2014-04-29 08:00:01 CEST
2014-04-29 08:00:11 CEST
REGULATED INFORMATION
Outokumpu Oyj - Interim report (Q1 and Q3)
Outokumpu - Improving financial results and continued progress in efficiency programs
OUTOKUMPU OYJ
INTERIM REPORT
April 29, 2014 at 9.00 am EET
Highlights in the first quarter 2014
In line with management expectations Outokumpu's operational performance
continued to improve in the first quarter and underlying EBIT1) loss was EUR 45
million. Operating cash flow was EUR -14 million.
-- Stainless steel deliveries grew by 9.1% and were 676,000 tonnes2) (IV 2013:
620,000 tonnes).
-- Underlying EBITDA1) was EUR 37 million compared to EUR -1 million in the
fourth quarter and underlying EBIT was EUR -45 million (IV 2013: EUR -90
million). The improvement was mainly due to higher delivery volumes,
benefits from the cost savings programs and somewhat higher base prices.
Operational performance in the fourth quarter also included EUR 20 million
EEG refund and EUR 5 million gain on sale of disposed assets.
-- EBIT was EUR -188 million (IV 2013: EUR -118 million). EBIT includes
non-recurring items of EUR -140 million as well as the net effect of raw
material-related inventory and hedging gains/losses of EUR -3 million (IV
2013: EUR 1 million3)).
-- Operating cash flow was EUR -14 million (IV 2013: EUR 223 million) despite
higher volumes and prices, mainly driven by stringent control of working
capital.
-- Net interest-bearing debt came down significantly to EUR 1,733 million (Dec
31, 2013: EUR 3,556 million) and gearing improved to 75.9% (Dec 31, 2013:
188.0%), due to the divestment of Terni and VDM to ThyssenKrupp as well as
the completed rights issue.
-- Agreement with the German labor unions regarding the company's
restructuring plan in Europe was reached in March. Implementation of the
plans proceeds. The original target of annual savings of EUR 100 million by
the end of 2017 remains intact.
1) Due to the revised metal hedging policy from the beginning of 2014 Outokumpu
has adjusted the definition for underlying EBIT and underlying EBITDA: In
addition to non-recurring items and raw material-related inventory
gains/losses, Outokumpu now also excludes metal derivative gains/losses. See
“New definition of underlying profitability” for detailed information.
2) metric ton = 1,000 kg
3) IV/13 excludes metal derivative gains/losses.
Note: Terni remedy assets, the VDM business and certain service centers are
reported as discontinued operations until February 28, 2014.
Group key figures
I/14 IV/13 I/13 2013
--------------------------------------------------------------------------------
Sales EUR 1,617 1,531 1,867 6,745
million
EBITDA EUR -78 -29 0 -165
million
EBITDA excl. non-recurring items EUR 34 0 2 -87
million
Underlying EBITDA 1) EUR 37 -1 5 -32
million
EBIT EUR -188 -118 -87 -510
million
EBIT excl. non-recurring items EUR -48 -89 -85 -432
million
Underlying EBIT 2) EUR -45 -90 -82 -377
million
Result before taxes EUR -262 -232 -147 -822
million
Net result for the period from EUR -267 -260 -145 -832
continuing operations million
excluding non-recurring items EUR -128 -181 -143 -706
million
Net result for the period EUR -248 -364 -152 -1,003
million
Earnings per share 3) EUR -0.07 -0.11 -0.05 -0.30
excluding non-recurring items 3) EUR -0.03 -0.09 -0.05 -0.26
Return on capital employed % -18.3 -9.9 -6.1 -10.3
excluding non-recurring items % -4.7 -7.4 -6.0 -8.7
Net cash generated from operating EUR -14 223 -58 34
activities, continuing oper. million
Net interest-bearing debt at the end EUR 1,733 3,556 3,671 3,556
of period million
Debt-to-equity ratio at the end of % 75.9 188.0 131.1 188.0
period
Capital expenditure, continuing EUR 15 45 68 183
operations million
Stainless steel deliveries, continuing 1,000 676 620 691 2,585
operations 4) tonnes
Stainless steel base price 5) EUR/tonn 1,070 1,057 1,177 1,103
e
Personnel at the end of period, 12,436 12,561 13,092 12,561
continuing operations
--------------------------------------------------------------------------------
1) EBITDA excluding non-recurring items, other than impairments; raw
material-related inventory gains/losses and as of I/14 metal derivative
gains/losses, unaudited.
