SSAB — Interim / Quarterly Report 2009

Oct 22, 2009

Report for the second quarter 2009

The quarter

• Sales declined by 56% to SEK 6,583 (14,957) million
• Operating profit of SEK -952 (3,149) million
• Profit after financial items of SEK -1,096 (3,006) million
• Profit after tax of SEK -636 (2,031) million, entailing earnings per share of SEK -1.95 (6.16)
• Operating cash flow of SEK 2,119 (2,536) million and cash flow from current operations of SEK 1,917 (1,379) million
• Net debt/equity ratio was 52%, unchanged compared with the end of the first quarter.

The half year

• Sales declined by 48% to SEK 14,618 (27,867) million
• Operating profit of SEK -1,086 (5,897) million
• Profit after financial items of SEK -1,311 (5,378) million
• Profit after tax of SEK -483 (3,732) million, entailing earnings per share of SEK -1.45 (11.32)
• Operating cash flow of SEK 3,043 (5,326) million and cash flow from current operations of SEK 1,541 (3,118) million
• The return on capital employed for the most recent twelve-month period was 5 (17)% and the return on equity was 7 (22)%.

Comments by the CEO

The steel market continues to be sluggish. The second quarter has been characterized by weak demand and continued pressure on prices. As a consequence, we are reporting an operating loss of SEK 952 million for the quarter. At the same time, our efficiency and cost-savings programs have had a more rapid impact than we had previously calculated. Accordingly, we have a positive operating cash flow of SEK 2,119 million and are able to report significantly lower fixed costs than last year.

Production during the quarter has remained well under 50 percent of capacity. Following the extended summer outages at our Swedish production plants, we now expect to resume production at one of our blast furnaces in Oxelösund as well as the blast furnace in Luleå towards the end of August.

Our raw materials costs will be lower. Prices in the coal agreements are approx. 36 percent lower in Swedish kronor than last year, but the impact will not be felt until towards the end of the year. SSAB's negotiations regarding iron ore pellet agreements have not yet been completed, but agreements reached on the world market show significantly greater price reductions for pellets compared with fines, a factor which benefits SSAB's pellet-based operations. The indicated price reduction for pellets would, in Swedish kronor, mean a decrease of approx. 34 percent for SSAB.

The global steel market is characterized by major uncertainty and it is not yet possible to foresee the full impact of the financial and economic crisis. It is too early to talk about a definite turnaround. What we can note is stabilization. Prices during the second quarter were lower than during the first quarter, but together with volumes have stabilized at this level.

During the third quarter we expect market conditions to be similar to those in the second quarter. We expect that the result for the third quarter will be weaker than for the second quarter, primarily due to seasonal variations as a consequence of our customers' holiday outages.

The trend going forward is still difficult to assess. By the end of the year, inventory liquidation at end users may have led to a certain strengthening in demand and an improvement on the market.

In the long term, I remain optimistic. Thus far this year, customer interest in cooperating with SSAB in developing new products has been greater than ever. The world needs steel and SSAB is well equipped to meet future needs for lighter and more sustainable steel products.

Consolidated income statement

	2009	2008	2009	2008	July 08-	2008
SEK millions	Q 2	Q 2	Q 1-2	Q 1-2	June 09	Full year
Sales	6,583	14,957	14,618	27,867	41,080	54,329
Operating profit	-952	3,149	-1,086	5,897	2,533	9,516
Of which operating profit per business area
- SSAB Strip Products 3)	-493	903	-859	1,942	523	3,324
- SSAB Plate	-216	1,033	148	2,024	1,278	3,154
- SSAB North America 1)	-366	841	-609	1,335	1,007	2,951
- Tibnor 2)	-12	343	-94	599	-59	634
- Provision, cost savings program 2)	0	0	0	0	-498	-498
Other 3)	135	29	328	-3	282	-49
	-952	3,149	-1,086	5,897	2,533	9,516
Financial items	-144	-143	-225	-519	-269	-563
Profit after financial items	-1,096	3,006	-1,311	5,378	2,264	8,953
Tax	460	-975	828	-1,646	29	-2,445
Profit after tax for continuing operations	-636	2,031	-483	3,732	2,293	6,508
Profit after tax for discontinued operations 4)	0	610	0	420	70	490
Profit for the period after tax	-636	2,641	-483	4,152	2,363	6,998
Key ratios
Return on capital employed before tax (%)	-	-	-	-	5	17
Return on equity after tax (%)	-	-	-	-	7	22
Earnings per share (SEK)	-1.95	8.04	-1.45	12.62	7.34	21.41
of which for continuing operations (SEK)	-1.95	6.16	-1.45	11.32	7.12	19.90
Goodwill (SEK millions)	21,032	13,418	21,032	13,418	21,032	21,105
Equity (SEK millions)	33,167	31,448	33,167	31,448	33,167	35,193
Net debt (SEK millions)	17,380	13,325	17,380	13,325	17,380	16,992
Net debt/equity ratio (%)	52	42	52	42	52	48

1) SSAB North America's operating profit during the first half of the year has been affected by SEK 511 (310) million in amortization of surplus values on intangible and tangible fixed assets, of which SEK 248 (131) million during the second quarter. During the full year of 2008, the amortization amounted to SEK 745 million.

2) The provision at the end of 2008 is reported as a joint item for the entire Group. The preliminary allocation between the divisions is SEK 200 million for SSAB Strip Products, SEK 125 million for SSAB Plate, SEK 0 million for SSAB North America, SEK 34 million for Tibnor, SEK 62 million for Other subsidiaries and an unallocated portion of SEK 77 million.

3) Earnings for the first half of the year include a profit of SEK 313 (-) million on the sale of emission rights, of which SEK 173 (-) million in the second quarter, whereof SEK 13 million is included in Strip Products and SEK 160 million in Other. For the full year of 2008, profit on the sale of emission rights amounted to SEK 240 million.

4) "Discontinued operations" means the tubular business in North America which was sold in 2008. For details regarding the discontinued operations, see the Annual Report for 2008.

The market

The economic downturn has been deeper than expected. In Europe, the United States and Japan, gross national product (GNP) has declined more sharply than for many decades.

According to statistics from the World Steel Association, crude steel production in the US fell by approx. 51% during the second quarter as compared with the same period of last year. Capacity utilization in the US steel industry increased somewhat during the quarter but remains below 50%. According to statistics from the Metals Service Center Institute, seasonally adjusted inventories of plate products at Steel Service Centers during May fell to 3.6 months, from 4.5 months in April. Market prices for scrap metal in North America declined until April but since then have gradually increased.

