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Investing.com -- SSAB (ST:SSABb) (ST:SSABa) shares tumbled over 6% Wednesday after the company reported a larger-than-expected drop in second-quarter operating profit, as weaker standard steel prices and growing uncertainty in the European market weighed on results.
The Swedish steelmaker posted operating earnings of 2.14 billion Swedish crowns ($224.93 million) for the April-June period, down 28% from a year earlier and below the company-compiled consensus of 2.29 billion crowns.
“The turbulence of tariffs and trade barriers resulted in increased uncertainty during the second quarter,” CEO Johnny Sjostrom said, noting that the largest impact was felt in the European steel market. He added that “the direct impact of U.S. tariffs on SSAB is limited.”
Free cash flow (FCF) came in at negative 458 million crowns, compared with a negative 1.9 billion crowns in the previous quarter, mainly due to seasonal working capital outflows of 616 million crowns.
Looking ahead, SSAB said it expects third-quarter shipments in its Special Steels division to be lower than the prior quarter. Shipments are also seen falling in the Americas unit and dropping significantly in Europe.
The company said pricing and raw material costs should remain stable for Special Steels and Europe, while its Americas business is projected to benefit from higher prices and slightly lower input costs.
Jefferies analyst Cole Hathorn said SSAB’s Q3 outlook is "affected by macro and tariff uncertainty." He notes the outlook suggests downside risk to the third-quarter Visible Alpha consensus EBITDA estimate of SEK 3.15 billion.
"Overall, we see 10-15% downside to SEK11.3bn cons EBITDA," Hathorn added.