SSAB ANNUAL REPORT 2016 TOWARD INDUSTRY-LEADING PROFITABILITY CONTENTS BUSINESS CORPORATE GOVERNANCE FINANCIAL REVIEW REPORT 2016 REPORTS 2016 3 Introduction 38 Tibnor 2 Corporate governance report 2016 2 Board of Directors’ Report 3 SSAB in brief 41 Ruukki Construction 6 Board of Directors 5 2016 in brief 10 Group Executive Committee 24 Group 6 Vision and values 44 Sustainable offering 24 Consolidated income statement 7 SSAB in the value chain 45 How we work with customers 24 Consolidated statement of comprehensive income 9 CEO’s review 47 Environmental benefits GRI REPORT 25 Consolidated balance sheet from special steels 26 Consolidated statement of changes in equity 11 Operating context 52 Sustainable construction 27 Consolidated cash flow statement 12 SSAB’s markets solutions 13 Market development in 2016 53 Corporate identity and brands 28 Parent Company 14 Global megatrends and 28 Parent Company’s income statement SSAB’s response 55 Sustainable operations 28 Parent Company’s other comprehensive income 56 Production sites 29 Parent Company’s balance sheet 16 Our strategy 57 Sustainable and efficient 30 Parent Company’s statements of changes in equity 17 Taking the Lead! production 2 Sustainability reporting 2016 31 Parent Company’s cash flow statement 22 Key achievements in 2016 62 High-performing 6 Sustainability management approach 23 Financial targets organization 7 Stakeholder engagement 32 5-year summary, Group 24 Sustainability strategy 65 Health and safety 33 Accounting and valuation principles 25 Sustainability targets 9 Sustainability data 43 Notes 68 Responsible partner 9 Economic impacts 85 Proposed allocation of profit 26 Our businesses 69 Responsible business practices 10 Environmental impacts 86 Auditor’s report 27 SSAB Special Steels 73 Responsible sourcing 26 Social impacts 92 Shares and shareholders 31 SSAB Europe 76 SSAB in the community 95 Annual general meeting, Nomination Committee, Calendar 35 SSAB Americas 79 Swedish Steel Prize 2017 34 GRI content index 96 Addresses BUSINESS REVIEW 3 Introduction 44 Sustainable offering 3 SSAB in brief 45 How we work with 5 2016 in brief customers 6 Vision and values 47 Environmental benefits 7 SSAB in the value chain from special steels 9 CEO’s review 52 Sustainable construction solutions BUSINESS 11 Operating context 53 Corporate identity 12 SSAB’s markets and brands REVIEW 13 Market development in 2016 14 Global megatrends and 55 Sustainable operations SSAB’s response 56 Production sites 57 Sustainable and efficient 16 Our strategy production 17 Taking the Lead! 62 High-performing 22 Key achievements in 2016 organization 23 Financial targets 65 Health and safety 24 Sustainability strategy 25 Sustainability targets 68 Responsible partner 69 Responsible business 26 Our businesses practices 27 SSAB Special Steels 73 Responsible sourcing 31 SSAB Europe 76 SSAB in the community 35 SSAB Americas 79 Swedish Steel Prize 2017 38 Tibnor 41 Ruukki Construction SSAB 2016 BUSINESS REVIEW CORPORATE GOVERNANCE REPORT GRI REPORT FINANCIAL REPORTS 2016 INTRODUCTION OPERATING CONTEXT OUR STRATEGY OUR BUSINESSES SUSTAINABLE OFFERING SUSTAINABLE OPERATIONS RESPONSIBLE PARTNER 3 SSAB IN BRIEF 55 15,000 50 Net sales SEK 55 billion Approximate number of employees Employees in more OUR than 50 countries BUSINESSES SSAB SPECIAL STEELS SSAB is a highly-specialized global steel company driven by close customer relationships. SSAB develops high-strength steels and provides services for better performance and sustainability. The company is a leading producer on the global market for Advanced High-Strength Steels (AHSS) and Quenched SSAB EUROPE SSAB AMERICAS & Tempered Steels (Q&T), strip, plate and tubular products, as well as construction solutions. SSAB’s steels and services help to make end products lighter and increase their strength and lifespan. TIBNOR RUUKKI CONSTRUCTION SSAB 2016 BUSINESS REVIEW CORPORATE GOVERNANCE REPORT GRI REPORT FINANCIAL REPORTS 2016 INTRODUCTION OPERATING CONTEXT OUR STRATEGY OUR BUSINESSES SUSTAINABLE OFFERING SUSTAINABLE OPERATIONS RESPONSIBLE PARTNER 4 SSAB is structured across three steel divisions: WE ARE UNIQUE SSAB Special Steels, SSAB Europe and SSAB Americas, • Global leadership in value-added high-strength steels MAIN PRODUCTION SITES: • Most innovative services and applications SSAB Europe and two subsidiaries: Tibnor and Ruukki Construction. • Home-market leadership in the Nordics and US • Borlänge, Sweden • Long-term customer relationships • Hämeenlinna, Finland • SSAB Special Steels – Global steel supplier and service partner in Quenched • Strong end-user focus • Luleå, Sweden & Tempered Steels (Q&T) and Advanced High-Strength Steels (AHSS) • Globally recognized brands • Raahe, Finland • SSAB Europe – Leading Nordic-based