2013-02-14 08:00:03 CET
2013-02-14 08:00:22 CET
REGULATED INFORMATION
Outokumpu Oyj - Financial Statement Release
Outokumpu's Annual Accounts Bulletin 2012: Positive operating cash flow but negative operating results in a weak market environment
OUTOKUMPU OYJ
STOCK EXCHANGE RELEASE
February 14, 2013 at 9.00 am EET
Outokumpu has published its Annual Accounts Bulletin 2012. Both Annual Accounts
and Q4 income statement comprise stand-alone Outokumpu. Balance sheet items,
headcount and share information take into account Inoxum values and other
related changes as the transaction was closed at the end of December 2012.
Highlights of the fourth quarter 2012
The continued challenging market environment led to a negative underlying
operational result of EUR -76 million in the fourth quarter 2012.
-- After the typically weak summer season, Outokumpu's external stainless
steel deliveries were up and reached 337,000 tonnes (III/2012: 311,000
tonnes).
-- Even with higher deliveries, the fourth quarter result was below that of
the third quarter due to continued weakness in prices, product mix and
slightly increased costs. The underlying operational result was EUR
-76 million (III/2012: EUR -56 million).
-- Including non-recurring costs of EUR 139 million (III/2012 EUR -14 million)
and raw material related inventory losses of EUR 5 million (III/2012: EUR
-18 million), the operating result was EUR -220 million (III/2012: EUR -89
million).
-- Operating cash flow remained positive and amounted to EUR 45 million
(III/2012: EUR 83 million)
Highlights of 2012
The underlying operational result for 2012 remained weak at EUR -168 million.
Highlight of the year and the starting point for the company's turnaround was
the closing of the Inoxum transaction.
-- Stainless steel deliveries for the full year increased to 1,428,000 tonnes
(FY 2011: 1,391,000 tonnes).
-- The year was marked by a weak market environment, especially during the
second half, leading to an underlying operational loss of EUR 168 million
(FY 2011: EUR -61 million). Including non-recurring items of EUR -200
million (FY 2011: EUR -146 million) and raw material-related inventory
losses of EUR 17 million (FY 2011: EUR -43 million) the operating loss was
EUR 385 million (FY 2011: EUR -251 million).
-- The primary reasons for the weak performance were declining stainless steel
base prices, a weaker product mix and the decline in nickel prices.
Contributing to the loss were also the costs related to finalization of the
expansion of ferrochrome production and the impact this had on production.
-- Operating cash flow for the full year remained strong at EUR 266 million
(FY 2011: EUR 338 million).
-- Following the Inoxum transaction, net interest-bearing debt increased to
EUR 2,620 million (December 31, 2011: EUR 1,720 million), leading to a
gearing of 88.7% (December 31, 2011: 83.9%).
-- The highlight of 2012 was closing of the Inoxum acquisition. This
transaction is the starting point for the company's turnaround - synergy
savings and mill closures will lead to higher capacity utilization and
market leadership.
-- The Board is proposing that no dividend be paid for 2012 (2011: no
dividend).
New efficiency measures
The company starts new efficiency measures in addition to the implementation of
the expected EUR 200 million synergy savings: new programs established with the
target of EUR 150 annual cost reductions and a EUR 300 million reduction of net
working capital. Both programs are expected to be fully implemented by the end
of 2014, and show first positive effects already in 2013.
Group key figures 2012
The following table shows Outokumpu stand-alone income and combined balance
sheet figures:
Group key figures
IV/12 III/12 IV/11 2012 2011
Restat Restat Restat
ed 1) ed 1) ed 1)
--------------------------------------------------------------------------------
Sales EUR million 1 004 974 1 125 4 538 5 009
EBITDA EUR million -67 -32 -10 -50 89
Adjusted EBITDA 2) EUR million -9 1 23 71 174
Operating result EUR million -220 -89 -69 -385 -251
excluding non-recurring EUR million -81 -74 -59 -186 -104
items
underlying operational EUR million -76 -56 -35 -168 -61
result 3)
Result before taxes EUR million -268 -132 -131 -523 -244
excluding non-recurring EUR million -129 -117 -109 -324 -314
items
Net result for the period EUR million -309 -116 -116 -535 -180
excluding non-recurring EUR million -170 -101 -93 -336 -242
items
Earnings per share 4) EUR -0,21 -0,08 -0,40 -0,46 -0,62
excluding non-recurring EUR -0,11 -0,07 -0,32 -0,29 -0,84
items 4)
Return on capital employed % -19,4 -10,0 -7,2 -8,2 -6,3
excluding non-recurring % -7,1 -8,4 -6,2 -4,0 -2,6
items
Net cash generated from EUR million 45 83 132 266 338
operating activities
Capital expenditure 5) EUR million 2 885 98 95 3 155 255
Net interest-bearing debt EUR million 2 620 1 714 1 720 2 620 1 720
at the end of period 6)
Debt-to-equity ratio at % 88,7 95,2 83,9 88,7 83,9
the end of period 6)
External deliveries 1 000 tonnes 351 325 334 1 495 1 449
Stainless steel external 1 000 tonnes 337 311 323 1 428 1 391
deliveries
Stainless steel base price EUR/tonne 1 167 1 155 1 137 1 172 1 181
7)
Personnel at the end of 16 649 7 366 8 253 16 649 8 253
period, continuing
operations 8)
--------------------------------------------------------------------------------
1) Figures for July 1-Sept 30, 2012 and Jan 1-Dec 31, 2011 have been restated
due to change in accounting principle of defined benefit plans and other
long-term employee benefits.
