SSAB : Result for 2020 presentation

Presentation of the Q4/2020 and FY 2020 results

Martin Lindqvist, President & CEO Håkan Folin, CFO

January 29, 2021

Agenda

• Q4 and FY 2020
• Financials
• Outlook and summary
• Q&A

2

Q4 and FY 2020 in brief

3

SSAB concludes IJmuiden discussions with Tata Steel

• After deeper analysis and discussions - limited possibilities to integrate IJmuiden into the framework of SSAB's strategies
• Acquisition would be difficult for technical reasons. Synergies would not fully justify the costs for our desired transformation to fossil free - transaction would not meet our financial expectations
• Discussions have now ended

Photo connected to sustainability

4

Solid performance in a volatile year

Summary of 2020

Managing downturn

Improved safety performance

Actions to limit Covid-19		First in fossil-free steel

• Good flexibility in adjusting production level and manning to volatile demand
• Fixed costs reduced by more than SEK 1.6bn compared to FY2019
• Strong cash flow and reduced net debt

5

	-12%
4.2	3.7
	LTIF
2019	2020

• Safeguard the health and safety of our personnel
• Production and other critical operations have been running according to plan
• All measures continue in 2021

• World unique HYBRIT pilot plant started in Aug 2020
• Fossil-freeproducts in the market in 2026
• SSAB's climate goals approved by the Science Based Targets initiative

Q4/20 - Better capacity utilization and higher shipments

• Market recovered during autumn
• Better capacity utilization
• • Idled BF in Raahe started end of Sep
  • Stable production in Oxelösund
• EBIT SEK 557m (-1,131m) in Q4
• Strong net cash flow supported by release of working capital

Ktonnes								+42%
1,976	2,000	2,100	1,902	2,081	1,779			2,156
	1,621	1,519
						Crude

production

+21%

1,634	1,744	1,722	1,614	1,787	1,422	1,779
				1,479	1,472
						Shipments

SEK million

1,035	1,674	1,316
				557
		300	343				EBIT
				-251
			-1,131		-973
					2,856
1,585
	503	398	387	48	27					Net cash

flow

-751

-1,577

18Q4 19Q1 19Q2 19Q3 19Q4 20Q1 20Q2 20Q3 20Q4

6

Operating profit/loss by division

SEK million

678

544	458	485	491
	358

SSAB

73Special

Steels

-72-126

18Q4 19Q1 19Q2 19Q3 19Q4 20Q1 20Q2 20Q3 20Q4

956 872

553522

SSAB

733
	347								SSAB
		66			0			83	Europe
			-480	-609		-566	-631
18Q4	19Q1	19Q2	19Q3	19Q4	20Q1	20Q2	20Q3	20Q4
	38							48
28	29				29			Tibnor

10645

-10-222

-435

Americas

2

12

6

-39

18Q4

19Q1

19Q2

19Q3

19Q4

20Q1

20Q2

20Q3

20Q4

18Q4 19Q1 19Q2 19Q3 19Q4 20Q1 20Q2 20Q3 20Q4

78		95	134	67		86	145	72	Ruukki
		11		Construction
	-14
18Q4	19Q1	19Q2	19Q3	19Q4	20Q1	20Q2	20Q3	20Q4

7

SSAB Special Steels

Improved margin for FY2020 despite Covid-19

• Shipments recovered in Q4

Operating profit/loss, SEK million

− Up 15% vs. Q3/20 and 19% vs. Q4/19	678
536	544	458	485	491
► Q4 EBIT increased to SEK 491m (-126m)
	358

− Better capacity utilization and higher volumes

• No maintenance in Q4/20

73

-72	-126

• FY2020
• • Shipments decreased to 1.1 (1.2) Mtonnes
  • EBITDA margin improved to 13.2% (11.3%)

18Q3

18Q4

19Q1

19Q2

19Q3

19Q4

20Q1

20Q2

20Q3

20Q4

Rolling production Oxelösund, ktonnes

• Fixed costs reduced by around SEK 480m vs. 2019 and stable production performance

