Swedish-based iron ore producer LKAB has issued its financial results for the second quarter and first half of the current year.
In the second quarter, the company registered a net profit of SEK 968 million ($119.86 million), compared to a net loss of SEK 214 million in the second quarter of 2016. Sales revenues in the given quarter increased by 50 percent year on year to SEK 5.71 billion ($707.44 million), while the company recorded an operating profit of SEK 1.16 billion ($144.38 million) compared to an operating loss of SEK 277 million in the corresponding quarter of the previous year. In the given period, profits and sales were positively impacted by higher iron ore prices than in the same period last year.
In the second quarter this year, the company’s iron ore output amounted to 6.3 million mt, increasing by 3.27 percent year on year, while its iron ore shipments fell by 1.5 percent year on year to 6.6 million mt.
Meanwhile, in the first half, the net profit of the company was SEK 2.39 billion ($296.07 million), rising from the net profit of SEK 119 million recorded in the first half of the previous year. Sales revenues in the given period rose by 48.7 percent year on year to SEK 11.25 billion ($1.39 billion), while the company registered an operating profit of SEK 2.87 billion ($356.25 million), compared to the operating loss of SEK 105 million in the corresponding period of the previous year.
In the first six months of this year, the iron ore output of LKAB amounted to 13.5 million mt, rising by 4.6 percent year on year. In the same period, the company's iron ore shipments increased by 1.5 percent year on year to 13 million mt.
LKAB expects that the oversupply situation within iron ore fines will continue, which is putting pressure on iron ore prices and thus also on LKAB’s profitability. Demand for LKAB’s pellets continues to be strong and the strategy of maximizing pellet production remains in place. The company is continuing its adaptation work, focusing on profitability, productivity improvements and cost cutting in order to increase competitiveness.