2013-04-25 08:00:03 CEST
2013-04-25 08:00:15 CEST
REGULATED INFORMATION
Outokumpu Oyj - Interim report (Q1 and Q3)
Outokumpu - Unsatisfactory results in a weaker than expected market environment
OUTOKUMPU OYJ
STOCK EXCHANGE RELEASE
April 25, 2013 at 9.00 am EET
Highlights of the first quarter 2013
The first quarter 2013 closed with lower underlying EBIT losses versus the
fourth quarter 2012 despite the challenging environment and weaker than
anticipated seasonality support.
-- During the first quarter of 2013, global stainless steel demand declined by
1.2% compared to Q1 2012. European stainless steel base prices increased
by 3% and the average nickel price was up by 2% for the quarter compared to
Q4 2012. On a year-on-year basis the average transaction price declined by
5.6%.
-- Outokumpu's stainless steel external deliveries reached 703,000 tonnes (Q4
2012: 644,000 tonnes, Q1 2012: 758,000 tonnes). Sequential growth was
driven by seasonality while the year-on-year reduction highlights the weak
economic environment and the price increases implemented by Outokumpu
during the first quarter.
-- Outokumpu was able to increase stainless steel prices in Europe despite the
weak market, even if not to the full extent targeted.
-- The underlying EBIT for the first quarter 2013 improved to EUR -77 million
(Q4 2012: EUR -162 million). Reduced losses were mainly driven by overall
higher deliveries, somewhat higher prices, cost savings and the Ferrochrome
ramp-up. The profitability improved in all Business Areas compared to Q4
2012 with main improvements in High Performance Stainless and Alloys (HPSA)
and Stainless Coil EMEA (EMEA). Compared to Q1 2012 the underlying EBIT
decreased (Q1 2012: EUR -21 million).
-- Including non-recurring items of EUR -2 million (Q4 2012: EUR -142 million)
and raw material-related inventory effects of EUR 3 million (Q4 2012: EUR
-3 million), the EBIT was EUR -82 million (Q4 2012: EUR -307 million).
-- Operating cash flow was negative at EUR 46 million (Q4 2012: comparable
data not available) mainly driven by the Calvert melt shop ramp-up related
working capital increase.
-- Net interest-bearing debt increased to EUR 2,891 million (December 31,
2012: EUR 2,620 million), leading to a gearing of 103.3% (December 31,
2012: 88.8%).
During the first quarter Outokumpu continued the divestment process of the
Terni operations and related assets as required by the European Commission.
Following an ongoing dialogue and consultation with the
Commission, the timeline for the transaction has been extended to accommodate
the required EU regulatory process. Outokumpu expects to release further
information during the second quarter of 2013.
Business outlook for the second quarter of 2013
Outokumpu reiterates its expectations of a soft first half year with
improvements in underlying EBIT during the second half of 2013.
For the second quarter Outokumpu expects sequentially flat or slightly lower
delivery volumes, weaker product mix and increased uncertainties from the
nickel price development. These developments are expected to be partly
compensated by the positive effects of the Ferrochrome and Calvert ramp-ups.
Therefore, we expect the second quarter underlying EBIT loss to be equal or
slightly worse than in the first quarter. Outokumpu's operating result in the
second quarter could be impacted by non-recurring items associated with the
Group's on-going cost-cutting programs.
Note: This report contains comparisons to both Outokumpu stand alone as well as
comparable figures for the combined entity based on management estimates.
Tables that are marked as ‘comparable' show the combined entity comparisons. In
the text itself only comparable numbers are stated and analyzed. Terni is
reported as a discontinued operation.
Group key figures
I/13 IV/12 I/12 2012
------------------------
Restate
d 1)
--------------------------------------------------------------------------------
Sales EUR 2,221 1,004 1,304 4,538
million
EBITDA EUR 12 -67 61 -50
million
Adjustments to EBITDA 2) EUR 5 59 -1 121
million
Underlying EBITDA EUR 17 -9 60 71
million
EBIT EUR -82 -220 3 -385
million
Adjustments to EBIT 3) EUR 5 145 -1 217
million
Underlying EBIT EUR -77 -76 2 -168
million
Result before taxes EUR -140 -269 7 -524
million
Net result for the period from EUR -139 -309 12 -536
continuing operations million
excluding non-recurring items EUR -137 -170 24 -336
million
Net result for the period EUR -152 -309 12 -536
million
Earnings per share 4) EUR -0.07 -0.21 0.04 -0.46
excluding non-recurring items 4) EUR -0.07 -0.11 0.09 -0.29
Return on capital employed % -5.8 -19.4 0.4 -8.2
excluding non-recurring items % -5.7 -7.1 1.7 -4.0
Net cash generated from operating EUR -46 45 116 266
activities million
Capital expenditure, continuing EUR 82 2,885 79 3,155
operations 5) million
Net interest-bearing debt at the end EUR 2,891 2,620 1,495 2,620
of period 6) million
Debt-to-equity ratio at the end of % 103.3 88.8 80.0 88.8
period 6)
External deliveries 1,000 721 351 418 1,495
tonnes
Stainless steel external deliveries 1,000 703 337 399 1,428
7) tonnes
Stainless steel base price 8) EUR/tonn 1,177 1,167 1,185 1,172
e
Personnel at the end of period, 15,705 16,649 7,968 16,649
continuing operations
--------------------------------------------------------------------------------
1) Figures for 2012 have been restated due to change in accounting principle of
defined benefit plans and other long-term employee benefits,
and adoption of revised IAS 19
standard.
2) Non-recurring items, other than impairments; and
inventory gains/losses, unaudited.
3) Non-recurring items and inventory
gains/losses, unaudited.
