Outokumpu's second quarter 2009 interim report ...
INTERIM REPORT
July 23, 2009 at 9.00 am EET
Second quarter 2009 highlights
- Operating loss EUR 94 million (I/2009: EUR -249 million), no major
raw-material related inventory gains or losses (I/2009: EUR -110
million)
- Stainless steel deliveries improved to 268 000 tons (I/2009:
247 000 tons)
- Slightly positive cash flow, balance sheet remained strong
- Some recovery in order intake, production capability in Tornio to
be increased accordingly
- Cost saving programmes progressing ahead of schedule, annual
savings target pushed to EUR 150 million
Group key figures
II/09 I/09 II/08 2008
Sales EUR million 617 679 1 549 5 474
Operating profit EUR million -94 -249 174 -63
Non-recurring items
in operating profit EUR million - -5 - -83
Profit before taxes EUR million -105 -252 166 -134
Non-recurring items
in financial income
and expenses EUR million - - - -21
Net profit for the period
from continuing
operations EUR million -85 -188 130 -110
Net profit for the period EUR million -87 -187 56 -189
Earnings per share
from continuing
operations EUR -0.47 -1.04 0.72 -0.61
Earnings per share EUR -0.48 -1.04 0.31 -1.05
Return on capital
employed % -11.1 -27.5 17.2 -1.6
Net cash generated from
operating activities EUR million 23 301 103 656
Capital expenditure,
continuing operations EUR million 45 62 56 544
Net interest-bearing debt
at end of period EUR million 926 825 939 1 072
Debt-to-equity ratio at
end of period % 37.1 32.3 29.1 38.4
Stainless steel
deliveries 1 000 tons 268 247 391 1 423
Stainless steel
base price 1) EUR/ton 1 117 925 1 307 1 185
Personnel at the
end of period,
continuing operations 7 985 8 253 8 884 8 471
1) Stainless steel: CRU - German base price (2 mm cold rolled 304
sheet).
SHORT-TERM OUTLOOK
During the second quarter, Outokumpu's order intake from both
distributors and end-users of stainless steel has increased somewhat
from the earlier very low levels. The reduction of inventories by
distributors and end-users seems to have ended and the increase in
the nickel price has triggered some purchasing activity. There is,
however, no major improvement in underlying demand for stainless
steel. Inventory levels at distributors in Europe are estimated to be
below normal.
Outokumpu is currently selling standard grades for deliveries in
October. Due to temporary production constraints, maintenance breaks
and seasonality of demand, delivery volumes in the third quarter are
estimated to be somewhat below the level in the first quarter
(247 000 tons). Outokumpu's average base prices for all flat products
for the third quarter are expected to increase by 100-150 EUR/t
compared to the average in the second quarter. The intention is to
continue to increase base prices in the fourth quarter.
Outokumpu's underlying operational result in the third quarter is
estimated to be at the same level or somewhat better than in the
second quarter as the positive impact of higher prices will be offset
by the decline in delivery volumes. With current metal prices,
raw-material related inventory gains are expected to have a slightly
positive impact on the operating result in the third quarter.
Outokumpu estimates that better prices and mix and slowly recovering
delivery volumes will gradually improve underlying profitability
towards the end of the year.
CEO Juha Rantanen:
"Despite the continued rather heavy operating loss, the second
quarter brought some signs of improvement. During the quarter we saw
a slight increase in the order intake for stainless steel and we were
able to increase base prices. The recovery in demand is a function of
destocking coming to an end and there is no major improvement in the
underlying demand for stainless steel from end-users. Outokumpu's
management will continue to maintain a tight focus on cash flow,
sales and cost-saving actions. This will have an increasing impact in
late 2009. It is our ambition to reach a break-even operating profit
towards the end of the year."
The attachments present the Management analysis for the second
quarter 2009 operating result and the Interim review by the Board of
Directors for January-June 2009, the accounts and notes to the
interim accounts. This report is unaudited.
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
News conference and live webcast today at 13.00 pm EET
A combined news conference, conference call and live webcast
concerning the second-quarter 2009 results will be held on July 23,
2009 at 13.00 pm Finnish time (12.00 pm CET, 6.00 am US EST, 11.00 am
UK time) at Hotel Kämp, conference room Akseli Gallen-Kallela,
address Pohjoisesplanadi 29, 00100 Helsinki, Finland.
To participate via the conference call, please dial in 5-10 minutes
before the beginning of the event:
UK +44 20 3043 2436
US & Canada +1 866 458 4087
Sweden +46 8 505 598 53
Password Outokumpu
The news conference can be viewed live via Internet at
www.outokumpu.com. Stock exchange release and 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 at
www.outokumpu.com as of July 23, 2009 at around 15.00 pm.
OUTOKUMPU OYJ
Corporate Management
Ingela Ulfves
Vice President - Investor Relations & Financial Communications
tel. + 358 9 421 2438, mobile +358 40 515 1531
ingela.ulfves@outokumpu.com
www.outokumpu.com
MANAGEMENT ANALYSIS - SECOND QUARTER OPERATING RESULT
Group key figures
EUR million I/08 II/08 III/08 IV/08 2008
Sales
General Stainless 1 304 1 222 933 687 4 147
Specialty Stainless 786 778 630 512 2 705
Other operations 64 63 69 62 258
Intra-group sales -465 -514 -362 -295 -1 636
The Group 1 689 1 549 1 270 966 5 474
Operating profit
General Stainless 81 125 -35 -177 -6
Specialty Stainless 42 44 -63 -123 -101
Other operations -20 4 29 25 38
Intra-group items -3 1 3 4 6
The Group 100 174 -66 -271 -63
EUR million I/09 II/09
Sales
General Stainless 476 501
Specialty Stainless 371 278
Other operations 66 58
Intra-group sales -233 -220
The Group 679 617
Operating profit
General Stainless -157 -52
Specialty Stainless -82 -37
Other operations -12 -5
Intra-group items 2 0
The Group -249 -94
Stainless steel
deliveries
1 000 tons I/08 II/08 III/08 IV/08 2008
Cold rolled 228 192 177 141 739
White hot strip 120 94 64 51 330
Quarto plate 33 35 27 25 120
Tubular products 19 19 16 16 70
Long products 15 15 15 11 55
Semi-finished
products 34 35 25 16 109
Total deliveries 449 391 323 261 1 423
1 000 tons I/09 II/09
Cold rolled 133 145
White hot strip 59 69
Quarto plate 19 18
Tubular products 16 13
Long products 10 9
Semi-finished
products 10 14
Total deliveries 247 268
Market prices and
exchange rates
I/08 II/08 III/08 IV/08 2008
Market prices 1)
Stainless steel
Base price EUR/t 1 243 1 307 1 143 1 045 1 185
Alloy surcharge EUR/t 1 702 1 888 1 582 1 293 1 616
Transaction price EUR/t 2 945 3 195 2 725 2 338 2 801
Nickel USD/t 28 957 25 682 18 961 10 843 21 111
EUR/t 19 335 16 440 12 599 8 227 14 353
Ferrochrome
(Cr-content) USD/lb 1.21 1.92 2.05 1.85 1.76
EUR/kg 1.78 2.71 3.00 3.09 2.63
Molybdenum USD/lb 33.81 33.40 33.75 17.29 29.56
EUR/kg 49.77 47.14 49.45 28.92 44.31
Recycled steel USD/t 393 565 465 181 401
EUR/t 262 361 309 138 273
Exchange rates
EUR/USD 1.498 1.562 1.505 1.318 1.471
EUR/SEK 9.400 9.352 9.474 10.234 9.615
EUR/GBP 0.757 0.793 0.795 0.839 0.796
I/09 II/09
Market prices 1)
Stainless steel
Base price EUR/t 925 1 117
Alloy surcharge EUR/t 893 634
Transaction price EUR/t 1 818 1 751
Nickel USD/t 10 471 12 920
EUR/t 8 036 9 478
Ferrochrome
(Cr-content) USD/lb 0.79 0.69
EUR/kg 1.34 1.12
Molybdenum USD/lb 9.15 9.41
EUR/kg 15.49 15.22
Recycled steel USD/t 207 199
EUR/t 159 146
Exchange rates
EUR/USD 1.303 1.363
EUR/SEK 10.941 10.781
EUR/GBP 0.909 0.879
1) Sources of market prices:
Stainless steel: CRU - German base price, alloy surcharge and
transaction price (2 mm cold rolled 304 sheet), estimates for
deliveries during the period.
