2012-07-20 08:00:00 CEST
2012-07-20 08:00:04 CEST
REGULATED INFORMATION
Outokumpu Oyj - Interim report (Q1 and Q3)
Outokumpu’s second quarter 2012 – Weaker profitability, continued positive cash flow
OUTOKUMPU OYJ
INTERIM REPORT
20 July 2012 at 9.00 am EET
Second-quarter 2012 highlights:
- Underlying operational result was some EUR -39 million (I/2012: EUR 2
million)
- Operating loss was EUR 80 million (I/2012: profit of EUR 3 million)
including raw material-related
inventory losses of some EUR 8 million (I/2012: gains of EUR 14 million) and
net non-recurring items
totalling EUR -33 million (I/2012: EUR -13 million)
- Operating loss excluding non-recurring items was EUR 47 million (I/2012:
profit of EUR 15 million)
- Positive operating cash flow of EUR 23 million (I/2012: EUR 116 million)
- Total external deliveries at 402 000 tonnes (I/2012: 418 000 tonnes)
- Divestment of remaining Brass operations and part of the Group's stainless
steel stock locations
Group key figures
II/12 I/12 II/11 2011
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Sales EUR million 1 254 1 304 1 281 5 009
EBITDA EUR million -12 60 -4 80
Adjusted EBITDA 1) EUR million 19 59 55 169
Operating result EUR million -80 3 -169 -260
excluding non-recurring items EUR million -47 15 -31 -109
underlying operational result 2) EUR million -39 2 -5 -66
Result before taxes EUR million -130 6 21 -253
excluding non-recurring items EUR million -97 19 -70 -318
Net result for the period EUR million -122 12 50 -186
excluding non-recurring items EUR million -89 24 -33 -244
Earnings per share 3) EUR -0.09 0.04 0.18 -0.64
excluding non-recurring items 3) EUR -0.06 0.08 -0.12 -0.85
Return on capital employed % -8.6 0.3 -16.1 -6.5
excluding non-recurring items % -5.0 1.6 -2.9 -2.7
Net cash generated from operating EUR million 23 116 -66 338
activities
Capital expenditure EUR million 93 79 50 255
Net interest-bearing debt at the end EUR million 1 691 1 644 1 885 1 720
of period 4)
Debt-to-equity ratio at the end of % 84.8 78.4 82.0 82.5
period 4)
External deliveries 1 000 tonnes 402 418 365 1 449
Stainless steel external deliveries 1 000 tonnes 380 399 348 1 391
Stainless steel base price 5) EUR/tonne 1 182 1 185 1 223 1 181
Personnel at the end of period 8 453 7 968 9 474 8 253
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1) EBITDA excluding raw-material related inventory gains/losses and
non-recurring items, unaudited.
2) Operating result excluding raw material-related inventory gains/losses and
non-recurring items, unaudited.
3) Calculated based on the rights-issue-adjusted weighted average number of
shares. Comparative figures adjusted accordingly.
4) 30 June 2012 and 31 March 2012 adjusted to exclude the effect of the rights
issue. Debt-to-equity ratio, including the effect of the rights issue, on 30
June 2012 is 24.1% (31 March 2012: 66.6%).
5) Stainless steel: CRU - German base price (2 mm cold rolled 304 sheet).
Raw-material related inventory gains or losses
The realised timing gain or loss per tonne of stainless steel is estimated
based on the difference between the purchase price and invoice price of each
metal in EUR per tonne times the average metal content in stainless steel. The
unrealised timing impact consists of the change in net realisable value ─ NRV
during each quarter. If there is a significant negative change in metal prices
during the quarter, inventories are written down to NRV at the end of the
period to reflect lower expected transaction prices for stainless steel in the
future. As this timing impact is expected to be realised in the cash flow of
Outokumpu only after the raw material has been sold, it is referred to as being
unrealised at the time of the booking.
