Impairment Loss Requires Focus on Productivity
LKAB´s Board has decided to recognise impairment losses of MSEK 7,136 before tax in respect of property, plant and equipment. The impairment losses cover LKAB’s iron ore operations, including logistics and ports. Cash flow is unaffected by the impairment.
JULY – SEPTEMBER
Net sales totalled MSEK 4,203 (4,991)
Underlying operating profit (note 1) was MSEK 798 (1,074)
Impairment loss on property, plant and equipment had a negative effect on operating profit of MSEK 7,136
Operating loss was MSEK -6,951 (-1,164)
Loss for the period was MSEK -5,641 (-979)
Deliveries of iron ore totalled 6.2 (6.7) Mt
Note 1: Underlying operating profit is defined as operating profit excluding costs for urban transformation provisions and impairment of property, plant and equipment.
The operating loss was MSEK 6,951 for the quarter, which included impairment losses not affecting liquidity of MSEK 7,136 on property, plant and equipment that were charged to operating profit along with provisions for urban transformation of MSEK 613.
The significantly lower iron ore price is expected to be long-term. The market situation calls for LKAB to focus further on cost reductions and increased efficiency in order to enhance profitability and competitiveness going forward.
The production volume for the quarter was 5.9 (6.3) Mt and deliveries totalled 6.2 (6.7) Mt for the quarter. The strategy to maximize pellet production remains in place. However, the target volume of 37 million tonnes is being deferred. The new open-pit mines at Svappavaara will primarily supply crushed ore to existing processing plants.
LKAB’s commitment to and responsibility for urban transformation in the mining communities is unchanged.
LKAB is now stepping up the pace of its adaptation work, focusing on improved productivity, lower costs and meeting customers’ quality requirements. Only by enhancing competitiveness and profitability can LKAB continue to add value for customers, communities and owners.
Contact: Frank Hojem, LKAB´s Senior Vice President of Communication. Tel: 46 (0) 920 380 70. E-mail: firstname.lastname@example.org
LKAB is an international high-tech minerals group that mines and upgrades the unique iron ore of northern Sweden for the global steel market. Sustainability is core to our business and our ambition is to be one of the industry’s most innovative, resource-efficient and responsible companies. The group had sales of more than SEK 20 billion in 2014 and employs about 4,500 people in 15 countries. Other group business include industrial minerals, drilling systems, rail transport, rockwork services and property management.