Nickel: London Metal Exchange (LME) cash quotation
Ferrochrome: Metal Bulletin - Quarterly contract price,
Ferrochrome lumpy chrome charge, basis 52% chrome
Molybdenum: Metal Bulletin - Molybdenum oxide - Europe
Recycled steel: Metal Bulletin - Steel scrap HMS 1&2 fob Rotterdam
Slightly recovering demand and increasing prices during the second
quarter
Global market conditions for stainless steel improved slightly during
the second quarter of 2009. Apparent consumption of stainless flat
products is estimated to have increased by 13% in Europe and by 13%
globally compared to the weak first quarter of 2009. Compared to the
second quarter of 2008, apparent consumption is estimated to have
declined by 33% in Europe and by 25% globally. During the quarter,
some recovery in demand was seen and mill's order intake increased
from the extremely low levels of the previous quarters. This was
mainly attributable to increasing metal prices, restricted levels of
production and the end of destocking. Compared to the first quarter
of 2009, production of stainless steel was down by 2% in Europe but
increased by some 6% globally. Compared to the second quarter of
2008, production fell by 47% in Europe and by 29% globally.
The average base price for 2mm cold rolled 304 stainless steel sheet
in Germany increased to 1 117 EUR/ton in the second quarter (I/2009:
925 EUR/ton). At the end of June, the base price was 1 170 EUR/ton.
Mainly as a consequence of the clearly lower price of ferrochrome,
the alloy surcharge continued to fall and was on average 634 EUR/ton
(I/2009: 893 EUR/ton) in the review period. The average transaction
price during the quarter was 1 751 EUR/ton (I/2009: 1 818 EUR/ton).
Currently, there is no major difference in prices between Europe and
Asia. (CRU)
Among the alloying elements, nickel markets were almost in balance
during the second quarter. A cautious increase in demand was
witnessed in the quarter, up by 5% from the first quarter, but
production was still cut globally, down by 6%. The nickel price
increased during the second quarter and averaged 12 920 USD/ton
(I/2009: 10 471 USD/ton). Nickel traded in the range 9 400 - 16 000
USD/ton during the quarter. Since the end of June, the price of
nickel has been 15 - 16 000 USD/ton. Ferrochrome markets also started
to improve in the second quarter and demand increased, mainly in
China. The quarterly contract price for ferrochrome in the second
quarter was 0.69 USD/lb (I/2009: 0.79 USD/lb) and has preliminary
been settled at 0.89 USD/lb for the third quarter. The price of
molybdenum increased slightly and averaged 9.41 USD/lb (I/2009: 9.15
USD/lb) in the quarter. The price of recycled steel was 199 USD/ton
in the second quarter (I/2009: 207 USD/ton).
Smaller operating loss as stainless steel markets begin to recover
Group sales in the second quarter declined by 9% to EUR 617 million
(I/2009: EUR 679 million) mainly as a result of the lower metal
prices reflected in the alloy surcharge. Deliveries of stainless
steel were up by 9% and totalled 268 000 tons (I/2009: 247 000 tons).
Outokumpu continued to cut back production at all of the Group's
production units. Capacity utilization was approximately 60% in the
second quarter.
Operating loss totalled EUR 94 million (I/2009: EUR -249 million).
There were no major raw material-related inventory gains or losses
during the quarter (I/2009: EUR 110 million losses). Underlying
operational loss was, however, smaller than in the first quarter as
both delivery volumes and base prices recovered and cost-saving
actions began to have an impact. Due to product and market mix in the
second quarter, Outokumpu's realized average base prices for flat
products were somewhat lower than the base prices reported by CRU for
German 304 sheet.
Outokumpu's cost-saving programmes, initiated in December 2008 are
proceeding ahead of schedule. Including the actions taken most
recently, Outokumpu currently estimates that total fixed-cost savings
in 2009 will total EUR 150 million half of which has already been
achieved during the first six months of 2009.
Return on capital employed was -11.1% (I/2009: -27.5%). Earnings per
share totalled EUR -0.48 (I/2009: EUR -1.04).
Outokumpu's gearing continued to be at a good level and was 37.1% at
the end of the second quarter (March 31, 2009: 32.3%), well below the
target of being below 75%. At the end of the quarter, net
interest-bearing debt totalled EUR 926 million (March 31, 2009: EUR
825 million).
Net cash from operating activities was slightly positive at EUR 23
million (I/2009: EUR 301 million). Cash release from working capital
was EUR 153 million due to lower inventory levels.
Capital expenditure in the second quarter totalled EUR 45 million
(I/2009: EUR 62 million).
Sales by General Stainless totalled EUR 501 million (I/2009: EUR 476
million) in the second quarter, and deliveries totalled 248 000 tons
(I/2009: 210 000 tons). Operating loss was EUR 52 million (I/2009:
EUR -157 million) of which the Tornio Works posted a loss of EUR 33
million (I/2009: EUR -129 million).
Sales by Specialty Stainless in the second quarter totalled EUR 278
million (I/2009: EUR 371 million), and deliveries totalled 82 000
tons (I/2009: 92 000 tons). Operating loss was EUR 37 million
(I/2009: EUR -82 million).
Operating loss posted by Other operations in the second quarter was
EUR 5 million (I/2009: EUR -12 million).
Personnel adjustments
In March, temporary layoffs for most employees at Tornio Works were
implemented because of the low order load. Some 330 employees at the
Group's Kemi Mine, at the Ferrochrome Works and in one of the
melt-shops were temporarily laid off for a fixed period.
Approximately 1 500 employees working on other steel production
lines, maintenance and support functions were temporarily laid off in
sequences until further notice.
At the end of June, Outokumpu announced an increase in production
capability as the order intake for deliveries following the summer
vacation period was showing some recovery. The currently idled
melt-shop will begin production one month earlier than planned, with
employees back at work from the beginning of September and working
shifts at steel production lines increased. Temporary layoffs for
some 700 employees at Tornio Works will be adjusted accordingly. The
temporary fixed-period layoffs for personnel employed at Kemi Mine
and the Ferrochrome Works will continue as planned until October. The
temporary part-time layoffs of employees on maintenance and support
functions will be implemented as planned with the need for these
actions reviewed on a quarterly basis.
In Sweden, agreements were made with personnel representatives on
temporary layoffs for white collar staff at almost all Group sites.