Steel production in Europe increased by approx. 4% during the second quarter compared with the first quarter of the year. Compared with the second quarter of 2008, production fell by approx. 41%. Inventory liquidation of steel products is continuing. In Europe, the distributors' inventory levels in relation to the past three months' sales continued to be somewhat higher than last year.

China, which thus far this year has accounted for approx. 49 (38)% of global crude steel production, increased its production by approx. 10% during the second quarter, as compared with the first quarter of the year, and by approx. 1% compared with the second quarter of 2008. Domestic steel prices in China increased each month during the second quarter and the price increase continued also at the beginning of July.

GNP growth in China during the second quarter was 7.9%, compared with 6.1% for the first quarter of 2009. The State Information Center in China (SIC) assesses that GNP growth for the full year of 2009 will be approx. 8%.

SSAB's deliveries during the second quarter were slightly up on the first quarter of the year, but declined by 54% compared with the same period of 2008. There was clear pressure on prices during the quarter and SSAB Plate's prices for quenched steels during the second quarter declined by 7% in local currency compared with the first quarter of the year. Prices for SSAB Strip Products' high-strength steels fell by 13%, while prices for standard products weakened by 17% in local currency. SSAB North America's prices in USD fell during the quarter by 20% before mix effects.

SSAB's total capacity utilization during the quarter was well below 50%. All of the Company's three blast furnaces were closed towards the end of the quarter.

Cost saving program

As a consequence of the dramatic downturn in the steel market and the uncertain prospects for 2009, at the beginning of December 2008 the Board decided on a cost savings program which is expected to reduce operating costs by at least SEK one billion per year. The program includes, among other things, a cut-back in personnel affecting 1,300 jobs. The cost savings program is being implemented in 2009 and the full impact is expected to be felt in 2010. The cost is estimated at approx. SEK 550 million, of which SEK 498 million was incurred in 2008. During 2009, the program has proceeded somewhat faster than originally anticipated. During the first half of the year, SEK 286 million of the reserve has been utilized, while it is estimated that the savings have generated a positive effect of approx. SEK 350 million. The program will gradually generate additional effects during the remainder of the year.

The Group

Sales during the quarter amounted to SEK 6,583 (14,957) million, a reduction of SEK 8,374 million or 56%. Lower volumes accounted for a negative effect of 53 percentage points while lower prices accounted for a negative effect of seven percentage points, a positive currency effect accounted for five percentage points and a weaker product mix accounted for one percentage point.

Sales during the first half of the year amounted to SEK 14,618 (27,867) million, a reduction of SEK 13,249 million or 48%. Lower volumes accounted for a negative effect of 56 percentage points while higher prices accounted for a positive effect of one percentage point, a positive currency effect accounted for six percentage points and an improved product mix accounted for one percentage point.

Operating profit during the quarter fell by SEK 4,101 million compared with the second quarter of last year and amounted to SEK -952 (3,149) million.

Operating profit during the first half of the year fell by SEK 6,983 million, to SEK -1,086 (5,897) million. The profit analysis is set forth in the table below.

Change in operating profit between the first half of 2009 and 2008 (SEK millions)
Steel operations
- Improved prices	+80
- Lower volumes	-4,520
- Higher variable manufacturing cost	-1,600
Tibnor
- Lower volumes, change in mix and margins	-660
Fixed costs	+720
Lower sales of by-products and slabs	-540
Increased provisions for bad debts	-115
Costs for under-utilization of subcontractor agreements	-120
Non-recurring insurance indemnification, preceding year	-114
Other	-114
Change in operating profit	-6,983

Operating profit during the first half of the year was negatively affected by write-downs of SEK 324 (11) million on the finished goods inventory in the steel operations and Tibnor, of SEK 256 (-) million on the coke inventory, as well as a contract write-down of SEK 60 (-) million regarding coke for delivery during the third quarter, but positively affected in the amount of SEK 313 (-) million resulting from sold emission rights. Fixed costs have declined by SEK 720 million, of which approx. SEK 350 million relates to the ongoing cost savings program, which is expected to be an enduring saving. The provision for bad debts has increased by SEK 115 million, to SEK 140 (25) million. Due to weaker demand, it is believed that a number of agreements with subcontractors will not be utilized and the costs therefore have negatively affected earnings by SEK 120 million. A weak Swedish krona compared with the first half of 2008 has positively affected sales by approx. SEK 1,800 million, while operating expenses have been negatively affected by approx. SEK 900 million.

Financial items for the first quarter amounted to SEK -144 (-143) million

Financial items improved compared with the first half of 2008 due to an improved currency result, lower indebtedness and lower interest rates. Financial items amounted to SEK -225 (-519) million.

Profit after financial items for the quarter was SEK -1,096 (3,006) million, a decline of SEK 4,102 million.

Profit after financial items was SEK 6,689 million lower than in the first half of the year and amounted to SEK -1,311 (5,378) million.

Tax

Tax was positive and amounted to SEK 460 (-975) million for the quarter and SEK 828 (-1,646) million for the first half of the year. Tax during the first half of the year was positively affected by SEK 240 million due to a reappraisal of the deferred tax debt from the acquisition of SSAB North America as a consequence of a change in tax rate.

Profit and earnings per share

During the first half of the year, profit after tax attributable to the shareholders in respect of the continuing operations amounted to SEK -470 (3,668) million, equal to SEK -1.45 (11.32) per share.

Financing and liquidity

Operating cash flow during the quarter amounted to SEK 2,119 (2,536) million, primarily due to a decrease in working capital in all divisions totaling SEK 2,611 million during the second quarter. Cash flow before financing and dividends during the quarter amounted to SEK 1,621 (25,968) million. Net debt decreased, despite a paid out dividend of SEK 1,296 million, with SEK 1,251 million and the net debt/equity ratio was unchanged at 52%.

During the first half of the year, operating cash flow amounted to SEK 3,043 (5,326) million, primarily due to a decrease in working capital in all divisions totaling SEK 3,299 million. Inventories declined by SEK 3,055 million, while reductions in operating receivables were offset by reductions in operating liabilities. Cash flow from the operations amounted to SEK 1,541 (3,118) million. Cash flow has been negatively affected by payments of approx. SEK 80 million with respect to the ongoing cost-savings program.

