SSAB Ab

We can drive our transformation from a position of strength. The level of earnings during the last years has been record high. We have achieved a 40% global market share in wear-resistance steels. And we have taken the lead in the green transformation of the steel industry. We plan for major investments in the Nordic operations, putting SSAB in a superior cost position The blast furnaces and coking plants will be closed and our CO2 emissions will largely be eliminated. Pilot shipments of fossil-free steel to customers already began in 2021. We will continue to increase the share of high-strength steels and premium steels. This will be done with industry-leading profitability and create value for all stakeholders. Join us when we're transforming the future of steel.

So welcome. Good morning and welcome to this presentation of the SSA Big Q3 result. My name is Per Hilstrom. I'm responsible for investor relations. And presenting today, we have our president and CEO, Martin Lindqvist, and our CFO, Lena Kraelius. We will start here with Martin. We'll give an overview of the third quarter. Then Lena comes in and goes deeper into the numbers. And then Martin comes back at the end with the outlook and the summary. And at the end, we will have good time also for your questions. So by that, please, Martin, start the presentation.

Thank you, Per. And good morning and welcome to this Q3 report presentation. If you look at the highlights for Q3, we had somewhat lower earnings compared to Q2, but I would claim that we still had, given the circumstances and the headwind we experienced, especially on the European market, we had a good profitability. We continued to generate good results in special steels in America. We had an operating margin in special steels of 24% in America. We were at 35% during the third quarter. But we do what we typically do when we experience headwind on the market. We become more cost-cautious. We have set a target on group level to reduce cost by more than 500 million SEK, where over 50%, roughly 50%, is structured. And that is a good thing to use the possibility to become more, when the market is tougher, to become more cost-cautious. It is about permanent and temporary layoffs. It's work, our banks and so on, and restrictions on new hires. But the most important part, I would say, is what we internally call multi-skillings. We start already now to prepare for the future and develop people so all of us working within SSAB can do more than one job in the future. So that's an important part, building for the future, but also handling the headwind on the European market. We continue to see a good trend in safety, rolling 12 months. We were at 0.94 in LTI frequency. That's not world-class yet, and we are not at our target to be the safest steel company in the world. But we have a couple of big sites like Hemelina, Rohe, Montpellier, and Oxidesund that are really approaching world-class performance when it comes to safety. We continue, as we should, to generate strong cash flows. We had an operating cash flow of more than 6.3 billion during the quarter, which is in line with the second quarter and slightly lower than the fourth quarter, 22, but still good and strong cash flow generation. And with that cash flow generation, we come outside our financial target, which is to have a net gearing or a net cash position of 20% of equity, so plus minus 20%. We ended the third quarter of 24%. When we look at that financial position and when we think about the market outlook and the upcoming investments in the transformation, we see the possibility to launch now a share buyback program of 2.5 billion SEC until the next AGM. And the reason why we do this is that we are confident that we will continue to perform well and we are performing well by increasing our product mix with focusing more and more on high strength steels and QNT and I will come back to that in a second. If we look at special steels during the third quarter, shipments were impacted by a weaker market, especially for strip-related products in Europe. The good thing is that prices held up, and they should do that over the business cycle, and that means that the profitability were still on fairly stable level compared to Q1 and Q2, so around or just below 2 billion. We are continuing to build our strong market position with products that add significant customer value in the form of higher productivity, better sustainability performance, lower weight, better fuel consumption, and more stable prices over the business cycle. And if we look at the product family, we usually divide it up between wear Q&T, structural Q&T, protection Q&T, tooling Q&T, and in our latest segments, additive powder or powder manufacturing. We start with the wear segment or the wear Q&T that typically goes to, as an example, truck and bodybuilders, material handling, mining, quarries, recycling. We have a very strong market position. The global market share is above 40%. And in certain segments, certain geographies, it's much stronger than that. So that's our prime product where we constantly develop new products and help our customers to develop new applications. Structure QT, we sell under the name of strength, goes mainly to lifting and forestry. So these are structural steels with long resistance. So a strong market share there as well globally. Protection, unfortunately, the uncertainty in the world has increased the demand for protection. QNT goes both to civil application and military application. Our brand name there is Armox probably. the best armoured plate produced in the world. Tooling, we work towards tooling and engineering companies under the brand name Toolox. And then AM powder or the powder we have started to produce now in Oxelösund goes mainly to customers 3D printing. And this is a very good way of getting fossil free powder and use it for prototyping and small series or small batches of products that we develop ourselves, but mainly together with customers. We look at Europe, weaker market, headwind, more pronounced seasonal slowdown than we usually see. Typically, we see slow July in the Nordics and a slow August in mainland Europe. But this year, it was slower than normal. We have measures to lower cost, both structurally and short-term, and increase flexibility. And here is where we mainly work with what we internally call multi-skilling. What is holding up pretty good is even though the volumes are going down, automotive, advanced high strength steels at automotive is holding up pretty well. And if you look at some recent examples where we increase our market share or take market shares is for the most advanced high strength steels. We are talking yield strength up to 2,000 megapascals. for examples of new products. But this is also part of the partnership program together with the future customers for fossil free steels. We start already now to ramp up volumes and come into new platforms in advance of being able to produce and deliver both SSAB 0, but also in the future, fossil free steel. So this is a good business driver and makes, together with the uniqueness of the products, us to grow and continue to grow this market over time. If you look at Americas, I would say when I look at this picture and I looked at it yesterday and I said this is stable, stable prices, fairly stable volumes, stable profitability, EBIT margin of 35%, which is really, really good. Some pressures on market prices on the spot market in Q3, but stable, generally stable demand. We had some during the quarter transport problems and conjunctions in the transport system. But apart from that, I would say stability. To ignore the reflection of the European, I would say the Nordic steel market, weak market conditions in Q3, lower shipments, lower volumes, measures to lower costs. I would say more than 50% here are structurally lowering costs. If we look at the EBIT, it was minus 113. If we take away revaluation of inventories, we had the positive underlying operating results. So, of course, we were hit a lot by revaluation of stocks. Rookie construction, seasonal improvement versus Q2, less pronounced than normal. And the reason for that is, of course, that the construction market is very, very weak and has been weak so far this year and will continue to be weak. But they are doing a good job reducing costs and structurally change the company. And even though the market conditions are very tough, they can post an operating result for the third quarter of the 28 million second. Some words then about SSAB0, the ramp up of zero, SSAB0 continues, and as you might remember, these are products based on recycled steel using fossil-free electricity, biocarbon and biogas. So no carbon emission offsetting or mass balancing allocation schemes, so this is purely fossil-free steel production. We see a very strong demand from segments like heavy transport, automotive construction, not only in Europe but also in the U.S. And this is, as said earlier, our platform to continue to leverage growth. So part of our partner program where we now start to deliver zero steel, small volumes of fossil-free steel, and ramping up new customers, new segments, new applications for the future. So with that, Lena, it's time for a deep dive into the financials.