steel producer of high-quality strip, plate and tube products Watch the Hardox video Watch the Strenx video SSAB Special Steels • SSAB Americas – Market-leading North American producer of quality steel • Oxelösund, Sweden plate and coil • Tibnor – Leading Nordic supplier of steel, other metals and processing PRODUCTION SSAB Americas services SSAB has a cost-efficient and flexible production system. SSAB’s • Mobile, Alabama, USA • Ruukki Construction – Sustainable building and construction products and production plants in Sweden, Finland and the US have an • Montpelier, Iowa, USA services in Europe annual steel production capacity of 8.8 million tonnes. SSAB is listed on Nasdaq OMX Stockholm (Large cap list) and The company also has capacity to process and finish various has a secondary listing on Nasdaq OMX Helsinki. steel products in China, Brazil and many other countries. • Headquarters in Stockholm, Sweden • President & CEO Martin Lindqvist In Sweden and Finland, production is integrated into a • SSAB employs approximately 15,000 people in more than 50 countries blast furnace process. In the US, electric arc furnaces • Net sales: SEK 55 billion are used for a scrap-based production process. 2007 SSAB acquires th Nrt American steel company IPSCO 1980 Tibno become part o SSAB 2014 SSAB and Finnis 1976 Rtaruukki rg int Tibnor on company 1960 Rtaruukki 1956 IPSCO 1940 Nrrbottens ärnverk, Luleå 1913 Oxelösunds ärnverk AB SSAB 1878 Domnarvets ärnverk, orlänge 1978 Domnarvets ärnverk, Oxelösunds ärnverk AB and Nrrbottens ärnverk beco SSAB SSAB 2016 BUSINESS REVIEW CORPORATE GOVERNANCE REPORT GRI REPORT FINANCIAL REPORTS 2016 INTRODUCTION OPERATING CONTEXT OUR STRATEGY OUR BUSINESSES SUSTAINABLE OFFERING SUSTAINABLE OPERATIONS RESPONSIBLE PARTNER 5 2016 IN BRIEF Sales, SEK 55,354 m KEY FIGURES 2016 2015 Sales, SEK million 55,354 56,864 SSAB S S Operating profit before depreciation/amortization, SSAB E 4,951 3,593 EBITDA, SEK million SSAB A Operating profit/loss, SEK million 1,213 -243 T Profit/loss after financial items, SEK million 324 -1,171 Ruukki Construction 9% Earnings per share, SEK 1.04 -0.66 Operating cash flow, SEK million 3,207 3,874 Dividend per share – 2016 proposal 0.00 0.00 Employees1) Energy consumption, GWh 8,990 8,381 Carbon dioxide emissions1), thousand tonnes 9,981 9,448 SSAB S S SSAB E Employees2) 14,980 16,045 SSAB A Lost time incident frequency (LTIF)3) 6.3 7.0 T 1) Direct emissions from production (Scope 1) 3) Number of accidents resulting in an absence of more than Ruukki Construction 17% 2) Permanent employees at year end one day per million working hours, including contractors O 1) Permanen y Tot Operating profit/loss1) SE SE Shar ITDA1) 60,000 1,500 50,000 1,000 SSAB S S 40,000 500 SSAB E 30,000 SSAB A 0 12 1 1 15 1 20,000 T -500 Ruukki Construction 6% 10,000 -1,000 12 1 1 15 1 0 -1,500 1) Operating profit/loss before depreciation/amortization 1) Excluding items affecting comparability (EBITDA) per business segment SSAB 2016 BUSINESS REVIEW CORPORATE GOVERNANCE REPORT GRI REPORT FINANCIAL REPORTS 2016 INTRODUCTION OPERATING CONTEXT OUR STRATEGY OUR BUSINESSES SUSTAINABLE OFFERING SUSTAINABLE OPERATIONS RESPONSIBLE PARTNER 6 VISION AND VALUES OUR VISION OUR VALUES A stronger, lighter and more sustainable world. CUSTOMER’S BUSINESS IN FOCUS Together with our customers, we will go further • We constantly listen to and understand our customers’ needs • We aim to always take an active, long-term interest in our than anyone else in realizing the full potential of customers’ business lighter, stronger and more durable steel products. • We want to earn our customers’ trust • We want to be our customers’ innovation partner Watch the Taking the Lead! video TAKING RESPONSIBILITY • We build strong, long-lasting relationships by being professional, cooperative and honest • We keep our promises • We work safely and responsibly • We respect people and strive for diversity EXCEEDING EXPECTATIONS • We are dedicated, ambitious and proud of what we do • We are straightforward, results-oriented and quickly take action • We don’t do things that don’t create value for our stakeholders • To achieve top performance, we always challenge ourselves and further enhance our expertise SSAB 2016 BUSINESS REVIEW CORPORATE GOVERNANCE REPORT GRI REPORT FINANCIAL REPORTS 2016 INTRODUCTION OPERATING CONTEXT OUR STRATEGY OUR BUSINESSES SUSTAINABLE OFFERING SUSTAINABLE OPERATIONS RESPONSIBLE PARTNER 7 SSAB IN THE VALUE CHAIN SSAB’s business model is built on fostering close, long-term customer relationships. Through intense collaboration, SSAB continuously develops new products, applications, services and processes in order to improve our customers’ performance in sustainability and overall efficiency. Within SSAB’s