4) 2012 figures calculated based on the
rights-issue-adjusted weighted average number of
shares.
5) Oct 1-Dec 31, 2012 and Jan 1-Dec 31, 2012 include Inoxum acquisition of EUR
2,720 million and acquisition-related finance leases and
asset purchases of EUR 79 million.
6) March 31, 2012 adjusted to exclude the effect of the rights issue.
Debt-to-equity ratio, including the effect of the rights issue,
on March 31, 2012 was 67.8%.
7) Excludes ferrochrome deliveries, includes
high performance alloy deliveries.
8) Stainless steel: CRU - German base price (2
mm cold rolled 304 sheet).
Raw material-related inventory gains
or losses
The realized 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
unrealized timing impact consists of the change in net realizable 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 realized in the cash flow of
Outokumpu only after the raw material has been sold, it is referred to as being
unrealized at the time of the booking.
Group key figures, comparable
I/13 IV/12 I/12 2012
--------------------------------------------------------------------------------
Sales EUR 2,221 2,067 2,648 9,458
million
EBITDA EUR 12 -117 73 -176
million
Adjustments to EBITDA 1) EUR 5 59 -5 203
million
Underlying EBITDA EUR 17 -58 68 27
million
EBIT EUR -82 -307 -58 -692
million
Adjustments to EBIT 2) EUR 5 145 37 344
million
Underlying EBIT EUR -77 -162 -21 -348
million
Capital expenditure, continuing EUR 82 254 181 821
operations 3) million
External deliveries 1,000 721 658 777 2,853
tonnes
Stainless steel external deliveries 4) 1,000 703 644 758 2,786
tonnes
Personnel at the end of period, 15,705 16,649 17,351 16,649
continuing operations
--------------------------------------------------------------------------------
1) Non-recurring items, other than impairments; and
inventory gains/losses, unaudited.
2) Non-recurring items and inventory
gains/losses, unaudited.
3) Oct 1-Dec 31, 2012 and Jan 1-Dec 31, 2012 include acquisition-related
finance leases and asset purchases of EUR 79 million.
4) Excludes ferrochrome deliveries, includes
high performance alloy deliveries.
Raw material-related inventory gains
or losses
The realized 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
unrealized timing impact consists of the change in net realizable 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 realized in the cash flow of
Outokumpu only after the raw material has been sold, it is referred to as being
unrealized at the time of the booking.
CEO Mika Seitovirta:
“The first quarter of 2013 was marked by the start of the combined entity after
Outokumpu's acquisition of Inoxum took effect on December 28, 2012. Integration
of the new Outokumpu has progressed well and we are implementing the new
strategy with full speed. Importantly we have been able to maintain a high
level of customer service and satisfaction during the first months of the
combined entity.
The stainless steel market remained challenging during the quarter, mainly
driven by the continued economic weakness in Europe and partially also in the
US. The first quarter is typically supported by strong seasonality but this
year the seasonality had a more muted effect than previous years. This resulted
in lower than targeted stainless steel base price increases during the quarter.
We will continue to aim for higher prices during 2013 in order to support the
turnaround of Outokumpu.
On the positive side, results of our High Performance Stainless and Alloys,
specifically specialty stainless, and EMEA units clearly improved from the
fourth quarter 2012 - driven by volume growth, price increases, cost savings,
and the Ferrochrome production ramp-up. Acquisition-related synergy savings
amounted to EUR 16 million and we are well on target to reach the planned EUR
50 million synergy savings this year. However, overall profitability remained
at an unsatisfactory level and we are taking decisive actions to turn Outokumpu
back to profitability.
During the quarter, our operating cash flow turned negative, mainly driven by
the planned ramp-up of the Calvert, US melt shop. Our focus is on working
capital management and improved financial performance and operating cash flow
for the remainder of the year.
The P150 savings program is progressing as planned and we expect to achieve EUR
30-50 million savings in 2013 and to reach the planned annual EUR 150 million
savings in full by end of 2014. As part of the synergy and P150 savings
programs, we have today announced further details on planned headcount
reductions to significantly reduce our operating expenses. With the new planned
actions, we expect the global headcount reduction to reach 2,500 by 2017.
Outokumpu's transformation requires tough decisions but I'm confident that the
chosen strategy and actions will enable us to turn to profitability and
maximize the opportunities we have as the global leader in stainless steel and
high performance alloys.”
A combined news conference, conference call and live webcast concerning the
first-quarter 2013 financial results will be held on April 25, 2013 at 1.00 pm
EET (6.00 am US EST, 11.00 pm UK time, 12.00 pm CET) at hotel Kämp, conference
room 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 1452 555 131
US & Canada: +1 866 682 8490
Participant code: Outokumpu
The news conference can be viewed live via Internet. At the end of this
release, please find a Direct 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 April 25,
2013 at around 4.00 pm EET at www.outokumpu.com/Investors/Webcasts.
Link to the webcast
For further information:
Investors:
Tamara Weinert
tel. +358 9 421 2438, mob. +358 40 751 7194
Media:
Saara Tahvanainen
tel. +358 9 421 3265, mob. + 358 40 589 0223
Outokumpu Oyj
Outokumpu is the global leader in stainless steel and high performance alloys.
Our advanced materials are the ideal choice for demanding applications ranging
from cutlery to bridges, energy plants to medical equipment. Stainless steel
contributes to a sustainable and long lasting world as it is a 100% recyclable,
corrosion-resistant, maintenance-free, durable and hygienic material. Outokumpu
employs approximately over 16 000 professionals in over 40 countries, with the
Group's head office in Espoo, Finland and shares listed on the NASDAQ OMX
Helsinki. www.outokumpu.com
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