For blue collar staff, temporary layoffs are on-going at some sites,
and there have been notices of permanent layoffs at other sites.
Related negotiations will resume in August. The extent of the
temporary layoffs is dependent on the order load at each site.
Outokumpu signed a EUR 900 million revolving credit facility
In June, Outokumpu signed a three-year EUR 900 million revolving
credit facility. This is a committed credit facility to be used for
general corporate purposes and it replaces the five-year EUR 1
billion facility signed in June 2005.
INTERIM REVIEW BY THE BOARD OF DIRECTORS - JANUARY-JUNE 2009
(Unaudited)
Weak stainless steel markets with markedly lower prices for stainless
steel
Demand for stainless steel was very weak during the first half of
2009 and markets were oversupplied. Demand started to recover
somewhat during the second quarter as destocking came to an end and
both distributors and end-users increased their buying activity as a
result of increasing metal prices and restricted levels of supply.
Compared to the first half of 2008, demand for stainless steel was
significantly lower in 2009. Apparent consumption of stainless steel
in Europe was down by 33% and down by 25% globally. The average
German base price for 2mm 304 cold rolled sheet was 1 021 EUR/ton in
I-II/2009, 20% lower than in I-II/2008. The transaction price for
stainless steel averaged 1 784 EUR/ton in I-II/2009, 42% lower than
in I-II/2008. (CRU)
Prices of most alloying materials were at clearly lower levels than
in the previous year. During the first six months of 2009, the nickel
price averaged 11 696 USD/ton (I-II/2008: 27 320 USD/ton) and
fluctuated in the range 9 400 - 16 000 USD/ton. The average quarterly
contract price for ferrochrome during the first half of 2009 was 0.74
USD/lb (I-II/2008: 1.57 USD/lb). The average price of molybdenum was
9.28 USD/lb (I-II/2008: 33.60 USD/lb). The price of recycled steel
averaged 203 USD/ton in the first six months of 2009 (I-II/2008: 479
USD/ton).
Significant operating loss but strong cash flow
Group sales in the first half of 2009 declined by 60% to EUR 1 296
million (I-II/2008: EUR 3 238 million) due to lower transaction
prices and depressed delivery volumes. Stainless steel deliveries
totalled 515 000 tons (I-II/2008: 840 000 tons), down by 39%.
Outokumpu cut production heavily and operated at 55-60% capacity
utilization in the first half of 2009.
Operating loss for the first half of 2009 totalled EUR 343 million
(I-II/2008: EUR 274 million profit). The primary causes were low
delivery volumes, low base price levels and raw-material related
inventory losses of some EUR 110 million compared to losses of some
EUR 40 million in I-II/2008. Loss before taxes totalled EUR 357
million (I-II/2008: EUR 247 million profit).
Net financial income and expenses in the first six months of 2009 was
EUR 10 million negative excluding non-recurring items (I-II/2008: EUR
16 million negative excluding non-recurring gains). In I-II/2008, an
impairment loss of EUR 12 million was booked in Other financial
expenses due to the decline in the share price of Belvedere Resources
Ltd, classified as available-for-sale financial asset.
Net loss for the period from continuing operations totalled EUR 272
million (I-II/2008: EUR 191 million profit). Earnings per share
totalled EUR -1.52 (I-II/2008: EUR 0.66) and earnings per share from
continuing operations EUR -1.50 (I-II/2008: EUR 1.06). The return on
capital employed for I-II/2009 was -18.8% (I-II/2008: 13.2%).
Net cash generated from operating activities totalled EUR 324 million
(I-II/2008: EUR 209 million) as a result of the release of working
capital due to declining metal prices and an efficient reduction in
inventory levels throughout the supply chain. Net interest-bearing
debt totalled EUR 926 million at the end of June (June 30, 2008: EUR
939 million). Outokumpu's gearing at the end of June was 37.1% (June
30, 2008: 29.1%).
Capital expenditure
Capital expenditure including maintenance totalled EUR 107 million in
the first half of 2009. The largest investments were related to the
replacement of the No. 2 annealing and pickling line in Tornio,
expansion of the service center in Willich, Germany, and the doubling
of special grades' production capacity at Nyby, Sweden. Total capital
expenditure in 2009 is estimated to be below EUR 250 million rather
than the previously announced EUR 300 million.
Risks and uncertainties
Outokumpu operates in accordance with the risk management policy
approved by its Board of Directors. This policy defines the
objectives, approaches and areas of responsibility in risk
management. Risks and uncertainties may, if they materialize, have a
substantial impact on earnings and cash flows. Key risks are assessed
and updated on a regular basis.
Important strategic and business risks include structural
overcapacity in stainless steel production, competition in stainless
steel markets and Eurocentricity. To mitigate risks related to
structural overcapacity and fierce competition in stainless steel
markets, Outokumpu aims to maintain the cost efficiency of its
operations, broaden the Group's product offering and increase sales
to end-users by, for example, developing distribution channels. This
strategy is supported by the Group Sales and Marketing function,
which ensures that customers are served in an optimal way. To
mitigate any possible impacts of Eurocentricity, Outokumpu is also
aiming to grow outside Europe.
During the first quarter of 2009, stainless steel markets continued
to weaken due to the global financial crisis that began in 2008.
Outokumpu responded with production cuts and personnel adjustments.
With some adjustments, these arrangements continued during the second
quarter.
Operational risks arise as a consequence of inadequate or failed
internal processes, employee actions, systematic or other events such
as natural catastrophes, misconduct or crime. Key operational risks
include a major fire or accident, variations in production
performance, failures in project implementation and the inability to
work according to a one-company approach. These risks are mitigated
through insurances and a variety of preventive or corrective actions
and initiatives. To minimize damage to property and business
interruptions that could be caused by fire at some of the Group's
major production sites, Outokumpu has implemented systematic fire and
security audit programmes.
Financial risks include exposure to market prices and default risk as
well as the ability to maintain adequate liquidity and low
refinancing risk. Due to the global financial crisis, credit risk
related to sales and to certain loan-receivable was added to the
Group's key risks' list during the first half of 2009. In addition to
these, the most important financial risks are variations in the price
of nickel, variations in the exchange rate between the Swedish krona
and the euro, the value of the US dollar and the capability to
maintain adequate liquidity and low refinancing risk. Outokumpu is
also exposed to equity and debt security prices.
Liquidity and refinancing risks are taken into account in capital
management decisions and, when necessary, in making investment and
other business decisions. To secure the necessary liquidity,
Outokumpu signed a three-year revolving credit facility of EUR 900
million in June 2009 to replace the previous five-year facility of
EUR 1 billion. During the first half of 2009, some additional
currency hedging was carried out in relation to local costs in
Sweden.
Outokumpu is closely monitoring the turbulence in global financial
markets. If the market situation remains difficult, Outokumpu is
prepared to take additional action to improve the Group's
profitability.
Environment, health and safety
Emissions to air and discharges to water remained within permitted
limits and the breaches that occurred were temporary, were identified
and caused only minimal environmental impact. Outokumpu is not a
party in any significant juridical or administrative proceeding
concerning environmental issues, nor is it aware of any realized
environmental risks that could have a material adverse effect on the
Group's financial position.
Carbon dioxide emissions under EU Emission Trading Scheme were at a
very low level in the second quarter due to reduced levels of
production, approximately 110 000 tons. Outokumpu's total amount of
carbon dioxide allowances in the UK, Sweden and Finland are expected
to be sufficient for the Group's planned production. Outokumpu did
not buy or sell any emission allowances during the second quarter.
