Sweden’s SSAB saw improving markets in the second quarter of 2016, the high strength steels producer tells Kallanish. Profits rose both quarter-on-quarter and year-on-year as demand and prices rose and the company starts to see improved “… synergy capture” following completion of the Rautaruukki acquisition process.

“During the third quarter, we expect stable underlying demand, although reflecting the normal seasonal slowdown,” says ceo Martin Lindquist. Although markets are expected to slow for seasonal reasons, the underlying demand for high-strength steels will be relatively unchanged during the third quarter, the steelmaker says. Overall, SSAB’s shipments during the third quarter are expected to be lower than during the second quarter, but at a higher price level.

The Rautaruukki acquisition process has now been completed.  At the end of Q2 2016, the annual run rate amounted to SEK 2.0 billion ($231 million). This means that the original target of synergies of SEK 1.0 - 1.35 billion was significantly exceeded and also realised one year earlier than originally planned. In Q2 this had a positive impact of SEK 399 million on the operating result, the company confirms.

Crude steel production rose both y-o-y and q-o-q to 2.058 million tonnes in Q2 2016, albeit marginally. Rolling production did likewise but more significantly, and at 1.904mt was up by 10.6% on-year and by 5.4% on-quarter. Shipments grew accordingly by 5.5% and 8.3% respectively.

All five major business segments produced increased operating profits compared to the previous quarter and the previous year-ago period. SSAB Europe returned strongly to profit following an operating loss in Q1, while SSAB Americas and Special Steels saw operating profit nearly triple and rise by 50% respectively on the same comparison. Both distribution arm Tibnor and longs specialist Ruukki Construction also rebounded well from a weak first quarter, returning healthily to profit in each case.

Second quarter sales were slightly down y-o-y at SEK 14,471m. These however were well up on Q1 2016 and generated an operating profit, excluding items affecting comparability, of SEK 668m, more than doubled that posted in Q2 2015.