Outokumpu's first quarter 2011 - better demand ...
PRESS RELEASE
20 April 2011 at 9.10 am EET
Highlights
- Operating profit EUR 33 million, underlying operational result EUR -12 million
- Improving end-user demand and restocking by distributors - deliveries up 14%
- Second quarter operating profit expected to be slightly positive or around
break-even
- Mika Seitovirta appointed Outokumpu's CEO from 1 April 2011
Group key figures, EUR million
  I/11 IV/10 I/10 2010
------------------------------------------------------------------------------
Sales  1 371 1 162 929 4 229
Operating profit  33 -85 -21 -83
Profit before taxes  17 -86 -32 -143
Net profit for the period  16 -91 -21 -124
Earnings per share, EUR Â 0.09 -0.50 -0.11 -0.68
Net cash generated from operating activities  -10 18 -87 -497
Stainless steel deliveries, 1 000 tonnes  380 336 333 1 315
Stainless steel base price, EUR/t 1) Â 1 215 1 213 1 235 1 252
Stainless steel transaction price, EUR/t 2) Â 3 115 2 909 2 329 2 780
------------------------------------------------------------------------------
1) CRU - German base price (2 mm cold rolled 304
sheet)
2) CRU - German transaction price (2 mm cold rolled 304
sheet)
Demand for stainless steel began to improve in early 2011. Growth in the first
quarter was supported by restocking among distributors. In March the nickel
price declined and this resulted in some destocking towards the end of the
quarter. The coming summer period may create some softness in demand from
distributors in the second quarter. Underlying demand has continued to improve
and is expected to remain stable in the second quarter. While the order intake
from investment-driven end-use segments has been improving, no major projects
utilising special grades have materialised.
Outokumpu's deliveries of stainless steel increased by 14% to 380Â 000 tonnes in
the first quarter compared to the first quarter of 2010. Base prices were
unchanged but transaction prices, which also include raw-material costs,
increased by 34%. The prices of the key raw-materials, nickel and ferrochrome,
gained strongly from their year-ago levels: nickel price increased by 35% and
ferrochrome price by 24%. Clearly higher delivery volumes and transaction prices
resulted in a strong 48% increase in sales, which amounted to EUR 1.4 billion in
the first quarter.
Outokumpu's operating profit in the first quarter was positive at EUR 33 million
whereas in the first quarter of 2010 the Group reported EUR 21 million operating
loss. The operating profit benefits from EUR 45 million of raw-material related
inventory gains (EUR 10 million gains in 2010). Thus, the underlying operational
result was at loss by EUR 12 million compared to EUR 32 million loss in the
first quarter of 2010. The main reason for the profitability improvement is
increase in delivery volumes.
Net cash from operating activities was slightly negative at EUR -10 million as
EUR 93 million of cash was tied up in the working capital during the quarter.
Outokumpu's gearing increased to 80.4%, above the Group's target maximum of 75%.
In February, Outokumpu's Board of Directors appointed Mr Mika Seitovirta as the
new Chief Executive Officer from 1 April 2011. The earlier CEO Mr Juha Rantanen
will support the new CEO in his taking on the new duties until August 2011.
Outokumpu estimates that the Group's delivery volumes in the second quarter will
be at a similar level as the volumes in the first quarter. Average base prices
are expected to be somewhat higher compared to the average prices in the first
quarter. Outokumpu's operating profit in the second quarter is expected to be
slightly positive or around break-even with no material impact from raw-material
related inventory gains or losses (at current metal prices).
CEO Mika Seitovirta:
"The first weeks at Outokumpu have proven to be a great learning experience. I
am energised and encouraged while going forward and gaining further knowledge of
this great company and fascinating industry. Our immediate actions will be
focused on profitability, cash flow and improving the balance sheet. Most of the
management attention this year will be spent on the implementation of the short-
term agenda, which is currently being prepared."
This press release presents the highlights of Outokumpu's official interim
report, which has been distributed as a separate stock exchange release and is
available at www.outokumpu.com/investors.
For further information, please contact:
Päivi 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
Outokumpu is a global leader in stainless steel with the vision to be the
undisputed number one. Customers in a wide range of industries use our stainless
steel and services worldwide. Being fully recyclable, maintenance-free, as well
as very strong and durable material, stainless steel is one of the key building
blocks for sustainable future. Outokumpu employs some 8 000 people in more than
30 countries. The Group's head office is located in Espoo, Finland. Outokumpu is
listed on the NASDAQ OMX Helsinki.
www.outokumpu.com
ENG Q1 2011 Media release:
http://hugin.info/3010/R/1507890/442788.pdf
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(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: Outokumpu Oyj via Thomson Reuters ONE
[HUG#1507890]
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