Cash flow before financing and dividends amounted to SEK 1,010 (27,635) million, but as a consequence of the dividend of SEK 1,296 (1,620) million together with negative translation effects on liabilities of SEK -102 (3,486) million, net debt increased by SEK 388 million since the beginning of the year and, at June 30, amounted to SEK 17,380 (13,325) million, equal to a net debt/equity ratio of 52 (42)%.

As at June 30, 2009, the average term to maturity on the loan portfolio was 3.4 years with a fixed interest period of 0.8 years. Short-term commercial paper accounted for SEK 3,010 (2,533) million of the loan portfolio of SEK 22,476 million. The debt payment capacity (measured as profit before tax with a reversal of depreciation and amortization on tangible and intangible assets, deduction of profit from shares in affiliated companies and non-recurring items, as well as deduction for tax payments, as a percentage of the net debt) amounted to 16% on an annual basis.

As at June 30, the Group's liquidity preparedness comprising cash and cash equivalents as well as non-utilized and binding credit facilities, but excluding short-term commercial paper of SEK 3,010 (2,533) million, amounted to SEK 12,733 (7,314) million, equal to approx. 31 (15)% of annual sales. When the short-term commercial paper is included, the liquidity preparedness was approx. 38 (20)% of annual sales.

	2009	2008	2009	2008	July 08-	2008
SEK millions	Q 2	Q 2	Q 1-2	Q 1-2	June 09	Full year
SSAB Strip Products	729	1,381	846	2,430	1,108	2,692
SSAB Plate	550	873	576	1,514	880	1,818
SSAB North America	206	404	825	1,203	3,761	4,139
Tubular business (up to date of divestment)	0	-678	0	-160	0	-160
Tibnor	328	385	438	490	625	677
Other	306	171	358	-151	428	-81
Operating cash flow	2,119	2,536	3,043	5,326	6,802	9,085
Financial items 1)	-126	9	-376	-517	-991	-1,132
Taxes 2)	-76	-1,166	-1,126	-1,691	-2,001	-2,566
Cash flow from current operations	1,917	1,379	1,541	3,118	3,810	5,387
Acquisition of companies and operations	0	0	0	0	-10	-10
Strategic investments	-295	-259	-561	-331	-1,000	-770
Divestment of companies and businesses 3)	-1	24,848	30	24,848	100	24,918
Cash flow before dividend and financing	1,621	25,968	1,010	27,635	2,900	29,525
Dividend	-1,296	-1,620	-1,296	-1,620	-1,296	-1,620
Net debt in divested companies	0	817	0	817	0	817
Currency translation, etc. (increase-/decrease+) 4)	926	621	-102	3,486	-5,659	-2,071
Change, net loan debt	1,251	25,786	-388	30,318	-4,055	26,651

Operating cash flow/change in net debt

1) Financial items consist of paid interest, while reappraisals of financial instruments and currency differences are reported in the financing activities.

2) Taxes relate to tax paid during the period.

3) Divested companies and businesses during the year relates to SSAB Laminated Steel (lamination of steel and aluminum sheet), while for 2008 it relates to the North American tubular business.

4) Most of the currency translation comprised reappraisals of liabilities against equity for hedging of foreign operations.

Return on capital employed/equity

The return on capital employed before tax for the total business for the most recent twelve-month period was 5% and the return on equity after tax was 7%. For 2008, the corresponding figures were 17% and 22% respectively.

Equity

Following a reduction to equity of SEK -470 million regarding the first half of the year's loss attributable to the Company's shareholders and other comprehensive income of SEK -217 million, and after distribution of the dividend for the year of SEK 1,296 million (SEK 4.00/share), the shareholders' equity in the Company amounted to SEK 33,011 (31,252) million, equal to SEK 101.91 (96.48) per share.

Capital expenditures

During the first half of the year, decisions were taken regarding new investments totaling SEK 339 (1,137) million, of which SEK 0 (0) million related to strategic investments. Capital expenditure payments for the entire business amounted to SEK 1,024 (1,219) million, of which SEK 561 (331) million related to strategic investments. Project planning of the major investments is continuing, at the same time as the Company is reviewing the scope of the investments. As a consequence, no firm orders are currently being placed regarding parts of the program.

Business areas

The steel operations jointly

New coal price agreements were entered into during the second quarter and entailed price reductions in USD of 47%. Including changes in freight costs, the result is a total price reduction in SEK of approx. 36% at present exchange rates. The coal agreements enter into effect on April 1, but due to existing inventories and the low production, the effect on earnings will only be felt towards the end of the year. Negotiations have not yet been completed regarding iron ore pellet agreements, but the agreements entered into between leading players on the world market are at prices 48% below last year's prices in USD and indicate the likely price level in SSAB's agreements. In SEK this would result in a price reduction of approx. 34% at present exchange rates. The agreements for iron ore will enter into effect from the beginning of this year and the estimated new price has been taken into account in the half-year report. Due to existing stocks, however, the new price impacted on earnings only towards the end of the second quarter.

Market prices for scrap metal at the end of the second quarter were 46% higher than the prices at the end of the first quarter.

SSAB Strip Products

Prices in local currency for the Division's deliveries of strip products fell by 16% compared with the first quarter of the year. Following changes in product mix (+4 percentage points) and currency (-1 percentage point), the price reduction was 13%. Prices in Swedish kronor of advanced high-strength steels (AHSS) fell by 15%.

Demand during the second quarter remained weak in respect to almost all products and markets. Deliveries were, however, 8% higher than during the first quarter of the year. Strip deliveries fell by 48% compared with the second quarter of 2008 and amounted to 332 (643) thousand tonnes. Of this, AHSS comprised 95 (228) thousand tonnes. In total, strip deliveries during the first quarter of the year amounted to 640 (1,338) thousand tonnes, of which 191 (461) thousand tonnes AHSS. Deliveries of AHSS thus accounted for 30 (34)% of total strip deliveries.

Production has continued to be curtailed in response to the weak demand. Since the middle of November, production at the blast furnace in Luleå has been reduced to the technically feasible minimum level for operation. During June, the blast furnace was once again brought up to normal production, and thereafter stopped entirely for a nine-week break. Crude steel production during the second quarter amounted to 358 (586) thousand tonnes, while strip production was 399 (651) thousand tonnes. In total, crude steel production during the first half of the year amounted to 700 (1,193) thousand tonnes and strip production to 682 (1,369) thousand tonnes.

