2016-02-11 08:55:02 CET
2016-02-11 08:55:02 CET
REGLERAD INFORMATION
Outokumpu Oyj - Financial Statement Release
CORRECTION: Outokumpu Annual Accounts Bulletin 2015: Underlying EBIT of EUR -11 million in the fourth quarter, balance sheet strengthened significantly in 2015
OUTOKUMPU OYJ
ANNUAL ACCOUNTS BULLETIN
February 11, 2016 at 9.55 am EET
Outokumpu corrects Annual Accounts Bulletin 2015 at 9.00 am EET as follows: in
the first paragraph of the "Highlights of 2015" summary market development
percentage figures have been corrected according to the "Stainless steel
demand" section on the page 11 of the report.
Corrected release and report can be found below.
Highlights in the fourth quarter 2015
Outokumpu’s underlying EBIT was EUR -11 million, compared to EUR -67 million in
the third quarter. The improvement was driven by Coil EMEA. EBIT was EUR 341
million and net debt EUR 1.6 billion, both significantly supported by the
divestment of Shanghai Krupp Stainless Co., Ltd. (SKS).
-- Stainless steel deliveries were stable at 574,000 tonnes (III 2015:
570,000 tonnes).
-- Underlying EBITDA was EUR 50 million (III 2015: EUR 13 million) and
underlying EBIT was EUR -11 million (III 2015: EUR -67 million). As
delivery volumes remained stable and prices under pressure, the reduction
in losses was mostly due to improved cost management. Furthermore,
extension of the useful life of property, plant and equipment was
implemented in the quarter.
-- EBIT was EUR 341 million (III 2015: EUR -77 million). EBIT includes
non-recurring items of EUR 381 million (III 2015: EUR -2 million). These
comprise of a EUR 409 million capital gain, excluding taxes, on the
divestment of SKS, redundancy provisions of EUR -23 million and impairments
of EUR -6 million in Coil EMEA, and EUR 2 million insurance compensation in
Coil Americas. The net effect of raw material-related inventory and metal
derivative gains/losses was EUR -29 million (III 2015: EUR -8 million).
-- Operating cash flow was EUR 2 million (III 2015: EUR 67 million).
-- Net debt decreased to EUR 1,610 million (Sept 30, 2015: EUR 2,012 million)
and gearing was 69.1% (Sept 30, 2015: 96.5%).
-- On October 26, Outokumpu announced the appointment of Roeland Baan as
President and CEO of Outokumpu as of January 1, 2016.
-- In December 2015, Outokumpu divested its entire 60% share in SKS in China
following its strategy to differentiate in the APAC region with specialty
grades and tailored solutions. Likewise, the divestment of Fischer Mexicana
was concluded.
-- Following the divestments, Outokumpu prepaid and cancelled EUR 100 million
of its EUR 900 million revolving credit facility and signed an amendment
and extension for the remaining amount.
Highlights of 2015
-- Global stainless steel real demand in 2015 grew by only 1.6% compared to
2014. Deceleration was driven by slowing economies in emerging markets,
notably China, general weakness in global manufacturing, and the
deteriorated nickel price.
Demand in the APAC region grew by 2.4%, and in the EMEA region by 0.2%. In
Americas, demand shrank by 1.4%.
The average nickel price for the year was 11,808 USD/tonne, 30.0% lower
than in 2014.
-- According to CRU, European transaction prices were most resilient, with a
decrease of 3.3% from 2014. Transaction prices in the US were down 17.8%
and in China 20.4%. In Europe, most of the decline in transaction prices
came from the alloy surcharge (-4.1%), whereas the base price was down by
2.4% from 2014. The US base price eased by 3.4% and the alloy surcharge by
29.4%.
-- Average imports into the EU are estimated to have declined to 24.7% of the
total consumption from 30.6% in 2014. In the NAFTA region, imports are
expected to have risen to around 23.7% versus 19.5% in 2014.
-- Outokumpu’s stainless steel deliveries for the full year declined by 6.8%
and were 2,381,000 tonnes (2014: 2,554,000 tonnes). The decline was most
prominent in Coil EMEA and Coil Americas, while the overall product mix
continued to improve with less semi-finished products delivered.
-- Sales declined by 6.7% to EUR 6,384 million (2014: EUR 6,844 million).
