Steelmaker SSAB misses Q2 profit estimates as war-related costs bite (updated)
UPDATE 4-Steelmaker SSAB misses Q2 profit estimates as war-related costs bite Adds share move in paragraph 4, CEO comments in paragraphs 3 and 5, analyst comment in paragraph 8.
By Marta Frackowiak
July 22 (Reuters) - SSAB's SSABa.ST earnings grew less than expected in the second quarter, the Swedish steelmaker said on Wednesday, as an Iran war-driven rise in costs of logistics and energy offset higher steel prices and shipments.
Quarterly operating earnings jumped 26% from a year ago to 2.70 billion Swedish crowns ($278.3 million), but missed analysts' consensus of 2.85 billion crowns provided on SSAB's website.
"It will take some time for us to ... be fully compensated for a sudden increase in transportation costs," CEO Johnny Sjöström told Reuters, adding SSAB would seek to offset the higher costs by raising prices.
The company's shares were down around 1% at 0825 GMT.
Despite the economic uncertainty, SSAB has not so far seen much customer trade-down from higher-value products, such as premium steel grades, to standard steel products, Sjöström said.
The company expects a seasonal demand slowdown in the third quarter, when it will also carry out maintenance works across its steel divisions on both sides of the Atlantic.
That will lead to lower shipments than last quarter in all divisions, and especially in the Europe and Special Steel units, it said.
EU MEASURES BRIGHTEN LONGER-TERM VIEW
The medium-term outlook for the European steel sector has improved structurally compared with previous cycles, said analysts from Jefferies, expecting a better supply-demand balance in the U.S. and Europe in the second half of 2026 and in 2027.
European steel producers are expected to benefit from tighter steel import quotas and a carbon border levy on emissions-intensive imports in the European Union. Sjöström said the EU measures should improve the future balance of supply and demand.
"Despite continued geopolitical uncertainty, we remain focused on executing our strategic priorities, strengthening the premium product offering, and advancing our transformation towards fossil-free steel production," he said in a statement.
Green steel, broadly defined as steel produced with a substantially lower carbon footprint than conventional steel, is central to SSAB's strategy. The steel industry accounts for about 7% to 9% of global carbon dioxide emissions.
($1 = 9.7031 Swedish crowns)
(Reporting by Marta Frąckowiak in Gdańsk; Editing by Milla Nissi-Prussak)