2010-04-27 08:00:00 CEST
2010-04-27 08:00:58 CEST
REGULATED INFORMATION
Outokumpu Oyj - Interim report (Q1 and Q3)
Outokumpu Oyj - demand for stainless recovering, return to profit in sight
INTERIM REPORT
April 27, 2010 9.00 am EET
First-quarter 2010 highlights
- Operating loss EUR 22 million (IV/2009: EUR -29 million) including some EUR
10 million (IV/2009: none) of raw material-related inventory gains, underlying
operational result some EUR -32 million (IV/2009: -29 million).
- EBITDA EUR 34 million (IV/2009: EUR 26 million), operational cash flow EUR -86
million (IV/2009: EUR -108 million).
- Improving demand from both distributors and end-users, deliveries at 333 000
tons (IV/2009: 277 000 tonnes).
- Ferrochrome investment study reinitiated, Finnish Government positive on
Fennovoima nuclear power initiative.
Group key figures
I/10 IV/09 I/09 2009
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Sales EUR million 916 728 679 2 611
Operating profit EUR million -22 -29 -249 -438
EBITDA EUR million 34 26 -198 -212
Non-recurring items
in operating profit EUR million - - -5 -20
Profit before taxes EUR million -33 -36 -252 -474
Net profit for the period
from continuing operations EUR million -21 -4 -188 -332
Net profit for the period EUR million -21 -6 -187 -336
Earnings per share
from continuing operations EUR -0.12 -0.03 -1.04 -1.83
Earnings per share EUR -0.12 -0.04 -1.04 -1.86
Return on capital employed % -2.4 -3.3 -27.5 -11.7
Net cash generated from
operating activities 1) EUR million -86 -108 295 198
Capital expenditure,
continuing operations EUR million 28 82 62 245
Net interest-bearing debt
at end of period EUR million 1 293 1 183 825 1 183
Debt-to-equity ratio at
end of period % 53.5 48.2 32.3 48.2
Stainless steel deliveries 1 000 tonnes 333 277 247 1 030
Stainless steel
base price 2) EUR/tonne 1 235 1 297 925 1 161
Personnel at the
end of period,
continuing operations 7 597 7 606 8 253 7 606
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1) Cash flows presented for continuing operations.
2) Stainless steel: CRU - German base price (2 mm cold rolled 304 sheet).
SHORT-TERM OUTLOOK
Demand for standard grades of stainless steel has recovered to some degree in
2010 compared to late 2009. The good order intake from the beginning of the year
has continued. The increased demand reflects both restocking as a result of
increasing metal prices, and improved demand from end-users. There are also
initial signs of increased activity in investment-driven customer-segments, but
this has not yet materialised in major orders. Inventories among distributors in
Europe are estimated to be at normal levels.
Lead times on mill-deliveries for standard grades are normal at 6-8 weeks.
Outokumpu is gradually increasing its production volumes and Tornio Works will
have full production capability by June. The Group's delivery volumes in the
second quarter are expected to be at the same level or somewhat higher than in
the first quarter (333 000 tonnes). Delivery volumes are strongly dependent on
distributors' short-term buying behaviour, and this is impacted by developments
in raw-material prices, especially nickel. Base prices have been increasing
recently and Outokumpu's average base prices for flat products in the second
quarter of 2010 are estimated to be 50-100 EUR/tonne higher than the average in
the first quarter. The contract price for ferrochrome in the second quarter
increases significantly, this will begin to have a positive impact on the
Group's profits from May.
Outokumpu's underlying operational result*) in the second quarter is expected to
be somewhat positive. At current metal price levels, raw material-related gains
are expected to be in excess of EUR 50 million. Cash flow is expected to be
negative as mainly higher metal prices will increase working capital.
*) Underlying operational result= Operating profit +/- raw material related
inventory gains and losses and non-recurring items.
CEO Juha Rantanen:"After a very difficult period we can finally see a clear change for the better.
Even though there was no improvement in profits in the first quarter, demand and
delivery volumes were up. The profit improvement will follow in the second
quarter. This recovery gives us the confidence to begin reconsidering our
investment projects. Expanding our ferrochrome production was a very attractive
project which the financial crisis forced us to put on hold. As the worst of the
crisis is behind us and ferrochrome markets have become attractive again, it is
time to take a new look at this investment. The Finnish Government's position on
the Fennovoima nuclear power initiative is favourable to the overall investment
consideration."
The attachments present the Management analysis for the first quarter operating
result and the Interim review by the Board of Directors for January-March 2010,
the accounts and notes to the interim accounts. This report is unaudited.
For further information, please contact:
Päivi Lindqvist, SVP - Communications and IR
tel. +358 9 421 2432, mobile +358 40 708 5351
paivi.lindqvist@outokumpu.com <mailto:paivi.lindqvist@outokumpu.com>
Ingela Ulfves, VP - Investor Relations and Financial Communications
tel. +358 9 421 2438, mobile +358 40 515 1531
ingela.ulfves@outokumpu.com <mailto:ingela.ulfves@outokumpu.com>
Esa Lager, CFO
tel. + 358 9 421 2516
esa.lager@outokumpu.com <mailto: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
first-quarter 2010 results will be held on April 27, 2010 at 1.00 pm EET (12.00
pm CET, 6.00 am US EST, 11.00 am UK time) at Hotel Kämp, conference room Akseli
Gallen-Kallela, address Pohjoisesplanadi 29, 00100 Helsinki, Finland.
To participate via a conference call, please dial in 5-10 minutes before the
beginning of the event:
UK +44 20 3043 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 www.outokumpu.com.
Stock exchange release and presentation material will be available before the
news conference at www.outokumpu.com/Investors/Downloads<http://www.outokumpu.com/Investors/Downloads>
An on-demand webcast of the news conference will be available at
www.outokumpu.com as of April 27, 2010 at around 3.00 pm.
OUTOKUMPU OYJ
Corporate Management
MANAGEMENT ANALYSIS - FIRST QUARTER OPERATING RESULT
Group key figures
EUR million I/09 II/09 III/09 IV/09 2009
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Sales
General Stainless 476 501 496 592 2 065
Specialty Stainless 371 278 258 332 1 239
Other operations 66 58 56 62 243
Intra-group sales -233 -220 -224 -259 -935
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The Group 679 617 587 728 2 611
Operating profit
General Stainless -157 -52 -38 -12 -259
Specialty Stainless -82 -37 -21 -10 -149
Other operations -12 -5 -4 -9 -31
Intra-group items 2 0 -3 2 1
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The Group -249 -94 -65 -29 -438
EUR million I/10
--------------------------------------------------------------------------------
Sales
General Stainless 754
Specialty Stainless 367
Other operations 89
Intra-group sales -295
--------------------------------------------------------------------------------
The Group 916
Operating profit
General Stainless -2
Specialty Stainless -21
Other operations 2
Intra-group items -1
--------------------------------------------------------------------------------
The Group -22
Stainless steel
deliveries
1 000 tonnes I/09 II/09 III/09 IV/09 2009
--------------------------------------------------------------------------------
Cold rolled 133 145 124 143 545
White hot strip 59 69 66 69 263
Quarto plate 19 18 14 16 67
Tubular products 16 13 12 12 53
Long products 10 9 11 10 40
Semi-finished
products 10 14 12 27 63
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Total deliveries 247 268 238 277 1 030
1 000 tonnes I/10
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Cold rolled 171
White hot strip 82
Quarto plate 21
Tubular products 13
Long products 13
Semi-finished
products 33
--------------------------------------------------------------------------------
Total deliveries 333
Market prices and
exchange rates
I/09 II/09 III/09 IV/09 2009
--------------------------------------------------------------------------------
Market prices 1)
Stainless steel
Base price EUR/t 925 1 117 1 307 1 297 1 161
Alloy surcharge EUR/t 893 634 923 1 049 875
Transaction price EUR/t 1 818 1 751 2 229 2 346 2 036
Nickel USD/t 10 471 12 920 17 700 17 528 14 655
EUR/t 8 036 9 478 12 375 11 860 10 507
Ferrochrome
(Cr-content) USD/lb 0.79 0.69 0.89 1.03 0.85
EUR/kg 1.34 1.12 1.37 1.54 1.34
Molybdenum USD/lb 9.15 9.41 15.36 11.76 11.42
EUR/kg 15.49 15.22 23.67 17.54 18.05
Recycled steel USD/t 207.00 199.00 236.00 250.00 223.00
EUR/t 159.00 146.00 165.00 169.00 160.00
Exchange rates
EUR/USD 1.303 1.363 1.430 1.478 1.395
EUR/SEK 10.941 10.781 10.424 10.351 10.619
EUR/GBP 0.909 0.879 0.872 0.905 0.891
--------------------------------------------------------------------------------
I/10
--------------------------------------------------------------------------------
Market prices 1)
Stainless steel
Base price EUR/t 1 235
Alloy surcharge EUR/t 1 094
Transaction price EUR/t 2 329
Nickel USD/t 19 959
EUR/t 14 433
Ferrochrome
(Cr-content) USD/lb 1.01
EUR/kg 1.61
Molybdenum USD/lb 16.19
EUR/kg 25.81
Recycled steel USD/t 323
EUR/t 234
Exchange rates
EUR/USD 1.383
EUR/SEK 9.946
EUR/GBP 0.888
--------------------------------------------------------------------------------
1) Sources of market prices:
Stainless steel: CRU - German base price, alloy surcharge and
transaction price (2 mm cold rolled 304 sheet), estimates for
deliveries during the
period.
