LKAB:s interim report for the third quarter 2013 is showing:
JULY – SEPTEMBER
• DELIVERIES OF IRON ORE TOTALLED 6.8 (6.5) MT.
• NET SALES DECREASED BY 2 PERCENT TO
MSEK 6,526 (6,693).
• OPERATING PROFIT AMOUNTED TO MSEK 2,754 (3,317).
• PROFIT BEFORE TAX TOTALLED MSEK 2,824 (3,369).
• PROFIT FOR THE PERIOD AMOUNTED TO MSEK 2,208 (2,473).
• OPERATING CASH FLOW WAS MSEK 844 (221).
Demand for LKAB’s products remained high during the quarter. Deliveries of iron ore products totalled 6.8 (6.5) Mt, an increase of 5 percent. Production for the quarter was 6.7 (6.7) Mt.
Net sales totalled MSEK 6,526 (6,693) and operating profit amounted to MSEK 2,754 (3,317). The slight drop in sales was mainly due to lower prices and a lower average dollar exchange rate.
The drop was offset to some extent by slightlyhigher delivery volumes. The gross profit margin for the third quarter was 47 (53) percent, down six percentage points as a result of lower prices and higher costs, mainly for production disruptions and increased depreciation due to initiation of capital expenditures.
Operating cash flow was MSEK 844 (221). Cash flow for the period was better compared with the same period last year, mainly due to less working capital.
The planned growth project at LKAB (LKAB 37), which entails a production increase to 37 Mt annually, is subject to investments being made in the three new open-pit mines: Mertainen, Gruvberget and Leveäniemi.
On 3 July, the Land and Environment Court issued a separate judgement on the execution authorization for Mertainen, which meant that the company could undertake preparatory work. On 8 August, the Land and Environment Court of Appeal ruled to inhibit the execution authorization for Mertainen, which meant that LKAB immediately halted the ongoing preparatory work.
The planned production increase in the Mertainen open-pit mine is now delayed so that the full effect of LKAB’s growth program hasshifted. LKAB 37 is crucial to LKAB’s efforts to enhance its competitiveness. Higher production volumes mean a lower cost per tonne and that LKAB can maintain market share in a growing iron ore market.