2016-07-26 11:00:01 CEST
2016-07-26 11:00:01 CEST
REGULATED INFORMATION
Outokumpu Oyj - Half Year financial report
Outokumpu - Group underlying EBIT EUR -5 million and operating cash flow EUR 54 million - record-high deliveries and improving performance in Americas
OUTOKUMPU OYJ
HALF YEAR FINANCIAL REPORT
July 26, 2016 at 12.00 pm EET
Highlights in the second quarter 2016
Outokumpu’s underlying EBIT was EUR -5 million, compared to EUR -20 million in
the first quarter. The improved earnings were mainly the result of higher
delivery volumes and decreased production costs in the Americas. Profitability
in Europe was negatively impacted by lower ferrochrome prices.
-- Stainless steel deliveries were 629,000 tonnes1 (610,000 tonnes)2.
-- Underlying EBITDA3 was EUR 51 million (EUR 38 million).
-- Underlying EBIT4 was EUR -5 million (EUR -20 million). Underlying EBIT
includes net adjustments of EUR 11 million in the second quarter (EUR 8
million), including the net effect of raw material-related inventory and
metal derivative gains/losses of EUR 15 million (EUR -9 million).
-- EBIT was EUR 6 million (EUR -12 million).
-- Operating cash flow was EUR 54 million (EUR 74 million).
-- Net debt decreased to EUR 1,485 million (EUR 1,551 million).
-- Gearing was 69.1% (69.6%).
-- Return on capital employed (ROCE) was 6.2% (5.3%).
1) Metric ton = 1,000 kg
2) Figures in parentheses refer to the previous quarter, unless otherwise
stated.
3) EBITDA excluding items classified as adjustments. Adjustments are material
income and expense items such as restructuring costs, impairments, and gains or
losses on sale of assets or businesses, as well as raw material related
inventory gains/losses and metal derivative gains/losses.
4) EBIT excluding items classified as adjustments.
Figures in parentheses refer to the previous quarter, unless otherwise stated.
Group key figures
II/16 I/16 II/15 2015
--------------------------------------------------------------------------------
Sales EUR 1,379 1,386 1,694 6,384
million
EBITDA EUR 62 46 55 531
million
Underlying EBITDA 1) EUR 51 38 57 196
million
EBIT EUR 6 -12 -26 228
million
Underlying EBIT 2) EUR -5 -20 -25 -101
million
Result before taxes EUR -22 -47 -65 127
million
Net result for the period EUR -20 -41 -62 86
million
Earnings per share EUR -0.05 -0.10 -0.14 0.23
Return on capital employed % 6.2 5.3 -1.8 5.3
Net cash generated from operating EUR 54 74 -41 -34
activities million
Net debt at the end of period EUR 1,485 1,551 2,116 1,610
million
Debt-to-equity ratio at the end of % 69.1 69.6 96.4 69.1
period
Capital expenditure EUR 28 32 35 154
million
Stainless steel deliveries 3) 1,000 629 610 616 2,381
tonnes
Personnel at the end of period 4) 10,645 10,920 11,665 11,002
--------------------------------------------------------------------------------
1) EBITDA excluding items classified as adjustments, unaudited.
2) EBIT excluding items classified as adjustments, unaudited.
3) Excludes ferrochrome deliveries.
4) On June 30, 2016 Group employed in addition some 800 summer trainees (June
30, 2015: some 800).
Business and financial outlook for the third quarter of 2016
Third quarter market outlook is impacted by typical seasonal decline in demand,
particularly in Europe. In Europe, stock levels among distributors are
currently at historical averages and the underlying demand in key sectors
outside of Oil & Gas is expected to continue to be relatively healthy. In
Americas, while a drop in demand is expected in the third quarter, there are
also a number of positive signs: stock levels among distributors are below
historical average levels, the announced price increases are gaining traction,
and the preliminary antidumping ruling is expected to curb unfair competition.
Outokumpu expects sequentially flat delivery volumes for the third quarter.
Outokumpu’s ferrochrome operations will be impacted by major maintenance work
during the third quarter, partly offsetting the positive impact of higher
ferrochrome price. Outokumpu expects the pace of the efficiency improvements to
continue and the Group’s underlying EBIT to turn positive in the third quarter.