145		145	130	134		151	156
							117
	89				83
								60
Q3/18	Q4/18	Q1/19	Q2/19	Q3/19	Q4/19	Q1/20	Q2/20	Q3/20	Q4/20

8

SSAB Europe

Weak market conditions impacted 2020, recovery in Q4

• Demand was negatively impacted by Covid-19 in Q2-Q3, demand and shipments recovered in Q4
• • Up 22% vs. Q3/20 and 21% vs. Q4/19
• Q4 EBIT rose to SEK 83m (-609m)
• • Better capacity utilization and higher volumes
  • Both BFs in operation in Raahe in Q4/20
  • Lower steel prices had a negative impact
• FY2020
• • Automotive AHSS decreased to 539 (578) ktonnes
  • Premium share of 38% (39%)
  • EBIT was SEK -1,114m(-677m)
  • Fixed costs reduced by around SEK 620m vs. 2019

Operating profit/loss, SEK million

	733
460		347
			66			0			83
				-480	-609		-566	-631
18Q3	18Q4	19Q1	19Q2	19Q3	19Q4	20Q1	20Q2	20Q3	20Q4

Shipments, ktonnes

810	850	907	909			955			913
794
		752			751
				695
18Q3	18Q4	19Q1	19Q2	19Q3	19Q4	20Q1	20Q2	20Q3	20Q4

9

SSAB Americas

Weak market conditions impacted FY2020, recovery in Q4

• Demand was negatively impacted by Covid-19 in Q2-Q3, demand and shipments recovered in Q4
• • Up 23% vs. Q3/20 and 19% vs. Q4/19
• Q4 EBIT rose to SEK 45m (-222m)
• • Better capacity utilization and higher volumes
  • Maintenance in Q4/19
  • Lower steel prices and higher scrap cost
• FY2020
• • EBIT was SEK -293m (2,128m)
  • Significantly lower margins
  • Fixed costs reduced by around SEK 270m
  • Premium share 30% (33%)

Operating profit/loss, SEK million

790	956	872

553522

10645

-10-222

-435

18Q3

18Q4

19Q1

19Q2

19Q3

19Q4

20Q1

20Q2

20Q3

20Q4

Change in realized prices y/y, %

	39	31
25
			10
				-14					-11
							-22
					-26	-30	-27
18Q3	18Q4	19Q1	19Q2	19Q3	19Q4	20Q1	20Q2	20Q3	20Q4

10

Tibnor

Restructuring program improved margins

• The market recovered in Q4, especially in Sweden and Finland
• Revenue was up by 16% vs. Q3/20
• Q4 EBIT rose to SEK 48m (-39m)
• • Higher volumes
  • Cost savings from the restructuring program
• FY2020
• • EBIT improved to SEK 96m (30m)
  • Positive effects from the restructuring program

Operating profit/loss, SEK million

53									48
		38
	28	29				29
				2		12		6
					-39
18Q3	18Q4	19Q1	19Q2	19Q3	19Q4	20Q1	20Q2	20Q3	20Q4

			Revenue, SEK billion
		2,3	2,5			2,4
2,2	2,2	2,2
		2,0		2,0
1,9						1,8

18Q3 18Q4 19Q1 19Q2 19Q3 19Q4 20Q1 20Q2 20Q3 20Q4

11

Ruukki Construction

Stable construction market in 2020, positive margin trend

• Comparable revenue on stable level, seasonally lower vs. Q3/20
• Q4 EBIT improved to SEK 72m (67m)
• • Better volumes in Roofing
• FY2020
• • EBIT increased to SEK 314m (283m)
  • Focus on product business improved margin, Building Systems was divested in Q2/20

