2012-10-24 08:00:00 CEST
2012-10-24 08:00:06 CEST
REGULATED INFORMATION
Outokumpu Oyj - Interim report (Q1 and Q3)
Outokumpu’s third quarter 2012 – Continued positive cash flow but unsatisfactory profitability in a challenging environment
OUTOKUMPU OYJ
INTERIM REPORT
24 October 2012 at 9.00 am EET
Third-quarter 2012 highlights
- Underlying operational result was EUR -57 million
- Operating loss was EUR 89 million including raw material-related inventory
losses of some EUR 18 million and net non-recurring items totalling EUR -14
million
- Operating loss excluding non-recurring items was EUR 75 million
- Positive operating cash flow of EUR 83 million
- Total external deliveries at 325 000 tonnes
- Outokumpu maintained its membership in the World Dow Jones Sustainability
Index (DJSI) for the sixth consecutive year
- Ferrochrome expansion project to be finalised ahead of schedule and below
budget
- In connection with the Inoxum transaction, Outokumpu submitted a binding
remedy commitment in October to ensure the approval of the transaction. Despite
the remedy commitment, the company expects to achieve annual synergy savings of
approximately EUR 200 million.
Group key figures
III/12 II/12 III/11 2011
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Sales EUR million 974 1 254 1 231 5 009
EBITDA EUR million -32 -12 4 80
Adjusted EBITDA 1) EUR million 0 19 42 169
Operating result EUR million -89 -80 -53 -260
excluding non-recurring items EUR million -75 -47 -53 -109
underlying operational result 2) EUR million -57 -39 -15 -66
Result before taxes EUR million -132 -130 -157 -253
excluding non-recurring items EUR million -117 -97 -157 -318
Net result for the period EUR million -116 -122 -135 -186
excluding non-recurring items EUR million -101 -89 -135 -244
Earnings per share 3) EUR -0,08 -0,09 -0,48 -0,64
excluding non-recurring items 3) EUR -0,07 -0,06 -0,48 -0,85
Return on capital employed % -9,8 -8,6 -5,3 -6,5
excluding non-recurring items % -8,2 -5,0 -5,3 -2,7
Net cash generated from operating EUR million 83 23 282 338
activities
Capital expenditure EUR million 98 93 67 255
Net interest-bearing debt at the end EUR million 1 714 1 691 1 730 1 720
of period 4)
Debt-to-equity ratio at the end of % 90,8 84,8 79,7 82,5
period 4)
External deliveries 1 000 tonnes 325 402 355 1 449
Stainless steel external deliveries 1 000 tonnes 311 380 340 1 391
Stainless steel base price 5) EUR/tonne 1 155 1 182 1 150 1 181
Personnel at the end of period 7 366 8 453 8 421 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 September 2012 and 30 June 2012 adjusted to exclude the effect of the
rights issue. Debt-to-equity ratio, including the effect of the
rights issue, on 30 September 2012 is 25.9% (30 June 2012: 24.1%).
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 third quarter was EUR -57
million. The positive effects resulting from lower production costs and a
better product mix compared to the second quarter were offset by lower delivery
volumes and lower prices. Certain maintenance break related issues at the
Group's ferrochrome operations in Tornio resulted in some short production
stoppages in the third quarter. Outokumpu's operating loss in the third quarter
totalled EUR 89 million and included some EUR 18 million of raw
material-related inventory losses resulting from lower metal prices as well as
EUR -14 million of non-recurring items.
Net cash from operating activities in the third quarter totalled EUR 83 million
and remained positive for the fifth consecutive quarter. The main contributor
to the Group's good cash flow was further reductions in levels of working
capital. A total of EUR 156 million was released from working capital in the
third quarter. The Group's net loss in the third quarter totalled EUR 116
million and earnings per share totalled EUR -0.08. Return on capital employed
in the third quarter was -9.8%. Excluding proceeds from the rights offering,
Outokumpu's gearing was 90.8% at the end of the third quarter, above
Outokumpu's maximum target level of 75%. Excluding proceeds from the rights
offering, net interest-bearing debt increased to EUR 1 714 million.