Nickel: London Metal Exchange (LME) cash quotation
Ferrochrome: Metal Bulletin - Quarterly contract price,
Ferrochrome lumpy chrome charge, basis 52% chrome
Molybdenum: Metal Bulletin - Molybdenum oxide - Europe
Recycled steel: Metal Bulletin - Steel scrap HMS 1&2 fob Rotterdam
Recovery in stainless steel demand with rising metal prices
Stainless steel markets began to recover from the beginning of 2010. Compared to
the fourth quarter of 2009, apparent consumption of flat products is estimated
to have increased by 13% in Europe and by 7% globally in the first quarter of
the year. In China, apparent consumption was up by 17%. First-quarter production
of stainless steel is estimated to have been 11% higher than in the preceding
quarter in Europe and 8% higher globally. In China, stainless production was up
by 5%.
According to CRU, the average base price for 2mm cold rolled 304 stainless steel
sheet in Germany declined slightly and was 1 235 EUR/tonne in the first quarter
(IV/2009: 1 297 EUR/tonne). The alloy surcharge increased somewhat to 1 094
EUR/tonne (IV/2009: 1 049 EUR/tonne) in the review period. The average
transaction price during the first quarter was 2 329 EUR/tonne (IV/2009: 2 346
EUR/tonne). The price difference between Chinese and European transaction prices
declined markedly in the first quarter. (CRU)
Among alloying elements, the average nickel price increased by 14% in the first
quarter compared to the fourth quarter of 2009. The main cause for this price
rise was improved demand for stainless steel and continuing constraints on
production as a result of strikes and production-related problems. Nickel
inventories at the London Metals Exchange (LME) have started declining slowly
from historically high levels. Nickel traded in the range 17 000 - 25 000
USD/tonne in the first quarter and stood at 25 000 USD/tonne at the end of
March. The average nickel price in the first quarter was 19 959 USD/tonne
(IV/2009: 17 528 USD/tonne). The nickel price increased further and has been
closer to 27 000 USD/tonne in most recent weeks. As a result of the improved
demand for stainless steel, markets for ferrochrome were tight in the first
quarter. Global production was up by 5%. The quarterly contract price for
ferrochrome in the first quarter was 1.01 USD/lb and has preliminarily been
settled at 1.36 USD/lb for the second quarter. Molybdenum was introduced to the
LME in February. Its price increased during the first quarter and averaged
16.19 USD/lb (IV/2009: 11.76 USD/lb). The price of recycled steel also rose and
averaged 323 USD/tonne in the first quarter (IV/2009: 250 USD/tonne).
Small operating loss in the first quarter
Group sales in the first quarter totalled EUR 916 million (IV/2009: EUR 728
million). Deliveries of stainless steel rose by 20% to 333 000 tonnes (IV/2009:
277 000 tonnes). Capacity utilisation at Group operations was still somewhat
restricted at approximately 75% during the first quarter.
Operating loss in the first quarter totalled EUR 22 million (IV/2009: EUR -29
million). This included some EUR 10 million of raw material-related inventory
gains as a result of higher metal prices. Consequently, the underlying
operational result in the first quarter was EUR -32 million (IV/2009: EUR -29
million). The positive impact of higher delivery volumes was partly offset by
lower base prices. Outokumpu's average base prices for flat products realised in
the first quarter declined by 80 EUR/tonne and were below base prices reported
by CRU for German 304 sheet.
Return on capital employed in the first quarter was -2.4% (IV/2009: -3.3%).
Earnings per share totalled EUR -0.12 (IV/2009: EUR -0.04).
Net cash from operating activities in continuing operations was negative at EUR
-86 million (IV/2009: EUR -108 million). In the first quarter, EUR 43 million of
cash was tied up in working capital mainly as a result of higher metal prices.
Compared to the level at the end of the preceding quarter, Outokumpu's gearing
at the end of the first quarter increased to 53.5% (Dec 31, 2009: 48.2%), well
below the target of <75%. Net-interest bearing debt increased to EUR 1 293
million (Dec 31, 2009: EUR 1 183 million). Current non-interest bearing
liabilities include the dividend payout of EUR 64 million.
Capital expenditure totalled EUR 28 million (IV/2009: EUR 82 million) in the
first quarter.
Sales by General Stainless in the first quarter totalled EUR 754 million
(IV/2009: EUR 592 million), and deliveries increased to 304 000 tonnes (IV/2009:
250 000 tonnes). Operating loss totalled EUR 2 million (IV/2009: EUR -12
million) of which the loss posted by Tornio Works totalled EUR 7 million
(IV/2009: EUR 22 million profit). The operating loss of General Stainless was
reduced by positive impact from the ferrochrome production.
Sales by Specialty Stainless in the first quarter totalled EUR 367 million
(IV/2009: EUR 332 million) and deliveries totalled 111 000 tonnes (IV/2009:
87 000 tonnes). Operating loss was EUR 21 million (IV/2009: EUR -10 million).
Other operations posted an operating profit of EUR 2 million (IV/2009: EUR -9
million) in the first quarter.
Strike by Finnish stevedores
The strike of the Finnish stevedores' (AKT) in March did not have any material
impact on Outokumpu's deliveries of stainless steel to customers or on the
importation of raw materials. During the strike, Outokumpu was able to operate
the private section of the Röyttä harbour in Tornio, which serves only the
Group's Tornio Works. The financial impact of this strike on Outokumpu was
marginal.
Outokumpu to re-evaluate the ferrochrome expansion project
Outokumpu announced a EUR 420 million investment project to double its
ferrochrome production capacity at Tornio in Finland to 530 000 tons in June
2008. The financial crisis and market uncertainty resulted in this investment
project being postponed in December 2008.
In March 2010, Outokumpu made a decision to update the feasibility study on this
investment. This study will include an updated financial evaluation and
technical specifications with detailed budgets and timetables. An investment
decision based on the study will be made by the end of June 2010.
100 years of Outokumpu
March 16, 2010 marked the centenary of the discovery of a rich copper ore
deposit in Outokumpu in eastern Finland. The discovery led to the establishment
of Outokumpu Oy and a booming mining industry in Finland. Over the years,
Outokumpu has undergone a major transformation, evolving from a mining and
multi-metal company into one of the world's leading producers of stainless
steel.