Operating profit/loss, SEK million

				134				145
103			95				86
	78						72
				67
						11
		-14
18Q3	18Q4	19Q1	19Q2	19Q3	19Q4	20Q1	20Q2	20Q3	20Q4

Revenue, SEK billion

1,8	1,7		1,7	1,8	1,8
				1,5
		1,3				1,4	1,4
						1,2
18Q3	18Q4	19Q1	19Q2	19Q3	19Q4	20Q1	20Q2	20Q3	20Q4

12

Financials

13

Better capacity utilization and higher shipments improved the result

Sales

	25 000
million	20 000
15 000
SEK	10 000
	5 000
	0

16Q1

16Q2

16Q3

16Q4

17Q1

17Q2

17Q3

17Q4

18Q1

18Q2

18Q3

18Q4

19Q1

19Q2

19Q3

19Q4

20Q1

20Q2

20Q3

20Q4

2016

2017

2018

2019

2020

EBITDA and EBITDA margin2

	3 000																			14,0 %
	2 500																			12,0 %
	2 000																			10,0 %
million
1 500																			8,0 %
																		6,0 %
1 000
SEK																			4,0 %
500
																			2,0 %
	0																			0,0 %
	-500																			-2,0 %
	16Q1	16Q2	16Q3	16Q4	17Q1	17Q2	17Q3	17Q4	18Q1	18Q2	18Q3	18Q4	19Q1	19Q2	19Q3	19Q4	20Q1	20Q2	20Q3	20Q4
		2016			2017			2018			2019			2020
14							EBITDA			EBITDA %

Shipments1

	2 000
	1 800
	1 600
	1 400
ktons	1 200
1 000
	800

600

400

200

0

16Q1

16Q2

16Q3

16Q4

17Q1

17Q2

17Q3

17Q4

18Q1

18Q2

18Q3

18Q4

19Q1

19Q2

19Q3

19Q4

20Q1

20Q2

20Q3

20Q4

2016

2017

2018

2019

2020

1) Including the steel operations: Special Steels, Europe and Americas

EBITDA per tonne delivered steel2

	1800
	1600
	1400
SEK/tonne	1200
1000
	800
	600

400

200

0 -200

16Q1

16Q2

16Q3

16Q4

17Q1

17Q2

17Q3

17Q4

18Q1

18Q2

18Q3

18Q4

19Q1

19Q2

19Q3

19Q4

20Q1

20Q2

20Q3

20Q4

2016

2017

2018

2019

2020

2) Excluding items affecting comparability

Change in operating profit/loss

Q4/2020 vs. Q4/2019

Higher capacity utilization, less maintenance

SEKm

Prices decreased yon -y in all steel divisions

-262	557
820
-80
210

				Lower raw material
			1 510	costs, better
				capacity utilization,
-1 131				less maintenance
	-1 110
		600
2019 Q4	Price	Volume	Var COGS	Fixed costs	FX	Unabsorption	Other	2020 Q4

15

Note: Excluding items affecting comparability

Change in operating profit/loss

Q4/2020 vs. Q3/2020

SEKm	Higher capacity utilization,
	less maintenance

Better capacity utilization, less maintenance

Volumes increased significantly in all steel divisions

Seasonally low fixed cost level in Q3, less temporary layoffs and short-time working

557

990

600	-460	80

470

-973-150

2020 Q3

Price

Volume

Var COGS

Fixed costs

FX

Unabsorption

2020 Q4

16 Note: Excluding items affecting comparability

Strong cash flow in Q4

	SEKm	Q4/2020	Q4/2019	Q3/2020	2020		2019
	EBITDA	1,439	-174		-66	3,364	6,177
	Change in working capital	2,036	2,187		699	1,570	896
	Maintenance expenditure	-606	-666		-332	-1,622	-1,875
	Other	61	-25		11	147	-4
	Operating cash flow	2,930	1,321		313	3,460	5,194
	Financial items	-84	-50		-164	-545	-432
	Taxes	122	-97		3	-56	-1,315
	Cash flow from current operations	2,967	1,175		151	2,859	3,447
	Strategic capital expenditure	-115	-456		-75	-582	-1,035
	Acquisitions of shares and operations	-35	-448		-43	-231	-1,221
	Divestments of shares and operations	39	118		-1	143	118
	Cash flow before dividend	2,856	389		32	2,189	1,309
	Dividend paid to shareholders	-	-		-	-	-1,545
	Dividend, non-controlling interest	-1	-1		-4	-9	-7
	Acquisition, non-controlling interest	-	-1		-	-	-46
	Net cash flow	2,856	387		27	2,180	-289

