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LKAB Reports 2019 Results

Mining News - Published on Mon, 17 Feb 2020

Image Source: LKAB
Stable production and favourable market conditions enabled LKAB to increase its operating profit both for the quarter and for the full year, this despite lower delivery volumes. The market remains uncertain, however. Sales for full-year 2019 increased to MSEK 31,260 (25,892) and operating profit strengthened to MSEK 11,788 (6,869), an increase of 72 percent. The improved earnings are mainly due to higher iron ore prices and a stronger dollar exchange rate. Lower sales had an adverse effect. Operating cash flow for the full year increased to MSEK 6,981 (3,386). The improvement is mainly due to the increase in profits and to lower levels of capital expenditure. Higher expenditure on urban transformation had a negative impact. Profit for the year amounted to MSEK 10,173 (5,274) and the Board is proposing to the Annual General Meeting an ordinary dividend amounting to MSEK 6,104 (3,164).

For the fourth quarter sales increased to MSEK 6,947 (6,911) and operating profit increased to MSEK 2,047 (1,900). The improved earnings are mainly a result of a stronger dollar exchange rate and lower costs for urban transformation provisions. Lower prices for highly upgraded iron ore products and lower delivery volumes during the quarter had an adverse effect.

The global spot price for iron ore peaked at around USD 125/tonne during the summer. Levels then fell significantly following a slowdown in demand from the steel industry. Towards the end of the fourth quarter prices increased again and at the end of the year the price was USD 92/tonne. During the quarter the average spot price for iron ore was USD 89 (72)/tonne. Pellet premiums reduced further and were at a lower level than during the fourth quarter of the previous year.

Production was relatively stable during the year, particularly in the third and fourth quarters. However, at the start of the year production was negatively affected by minor operational disruption at the pelletising plants in Kiruna as well as extensive maintenance work at the pelletising plant in Svappavaara. Despite this, LKAB is equalling its production record from 2017 of 27.2 Mt on an annual basis. The improvement is a result of LKAB’s focus on production stability.

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Posted By : Nishith Sharma on Mon, 17 Feb 2020
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