2) EBIT excluding non-recurring items, raw material-related inventory
gains/losses and as of I/14 metal derivative gains/losses, unaudited.
3) Calculated based on the rights-issue-adjusted weighted average number of
shares.
4) Excludes ferrochrome deliveries.
5) Stainless steel: CRU - German base price (2 mm cold rolled 304 sheet).
New definition of underlying profitability
Following the change in Outokumpu's metal hedging policy in the beginning of
2014, Outokumpu has changed the definition of its underlying profitability. The
new definition of the underlying profitability follows the company's underlying
profit development by eliminating the impact of non-recurring items, raw
material related inventory gains/losses and metal derivative gains/losses.
Raw material-related inventory gains/losses as well as metal derivative result
is presented as net effect. The historical figures were not adjusted as the new
hedging policy was implemented in the beginning of 2014 and is not applicable
to past periods.
Business and financial outlook for the second quarter of 2014
Outokumpu extends its cautiously optimistic view of the markets for the second
quarter. Underlying demand is estimated to continue recovery and the recent
rally in the nickel price is expected to have a positive impact on market
dynamics. The company estimates similar or somewhat higher delivery volumes and
some improvement in base prices for the second quarter. The steady progress in
the cost efficiency initiatives and synergies is expected to continue.
For the second quarter of 2014, Outokumpu estimates that the underlying EBIT
will improve, but will be still at a loss. At current metal prices, net impact
of raw material-related inventory and metal derivative gains/losses on
profitability is expected to be marginal.
Going forward, Outokumpu's operating result is likely to be impacted by
non-recurring items associated with the Group's ongoing restructuring programs,
but significantly less than in the first quarter. This outlook reflects the
current scope of continuing operations of Outokumpu.
CEO Mika Seitovirta:
“The first quarter was important for us for many reasons: we completed the
divestment of Terni and VDM, finalized comprehensive financing arrangements and
carried out a rights issue. As a result, we have a significantly stronger
balance sheet and improved financial position. At the end of the quarter we
also reached an agreement with the labor unions in Germany to proceed with the
closure of the Bochum melt shop and the restructuring measures in EMEA at an
accelerated pace.
During the first quarter, the stainless steel market started to pick up as
well. There was modest improvement in the underlying market demand,
sequentially higher delivery volumes and some improvement in base prices. We
estimate continuing positive trend and remain cautiously optimistic about the
market sentiment.
Despite higher deliveries we managed to continue tight control over our
inventories, and thus delivered a better cash flow for the first quarter than
we originally estimated. We remain focused on safeguarding the cash flow.
However, the strong increase in nickel price and typical seasonal build-up of
inventories may have an adverse effect on the operating cash flow in the coming
months.
Our financial performance developed in line with our expectations. The one-off
costs affecting the first-quarter results are related to the measures we are
taking to improve our profitability, in particular the planned closure of
Kloster in Sweden and the EMEA restructurings in Germany. There was a visible
improvement in the underlying EBIT sequentially and year-on-year. We are going
towards to right direction, but we still have a lot of work ahead of us before
we are back to sustainable profitability.
Our focus thus remains on our customers and the completion of our turnaround
plan. The ramp-up of Calvert is our single biggest profitability lever this
year. During the first quarter we progressed according to plans, thereby
supporting our goal of break-even EBITDA for Stainless Americas this year. The
restructuring and savings programs are also starting to gain traction. We will
continue to explore opportunities to build on the good development of our
efficiency measures to fundamentally change the cost levels of our operations
and reach sustainable profitability.”
News conference and conference call today at 1.00 pm EET
A combined news conference, conference call and live webcast concerning
publishing of the first-quarter 2014 financial results will be held on Tuesday,
April 29, 2014 at 1.00 pm EET (6.00 am US EST, 11.00 am 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 April 29,
2014 at around 4.00 pm EET at www.outokumpu.com/en/investors/webcasts/.
Link to the webcast
For more information:
Investors: Johanna Henttonen, tel. +358 9 421 3804, mob. +358 40 5300 778
Media: Saara Tahvanainen, tel. +358 40 589 0223
Outokumpu Group
Outokumpu is a global leader in stainless steel. 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 12 000
professionals in more than 30 countries, with headquarters in Espoo, Finland
and shares listed in the NASDAQ OMX Helsinki. www.outokumpu.com
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