2014-02-13 08:00:05 CET
2014-02-13 08:00:11 CET
REGULATED INFORMATION
Outokumpu Oyj - Financial Statement Release
Outokumpu’s Annual Accounts Bulletin 2013: Financial results still unsatisfactory but continued strong positive operating cash flow
OUTOKUMPU OYJ
ANNUAL ACCOUNTS BULLETIN
February 13, 2014 at 9.00 am EET
Highlights in the fourth quarter 2013
Note: In the following report Terni remedy assets, the VDM business and certain
service centers are reported as discontinued operations. All commentary in this
report thus refers to Outokumpu's continuing operations. Please find more
information in the Notes to the condensed financial statements in this release.
Outokumpu posted a fourth-quarter underlying EBIT loss of EUR 90 million and
operating cash flow was positive at EUR 223 million. Good progress in
synergies, cost saving and the ongoing ramp-ups of the Ferrochrome and Calvert
operations were partially offset by lower deliveries.
-- Stainless steel deliveries declined by 2.4% and were 620,000 tonnes1 (III
2013: 635,000 tonnes).
-- The underlying EBITDA was EUR -1 million compared to EUR -34 million in the
third quarter and the underlying EBIT was EUR -90 million (III 2013: EUR
-118 million). The operational performance was in line with the third
quarter due to somewhat positive price and mix effect while the delivery
volumes were down. The result also includes a EUR 20 million refund of the
renewable energy charge for continuing operations in Germany and about EUR
5 million in gains on the sale of non-core assets and positive impact from
derivatives.
-- Including non-recurring items of EUR -29 million (III 2013: EUR -1 million)
and raw material-related inventory gains of EUR 1 million (III 2013: EUR
-15 million), the EBIT was EUR -118 million for the fourth quarter of 2013
(III 2013: EUR -134 million).
-- Operating cash flow was positive at EUR 223 million (III 2013: EUR 43
million), mainly driven by a strong release of working capital.
-- Net interest-bearing debt2 decreased to EUR 3,556 million (September 30,
2013: EUR 3,861 million), and gearing rose to 188.0% (September 30, 2013:
170.7%).
-- Comprehensive actions to significantly strengthen Outokumpu's financial
position: the sale of the Terni remedy assets, the VDM business and certain
service centers has been agreed with ThyssenKrupp in exchange for the EUR
1.3 billion loan note. Additionally extensive financial package, including
renewing the debt portfolio and a proposed rights issue of approximately
EUR 650 million.
Highlights of 2013
-- During 2013, global stainless steel demand increased by 5.6% compared to
2012. In the Americas and APAC regions, consumption rose by 4.0% and 7.9%
respectively. Consumption in EMEA remained weak. The European stainless
steel base price declined by 2.8% and nickel price came down by 18.2%
during the year.
-- Stainless steel deliveries for the full year declined by 5.3% to 2,585,000
tonnes (2012: 2,723,000).
-- Sales were EUR 6,745 million, down by 15% (2012: EUR 7,961 million).
Underlying EBITDA was EUR
-32 million (2012 EUR -66 million) and underlying EBIT amounted to EUR -377
million (2012: EUR -412 million).
-- Including non-recurring items of EUR -78 million (2012: EUR -308 million)
and raw material-related inventory effects of EUR -56 million (2012: EUR
-33 million), the EBIT was EUR -510 million (2012: EUR -754 million).
-- Operating cash flow was positive at EUR 34 million.
1) metric ton = 1,000 kg, 2) Net interest-bearing debt as per new definition
announced in January 2014: Long-term debt and current debt less cash and cash
equivalents.
Note: This report contains comparisons to both Outokumpu stand alone as well as
comparable figures for the combined entity based on management estimates for
2012. Tables that are marked with ‘comparable' show the combined entity
comparisons for 2012. In the text itself, only comparable numbers will be
stated and analyzed. No verbal analysis is done based on the official financial
statements 2012 since it presents Outokumpu stand alone and such analysis would
not be meaningful. Terni remedy assets, the VDM business and certain service
centers are reported as discontinued operations. Quarterly 2013 profit or loss
figures including related key figures have been restated for this reason. All
comparable 2012 figures as well as restated quarterly 2013 figures are
unaudited.
