Results for 2001

Results for 2001 · Profit for 2001, excluding non-recurring items, amounted to SEK 835 (1,283) million. Including non-recurring items of SEK 78 (587) million, profit after financial items amounted to SEK 913 (1,870) million. · Notwithstanding a weak market, deliveries of the steel operations' niche products were largely unchanged. · Cash flow during the year was positive and amounted to SEK 151 (-406) million. · The Board proposes an unchanged dividend at SEK 5 per share. Consolidated Profit and Loss Account 2000 2001 2000 2001 SEK millions Quarter Quarter 4 Full Full 4 year year Sales 5,261 4,571 19,271 19,682 Cost of goods sold -4,258 -4,050 -16,100 -16,984 Gross profit 1,003 521 3,171 2,698 Selling and administrative expenses -508 -429 -1,830 -1,786 Other operating revenues and -7 -2 601 153 expenses *) Affiliated companies 8 -6 20 3 Operating profit 496 84 1,962 1,068 Financial items -17 -39 -92 -155 Profit after financial items 479 45 1,870 913 Tax -121 -11 -517 -277 Minority shares -3 3 -42 -17 Profit after tax 355 37 1,311 619 Return on capital employed before - - 15 8 tax (%) Return on equity after tax (%) - - 14 6 Earnings per share (SEK) 3.40 0.40 12.00 6.10 Equity per share (SEK) 94.50 96.70 94.80 96.70 Equity ratio (%) 50 51 50 51 Net debt/equity ratio (%) 32 38 32 38 Number of shares at end of period 102.54 100.90 102.54 100.90 (millions) Average number of shares (millions) 104.27 100.90 108.84 101.06 *) The capital gain of SEK 135 million from the sale of Tibnor's industrial supplies group is included as 'other operating income' for the full year. The effect on profits of surplus funds from SPP was included in the results for last year in the amount of SEK 11 million in quarter 4 and SEK 636 million for the full year. The Market According to the International Iron and Steel Institute's autumn assessment, global steel consumption during 2001 increased marginally to a new record level of 772 million tonnes. The major growth occurred in China, which now accounts for more than 20% of the world market, while steel consumption declined on most other major markets. In the United States, steel consumption peaked at the beginning of 2000. During the second half of 2000, steel consumption declined rapidly and thereafter stabilised during 2001 at the same level as was reached at the end of 2000. Steel consumption in Europe peaked towards the end of 2000 and has subsequently fallen gradually. However, the decline has been moderate. Steel consumption in Sweden fell significantly within the heavy vehicle and telecom sectors, but was somewhat higher within the building sector. The markets for sheet and plate declined by 10% to 1,700,000 tonnes and 200,000 tonnes respectively. The Group's market shares for sheet and plate were approximately unchanged. Sheet prices came under pressure towards the end of 2000. However, by prioritising price over volume it was possible to limit the effect of the pressure on prices. It was subsequently possible to carry out small price increases in local currencies for hot-rolled sheet at the beginning of the autumn, but prices subsequently came under renewed pressure. Towards the end of the year, the inflow of orders was weak and orders for 160,000 tonnes of sheet were signed with customers off the ordinary markets in order to ensure utilisation of capacity in the hot- rolling strip mill at the end of the year and the beginning of 2002. Demand for both ordinary plate and quenched steels was good and it was possible to increase prices in local currencies during the first half of the year. Prices during the fourth quarter were 6% lower than during the third quarter. Of the decline in prices, 3 percentage points were due to lower prices and 3 percentage points due to a seasonally change in product mix. In total, the Group's steel prices in local currencies for the year were on average 6% lower than in the preceding year. In Swedish krona, they were 4% higher than in 2000. Production and Deliveries Crude steel production during the fourth quarter was stable and high. Following the bankruptcy of Inexa Profil, it has been possible to cast the crude steel that was previously delivered to that company into slabs for SSAB's own use. In total, this meant that crude steel production for the fourth quarter amounted to 1,049,000 tonnes, an increase of 4% on the final quarter of 2000. For the year as a whole, crude steel production increased by just over 400,000 tonnes to 3,820,000 tonnes. The increase was primarily due to the fact that the new furnace in Luleå was operated without a summer break in 2001. Production in the rolling mills was also stable during the fourth quarter and amounted to 834,000 tonnes, 8% higher than in the preceding year. In total, sheet production during the year amounted to 3,016,000 tonnes, an increase of 4% on the preceding year. Deliveries in the steel operations during the quarter amounted to 