Outokumpu Oyj - Company Announcement

Outokumpu moves into a new phase in the Group s strategy development with major investment decisions

Stock Exchange Release
September 17, 2007 at 9.00 a.m.


Outokumpu enters the next phase in its strategy development aiming at
delivering a more stable and profitable business model whilst also
addressing the most attractive growth opportunities. In this respect
the following decisions have been made:

- To increase the share of value-added special grades sales, an EUR
550 million investment will be made in Avesta, Sweden.

- To increase the share of sales to end-use and project customers,
the service center network will be strengthened in China and Italy.

- The successful Operational Excellence programs will be further
expanded, with new targets for 2009 and beyond.

As announced in January 2005, Outokumpu's vision is to be the
undisputed number one in stainless, with success based on operational
excellence. The path to reach the vision was divided into two main
phases: firstly, ensuring the number one position in Europe with
building and strengthening operational excellence, and secondly,
achieving global leadership in stainless by multiplying operational
excellence. The ultimate goal is to secure a significant and
sustained increase in shareholder value.

In accordance with this plan, the emphasis has been so far on
internal improvements and strengthening of the financial performance,
as well as on developing the quality of the current asset base.
Today, both the Production Excellence and Commercial Excellence
programs are proceeding at full speed delivering this year at least
the planned EUR 40 million benefits, with the ultimate target of EUR
160 million to be delivered from 2009 onwards. In addition, the EUR
100 million group-wide fixed cost reduction program was completed in
2006 delivering full results this year. This comes in addition to the
closure of Coil Products Sheffield, which was completed last year
delivering an extra EUR 50 million annual fixed cost savings. The
sale of shares and listing of Outokumpu Technology (now Outotec Oyj)
last year and the subsequent sale of the remaining minority share in
Outotec practically completes the targetted restructuring of the
Group.

Outokumpu is today a pure play stainless steel company with a strong
balance sheet and is well positioned to accelerate its profitable
growth.

Second phase starting in Outokumpu's strategic development

The Board of Directors has reviewed Management proposals to enter
into the second phase in the strategy development towards the
undisputed number one position in stainless. This phase will
concentrate on developing and securing a more stable and profitable
business model to balance the effects of the volatility of the
stainless steel standard products market, and will address growth
prospects with respect to both the size and geographical coverage of
the Group.

The Board of Directors has approved the Management's proposal to
start implementing the new strategy phase. This will entail the
increasing of the share of direct end-user and project sales from the
current 35% to at least 50% in five years time. It will also include
the expanding of the value added special products capacity, while at
the same time maintaining cost leadership in standard grade volume
production.

The transformation towards more end-user and project sales requires
investment into the Group's service capability. Earlier this year new
service centers were announced to Poland and India. Now, a decision
has been made to invest some EUR 70 million in the restructuring and
expansion of the Group's service center in Italy from the current
40 000 tons to some 110 000 tons from 2010 onwards. Also a new
service center will be built in China near Shanghai with a capacity
to stock and process some 30 000 tons of mainly special grades from
2010 onwards. The investment in China will be some EUR 20 million.

The increase of the value added special products capacity includes a
broadening of the grades manufactured and namely an increase in the
production of low-nickel duplex grades. Growth targets will also
include the increasing of ferritic grades production capacity
(stainless steel without nickel). These grades will help reduce the
earnings cyclicality driven by volatile nickel prices.

There is an increasing underlying high demand for the value-added
special grades. It is a market with high barriers of entry, and a
very limited number of players worldwide who can provide the level of
service and product range that Outokumpu targets. Margins in special
grades are higher and more stable than in the current standard
grades. With the special products offering Outokumpu is getting
closer to the end customer and can offer them tailor-made services
that enable customers to extract better performance out of
Outokumpu's products and hence realize themselves attractive cost
savings or an improvement of their product offering. This results in
the customers' willingness to pay a premium for Outokumpu's services,
fuel long-term relationships, and for Outokumpu an increased share of
more profitable and stable revenues reducing the cyclicality of
earnings.

As the first step in increasing of the value added special products
capacity, Outokumpu has decided on an EUR 550 million investment,
over the next three years, in stainless steel special grades capacity
in its Avesta Works in Sweden. The investment will increase the
finished products capacity of Avesta from the current 250 000 tons to
some 650 000 tons with mainly duplex grades, starting in 2010. The
return on capital employed from the expansion is estimated to be
clearly higher than the Group's 13% target. (See separate release for
more details.) The investment decisions on other expansion projects
will be made later this year.

To widen the geographical coverage of the Group, in addition to the
above mentioned service centers in India and China, Outokumpu is
currently conducting a feasibility study on the building of a 250 000
ton stainless steel cold rolling mill in India, as announced earlier
this year.

Operational Excellence programs to be expanded

Encouraged by the success of the on-going Production and Commercial
Excellence programs the Board of Directors has approved Management
plans to expand the excellence initiatives with supply chain
management. The first phase of the Supply Chain Excellence program
will concentrate on procurement. The addition of the new initiative
into the Operational Excellence programs will increase the total
current EUR 160 million benefit target for the year 2009 to EUR 200
million, and the target from 2010 onwards to some EUR 300 million.

For further information, please contact:

Kari Lassila, Senior Vice President - IR and Communications,
Outokumpu Oyj,
tel. +358 9 421 2555, kari.lassila@outokumpu.com

Eero Mustala, Senior Vice President - Corporate Communications,
Outokumpu Oyj,
tel. +358 9 421 2435, eero.mustala@outokumpu.com

OUTOKUMPU OYJ
Corporate Management

Ingela Ulfves
Vice President - Investor Relations
tel. + 358 9 421 2438, mobile +358 40 515 1531, fax +358 9 421 2125
e-mail: ingela.ulfves@outokumpu.com
www.outokumpu.com

Priedai:

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