Third quarter report 2008 Olof Faxander, President & CEO Marco Wirén, acting CFO October 28th, 2008
Highlights – Q3 2008 • Continued strong earnings growth in Q3 • North American Division’s contribution significant • Price increases have compensated for higher raw material costs • Announced SEK 5.3bn capex to upgrade product mix 1
Forward-looking statements The presentation and the materials constituting it contain certain statements that are forward-looking statements within the meaning of the U.S. federal securities laws. Actual results could differ materially from the future results expressed or implied by these forward-looking statements due to factors that are beyond SSAB’s ability to control or estimate precisely, such as the effect of general economic or political conditions, fluctuations in interest or exchange rates, changes in competition, the actions of courts, regulators, government agencies, competitors, customers, employees and other third parties, SSAB’s ability to implement successfully its plans and the timing thereof, the benefits from SSAB’s plans being less than anticipated, and other factors. These forward-looking statements speak only as of the date of this presentation. SSAB does not undertake any obligation to publicly release any revisions to these forward- looking statements to reflect events or circumstances after the date of this presentation, except as may be required by applicable securities laws. This presentation contains unaudited non-IFRS financial measures, including EBITDA, EBIT, net debt and free cash flow. These non-IFRS financial measures should be considered in addition to, but not as substitutes for, the most directly comparable measures under generally accepted accounting principles. This presentation is for information only and is not for distribution in, nor does it constitute an offer of securities in the United States, Australia, Canada, Hong Kong or Japan. Neither the presentation nor any copy of it may be taken or transmitted into the United States of America, its territories or possessions, or distributed, directly or indirectly, in the United States of America, its territories or possessions or to any US person as defined in Regulation S under the US Securities Act 1933 (the "Securities Act"). Securities Act 1933 (the "Securities Act"). The material set forth herein is for informational purposes only and is not intended, and should not be construed, as an offer to sell, or as a solicitation of an offer to purchase, any securities. The securities described herein have not been and will not be registered under the Securities Act, or the laws of any state, and may not be offered or sold within the United States, except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state laws. This presentation is made to and directed only at (i) persons outside the United Kingdom, (ii) qualified investors or investment professionals falling within Article 19(5) and Article 49(2) (a) to (d) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order"), and (iii) high net worth individuals, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (such persons collectively being referred to as "Relevant Persons"). This presentation and its contents are confidential and must not be distributed, published or reproduced (in whole or in part) or disclosed by recipients to any other person, whether or not such person is a Relevant Person. Failure to comply with this restriction may constitute a violation of applicable securities laws. If you have received this presentation and you are not a Relevant Person you must return it immediately to the Company. This presentation does not constitute a recommendation regarding the securities of SSAB. 2
Q3 2008 – Continued strong earnings growth SEK million 16 000 3 000 14 000 2 500 Sales EBIT 12 000 2 000 10 000 Sales EBIT 8 000 1 500 6 000 1 000 4 000 500 500 2 000 0 0 Q3-04 Q3-05 Q3-06 Q3-07 Q3-08 MSEK (except per share) Q3-08 Q3-07 Chge, % Sales 13,399 10,358 29 EBIT 2,640 1,380 91 Cash flow from operations 903 557 62 EPS, SEK 5.91 2.11 180 3
Q3 2008 - Highlights by Division Plate Division Strip Products Division High demand for Q&T Prices increased 17% vs. Q2-08 North America Division Tibnor Synergies advancing according Slightly lower deliveries to plan quarter-on-quarter 4