-- Outokumpu closed the Synergy and P250 savings programs at the end of 2015
with full achievements. The EMEA restructuring program continues into 2017
as planned. Likewise, the P400 program to release cash from net working
capital was completed. As Outokumpu’s performance remains unsatisfactory,
new savings and efficiency measures are planned.
-- EBIT improved significantly to EUR 228 million and earnings per share was
EUR 0.23 driven by the divestment of SKS (2014: EUR -243 million and EUR
-1.24).
-- Excluding net non-recurring items of EUR 360 million (2014: EUR -186
million) and raw material-related inventory effects of EUR -31 million
(2014: EUR 31 million), the underlying EBIT was EUR -101 million (2014: EUR
-88 million).
-- Operating cash flow was negative at EUR -34 million (2014: EUR -126
million).
-- The balance sheet was strengthened through divestments: net debt was
reduced from EUR 1,974 million to EUR 1,610 million and gearing from 92.6%
to 69.1%.
Group key figures
IV/15 III/15 IV/14 2015 2014
--------------------------------------------------------------------------------
Sales EUR 1,435 1,487 1,674 6,384 6,844
million
EBITDA EUR 408 3 45 531 104
million
EBITDA excl. non-recurring EUR 21 6 73 165 263
items million
Underlying EBITDA 1) EUR 50 13 72 196 232
million
EBIT EUR 341 -77 -36 228 -243
million
EBIT excl. non-recurring EUR -40 -74 -9 -132 -57
items million
Underlying EBIT 2) EUR -11 -67 -9 -101 -88
million
Result before taxes EUR 352 -113 -75 127 -459
million
Net result for the period EUR 308 -115 -56 86 -439
million
Earnings per share 3) EUR 0.74 -0.27 -0.13 0.23 -1.24
Return on capital employed % 34.5 -7.6 -3.5 5.8 -5.8
Net cash generated from EUR 2 67 122 -34 -126
operating activities million
Net debt at the end of period EUR 1,610 2,012 1,974 1,610 1,974
million
Debt-to-equity ratio at the % 69.1 96.5 92.6 69.1 92.6
end of period
Capital expenditure EUR 65 29 54 154 127
million
Stainless steel deliveries 4) 1,000 574 570 568 2,381 2,554
tonnes
Stainless steel base price 5) EUR/tonne 1,057 1,060 1,053 1,056 1,082
Personnel at the end of 11,002 11,560 12,125 11,002 12,125
period
--------------------------------------------------------------------------------
1) EBITDA excluding non-recurring items, other than impairments; raw
material-related inventory gains/losses and metal derivative
gains/losses, unaudited.
2) EBIT excluding non-recurring items, raw material-related inventory
gains/losses and metal derivative gains/losses, unaudited.
3) 2014 figures 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).
Business and financial outlook for the first quarter of 2016
The year 2016 has started with downward revisions to economic growth outlooks
and pressure in the materials sector. Outokumpu estimates no meaningful pick up
in the stainless steel markets for the first quarter, and while distributor
stocks have come to more normalized levels, the low nickel price continues to
curtail distributor buying activity. On the positive note, demand among
end-customers outside of Oil & Gas has remained healthy. In both Coil EMEA and
Coil Americas order intake levels are on track for the ongoing quarter and the
lead-times from the mills are competitive.
Market uncertainties warrant prudence in the outlook statement. Outokumpu
estimates first-quarter delivery volumes to remain at the a similar level as in
the fourth quarter of 2015 and the Group’s underlying EBIT to be still
negative. With current nickel prices, the net impact of raw material-related
inventory and metal derivative gains/losses on profitability is expected to be
approximately EUR 30 million negative.
Outokumpu is finalizing plans for new savings from operational improvements and
working capital optimization. The scale, details and time frame for these will
be communicated in the next couple of months. Outokumpu expects that already in
the first quarter continued cost streamlining will mitigate some of the current
downward pressure on base prices as well as increase in scrap costs.
This outlook reflects the current scope of operations. Outokumpu’s operating
result may be impacted by costs associated with restructuring programs.
CEO Roeland Baan:
“For the last quarter of 2015, Outokumpu posted an underlying EBIT loss of EUR
11 million. The divestments in Mexico and China reduced the net debt
significantly; pushing Outokumpu’s gearing to a more robust level of 69 percent
and improving our financial stability. These transactions also helped us to
reach a positive net result for the full year.
At the end of the year, we closed the synergy and P250 programs as planned,
achieving the targeted EUR 470 million of savings since the merger with Inoxum.
