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Swedish steel maker SSAB paints gloomy future

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12:27 CEST+02:00
Swedish steel maker SSAB reported a net loss of 636 million kronor ($86 million) in the second quarter and warned of worse to come as demand continues to decline.

The results, for the period April-June 2009, came in under analyst expectations and in stark contrast to the net profit of 2.6 billion kronor in the corresponding period of last year.

At the operating level, the loss came to 952 million kronor on sales that fell 56 percent to 6.6 billion kronor.

"The steel market continues to be sluggish," said SSAB chairman Olof Faxander.

"The second quarter has been characterized by weak demand and continued pressure on prices ... Production during the quarter has remained well under 50 percent of capacity."

"During the third quarter, we expect market conditions to be similar to those in the second quarter. We expect that the result for the third quarter will be weaker than for the second quarter, primarily due to seasonal variations as a consequence of our customers' holiday outages."

Faxander said that by the end of the year, inventory drawdowns by steel users could lead to a strengthening in demand and an improvement in the market.

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