SSAB (62.32 kr) released their first-quarter 2025 numbers this morning, revealing a significant drop in operating profit compared to the same period last year. The operating profit landed at 1.4 billion kr, more than halved from the previous year. This decline is primarily attributed to lower steel prices in the US, causing the profitability within the Americas segment to collapse.
The steel prices and, consequently, SSAB’s profitability were on a downward trend throughout 2024. However, in 2025, prices have started to rise again, with SSAB expecting a substantial recovery for the Americas segment in Q2.
This turnaround has led to a 42% surge in SSAB’s stock on the market since the beginning of the year. Analysts predict that by 2026, SSAB’s operating profit will have rebounded to just over 9 billion kr, representing a new normal profit level for the company.
Despite concerns about the impact of the trade war, SSAB seems to be weathering the storm. The company’s US operations are mainly focused on the booming energy sector, while its European operations cater to the automotive industry, which could be affected by trade tensions. However, policymakers are likely to support the automotive industry for national security reasons, minimizing the potential impact on SSAB.
SSAB is currently trading at a significant discount on the stock market compared to its peers, despite having strong profitability. This discount is likely due to widespread skepticism surrounding the company’s mega investments in transitioning from coal-based blast furnaces to electric arc furnaces.
In the coming years, SSAB plans to invest 50 billion kr in revamping its Luleå facility and 6 billion kr in upgrading its Oxelösund plant. These investments come with high risks, as highlighted in a previous column by Afv’s Peter Benson, who questioned the expected returns against the elevated risks.
Despite the promising potential of SSAB’s investments, the complexity and challenges of transitioning its Luleå steel plant raise concerns. The company’s bureaucratic structure, combined with state ownership and limited insider ownership, could pose obstacles to successful project execution.
Given these factors, a neutral stance on SSAB’s stock is advised, as the company navigates through its ambitious transformation. The successful execution of these investments could reduce the skepticism surrounding SSAB and lead to improved financial performance in the future.
The top ten shareholders in SSAB include LKAB, the Government of Finland, Vanguard, Handelsbanken Fonder, Norges Bank Investment Management, Folksam, BlackRock, Goldman Sachs Asset Management, Avanza Pension, and Nordea Funds. The three largest insiders are Lennart Evrell (SO), Johnny Sjöström (CEO), and Leena Craelius (CFO).
Overall, SSAB’s future outlook remains uncertain, with the company facing challenges and opportunities as it navigates through its transformation journey.