Outokumpu Oyj - Interim report (Q1 and Q3)

Outokumpu Oyj - increased demand improved profitability

INTERIM REPORT
20 April 2011 at 9.00 am EET

First-quarter 2011 highlights

- Operating profit EUR 33 million (IV/2010: EUR -85 million) including some EUR
45 million (IV/2010: none) of raw material-related inventory gains, underlying
operational result some EUR -12 million (IV/2010: EUR -68 million).
- Operational cash flow EUR -10 million (IV/2010: EUR 18 million).
- Improved demand from both distributors and end-users, deliveries at 380 000
tonnes (IV/2010: 336 000 tonnes).
- Mika Seitovirta appointed Outokumpu's CEO from 1 April 2011.
- Plan for efficiency improvement aimed at achieving EUR 25 million in cost
savings announced in April.

Group key figures

                                               I/11 IV/10             I/10  2010
--------------------------------------------------------------------------------
Sales                             EUR million 1 371 1 162              929 4 229

Operating profit                  EUR million    33   -85              -21   -83

EBITDA                            EUR million    93    -4               35   172

Non-recurring items in
operating profit                  EUR million     -   -17                -   -17

Profit before taxes               EUR million    17   -86              -32  -143

Non-recurring items in
financial income                  EUR million     -     9                -     9

and expenses

Net profit for the
period                            EUR million    16   -91              -21  -124

Earnings per share                        EUR  0.09 -0.50            -0.11 -0.68

Return on capital
employed                                    %   3.1  -8.0             -2.3  -2.1

Net cash generated from
operating activities              EUR million   -10    18              -87  -497

Capital expenditure               EUR million    42    48               28   161

Net interest-bearing
debt at end of period             EUR million 1 873 1 837            1 302 1 837

Debt-to-equity ratio at
end of period                               %  80.4  77.3             53.9  77.3

Stainless steel
deliveries                       1 000 tonnes   380   336              333 1 315

Stainless steel base
price 1)                            EUR/tonne 1 215 1 213            1 235 1 252

Personnel at the end of
period 2)                                     8 452 8 431            8 048 8 431
--------------------------------------------------------------------------------


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

2) Personnel reported as headcount. Earlier reported as full-time
equivalent, comparative figures restated.


The improvement in profitability compared to the fourth quarter of 2010 is
primarily a result of higher delivery volumes but a somewhat improved product
and geographic mix and higher prices also had an impact. Net cash from operating
activities in the first quarter totalled EUR -10 million. EUR 93 million of cash
was tied up in working capital mainly as a result of higher metal prices.
Outokumpu's gearing at the end of the first quarter increased to 80.4% and
remained above the Group's target maximum of 75%. Net interest-bearing debt
increased marginally to EUR 1 873 million. Current non-interest bearing
liabilities include the dividend payout of EUR 45 million, which was made in
April.

SHORT-TERM OUTLOOK

Demand for standard grades of stainless steel has remained relatively stable
after the improvement in early 2011. Growth in demand in the first quarter was
supported by restocking among distributors. Some destocking occurred towards the
end of the quarter as the nickel price declined in March. Underlying demand
continued to improve and is expected to remain stable in the second quarter.
While the order intake from investment-driven end-use segments has been
improving, no major projects utilising special grades have materialised. Lead
times for standard grades are normal at 6-8 weeks. No significant changes in
distributors' inventory levels have occurred and they are currently estimated to
be almost at normal levels. As summer is approaching some softness in demand
from distributors may appear in the second quarter.

Outokumpu estimates that the Group's delivery volumes in the second quarter will
be at a similar level to volumes in the first quarter. Average base prices for
stainless steel in the second quarter are expected to be somewhat higher than
average prices in the first quarter.

Outokumpu's operating profit in the second quarter is expected to be slightly
positive or around break-even with no material impact from raw material-related
inventory gains or losses (at current metal prices).

In addition, the Group's operating profit in the second quarter is expected to
be impacted by non-recurring restructuring provisions related to on-going
statutory negotiations in Europe. The extent of the provisions will be
determined later in the second quarter once these personnel-related negotiations
have been concluded.

CEO Mika Seitovirta:"The first weeks at Outokumpu have proven to be a great learning experience. I
am energised and encouraged while going forward and gaining further knowledge of
this great company and fascinating industry. Our immediate actions will be
focused on profitability, cash flow and improving the balance sheet. Most of the
management attention this year will be spent on the implementation of the short-
term agenda, which is currently being prepared."

The attachments present the Management analysis for the first quarter operating
result and the Interim review by the Board of Directors for January-March 2011,
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

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
first-quarter 2011 financial results will be held on 20 April 2011 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 www.outokumpu.com. Stock
exchange release and 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 at
www.outokumpu.com as of 20 April 2011 at around 3.00 pm EET.

OUTOKUMPU OYJ
Corporate Management


[HUG#1507872]

Attachments:

ENG Q1 2011 interim report.pdf