Sales fell by 50% compared with the second quarter of last year, to SEK 2,455 (4,875) million. In total, sales during the first half of the year were SEK 5,099 (9,489) million.

As a consequence of the lower delivery volumes together with somewhat lower average prices compared with the second quarter of last year, operating profit for the quarter was SEK -493 (903) million, while operating profit before depreciation and amortization was SEK -343 (1,043) million. The result for the quarter was affected by an SEK 35 (-) million write-down of coke inventories to net realizable value and an SEK 60 (-) million contract write-down regarding deliveries of coke during the third quarter. Earnings for the second quarter of last year included non-recurring items of SEK 138 million. In total, operating profit for the first half of the year was SEK -859 (1,942) million, while operating profit before depreciation and amortization was SEK -557 (2,220) million. The profit for the first half of the year includes inventory write-downs and contract write-downs totaling SEK 180 (-) million.

Working capital was reduced by SEK 1,224 million during the quarter, and as a consequence, operating cash flow amounted to SEK 729 (1,381) million, notwithstanding a negative operating profit before depreciation and amortization. The reduced tie-up of working capital involved primarily inventories, which were SEK 852 million lower. In total, operating cash flow for the first half of the year was SEK 846 (2,430) million.

During the first half of the year, decisions were taken regarding new capital expenditures totaling SEK 33 (435) million. The largest ongoing investment relates to the establishment of quenching capacity for sheet and a new cutting line in Borlänge, for a total of approx. SEK 1.5 billion. It is estimated that the investment will initially allow for an increase in the annual volume of quenched sheet to 300 thousand tonnes. The investment program is currently under review. The total capital expenditure payments during the first half of the year amounted to SEK 388 (377) million, of which SEK 98 (117) related to strategic investments.

SSAB Plate

Prices in local currencies for the Division's deliveries of quenched steels during the second quarter fell by 7% compared with prices in the first quarter. Following changes in product mix (-1 percentage point) and currency (-1 percentage point), the price reduction was 9%.

Demand for quenched steels continued to decline during the second quarter and deliveries were 37% lower than during the first quarter of the year. Deliveries of quenched steels fell by 63% compared with the second quarter of 2008 and amounted to 62 (166) thousand tonnes. In total, deliveries of quenched steels during the first half of the year amounted to 161 (322) thousand tonnes and accounted for 93 (93)% of the total plate deliveries.

Since the middle of May, the second blast furnace has also been stopped, entailing that both blast furnaces in Oxelösund are now standing idle and are planned to stand idle until the end of August. Crude steel production during the second quarter was 60 (382) thousand tonnes. Plate production during the quarter was 42 (182) thousand tonnes. In total, crude steel production during the first half of the year amounted to 210 (802) thousand tonnes and plate production to 131 (353) thousand tonnes.

Sales declined by 57% compared with the second quarter of last year, to SEK 1,610 (3,732) million. In total, sales for the first half of the year were SEK 3,974 (7,266) million.

The lower delivery volumes were only marginally offset by higher average prices compared with the second quarter of last year, and as a consequence operating profit for the quarter was SEK -216 (1,033) million, while operating profit before depreciation and amortization was SEK -108 (1,114) million. The result for the quarter has been affected by an SEK 43 (-) million write-down of, primarily, coke inventory to net realizable value. In total, operating profit for the first half of the year amounted to SEK

148 (2,024) million, while operating profit before depreciation and amortization was SEK 356 (2,195) million. The result includes write-downs of SEK 195 (-) million on inventories.

Working capital was reduced by SEK 749 million during the second quarter, and as a consequence, operating cash flow amounted to SEK 550 (873) million, notwithstanding a negative operating profit before depreciation and amortization. The reduced tie-up of working capital involved primarily inventories, which were SEK 303 million lower, and accounts receivable, which were SEK 442 million lower. In total, operating cash flow for the first half of the year was SEK 576 (1,514) million.

During the first half of the year decisions were taken regarding new capital investments totaling SEK 255 (548) million, of which almost SEK 200 million relates to an environmental investment in a new hood and filter plant for the coking plant in Oxelösund, which will appreciably reduce emissions of dust. The largest ongoing investment amounts to almost SEK 1 billion and is aimed at increasing annual production of quenched steels by a further 80 thousand tonnes, to 780 thousand tonnes. The investment program is currently under review. The total capital expenditure payments during the first half of the year were SEK 364 (324) million, of which SEK 283 (214) million related to strategic investments.

SSAB North America

Prices in USD for the Division's plate deliveries (excluding mix effects) fell during the second quarter by 20% compared with the first quarter of the year.

Plate deliveries were 7% higher than during the first quarter of the year, but 57% below the second quarter of 2008 and amounted to 284 (655) thousand tonnes. Deliveries of niche products declined by 52% compared with the second quarter of last year, to 31 (64) thousand tonnes. In total, plate deliveries during the first half of the year amounted to 549 (1,334) thousand tonnes, of niche products constituted 11 (11)%.

Production continues to be adapted to the weaker demand. Crude steel production during the quarter amounted to 278 (685) thousand tonnes, while plate production was 262 (649) thousand tonnes. In total, crude steel production for the first half of the year was 558 (1,364) thousand tonnes and plate production 522 (1,286) thousand tonnes.

Sales during the second quarter fell by 67% compared with the second quarter of 2008 and amounted to SEK 1,519 (4,661) million. In total, sales for the first half of the year were SEK 3,449 (8,018) million.

Lower delivery volumes and lower average prices compared with the second quarter of last year were only partially offset by lower costs, and as a consequence, the operating profit for the quarter was SEK -366 (841) million, while the operating profit before depreciation and amortization was SEK -14 (1,065) million. Earnings for the quarter have been affected by an SEK 72 (6) million write-down of inventories to net realizable value. In total, operating profit for the first half of the year was SEK -609 (1,335) million, while operating profit before depreciation and amortization was SEK 120 (1,832) million. The result includes an SEK 139 (11) million write-down of inventories.

Working capital was reduced during the second quarter by SEK 144 million, and as a consequence operating cash flow amounted to SEK 206 (404) million, notwithstanding a negative operating profit before depreciation and amortization. The reduced tie-up of working capital involved primarily lower inventories. In total, operating cash flow for the first half of the year amounted to SEK 825 (1,203) million.