CEO Roeland Baan:
“Outokumpu recorded an underlying EBIT loss of EUR 5 million for the second
quarter. While our financial results are still not where they should be, we are
clearly gaining momentum: during the quarter, we achieved record deliveries in
Americas, applied vigorous cost control, released net working capital,
generated positive cash flow, and further reduced our net debt.
At the start of the quarter, we announced the new vision for Outokumpu,
including measures to drive competitiveness and further improve the financial
performance of the company. We took decisive steps and started the
implementation of these measures during the quarter by streamlining our
organizational structure and initiating related job reductions.
One of the main levers to achieve our vision is ensuring continuous
productivity gains through manufacturing excellence. This focus on production
costs and efficiency is already reflected in our second quarter results. In the
business area Americas, we achieved a 14% reduction in variable costs during
the quarter, and record-high deliveries of 177,000 tonnes. The improved
efficiency has put us in a good position to capture the positive market
momentum in the Americas, and helped us reduce the business area’s underlying
EBIT loss to EUR 24 million from the first-quarter loss of EUR 43 million. This
is good progress, and we expect the trend to continue, with significant further
improvement potential.
Parallel to these efforts, we continued our relentless drive to improve
efficiency and reduce our cost base also in Europe. In the second quarter, we
achieved further EUR 15 million cost savings in the business area Europe.
However, the financial performance was burdened by the weaker ferrochrome
price, slightly lower stainless steel deliveries and increase in raw material
prices. While these negative impacts were partly offset by the reduced costs
and improved productivity, the business area Europe’s profitability declined
from EUR 42 million to EUR 29 million.
With the positive development in the Americas, our total deliveries for the
Group increased to 629,000 tonnes. Even with the higher deliveries, we
continued to reduce our net working capital across the Group, achieving EUR 117
million net working capital reduction for the first half of the year and a
positive operating cash flow of EUR 54 million for the second quarter. Debt
reduction remains a key priority for us: at the end of the second quarter our
net debt was EUR 1,485 million, down from EUR 1,551 million at the end of the
first quarter, and gearing at 69.1%.
We have improved our financial performance throughout this year, and expect the
pace of efficiency improvements to continue. Thus, for the third quarter, we
expect a positive underlying EBIT for the Group, driven mainly by further
improvement in Americas. In Europe, the typical seasonal effects will have a
negative impact. Additionally, a planned major maintenance on our largest
ferrochrome furnace will reduce our ferrochrome output by approximately 30% in
the third quarter.
While we still have a long way to go to realize our full potential, I am
encouraged by the momentum and convinced of our ability to reach our vision and
target of EUR 500 million EBIT in 2020.”
Conference call today at 3.00 pm EET
A conference call will be held on Tuesday, July 26, 2016 at 3.00 pm EET (8.00
am US EST, 1.00 pm UK time, 2.00 pm CET). The results will be introduced by
Outokumpu’s CEO Roeland Baan and CFO Christoph de la Camp. To participate the
conference call, please dial in 5-10 minutes before the beginning of the event:
UK/Europe: +44 20 3427 1936
US & Canada: +1 646 254 3370
Confirmation code: 9174154
The event can be viewed live online at
http://edge.media-server.com/m/p/fb7xm323. The stock exchange release and the
presentation material will be available before the event at
www.outokumpu.com/en/investors.
A recording of the event will be available at
www.outokumpu.com/en/investors/IR-events/webcasts as of July 26, 2016 at around
6.00 pm EET.
For more information:
Investors: Tommi Järvenpää, tel. +358 9 421 3466, mobile +358 40 576 0288
Media: Saara Tahvanainen, tel. +358 40 589 0223
Outokumpu Group
Outokumpu is a global leader in stainless steel. We create advanced materials
that are efficient, long lasting and recyclable – thus building a world that
lasts forever. Stainless steel, invented a century ago, is an ideal material to
create lasting solutions in demanding applications from cutlery to bridges,
energy and medical equipment: it is 100% recyclable, corrosion-resistant,
maintenance-free, durable and hygienic. Outokumpu employs 11,000 professionals
in more than 30 countries, with headquarters in Helsinki, Finland and shares
listed in Nasdaq Helsinki.
www.outokumpu.com outokumpu.com/stainless-news
choosestainless.outokumpu.com
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