2015-02-12 08:00:06 CET
2015-02-12 08:00:13 CET
REGULATED INFORMATION
Outokumpu Oyj - Financial Statement Release
Outokumpu Annual Accounts Bulletin 2014: Clear improvement in financial performance and debt reduction in 2014, turnaround to profitability continues
OUTOKUMPU OYJ
ANNUAL ACCOUNTS BULLETIN
February 12, 2015 at 9.00 am EET
Strong operating cash flow and underlying EBIT of EUR -9 million in Q4. Clear
improvement in financial performance and debt reduction in 2014, turnaround to
profitability continues.
Highlights in the fourth quarter 2014
Outokumpu delivered underlying EBIT of EUR -9 million compared to EUR -28
million in the third quarter. Financial performance was negatively impacted by
low delivery volumes in a subdued market, while base prices were stable and
progress in the company's savings programs continued to be good. Strong focus
on net working capital management resulted in EUR 122 million operating cash
flow.
-- Stainless steel deliveries decreased by 10% to 568,000 tonnes1) (III 2014:
634,000 tonnes).
-- Underlying EBITDA2) was EUR 72 million (III 2014: EUR 48 million). The
negative impact of lower deliveries was more than offset by stable prices
and good progress in savings programs. EBIT was EUR -36 million (III 2014:
EUR -9 million). EBIT includes non-recurring items of EUR -27 million
related to net costs of the technical issues in Calvert (-21) and
restructuring provisions (-6). Net effect of timing and raw material
related inventory and hedging gains/losses was EUR 0 million (III 2014: NRI
of EUR -12 million and net timing of EUR 31 million). Thus, underlying EBIT
was EUR -9 million (III 2014: EUR -28 million).
-- Operating cash flow was EUR 122 million (III 2014: EUR 23 million) due to a
successful reduction in working capital, particularly towards the year-end.
-- Net interest-bearing debt was reduced to EUR 1,974 million and gearing was
92.6% (Sept 30, 2014: EUR 2,068 million and 96.4%).
Highlights of 2014
-- Global stainless steel real demand in 2014 grew by 5.5% compared to 2013.
In the Americas, consumption was up by 4.7% and also in Europe consumption
grew by 3.8%. In APAC, growth was 6.1%. Stainless steel base prices
(according to CRU) were up by 3.6% in the US and down by 1.9% in Europe,
while transaction prices were up in all key regions driven by a rise in
alloy surcharge. Imports into the EU reached 30.6% and in the NAFTA region
18.9% of total consumption in 2014.
-- Outokumpu's stainless steel deliveries for the full year were stable at
2,554,000 tonnes (2013: 2,585,000 tonnes). Deliveries in the Coil Americas
grew in line with progress of the Calvert ramp-up and in Coil EMEA the
change in mix towards higher margin products resulted in lower overall
volumes.
-- Sales were EUR 6,844 million (2013: EUR 6,745 million). Underlying EBITDA
improved significantly to EUR 232 million (2013: EUR -32 million) and
underlying EBIT to EUR -88 million (2013: EUR -377 million).
-- Including non-recurring items of EUR -186 million (2013: EUR -78 million)
and raw material-related inventory effects of EUR -31 million, the EBIT was
EUR -243 million (2013: EUR -510 million).
-- Operating cash flow was negative at EUR -126 million (2013: EUR 34
million).
-- Balance sheet was strengthened significantly through refinancing and rights
issue: net debt was reduced from EUR 3,556 million to EUR 1,974 million and
gearing from 188.0% to 92.6%.
1) metric ton = 1,000 kg
2) 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 metal derivative gains/losses.
Group key figures
IV/14 III/14 IV/13 2014 2013
--------------------------------------------------------------------------------
Sales EUR 1 674 1 799 1 531 6 844 6 745
million
EBITDA EUR 45 67 -29 104 -165
million
EBITDA excl. non-recurring EUR 73 79 0 263 -87
items million
Underlying EBITDA 1) EUR 72 48 -1 232 -32
million
EBIT EUR -36 -9 -118 -243 -510
million
EBIT excl. non-recurring items EUR -9 3 -89 -57 -432
million
Underlying EBIT 2) EUR -9 -28 -90 -88 -377
million
Result before taxes EUR -75 -73 -232 -459 -822
million
Net result for the period from EUR -57 -77 -260 -450 -832
continuing operations million
excluding non-recurring items EUR -29 -65 -181 -264 -706
million
Net result for the period EUR -56 -77 -364 -439 -1 003
million
Earnings per share 3) EUR -0,13 -0,18 -2,72 -1,24 -7,52
excluding non-recurring items EUR -0,07 -0,15 -2,13 -0,71 -6,56
3)
Return on capital employed % -3,5 -0,8 -9,9 -5,8 -10,3
excluding non-recurring items % -0,9 0,3 -7,4 -1,4 -8,7
Net cash generated from EUR 122 23 223 -126 34
operating activities, million
continuing oper.
