Outokumpu - Operationally solid first quarter, Group adjusted EBITDA at EUR 133 million

Outokumpu Oyj
Interim statement
April 26, 2018 at 12.00 pm EEST

Outokumpu – Operationally solid first quarter, Group adjusted EBITDA at EUR 133 million

Highlights in the first quarter of 2018

  • Stainless steel deliveries were 644,000 tonnes (639,000 tonnes)1.
  • Adjusted EBITDA was EUR 133 million (EUR 294 million).
  • EBITDA was EUR 140 million (EUR 309 million).
  • Operating cash flow was EUR 39 million (EUR -53 million).
  • Net debt decreased to EUR 1,086 million (Dec 31, 2017: EUR 1,091 million).
  • Gearing was 40.9% (Dec 31, 2017: 40.1%).
  • Return on capital employed (ROCE) was 7.2% (Dec 31, 2017: 11.3%).

1 Figures in parentheses refer to the corresponding period for 2017, unless otherwise stated.

Q1 2018 compared to Q1 2017

Outokumpu’s first quarter adjusted EBITDA of EUR 133 million was significantly lower compared to EUR 294 million in the first quarter of 2017. Profitability declined primarily due to the lower ferrochrome price and lower realized base prices in both Europe and the Americas. In addition, higher graphite electrode and other input costs of approximately EUR 20 million had a negative impact on profitability. The large negative impacts were partly offset by better cost efficiency, particularly lower SG&A costs. Other operations and intra-group items’ adjusted EBITDA of EUR 10 million (EUR -9 million) includes a EUR 12 million gain from emission allowance derivatives. Raw material-related inventory and metal derivative losses were EUR 5 million (gains of EUR 33 million).

Group key figures I/18I/17IV/172017
SalesEUR million1,6711,7561,4636,356
EBITDAEUR million14030982663
Adjusted EBITDA 1)EUR million13329482631
EBITEUR million9025230445
Adjusted EBIT 1)EUR million8323830414
Result before taxesEUR million702240327
Net result for the periodEUR million49182128392
Earnings per shareEUR0.120.440.310.95
Diluted earnings per shareEUR0.120.420.290.90
Return on capital employed%7.29.411.311.3
Net cash generated from operating activitiesEUR million39-53104328
Net debt at the end of periodEUR million1,0861,3761,0911,091
Debt-to-equity ratio at the end of period%40.955.040.140.1
Capital expenditureEUR million371984174
Stainless steel deliveries1,000 tonnes6446395612,448
Personnel at the end of period 10,11110,42010,14110,141

Outokumpu has adopted to IFRS 15 – Revenue from Contracts with Customers retrospectively. Comparable financial figures for 2017 have been restated accordingly.
Further information on changes to Outokumpu's accounting principles and restatement impacts can be found in Financial Information section of this Interim Statement.
1) Adjusted EBITDA or EBIT = EBITDA or EBIT – Items classified as adjustments.

President & CEO Roeland Baan:

“Our operational performance in the first quarter was solid – delivery volumes were healthy, order intake was strong, and our adjusted EBITDA amounted to EUR 133 million. In Europe, our operational performance was robust, whereas development in the Americas was disappointing due to low realized pricing.

Despite a seasonal increase in working capital, we maintained our net debt level below EUR 1.1 billion in the first quarter.

The US steel tariffs are expected to come into force in the beginning of May. As negotiations around the effective implementation are still underway, markets have been roiled by the uncertainty this brings. One of the tangible effects has been an 8% increase of steel imports into Europe year on year.

Consequently, the European Commission has started investigations on safeguard measures to protect the European steel market. In the US, steel tariffs have already led to higher base prices benefitting our business in the Americas going forward.

In 2018, we are continuing to execute on our six must-win battles with a special focus on improving our delivery performance and efficiency. Despite the current uncertainty in the markets, the demand for stainless steel is expected to stay at healthy levels. With our strong product portfolio, solid balance sheet and dedicated workforce, we are confident that we will reach our 2020 vision.”

Outlook for Q2 2018

Underlying stainless steel demand is expected to remain healthy. Base prices are trending upward in the US, supported by steel import tariffs, whereas in Europe, higher Asian imports are expected to result in further pressure on base prices.

The benefits from the higher ferrochrome price will be partly offset by a planned maintenance shutdown of one ferrochrome furnace.

Stainless steel deliveries are expected to be relatively flat compared to the first quarter in all business areas. Outokumpu expects its second-quarter adjusted EBITDA to be at a similar level to the first quarter (Q1/18: EUR 133 million).

Financial and market data available online

A new Excel file is available at www.outokumpu.com/en/investors. The file includes key financial and market data for the Group and business areas. The data will be updated on a quarterly basis after the results announcements.

Conference call today at 3.00 pm EEST

A conference call for investors and analysts will be held on Thursday, April 26, 2018 at 3.00 pm EEST (8.00 am US EDT, 1.00 pm UK, 2.00 pm CET). The results call will be hosted by Outokumpu’s CEO Roeland Baan and CFO Christoph de la Camp. To participate in the conference call, please dial in 5−10 minutes before the beginning of the event:

Finland: +358 9 7479 0404
UK/Europe: +44 330 336 9411 
US & Canada: +1 646 828 8156
Confirmation code: 5683003

The event can be viewed live at https://edge.media-server.com/m6/p/2uccnr83. The stock exchange release and the presentation material will be available before the event at www.outokumpu.com/en/investors.

A recording of the event will be available at www.outokumpu.com/en/investors/IR-events/webcasts as of April 26, 2018 at around 6.00 pm EEST.

For more information:

Investors: Tommi Järvenpää, tel. +358 9 421 3466, +358 40 576 0288

Media: Reeta Kaukiainen, tel. +358 50 522 0924

Outokumpu Group

Outokumpu is the global leader in stainless steel. We aim to be the best value creator in stainless by 2020, through our competitive edge of customer orientation and efficiency. The foundation of our business is our ability to tailor stainless steel into any form and for almost any purpose. Stainless steel is sustainable, durable and designed to last forever. Our customers use it to create civilization’s basic structures and its most famous landmarks as well as products for households and various industries. Outokumpu employs 10,000 professionals in more than 30 countries, with headquarters in Helsinki, Finland and shares listed in Nasdaq Helsinki. www.outokumpu.com       outokumpu.com/stainless-news