NEW YORK SSAB Americas, a subsidiary of Swedish steelmaker SSAB AB, posted a second-quarter lossits first dip into the red in four yearson lackluster demand, although it expects positive momentum in the second half of the year.
SSAB Americas posted an operating loss of 49 million kronor ($7.49 million) for the three months ended June 30 in contrast to operating earnings of 537 million kronor a year earlier and 87 million kronor in the first three months of this year.
The Stockholm-based parent said that the second-quarter loss in the Americas was due to a planned outage at its Montpelier, Iowa, facility, along with low inventories at service centers and lower shipment volumes. However, a recent price hike by SSAB, along with some of its U.S. competitors, may help financials going forward.
"Demand from (the) automotive segment remains good and strong, but demand from other segments remains more stagnant," Martin Lindqvist, president and chief executive officer of the Swedish parent company, said during an earnings conference call July 19 about second-quarter conditions in the Americas. "Service centers are very reluctant to buy, even during the second quarter ... (and) inventory levels are low within the service center (segment) as they have not been restocking during the quarter."
SSAB Americas recorded second-quarter sales of 3.51 billion kronor ($536.7 million), down 24.7 percent from a year ago but up 1.4 percent from the first quarter.
The company said that it has pushed up a planned outage at its other U.S. facility in Mobile, Ala., to the current quarter, which likely will affect third-quarter earnings by some 50 million kronor ($7.64 million). The outage originally was planned to start in the fourth quarter and continue into the first quarter, but the company said it moved it up because it expects the market to strengthen in the fourth quarter.
"When we looked at a lot of the leading indicators in North America, we can see that there is an economic recovery going on, and we expect the market to gradually improve," Lindqvist said. "Our conclusion was that (the fourth quarter) will be slightly better than (the third quarter). We did the math and decided to move the outage into (the third quarter). ... We need an outage every 18 months, or every second year. We just need to be a little pragmatic when we take them."
The company said that the U.S. tank rail car business has remained "strong" while the wind tower business is picking up from very low levels and transmission towers are fairly strong.
Lindqvist said that there are bright spots ahead, even if not immediately. "The fourth quarter looks to be somewhat better than the third quarter. We dont expect any uptick in the third quarter, but (it) will be ... on the same level demand-wise as (the second quarter)," he said.