Improved demand and higher prices in North America helped SAAB Americas report a strong profit for second quarter and the first half of 2014 after reporting losses in both time periods in 2013.
SSAB Americas steel sales soared 15 percent year over year in the second quarter of 2014 and 9 percent on a quarterly basis. Sales in Q2 were SEK 4,020 million ($587 million). First half sales for SSAB Americas totaled SEK 7,705 million ($1,125 million).
Operating profit in second quarter was SEK 232 million ($34 million) compared to a loss of SEK 49 million ($7.16 million) in Q2 2013 and SEK 358 million ($52.3 million) for the half compared to a loss of SEK 195 million ($28.5 million) in the 2013. In the twelve months from July 13 to June 2014, operating profit more than doubled the full year profits of 2013.
Steel shipments in second quarter were 629,000 tonnes (693,342 net tons), up 4 percent from the previous quarter and 10 percent year/year. High strength steels accounted for 23 percent of total shipments.
SSAB Americas crude steel production dropped 5 percent q/q but was 2 percent higher compared to Q2 2013. Steel production improved 2 percent from Q1 and 6 percent from Q2 2013.
A maintenance outage at the Mobile mill negatively impacted earnings by SEK 150 million in the first half, mostly in the second quarter. Operations are back at full capacity utilization at both of the SSAB North American plants with no maintenance outages expected in Q3.
In the earnings conference call, CEO Martin Lindqvist said he expects a continued positive outlook for the US plate market with already announced price increases continuing into third quarter. Demand from automotive and services centers in the US is strong and there are signs of improvement in the US construction machinery segment. Inventory levels seem to be in balance in North America.
Lindqvist said that SSAB’s US automotive focus is very small and focused on advanced high strength cold rolled steel for safety components. The amount of SSAB products used in an automobile is very tiny, said Lindqvist, mostly side impact beams, crash boxes and some parts of the seats. Sales are in range of 200,000-300,000 tonnes per year (220,000 to 330,000 net tons). Demand continues to be good.
“There is,” said Lindqvist, “a big question mark when it comes to imports. Import products are on a high level in North America. That has not affected us yet and we are fully booked for Q3. We will not see any affects of that in Q3 but you never know going forward.”
Lindquist said he could not comment on the preliminary study on the expansion at Montpelier. SSAB did not considered bidding on the Severstal North American companies.
Parent company SSAB received approval for its merger with Rautaruukki from the EU commission on July 14 and concessions required were in line with company expectations. Over 90 percent of Rautaruukki shareholders have accepted the SAAB offer with which expires on July 22. SSAB also acquired 51 percent of G&G Mining Fabrication in Australia.
SSAB Sales were up by SEK 9,323 million ($1,349 million) in Q2 on 1.137 million tonnes of shipments. SSAB posted a net profit of 135 million in second quarter, a positive income for the first time since Q2 2012.
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