Occupational safety continues to be a major focus area within the
Group and Outokumpu has a separate safety function responsible for
safety management and development. In I-II/2009, the lost-time injury
rate (i.e. lost-time accidents per million working hours) was six
(I-II/2008: 10). In 2009, the target is less than five. No severe
accidents were reported in the second quarter.
Corporate Responsibility
In March 2009, Outokumpu was selected to be a member of the
Kempen/SNS Smaller Europe SRI Universe, a concept launched by Kempen
Capital Management. Membership is only offered to companies with the
very highest standards and codes of practice in the three areas of
business ethics, human resources and the environment.
In 2008, Outokumpu launched a competition to combat climate change as
part of its Corporate Responsibility Theme year 2008. Outokumpu
decided to invest EUR 5 million in an environmental target to be
identified through this Group-wide competition. Proposed innovations
were required to reduce direct or indirect carbon dioxide emissions
caused by the use of fuels, or to replace the use of virgin resources
by recycling and utilizing Outokumpu's by-products. Outokumpu's
internal jury decided that the EUR 5 million will be divided among
the three best initiatives. The winning proposal - a project
investing in wind power generation to reduce carbon dioxide emissions
and further increase the amount of electricity obtained from
renewable sources - includes the suggestions that Outokumpu should
provide the stainless steel for the turbines. Outokumpu's primary
source of energy for its operations is electricity with renewable
sources providing some 50%.
Personnel
The Group's continuing operations employed an average of 8 184 people
during January-June 2009 (I-II/2008: 8 362). At the end of June,
Outokumpu had 7 985 employees (June 30, 2008: 8 884).
Class actions regarding the sold fabricated copper products business
The fabricated copper products business sold in 2005, comprised,
among others, Outokumpu Copper (USA), Inc. This company has been
served with one individual damage claim for ACR Tubes under US
antitrust laws. Outokumpu believes that the allegations in this case
are groundless and will defend itself in any proceedings. In
connection with the transaction to sell the fabricated copper
products business to Nordic Capital, Outokumpu has agreed to
indemnify and hold harmless Nordic Capital with respect to this
claim.
The European Commission's fine for Outokumpu related to copper
air-conditioning tube cartel remains unchanged
In 2003, the European Commission issued its judgment on Outokumpu's
participation in a European price-fixing and market-sharing cartel
regarding copper air-conditioning tubes during 1988-2001. A fine of
EUR 18 million was imposed on the Group for its participation. In
2004, Outokumpu made an appeal to the Court of First Instance for
Europe regarding the basis for the calculation and the amount of the
fine. According to decision issued by the Court in May 2009, the
amount of the fine remains unchanged. Outokumpu exited from the
copper fabrication business by divesting a major part of the business
in 2005 and the remainder in April 2008.
Customs investigation of exports to Russia by Outokumpu Tornio Works
In March 2007, Finnish Customs authorities initiated a criminal
investigation into the Group's Tornio Works' export practices to
Russia. It was suspected that a forwarding agency based in
south-eastern Finland had prepared defective and/or forged invoices
regarding the export of stainless steel to Russia. The preliminary
investigation focused on possible complicity by Outokumpu Tornio
Works in the preparation of defective and/or forged invoices by the
forwarding agent.
In June 2009, the Finnish Customs completed its preliminary
investigation and forwarded the matter for consideration of charges
to the prosecuting authorities. According to initial estimates, the
consideration of charges will be completed by the end of 2009.
Immediately after the Finnish Customs authorities began their
investigations in 2007, Outokumpu initiated its own investigation
into the trade practices connected with stainless steel exports from
Tornio to Russia. In June 2007, after carrying out its own
investigation, a leading Finnish law firm Roschier Attorneys Ltd.,
concluded that it had not found evidence that any employees of Tornio
Works or the Group had committed any of the crimes alleged by the
Finnish Customs.
Acting under instructions from Outokumpu, Roschier has subsequently
examined the preliminary investigation material produced by the
Finnish Customs' and concluded that it contains no evidence that any
employees of Outokumpu committed forgery or the accounting offence
alleged by the Finnish Customs. Outokumpu's Auditor, KPMG Oy Ab, has
also stated that suspicions related to the making of false financial
statements are groundless.
Outokumpu has stated that neither the Group nor its personnel have
committed any of the crimes alleged by the Finnish Customs.
Organizational change and appointments
Mr Andrea Gatti, former EVP - Group Sales and Marketing at Outokumpu,
has assumed the role of Corporate Vice President outside the
Executive Committee from February 24, 2009. He will work on strategic
corporate projects and report to Karri Kaitue, Deputy CEO. Bo Annvik,
EVP - Specialty Stainless, has assumed Mr. Gatti's duties for an
interim period.
Shares and shareholders
According to the Nordic Central Securities Depository, Outokumpu's
largest shareholders by group at the end of the second quarter were
Finnish corporations (33.88%), foreign investors (31.93%), Finnish
public sector institutions (16.56%), Finnish private households
(9.98%), Finnish financial and insurance institutions (5.12%), and
Finnish non-profit organizations (2.53%). The list of largest
shareholders is updated regularly on Outokumpu's Internet pages:
www.outokumpu.com/Investors
Shareholders that have more than 5% of the shares and votes in
Outokumpu Oyj are Solidium Oy (owned by the State of Finland)
(31.01%) and the Finnish Social Insurance Institution (8.05%).
At the end of June, Outokumpu's closing share price was EUR 12.29
(II/2008: EUR 22.25). The average share price during the first half
of 2009 was EUR 10.37 (I-II/2008: EUR 25.86) with EUR 14.68
(I-II/2008: EUR 33.99) as the highest traded price and EUR 7.72
(I-II/2008: EUR 17.20) as the lowest. At the end of June, the market
capitalization of Outokumpu Oyj shares totalled EUR 2 224 million
(June 30, 2008: EUR 4 010 million). Share turnover on the Nasdaq OMX
Helsinki exchange during the first half of 2009 amounted to 204.5
million (I-II/2008: 260.6 million) shares. The total value of shares
traded during the first six months was EUR 2 119.9 million
(I-II/2008: EUR 6 738.9 million).
Outokumpu's fully paid-up share capital at the end of June totalled
EUR 309.4 million and consisted of 182 004 266 shares. The number of
shares outstanding at the end of the second quarter was 180 963 378
excluding treasury shares.
Annual General Meeting 2009
The Annual General Meeting (AGM) approved a dividend of EUR 0.50 per
share for 2008. Dividends totalling EUR 90 million were paid on April
3, 2009.
The AGM authorized the Board of Directors to decide to repurchase the
Group's own shares and to issue shares and grant special rights
entitling to shares. These authorizations are valid 12 months or
until the next AGM, but no longer than May 31, 2010. To date, the
authorizations have not been used.
The AGM decided on the number of the Board members, including the
Chairman and Vice Chairman, to be eight. The members of the Outokumpu
Board of Directors are: Evert Henkes, Ole Johansson (Chairman), Jarmo
Kilpelä, Victoire de Margerie, Anna Nilsson-Ehle, Jussi Pesonen,
Leena Saarinen and Anssi Soila (Vice Chairman).