During the first half of the year, decisions were taken regarding new capital expenditures totaling SEK 19 (119) million. The largest ongoing investment comprises a new advanced quenching line for plate in Mobile. The new quenching line will provide increased annual capacity for 300 thousand tonnes of quenched plate. The investment also includes a separate annealing line, an automated high-bay storage facility, a blasting and organic coating plant, equipment for increased loading capacity, a tank vacuum facility for ensuring purity of the steel, and modifications to the rolling mill for improved rolling precision and flexibility. The investment program is currently under review. Capital expenditure payments during the first half of the year totaled SEK 225 (442) million, of which SEK 180 (0) million related to strategic investments.

Tibnor

The pace of deliveries remained at a low level during the second quarter and deliveries in total for the first half of the year were 51% lower than during the first half of 2008.

Sales declined by 57% compared with the second quarter of last year, to SEK 1,319 (3,066) million. In total, sales for the first half of the year were SEK 2,897 (5,886) million.

As a consequence of lower delivery volumes, operating profit for the quarter was SEK -12 (343) million, while operating profit before depreciation and amortization amounted to SEK 3 (358) million. Earnings for the quarter include an SEK 28 (-) million negative effect of inventory appraisals. In total, operating profit for the first half of the year amounted to SEK -94 (599) million, while operating profit before depreciation and amortization was SEK -64 (627) million. Earnings include an SEK 133 (0) million negative effect of inventory appraisals.

Working capital during the second quarter was reduced by SEK 313 million, and as a consequence, operating cash flow amounted to SEK 328 (385) million, notwithstanding a marginally positive operating profit before depreciation and amortization. The reduced tie-up of working capital involved primarily an SEK 213 million reduction in inventories. In total, operating cash flow for the first half of the year amounted to 438 (490) million.

Environmental issues during the quarter

As a consequence of the recession and thereby the limited production, there has been a sharp reduction in carbon dioxide discharges and thus it was possible to sell a further 1.2 million carbon dioxide emission rights during the second quarter. The sale brought in SEK 173 million and contributed economically to the approved investment of almost SEK 200 million in a new hood and filter plant for the coking plant in Oxelösund. The hood will appreciably reduce discharges of dust and improve the environment for residents in the immediate vicinity. Carbon dioxide is a current issue in several ways. Among other things, the Swedish Energy Authority's research program regarding carbon capture and storage (CCS) has commenced. SSAB is participating in this important project, particularly with respect to transportation and storage of carbon dioxide, since SSAB's furnace-based steel production accounts for approx. 10% of Sweden's entire carbon dioxide emissions. For some time SSAB has been a participant in a European project for the capture of carbon dioxide from blast furnaces.

Prospects for the remainder of the year

There continues to be great uncertainty in the global economy but there are some signs that the financial crisis is beginning to bottom out. It is too early to talk in terms of a clear turnaround. The International Monetary Fund (IMF) believes that stabilization is uneven and that recovery will be slow. In its

most recent forecast, the IMF assesses that the global GNP will decline by 1.4% this year but increase by 2.5% next year. It is estimated that the quickest recovery will take place in Asia.

Prices and volumes stabilized towards the end of the second quarter. Prices are clearly lower than during the preceding quarter and are expected to remain at a low level during the coming quarter. In seasonal terms it is the third quarter which is the weakest period of the year due to low customer activity and scheduled maintenance outages in SSAB's steel divisions in Sweden. As a consequence of the weak demand and high inventory levels compared to demand, SSAB this year has extended the normal summer outage. Due to the seasonal variation, continued inventory liquidation as well as anticipated weak activity at the customers during the summer, the third quarter loss is expected to exceed the loss for the second quarter.

Coal agreements were signed during the second quarter and prices were 47% lower in USD, which at the current exchange rate for USD represents a decline of approx. 36% in SEK. The contract period extends from April 2009 up to March 2010. As a consequence of the inventory situation, the coal agreements will not impact earnings until towards the end of the year.

Iron ore pellet agreements have not yet been concluded but benchmark prices indicate a price reduction of 48% in USD; at the current exchange rate for USD this represents a decrease of approx. 34% in SEK. Since iron ore agreements impact earnings during the first half of the year, SSAB has chosen to apply the mentioned benchmark price during the first half of the year, but due to existing stocks, however, the new price impacted on earnings only towards the end of the second quarter.

The cost savings program which was launched in December and is expected to generate annual savings of SEK 1 billion commencing 2010 is proceeding more quickly than originally anticipated. During the first half of the year the program generated an effect of approx. SEK 350 million. The savings will gradually generate further effects during the remainder of the year. The Company is continuing to focus on cash flow in the form of cost reductions, optimization of working capital and a reduction in capital expenditure payments.

The capital expenditures decided upon in the autumn, and their scope, are currently under review and consequently no firm orders are being placed for parts of the program. Capital expenditure payments for the year are estimated at approx. SEK 2 billion compared to SEK 2.6 million in 2008.

The trend going forward is still difficult to assess. Towards the end of the year, inventory liquidation at the end users may lead to a certain increase in demand and an improvement of the market.

SSAB's technical know-how and niche products, combined with experienced and well-educated personnel, have contributed to close relations with the customers. In this way, both SSAB and the customers are well prepared for when the recovery occurs. One example is that development projects together with customers are continuing at a higher level than ever before. SSAB's flexibility and practice of working with customer-adapted products means that the Company can rapidly readjust production to an increase in demand.

Accounting principles

This quarterly report has been prepared in accordance with IAS 34.

Commencing January 1, 2009, in accordance with the amended IAS 1, Presentation of Financial Statements, in addition to the income statement a statement of comprehensive income will also be presented. Comprehensive income comprises revenues and expenditures from transactions previously reported directly in shareholders' equity, e.g. cash flow hedging, hedging of net investments and translation differences. SSAB has chosen to present the Group's comprehensive income divided into two reports, an income statement and a statement of other comprehensive income.

The new standard for Segment Reporting, IFRS 8, entered into force on January 1, 2009 but, already prior thereto, the management's follow-up of the Group's earnings and financial position had corresponded to the segment division, and thus this standard has had no impact on the financial statements.

SSAB decided to apply the revised recommendation IAS 23, Borrowing Costs, as early as October 1, 2008. Thus, borrowing costs for major investments which began not earlier than October 1, 2008 have been capitalized as a part of the investment. In accordance with the Company's definitions, the investments in respect of which borrowing costs are capitalized must amount to at least SEK 500 million

and be expected to take at least twelve months for completion. The borrowing costs capitalized during the fourth quarter of 2008 amounted to SEK 1 million and, for the first half of 2009, to SEK 6 million.

