STOCKHOLM (Reuters) - Swedish steelmaker SSAB (SSABa.ST) reported a 19% drop in second-quarter operating profit on Friday as weak profitability in Europe, its biggest market, overshadowed more solid development in the United States.
The company said there was uncertainty regarding the state of the business cycle going forward, and that production volumes and temporary staff would be cut in the third 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 1.32 billion Swedish crowns ($142 million) from 1.63 billion in the year-ago quarter.
“A sharp rise in iron ore prices and weaker steel prices have resulted in exceptional pressure on margins on the European market,” SSAB chief executive Martin Lindqvist said in a statement.
“Weaker steel prices on our home markets, Europe and the USA, imply a cautious sentiment at distributors and demand is expected to be seasonally weaker during the third quarter,” he added.
SSAB said it would idle the smaller blast furnace at its plant in Oxelosund, Sweden, adding other cost-cutting measures across all its divisions were being carried out.
Reporting by Johannes Hellstrom