Outokumpu's underlying operational result in the second quarter was EUR -39
million. Weaker profitability resulted from a weaker product and geographic
mix, higher production costs and slightly lower delivery volumes of stainless
steel. Ramping up production at the new concentration plant in Kemi also had a
negative impact on profitability. Outokumpu's operating loss in the second
quarter totalled EUR 80 million and included some EUR 8 million of raw
material-related inventory losses resulting from lower metal prices as well as
EUR -33 million of non-recurring items. Net cash from operating activities in
the second quarter totalled EUR 23 million and remained positive for the fourth
consecutive quarter. The main contributor to positive cash flow was reduced
levels of working capital. A total of EUR 74 million was released from working
capital in the second quarter. Group net loss in the second quarter totalled
EUR 122 million and earnings per share totalled EUR -0.09. Return on capital
employed in the second quarter was -8.6%. Outokumpu's gearing at the end of the
second quarter was 84.8% and net interest-bearing debt increased to EUR 1 691
million.
SHORT-TERM OUTLOOK
The economic uncertainty in Europe has increased resulting in shorter
visibility for future stainless steel demand with underlying demand expected to
be flat or slightly softer. Normal seasonality and the declining nickel price
have had an adverse effect on distributors buying behaviour. Lead times for
standard grades continue to be normal at 6-8 weeks and distributor inventories
are estimated to be at or below normal levels.
Mainly impacted by normal seasonality, Outokumpu's average base prices for
stainless steel in the third quarter are expected to be slightly lower than in
the second quarter. As a result of the slowdown in demand during the European
holiday season and annual maintenance breaks at Group mills, Outokumpu's
third-quarter external delivery volumes (stainless and ferrochrome) are
expected to be clearly lower than in the second quarter. On the other hand,
compared to the second quarter, the Group's product and geographic mix in the
third quarter is expected to improve. The production cost increase in the
second quarter is expected to be partly reversed in the third quarter.
Outokumpu's underlying operational result*) in the third quarter is therefore
expected to be approximately at the same level or slightly weaker than in the
second quarter. At current metal prices, marginal raw material-related
inventory losses are expected as a result of the decline in the nickel price.
Outokumpu's operating result in the third quarter could be impacted by small
non-recurring items associated with the Inoxum transaction and the Group's
on-going cost-cutting programmes.
*) Underlying operational result = operating result excluding raw
material-related inventory gains/losses and non-recurring items.
CEO Mika Seitovirta:
“After a solid start of the year, demand for stainless steel slowed during the
second quarter. Economic uncertainty in Europe, a declining nickel price and
consequent destocking by distributors all had a negative impact. Even though
our average prices were rather stable and our on-going cost reduction
programmes had a positive impact, the weaker product mix and lower volumes
resulted in unsatisfactory results. Despite our weaker than expected
performance we were still able to deliver positive operational cash flow for
the fourth consecutive quarter. Our focus in the third quarter will continue to
be on customers, cash flow and cost efficiency.
Outokumpu's on-going EUR 100 million cost-saving programme is progressing as
planned and its full effects will be visible in Group results from the
beginning of 2013. I am also pleased with our progress in reducing levels of
working capital. We have released some EUR 650 million of cash from working
capital over the last twelve months.
We expect the Inoxum acquisition to be finalised by the end of this year. To
ensure that the targeted significant synergy savings are delivered as quickly
as possible, preparations for the integration process are already under way. I
am confident that the combined entity will be well positioned to deliver
excellent service to our customers, while achieving cost-efficiency that
enables us to return to sustainable profitability.”
The attachments present the Management analysis for the second quarter 2012
operating result and the Interim Review by the Board of Directors for
January-June 2012, the accounts and notes to the interim accounts. The report
is unaudited.
For further information, please contact:
Ingela Ulfves, Investor Relations
tel. +358 9 421 2438, mobile +358 40 515 1531
ingela.ulfves@outokumpu.com
Saara Tahvanainen - Media Relations
tel. +358 9 421 3265, mobile + 358 40 589 0223
saara.tahvanainen@outokumpu.com
News conference and live webcast today at 1.00 pm EET
A combined news conference, conference call and live webcast concerning the
second-quarter 2012 financial results will be held on 20 July 2012 at 1.00 pm
EET (6.00 am US EST, 11.00 am UK time, 12.00 pm CET) at Hotel Kämp, conference
room Akseli Gallen-Kallela (2nd floor), Kluuvikatu 2, 00100 Helsinki.
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 the Internet. Please find a direct
link to the webcast at the end of this announcement.
The 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 as of 20 July
2011 at around 3.00 pm EET at
http://www.outokumpu.com/en/Investors/Pages/Webcasts.aspx.
Link to the webcast
OUTOKUMPU OYJ
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