Highlights
�
Underlying operational result some EUR -5
million
�
Non-recurring
costs EUR -138 million
�
Operating
loss EUR -169 million
�
Capital
gains EUR 242 million
�
Profit before
taxes and earnings per share positive at EUR 21 million and EUR 0.28 per share
�
Customers destocking due to declining nickel price,
third-quarter operating profit expected to be clearly negative
|
Group key figures, EUR million
|
|
II/11
|
II/10
|
I/11
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
|
|
|
1 281
|
1 125
|
1 371
|
|
|
Operating profit
|
|
|
|
-169
|
72
|
33
|
|
|
Profit before
taxes
|
|
|
|
21
|
64
|
17
|
|
|
Net profit for the period
|
|
|
50
|
44
|
16
|
|
|
Earnings per
share, EUR
|
|
|
|
0.28
|
0.24
|
0.09
|
|
|
Net cash generated from operating activities
|
-66
|
-317
|
-10
|
|
|
|
|
|
|
|
|
|
|
|
|
Stainless steel
deliveries, 1000 tonnes
|
|
348
|
339
|
380
|
|
|
Stainless steel base price, EUR/t 1)
|
|
1 223
|
1 317
|
1 215
|
|
|
Stainless steel transaction price, EUR/t 2)
|
3 063
|
3 018
|
3 115
|
|
|
|
|
|
|
|
|
|
|
|
|
1) CRU:
German base price (2mm cold rolled 304 sheet)
|
|
|
2) CRU:
German transaction price (2mm cold rolled 304 sheet)
|
|
Demand for standard grades of stainless steel slowed
down in Europe towards the summer as the nickel price started to decline and
led to destocking among customers. The normal seasonality resulting from the
holiday season in Europe has been impacting the distributors' buying behaviour.
Underlying demand however
continues to be relatively stable globally.
Outokumpu's
second-quarter deliveries totalled 348 000 tonnes. Deliveries went down
from the first quarter but increased by 3% compared to the second quarter 2010.
Base prices declined by 7%. Transaction prices, which also include raw material
costs, increased by 1.5% from the second quarter 2010.This was driven by the
nickel price as the average nickel price was 8% higher than a year ago. The
ferrochrome price was practically unchanged. Outokumpu's sales grew 14% to EUR
1 281 million in the second quarter.
The
higher delivery volume was not sufficient to compensate for the impact from
lower base prices and thus the underlying operational result was marginally
negative at EUR -5 million compared to a small profit of EUR 16 million in the
second quarter 2010. The operating loss for the quarter, EUR -169 million, was
burdened by raw material-related inventory losses of EUR 26 million and
non-recurring impairment and restructuring costs of EUR 138 million. The second
quarter 2010 included EUR 55 million of raw-material related inventory gains,
which took operating profit to EUR 72 million. The impairment and restructuring
costs are related to Outokumpu's short-term agenda, which focuses on improving
the Group's cash flow, improving balance sheet flexibility and restoring
profitability.
The
short-term agenda includes turnaround plans for two of Outokumpu's units: the
tubular products business (OSTP) and the Kloster thin strip mill in Sweden.
Based on the plans, Outokumpu booked EUR 125 million of asset impairments for
these units. Additionally, there was EUR 13 million of provisions from the
functional efficiency improvement, which will reduce a total of 350 jobs in
Europe.
As
part of the short-term agenda, Outokumpu sold its holding in Tibnor AB and the
listed Talvivaara Mining Company Plc as well as one fifth of its 20% holding in
the unlisted Talvivaara Sotkamo Ltd. In total, these divestments resulted in
EUR 242 million of capital gains and EUR 162 million of cash inflow for the
quarter. The substantial capital gains brought Outokumpu's profit before taxes
to EUR 21 million and earnings per share to EUR 0.28.
In
the third quarter, Outokumpu expects delivery volumes and average base prices
to be lower than in the second quarter, which is expected to lead to negative
underlying operational result. Additionally, declined metal prices are expected
to result in raw material-related inventory losses (at current metal prices). Thus,
Outokumpu estimates its third-quarter operating profit to be clearly negative.
CEO
Mika Seitovirta:
"During my
first months much of our attention has been on the Group's short-term agenda,
and this has provided us with quick sources of cash and helped attack the most
critical factors burdening Outokumpu's profitability. In the stainless
business, improving sales, generating cash and reducing costs are part of a
never-ending race. Current market circumstances mean that the pressure to move
even faster with this work and related actions is higher."
This
press release is a summary of Outokumpu's official second quarter 2011 report.
For further
information, please contact:
P�ivi Lindqvist,
SVP - Communications and IR
tel. +358 9 421
2432, mobile +358 40 708 5351
paivi.lindqvist@outokumpu.com
Ingela Ulfves, VP
- Investor Relations and Financial Communications
tel. +358 9 421
2438, mobile +358 40 515 1531
ingela.ulfves@outokumpu.com
Esa Lager, CFO
tel +358 9 421
2516
esa.lager@outokumpu.com
OUTOKUMPU OYJ