Group key figures, comparable
IV/13 III/13 IV/12 2013 2012
--------------------------------------------------------------------------------
Sales EUR 1 531 1 609 1 742 6 745 7 961
million
EBITDA EUR -29 -50 -131 -165 -267
million
Adjustments to EBITDA 1) EUR 29 16 58 133 201
million
Underlying EBITDA EUR -1 -34 -73 -32 -66
million
EBIT EUR -118 -134 -313 -510 -754
million
Adjustments to EBIT 2) EUR 29 16 144 133 342
million
Underlying EBIT EUR -90 -118 -169 -377 -412
million
Result before taxes EUR -232 -207 n/a -822 n/a
million
Net result for the period from EUR -260 -197 n/a -832 n/a
continuing operations million
excluding non-recurring items EUR -181 -196 n/a -706 n/a
million
Net result for the period EUR -364 -238 n/a -1 003 n/a
million
Earnings per share EUR -0,17 -0,11 n/a -0,48 n/a
excluding non-recurring items EUR -0,14 -0,11 n/a -0,42 n/a
Return on capital employed % -9,9 -9,8 n/a -10,3 n/a
excluding non-recurring items % -7,4 -9,8 n/a -8,7 n/a
Net cash generated from EUR 223 43 n/a 34 n/a
operating activities, million
continuing oper.
Net interest-bearing debt at EUR 3 556 3 861 n/a 3 556 n/a
the end of period million
Debt-to-equity ratio at the end % 188,0 170,7 n/a 188,0 n/a
of period
Capital expenditure, continuing EUR 45 40 231 183 763
operations 3) million
Stainless steel deliveries, 1,000 620 635 631 2 585 2 723
continuing operations 4) tonnes
Stainless steel base price 5) EUR/ton 1 057 1 043 1 167 1 103 1 172
ne
Personnel at the end of period, 12 561 12 798 14 073 12 561 14 073
continuing operations
--------------------------------------------------------------------------------
1) Non-recurring items, other than impairments; and inventory gains/losses,
unaudited.
2) Non-recurring items and inventory gains/losses, unaudited.
3) Oct 1-Dec 31 ,2012 and Jan 1-Dec 31, 2012 excludes Inoxum acquisition of EUR
2,720 million.
4) Excludes ferrochrome deliveries.
5) Stainless steel: CRU - German base price (2 mm cold rolled 304 sheet).
Raw material-related inventory gains or losses
The realized timing gain or loss per tonne of stainless steel is estimated
based on the difference between the purchase price and invoice price of each
metal in EUR per tonne times the average metal content in stainless steel. The
unrealized timing impact consists of the change in net realizable value ─ NRV
during each quarter. If there is a significant negative change in metal prices
during the quarter, inventories are written down to NRV at the end of the
period to reflect lower expected transaction prices for stainless steel in the
future. As this timing impact is expected to be realized in the cash flow of
Outokumpu only after the raw material has been sold, it is referred to as being
unrealized at the time of the booking.
Business and financial outlook for the first quarter of 2014
Outokumpu expects modest improvement in the underlying market demand for the
first quarter. The company estimates sequentially higher delivery volumes and
some improvement in base prices. The progress in the cost efficiency
initiatives and synergies is estimated to be steady.
For the first quarter of 2014, Outokumpu estimates that the underlying EBIT
will be better than in the fourth quarter, but still a loss. Operating cash
flow is expected to be negative during the first quarter of 2014, driven by an
increase in inventories related to anticipated higher deliveries. At current
metal prices, marginal raw material-related timing gains are expected, if any.
Outokumpu's operating result in the first quarter 2014 could be impacted by
non-recurring items associated with the Group's ongoing restructuring programs.