Events after the review period
The Finnish Government has announced its support for the Fennovoima nuclear
power initiative. Outokumpu has about 10% ownership in Fennovoima, which would
enable the Group to get electricity at production cost according to its
ownership. Fennovoima's plan is to have the nuclear reactor in operation by
2020. Final decision on the licence to build the reactor will be made by the
Finnish Parliament later this year.
INTERIM REVIEW BY THE BOARD OF DIRECTORS - JANUARY-MARCH 2010
(Unaudited)
Improving stainless steel markets with rising metal prices
Stainless steel markets began to recover from the beginning of 2010 and improved
significantly compared to the beginning of 2009. Compared to the first quarter
of 2009, apparent consumption of flat products is estimated to have been 53%
higher in Europe and 43% higher globally in the first quarter of the year.
First-quarter 2010 production of stainless steel is estimated to have increased
by more than 52% in Europe and by 48% globally compared to the first quarter of
2009. The average base price for 2mm cold rolled 304 stainless steel sheet in
Germany rose to 1 235 EUR/tonne in the first quarter (I/2009: 925 EUR/tonne) and
the average transaction price during the review period was 2 329 EUR/tonne
(I/2009: 1 818 EUR/tonne). (CRU)
Prices of all alloying elements were significantly higher in the first quarter
of 2010 than they were in the same period in 2009. The nickel price averaged
19 959 USD/tonne in the first quarter (I/2009: 10 471 USD/tonne). The quarterly
contract price for ferrochrome was 1.01 USD/lb (I/2009: 0.79 USD/lb). The
average price of molybdenum was 16.19 USD/lb (I/2009: 9.15 USD/lb) and the price
of recycled steel was 323 USD/tonne (I/2009: 207 USD/tonne).
Small operating loss in recovering markets for stainless steel
Group sales in the first quarter increased by 35% to EUR 916 million (I/2009:
EUR 679 million) mainly as a result of higher delivery volumes and clearly
higher metal prices. Deliveries of stainless steel increased by 35% and totalled
333 000 tonnes (I/2009: 247 000 tonnes). Capacity utilisation in the Group's
operations was approximately 75% in the first quarter of 2010.
Operating loss was significantly reduced at EUR 22 million (I/2009: EUR -249
million). This figure included EUR 10 million of raw material-related inventory
gains (I/2009: losses of EUR -110 million), resulting from higher metal prices.
The underlying operational result consequently improved to EUR -32 million
(I/2009: EUR -134 million) with the main reasons for the improvement being
higher delivery volumes and higher base prices. Loss before taxes totalled EUR
33 million (I/2009: EUR -252 million).
Net financial income and expenses totalled EUR -4 million (I/2009: EUR 0
million). Net loss for the period from continuing operations totalled EUR 21
million (I/2009: EUR -188 million) and earnings per share totalled EUR -0.12
(I/2009: EUR -1.04). Return on capital employed in the first quarter was -2.4%
(I/2009: -27.5%).
Net cash generated from operating activities was somewhat negative at EUR -86
million (I/2009: EUR 295 million positive). Some EUR 43 million was tied up in
working capital as a result of higher metal prices. Net interest-bearing debt
increased by EUR 468 million to EUR 1 293 million in the first quarter (March
31, 2009: EUR 825 million) and gearing was 53.5% (March 31, 2009: 32.3%), still
well below the target of <75%. Current non-interest bearing liabilities include
the dividend payout of EUR 64 million.
Capital expenditure and investment projects
Capital expenditure totalled EUR 28 million (I/2009: EUR 62 million) in the
first quarter.
Outokumpu announced a EUR 420 million investment project to double its
ferrochrome production capacity at Tornio in Finland to 530 000 tons in June
2008. The financial crisis and market uncertainty resulted in this investment
project being postponed in December 2008.
In March 2010, Outokumpu made a decision to update the feasibility study on this
investment. This study will include an updated financial evaluation and
technical specifications with detailed budgets and timetables. An investment
decision based on the study will be made by the end of June 2010.
Capital expenditure by the Group in 2010 is expected to be below EUR 200 million
excluding decisions on any new or postponed investment projects. This figure
includes annual capital expenditure on maintenance and the finalising of some
ongoing investment projects.
Risks and uncertainties
Outokumpu operates in accordance with the risk management policy approved by its
Board of Directors. This policy defines the objectives, approaches and areas of
responsibility in risk management. Risks and uncertainties may, if they
materialise, have a substantial impact on earnings and cash flows. Key risks are
assessed and updated on a regular basis.
Important strategic and business risks include structural overcapacity and
competition in stainless steel markets, the Euro-centricity of Group operations
and weak market conditions affecting utilisation of the Group's stainless steel
production capacity. To mitigate risks related to structural overcapacity and
fierce competition in stainless steel markets, Outokumpu aims to maintain the
cost-efficiency of its operations, broaden the Group's product offering and
increase sales to end-users by, for example, developing distribution channels.
This strategy is supported by the Group Sales and Marketing function, which
ensures that customers are served in an optimal way. To mitigate any possible
impacts resulting from Euro-centricity, Outokumpu is also aiming to grow outside
Europe.
Stainless steel markets were improving during the early part of 2010. Outokumpu
is monitoring the situation continuously and will adjust its operations in
response to possible changes in market sentiment.
Operational risks arise as a consequence of inadequate or failed internal
processes, employee actions, systematic or other events such as natural
catastrophes, misconduct or crime. Operational risks also include different
issues related to leadership, organisational efficiency and corporate culture.
Key operational risks are a major fire or accident and variations in production
performance. These risks are mitigated through insurances and a variety of
preventive or corrective actions and initiatives. To minimise damage to propertyand business interruptions that could be caused by fire at the Group's major
production sites, Outokumpu has implemented systematic fire and security audit
programmes.
During the first quarter, prices of alloying metals were rising. While this has
a positive impact on earnings, the impact on cash-flow is negative as the rising
metal prices increase working capital. Molybdenum futures contracts were
launched on the London Metal Exchange (LME) in February. Outokumpu is prepared
for the hedging of molybdenum prices using similar principles to those applied
when hedging nickel price risks.
The US dollar and Swedish krona strengthened during the review period. A strong
dollar has a positive impact especially on ferrochrome-related revenues while a
stronger krona increases Group production costs in Sweden. Part of the Swedish
krona-related cash flow risk has been hedged. Outokumpu is also exposed to
changes in interest rates, certain equity security prices and credit risk
related to receivables. No new interest rate hedges were made in the first
quarter. The Group's liquidity position has remained at a good level.
Environment, health and safety
Emissions to air and discharges to water remained within permitted limits and
the breaches that occurred were temporary, were identified and caused only
minimal environmental impact. Outokumpu is not a party in any significant
juridical or administrative proceeding concerning environmental issues, nor is
it aware of any realised environmental risks that could have a material adverse
effect on the Group's financial position.
Emissions trading activities have been conducted in accordance with obligations,
agreed procedures and the Group's financial risk policy. Emissions under the EU
Emission Trading Scheme during the first quarter totalled approximately 188 000
tonnes (I/2009: 172 000 tonnes). No external trading of emission allowances was
carried out in the first quarter. Outokumpu's carbon dioxide allowances in the
UK, Sweden and Finland proved adequate for the Group's planned production.
In the first quarter of 2010, the lost-time injury rate (i.e. lost-time
accidents per million working hours) was 6.3 (I/2009: 5.5), not meeting the
Group's 2010 target of less than four.
Outokumpu is participating in the construction of a wind farm in Tornio,
Finland. The Group is a shareholder in Rajakiiri Oy, a company specialising in
wind power technology. Rajakiiri has made a decision to invest in a 30 MW wind
farm at Röyttä, on the coast of the Baltic Sea near the Tornio Works site and
Outokumpu has been allocated 20% of the electrical energy that will be produced.