SHORT-TERM OUTLOOK
During the second quarter, Outokumpu's order intake from both
distributors and end-users of stainless steel has increased somewhat
from the earlier very low levels. The reduction of inventories by
distributors and end-users seems to have ended and the increase in
the nickel price has triggered some purchasing activity. There is,
however, no major improvement in underlying demand for stainless
steel. Inventory levels at distributors in Europe are estimated to be
below normal.
Outokumpu is currently selling standard grades for deliveries in
October. Due to production constraints, maintenance breaks and
seasonality of demand, delivery volumes in the third quarter are
estimated to be somewhat below the level in the first quarter
(247 000 tons). Outokumpu's average base prices for all flat products
for the third quarter are expected to increase by 100-150 EUR/t
compared to the average in the second quarter. The intention is to
continue to increase base prices in the fourth quarter.
Outokumpu's underlying operational result in the third quarter is
estimated to be at the same level or somewhat better than in the
second quarter as the positive impact of higher prices will be offset
by the decline in delivery volumes. With current metal prices,
raw-material related inventory gains are expected to have a slightly
positive impact on the operating result in the third quarter.
Outokumpu estimates that better prices and mix and slowly recovering
delivery volumes will gradually improve underlying profitability
towards the end of the year.
In Espoo, July 23, 2009
Board of Directors
CONSOLIDATED FINANCIAL
STATEMENTS (unaudited)
Income statement
Jan- Jan- April- April- Jan-
June June June June Dec
EUR million 2009 2008 2009 2008 2008
Continuing operations:
Sales 1 296 3 238 617 1 549 5 474
Other operating income 12 2 1 1 57
Costs and expenses -1 633 -2 956 -708 -1 373 -5 552
Other operating expenses -19 -11 -4 -4 -42
Operating profit -343 274 -94 174 -63
Share of results in
associated companies -3 1 -0 1 -2
Financial income and expenses
Interest income 9 10 5 5 20
Interest expenses -23 -34 -9 -18 -74
Market price gains and losses -0 -2 -5 5 -2
Other financial income 3 11 0 1 11
Other financial expenses -0 -14 -1 -1 -24
Profit before taxes -357 247 -105 166 -134
Income taxes 84 -56 20 -36 24
Net profit for the period
from continuing operations -272 191 -85 130 -110
Discontinued operations:
Net profit for the period
from discontinued operations -2 -72 -2 -74 -79
Net profit for the period -274 119 -87 56 -189
Attributable to:
Owners of the parent -274 119 -87 56 -189
Non-controlling interests -1 - -0 - -0
Earnings per share for profit
attributable to the owners
of the parent:
Earnings per share, EUR -1.52 0.66 -0.48 0.31 -1.05
Diluted earnings per share, EUR -1.52 0.66 -0.48 0.31 -1.04
Earnings per share from continuing
operations attributable to the
owners
of the parent:
Earnings per share, EUR -1.50 1.06 -0.47 0.72 -0.61
Earnings per share from
discontinued
operations attributable to the
owners
of the parent:
Earnings per share, EUR -0.01 -0.40 -0.01 -0.41 -0.44
Statement of other comprehensive
income
Jan- Jan- Jan- Jan- Jan-
June June June June Dec
EUR million 2009 2008 2009 2008 2008
Net profit for the period -274 119 -87 56 -189
Other comprehensive income:
Exchange differences on
translating foreign operations 32 -29 15 3 -75
Available-for-sale financial
assets
Fair value changes during
Fair value changes during the
period 17 10 17 -1 -37
Reclassification adjustments
from equity to profit - 5 - 0 5
Income tax relating to
available-for-sale financial
assets -8 -2 -5 0 8
Cash flow hedges
Fair value changes during the
period 2 1 6 8 -65
Reclassification adjustments
from equity to profit - -2 - -3 -5
Income tax relating to cash flow
hedges -1 0 -2 -1 18
Net investment hedges
Fair value changes during the
period 1 0 0 1 13
Income tax relating to net
investment hedges -0 -0 -0 -0 -3
Share of other comprehensive
income of associated companies 18 - - - -
Other comprehensive income for the
period, net of tax 61 -16 32 6 -140
Total comprehensive income for the
period -213 103 -55 62 -329
Attributable to:
Owners of the parent -213 103 -55 62 -329
Non-controlling interests -0 - -0 - -0
Statement of financial position
June 30 June 30 Dec 31
EUR million 2009 2008 2008
ASSETS
Non-current assets
Intangible assets 574 469 584
Property, plant and equipment 2 051 1 971 2 027
Investments in associated companies 1) 177 164 156
Available-for-sale financial assets 1) 87 133 67
Derivative financial instruments 1) 8 36 9
Deferred tax assets 20 25 37
Trade and other receivables
Interest-bearing 1) 130 121 132
Non interest-bearing 62 54 55
Total non-current assets 3 111 2 974 3 067
Current assets
Inventories 879 1 605 1 204
Available-for-sale financial assets 1) 9 9 8
Derivative financial instruments 1) 25 39 92
Trade and other receivables
Interest-bearing 1) 32 15 25
Non interest-bearing 501 1 146 701
Cash and cash equivalents 1) 218 77 224
Total current assets 1 663 2 892 2 252
Receivables related to assets held for sale
1) 13 30 22
TOTAL ASSETS 4 787 5 895 5 341
EQUITY AND LIABILITIES
Equity attributable to the
equity holders of the Company
Share capital 309 308 308
Premium fund 705 702 702
Other reserves 22 86 -13
Retained earnings 1 733 2 012 1 984
Net profit for the financial year -274 119 -189
2 496 3 227 2 794
Non-controlling interests 1 - 1
Total equity 2 497 3 227 2 795
Non-current liabilities
Long-term debt 1) 975 976 1 170
Derivative financial instruments 1) 51 13 48
Deferred tax liabilities 132 245 216
Pension obligations 65 57 64
Provisions 32 34 28
Trade and other payables 1 2 2
Total non-current liabilities 1 256 1 327 1 529
Current liabilities
Current debt 1) 555 514 501
Derivative financial instruments 1) 22 29 54
Income tax liabilities 4 55 5
Provisions 28 29 48
Trade and other payables
Interest-bearing 1) 15 22 26
Non interest-bearing 402 683 378
Total current liabilities 1 027 1 332 1 012
Liabilities related to assets held for sale 1) 7 9 6
TOTAL EQUITY AND LIABILITIES 4 787 5 895 5 341
1) Included in net interest-bearing debt.
