2020 Global Metals, Mining and Steel Conference - Håkan Folin, CFO 13 May, 2020 - SSAB
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2020 Global Metals, Mining and Steel Conference Håkan Folin, CFO 13 May, 2020
Agenda ►Q1/2020 and short-term outlook ►Medium-term strategy ►First in fossil-free steel 2
Q1/2020 and short-
term outlook
3
Recovery in Q1/20 from Q4/19
Ktonnes +28%
2,081 1,911 1,976 2,000 2,100 1,902 2,081
► Improved demand and restocking 1,621
Crude
− Higher shipments and production production
► Improved capacity utilization +21%
− No maintenance 1,811 1,646 1,634 1,744 1,722 1,614 1,787
1,479
− Stable production performance Shipments
► Continued pressure on steel margins
in standard products SEK million
► Seasonal working capital build-up 1,630 1,600
1,035
1,674
1,316
300 343 EBIT
-1,131
1,922 1,960
1,696
1,325 1,139 1,321
1,038
Operating
cash flow
-411
18Q2 18Q3 18Q4 19Q1 19Q2 19Q3 19Q4 20Q1
4Operating profit by division
678
522 536 544
434 458
358 907
SSAB 657 733 SSAB
Special 460 347 Europe
Steels 66 0
-72
-126
-480 -609
18Q1 18Q2 18Q3 18Q4 19Q1 19Q2 19Q3 19Q4 20Q1
18Q1 18Q2 18Q3 18Q4 19Q1 19Q2 19Q3 19Q4 20Q1
956 872
790 83
553 522 67
53
365 SSAB 38
129 Americas 28 29 Tibnor
106 12
2
-222
18Q1 18Q2 18Q3 18Q4 19Q1 19Q2 19Q3 19Q4 20Q1 -39
18Q1 18Q2 18Q3 18Q4 19Q1 19Q2 19Q3 19Q4 20Q1
134
103 95
59 78 67 Ruukki
11 Construction
-14
5 -62
18Q1 18Q2 18Q3 18Q4 19Q1 19Q2 19Q3 19Q4 20Q1Uncertain outlook due to the Covid-19 outbreak
- Examples of previous downturns
Nordic Apparent Steel growth y-o-y, %
% 1970’s Early 1980’s
1991 2008-2009
► ► Low demand
60 Lengthy slowdown ► Global slowdown
► Pricing pressure ► Global slowdown
► Shipbuilding crisis ► Financial crisis
in Sweden ► Tariffs and quotas ► Real estate crisis in
40 Sweden ► Major destocking
20
0
-20 -16
-21 -25
-40 -38
-60
1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
6 Source: World Steel AssociationSSAB’s outlook for Q2/2020
Industrial deceleration affects steel demand negatively
Volume outlook
►The outlook is more uncertain than normal
Volume trend Q2/20
►Shipments for SSAB Americas and SSAB Europe Business segment
vs. Q1/20
Comment
expected to contract sharply Covid-19 impacting
SSAB Special Steels demand, China
►Contraction also for SSAB Special Steels, albeit recovering
somewhat less compared to standard steel Covid-19 impacting
SSAB Europe demand
►Prices realized during Q2/20 (compared to Q1/20) are
expected to be: Covid-19 impacting
demand
− Flat for SSAB Europe SSAB Americas
− Somewhat lower for SSAB Special Steels
− Lower for SSAB Americas
7Actions taken to decrease the negative effects of lower
demand
SSAB Special Steels SSAB Europe SSAB Americas Common activities
► Annual planned ► One BF in Raahe idled in ► Planned maintenance in ► External services
maintenance brought mid-April (1.3 million Montpelier less sharply reduced
forward to the summer tonnes/year) extensive and brought ► Projects postponed
forward to the summer
► Short-time work ► Rolling production ► Group Executive
allowances reduced by >25% ► Production in Mobile will Committee reduced
be idled at least one
► Postponing capacity ► Short-time work salaries by 10%
expansion projects allowances and layoffs week, both in May and
June ► Hiring freeze
► Planned maintenance
► Relatively high share of ► Postponing investments
brought forward
variable cost
► So far, annualized savings totaling SEK >1bn implemented
► Investment level reduced to SEK 2.0 – 2.5bn (earlier 3bn) in FY
2020
Summary
► Liquid assets and committed credit lines increased to SEK 22bn
(as of March 31)
► Further actions prepared and can be implemented on short notice
8Strategy 9
Reach 50% share of premium and high-strength steel
– Driving future profitability for SSAB’s steel operations
SSAB growth ambition… …driving a more profitable mix
100% 100% 100%
Indexed gross margin
13% 16% 20% SSAB Special Steels Hot rolled strip Hardox 450
6%
7% 140
13% 10% Automotive AHSS
16% 120
20% Premium 100
80
60
40
Standard 20
0
Q1 Q2 Q3 Q4 Q1 Q2 Q3
2018 2019
2016 2018 2022