The accounting principles are otherwise unchanged since the annual accounts for 2008 and are based on International Financial Reporting Standards as adopted by the EU and the consequential references to Chapter 9 of the Annual Accounts Act. Reporting standards and applications introduced during the year have otherwise had no effect on the Group's results and financial position. The accounts of the Parent Company have been prepared in accordance with RFR 2.2 and the Annual Accounts Act.

Risks and uncertainty

The dramatic developments on the global financial markets of recent times and the negative impact thereof on the global economy have resulted in increased risks and an increased general uncertainty.

The main risks and uncertainty factors facing the Group as a consequence of this relate to the impact of the state of the economy on demand, existing financing and possibilities for future financing, as well as changes in the value of fixed assets and operating assets.

Continued weak demand leads to a low rate of turnover of inventory, which increases the risk of physical obsolescence in inventories in the steel divisions.

For further information regarding significant risks and uncertainty factors, reference is made to the detailed description in the Annual Report for 2008.

Sensitivity analysis

The approximate full year effect on profit after financial items and earnings per share of changes in significant factors is shown in the sensitivity analysis below. The calculation is based on the results for the first half of the year.

Change, %	Effect on profit, SEK millions	Effect on earnings per share, SEK 4)
10	2,130	4.90
10	330	0.70
10	180	0.40
10	280	0.70
10	180	0.40
1 percentage point	220	0.50
5	340	0.80

1) Prices are established in annual agreements.

2) Changes in scrap metal prices in SSAB North America also affect sales prices for steel to a certain extent, since a scrap price supplement is applied when setting prices.

3) Calculated on SSAB's exposure. If the krona is weakened, this entails a positive effect.

4) Calculated based on a tax rate of 26.3%.

The report for the third quarter 2009 will be published on October 30, 2009 SSAB AB (publ) Reg. no. 556016-3429

Affirmation

The Board of Directors and CEO hereby affirm that the interim report provides a fair and true overview of the operations, financial position and results of the Company and the Group and describes material risks and uncertainty factors facing the Company and the Group.

Stockholm, July 24, 2009

Sverker Martin-Löf Carl Bennet Anders G Carlberg Chairman of the Board Director Director

Director Director Director

Bert Johansson Marianne Nivert Anders Nyrén Director Director Director

John Tulloch Lars Westerberg Olof Faxander

Ola Parten Per Scheikl Matti Sundberg

Director Director President and CEO

Review report

We have conducted a review of the interim report for SSAB AB (publ) for the period January 1 to June 30 2009. The Board of Directors and President are responsible for preparing and presenting this interim report in accordance with IAS 34 and the Annual Accounts Act. Our responsibility is to express a conclusion regarding this interim report based on our review.

We have performed our review in accordance with the Swedish Standard on Review Engagements, SÖG 2410, "Review of interim reports performed by the independent auditors of the entity". A review consists of making enquiries, primarily to persons responsible for financial issues and accounting issues, performing analytical reviews and taking other general review measures. A review has a different focus and is significantly less extensive than the focus and scope of an audit in accordance with Auditing Standards in Sweden, RS and generally accepted auditing standards in general. The review measures taken in conjunction with a review mean that is not possible for us to acquire such a degree of certainty that we will become aware of all important circumstances which might have been identified had an audit been performed. Accordingly, the conclusion expressed based on a review does not have the certainty of a conclusion expressed based on an audit.

Based on our review, no circumstances have come to light which give us cause to believe that the interim report is not, in all essential respects, prepared with respect to the Group in accordance with IAS 34 and the Annual Accounts Act and, with respect to the Parent Company, in accordance with the Annual Accounts Act.

Stockholm, July 24, 2009

PricewaterhouseCoopers AB

Claes Dahlén Authorized public accountant

Production and deliveries
1/07	2/07	3/07	4/07	1/08	2/08	3/08	4/08	1/09	2/09
580	581	539	604	607	586	616	470	342	358
456	449	316	432	420	382	223	312	150	60
560	647	687	689	679	685	593	501	280	278
1,596	1,677	1,542	1,725	1,706	1,653	1,432	1,283	772	696
727	686	548	692	718	651	543	450	283	399
163	158	129	179	171	182	125	162	89	42
505	595	647	638	637	649	568	491	260	262
1,395	1,439	1,324	1,509	1,526	1,482	1,236	1,103	632	703
665	656	530	600	695	643	540	456	308	332
165	151	137	156	168	180	143	132	105	69
575	598	647	685	679	655	596	516	265	284
1,405	1,405	1,314	1,441	1,542	1,478	1,279	1,104	678	685
212	213	189	203	233	228	201	195	96	95
145	137	129	146	156	166	136	128	99	62
26	23	49	62	60	41	70	71	24	26
10	18	20	20	23	23	25	14	4	5
393	391	387	431	472	458	432	408	223	188

1) Including subcontract rolling

2) Advanced high-strength steels

Consolidated income statement

	2009	2008	2009	2008	July 08-	2008
SEK millions	Q 2	Q 2	Q 1-2	Q 1-2	June 09	Full year
Sales	6,583	14,957	14,618	27,867	41,080	54,329
Costs of goods sold	-6,959	-11,368	-14,602	-20,515	-36,284	-42,197
Gross profit	-376	3,589	16	7,352	4,796	12,132
Selling and administrative costs	-776	-788	-1,637	-1,647	-3,334	-3,344
Other operating income and expenses 1)	191	302	544	128	1,049	633
Affiliated companies, profit after tax	9	46	-9	64	22	95
Operating profit	-952	3,149	-1,086	5,897	2,533	9,516
Financial income	-31	215	60	249	214	403
Financial expenses	-113	-358	-285	-768	-483	-966
Profit for the period after financial items	-1,096	3,006	-1,311	5,378	2,264	8,953
Tax	460	-975	828	-1,646	29	-2,445
Profit for the period after tax, continuing operations	-636	2,031	-483	3,732	2,293	6,508
Profit for the period after tax, discontinued operations 2)	0	610	0	420	70	490
Profit for the period after tax	-636	2,641	-483	4,152	2,363	6,998
Attributable to:
- the Parent Company's shareholders	-633	2,605	-470	4,088	2,377	6,935
- minority interests	-3	36	-13	64	-14	63
Key ratios
Return on capital employed before tax (%)	-	-	-	-	5	17
Return on equity after tax (%)	-	-	-	-	7	22
Earnings per share (SEK) 3)	-1.95	8.04	-1.45	12.62	7.34	21.41
- of which continuing operations (SEK) 3)	-1.95	6.16	-1.45	11.32	7.12	19.90
Equity per share (SEK)	101.91	96.48	101.91	96.48	101.91	108.64
Equity ratio including minority (%)	50	53	50	53	50	51
Net debt/equity ratio (%)	52	42	52	42	52	48
Average number of shares during the period (millions)	323.9	323.9	323.9	323.9	323.9	323.9
Number of shares at end of period (millions)	323.9	323.9	323.9	323.9	323.9	323.9
Average number of employees	-	-	-	-	8,835	9,172