Consolidated
statement
of changes in
equity
Attributable to the owners of the parent
Fair
Share Unregister- Share Other value
capital ed share premium reserves reserves
EUR million capital fund
Equity on December
31, 2007 308 - 701 16 57
Total
comprehensive
income
for the period - - - - 13
Dividends - - - - -
Share-based
payments - - - - -
Share options
exercised 0 - 1 - -
Equity on June 30,
2008 308 - 702 16 70
Equity on December
31, 2008 308 - 702 15 -28
Total
comprehensive
income
for the period - - - - 33
Transfers within
equity - - - 2 -
Dividends - - - - -
Share-based
payments - - - - -
Share options
exercised 1 - 3 - -
Equity on June 30,
2009 309 - 705 17 6
Attributable to the owners of the parent
Treasury Cumulative Retained Non- Total
shares translation earnings controlling equity
EUR million differences interests
Equity on December
31, 2007 -27 -82 2 364 - 3 337
Total
comprehensive
income
for the period - -29 119 - 103
Dividends - - -216 - -216
Share-based
payments - - 2 - 2
Share options
exercised - - - - 1
Equity on June 30,
2008 -27 -111 2 269 - 3 227
Equity on December
31, 2008 -27 -138 1 961 1 2 795
Total
comprehensive
income
for the period - 28 -274 -0 -213
Transfers within
equity - - -2 - -
Dividends - - -90 - -90
Share-based
payments - - 1 - 1
Share options
exercised - - - - 4
Equity on June 30,
2009 -27 -110 1 596 1 2 497
Condensed statement of
cash flows
Jan-June Jan-June Apr-June Apr-June Jan-Dec
EUR million 2009 2008 2009 2008 2008
Net profit for the
period -274 119 -87 56 -189
Adjustments
Depreciation and
amortization 103 100 52 50 206
Impairments 1 17 1 1 36
Other adjustments -152 145 -84 144 321
Change in working
capital 647 -94 153 -73 370
Dividends received 3 11 0 0 12
Interests received 3 3 2 2 5
Interests paid -33 -38 -20 -23 -76
Income taxes paid 26 -54 6 -56 -30
Net cash from operating
activities 324 209 23 103 656
Purchases of assets -120 -106 -48 -58 -325
Purchase of
subsidiaries - - - - -204
Proceeds from the sale
of subsidiaries - 49 - 49 49
Proceeds from the sale
of other assets 7 3 1 2 31
Net cash from other
investing activities 0 -0 0 -0 0
Net cash from investing
activities -112 -54 -46 -8 -449
Cash flow before
financing activities 212 155 -24 95 207
Share options exercised 4 1 0 1 1
Borrowings of long-term
debt 59 - 50 - 341
Repayment of long-term
debt -283 -145 -274 -137 -236
Change in current debt 91 199 173 229 47
Dividends paid -90 -216 -90 -216 -216
Proceeds from the sale
of other financial
assets 0 0 0 0 0
Other financing cash
flow 1 -2 0 -2 -1
Net cash from financing
activities -219 -163 -141 -124 -64
Net change in cash and
cash equivalents -7 -7 -164 -30 143
Cash and cash
equivalents
at the beginning of the
period 224 86 381 107 86
Foreign exchange rate
effect 1 -1 1 0 -5
Net change in cash and
cash equivalents -7 -7 -164 -30 143
Cash and cash
equivalents
at the end of the
period 218 77 218 77 224
Key figures
Jan-June Jan-June Jan-Dec
EUR million 2009 2008 2008
Operating profit
margin, % -26.5 8.4 -1.2
Return on
capital
employed, % -18.8 13.2 -1.6
Return on
equity, % -20.8 7.2 -6.2
Return on
equity,
continuing
operations, % -20.6 11.6 -3.6
Capital employed
at end of period 3 423 4 166 3 867
Net
interest-bearing
debt at end of
period 926 939 1 072
Equity-to-assets
ratio
at end of
period, % 52.2 54.8 52.4
Debt-to-equity
ratio at end of
period, % 37.1 29.1 38.4
Earnings per
share, EUR -1.52 0.66 -1.05
Earnings per
share from
continuing
operations, EUR -1.50 1.06 -0.61
Earnings per
share from
discontinued
operations, EUR -0.01 -0.40 -0.44
Average number
of shares
outstanding, in
thousands 1) 180 685 180 142 180 185
Fully diluted
earnings per
share, EUR -1.52 0.66 -1.04
Fully diluted
average number
of shares, in
thousands 1) 180 736 181 167 180 995
Equity per share
at end
of period, EUR 13.79 17.91 15.50
Number of shares
outstanding
at end of
period,in
thousands 1) 180 963 180 222 180 233
Capital
expenditure,
continuing
operations 107 97 544
Depreciation,
continuing
operations 103 100 206
Average
personnel for
the
period,
continuing
operations 8 184 8 362 8 551
1) The number of own shares
repurchased is excluded.
NOTES TO THE INCOME STATEMENT AND BALANCE SHEET
This interim financial report is prepared in accordance with IAS 34
(Interim Financial Reporting). Mainly the same accounting policies
and methods of computation have been followed in the interim
financial statements as in the annual financial statements for 2008.
Outokumpu has applied the IFRS 8 - Operating segments as of January
1, 2009. According to IFRS 8, segment information should be based on
management's internal reporting structure and accounting principles.
As disclosed in financial statement for 2008, Outokumpu's segment
information has already been based on management reporting structure
and therefore the operating segments are the same as they were
previously, General Stainless and Specialty Stainless. Outokumpu has
also applied amended standard IAS 1 - Presentation of financial
statements as of January 1, 2009, which has changed the presentation
of income statement and statement of changes in equity. These changes
have impacted the presentation of financial statements.
Use of estimates
The preparation of the financial statements in accordance with IFRS
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities, as well as the disclosure
of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of income and expenses during
the reporting period. Accounting estimates are employed in the
financial statements to determine reported amounts, including the
realizability of certain assets, the useful lives of tangible and
intangible assets, income taxes, provisions, pension obligations,
impairment of goodwill and other items. Although these estimates are
based on management's best knowledge of current events and actions,
actual results may differ from the estimates.
Shares and share capital
The total number of Outokumpu Oyj shares was 182 004 266 and the
share capital amounted to EUR 309.4 million on June 30, 2009.
Outokumpu Oyj held 1 040 888 treasury shares on June 30, 2009. This
corresponded to 0.6% of the share capital and the total voting rights
of the Company on June 30, 2009.
Outokumpu has a stock option programme for management (2003 option
programme). The stock options have been allocated as part of the
Group's incentive programmes to key personnel of Outokumpu. The
option programme has three parts 2003A, 2003B and 2003C. On June 30,
2009 a total of 650 881 Outokumpu Oyj shares had been subscribed for
on the basis of 2003A stock option programme, a total of 82 830
Outokumpu Oyj shares on the basis of 2003B stock option programme and
a total of 20 000 Outokumpu Oyj shares on the basis of 2003C stock
option programme. Share subscription period with the Outokumpu stock
options 2003A ended on March 1, 2009. An aggregate maximum of 945 990
shares can be subscribed with the remaining 2003B stock options and
80 500 shares with the remaining 2003C stock options. In accordance
with the terms and conditions of the option programme, the dividend
adjusted share price for a stock option 2003B was EUR 9.81 and for
stock option 2003C EUR 10.44 on June 30, 2009. As a result of the
share subscriptions with the 2003 stock options, Outokumpu Oyj's
share capital may be increased by a maximum of EUR 1 745 033 and the
number of shares by a maximum of 1 026 490 shares. This corresponds
to 0.6% of the Company's shares and voting rights.
Outokumpu has also two share-based incentive programmes for years
2006-2010 and 2009-2013 as part of the key employee incentive and
commitment system of the Company.
The first earning period for 2006-2010 incentive programme was ended
on December 31, 2008. Based on the achievement of the targets, the
Board confirmed that the participants would receive 50% of the
maximum number of shares. Altogether 177 715 shares were distributed
to 125 persons in March 2009. Outokumpu used its treasury shares for
the reward payment, which means that the total number of shares of
the company did not change.