Strip Products Division Leading supplier of AHSS MSEK Q3-08 Q3-07 Chge, % Growth drivers Sales 4,530 3,756 21 • Heavy and light transport EBIT 1,080 682 58 • Nordic market EBIT-margin, % 24 18 Market exposure Production and Deliveries 10% • Decision to invest in Q&T strip production 27% 10% 10% • AHSS deliveries 6% higher in Q3-08 vs. Q3-07 • AHSS 37% (35%) of total shipments in Q3-08 10% • Record quarter for crude steel production in Luleå 43% Market conditions Heavy transport Light transport • Average prices up 17% from previous quarter Nordic Building • Higher costs (iron, coking coal) have been compensated for Ordinary products outside Nordic 5
Plate Division Global leader within Q&T steels MSEK Q3-08 Q3-07 Chge, % Key segments Sales 2,995 2,443 23 EBIT 590 499 18 EBIT-margin, % 20 20 20% 30% 20% Production and Deliveries • Deliveries of Q&T increased 5% in Q3-08 vs. Q3-07 20% 10% • Q&T 95% (94%) of total shipments in Q3-08 OEM Yellow goods OEM Mining • Decision taken to increase Q&T volumes by 80,000 t, Recycling Aftermarket Other mainly through de-bottlenecking • Slab production affected by disruptions Market conditions • Prices increased 8% for Q&T from previous quarter • Demand for niche products was strong 6
North American Division - NAD Leading plate supplier in North America MSEK Q3-08 Q3-07 Chge, % Market exposure Sales 4,244 2,510 69 EBIT 1,025 808 27 EBIT-margin, % 24 32 Production and Deliveries • Plate deliveries were 9% lower in Q3-08 vs. Q3-07 mainly 48% 52% due to a planned production outage due to a planned production outage • Deliveries of Q&T and AHSS increased 38% vs. Q3-07 • Start-up of Montpelier in early October according to plan OEM Service Centers Market conditions • Prices increased by 17% compared with previous quarter • Scrap prices fell towards the end of the period NAD is consolidated in the SSAB group as of July 18, 2007 7
NAD – Q&T expansion program • Decision taken to install a new quenching line with advanced finishing facilities, steering and roll shifting technology for the rolling mill, and a vacuum tank degasser in Mobile, Alabama • The planned US$460 m program will allow an increase in Q&T capacity to 400,000 t, from 100,000 t, as well as enhance capabilities in the melt shop and rolling mill • Production start up is planned for 2011 • The projects will bring approximately 180 new jobs to the area • Part of the strategic investment program announced in August 2008 The investment will significantly strengthen SSAB’s position as a global leader in high strength steel
Tibnor leading supplier of steel in the Nordic region MSEK Q3-08 Q3-07 Chge, % Sales 2,489 2,283 9 EBIT 254 159 60 EBIT-margin, % 10 7 Deliveries • Deliveries fell 5% in Q3-08 vs. Q3-07, but are up 3% year-to-date Market conditions • Signs of weakness in the Nordic market, e.g. construction and auto industry 9
Market outlook • The economic outlook has become more uncertain � Recent turbulence in financial markets has reduced visibility � World Steel Association has declined to provide a projection for 2009 � Signs of weaker demand � Major producers have announced production cuts to stabilize supply/demand � In general, prices for commodity grades have started to come down • High uncertainty within the raw material markets � Difficult to project 2009 trends for iron ore and coking coal • • Continued strong demand for SSAB’s niche products Continued strong demand for SSAB’s niche products � Substitution into Q&T and AHSS grades continues � Prices for SSAB’s niche products expected to be stable � The Nordic market shows a weakening in steel demand
Financials • Record high earnings for a third quarter • North American mills strong contributors • Cash flow in Q3 affected by the increase in costs for raw materials • The strengthening of the US$ had negative impact on Debt/Equity 11
Key Figures for the Group SEK million Oct '07 - (except for EPS) Q3-08 Q3-07 Sep '08 Sales 13,399 10,358 53,470 Operating profit 2,640 1,380 11,111 Pre-tax profit 885 10,205 2,734 Earnings per share, SEK 5.91 2.11 21.84 Cash-flow from operations (entire op.) 903 557 5,365 Debt/Equity, % 46 163 46 RoCE, % (entire op.) RoCE, % (entire op.) - - - - 19 19 RoE, % (entire op.) - 25 - 12
Change in operating profit, Q1-3 2008 vs. Q1-3 2007 SEK millions 308 9,000 1,862 187 8,423 1,645 8,000 -126 -243 430 7,000 5,870 6,000 -1,510 5,000 4,000 1,619 3,000 2,000 1,000 0 2007 9m Prices COGS Core Niche NAD Depr. on Tibnor Fixed costs Other 2008 9m excess values Excl. one-off items 13
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