Sweden's SSAB tops profit forecast ahead of EU steel safeguard boost
SSAB Reports Strong First-Quarter Earnings and Market Outlook
April 28 (Reuters) - Swedish steelmaker SSAB reported stronger than expected first-quarter earnings on Tuesday, driven by higher results in its Europe and Americas units and strong shipments of advanced steels.
Advanced Steels Drive Growth
SSAB said its strategy to increase the share of premium products was yielding results, as deliveries of advanced steels hit "record levels" in the quarter. Those products include high-strength and speciality steels used in cars, construction machinery and agricultural equipment.
Financial Performance Surpasses Expectations
Operating earnings rose 63% to 2.20 billion Swedish crowns ($237.9 million) in the quarter. Analysts were expecting 2.05 billion crowns on average, a poll provided by SSAB showed.
Impact of EU Steel Safeguard Regulation
Europe's steel sector, long squeezed by high energy costs and cheaper imports from Asia, stands to gain from tighter EU trade measures and the bloc's carbon border levy on high-emission imports.
CEO's Perspective on Market Changes
"SSAB expects this to improve the supply-demand balance in the European market," CEO Johnny Sjostrom said in a statement, referring to the European Union's new steel safeguard regulation.
Details of the New Safeguard Regulation
The safeguard will come into effect from July 1, reducing the bloc's overall steel import quotas by about 47% to 18.3 million metric tons per year and increasing the out-of-quota duty to 50%.
Analyst Insights and Market Risks
Tighter trade policies will support prices and volumes, Jefferies analysts said in their first take on the report. They expect supply and demand in the U.S. and Europe to improve into 2026, though a prolonged war in Iran could hurt those prospects.
Geopolitical and Economic Considerations
SSAB has so far seen limited direct impact from the war in the Middle East, with customers across several markets growing more cautious, Sjostrom said, but he also warned a prolonged conflict could weigh on economic activity.
Outlook for Second Quarter
The company expects second-quarter shipments at its Special Steels, Europe and Americas divisions to be stable compared to the previous three months.
Realised steel prices are seen somewhat higher for all three units, while raw material costs are set to be somewhat higher for Special Steels and Europe and fairly stable for the Americas.
Market Reaction and Additional Information
SSAB's shares were broadly flat in early trading.
($1 = 9.2487 Swedish crowns)
(Reporting by Marta Frąckowiak in Gdańsk; Editing by Milla Nissi-Prussak)