This new wind power project will meet approximately 0.5% of Outokumpu's total
energy needs. As part of its energy strategy, Outokumpu is investigating the
possibilities to increase the proportion of wind power in the energy mix.
The Life Cycle Inventory Study on Stainless Steel Production in the EU shows
that Outokumpu's stainless steel products have the smallest carbon footprint,
10-20% smaller than the EU average. This good result has been achieved through
improved processes and by optimising the use of recycled steel and by actively
pursuing a low-carbon electricity mix. To further develop the Group's operations
in the area of sustainability, Outokumpu has published a new Energy and
Low-carbon Programme. In the last ten years, Outokumpu has managed to reduce the
Group's direct carbon dioxide (CO2) emissions by 25% per tonne of stainless
steel produced and the target is a further 20% reduction by 2020. Outokumpu's
carbon profile consists of direct emissions from production operations, indirect
emissions from purchased electricity, emissions resulting from the
transportation of products, and business travel.
Corporate responsibility
In 2010, for the second time, Outokumpu was awarded 'Sector Mover' status for
having the largest proportional annual improvement in sustainability (corporate
responsibility) performance within the steel industry compared to the previous
year. Each year, 2 500 of the world's largest companies are assessed by
Sustainable Asset Management (SAM) on their economic, environmental and social
responsibilities including areas such as corporate governance, labour practices,
talent attraction and retention, and the quality of reporting on environmental
and social issues.
Outokumpu Oyj has qualified for the OMX GES Sustainability Nordic index.
Calculated by NASDAQ OMX in cooperation with GES Investment Services, this is a
benchmark sustainability index which consists of 50 leading companies listed on
the NASDAQ OMX Copenhagen, Helsinki, Stockholm and Oslo Bors exchanges. The
index criteria are based on international guidelines for environmental, social
and governance (ESG) issues.
Personnel
The Group's continuing operations employed an average of 7 601 people during
January-March 2010
(I/2009: 8 336). Outokumpu had 7 597 employees at the end of March (March
31, 2009: 8 253).
Civil actions regarding the sold fabricated copper products business
In 2003, the European Commission issued its judgment on Outokumpu's
participation in a European price-fixing and market-sharing cartel involving
industrial copper tubes during 1988-2001. In the investigation concerning the
sanitary copper tube sector, Outokumpu has lodged an appeal with the Court of
First Instance for Europe regarding the level of the fine. The final decision
from the Court of First Instance regarding sanitary tubes is expected during
2010. Outokumpu paid the fines imposed by the Commission for both cases in 2009.
In connection with the industrial tubes cartel investigation, Outokumpu Oyj has
since 2004 been in the process of addressing several civil complaints raised in
the US against the company and its former fabricated copper products business in
the US. The majority of those complaints have been concluded, but two civil
actions are still pending in the US. The first of these is a class action
brought in the federal court of Tennessee on behalf of certain indirect
purchasers of industrial copper tubing. Outokumpu believes that this class
action lacks merit and is attempting to reach a favourable resolution. The
second pending complaint in the US, an individual action filed in 2006 in the
federal district court in Memphis, Tennessee seeks an unstated amount of damages
related to an alleged world-wide price-fixing and market allocation cartel. The
court dismissed this complaint in 2007, and it is the appeal against that
dismissal which is currently pending. In 2010, a third civil action was brought
in the UK courts against Outokumpu Oyj (and two other defendant groups) by the
same claimant group as that in the Memphis suit. The claimants allege that they
suffered loss across Europe as a result of the cartel and are seeking to
recovery from the three main defendant groups either jointly or jointly and
severally. The claimants' initial claim for alleged losses (between the three
defendant groups) is some GBP 20 million excluding interest. Outokumpu will be
challenging the jurisdiction of the UK courts to hear this claim. In any event,
Outokumpu believes that the allegations regarding damages caused by the cartel
are groundless and, if pursued, Outokumpu will defend itself in any proceedings.
No provisions have been booked on these claims.
Customs investigation of exports to Russia by Tornio Works
In March 2007, Finnish Customs authorities initiated a criminal investigation
into the Group's Tornio Works' export practices to Russia. It was suspected that
a forwarding agency based in south-eastern Finland had prepared defective and/or
forged invoices regarding the export of stainless steel to Russia. The
preliminary investigation focused on possible complicity by Outokumpu Tornio
Works in the preparation of defective and/or forged invoices by the forwarding
agent.
In June 2009, the Finnish Customs completed its preliminary investigation and
forwarded the matter for consideration of possible charges to the prosecuting
authorities. The process of considering possible charges is expected to be
completed in June 2010.
Immediately after the Finnish Customs authorities began their investigations in
2007, Outokumpu initiated its own investigation into the trade practices
connected with stainless steel exports from Tornio to Russia. In June 2007,
based on its own investigation, a leading Finnish law firm Roschier Attorneys
Ltd. concluded that it had not found evidence that any employees of Tornio Works
or the Group would have committed any of the crimes alleged by the Finnish
Customs.
Roschier has subsequently, at Outokumpu's request, examined the preliminary
investigation material produced by the Finnish Customs and concluded that it
contains no evidence that any Outokumpu employees would have committed either
forgery or any accounting offences as alleged by the Finnish Customs.
Outokumpu's Auditor, KPMG Oy Ab, has also stated that suspicions related to the
making of false financial statements are groundless.
Outokumpu has stated that neither the Group nor its personnel have committed any
of the crimes alleged by the Finnish Customs.
Organisational changes and appointments
At the beginning of April, Mr Pekka Erkkilä, EVP - General Stainless, left
Outokumpu Oyj and joined Outotec Oyj. Mr Hannu Hautala, SVP - Tornio Works, took
up his duties as head of Tornio Works at the beginning of April.
Mr Kari Parvento, EVP - Group Sales and Marketing, and a member of Outokumpu's
Executive Committee, took up his position at Outokumpu Oyj at the beginning of
April.
Shares and shareholders
According to the Nordic Central Securities Depository, Outokumpu's largest
shareholders by group at the end of the first quarter of 2010 were the State of
Finland through its holding in Solidium Oy (30.9%), foreign investors (26.2%),
Finnish public sector entities (17.3%), Finnish households (12.3%), Finnish
financial and insurance institutions (7.3%), Finnish corporations (3.4%) and
Finnish non-profit organisations (2.6%). The list of largest shareholders is
updated daily on Outokumpu's Internet pages: www.outokumpu.com/Investors<http://www.outokumpu.com/Investors>.
Shareholders that hold more than five percent of the shares and votes in
Outokumpu Oyj are Solidium Oy (30.9%) and the Finnish Social Insurance
Institution (8.0%).
At the end of March, the market capitalisation of Outokumpu Oyj shares was EUR
2 973 (March 31, 2009: EUR 1 485 million). At the end of the first quarter, the
closing share price was EUR 16.25 (I/2009: EUR 8.16) and the average share price
for the quarter was EUR 13.78 (I/2009: EUR 8.94) with EUR 16.74 (I/2009: EUR
11.18) as the highest share price and EUR 12.03 (I/2009: EUR 7.72) as the lowest
share price. In the first quarter, share turnover at the Nasdaq OMX Helsinki LTD
exchange totalled 94.4 million shares (I/2009: 108.2 million shares). The total
value of shares traded in the first quarter was EUR 1 300.9 million (I/2009: EUR
967.4 million).
Outokumpu's fully paid share capital at the end of March totalled EUR 311.0
million and consisted of 182 938 249 shares. Excluding treasury shares, the
average number of shares outstanding during the review period was 181 244 775.
Annual General Meeting 2010
The 2010 Annual General Meeting (AGM) approved a dividend of EUR 0.35 per share
for 2009. Dividends totalling EUR 64 million were paid on April 13, 2010.
The AGM authorised the Board of Directors to decide to repurchase the Group's
own shares. The maximum number of shares to be repurchased is 18 000 000,
currently representing 9.89% of the total number of registered shares. Based on
earlier authorisations Outokumpu currently holds 1 040 888 of its own shares.
