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Steelmaker SSAB upbeat on demand and prices after Q1 profit beat

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Helena Soderpalm
·2-min read
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By Helena Soderpalm

STOCKHOLM (Reuters) -SSAB posted a forecast-beating first-quarter profit on Monday, boosted by strong demand and higher prices, lifting shares in the Swedish steelmaker.

SSAB, which is one of the top producers of heavy plate in the United States but counts Europe as its biggest market, said it expected steel demand in the second quarter to be "very strong", driven by both underlying demand and customer restocking.

It added that a market recovery that started last autumn had strengthened in the first quarter, while measures to limit the spread of COVID-19 continued with no major impact on production.

"We saw record earnings both for Special Steels and Tibnor," Chief Executive Martin Lindqvist said on a call with analysts.

SSAB shares, already up more than 60% so far this year, rose 4.2% in early trade.

"Earnings continued to recover quicker than the market and we expected, driven mainly by better prices and to some extent by higher steel shipments in the current quarter," Credit Suisse wrote, noting a "very strong" beat on earnings and free cashflow.

SSAB said it expected prices realised by SSAB Americas and SSAB Europe to be significantly higher in the second quarter compared to the first quarter.

Operating profit was 1.99 billion Swedish crowns ($237.6 million), up from 343 million crowns in the year-ago quarter, and beating a 1.30 billion crown profit seen by analysts according to data from Refinitiv.

Quarterly operating cashflow improved to 1.43 billion crowns from a negative 411 million.

The group, which has a target to become fossil free by 2045, said it expected total maintenance costs in 2021 to be 1.165 billion crowns, compared to an earlier forecast of 1.2 billion.

SSAB has attracted investors in recent years with its Hybrit green steel venture, which it owns together with Swedish state-owned utility Vattenfall and miner LKAB.

($1 = 8.3748 Swedish crowns)

(Reporting by Helena Soderpalm, editing by Niklas Pollard, Kirsten Donovan)