(Reuters) -Sweden’s SSAB posted fourth-quarter operating profit well above analysts’ estimates on Wednesday, helped by resilient demand for its high-strength steel and other premium products despite generally weak markets in Europe and North America.
Shares of the Swedish steelmaker lost some of their early gains and were trading 1% higher by 1028 GMT.
Kicking off the earnings season for European steelmakers, SSAB’s operating result slumped to 487 million Swedish crowns ($44.36 million) in the December quarter from 2.40 billion crowns a year earlier.
This, however, beat the 419 million crowns expected by analysts on average, according to a consensus provided by the company.
“A >100% EBITDA beat in SSAB Europe against bearish expectations sets a positive tone and raises the bar for forthcoming European steel producers for Q4 reporting,” J.P.Morgan said in a note to clients.
ArcelorMittal and ThyssenKrupp, among SSAB’s main rivals in Europe, will report their earnings in the first weeks of February.
SSAB said it expected demand to remain weak in its home markets, Europe and North America, during the first quarter, but flagged a seasonal improvement in shipments.
The group expects first-quarter shipments by its Special Steels and Europe units to be significantly higher than in the prior quarter, while those for the Americas arm were expected to be “somewhat higher”.
Prices will be “somewhat lower” for Special Steels and Americas and lower for Europe in the first quarter. Raw material costs should be stable for Special Steels and Europe and “somewhat higher” for Americas, SSAB said.
“If the interest rates come down further, and construction segment comes down further, then we’re quite optimistic that we will see an improvement in the year 2025,” CEO Johnny Sjostrom said during a conference call.
Sjostrom said SSAB had seen some signs that the market was starting to inflect, but added he could not really say it was a trend yet.
Jefferies analysts said they expected “modestly better” earnings before interest, tax, depreciation and amortization in the first quarter compared with the previous three months, with lower prices offset by higher volumes and less maintenance.
SSAB proposed a dividend of 2.60 crowns per share for last year, 48% lower than the 5.00 crowns paid for 2023.
($1 = 10.9779 Swedish crowns)
(Reporting by Marta Frąckowiak in Gdansk; Editing by Subhranshu Sahu and Milla Nissi)
