Outokumpu Oyj - Interim report (Q1 and Q3)

Outokumpu's third quarter 2011 - profitability seasonally weak, significant improvement in cash flow

INTERIM REPORT
20 October 2011 at 9.00 am EET

Third-quarter 2011 highlights

- Underlying operational result some EUR -15 million (II/2011: EUR -5 million).
- Operating loss EUR -53 million (II/2011: EUR -169 million) including raw
material-related inventory losses of some EUR -38 million (II/2011: some EUR -26
million), no non-recurring items (II/2011: EUR -138 million).
- Financial expenses of EUR 77 million reported under net financial income and
expenses as a result of the fair valuation of the Group's stake in Talvivaara
Sotkamo.
- Very strong operational cash flow of EUR 282 million (II/2011: EUR -66
million).
- Deliveries at 340 000 tonnes (II/2011: 348 000 tonnes).
- Change in corporate organisation and Group Executive Committee, job reductions
planned.




Group key figures

                                        III/11 II/11 III/10  2010
------------------------------------------------------------------
Sales                       EUR million  1 231 1 281  1 014 4 229

EBITDA                      EUR million      4    -4     12   172

Operating profit            EUR million    -53  -169    -49   -83

- excluding non-recurring

items                       EUR million    -53   -31    -49   -66

- underlying operational

result 1)                   EUR million    -15    -5    -10   -91

Profit before taxes         EUR million   -157    21    -88  -143

- excluding non-recurring

items                       EUR million   -157   -70    -88  -135
Net profit for the period   EUR million   -135    50    -56  -124

- excluding non-recurring

items                       EUR million   -135   -33    -56  -115

Earnings per share                  EUR  -0.74  0.28  -0.31 -0.68

- excluding non-recurring

items                               EUR  -0.74 -0.18  -0.31 -0.63

Return on capital employed            %   -5.3 -16.1   -4.6  -2.1

- excluding non-recurring

items                               EUR   -5.3  -2.9   -4.6  -1.7

Net cash generated from

operating activities        EUR million    282   -66   -111  -497

Capital expenditure         EUR million     67    50     40   161

Net interest-bearing debt

at end of period            EUR million  1 730 1 885  1 831 1 837

Debt-to-equity ratio at

end of period                         %   79.7  82.0   74.9  77.3

Stainless steel deliveries 1 000 tonnes    340   348    307 1 315

Stainless steel

base price 1)                 EUR/tonne  1 150 1 223  1 245 1 252

Personnel at the

end of period 2)                         8 421 9 474  8 370 8 431
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1) Operating profit excluding non-recurring items and raw-material

related timing gains and losses.

2) Stainless steel: CRU - German base price (2 mm cold rolled 304 sheet).

3) Personnel reported as head count. Up to 31 December 2010 reported as

full-time equivalent. Comparative figures restated.



The underlying operational result in the third quarter declined to EUR -15
million. The negative impact of somewhat lower base prices and a somewhat weaker
mix was partly offset by a positive impact from metal hedging activities.
Operating loss in the third quarter was EUR -53 million. Demand in Europe was
adversely affected by normal seasonality and Outokumpu held its annual
maintenance breaks at Group sites. Net cash from operating activities in the
third quarter improved significantly and totalled EUR 282 million. The main
reasons for
the very strong cash flow were the reduction in working capital which resulted
from lower metal prices and inventories being at lower levels than in the second
quarter. EUR 331 million of cash was released from working in the third quarter.

SHORT-TERM OUTLOOK

During the summer, demand for standard grades of stainless steel in Europe was
impacted by the normal seasonal slowdown. Following the summer period, both
global economic uncertainty and lower metal prices weakened underlying demand
for stainless steel. Distributors are currently hesitant about placing orders.
Inventories among distributors are however lower than normal. Lead times for
standard grades continue to be 6-8 weeks.

Due to the weakened demand for stainless, Outokumpu expects the Group's delivery
volumes in the fourth quarter of 2011 to be below the level achieved in the
third quarter. As the conditions in the stainless markets softened, base prices
declined towards the end of the third quarter but seem to have stabilised
currently. Outokumpu expects its average base prices in the fourth quarter to be
somewhat lower than the average for the third quarter.

Lower delivery volumes and lower average base prices are expected to lead to a
somewhat negative underlying operational result(*)) in the fourth quarter. At
current metal prices, declined metal prices are expected to result in raw
material-related inventory losses resulting in a clearly negative operating
result for the fourth quarter. In addition, Outokumpu's operating result in the
fourth quarter is expected to be affected by the Group's planned cost saving and
restructuring programmes.

(*) )Underlying operational result= Operating profit/loss excluding raw
material-related inventory gains/losses and non-recurring items.

CEO Mika Seitovirta:"Since the global economic sentiment has worsened after the summer and the
stainless markets consequently have weakened, it is of extreme importance for us
to take actions to improve our financial performance in every part of the
company. In the current environment we will keep strong focus on continuing to
improve our cash flow. Therefore we have announced new restructuring and cost
cutting plans and introduced a new organisation structure."

The attachments present the Management analysis for the third quarter operating
result and the Interim review by the Board of Directors for January-September
2011, the accounts and notes to the interim accounts. This report is unaudited.

For further information, please contact:

Ingela Ulfves, VP - Investor Relations and Financial Communications
tel. +358 9 421 2438, mobile +358 40 515 1531
ingela.ulfves@outokumpu.com

Esa Lager, CFO
tel. + 358 9 421 2516
esa.lager@outokumpu.com

News conference and live webcast today at 1.00 pm

A combined news conference, conference call and live webcast concerning the
third-quarter 2011 financial results will be held on 20 October at 1.00 pm EET
(6.00 am US EST, 11.00 am UK time, 12.00 pm CET) at Restaurant Bank, meeting
rooms 12-14, address Unioninkatu 20, 00130 Helsinki, Finland.

To participate via a conference call, please dial in 5-10 minutes before the
beginning of the event:

UK +44 203 043 2436, US & Canada +1 866 458 4087, Sweden +46 8 505 598 53
Password Outokumpu

The news conference can be viewed live via Internet at
http://www.outokumpu.com/Investors/Webcasts. 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 20 October
2011 at around 3.00 pm EET at www.outokumpu.com/Investors/Webcasts.

OUTOKUMPU OYJ


[HUG#1556302]

Attachments:

ENG Q3 2011 Interim report.pdf