While Outokumpu has now successfully implemented the industrial restructuring
and established a strong presence in both Europe and Americas, the current
unsatisfactory financial performance shows that these improvements are not
enough. We need to become much more resilient in our operational performance to
safeguard our financial stability regardless of external conditions.
After a thorough analysis of the company’s operations, we are confident about
what needs to be done to improve the financial performance and competitiveness
of Outokumpu both short and long term.
On an immediate term, we will take swift and precise measures to address three
particular areas: overhead costs, general procurement and working capital. We
are targeting a substantial reduction in our sales, general and administrative
(SG&A) costs as well as in general procurement. In working capital reduction
the focus will be specifically in inventory management, because despite the
earlier efforts our level of inventories is still too high. The scale, details
and time frame for the savings and working capital reduction will be
communicated in the next couple of months.
To drive long-term competitiveness, we will have a renewed vigor in
manufacturing excellence, because there is significant potential to increase
efficiency and lower our production costs. Outokumpu has made a huge effort to
form a strong, well-balanced industrial footprint. Now, we will take a very
systematic approach to make the most of this competitive advantage: improve the
efficiency of our manufacturing processes and bring the operational capability
and productivity to a world class level. This will also further enhance our
commercial capability through improved quality and delivery reliability, thus
enabling differentiation through superior customer experience.
Our outlook for the first quarter reflects the current market realities: nickel
price is at a 12-year low, with a 44% drop year-on-year. The economic growth
expectations across the globe are minimal, with commodity markets and prices
under pressure. There is little reason to expect the stainless steel market to
be any better, but Outokumpu must and will be. We expect Coil EMEA to further
benefit from the new industrial set-up and a gradual profitability improvement
in Coil Americas. The measures we will take across the entire company to
improve cost efficiency and reduce working capital are geared towards further
reducing our debt.
During the first weeks as the Outokumpu CEO, I have visited all our main sites,
and what I have witnessed has only strengthened my belief in this company. The
competence and passion of our people, and their will to succeed are a strong
foundation to build upon. The quality and capabilities of our mills can compete
with the best that I have seen in the metals industry: modern, well maintained
equipment with a high level of automatization. We will now move ahead from the
merger and integration phase into an era of strong customer orientation and
steady operational improvements with a lean, efficient cost structure. This
will give us the power to successfully compete and perform in any market
condition, and enable us to create solid, long-term value to our shareholders.”
Board of Directors’ proposal for profit distribution
In accordance with the Board of Directors’ established dividend policy, the
pay-out ratio over a business cycle should be at least one third of the Group’s
profit for the period, with the aim of having stable annual payments to
shareholders. In its annual dividend proposal, the Board of Directors will, in
addition to financial results, take into consideration the Group’s investment
and development needs.
According to the parent company’s financial statements on December 31, 2015
distributable funds totaled EUR 2,149 million, of which retained earnings were
EUR 26 million.
The Board of Directors is proposing to the Annual General Meeting scheduled for
April 6, 2016 that no dividend be paid from the parent company’s distributable
funds and that net result for the financial year 2015 be allocated to retained
earnings.
News conference, conference call and live webcast today February 11, 2016 at
3.00 pm EET
A news conference, conference call and live webcast will be held on Thursday,
February 11, 2016 at 3.00 pm EET (8.00 am US EST, 1.00 pm UK time, 2.00 pm CET)
at the restaurant Bank, in the Auditorium ( 1st floor), Unioninkatu 20, 00130
Helsinki, Finland.
The Annual Accounts will be introduced by Outokumpu’s CEO Roeland Baan and CFO
Reinhard Florey.
To participate the 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
The webcast can be viewed live online. Link to the webcast.
The stock exchange release and the presentation material will be available
before the event at www.outokumpu.com/en/investors.
A recording of the event will be available at
www.outokumpu.com/en/investors/IR-events/webcasts/ as of February 11, 2016 at
around 6.00 pm EET.
For more information:
Investors: Johanna Henttonen, tel. +358 9 421 3804, mobile +358 40 530 0778
Media: Saara Tahvanainen, tel. +358 40 589 0223
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 11,000 professionals
in more than 30 countries, with headquarters in Espoo, Finland and shares
listed in Nasdaq Helsinki.
www.outokumpu.com outokumpu.com/stainless-news
choosestainless.outokumpu.com
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