Third quarter

• Net sales decreased by 19% to SEK 859 M (1,057)
• The underlying operating result amounted to SEK -23 M (6)
• The operating result amounted to SEK -30 M (5), including inventory gains and losses of SEK 0 M (-9) and items affecting comparability of SEK -7 M (8)
• Result after tax amounted to SEK -29 M (18)
• Cash flow from operating activities increased to SEK 48 M (-13)
• Earnings per share amounted to SEK -1.95 (1.36)
• The company has entered into an updated credit agreement of SEK 775 M with a term of three years with the possibility of an extension of another two years
• An oversubscribed rights issue was completed with net proceeds amounting to SEK 135 M
• Peter Andersson resigned as President and CEO, the recruitment process is ongoing

Statement from the CEO
In the third quarter, net sales fell to SEK 859 M (1,057), which is mainly attributable to a negative development in the Finnish part of the operations. The prevailing economy and market situation continued to pressure the gross margins and the underlying operating result amounted to SEK -23 M (6), corresponding to an operating margin of -2.7% (0.6).

Cash flow from operating activities increased to SEK 48 M (-13, indicating that our efforts in capital management and cost control has an impact even in a challenging market.

The joint venture ArcelorMittal BE Group SSC AB continues to deliver satisfactory results and again exceeds its operating result target despite a challenging economic and market situation here as well.

Work on cost rationalization has paid off and sales and administration costs in the Swedish company have decreased by 10% compared with the same period the previous year. For the Finnish part, the work has essentially been completed and will improve the results in the future. The total cost reduction amounts to approximately SEK 60 M compared with SEK 50 M announced in connection with the report for the first quarter.

During the quarter, a rights issue was carried out of approximately SEK 143 M, which was subscribed for at 229%. The strong interest from our shareholders confirms their confidence in our ability to create long-term value.

Market outlook
The EU recently announced increased tariff rates for imports outside the quotas of 50% instead of the current 25%. In addition, they propose an increased requirement for traceability to prevent rerouting for the purpose of circumventing customs duties. The proposal should reasonably create a better balance between supply and demand and enable strengthened gross margins for both steel producers and steel distributors.

The construction segment, at least in Sweden, has already bottomed out. In the first nine months of the year, sales of rebar increased by 55% and the interest rate situation combined with infrastructure investments point to a continued recovery. Forecasts from a number of industrial customers also indicate a more favorable economic situation going forward.

Our focus
Initially, the transition to a new ERP system led to a considerable decrease in efficiency in the Finnish company. The technical challenges have largely been resolved, and the organization is now fully focused on regaining market share. In early October, the number of quotes was at the same level as before the transition and order bookings were at the same level as the previous year.

For the Swedish part of the company, clear business plans have been prepared for the parts of the business burdened by losses and I confidently look forward to delivering on these plans.

Peter Andersson, President and CEO