2) EBITDA excluding raw material-related inventory gains/losses and
non-recurring items, unaudited.
3) Operating result excluding raw material-related inventory gains/losses and
non-recurring items, unaudited.
4) Calculated based on the rights-issue-adjusted weighted average number of
shares. Comparative figures adjusted accordingly.
5) Includes Inoxum acquisition of EUR 2,720 million and acquisition-related
finance leases and asset purchases of EUR 79 million.
6) Sept 30, 2012 adjusted to exclude the effect of the rights issue.
Debt-to-equity ratio, including the effect of the rights issue, on Sept 30,
2012 is 26.8%.
7) Stainless steel: CRU - German base price (2 mm cold rolled 304 sheet).
8) Excluding Terni operations.
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.
Short-term outlook
Outokumpu's stainless steel delivery volumes in the first quarter of 2013 are
expected to be in the range 680,000-750,000 tonnes. Stainless steel prices are
expected to remain at the same level or slightly higher than in the fourth
quarter of 2012, but remain below the levels achieved in the first quarter of
2012. In January, Outokumpu introduced price increases which are expected to
take effect towards the end of the first quarter.
Outokumpu expects the first quarter underlying operational result to be
slightly worse than the stand alone Outokumpu fourth quarter 2012 underlying
operational result.
CEO Mika Seitovirta:
“For Outokumpu, 2012 was characterized by the global economic slowdown and our
announcement of the Inoxum acquisition. The soft demand in Europe resulted in
continued negative results for the full year despite the significant cost
savings programs. The difficult market situation highlighted the importance of
the strategic restructuring of Outokumpu that the Inoxum transaction will
enable.
Outokumpu's fourth quarter was disappointing but developed in line with our
expectations in a challenging environment. Sequentially, our delivery volumes
increased somewhat but prices remained flat, reflecting the weak market
conditions, especially in the important specialty stainless segments. On the
positive side, we finalized the Ferrochrome expansion project ahead of time and
planned costs that will double our annual ferrochrome production capacity to
530,000 tonnes. Operating cash flow remained positive due to the rigorous focus
on managing working capital. Even with strong implementation of our cost
savings programs, profitability remained at an unsatisfactory level.
The Inoxum acquisition was finalized at the end of the quarter and we began
implementing our new strategy to return to sustainable profitability. The
transaction will enable us to reduce our fixed costs significantly. It expands
our business in both Asia and the Americas, where we see healthier market
environments. Ramp-up of the new integrated mill in Calvert, USA and our
Ferrochrome production are two key priorities in 2013.
Unfortunately, due to continued weakness in the markets for stainless steel in
Europe and globally, the starting point for the new Outokumpu is more
challenging than we anticipated 12 months ago. We will be implementing the
targeted EUR 200 million of synergy savings in a decisive manner and will also
be seeking further opportunities to make savings during 2013. Our focus on cash
flow generation - minimizing capital expenditure and implementing tight
management of working capital - continues. Therefore, we have established two
new efficiency programs: P150 for a EUR 150 million annual cost reductions and
P300 for a EUR 300 million reduction of net working capital. We expect these
two programs to be fully implemented by end of 2014 and to show first positive
effects already in 2013. We are also determined to achieve further price
increases to improve profitability. We will also evaluate different
alternatives to strengthen the balance sheet.”
For further information, please contact:
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
News conference and live webcast today at 1.00 pm EET
A combined news conference, conference call and live webcast concerning the
Annual Accounts 2012 will be held on February 14, 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: +44 8 445 718 957
US & Canada: +1 866 682 8490
Other countries: +44 1452 555 131
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 February
14, 2013 at around 3.00 pm EET at
www.outokumpu.com/en/Investors/Pages/Webcasts.aspx.
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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