On February 3, 2009, the Board of Directors of Outokumpu approved the
second share-based incentive plan to be offered to the key management
of Outokumpu for years 2009-2013. The Programme will last five years,
comprising three earning periods of three calendar years each. The
earning periods commence on January 1, 2009, January 1, 2010 and
January 1, 2011. The Board approves the number of participants, final
allocations and performance criteria separately for each earning
period. For earning period 2009-2011, the Board approved 139
employees to be in the scope of the Programme. The amount of reward
will be determined and paid to the participants on the basis of the
achievement of performance targets after the financial statements of
the last year of earning period have been prepared. The rewards to be
paid on the basis of the programme will correspond to a maximum of 1
500 000 Outokumpu shares. No new shares will be issued in connection
with the programme and therefore the incentive plan will have no
diluting effect.
If persons covered by the programmes were to receive the number of
shares in accordance with the maximum reward, currently a total of
911 430 shares, their shareholding obtained via the programme would
amount to 0.5% of the Company's shares and voting rights.
The detailed information of the 2003 option programme and of the
share-based incentive programmes can be found in the annual report of
Outokumpu and from Outokumpu's Internet site www.outokumpu.com.
Non-current assets held for sale and discontinued operations
Outokumpu Brass produces brass rods for applications in the
construction, electrical and automotive industries. The brass rod
plant is located in Drünen in the Netherlands and the unit also has a
50% stake in a brass rod company in Gusum, Sweden. Outokumpu Brass
employs some 150 employees. The assets and liabilities of brass rod
business are presented as held for sale. Outokumpu intends to divest
the brass rod business.
Specification of non-current
assets held for sale
and discontinued operations
Income statement
Jan-June Jan-June Jan-Dec
EUR million 2009 2008 2008
Sales 15 241 267
Expenses -14 -240 -269
Operating profit 0 1 -2
Net financial items -1 -2 -4
Profit before taxes -1 -1 -6
Taxes -0 -1 -0
Profit after taxes -1 -2 -6
Impairment loss recognized
on the fair valuation of the
Outokumpu Brass division's
assets and liabilities -1 -5 -6
Loss on the sale of copper tube
business - -66 -66
Taxes - - -
After-tax result from the
disposal and impairment loss -1 -70 -73
Non-controlling interests - - -
Net profit for the period
from discontinued operations -2 -72 -79
Statement of financial position
June 30 June 30 Dec 31
EUR million 2009 2008 2008
Assets
Intangible and tangible assets 2 2 2
Other non-current assets 2 3 3
Inventories 5 14 9
Other current non
interest-bearing assets 4 11 8
13 30 22
Liabilities
Provisions 2 1 2
Other non-current non
interest-bearing liabilities 1 1 1
Trade payables 3 7 2
Other current non
interest-bearing liabilities 0 0 1
7 9 6
Cash flows
Jan-June Jan-June Jan-Dec
EUR million 2009 2008 2008
Operating cash flows 8 -9 -8
Investing cash flows -1 -12 -16
Financing cash flows -6 16 19
Total cash flows 0 -5 -5
Major non-recurring items
in operating profit
Jan-June Jan-June Jan-Dec
EUR million 2009 2008 2008
Redundancy provisions -5 - -17
Thin Strip restructuring in
Britain - - -66
-5 - -83
Major non-recurring items in
financial income and expenses
Jan-June Jan-June Jan-Dec
EUR million 2009 2008 2008
Impairment of Belvedere shares - -12 -21
- -12 -21
Income taxes
Jan-June Jan-June Jan-Dec
EUR million 2009 2008 2008
Current taxes -4 -51 -6
Deferred taxes 88 -5 30
84 -56 24
Property, plant and equipment
Jan 1 - Jan 1 - Jan 1 -
June 30 June 30 Dec 31
EUR million 2009 2008 2008
Historical cost at the
beginning of the period 4 021 3 984 3 984
Translation differences 23 -28 -190
Additions 109 97 301
Acquisition of subsidiaries - - 36
Disposals -5 -15 -108
Reclassifications -2 -2 -2
Historical cost at
the end of the period 4 146 4 036 4 021
Accumulated depreciation at
the beginning of the period -1 994 -2 004 -2 004
Translation differences -14 19 115
Disposals 3 12 83
Reclassifications 0 0 -0
Depreciation -91 -93 -188
Accumulated depreciation at
the end of the period -2 095 -2 065 -1 994
Carrying value at
the end of the period 2 051 1 971 2 027
Carrying value at the
beginning of the period 2 027 1 980 1 980
Commitments
June 30 June 30 Dec 31
EUR million 2009 2008 2008
Mortgages and pledges
Mortgages on land 189 121 189
Other pledges 1 0 5
Guarantees
On behalf of subsidiaries
for commercial commitments 19 52 55
On behalf of associated companies
for financing 5 5 5
Other commitments 56 61 59
Minimum future lease payments
on operating leases 62 53 59
Group's off-balance sheet investment commitments totaled EUR 86
million on June 30, 2009 (June 30, 2008: EUR 70 million, Dec 31,
2008: EUR 93 million).
Related party transactions
Transactions and balances
with associated companies
June 30 June 30 Dec 31
EUR million 2009 2008 2008
Sales 0 0 0
Purchases -4 -5 -13
Financial income and expenses 0 0 2
Loans and other receivables 7 9 7
Trade and other receivables 1 1 0
Fair values and nominal
amounts of
derivative
instruments
June 30 June 30 June 30 Dec 31 June 30 Dec 31
2009 2009 2009 2008 2009 2008
Positive Negative Net Net
fair fair fair fair Nominal Nominal
EUR million value value value value amounts amounts
Currency and
interest
rate derivatives
Currency forwards 21 57 -36 0 1 504 1 920
Interest rate
swaps 0 2 -2 2 240 200
Cross-currency
swaps 7 2 5 7 207 46
Currency options,
bought 2 - 2 - 70 -
Currency options,
sold - 1 -1 - 72 -
Number Number
of of
shares, shares,
million million
Stock options
Belvedere
Resources Ltd. - - - 0 - 3.7
Tons Tons
Metal derivatives
Forward and
futures
nickel contracts - 0 -0 -0 170 4 729
Nickel options,
bought - - - 14 - 16 758
Nickel options,
sold - - - -14 - 11 478
Forward and
futures
copper contracts 0 0 0 -0 900 4 925
Forward and
futures
zinc contracts 0 0 -0 -0 850 1 025
Emission allowance
derivatives 2 0 2 1 375 000 270 000
TWh TWh
Electricity
derivatives 1 12 -10 -11 0.9 1.3
33 74 -40 -1
Segment information
General Stainless
EUR million I/08 II/08 III/08 IV/08 2008
Sales 1 304 1 222 933 687 4 147
of which Tornio Works 905 833 567 396 2 701
Operating profit 81 125 -35 -177 -6
of which Tornio Works 67 114 -22 -93 66
Operating capital at
the end of period 2 722 2 671 2 820 2 663 2 663
Average personnel
for the period 3 578 4 000 4 163 3 989 3 933
Deliveries of main
products (1 000 tons)
Cold rolled 196 162 151 121 628
White hot strip 102 85 58 51 297
Semi-finished products 100 113 76 51 340
Total deliveries
of the division 398 359 285 223 1 265
EUR million I/09 II/09
Sales 476 501
of which Tornio Works 270 300
Operating profit -157 -52
of which Tornio Works -129 -33
Operating capital at
the end of period 2 390 2 379
Average personnel
for the period 3 917 3 848
