NEW YORK SSAB Americas, a subsidiary of Swedish steelmaker SSAB AB, saw its fourth-quarter earnings plunge due to depressed demand and falling U.S. prices.
"(Last year) was a very challenging year for the steel industry and SSAB," president and chief executive officer Martin Lindqvist said during a conference call Feb. 8.
SSAB Americas posted operating earnings of 110 million kronor ($17.06 million) for the three months ended Dec. 31, down 73 percent from 414 million kronor in the same period a year earlier.
The Stockholm, Sweden-based parent said that its depressed earnings in the Americas were due to decreased plate prices, lackluster steel demand and political and economic uncertainty.
"U.S. steel demand was also affected by the worries about the fiscal cliff combined with destocking in (the fourth quarter)," Lindqvist said, adding that the company expects restocking to take place in the first and second quarters.
Plate prices in the Americas for niche steels decreased 4 percent in the fourth quarter compared with the previous quarter, while standard steel prices decreased some 12 percent, the company said.
SSAB Americas also saw steel shipments fall 9 percent in the quarter compared with the same period a year earlier and were down 2 percent from the third quarter.
The steelmaker, which has mills in Mobile, Ala., and Montpelier, Iowa, expects its earnings in the Americas will be affected in the first and second quarters as a result of a planned maintenance outage at its Montpelier plant. The company estimates a setback of some 150 million to 200 million kronor ($27.27 million to $31.03 million).
One bright spot for the company is the growth of the energy market, including wind towers, particularly with the renewal of certain tax credits in the U.S. market. "Weve seen a bit of optimism in the wind-tower segment in North America, which is of course due to the renewed production tax credits in the U.S.," Lindqvist said.
Concerning raw materials, Marco Wirén, chief financial officer of the Swedish parent, said that the companys 2012 coal procurement contract is set to expire at the end of March. He noted that price agreements for 2012 were 30 percent lower than in 2011.
Looking forward, the company said it expects to see a rebound in the Americas compared with other regions.
"We expect volumes in the Americas ... to improve compared with (the fourth quarter)," Lindqvist said. "We think the trend in Europe continues to be uncertain."