Well-balanced maturity profile

►Duration of the loan portfolio was 4.7 (7.1)

years

►Liquid assets and committed credit lines at

comfortable level of SEK 21.5bn -

corresponds to 33% of rolling 12 month

revenue

►Most maturities in 2021 refer to commercial

Maturity profile Q4/2020

SEKm

25000

20000

Back-up facilities

15000

SEK 9.5bn

10000

papers

5000

Cash

0

Cash and

2021

2022

2023

2024

2025

2026+

back-up facilities

18

Significant reduction of net debt since Ruukki-merger

• Net debt decreased to SEK 10,278m (11,696m) at the end of 2020
• Net gearing was 19% (19%)
• 2014-2017excluding IFRS 16 (impact of around SEK 2bn)

30 000						60
25 000						50
20 000						40
15 000						30
10 000						20
5 000						10
0						0
2014	2015	2016	2017	2018	2019	2020

Net interest bearing debt, SEKm		Net gearing ratio, %

19

Cash needs of the business

• Total cash needs* estimated at SEK 4.8-5.3 billion in 2021
• Higher strategic capex:
• • Capacity expansion of Q&T in Mobile
  • Start of Oxelösund conversion
• Interest paid expected to be relatively stable
• Taxes paid will normalize**

4.8-5.3

3.0-3.5

2.8

Capex (maintenance and strategic)

2.2

Net interest

Taxes and other 0.5 0.1

20202021F

*Cash needs defined as capex, interest paid and taxes paid. Excluding working capital

**2019-level used as starting point, will depend on earnings in 2021 20

Higher prices for iron ore, lower for coking coal

Iron ore

• Average pellet purchase price in Q4/20 was 6% higher in terms of SEK (+9% in USD) vs. Q3/20
• Iron ore spot prices increased sharply during Q4, will impact SSAB in Q1/21

Coking coal

• Average coking coal purchase price in Q4/20 was 2% lower in terms of SEK (1% in USD) vs. Q3/20

SSAB's purchase price, coking coal and iron ore

Indexed

180

160

140

120

100

80

60

40

20

0

Q1/18	Q2/18	Q3/18	Q4/18	Q1/19	Q2/19	Q3/19	Q4/19	Q1/20	Q2/20	Q3/20	Q4/20
		Iron ore (SSAB purchase price, indexed)			Coal (SSAB purchase price, indexed)

• Coal spot prices decreased during the quarter

21

Scrap spot prices increased in Q4

• SSAB's average purchase price for scrap in Q4/20 was 14% higher (in terms of USD) vs. Q3/20
• Scrap spot prices in US increased sharply in Dec-20 and Jan-21

Scrap spot price

USD/gross ton

450

400

350

300

250

200

150

100

50

0

Mar-18

Apr-18

May-18

Jun-18

Sep 18

Feb 19

Jul 19

Sep 19

Feb 20

June 20

Sep 20

Jan-18

Feb-18

Jul-18

Aug 18

Oct 18

Nov 18

Dec 18

Jan 19

Mar 19

Apr 19

May 19

Jun 19

Aug 19

Oct 19

Nov 19

Dec 19

Jan 20

Mar 20

Apr 20

May 20

July 20

Aug 20

Oct 20

Nov 20

Dec 20

Jan 21

Chicago #1HM Scrap (AMM) [USD/gross ton]

Source: AMM

22

Major planned maintenance outages in 2021

• Total maintenance costs for 2021 expected to be SEK 1,200m, compared to SEK 805m in 2020
• Costs in 2020 were lower than normal - more use of our own resources, due to a lower level of production
• SSAB Americas maintenance take place at SSAB's mill in Mobile in 2021, including Q&T lines

SEKm	Q1/21	Q2/21	Q3/21	Q4/21	2021	2020	2019

SSAB Special	-	-	320	-	320	250	300
Steels
SSAB Europe	-	-	300	145	445	335	420
SSAB	-	-	-	435	435	220	415
Americas
Total	-	-	620	580	1,200	805	1,135

Note: The estimates shown in table includes direct maintenance cost and cost of lower capacity utilization (under absorption), but excludes lost margins.