1) The results for the quarter include primarily exchange rate profits on operating receivables/liabilities of SEK 32 (87) million, profit from the sale of emission rights of SEK 173 (0) million and insurance indemnification of SEK 0 (138) million.

2) Discontinued business relates to the tubular business in North America, which was divested in 2008. For details regarding the discontinued business, see the Annual Report for 2008.

3) There are no outstanding share instruments, and thus no dilution is relevant.

Consolidated statement of comprehensive income

	2009	2008	2009	2008	July 08-	2008
SEK millions	Q 2	Q 2	Q 1-2	Q 1-2	June 09	Full year
Profit for the period after tax	-636	2,641	-483	4,152	2,363	6,998
Other comprehensive income
Translation differences for the period	-2,451	843	-82	-225	3,698	3,555
Hedging of currency risks in foreign operations	909	-539	-193	182	-4,121	-3,746
Share in other comprehensive income of affiliated compa	-7	-55	7	-63	70	0
nies and joint ventures
Tax attributable to other comprehensive income	-239	0	51	0	1,035	984
Other comprehensive income for the period, net after tax	-1,788	249	-217	-106	682	793
Total comprehensive income for the period	-2,424	2,890	-700	4,046	3,045	7,791
Of which attributable to:
- parent company's shareholders	-2,419	2,854	-687	3,982	3,055	7,724
- minority interest	-5	36	-13	64	-10	67

Consolidated statement of changes in equity

Equity attributable to the parent company's shareholders

		Other con	Transla
	Share	tributed	tion re	Retained			Total
SEK millions	capital	funds	serve	earnings	Total	Minority	equity
Equity, Dec 31, 2007	2,851	9,944	150	15,945	28,890	229	29,119
Changes Jan 1 – Jun 30, 2008
Comprehensive income for the period			-106	4,088	3,982	64	4,046
Dividend				-1,620	-1,620	-97	-1,717
Equity, Jun 30, 2008	2,851	9,944	44	18,413	31,252	196	31,448
Changes Jul 1 – Dec 31, 2008
Comprehensive income for the period			895	2,847	3,742	3	3,745
Dividend						-	-
Equity, Dec 31, 2008	2,851	9,944	939	21,260	34,994	199	35,193
Changes Jan 1 – Jun 30, 2009
Comprehensive income for the period			-217	-470	-687	-13	-700
Dividend				-1,296	-1,296	-30	-1,326
Equity, Jun 30, 2009	2,851	9,944	722	19,494	33,011	156	33,167

There are 323,934,755 shares with a par value of SEK 8.80.

	June 30	June 30	Dec 31
SEK millions	2009	2008	2008
Assets
Goodwill	21,032	13,418	21,105
Other intangible assets	6,192	5,529	6,663
Tangible fixed assets	17,562	15,219	17,584
Participations in affiliated companies	332	351	373
Financial assets	55	712	119
Deferred tax receivables	279	180	245
Total fixed assets	45,452	35,409	46,089
Inventories	9,893	10,919	12,924
Accounts receivable	4,454	8,455	5,921
Current tax receivables	637	69	154
Other current receivables	548	4,530	1,454
Cash and cash equivalents	5,230	383	2,713
Total current assets	20,762	24,356	23,166
Total assets	66,214	59,765	69,255
Equity and liabilities
Equity for shareholders in the company	33,011	31,252	34,994
Minority shares	156	196	199
Total equity	33,167	31,448	35,193
Deferred tax liabilities	5,585	5,278	6,279
Other long-term provisions	433	254	504
Long-term interest-bearing liabilities	18,666	10,261	18,064
Total long-term liabilities	24,684	15,793	24,847
Current interest-bearing liabilities	3,833	4,018	1,640
Current tax liabilities	119	819	868
Accounts payable	2,131	5,122	3,831
Other current liabilities	2,280	2,565	2,876
Total current liabilities	8,363	12,524	9,215
Total equity and liabilities	66,214	59,765	69,255

Cash flow (entire business)
	2009	2008	2009	2008	July 08-	2008
SEK millions	Q 2	Q 2	Q 1-2	Q 1-2	June 09	Full year
Profit from operations 1)	-599	3,083	-1,487	5,814	2,519	9,820
Change in working capital	2,611	-1,186	3,299	-1,727	2,267	-2,759
Cash flow from operations	2,012	1,897	1,812	4,087	4,786	7,061
Capital expenditure payments	-510	-588	-1,024	-1,219	-2,411	-2,606
Divested companies and businesses 2)	-1	24,848	30	24,848	100	24,918
Other investing activities	120	-191	192	-81	424	151
Cash flow from investing activities	-391	24,069	-802	23,548	-1,887	22,463
Dividend	-1,296	-1,620	-1,296	-1,620	-1,296	-1,620
Other financing activities	1,273	-25,129	2,803	-27,339	3,244	-26,898
Cash flow from financing activities	-23	-26,749	1,507	-28,959	1,948	-28,518

Change in cash and cash equivalents 1,598 -783 2,517 -1,324 4,847 1,006 1) After financial items and paid tax.

2) "Divested companies and businesses" for the year relates to SSAB Laminated Steel (lamination of steel and aluminum sheet), while for 2008 it relates to the North American tubular business.