Net interest-bearing debt at EUR 1 974 2 068 3 556 1 974 3 556
the end of period million
Debt-to-equity ratio at the end % 92,6 96,4 188,0 92,6 188,0
of period
Capital expenditure, continuing EUR 54 25 45 127 183
operations million
Stainless steel deliveries, 1,000 568 634 620 2 554 2 585
continuing operations 4) 5) tonnes
Stainless steel base price 6) EUR/ton 1 053 1 110 1 057 1 082 1 103
ne
Personnel at the end of period, 12 125 12 385 12 561 12 125 12 561
continuing operations
--------------------------------------------------------------------------------
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) Deliveries for III/14 have been
corrected.
6) Stainless steel: CRU - German base price (2 mm cold
rolled 304 sheet).
Business and financial outlook for the first quarter of 2015
Stainless steel demand has improved from the year-end 2014 lows but outlook for
the first quarter varies by region. In EMEA, order intake is improving and
underlying demand remains relatively healthy, while Asia remains soft in the
beginning of the year. In Americas, the pace for placing new orders is somewhat
subdued with the uncertainty over the nickel price, but overall market
conditions remain promising. In both key regions, distributors are still
digesting high stocks partly due to recent high third-country import ratios.
Outokumpu estimates higher delivery volumes quarter-on-quarter and base prices
to be slightly down. Continued improvement in profitability is expected,
resulting in slightly positive underlying EBIT for the first quarter. With
current prices, the net impact of raw material-related inventory and metal
hedging gains/losses on profitability is expected to be EUR 5-10 million
negative.
Outokumpu's operating result may be impacted by non-recurring items associated
with the ongoing restructuring programs. This outlook reflects the current
scope of operations.
CEO Mika Seitovirta:
“In year 2014 Outokumpu turned towards the right direction. The second year
since the merger, we started to see tangible results of our strategy.
Profitability was clearly improved, and the strengthened customer focus was
reflected in improved delivery performance, which was a key theme for us in
2014. This year we continue the work to improve delivery accuracy and customer
service, both essential to strengthen our market position despite competitive
market.
The stainless steel market had two very different phases in 2014. The beginning
of the year was upbeat, with a clear pick-up in demand compared to 2013, and a
sharp increase in nickel price. Especially in Americas, both demand and pricing
for stainless steel were robust, and even in Europe there was a 3.8% growth in
consumption compared to the negative number a year before. However, as new
uncertainties emerged to shadow the European economy, Asian imports reached new
heights, and the nickel price started to descend, the environment turned much
more difficult in the latter part of the year.
In Europe, we made progress on the restructuring and cost savings, and with a
full year EBIT (excl. NRIs) of EUR 78 million compared to EUR -111 million a
year ago, our Coil EMEA business area is on the road to recovery. In Americas,
we completed the technical ramp-up of the Calvert mill. However, due to the
technical issues and delivery performance challenges in the second half of the
year we cannot be entirely satisfied with the speed of our progress. Coil
Americas did improve its EBIT (excl. NRI) by EUR 180 million in 2014, but
missed its target for a break-even EBITDA. Since the beginning of January all
cold rolling lines have been back in operation, and we expect Coil Americas to
step up its performance this year. Through the seamless cooperation between
Calvert and the cold rolling mill in Mexico, we strengthened our presence in
this important market: our US market share increased from 15% to 18% and in the
entire NAFTA market from 20% to 22%.
Across the company we continued the efforts to improve our cost competitiveness
and working capital management. The savings of EUR 186 million during 2014
brought the total cumulated savings to EUR 385 million compared to 2012. This
year we expect to make further steps towards the overall target of EUR 550
million by the end of 2017. In the past two years, we have released EUR 351
million from the net working capital achieving our target in the P300 program,
and see further potential in this front.
During the last quarter of 2014, Outokumpu posted underlying EBIT of EUR -9
million compared to EUR -28 million in the third quarter mostly due to the
progress in the savings programs and stable base prices. However, the subdued
market was reflected in lower delivery volumes. We ended the year with strong
cash flow of EUR 122 million as a result of decisive net working capital
management actions. In the first quarter we aim to further improve
profitability but the cash flow is estimated to be negative reflecting higher
volumes and showing also outflow related to earlier restructuring provisions.
Our 2014 net loss shows how much we still have work ahead of us. Thus, our goal
remains firmly on improving our profitability and reducing our debt. In 2014,
we took steps towards the right direction: we halved our net losses compared to
2013, and reduced our net debt from EUR 3.6 billion to below EUR 2 billion.
This progress has given us confidence to continue the execution of our
strategy, constantly raising the bar to return Outokumpu back to sustainable
profitability.”
News conference and live webcast today at 1.00 pm EET
A combined news conference, conference call and live webcast concerning
publishing of the 2014 Annual Accounts will be held on Thursday, February 12,
2015 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
An on-demand webcast will be available via Internet at
www.outokumpu.com/en/investors/webcasts as of February 12, 2015 at around 4.00
pm EET.
The stock exchange release and the presentation material will be available
before the news conference at www.outokumpu.com/Investors.
For more information:
Investors: Johanna Henttonen, tel. +358 9 421 3804, mobile +358 40 530 0778
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 more than 12 000
professionals in more than 30 countries, with headquarters in Espoo, Finland
and shares listed in Nasdaq Helsinki. www.outokumpu.com
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