This outlook reflects the current scope of continuing operations of Outokumpu.
CEO Mika Seitovirta:
”The year 2013 marked the beginning of the new Outokumpu after the acquisition
of Inoxum at the end of 2012. Through the acquisition we gained not only
significant cost savings potential and a stronger market share in all the key
markets, but also a truly global position with a more diverse and balanced
customer base and the broadest range of products in the industry.
However, our journey started in strong headwinds. The demand for stainless
steel remained even weaker than expected, particularly in Europe. Nickel price
declined by over 18% from beginning of 2013 till year end, which negatively
affected our financial performance. Furthermore, we were burdened by the remedy
requirement of the European Commission that dictated the divestiture of the
stainless steel operations in Terni, Italy and additional European service
centers. The Terni remedy requirement did not only tie our time and resources,
but also significantly hampered the ramp-up of the Calvert stainless steel mill
in Alabama, USA.
Despite these obstacles, we took decisive action to restructure our business
back to profitability and to strengthen our balance sheet. We made good
progress with synergy and cost savings measures, and the combined savings for
2013 reached EUR 199 million. We were also able to release EUR 351 million cash
from our working capital during 2013 mostly due to inventory reductions. All in
all, our losses got smaller last year but financial performance remained
clearly unsatisfactory.
During the fourth quarter, our sales developed slightly better than planned,
especially in Europe. The ramp-up of the Calvert mill in the US progressed in
line with expectations, and we were able to continue reducing the losses. End
of November, we also announced comprehensive measures to strengthen our
financial position: the divestment of the Terni remedy assets, the VDM business
and certain service centers to ThyssenKrupp, the renewal of our debt portfolio
and a planned rights issue of about EUR 650 million to strengthen our financial
position.
This year has started with an expectation of a gradual economic improvement and
this has also meant somewhat higher stainless steel demand compared to the slow
fourth quarter of last year. The coming months will show whether this is driven
by the typical industry seasonality or whether there is a more fundamental
improvement under way. We have clear operational priorities for this year which
include implementation of the savings programs, finalization of the Calvert
ramp-up and improvement in customer satisfaction through enhanced delivery
reliability. I am confident that we will continue to make significant progress
in all key areas to return Outokumpu to sustainable profitability.”
News conference and live webcast today at 1.00 pm EET
A combined news conference, conference call and live webcast concerning the
Annual Accounts 2013 will be held on Thursday, February 13, 2014 at 1.00 pm
EET (6.00 am US EST, 11.00 pm UK time, 12.00 pm CET) at the hotel Kämp, in the
Mirror Room (2nd floor), Kluuvikatu 2, 00100 Helsinki, Finland.
To participate via a conference call, please dial in 5-10 minutes before the
beginning of the event:
UK/Europe: +44 203 364 5374
US & Canada: +1 855 753 2230
Participant code: Outokumpu
The news conference can be viewed live via Internet. At the end of this
release, please find a direct link to the webcast.
The stock exchange release and the presentation material will be available
before the news conference at www.outokumpu.com/Investors.
An on-demand webcast of the news conference will be available as of February
13, 2014 at around 4.00 pm EET at www.outokumpu.com/en/investors/webcasts/.
Link to the webcast
For more information:
Investors: Johanna Henttonen, el. +358 9 421 3804, mob. +358 40 5300 778
Media: Saara Tahvanainen, mob. + 358 40 589 0223
Outokumpu Group
Outokumpu is the global leader in stainless steel and high performance alloys.
We create advanced materials that are efficient, long lasting and recyclable -
thus building a world that lasts forever. Stainless steel, invented a century
ago, is an ideal material to create lasting solutions in demanding applications
from cutlery to bridges, energy and medical equipment: it is 100% recyclable,
corrosion-resistant, maintenance-free, durable and hygienic. Outokumpu employs
more than 12 500 professionals in more than 40 countries, with headquarters in
Espoo, Finland and shares listed in the NASDAQ OMX Helsinki. www.outokumpu.com
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