STOCKHOLM (Reuters) - Steelmaker SSAB (SSABa.ST) reported a steep fall in quarterly operating earnings on Monday and said it expected shipments at its Americas and Europe divisions to contract sharply in the current quarter versus the first three months of 2020.
The Swedish company said it would postpone some strategic investments in addition to earlier announced cost-cutting to cushion the blow from the COVID-19 pandemic.
“We are postponing strategic investments of at least SEK 500 million that had been planned for 2020, but maintenance investments will be performed as planned,” SSAB CEO Martin Lindqvist said in a statement.
The company, one of the largest steel plate producers in the United States though it still generates the bulk of its revenues in Europe, reported a first-quarter operating profit of 343 million crowns ($34.3 million), down from 1.67 billion a year ago.
That was still a significant improvement from its 1.13 billion loss in the fourth quarter, and better than expected according to analysts at Credit Suisse.
“While the market should take the results positive, the uncertainty looming over the coming quarters will limit the appetite to increase positions, in our view,” Credit Suisse said in a research note.
SSAB announced a raft of cost-cutting measures earlier in April, aimed at generating annual savings of more than 1 billion crowns.
The company said on Monday actions were in place to decrease the negative impact of lower shipments and higher underabsorption of costs due to lower industrial activity among its customers.
“We are adjusting production and costs to demand, rolling mill production in SSAB Europe is reduced by at least 25%, and one of the blast furnaces in Raahe was idled in mid-April,” SSAB said.
Reporting by Johannes Hellstrom, editing by Anna Ringstrom and Niklas Pollard