The AGM authorised the Board of Directors to decide to issue shares and to grant
special rights entitling to shares. The maximum number of new shares to be
issued through the share issue and/or by granting special rights entitling to
shares is 18 000 000, and, in addition, the maximum number of treasury shares to
be transferred is 18 000 000. The authorisation includes the right to resolve
upon directed share issues. These authorisations are valid 12 months or until
the next AGM, however no longer than May 31, 2011. To date the authorisations
have not been used.
The 2010 Annual General Meeting also decided that Outokumpu would make a
donation to the Aalto University Foundation. The maximum aggregate amount of
Outokumpu Group's donations to the Aalto University Foundation in 2010 is EUR 1
million.
The AGM decided on the number of the Board members, including the Chairman and
Vice Chairman, should be eight. Evert Henkes, Ole Johansson, Victoire de
Margerie, Anna Nilsson-Ehle, Jussi Pesonen, Leena Saarinen and Anssi Soila were
re-elected as members of the Board of Directors, and Olli Vaartimo was elected
as a new member. The AGM re-elected Ole Johansson as Chairman of the Board and
Anssi Soila as Vice Chairman of the Board. The AGM also resolved to form a
Shareholders' Nomination Committee to prepare proposals on the composition and
remuneration of the Board of Directors for presentation to the next AGM.
At its first meeting, the Board of Directors of Outokumpu appointed two
permanent committees consisting of Board members. Olli Vaartimo (Chairman), Anna
Nilsson-Ehle, Victoire de Margerie and Jussi Pesonen were elected as members of
the Board Audit Committee. Ole Johansson (Chairman), Evert Henkes, Leena
Saarinen and Anssi Soila were elected as members of the Board Nomination and
Compensation Committee.
KPMG Oy Ab, Authorised Public Accountants, was re-elected as the Company's
auditor for the period ending at the close of the next AGM.
Events after the review period
The Finnish Government has announced its support for the Fennovoima nuclear
power initiative. Outokumpu has about 10% ownership in Fennovoima, which would
enable the Group to get electricity at production cost according to its
ownership. Fennovoima's plan is to have the nuclear reactor in operation by
2020. Final decision on the licence to build the reactor will be made by the
Finnish Parliament later this year.
SHORT-TERM OUTLOOK
Demand for standard grades of stainless steel has recovered to some degree in
2010 compared to late 2009. The good order intake from the beginning of the year
has continued. The increased demand reflects both restocking as a result of
increasing metal prices, and improved demand from end-users. There are also
initial signs of increased activity in investment-driven customer-segments, but
this has not yet materialised in major orders. Inventories among distributors in
Europe are estimated to beat normal levels.
Lead times on mill-deliveries for standard grades are normal at 6-8 weeks.
Outokumpu is gradually increasing its production volumes and Tornio Works will
have full production capability by June. The Group's delivery volumes in the
second quarter are expected to be at the same level or somewhat higher than in
the first quarter (333 000 tonnes). Delivery volumes are strongly dependent on
distributors' short-term buying behaviour, and this is impacted by developments
in raw-material prices, especially nickel. Base prices have been increasing
recently and Outokumpu's average base prices for flat products in the second
quarter of 2010 are estimated to be 50-100 EUR/tonne higher than the average in
the first quarter. The contract price for ferrochrome in the second quarter
increases significantly, this will begin to have a positive impact on the
Group's profits from May.
Outokumpu's underlying operational result*) in the second quarter is expected to
be somewhat positive. At current metal price levels, raw material-related gains
are expected to be in excess of EUR 50 million. Cash flow is expected to be
negative as mainly higher metal prices will increase working capital.
*) Underlying operational result= Operating profit +/- raw material related
inventory gains and losses and non-recurring items.
In Espoo, April 26, 2010
Board of Directors
Outokumpu is a global leader in stainless steel with the vision to be the
undisputed number one. Customers in a wide range of industries use our stainless
steel and services worldwide. Being fully recyclable, maintenance-free, as well
as very strong and durable material, stainless steel is one of the key building
blocks for sustainable future. Outokumpu employs some 7 500 people in more than
30 countries. The Group's head office is located in Espoo, Finland. Outokumpu is
listed on the NASDAQ OMX Helsinki.
www.outokumpu.com <http://www.outokumpu.com/>
CONSOLIDATED FINANCIAL
STATEMENTS (unaudited)
Statement of
comprehensive income
Condensed income statement
Jan- Jan- Jan-
March March Dec
EUR million 2010 2009 2009
------------------------------------------------------------------------------
Continuing operations:
Sales 916 679 2 611
Other operating income 7 10 28
Costs and expenses -942 -924 -3 044
Other operating expenses -3 -15 -32
-------------------
Operating profit -22 -249 -438
Share of results in
associated companies -7 -3 -12
Financial income and expenses
Interest income 4 5 17
Interest expenses -10 -13 -38
Market price gains and losses 6 5 -2
Other financial income 2 3 5
Other financial expenses -6 0 -6
-------------------
Profit before taxes -33 -252 -474
Income taxes 12 64 142 -------------------
Net profit for the period
from continuing operations -21 -188 -332
Discontinued operations:
Net profit for the period
from discontinued operations 0 0 -4
Net profit for the period -21 -187 -336
Attributable to:
Owners of the parent -21 -187 -336
Non-controlling interests -0 -0 -0
Earnings per share for profit attributable
to the owners of the parent:
Earnings per share, EUR -0.12 -1.04 -1.86
Diluted earnings per share, EUR -0.12 -1.04 -1.86
Earnings per share from continuing operations
attributable to the owners of the parent:
Earnings per share, EUR -0.12 -1.04 -1.83
Earnings per share from discontinued operations
attributable to the owners of the parent:
Earnings per share, EUR 0.00 0.00 -0.02
Statement of other comprehensive income
Jan- Jan- Jan-
March March Dec
EUR million 2010 2009 2009
------------------------------------------------------------------------------
Net profit for the period -21 -187 -336
Other comprehensive income:
Exchange differences on translating foreign operations 14 17 29
Available-for-sale financial assets
Fair value changes during the period 11 -1 34
Income tax relating to
available-for-sale financial assets -2 -3 -9
Cash flow hedges
Fair value changes during the period 18 -4 23
Reclassification adjustments from other
comprehensive income to profit -0 - 1
Income tax relating to cash flow hedges -5 1 -6
Net investment hedges
Fair value changes during the period - 1 1
Income tax relating to net investment hedges - -0 -0
Share of other comprehensive income of associated companies 4 18 5
-------------------
Other comprehensive income for the period,
net of tax 41 29 77
Total comprehensive income for the period 20 -158 -259
Attributable to:
Owners of the parent 20 -158 -259
Non-controlling interests -0 -0 -1
Statement of financial position
March 31 March 31 Dec 31
EUR million 2010 2009 2009
-------------------------------------------------------------------------
ASSETS
Non-current assets
Intangible assets 565 580 566
Property, plant and equipment 2 106 2 043 2 097
Investments in associated companies 1) 151 177 152
Available-for-sale financial assets 1) 113 72 98
Derivative financial instruments 1) 3 9 7
Deferred tax assets 41 34 42
Trade and other receivables
Interest-bearing 1) 156 139 140
Non interest-bearing 56 57 55
-------------------------
Total non-current assets 3 192 3 111 3 157
Current assets
Inventories 1 102 878 1 016
Available-for-sale financial assets 1) 14 7 14
Derivative financial instruments 1) 23 34 16
Trade and other receivables
Interest-bearing 1) 14 28 9
Non interest-bearing 646 521 508
Cash and cash equivalents 1) 100 381 112
-------------------------
Total current assets 1 900 1 849 1 674
-------------------------
Receivables related to assets held for sale 1) 24 16 20
TOTAL ASSETS 5 116 4 976 4 850
EQUITY AND LIABILITIES
Equity attributable to the
equity holders of the Company
Share capital 311 309 309
Premium fund 713 705 706
Other reserves 65 3 37
Retained earnings 1 347 1 719 1 735
Net profit for the financial year -21 -187 -336
-------------------------
2 416 2 550 2 451
Non-controlling interests 1 1 0
-------------------------
Total equity 2 417 2 551 2 451
Non-current liabilities
Long-term debt 1) 1 059 1 152 997
Derivative financial instruments 1) 40 55 41
Deferred tax liabilities 90 161 100
Pension obligations 67 66 65
Provisions 17 28 17
Trade and other payables 1 2 1
-------------------------
Total non-current liabilities 1 275 1 464 1 221
Current liabilities
Current debt 1) 717 422 652
Derivative financial instruments 1) 56 27 45
Income tax liabilities 7 5 3
Provisions 23 44 26
Trade and other payables
Interest-bearing 1) 7 26 7
Non interest-bearing 603 432 437
-------------------------
Total current liabilities 1 413 955 1 170
Liabilities related to assets held for sale 1) 12 6 8
TOTAL EQUITY AND LIABILITIES 5 116 4 976 4 850
1) Included in net interest-bearing debt.
