STOCKHOLM, Feb 10 (Reuters) - Swedish specialty steelmaker SSAB said it would slash costs by 800 million crowns ($121 million) and cut 200 jobs after a drop in demand due to Europe's debt crisis slammed quarterly earnings.
The Sweden-based group warned in November it would have to scale back staff in Sweden as customers across Europe had turned increasingly cautious about orders. A downward trend in steel prices has also squeezed profits.
"Demand in Europe remains weak, with low price levels," Chief Executive Martin Lindqvist said on Friday.
He told a call with analysts that the firm would take an extra cost due to the new measures but declined to offer specific details about how much.
The Sweden-based group, which counts Nucor Corp and Posco among its rivals, and whose products are used to make vehicles, mining equipment and in construction, said European customers had adopted a wait-and-see approach.
The situation, however, appeared to be somewhat brighter in other parts of the world. "There are clear signs that a recovery has begun in North America," Lindqvist said.
Volumes in the United States - its biggest single market - were more stable during the fourth quarter while the Chinese industry appeared to be picking up.
After a very strong first half, steelmakers in China and worldwide were forced to reduce their production rate as a gloomier economic situation started to take its toll on demand for metal and steel.
Global crude steel production hit a new record in 2011, but the pace of growth fell sharply.
SSAB's operating profit of 50 million crowns ($7.6 million) compared to a 55 million crown loss in the same period a year ago but was well below a 204 million average forecast in a poll of analysts.
Shares in the firm, one of the biggest gainers in the STOXX Europe 600 Basic Resources index this year with a near 25 percent increase based on Thursday's close, slid almost 8 percent after the weak results on Friday.
"It was surprisingly weak in Europe - much worse than expected both reported and even underlying," said Fredrik Agardh, an analyst at Handelsbanken Capital Markets.
Fears of recession in Europe have clouded the outlook for many Swedish firms. Scania has announced job cuts and fellow truckmaker Volvo - the world no.2 - has forecast a 10 percent drop in European demand.
SSAB said its cost cuts would include a reduction of about 10 percent in white-collar staff in Sweden, or some 200 jobs. The group employs about 6,000 staff in the country.
SSAB said it had renegotiated its iron ore agreements for deliveries during the first quarter because of lower prices, a factor which would help second quarter results.
The company proposed a dividend of 2.00 crowns per share, below a forecast for a 2.40 crown payout.