715,000 tonnes, which was somewhat lower than last year. Deliveries for the year were thus 1% lower than last year and amounted to 2,771,000 tonnes. The customer base for high-strength sheet products has continued to expand and thereby almost to compensate for a lower demand from, primarily, the heavy vehicles sector. In total, deliveries of high- strength sheet, was 3% lower than last year. During the year, deliveries of quenched steel were restricted by production capacity. With the new quenching line being brought into production during the second half of the year, capacity has increased and no longer constitutes a limitation. During the fourth quarter, deliveries of quenched steel were 9% higher than in the preceding year, but in total volumes during the year declined by 2% to 297,000 tonnes. A very weak activity on the Swedish market in December meant that deliveries to Swedish customers during the month were almost 25% lower than last year. Non-Recurring Items Tibnor's industrial supplies group was sold in September 2001, entailing a pre tax capital gain of SEK 135 million. In addition, the transaction had a positive effect on liquidity of almost SEK 430 million, of which just over SEK 380 million was included in the cash flow for the third quarter and the remaining amount, just under SEK 50 million is included in the cash flow for the fourth quarter. SSAB Tunnplåt has been delivering liquid crude steel to Inexa Profil in Luleå pursuant to a fifteen-year agreement. In the middle of September, the Board of Directors of Inexa Profil filed a petition for bankruptcy. Net claims against the bankruptcy estate amount to SEK 57 million. The operating profit for the third quarter was affected by a write-down of this entire claim. Non-recurring items last year consisted of revenues of SEK 636 million relating to SPP's surplus funds and energy tax expenses for the years 1995-1999 amounting to SEK 49 million. In total, non-recurring items totalling SEK 78 (587) million are included in the profit for the full year. Sales and Profit Sales during the final quarter of the year fell by 13% to SEK 4,571 (5,261) million. Excluding sales from the sold industrial supplies group, sales during the quarter declined by 6%. In total, the Group's sales increased by 2% to SEK 19,682 (19,271) million. Adjusted for the sold business, the increase was 5%, of which higher volumes accounted for 4% and higher prices for 1%. Iron ore and coal are purchased pursuant to annual agreements and prices are set in USD. The year's iron ore and coal agreements resulted in price increases in USD of 2% and 13% respectively. The higher dollar rate, together with price increases, resulted in significantly higher costs for raw materials than last year. Thus, the year's costs for iron ore and coal were 20% and 21% higher respectively than in 2000. Processing costs increased during the year by 5%. Of the increase, 1 percentage point consisted of the expanded operations of SSAB HardTech and an additional percentage point relates to additional staffing for the new quenching line in Oxelösund and for the year-round operation of the blast furnace in Luleå. Operating profit for the fourth quarter fell by SEK 400 million to SEK 84 (484) million, excluding non-recurring items of SEK 0 (12) million. Profit has been affected by assessed losses in the steel operations of SEK 152 (4) million on deliveries during the first quarter of 2002. In addition, weaker margins and increased processing costs had a negative effect on profit compared with the fourth quarter of last year. Operating profit for the full year, excluding non-recurring items, declined to SEK 990 (1,375) million. The profit analysis is set forth in the table below. Change in operating profit excluding non-recurring items (SEK millions) Steel operations - Weaker margins -360 - Increased volumes +285 Trading and processing operations - Weaker margins -130 - Increased volumes +100 Increased processing costs -265 Increased depreciation -10 Other -5 Change in operating profit -385 Including non-recurring items of SEK 78 (587) million, operating profit amounted to SEK 1,068 (1,962) million. Changes in currency rates between the years had a positive effect on profit of approx. SEK 350 million. An increase in net debts resulted in a deterioration in financial items to SEK -155 (-92) million. Profit after financial items thus amounted to SEK 913 (1,870) million. Earnings per share amounted to SEK 6.10 (12.00). Excluding non-recurring items, profit after financial items amounted to SEK 835 (1,283) million and earnings per share amounted to SEK 5.70 (8.30). Capital Expenditures During the year, decisions were taken on new capital expenditures totalling SEK 670 (850) million. Of this amount, SEK 175 million relates to a decision to invest in additional capacity for the formatting of high-strength sheet. Production in the new cutter lines will commence at the beginning of 2003. A second quenching line has been built in Oxelösund. The quenching line provides the possibility to expand the product range within quenched steels and increase quenching capacity by approx. 