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2016-10-27

LKAB: Stable Deliveries and Reduced Costs

The operating profit was MSEK 273 (-6,951), with impairment losses of
MSEK -7,136 on property, plant and equipment having been charged to
earnings in the third quarter of 2015. The underlying operating
profit(1) for the quarter was MSEK 762 (798).

"LKAB's third quarter saw stable production, increased delivery
volumes and positive cash flow. Continued efficiency improvements and
cost savings have had an effect, primarily as a result of measures to
improve productivity in daily operations and more efficient capacity
utilization," says Jan Moström, President and CEO.

LKAB's delivery volumes increased by 16 percent compared with the same
period the previous year. At the same time the average spot price(2)
for the quarter increased to USD 59 (55)/tonne.

The positive impact of higher delivery volumes and a higher iron ore
price remains countered by the results of hedging activities. The
hedges were entered into at the lower iron ore prices that prevailed
during the fourth quarter of 2015 and the first quarter of 2016.
Hedging was carried out in order to alleviate the effects of changes
in prices and exchange rates in the market. This meant that LKAB was
not able to take full advantage of the price increase during the
year.

"To sum up the year's third quarter, business was better than in the
same period last year. The focus on maximizing pellet production
remains and demand for LKAB's processed iron ore products is strong.
The price of processed iron ore products developed well compared to
the market situation earlier in the year", says Jan Moström.

All mining operations require the use of land, and LKAB's commitment
to and responsibility for urban transformation in the mining
communities remains unchanged.

"LKAB will strengthen its long-term competitiveness through increased
production, a focus on costs and the efficient use of the investments
made in LKAB, and will do this in partnership with the communities
where we operate. The goal is mining operations that are financially,
socially and environmentally sustainable in the long term," says Jan
Moström.

JULY-SEPTEMBER
· Net sales totalled MSEK 4,258 (4,203)
· Underlying operating profit(1) was MSEK 762 (798)
· Operating profit/loss was MSEK 273 (-6,951)
· Costs for urban transformation provisions totalled MSEK -489 (-613)
· Profit/loss for the period was MSEK 509 (-5,641)
· Operating cash flow was MSEK 235 (-417)
· Deliveries of iron ore totalled 7.2 (6.2) Mt

JANUARY - SEPTEMBER
· Net sales totalled MSEK 11,826 (11,948)
· Underlying operating profit(1) was MSEK 1,095 (1,420)
· Operating profit/loss was MSEK 167 (-6,805)
· Costs for urban transformation provisions totalled MSEK -928
(-1,088)

· Profit for the period was MSEK 628 (-5,451)
· Operating cash flow was MSEK -2,366 (-1,612)
· Deliveries of iron ore totalled 20.1 (17.4) Mt
(1): Underlying operating profit is defined as operating profit
excluding costs for urban transformation provisions and impairment of
property, plant and equipment.

(2): Platts IODE X 62% Fe CFR North China
Contact: Bo Krogvig, Senior Vice President of Communications at LKAB,
Tel: +46 (0)8 429 34 45. E-mail:bo.krogvig@lkab.com

LKAB is an international high-tech minerals group that mines and
upgrades the unique iron ore of northern Sweden for the global steel
market. Sustainability is core to our business and our ambition is to
be one of the industry's most innovative, resource-efficient and
responsible companies. The group had sales of more than SEK 16
billion in 2015 and employs about 4,500 people in 13 countries. Other
group business include industrial minerals, drilling systems, rail
transport, rockwork services and property management.

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http://news.cision.com/lkab/r/stable-deliveries-and-reduced-costs,c2110417
http://mb.cision.com/Main/11419/2110417/581387.pdf
http://mb.cision.com/Public/11419/2110417/b72936e353c84f3c.pdf

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