(Reuters) -SSAB aims to boost its core earnings over the next five years and beyond through strategic investments and by increasing the share of premium steels in its product mix, the Swedish group said ahead of its investor day on Tuesday.
The company, whose specialized high-strength steels are used in cars and heavy machinery, expects to lift its average yearly earnings before interest, taxes, depreciation and amortisation to around 23 billion Swedish crowns ($2.4 billion) over the business cycle running until after 2030.
That compares to an average of 14 billion crowns per year in the previous cycle, it said. One business cycle normally covers a period of 8-10 years, a company spokesperson told Reuters.
SSAB said it also aimed to accelerate growth of its premium offering so that it would make up 65% of its total shipments by 2030 and 75% by 2035. Premium products, as opposed to commodity steel, make up 55% of SSAB’s shipments today.
The group’s announced investments for the next five years amount to about 58 billion crowns. Some key focus areas include expanding production capacity for advanced cold rolled and coated products and quenched and tempered steels, moving from primary to secondary steelmaking, and reducing CO2 emissions, it said.
Steelmaking, among the world’s most carbon-intensive industries, faces mounting pressure to reduce its negative impact on the environment, making investments in decarbonisation essential.
European steelmakers are also pressured by soaring energy costs, growing competition from low-cost exports from Asia and U.S. tariffs on imported metals, although SSAB managed to beat market estimates with its third-quarter earnings in October.
Shares of the company were down 3.8% at 1115 GMT. Analysts from J.P. Morgan noted that investments would have a negative effect on cash flow, but added the EBITDA target also promised returns from them.
($1 = 9.4155 Swedish crowns)
(Reporting by Marta Frąckowiak in Gdańsk; Editing by Milla Nissi-Prussak)