50%. Production at the quenching line started as planned at the beginning of August. The investment amounted to just over SEK 550 million. In 2000, a decision was taken regarding a significant environmental investment at the coking plant in Luleå, at which a cover has been installed in order to collect particulates from the coking plant. The investment amounted to just under SEK 100 million and the cover was brought into operation in January 2002. In 2000, a decision was also taken regarding a fifth press-hardening line at SAB HardTech's plant in Luleå and a third press-hardening line at the plant in the United States. The investments in these new press- hardening lines amount to just over SEK 150 million. Production at the new lines will commence in the spring of 2002. Capital expenditures fell to SEK 926 (1,840) million. Financing and Liquidity Since the beginning of the year, inventories increased by SEK 500 million, of which increased raw materials prices accounted for approx. SEK 400 million. In total working capital increased by SEK 855 million. Cash flow in the business operations improved during the year by SEK 791 million to SEK +230 (-561) million. Including the effect of SPP funds, cash flow amounted to SEK +151 (-406) million. Notwithstanding the positive cash flow, a repurchase of shares at the beginning of the year in the amount SEK 150 million and dividends of SEK 504 million meant that net debts increased by SEK 574 million to SEK 3,659 (3,085) million. Liquid assets at the end of the year amounted to SEK 460 (766) million, of which SEK 295 (135) million were in the parent company. There is a Medium Term Note programme for long-term borrowing, while short-term borrowing takes place primarily within a commercial paper programme. Borrowing possibilities within each of these programmes amount to SEK 2,000 million. At the end of the year, borrowing within these programmes amounted in total to SEK 3,557 (3,370) million. Prospects for 2002 It has been necessary to accept certain price reductions regarding sheet and ordinary plate for the first quarter. However, in the US increased prices for sheet are currently being noted and, in Europe, several major producers have announced that they intend to increase prices in the second quarter. Apart from price trends, margins in the steel operations will be strongly affected by raw materials costs, primarily costs for iron ore and coal. Following price increases in 2001, it is expected that prices of raw materials in local currencies will fall during 2002. In addition, margins in the steel operations will depend on future changes in the exchange rate for the Swedish krona, since nearly 70% of the steel operations' volumes are exported. Most of the raw materials are purchased in USD. No general increase in steel consumption in Europe is foreseen before the second half of the year. However, it is believed that it is possible to increase volumes in the steel operations through increased sales of high-strength sheet and quenched steels. Volumes in the trading and processing operations that are dependent on the Swedish market depend on economic trends in Sweden and are not expected to change significantly. In order to combat the weaker state of the economy, last year a number of cost-cutting programmes were commenced which will gradually bear fruit during this year. The Group's profit is thus strongly affected by changes in prices and volumes within the steel operations, volumes and margins within the trading and processing operations, and cost trends for wages and raw materials, as well as changes in exchange rates. The approximate effects in 2002 on profit after financial items and earnings per share as a consequence of changes in the aforementioned factors are set forth in the table below. Change Effect on profit, Effect on % SEK million earnings per share, SEK Prices - steel operations 10 1,100 7.85 Volume - steel operations 5 210 1.50 Volume - trading operations 10 115 0.80 Margin - trading operations 2%-pts 80 0.55 Wage costs 2 80 0.55 Prices - raw materials 10 520 3.70 SEK index 10 465 3.30 Dividends The Board proposes to the General Meeting that an unchanged dividend be paid in the amount of SEK 5 per share, equal to SEK 504 (504) million. Stockholm, 12 February 2002 Anders Ullberg The General Meeting of the Company will be held on 26 April in Luleå. In conjunction therewith, the report for the first quarter of 2002 will be published. SSAB Svenskt Stål AB (publ) Company no. 556016-3429 ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2002/02/12/20020212BIT01350/bit0002.doc The Full Year-End Report http://www.waymaker.net/bitonline/2002/02/12/20020212BIT01350/bit0002.pdf The Full Year-End Report