Consolidated
statement
of changes in equity
Attributable to the owners of the
parent
-----------------------------------------------------
Share Share Other Fair value
capital premium reserves reserves
EUR million fund
--------------------------------------------------------------------------
Equity on December
31, 2008 308 702 15 -28
--------------------------------------------------------------------------
Total comprehensive
income for the period - - - 16
Dividends - - - -
Share-based payments - - - -
Share options
exercised 1 3 - -
--------------------------------------------------------------------------
Equity on March
31, 2009 309 705 15 -12
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Equity on December
31, 2009 309 706 15 22
--------------------------------------------------------------------------
Total comprehensive
income for the period - - - 28
Dividends - - - -
Share-based payments - - - -
Share options
exercised 2 8 - -
Other change - - - -
--------------------------------------------------------------------------
Equity on March
31, 2010 311 713 15 50
--------------------------------------------------------------------------
Attributable to the
owners of the
parent
-----------------------------------------
Treasury Cumulative Retained Non- Total
shares translation earnings controlling equity
EUR million differences interests
--------------------------------------------------------------------------------
Equity on December
31, 2008 -27 -138 1 961 1 2 795
--------------------------------------------------------------------------------
Total comprehensive
income for the period - 13 -187 0 -158
Dividends - - -90 - -90
Share-based payments 2 - -1 - 0
Share options
exercised - - - - 4
--------------------------------------------------------------------------------
Equity on March
31, 2009 -25 -125 1 683 1 2 551
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Equity on December
31, 2009 -25 -110 1 534 0 2 451
--------------------------------------------------------------------------------
Total comprehensive
income for the period - 13 -21 -0 20
Dividends - - -64 - -64
Share-based payments - - 0 - 0
Share options
exercised - - - - 9
Other change - - - 1 1
--------------------------------------------------------------------------------
Equity on March
31, 2010 -25 -97 1 449 1 2 417
--------------------------------------------------------------------------------
Condensed statement of cash flows
Jan- Jan- Jan-
March March Dec
EUR million 2010 2009 2009
----------------------------------------------------------------
Net profit for the period -21 -187 -336
Adjustments
Depreciation and amortisation 56 52 211
Impairments - - 15
Other non-cash adjustments -68 -69 -230
Change in working capital -43 489 548
Dividends received 2 3 3
Interests received 1 2 8
Interests paid -10 -14 -57
Income taxes paid -3 20 36
-----------------
Net cash from
operating activities -86 295 198
Purchases of assets -43 -71 -232
Proceeds from the sale of assets 4 6 17
Net cash from other
investing activities 1 -0 -2
-----------------
Net cash from
investing activities -38 -65 -216
Cash flow before
financing activities -124 229 -19
Share options exercised 9 4 4
Borrowings of long-term debt 56 9 130
Repayment of long-term debt -51 -9 -350
Change in current debt 101 -77 212
Dividends paid - - -90
Proceeds from the sale
of other financial assets - 0 0
Other financing cash flow -6 1 -1
-----------------
Net cash from
financing activities 109 -72 -97
Net change in cash
and cash equivalents -15 157 -115
Cash and cash equivalents at
the beginning of the period 112 224 224
Foreign exchange rate effect 3 0 3
Discontinued operations'
net change in cash effect 1 -0 0
Net change in cash
and cash equivalents -15 157 -115
Cash and cash equivalents
at the end of the period 100 381 112
Cash flows presented for continuing operations.
Key figures
Jan-March Jan-March Jan-Dec
EUR million 2010 2009 2009
-----------------------------------------------------------------------
Sales 916 679 2 611
Operating profit -22 -249 -438
Operating profit margin, % -2.4 -36.7 -16.8
EBITDA 34 -198 -212
Return on capital employed, % -2.4 -27.5 -11.7
Return on equity, % -3.4 -28.1 -12.8
Return on equity, continuing operations, % -3.5 -28.0 -12.7
Capital employed at end of period 3 709 3 376 3 634
Net interest-bearing
debt at end of period 1 293 825 1 183
Equity-to-assets ratio
at end of period, % 47.3 51.3 50.6
Debt-to-equity ratio at end of period, % 53.5 32.3 48.2
Earnings per share, EUR -0.12 -1.04 -1.86
Earnings per share from
continuing operations, EUR -0.12 -1.04 -1.83
Earnings per share from
discontinued operations, EUR 0.00 0.00 -0.02
Average number of shares
outstanding, in thousands 1) 181 245 180 413 180 826
Fully diluted earnings per share, EUR -0.12 -1.04 -1.86
Fully diluted average number
of shares, in thousands 1) 181 264 180 413 180 970
Equity per share at end
of period, EUR 13.28 14.09 13.54
Number of shares outstanding
at end of period,in thousands 1) 181 897 180 953 180 970
Capital expenditure,
continuing operations 28 62 245
Depreciation, continuing operations 56 52 211
Deliveries, continuing operations,
1 000 tonnes 333 247 1 030
Average personnel for the
period, continuing operations 7 601 8 336 7 941
-----------------------------------------------------------------------
1) The number of own shares repurchased is excluded.
NOTES TO THE INTERIM FINANCIAL STATEMENTS (unaudited)
This interim report is prepared in accordance with IAS 34 (Interim Financial
Reporting). The same accounting policies and methods of computation have been
followed in the interim financial statements as in the annual financial
statements for 2009, except for changes in IFRS-standards, which are applicable
from the beginning of 2010. Of these, the most significant are in the following
standards:
- IFRS 3 Business Combinations
- IAS 27 Consolidated and Separate Financial Statements
These changes have not had material impact on the interim financial statements.
All presented figures in this interim report have been rounded and consequently
the sum of individual figures can deviate from the presented sum figure. Key
figures have been calculated using exact figures.
Use of estimates
The preparation of the financial statements in accordance with IFRS requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities, as well as the disclosure of contingent assets and
liabilities, and the reported amounts of income and expenses during the
reporting period. Accounting estimates are employed in the financial statements
to determine reported amounts, including the realisability of certain assets,
the useful lives of tangible and intangible assets, income taxes, provisions,
pension obligations, impairment of goodwill and other items. Although these
estimates are based on management's best knowledge of current events and
actions, actual results may differ from the estimates.
Shares and share capital
The total number of Outokumpu Oyj shares was 182 938 249 and the share capital
amounted to EUR 311.0 million on March 31, 2010. Outokumpu Oyj held 1 040 888
treasury shares on March 31, 2010. This corresponded to 0.6% of the share
capital and the total voting rights of the Company on March 31, 2010.
