By Marta Frackowiak
(Reuters) -Swedish steelmaker SSAB posted a smaller than expected drop in fourth quarter earnings on Wednesday as European prices of the metal picked up towards the end of the year, lifting the company's shares 4%.
Europe's steel industry has been suffering from falling demand at home, a stuttering Chinese economy, and Asian rivals flooding the local market with cheaper products.
"We saw that spot prices in Europe started to move upwards towards end of the fourth quarter," CEO Martin Lindqvist said on a call with analysts.
SSAB, whose main production facilities are located in Sweden, Finland and the United States, reported a 36% decline in quarterly adjusted operating profit from the year earlier period to 2.4 billion Swedish crowns ($230 million), hit by lower steel prices on both sides of the Atlantic.
However, it beat an LSEG consensus forecast of 2.12 billion, with Oddo BHF saying in a note that the European business was helped by less drastic price drops and better volumes than initially guided.
The company expects shipments for its special steels business to be "significantly higher" in the first quarter of 2024 compared to the previous three months, while those from its Europe and Americas units should also increase. Realised prices for all three divisions will be "somewhat lower", it added.
Production and shipments in the fourth quarter were in line with the same period of 2022, but down from the prior quarter due to planned maintenance outages.
Chief Financial Officer Leena Craelius said on the call that Red Sea shipping disruptions were affecting the cost of importing raw materials from Australia, without elaborating.
An increase in shipping times between the Nordics and Asia was having only a limited impact as such shipments account for a small portion of SSAB's total deliveries from its home region, a company spokesperson told Reuters.
($1 = 10.4335 Swedish crowns)