Impairment Loss Requires Focus on Productivity

LKAB´s Board has decided to recognise impairment losses of MSEK 7,136 before tax
in respect of property, plant and equipment. The impairment losses cover LKAB’s
iron ore operations, including logistics and ports. Cash flow is unaffected by
the impairment.
JULY – SEPTEMBER

  ·
Net sales totalled MSEK 4,203 (4,991)

  ·
Underlying operating profit (note 1) was MSEK 798 (1,074)

  ·
Impairment loss on property, plant and equipment had a negative effect on
operating profit of MSEK 7,136

  ·
Operating loss was MSEK -6,951 (-1,164)

  ·
Loss for the period was MSEK -5,641 (-979)

  ·
Deliveries of iron ore totalled 6.2 (6.7) Mt

Note 1: Underlying operating profit is defined as operating profit excluding
costs for urban transformation provisions and impairment of property, plant and
equipment.

The operating loss was MSEK 6,951 for the quarter, which included impairment
losses not affecting liquidity of MSEK 7,136 on property, plant and equipment
that were charged to operating profit along with provisions for urban
transformation of MSEK 613.

The significantly lower iron ore price is expected to be long-term. The market
situation calls for LKAB to focus further on cost reductions and increased
efficiency in order to enhance profitability and competitiveness going forward.

The production volume for the quarter was 5.9 (6.3) Mt and deliveries totalled
6.2 (6.7) Mt for the quarter. The strategy to maximize pellet production remains
in place. However, the target volume of 37 million tonnes is being deferred. The
new open-pit mines at Svappavaara will primarily supply crushed ore to existing
processing plants.

LKAB’s commitment to and responsibility for urban transformation in the mining
communities is unchanged.

LKAB is now stepping up the pace of its adaptation work, focusing on improved
productivity, lower costs and meeting customers’ quality requirements. Only by
enhancing competitiveness and profitability can LKAB continue to add value for
customers, communities and owners.
Contact: Frank Hojem, LKAB´s Senior Vice President of Communication. Tel: 46 (0)
920 380 70. E-mail: frank.hojem@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 20 billion in 2014 and employs about 4,500 people in 15 countries.
Other group business include industrial minerals, drilling systems, rail
transport, rockwork services and property management.