore costs and lower steel prices, SSAB Americas held up better, posting a 522 million crown profit in the quarter.

($1 = 9.6671 Swedish crowns)

Reporting by Johannes Hellstrom, Editing by Helena Soderpalm and Susan Fenton

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