SSAB Europe Mix improvement

SSAB Europe – Mix improvement driving profitability Olavi Huhtala, EVP and Head of SSAB Europe

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Agenda

►SSAB Europe & current situation

►Market situation and outlook

►Strategy

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Market leader in Nordic region – Profitability leader in Europe

9.7

8.9

8.6

5.8

3.7

SSAB Europe

TK Steel Europe

ArcelorMittal Europe

Salzgitter

Tata Steel Europe1.86 Mton SSAB shipments 2016

~50% of SSAB Europe volumes

40-50% Market share

EBITDA margin 2016 vs. European peers Nordic market leader

%

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SSAB Europe business 2016

Nordic Home Market (flats)

► Clear market leader

► Superior set-up to service local market

► Active towards all segments – Multichannel

Automotive (global)

► Selective focus based on Advanced High-Strength Steel

► Focus on OEMs and Tiers

► Based on collaboration & flexibility

Continental Europe (flats)

► Focus on Premium products and more value added sales

► Based on strong product portfolio

► Multichannel approach

Tubular

► Strong position in the Nordics

► Premium products outside Nordics

► Based on strong product portfolio & service

Share of volumes

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Profitability clearly improving

1) Excluding items affecting comparability 2) Figures for 2014 are pro forma, as if SSAB had owned Rautaruukki during the year

Sales and EBITDA margin1,2

0

2

4

6

8

10

12

14

16

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

Q12014

Q2 Q3 Q4 Q12015

Q2 Q3 Q4 Q12016

Q2 Q3 Q4 Q12017

SEKm %

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Agenda

►SSAB Europe & current situation

►Market situation and outlook

►Strategy

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Stable demand at relatively good levels, albeit far from 2007 peak

Source: Eurofer Market Outlook 4/2017 and previous versions

204

185

121

148 157

141 141 147 152 156 159 160

-23.0%

+2.6%

2018F 2017F 2016 2015 2014 2013 2012 2007 2008 2009 2010 2011

+1.3%

+5.2%

Apparent steel use in EU, mt finished steel

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Positive development in Nordic market expected to continue

Overall healthy outlook, some regional differences All key steel consuming segments are growing

0,5

1,0

1,5

2,0

2,5

3,0

3,5

4,0

4,5

0,0

2020f 2019f 2018 2017f 2016 2015

Norway

Denmark Finland

Sweden

GDP yearly growth rate, %

Source: IMF, April 2017

► Automotive expected to continue to grow steadily the next 3-4 years

► Heavy trucks growing, with Scania and Volvo Trucks gaining market share

► Overall healthy outlook for Construction

► Offshore dependent on oil prices: in Norway a number of new projects starting up which might attract investments

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Positive long-term demand sentiment in most customer segments

Source: KallanishSteel, Eurofer, SSAB analysis (April 2017)

Energy

Automotive

Others

Sentiment Comment

Marine & Offshore

Construction

► Heavy transport continue strong growth

► Agriculture showing clear signs of improvement starting in 2018

► Overall healthy outlook (+2.1% in 2017 and 2.7% in 2018 - Eurofer)

► Automotive output is estimated to have grown ~5% in 2016 ► Fundamentals for the automotive market in the EU are expected to remain overall positive

in 2017 and 2018, albeit at a lower pace

► Continued positive outlook for wind energy sector 2018-2020

► Good order books and opportunities coming up

► Solar power projects continue to be funded

► Good situation in the shipbuilding sector

► Offshore dependent on oil prices

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Agenda

►SSAB Europe & Current situation

►Market situation and outlook

►Strategy

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Strategic focus areas

Strengthen the Nordic Home Market leadership

Improve the mix Continuous improvements to enhance cost position

and productivity

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Strengthen the Nordic Home Market leadership

63%

► Full product offering

► Asset closeness and flexibility – superior services

► Best technical and development support

► Long customer relationships

► Trusted partner for the long term ► Develop relationships with top accounts

►Multichannel strategy

► Leverage own Steel Service Centers

► Leverage cooperation with Tibnor

► Grow Premium products in selective segments

Continue to leverage unique market leader position

Key focus ahead

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Premium vs. standard

► Material optimized for a purpose

► Typical customer is an end-user

► Customers value total offer and are prepared to pay a premium

► Close cooperation – higher switching cost

► Less exposed to competition

Seat Back rest Docol CR1300M

“Standard” business

► Material serving multiple purposes

► Typical customer is a steel service center

► Customers value properties such as consistency, but are not prepared to pay a premium

► Business more transaction based

► Full competition, incl. non-EU actors

Vs.

Volume and price more stable Volume and price follow market

Premium product business

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Increase premium product share to 40% by 2020

2016

100%

Automotive premium

Standard Hot-Rolled-Coils

Tubular products

2020

100%

Other premium products

Other Standard products

Processed products (CTL/Slit)

Share of SSAB Europe volumes, % Mix change

Nordic Rest of EU RoW

Automotive Premium

Other premium products

Tubular products

Processed products (CTL / Slitted)

Standard Hot-Rolled-Coils

Other Standard products

Grow volumes and allocate more capacity

Stable volumes and capacity allocation

Decrease volumes and allocate less capacity

30% 40%

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ALL OPTIMIZED FOR A PURPOSE

SSAB Boron

SSAB Weathering

SSAB Form

SSAB Domex ®

SSAB Laser ®

Our product offering – A complete new brand portfolio launched since merger

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Growing Premium products outside Automotive through a two-fold approach

63%

► Based on local needs and opportunities

► Central market development provides support

► Leveraging cross geography learnings

► Central Market Development identifies growth areas

Local pull

Pushing new opportunities

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Striving towards best in basics through continuous improvements

Delivery accuracy

Focus on implementing new Supply Chain Management model and reduce complexity

Quality

Focus on improved proactive quality management as well as harmonized claims handling

Cost efficiency and waste reduction

Focus on key areas like production yield and energy

Key continuous improvement projects

► Luleå slab yield

► Borlänge yield

► Borlänge continuous annealing capacity

► Energy use optimization

► Reducing rejections in Raahe hot-strip rolling

► Raahe PCI coal cost

► Hämeenlinna hot-dip galvanizing capacity

Stability & flexibility in production

Focus on bottlenecks, improved availability and reducing complexity

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Safety

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Example: Continuous annealing line in Borlänge ► Improved availability and productivity through

− Tuning of burners and induction furnaces

− 100% material flow

► As a result, weekly production has increased from 8.3 ktonnes in 2015 to 10.5 ktonnes (~30%) in 2017

► Supports growing sales to the automotive sector

► Further capacity improvements targeted

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Summary

►Market leader in Nordic region – profitability leader in Europe

►Competitive platform in place

►Positive market outlook

► Strategic focus areas:

− Strengthen the home market position

− Mix improvement to 40% premium

− Continuous improvement to improve cost position

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