SHORT-TERM OUTLOOK*)
Demand for stainless steel is expected to grow slightly in the fourth quarter
as a result of normal seasonality. No visible recovery among investment-driven
end-use segments has taken place and distributor inventories are currently
estimated to be below normal levels.
Outokumpu's average base prices for stainless steel in the fourth quarter are
expected to be approximately at the same level as in third quarter. Outokumpu's
fourth-quarter external delivery volumes (stainless and ferrochrome) are
expected to be at the same level or slightly higher than in the third quarter.
Outokumpu's underlying operational result**) is expected to be approximately at
the same level as or slightly weaker than in the third-quarter. At current
metal prices, no significant raw material related timing impact is expected.
Outokumpu's operating result in the fourth quarter could be impacted by
non-recurring items associated with the Inoxum transaction and the Group's
on-going cost-cutting programmes.
*) Short-term outlook for current standalone Outokumpu. In the event that the
combined entity would start operations before 31 December 2012, Outokumpu will
publish its results for the quarter ending 31 December consolidating Inoxum
into Outokumpu from the closing date to year-end (31 December 2012).
**) Underlying operational result=operating result excluding raw
material-related inventory gains/losses and non-recurring items.
CEO Mika Seitovirta:
“Outokumpu's third quarter developed in-line with our expectations with
profitability remaining at unsatisfactory levels. The beginning of the quarter
was seasonally slow but customer activity picked up in September. Seasonality
and continued economic and nickel price weakness resulted in lower volumes and
prices for the quarter. The oil and gas customer segment was one of the few
customer segments in which we continued to see solid activity. Most other
end-use segments were affected by the weak economy, especially in Europe.
We continued to implement our on-going cost-cutting and working capital
programmes to manage our financials in this challenging environment. We were
very happy to see the fifth consecutive quarter of positive operational cash
flow - EUR 83 million for the quarter - as well as continuing reductions in our
fixed costs. We expect to see the full effect of the Group's EUR 100 million
cost-savings programme from the beginning of 2013.
We made good progress in the ferrochrome expansion project and we expect to be
able to finalise the project ahead of schedule with EUR 30 million lower
capital expenditure than originally planned - a great achievement from the
project team. We plan to start ramp-up of the new ferrochrome smelter in Tornio
during the fourth quarter.
In October we filed a binding remedy commitment in connection with the Inoxum
transaction and we expect the European Commission to make its decision
regarding the transaction by 16 November. We expect to be able to finalise the
transaction by end of 2012. Despite the remedy, the strategic importance of the
transaction remains unchanged and we expect to achieve annual synergy savings
of approximately EUR 200 million. I am very excited to start the implementation
of the much-needed structural change and creating the new global leader in
stainless steel.”
The attachments present the Management analysis for the third quarter 2012
operating result and the Interim Review by the Board of Directors for
January-September 2012, the accounts and notes to the interim accounts. The
report is unaudited.
For further information, please contact:
Investor relations
Kari Tuutti, Communications, IR and Marketing
tel. +358 9 421 2432, mob. +358 40 717 0830
kari.tuutti@outokumpu.com
Media relations
Saara Tahvanainen, Communications
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
third-quarter 2012 financial results will be held on 24 October 2012 at 1.00 pm
EET (6.00 am US EST, 11.00 am UK time, 12.00 pm CET) at restaurant Bank,
conference rooms 12-14, address Unioninkatu 20, 00130 Helsinki.
To participate via a conference call, please dial in 5-10 minutes before the
beginning of the event:
UK +44 1452 555 131
US & Canada +1 866 6828 490
Sweden +46 8 5063 0779
Reference Outokumpu Q3 webcast
The news conference can be viewed live via 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 24 October
2012 at around 3.00 pm EET at
http://www.outokumpu.com/en/Investors/Pages/Webcasts.aspx.
OUTOKUMPU OYJ
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