Outokumpu has a stock option program for management. The stock options have been
allocated as part of the Group's incentive programs to key personnel of
Outokumpu. The option programme has three parts 2003A, 2003B and 2003C. On March
31, 2010 a total of 650 881 Outokumpu Oyj shares had been subscribed for on the
basis of 2003A stock option program, a total of 1 016 813 Outokumpu Oyj shares
on the basis of 2003B stock option program and a total of 20 000 Outokumpu Oyj
shares on the basis of 2003C stock option program. On March 31, 2010, only stock
options 2003C had remaining share subscription period and an aggregate maximum
of 80 500 shares can be subscribed with the remaining 2003C stock options. In
accordance with the terms and conditions of the option program, the dividend
adjusted share price for a stock option 2003C was EUR 10.44 on March 31, 2010.
As a result of the remaining share options, Outokumpu Oyj's share capital may be
increased by a maximum of EUR 136 850 and the number of shares by a maximum of
80 500 shares. This corresponds to 0.0% of the Company's shares and voting
rights.
Outokumpu has also two share-based incentive programmes for years 2006-2010 and
2009-2013 as part of the key employee incentive and commitment system of the
Company. The second earnings period for 2006-2010 incentive programme was ended
on December 31, 2009. The set targets for the earnings period were not met and
thus no reward was paid to the participants.
Outokumpu Board approved on February 2, 2010 134 employees to be in the scope of
the share incentive programme 2009-2013 second earnings period (2010-2012). The
amount of reward will be determined and paid to the participants on the basis of
the achievement of performance targets after the financial statements of the
last year of earnings period have been prepared. If persons covered by both
share-based incentive programs were to receive the number of shares in
accordance with the maximum reward, currently a total of 1 310 710 shares, their
shareholding obtained via the program would amount to 0.7% of the Company's
shares and voting rights.
Detailed information on the option programme and of the share-based incentive
programmes can be found in the annual report of Outokumpu from
http://ar.outokumpu.com/2009.
Discontinued operations
and assets held for sale
Jan-March Jan-March Jan-Dec
EUR million 2010 2009 2009
--------------------------------------------------------
Sales 13 8 31
Operating profit 1 1 -1
Net profit for the period
from discontinued operations 0 0 -4
Assets
Non-current 4 4 4
Current 21 11 16
Liabilities
Non-current 3 3 3
Current 10 3 5
Operating cash flows -0 6 3
--------------------------------------------------------
Outokumpu Brass produces brass rods for applications in the construction,
electrical and automotive industries. The brass rod plant is located in Drünen
in the Netherlands and the unit also has a 50% stake in a brass rod company in
Gusum, Sweden. Outokumpu Brass employs some 150 employees. The assets and
liabilities of brass rod business are presented as held for sale. Outokumpu
intends to divest the brass rod business.
Major non-recurring items
in operating profit
Jan-March Jan-March Jan-Dec
EUR million 2010 2009 2009
-------------------------------------------------------------
Write-down of Avesta
melt-shop investment - - -15
Redundancy provisions - -5 -5 ----------------------------
- -5 -20
Income taxes
Jan-March Jan-March Jan-Dec
EUR million 2010 2009 2009
-------------------------------------------------------------
Current taxes -6 -0 -4
Deferred taxes 18 64 146
----------------------------
12 64 142
Property, plant and equipment
Jan 1 - Jan 1 - Jan 1 -
March 31 March31 Dec 31
EUR million 2010 2009 2009
-------------------------------------------------------------
Historical cost at the
beginning of the period 4 309 4 021 4 021
Translation differences 72 2 69
Additions 27 64 246
Disposals -6 -2 -23
Reclassifications 0 -1 -4
----------------------------
Historical cost at
the end of the period 4 401 4 083 4 309
Accumulated depreciation at
the beginning of the period -2 212 -1 994 -1 994
Translation differences -38 -2 -38
Disposals 5 1 20
Reclassifications 0 0 0
Depreciation -50 -45 -185
Impairments - - -15
Accumulated depreciation at
----------------------------
the end of the period -2 294 -2 040 -2 212
Carrying value at
the end of the period 2 106 2 043 2 097
Carrying value at the
beginning of the period 2 097 2 027 2 027
Commitments
March 31 March 31 Dec 31
EUR million 2010 2009 2009
-------------------------------------------------------------
Mortgages and pledges
Mortgages on land 229 189 185
Other pledges 1 5 1
Guarantees
On behalf of subsidiaries
for commercial commitments 35 37 22
On behalf of associated companies
for financing 1 5 1
Other commitments 50 57 53
Minimum future lease payments
on operating leases 59 55 62
-------------------------------------------------------------
Group's off-balance sheet investment commitments totaled EUR 62 million on March
31, 2010 (March 31, 2009: EUR 99 million, Dec 31, 2008: EUR 62 million).
Related party transactions
Outokumpu's ownership in Outokumpu Industriunderhåll AB (previously ABB
Industriunderhåll AB) increased from 49% to 51% on March 1, 2010 and since then
the company has been consolidated as a subsidiary. Non-controlling interest is
presented separately from the net profit and disclosed as a separate item in the
equity. The acquisition price for the 2% increase in the ownership was EUR
22 000.
The only remaining significant related party transactions are loan receivables
totalling EUR 17 million (March 31, 2009: EUR 7 million, Dec 31, 2009: EUR 11
million).
Fair values and nominal
amounts of
derivative instruments
March 31 March 31 March 31 Dec 31 March 31 Dec 31
2010 2010 2010 2009 2010 2009
Positive Negative Net Net
fair fair fair fair Nominal Nominal
EUR million value value value value amounts amounts
-----------------------------------------------------------------------------
Currency and interest
rate derivatives
Currency forwards 16 44 -28 -42 1 865 1 784
Interest rate swaps - 4 -4 -3 202 199
Cross-currency swaps 2 23 -21 -8 218 212
Currency options, bought 2 - 2 1 36 30
Currency options, sold - 0 -0 -0 36 31
Interest options, bought 1 - 1 2 82 78
Interest options, sold - 2 -2 -2 82 78
Tonnes Tonnes
-----------------------------------------------------------------------------
Metal derivatives
Forward and futures
nickel contracts 4 - 4 - 1 380 -
Nickel options, bought 0 - 0 2 3 480 13 290
Nickel options, sold - 12 -12 -4 3 480 13 290
Forward and futures
copper contracts 0 0 -0 -0 2 100 1 275
Forward and futures
zinc contracts 0 0 0 -0 1 375 400
Emission allowance
derivatives 1 0 1 0 404 000 404 000
TWh TWh
-----------------------------------------------------------------------------
Electricity
derivatives 1 11 -10 -8 1.0 0.8
-----------------------------------------------------------------------------
26 97 -70 -63
Segment information
General Stainless
EUR million I/09 II/09 III/09 IV/09 2009
------------------------------------------------------
Sales 476 501 496 592 2 065
of which Tornio Works 270 300 303 420 1 292
Operating profit -157 -52 -38 -12 -259
of which Tornio Works -129 -33 -44 22 -183
Operating capital at
the end of period 2 390 2 379 2 355 2 421 2 421
Average personnel
for the period 3 917 3 848 3 820 3 752 3 834
Deliveries of main
products (1 000 tonnes)
Cold rolled 114 132 112 128 486
White hot strip 57 64 64 62 248
Semi-finished products 39 51 45 61 196
------------------------------------------------------
Total deliveries
of the division 210 248 221 250 929
------------------------------------------------------
EUR million I/10
------------------------------------------------------
Sales 754
of which Tornio Works 481
Operating profit -2
of which Tornio Works -7
Operating capital at
the end of period 2 484
Average personnel
for the period 3 780
Deliveries of main
products (1 000 tonnes)
Cold rolled 151
White hot strip 84
Semi-finished products 70
------------------------------------------------------
Total deliveries
of the division 304
------------------------------------------------------
Specialty Stainless
EUR million I/09 II/09 III/09 IV/09 2009
------------------------------------------------------
Sales 371 278 258 332 1 239
Operating profit -82 -37 -21 -10 -149
Operating capital at
the end of period 1 007 906 965 1 035 1 035
