LKAB’s net profit declines amid lower iron ore prices in Q1

Swedish-based iron ore producer LKAB has issued its financial results for the first quarter of 2013, stating that its target for a 35 percent increase in planned deliveries by 2015 remains unchanged. The licensing process for the Mertainen open pit mine in Sweden continues, with production aimed to start in 2015. The demand for LKAB's products remains good, despite the weak European economy.
 
In the first quarter, the net profit of the company was SEK 1.23 billion ($188.2 million), decreasing by 61.6 percent year on year. Sales revenues in the given quarter decreased by 30.3 percent year on year to SEK 5.32 billion ($814.03 million), while the company's operating profit amounted to SEK 1.52 billion ($232.6 million), down 62.9 compared to the corresponding quarter of the previous year. LKAB said that the decline in sales and net profit for the period was caused by lower iron ore prices.
 
In the first quarter, the iron ore output of LKAB amounted to 6.1 million mt, decreasing by 11.6 percent year on year. In the same quarter, the company's shipments decreased by six percent to 6.3 million mt, including 5.5 million mt of pellets which declined by 3.5 percent compared to the first quarter of 2012. Delivery volumes were negatively impacted by several major production stoppages in Kiruna and Svappavaara during the quarter because of operational problems in the pelletizing plants. As of March 31, LKAB's iron ore stocks stood at 1 million mt.