April 27, 2018 / 3:23 PM / in a year

RPT-UPDATE 1-European production problems weigh on SSAB Q1 profit

(Repeats story, no change to text)

STOCKHOLM, April 20 (Reuters) - Swedish steelmaker SSAB reported first-quarter operating earnings below market expectations on Friday due to production and transport capacity problems that it said were resolved by the end of the period.

The main reason for the earnings miss was a weaker than expected result in Europe, where capacity problems in rail transport of slabs resulted in both output and shipment losses, the company said.

SSAB generates the majority of its profits in Europe, but is also one of the largest steel plate producers in the United States.

The company’s quarterly operating profit rose to 916 million Swedish crowns ($108.8 million) from 702 million crowns in the year-ago quarter, lagging a 1.17 billion crown forecast in a Reuters poll.

“Demand is still good in our markets and SSAB’s growth initiatives developed well during the quarter,” it said.

SSAB shares have been performing strongly of late, boosted by rising steel prices and new U.S. steel tariffs. The stock is up 16 percent so far this year, sharply outperforming a 3 percent rise in the Thomson Reuters Europe Steel Index .

SSAB said the steel tariffs introduced in the quarter had so far had a limited impact on its business.

The company also said contract prices and longer lead times meant a sharp rise in North American heavy plate spot prices since November only began to boost SSAB’s margins toward the end of the quarter.

SSAB forecast good underlying demand for high-strength steels in most markets during the second quarter.

$1 = 8.4168 Swedish crowns Reporting by Johannes Hellstrom Editing by Niklas Pollard and Edmund Blair

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