23

Outlook and summary

24

Covid-19 impacted steel markets in 2020

Strategic targets moved from 2022 to 2023

SSAB Special Steels

Shipments	1.6
(million
tonnes)
1.1
2020	2023

SSAB Europe

SSAB Services		SSAB Americas

Sales	4.5		Premium share
(SEK billion)
			30% (2020)
2.0	3.0	Organic
	1.5	Acquistions	39%
2020	2023

SSAB Europe		SSAB Europe - supported by Tibnor
	and Ruukki Construction

Premium share

38% (2020)

46%

Shipments	Automotive
(ktonne)	AHSS
	800
539
2020	2023

Premium
719	900
2020	2023

Market share in the Nordics

(over time)

40-45%

37% in 2020

25

Firmly on track for a more sustainable SSAB

• SSAB's overarching goal to be fossil-free in 2045
• SSAB's aims to be the first to offer the market fossil-free steel in 2026
• The world unique HYBRIT pilot plant was started up in Luleå, Sweden in Aug 2020
• Sustainability strategy was updated in 2020 and SSAB's climate goals were approved by the Science Based Targets initiative

26

SSAB's outlook for main customer segments Q1/2021

	Segment	Q4/2020	Comments	Strong	Healthy	Weak
	Heavy Transport		 Heavy truck production at high level
		 Rail cars in the US still low
	Automotive		 Recovery in production
		 Underlying structural growth in AHSS
	Construction Machinery		 Production levels recovering in main markets
	Material Handling		 Mining operations continue at a good level
	Energy		 Low activity in oil and gas
		 Good activity within wind power and transmission
	Construction		 Stable underlying demand, seasonal slow down
	Service Centers		 Restocking expected in Europe and the US
	27

SSAB's outlook for Q1/2021

• In Q1/21 demand for steel is expected to be good, driven both by underlying demand and by customer restocking
• • Still uncertainty as to how Covid-19 will affect demand mid- term
  • Global demand for high-strength steel is estimated to be good
• Prices realized during (vs. Q4/20) are expected to:
• • SSAB Special Steels: increase
  • SSAB Europe: increase significantly
  • SSAB Americas: increase significantly
• Costs for raw material (vs. Q4/20) will increase

Volume outlook

Volume trend Q1/21

Business segment

vs. Q4/20

SSAB Special Steels

SSAB Europe

SSAB Americas

Demand driven both by underlying demand and by customer restocking

Shipments in Q4/20 for SSAB Americas were high, and slab balance low into Q1

28

Summary

• Good flexibility in 2020 to manage downturn
• Strong cash flow and reduced net debt
• Fixed costs reduced by over SEK 1.6bn
• Market recovery in Q4, succesful ramp-up of production
• Good demand expected in Q1/21
• Discussions with Tata Steel have now ended
• Target to be first in fossil-free steel

29

Questions & Answers

30

Appendix

31

Debt portfolio duration and interest rate

• Duration of the loan portfolio was 4.7 (7.1) years
• Averaged fixed interest term was 0.9 (1.1) years
• Average interest rate was 1.82% (3.08%)

Debt cost and duration

Years	%
8,0				4,0
7,0				3,5
6,0				3,0
5,0				2,5
4,0				2,0
3,0				1,5
2,0				1,0
1,0				0,5
0,0				0,0

2017 2017 2017 2017 2018 2018 2018 2018 2019 2019 2019 2019 2020 2020 2020 2020

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Avg. duration (rhs)

Avg. interest rate

32

SSAB's climate goals approved by the Science Based Targets initiative

• SSAB is committed to reducing its greenhouse gas (CO2e) emissions by 35% by 2032 (based on 2018 figures).
• • The goal applies to both direct and indirect emissions (Scope 1 and 2)
  • In line with the objective of keeping global warming well below 2°C
• Objective is scientifically based and in line with the Paris Agreement
• SSAB's aims to be the first to offer the market fossil-free steel in 2026

33

Hybrit: Start up of world unique pilot plant

• The world unique pilot plant for fossil-free steel, producing sponge iron (DRI/HBI), was started up in Luleå, Sweden
• First using natural gas and then hydrogen to be able to compare production results
• The Swedish Energy Agency granted the joint venture SEK 22m for a study to establish the prerequisites for the demonstration plant

34