2014-07-24 08:00:01 CEST
2014-07-24 08:00:09 CEST
REGULATED INFORMATION
Outokumpu Oyj - Interim report (Q1 and Q3)
Outokumpu - Financial results continued to improve but cash flow was negative
Outokumpu Oyj
Interim Report
July 24, 2014 at 9.00 pm EET
Highlights in the second quarter 2014
Outokumpu's operational performance continued to improve in line with
management expectations. The second-quarter underlying EBIT1) loss was EUR 6
million. Operating cash flow was EUR -257 million.
-- Stainless steel deliveries stayed on a constant level at 675,000 tonnes2)
(I 2014: 676,000 tonnes).
-- Underlying EBITDA1) doubled to EUR 75 million versus EUR 37 million in the
first quarter and underlying EBIT was EUR -6 million (I 2014: EUR -45
million). The improvement shows a better product mix in deliveries and an
average EUR 20-30/tonne higher base prices coupled with traction from cost
savings benefits.
-- EBIT was EUR -10 million (I 2014: EUR -188 million). EBIT includes
non-recurring items of EUR -7 million as well as positive net effect of raw
material-related inventory and hedging gains/losses of EUR 3 million (I
2014: EUR -140 million and EUR -3 million).
-- Operating cash flow was EUR -257 million (I 2014: EUR -14 million) due to
the increase in working capital.
-- Net interest-bearing debt increased to EUR 2,068 million (March 31, 2014:
EUR 1,733 million) and gearing to 92.5% (March 31, 2014: 75.9%).
1) Due to the revised metal hedging policy from the beginning of 2014 Outokumpu
has adjusted the definition for underlying EBIT and underlying EBITDA: In
addition to non-recurring items and raw material-related inventory
gains/losses, Outokumpu now also excludes the metal derivative gains/losses.
2) metric ton = 1,000 kg
Group key figures
II/14 I/14 II/13 2013
--------------------------------------------------------------------------------
Sales EUR 1,753 1,617 1,738 6,745
million
EBITDA EUR 70 -78 -86 -165
million
EBITDA excl. non-recurring items EUR 78 34 -40 -87
million
Underlying EBITDA 1) EUR 75 37 -2 -32
million
EBIT EUR -10 -188 -171 -510
million
EBIT excl. non-recurring items EUR -3 -48 -125 -432
million
Underlying EBIT 2) EUR -6 -45 -87 -377
million
Result before taxes EUR -48 -262 -236 -822
million
Net result for the period from EUR -49 -267 -231 -832
continuing operations million
excluding non-recurring items EUR -42 -128 -185 -706
million
Net result for the period EUR -58 -248 -250 -1,003
million
Earnings per share 3) EUR -0.14 -1.66 -1.87 -7.52
excluding non-recurring items 3) EUR -0.12 -0.71 -1.53 -6.56
Return on capital employed % -1.0 -18.3 -12.0 -10.3
excluding non-recurring items % -0.3 -4.7 -8.8 -8.7
Net cash generated from operating EUR -257 -14 -175 34
activities, continuing oper. million
Net interest-bearing debt at the end of EUR 2,068 1,733 3,859 3,556
period million
Debt-to-equity ratio at the end of % 92.5 75.9 152.9 188.0
period
Capital expenditure, continuing EUR 33 15 30 183
operations million
Stainless steel deliveries, continuing 1,000 675 676 640 2,585
operations 4) tonnes
Stainless steel base price 5) EUR/ton 1,093 1,070 1,137 1,103
ne
Personnel at the end of period, 12,365 12,436 13,021 12,561
continuing operations, excl. summer
trainees 6)
--------------------------------------------------------------------------------
1) EBITDA excluding non-recurring items, other than impairments; raw
material-related inventory gains/losses and as of I/14 metal derivative
gains/losses, unaudited.
2) EBIT excluding non-recurring items, raw material-related inventory
gains/losses and as of I/14 metal derivative gains/losses, unaudited.