% of total 32% 39% 50%
Mix improvement possible with current asset base and ongoing investments
10Continue to develop SSAB’s downstream channels
– Drives profitability and a more resilient revenue stream
SSAB’s main channels for volume growth
Traditional steel company Stocks / SSAB Services and
Ruukki
processing Tibnor Hardox wearparts
Construction
lines network
Customer Small and fragmented market within
type Large OEMs/Service centers Mid-size manufacturers manufacturing and services
Competition
Profitability
Volatility
11Strategic targets for 2022
Presented at Capital Markets Day in December 2019
SSAB Special Steels SSAB Services SSAB Americas
Shipments Sales
1.6 Premium share
(million
tonnes)
(SEK billion) 4.5
1.2 33%
2.4 3.0 Organic
1.5 Acquisitions 39%
2019 2022 2019 2022
SSAB Europe – supported by Tibnor
SSAB Europe SSAB Europe and Ruukki Construction
Premium share Shipments Automotive Premium
(ktonne) AHSS 900 Market share in the Nordics
39% 800 (over time)
720
578
40-45%
46% 2019 2022 2019 2022
39% in 2019
12First in fossil-free steel 13
HYBRIT ‒ Joint venture to produce fossil-free steel 14
Appendix 15
Roadmap to be first in fossil-free steel
Faster transition possible depending on customer demand
Pre-feasibility Feasibility Study Commercial volume
Study Pilot plant trials Plant Trials and transformation
2016 – 2017 2018 – 2024 2025 – 2040 2045
2016 Feb 2018 2025
Prefeasibility study with Decision for pilot phase Transformation - BF to EAF
support from Swedish at SSAB Oxelösund SSAB
Energy Agency 2019–2021 Fossil-free
Fossil-free pellets trials 2025
4-year R&D project with HYBRIT demo plant
2020–2024
Support from Swedish
Hydrogen based reduction 2026
Energy Agency SSAB fossil-free steel on
and melting trials
2017
market
A joint venture company 2021/22–2024
2030-2040
between SSAB, LKAB Hydrogen Storage Transformation - BFs to EAFs
and Vattenfall at SSAB Raahe & Luleå
16SSAB’s outlook for main customer segments Q2/2020
Segment Q2/2020 Comments Strong Healthy Weak
Outlook for Q1 for SSAB’s key customer segments
Heavy Transport
Clearly lower heavy truck production
Rail cars weaker, barges more stable
Temporary close down of production in major markets
Automotive
AHSS and Asia more stable
Construction Machinery Lower production levels
Lower investment in new equipment
Material Handling
Mining operations continue at fairly stable level
Substantially lower oil price
Energy
Wind energy more stable
Seasonal improvement vs. Q1
Construction
Risk of slow down
Service Centers Generally cautious sentiment
17Maturity profile and net debt
Maturity profile Q1/2020
►Net debt amounted to SEK 12,692m (10,114)
SEKm
►Net gearing was 20% (16%) 25000
►Duration of the loan portfolio was 5.2 (6.3)
20000
years Back-up
facilities
►Liquid assets and committed credit lines 15000
SEK 10bn
increased to SEK 22 billion (as of March 31) –
10000
corresponds to 29% of revenue
Cash
►Further options for additional liquidity buffer 5000
under review
0
Cash and 2020 2021 2022 2023 2024 2025+
back-up
facilities
18Strong track record of growth
►SSAB is the driver of the high- Structurally growing volume
strength steel market
►Introduction of new products
and applications ~8% p.a. 1.3
►R&D together with leading customers
– both applications and products 0.9 Raahe Oxelösund
►Capacity investments 15%
38%
►Expansion of sales network and 0.6
Borlänge
24%
technical support 23%
0.3 Mobile
Products produced at four steel
mills within SSAB Group
2000 2005 2010 2018
SSAB Special Steels shipments, Mton
19Cash needs of the business
►Total cash needs* estimated at SEK 3.0 –3.5
billion in 2020 (4.6 in 2019) 4.6
►Projects postponed:
− Capacity expansion in Mobile 3.0-3.5
Capex (maintenance and strategic) 2.9
− Start of Oxelösund conversion
►Interest paid stable
2.0-2.5
►Lower taxes paid expected in 2020 (2019
Net interest 0.4
unusually high due to lag in the US)
Taxes and other 1.3
2019 2020F
*Cash needs defined as capex, interest paid and taxes paid. Excluding working capital
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