Deliveries of main
products (1 000 tons)
Cold rolled 114 132
White hot strip 57 64
Semi-finished products 39 51
Total deliveries
of the division 210 248
Specialty Stainless
EUR million I/08 II/08 III/08 IV/08 2008
Sales 786 778 630 512 2 705
Operating profit 42 44 -63 -123 -101
Operating capital at
the end of period 1 430 1 449 1 378 1 174 1 174
Average personnel
for the period 4 115 4 096 4 192 4 103 4 127
Deliveries of main
products (1 000 tons)
Cold rolled 46 44 35 29 154
White hot strip 45 40 31 27 142
Quarto plate 35 37 28 27 126
Tubular products 19 18 14 15 66
Long products 14 14 14 10 52
Total deliveries
of the division 161 153 121 106 541
EUR million I/09 II/09
Sales 371 278
Operating profit -82 -37
Operating capital at
the end of period 1 007 906
Average personnel
for the period 3 892 3 656
Deliveries of main
products (1 000 tons)
Cold rolled 25 19
White hot strip 23 25
Quarto plate 20 19
Tubular products 14 12
Long products 9 8
Total deliveries
of the division 92 82
Other operations
EUR million I/08 II/08 III/08 IV/08 2008
Sales 64 63 69 62 258
Operating profit -20 4 29 25 38
Operating capital at
the end of period -20 283 266 214 214
Average personnel
for the period 447 487 507 525 492
EUR million I/09 II/09
Sales 66 58
Operating profit -12 -5
Operating capital at
the end of period 108 252
Average personnel
for the period 527 526
Income statement by quarter
EUR million I/08 II/08 III/08 IV/08 2008
Continuing operations:
Sales
General Stainless 1 304 1 222 933 687 4 147
of which intersegment sales 284 337 216 157 993
Specialty Stainless 786 778 630 512 2 705
of which intersegment sales 124 120 85 78 407
Other operations 64 63 69 62 258
of which intersegment sales 57 57 61 61 235
Intra-group sales -465 -514 -362 -295 -1 636
Total sales 1 689 1 549 1 270 966 5 474
Operating profit
General Stainless 81 125 -35 -177 -6
Specialty Stainless 42 44 -63 -123 -101
Other operations -20 4 29 25 38
Intra-group items -3 1 3 4 6
Total operating profit 100 174 -66 -271 -63
Share of results
in associated companies 0 1 -2 -1 -2
Financial income and expenses -20 -8 -14 -26 -69
Profit before taxes 80 166 -82 -298 -134
Income taxes -19 -36 9 71 24
Net profit for the period
from continuing operations 61 130 -73 -228 -110
Net profit for the period
from discontinued
operations 2 -74 -1 -5 -79
Net profit for the period 63 56 -74 -233 -189
Attributable to:
The owners of the parent 63 56 -74 -233 -189
Non-controlling interests - - - -0 -0
EUR million I/09 II/09
Continuing operations:
Sales
General Stainless 476 501
of which intersegment sales 97 100
Specialty Stainless 371 278
of which intersegment sales 75 67
Other operations 66 58
of which intersegment sales 5 52
Intra-group sales -233 -220
Total sales 679 617
Operating profit
General Stainless -157 -52
Specialty Stainless -82 -37
Other operations -12 -5
Intra-group items 2 0
Total operating profit -249 -94
Share of results
in associated companies -3 -0
Financial income and expenses 0 -11
Profit before taxes -252 -105
Income taxes 64 20
Net profit for the period
from continuing operations -188 -85
Net profit for the period
from discontinued
operations 0 -2
Net profit for the period -187 -87
Attributable to:
The owners of the parent -187 -87
Non-controlling interests -0 -0
Major non-recurring
items in operating profit
EUR million I/08 II/08 III/08 IV/08 2008
Specialty Stainless
Redundancy provisions - - - -17 -17
Thin Strip restructuring
in Britain - - -66 - -66
- - -66 -17 -83
EUR million I/09 II/09
Specialty Stainless
Redundancy provisions -5 -
Thin Strip restructuring
in Britain - -
-5 -
Major non-recurring items in
financial income and expenses
EUR million I/08 II/08 III/08 IV/08 2008
Impairment of Belvedere shares -12 - - -9 -21
-12 - - -9 -21
EUR million I/09 II/09
Impairment of Belvedere shares - -
- -
Key figures by quarter
EUR million I/08 II/08 III/08 IV/08
Operating profit margin, % 5.9 11.2 -5.2 -28.1
Return on capital employed, % 10.0 17.2 -6.3 -26.8
Return on equity, % 7.7 7.0 -9.3 -31.5
Return on equity,
continuing operations, % 7.5 16.3 -9.2 -30.8
Capital employed at end of period 3 899 4 166 4 228 3 867
Net interest-bearing
debt at end of period 737 939 1 096 1 072
Equity-to-assets ratio
at end of period, % 53.2 54.8 52.3 52.4
Debt-to-equity ratio
at end of period, % 23.3 29.1 35.0 38.4
Earnings per share, EUR 0.35 0.31 -0.41 -1.30
Earnings per share from
continuing operations, EUR 0.34 0.72 -0.41 -1.27
Earnings per share from
discontinued operations, EUR 0.01 -0.41 -0.01 -0.03
Average number of shares
outstanding, in thousands 1) 180 112 180 172 180 223 180 231
Equity per share
at end of period, EUR 17.56 17.91 17.38 15.50
Number of shares outstanding
at end of period, in thousands 1) 180 127 180 222 180 228 180 233
Capital expenditure,
continuing operations 41 56 317 129
Depreciation, continuing operations 50 50 52 54
Average personnel for the period,
continuing operations 8 140 8 583 8 862 8 617
EUR million I/09 II/09
Operating profit margin, % -36.7 -15.3
Return on capital employed, % -27.5 -11.1
Return on equity, % -28.1 -13.8
Return on equity,
continuing operations, % -28.0 -13.5
Capital employed at end of period 3 376 3 423
Net interest-bearing
debt at end of period 825 926
Equity-to-assets ratio
at end of period, % 51.3 52.2
Debt-to-equity ratio
at end of period, % 32.3 37.1
Earnings per share, EUR -1.04 -0.48
Earnings per share from
continuing operations, EUR -1.04 -0.47
Earnings per share from
discontinued operations, EUR 0.00 -0.01
Average number of shares
outstanding, in thousands 1) 180 413 180 955
Equity per share
at end of period, EUR 14.09 13.79
Number of shares outstanding
at end of period, in thousands 1) 180 953 180 963
Capital expenditure,
continuing operations 62 45
Depreciation, continuing operations 52 52
Average personnel for the period,
continuing operations 8 336 8 031
1) The number of own shares repurchased is excluded.
Definitions of key financial figures
Total equity + net interest-bearing
Capital employed = debt
Operating capital = Capital employed + net tax liability
Return on equity = Net profit for the financial period × 100
Total equity (average for the period)
Return on capital = Operating profit × 100
employed (ROCE) Capital employed (average for the period)
Net interest- Total interest-bearing debt
bearing debt = - total interest-bearing assets
Equity-to-assets ratio = Total equity × 100
Total assets - advances received
Debt-to-equity ratio = Net interest-bearing debt × 100
Total equity
Net profit for the financial period
attributable to the owners of the
Earnings per share = parent
Adjusted average number
of shares during the period
Equity attributable to
Equity per share = the owners of the parent
Adjusted number of shares
at the end of the period
This announcement was originally distributed by Hugin. The issuer is
solely responsible for the content of this announcement.
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