3) Calculated based on the rights-issue-adjusted weighted average number of
shares, comparative figures adjusted accordingly. Comparative figures adjusted
to reflect the reverse split on June 20, 2014. 4) Excludes ferrochrome
deliveries.
5) Stainless steel: CRU - German base price (2 mm cold rolled 304 sheet).
6) On June 30, 2014 Group employed in addition some 800 summer trainees (June
30, 2013: some 700).
Business and financial outlook for the third quarter of 2014
Outokumpu estimates overall stainless steel demand and pricing environment to
remain relatively healthy in the third quarter, with a seasonal slowdown in the
European market. The company estimates somewhat lower delivery volumes and some
improvement in stainless steel base prices in the third quarter. Outokumpu
expects continued progress, although with a slower rate, in the cost efficiency
initiatives and synergies.
For the third quarter of 2014, Outokumpu expects sequentially slightly worse
underlying EBIT primarily due to seasonal impacts. Net impact of raw
material-related inventory and metal hedging gains/losses on profitability is
expected to be EUR 10-20 million positive.
Outokumpu's operating result may be impacted by non-recurring items associated
with the ongoing restructuring programs. This outlook reflects the current
scope of continuing operations.
CEO Mika Seitovirta:
“During the second quarter we saw interesting developments in the stainless
steel market. Nickel price continued its sharp increase, peaking above 21,200
US dollars per tonne in May and averaging 26% above the first quarter. Even
more importantly, stainless steel demand continued to recover and base prices
increased moderately in both Europe and US. Import levels into Europe were
exceptionally high, close to 30%, reflecting the turbulence in the Asian
stainless steel market.
Our financial performance developed in line with our expectations. There was a
visible improvement in underlying EBIT compared to the previous quarter.
Delivery volumes stayed on a similar level to the first quarter, and both
product mix and base prices were better. These, together with continued
progress on the savings programs resulted in improved financial performance.
Looking at our biggest profitability improvement levers, we saw Stainless
Americas to reach break-even quarterly EBITDA for the first time, and in EMEA
we saw continued improvement in profitability despite lower delivery volumes.
The increase in nickel price and typical seasonal build-up of inventories had
an anticipated adverse effect on cash flow. For the first half of the year,
operating cash flow was EUR 271 million negative. While increase in inventories
is typical for the second quarter, we still see further room for improvement in
our inventory and net working capital management in general. Thus, we will
continue focused efforts on these. Furthermore, as we execute the large scale
industrial changes in Europe and ramp-up in the United States, it is crucial
that we address any production and delivery issues promptly and take necessary
corrective measures.
We have moved in to the second half of the year in a relatively healthy
operating environment. The demand in Americas remains robust. In Europe we
expect some slowdown for the summer period. Thus, we estimate lower delivery
volumes for Outokumpu in the third quarter which will affect our financial
results negatively. However, we remain confident that the positive momentum
continues, and believe that Outokumpu is well positioned to continue towards
profitability.”
News conference, conference call and live webcast today at 1.00 pm EET
A combined news conference, conference call and live webcast concerning
publishing of the second-quarter 2014 financial results will be held on
Thursday, July 24, 2014 at 1.00 pm EET (6.00 am US EST, 11.00 am UK time, 12.00
pm CET) at the hotel Kämp, in the Mirror Room (2nd floor), Kluuvikatu 2, 00100
Helsinki, Finland.
To participate via a conference call, please dial in 5-10 minutes before the
beginning of the event:
UK/Europe: +44 203 364 5374
US & Canada: +1 855 753 2230
Participant code: Outokumpu
The news conference can be viewed live via Internet. Link to the webcast
The stock exchange release and the 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 July 24,
2014 at around 4.00 pm EET at www.outokumpu.com/en/investors/webcasts.
For more information:
Investors: Johanna Henttonen, tel. +358 9 421 3804, mobile +358 40 530 0778
Media: Saara Tahvanainen, mobile +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 more than 12 000
professionals in more than 30 countries, with headquarters in Espoo, Finland
and shares listed on the NASDAQ OMX Helsinki. www.outokumpu.com
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