The divisions' /subsidiaries' sales, profits and return on capital employed

		Sales			Operating profit			Return on capital employed (%)
	2009	2008	Change	Change	2009	2008	July 08-	2008
SEK millions	Q 1-2	Q 1-2	in %	in % 3)	Q 1-2	Q 1-2	June 09	Full year
SSAB Strip Products	5,099	9,489	-46%	-50%	-859	1,942	4	39
SSAB Plate	3,974	7,226	-45%	-52%	148	2,024	14	40
SSAB North America 1)	3,449	8,018	-57%	-68%	-609	1,335	3	10
Tibnor	2,897	5,886	-51%	-52%	-94	599	-4	31
Other subsidiaries	805	1,068			-43	27	-	-
Parent Company 2)	-	-			111	1,671	-	-
Parent Company's affiliated companies	-	-			0	53	-	-

Other Group adjustments -1,606 -3,820 260 -1,754 - - Total 14,618 27,867 -48% -54% -1,086 5,897 5 17

1) SSAB North America's sales and operating profit relate to the continuing operations. The operating profit during the first half of the year is af-

fected by SEK 511 (310) million in amortization on surplus values on intangible and tangible assets.

2) The Parent Company's profit includes a profit of SEK 300 (0) million on the sale of emission rights. In 2008, includes the Parent Company's profit upon the sale of the tubular business.

3) Adjusted for changes in exchange rates.

Results per quarter

SEK millions	1/07	2/07	3/07	4/07	1/08	2/08	3/08	4/08	1/09	2/09
Sales	8,780	9,099	13,686	16,086	12,910	14,957	13,399	13,063	8,035	6,583
Operating expenses	-6,420	-7,043	-11,766	-12,415	-9,656	-11,384	-10,243	-11,461	-7,499	-6,911
Depreciation	-253	-259	-691	-843	-524	-470	-549	-621	-652	-633
Affiliated companies	29	36	19	16	18	46	33	-2	-18	9
Financial items	2	15	-758	-921	-376	-143	94	-138	-81	-144
Profit after financial items	2,138	1,848	490	1,923	2,372	3,006	2,734	841	-215	-1,096

Sales per quarter and division/subsidiary

SEK millions	1/07	2/07	3/07	4/07	1/08	2/08	3/08	4/08	1/09	2/09
SSAB Strip Products	4,389	4,563	3,756	4,210	4,614	4,875	4,530	3,962	2,644	2,455
SSAB Plate	2,856	2,895	2,443	3,101	3,494	3,732	2,995	3,016	2,364	1,610
SSAB North America	-	-	2,510	3,597	3,357	4,661	4,244	4,483	1,930	1,519
Tibnor	2,774	2,769	2,283	2,587	2,820	3,066	2,489	2,187	1,578	1,319
Other	555	803	759	522	480	588	625	478	339	466
Group adjustments	-1,794	-1,931	-1,393	-1,813	-1,855	-1,965	-1,484	-1,063	-820	-786
Sales	8,780	9,099	10,358	12,204	12,910	14,957	13,399	13,063	8,035	6,583

Operating profit per quarter and division/subsidiary

SEK millions	1/07	2/07	3/07	4/07	1/08	2/08	3/08	4/08	1/09	2/09
SSAB Strip Products	1,023	879	682	888	1,039	903	1,080	302	-366	-493
SSAB Plate	782	593	499	802	991	1 033	590	540	364	-216
SSAB North America			880	1 090	494	841	827	789	-243	-366
Tibnor	267	291	159	160	256	343	254	-219	-82	-12
Cost savings program								-498	0
Amortization, surplus value			-1,010	-9	0	0	0	0	0	0
on inventory
Other, incl. Parent Company	64	70	38	-87	-32	29	-111	65	193	135
Operating profit	2,136	1,833	1,248	2,844	2,748	3,149	2,640	979	-134	-952

The Parent Company's income statement

	2009	2008	2009	2008	July 08-	2008
SEK millions	Q 2	Q 2	Q 1-2	Q 1-2	June 09	Full year
Gross profit	0	0	0	0	0	0
Administrative expenses	-40	-86	-89	-145	-209	-265
Other operating income 1)	39	1,816	200	1,816	881	2,497
Operating profit	-1	1,730	111	1,671	672	2,232
Dividend from subsidiaries	0	148	412	853	4,329	4,770
Financial items	-87	34	-104	-53	600	651
Profit after financial items	-88	1,912	419	2,471	5,601	7,653
Appropriations	5	0	5	0	-639	-644
Tax	-19	-71	-45	-30	-80	-65
Profit after tax	-102	1,841	379	2,441	4,882	6,944

The Parent Company's balance sheet

	June 30	June 30	Dec 31
SEK millions	2009	2008	2008
Assets
Tangible assets	5	7	6
Financial assets	36,758	7,012	36,758
Long-term receivables from subsidiaries	32	22,097	32
Deferred tax receivables	1	1	1
Total fixed assets	36,796	29,117	36,797
Current receivables from subsidiaries	11,769	9,133	13,218
Other current interest-bearing receivables	-	-	142
Other current receivables	176	856	625
Cash and cash equivalents	4,560	137	2,219
Total current assets	16,505	10,126	16,204
Total assets	53,301	39,243	53,001
Equity and liabilities
Share capital	2,851	2,851	2,851
Statutory reserves	902	902	902
Retained earnings	25,213	18,901	19,706
Profit for the year	379	2,441	6,944
Total equity	29,345	25,095	30,403
Untaxed reserves	652	13	657
Total untaxed reserves	652	13	657
Pension provisions	5	6	5
Other long-term provisions	242	-	224
Long-term liabilities to subsidiaries	1	1	1
Long-term interest-bearing liabilities	18,628	10,171	18,023
Total long-term liabilities and provisions	18,876	10,178	18,253
Current liabilities to subsidiaries	1,143	318	1,372
Current interest-bearing liabilities	3,118	3,351	1,482
Current tax liabilities	45	30	548
Accounts payable	2	12	31
Other current liabilities)	120	246	255
Total current liabilities	4,428	3,957	3,688
Total equity and liabilities	53,301	39,243	53,001

1) "Other operating income" consists primarily of a profit of SEK 300 (0) million upon the sale of emission rights. In 2008, includes the profit upon the sale of the tubular business.

Note:

This report has been published in Swedish and English. In the event of differences between the English translation and the Swedish original, the Swedish Report shall prevail.

SSAB AB (publ)

Box 70, SE-101 21 Stockholm, Sweden Telephone +46-8-45 45 700. Telefax +46-8-45 45 725 Street address: Klarabergsviadukten 70 D6, Stockholm E-mail: info@ssab.com www.ssab.com