Swedish steelmaker SSAB's profit slumps, warns of slow Q3

Marta Frackowiak
Updated 2-min read

By Marta Frackowiak

(Reuters) -Swedish steelmaker SSAB expects a steeper than usual demand decline in the third quarter, it said on Wednesday, after its second-quarter operating profit slumped 40% on lower U.S. heavy plate prices and a still weak European market.

Its shares fell more than 5% by 0802 GMT, among the bottom performers on Europe's benchmark STOXX 600 index.

"The seasonal downturn during the third quarter is assessed to be more pronounced than normal and will especially impact SSAB Special Steels and SSAB Europe," it said in a statement.

The specialised high-strength steels producer said it expects somewhat lower realised prices at the Special Steels arm in the third quarter than in the second, and lower ones in the Europe and Americas divisions.

Shipments at the Americas unit will be significantly lower in the current quarter, SSAB added. It also expects lower shipments for the Special Steels and Europe units.

J.P.Morgan said in a note that the outlook for third-quarter shipments and steel prices was slightly weaker than its projections, and implied a weaker profitability in the quarter.

SSAB also said it would carry out planned maintenance at most of its production sites during the third quarter, which would impact output.

The steel industry has suffered from reduced construction activity in Europe and a slowdown in the real estate sector in China, the world's top consumer and producer of the metal. In the U.S., interest rate hikes have dented demand.

SSAB's second-quarter operating result fell to 2.97 billion Swedish crowns ($275.30 million) from 4.96 billion last year, missing analysts' average forecast of 3.02 billion crowns in an LSEG poll.

SSAB said, however, that the market for high-strength steel had showed more resilience in the quarter, while cost reduction measures also had a positive effect on the results.

As expected, its European unit took an additional hit of about 125 million crowns from labour union strikes in Finland, which had also impacted its first-quarter results.

($1 = 10.7884 Swedish crowns)

(Reporting by Marta Frąckowiak in Gdansk; Editing by Milla Nissi)