Average personnel
for the period 3 892 3 656 3 433 3 372 3 588
Deliveries of main
products (1 000 tonnes)
Cold rolled 25 19 19 24 86
White hot strip 23 25 21 24 92
Quarto plate 20 19 15 18 71
Tubular products 14 12 10 11 47
Long products 9 8 10 10 38
------------------------------------------------------
Total deliveries
of the division 92 82 75 87 335
------------------------------------------------------
EUR million I/10
------------------------------------------------------
Sales 367
Operating profit -21
Operating capital at
the end of period 1 109
Average personnel
for the period 3 319
Deliveries of main
products (1 000 tonnes)
Cold rolled 35
White hot strip 30
Quarto plate 21
Tubular products 12
Long products 13
------------------------------------------------------
Total deliveries
of the division 111
------------------------------------------------------
Other operations
EUR million I/09 II/09 III/09 IV/09 2009
------------------------------------------------------
Sales 66 58 56 62 243
Operating profit -12 -5 -4 -9 -31
Operating capital at
the end of period 108 252 233 240 240
Average personnel
for the period 527 526 521 497 518
------------------------------------------------------
EUR million I/10
------------------------------------------------------
Sales 89
Operating profit 2
Operating capital at
the end of period 172
Average personnel
for the period 503
------------------------------------------------------
Income statement by quarter
EUR million I/09 II/09 III/09 IV/09 2009
-----------------------------------------------------------
Continuing operations:
Sales
General Stainless 476 501 496 592 2 065
of which intersegment sales 97 100 107 117 421
Specialty Stainless 371 278 258 332 1 239
of which intersegment sales 75 67 64 87 293
Other operations 66 58 56 62 243
of which intersegment sales 61 52 52 55 221
Intra-group sales -233 -220 -224 -259 -935
-----------------------------------------------------------
Total sales 679 617 587 728 2 611
Operating profit
General Stainless -157 -52 -38 -12 -259
Specialty Stainless -82 -37 -21 -10 -149
Other operations -12 -5 -4 -9 -31
Intra-group items 2 0 -3 2 1
-----------------------------------------------------------
Total operating profit -249 -94 -65 -29 -438
Share of results
in associated companies -3 -0 -6 -3 -12
Financial income and expenses 0 -11 -11 -4 -25
-----------------------------------------------------------
Profit before taxes -252 -105 -81 -36 -474
Income taxes 64 20 26 32 142
-----------------------------------------------------------
Net profit for the period
from continuing operations -188 -85 -55 -4 -332
Net profit for the period
from discontinued
operations 0 -2 -1 -2 -4
-----------------------------------------------------------
Net profit for the period -187 -87 -56 -6 -336
-----------------------------------------------------------
Attributable to:
The owners of the parent -187 -87 -55 -7 -336
Non-controlling interests -0 -0 -0 0 -0
EUR million I/10
-----------------------------------------------------------
Continuing operations:
Sales
General Stainless 754
of which intersegment sales 138
Specialty Stainless 367
of which intersegment sales 91
Other operations 89
of which intersegment sales 65
Intra-group sales -294
-----------------------------------------------------------
Total sales 916
Operating profit
General Stainless -2
Specialty Stainless -21
Other operations 2
Intra-group items -1
-----------------------------------------------------------
Total operating profit -22
Share of results
in associated companies -7
Financial income and expenses -4
-----------------------------------------------------------
Profit before taxes -33
Income taxes 12
-----------------------------------------------------------
Net profit for the period
from continuing operations -21
Net profit for the period
from discontinued
operations 0
-----------------------------------------------------------
Net profit for the period -21
-----------------------------------------------------------
Attributable to:
The owners of the parent -21
Non-controlling interests -0
Major non-recurring
items in operating profit
EUR million I/09 II/09 III/09 IV/09 2009
-----------------------------------------------------------
Specialty Stainless
Write-down of Avesta
melt-shop investment - - -15 - -15
Redundancy provisions -5 - - - -5
-----------------------------------------------------------
-5 - -15 - -20
EUR million I/10
-----------------------------------------------------------
Specialty Stainless
Write-down of Avesta
meltshop investment -
Redundancy provisions -
-----------------------------------------------------------
-
Key figures by quarter
EUR million I/09 II/09 III/09 IV/09
-----------------------------------------------------------------------------
Sales 679 617 587 728
Operating profit -249 -94 -65 -29
Operating profit margin, % -37 -15 -11 -4
EBITDA -198 -42 2 26
Return on capital employed, % -28 -11 -8 -3
Return on equity, % -28 -14 -9 -1
Return on equity,
continuing operations, % -28.1 -13.5 -8.9 -0.7
Capital employed at end of period 3 376 3 423 3 459 3 634
Net interest-bearing
debt at end of period 825 926 1 014 1 183
Equity-to-assets ratio
at end of period, % 51.3 52.2 50.8 50.6
Debt-to-equity ratio
at end of period, % 32.3 37.1 41.4 48.2
Earnings per share, EUR -1.04 -0.48 -0.31 -0.04
Earnings per share from
continuing operations, EUR -1.04 -0.47 -0.30 -0.03
Earnings per share from
discontinued operations, EUR 0.00 -0.01 -0,00 -0.01
Average number of shares
outstanding, in thousands 1) 180 413 180 955 180 963 180 963
Equity per share
at end of period, EUR 14.09 13.79 13.51 13.54
Number of shares outstanding
at end of period, in thousands 1) 180 953 180 963 180 963 180 970
Capital expenditure,
continuing operations 62 45 55 82
Depreciation, continuing operations 52 52 52 55
Deliveries, continuing operations,
1 000 tonnes 247 268 238 277
Average personnel for the period,
continuing operations 8 336 8 031 7 774 7 621
-----------------------------------------------------------------------------
EUR million I/10
-----------------------------------------------------------------------------
Sales 916
Operating profit -22
Operating profit margin, % -2.4
EBITDA 34
Return on capital employed, % -2.4
Return on equity, % -3.4
Return on equity,
continuing operations, % -3.5
Capital employed at end of period 3 709
Net interest-bearing
debt at end of period 1 293
Equity-to-assets ratio
at end of period, % 47.3
Debt-to-equity ratio
at end of period, % 53.5
Earnings per share, EUR -0.12
Earnings per share from
continuing operations, EUR -0.12
Earnings per share from
discontinued operations, EUR 0.00
Average number of shares
outstanding, in thousands 1) 181 245
Equity per share
at end of period, EUR 13.28
Number of shares outstanding
at end of period, in thousands 1) 181 897
Capital expenditure,
continuing operations 28
Depreciation, continuing operations 56
Deliveries, continuing operations,
1 000 tonnes 333
Average personnel for the period,
continuing operations 7 601
-----------------------------------------------------------------------------
1) The number of own shares repurchased is excluded.
Definitions of key financial figures
EBITDA = Operating profit before depreciation,
amortisation and impairments
Capital employed = Total equity + net interest-bearing debt
Operating capital = Capital employed + net tax liability
Return on equity = Net profit for the financial period × 100
-------------------------------------------
Total equity (average for the period)
Return on capital = Operating profit × 100
-------------------------------------------
employed (ROCE) Capital employed (average for the period)
Net interest- Total interest-bearing debt
bearing debt = - total interest-bearing assets
Equity-to-assets ratio = Total equity × 100
-------------------------------------------
Total assets - advances received
Debt-to-equity ratio = Net interest-bearing debt × 100
-------------------------------------------
Total equity
Net profit for the financial period
Earnings per share = attributable to the owners of the parent
-------------------------------------------
Adjusted average number
of shares during the period
Equity attributable to
Equity per share = the owners of the parent
-------------------------------------------
Adjusted number of shares
at the end of the period
[HUG#1408328]
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