Outokumpu - Strong start to the year, Group adjusted EBITDA at EUR 294 million
Outokumpu Oyj
Interim statement
April 27, 2017 at 12.00 pm EET
Highlights in the first quarter 2017
Outokumpu’s adjusted EBITDA was EUR 294 million, compared to EUR 29 million in the first quarter of 2016. The improved performance was a result of successful continuation of productivity and efficiency improvement measures, supported by strong market fundamentals and higher ferrochrome prices. Operating cash flow of EUR -53 million was negatively impacted by an increase in net working capital of EUR 280 million.
• Stainless steel deliveries were 639,000 tonnes (610,000 tonnes)1.
• Adjusted EBITDA2 was EUR 294 million (EUR 29 million).
• EBITDA was EUR 309 million (EUR 46 million).
• Adjusted EBIT3 was EUR 238 million (EUR -29 million).
• EBIT was EUR 252 million (EUR -12 million).
• Operating cash flow was EUR -53 million (EUR 74 million).
• Net debt increased to EUR 1,376 million (Dec 31, 2016: EUR 1,242 million).
• Gearing was 55.0% (Dec 31, 2016: 51.4%).
• Return on capital employed (ROCE) was 9.4% (5.3%).
1) Figures in parentheses refer to the corresponding period for 2016, unless otherwise stated.
2) EBITDA excluding items classified as adjustments. Adjustments are material income and expense items such as restructuring costs, and gains or losses on sale of assets or businesses.
3) EBIT excluding items classified as adjustments.
| Group key figures | |||||
| I/17 | I/16 | IV/16 | 2016 | ||
| Sales | EUR million | 1 757 | 1 386 | 1 506 | 5 690 |
| EBITDA | EUR million | 309 | 46 | 128 | 355 |
| Adjusted EBITDA 1) | EUR million | 294 | 29 | 98 | 309 |
| EBIT | EUR million | 252 | -12 | 69 | 103 |
| Adjusted EBIT 2) | EUR million | 238 | -29 | 38 | 57 |
| Result before taxes | EUR million | 224 | -47 | 43 | -13 |
| Net result for the period | EUR million | 182 | -41 | 192 | 144 |
| Earnings per share | EUR | 0,44 | -0,10 | 0,46 | 0,35 |
| Diluted earnings per share | EUR | 0,42 | -0,10 | 0,46 | 0,35 |
| Return on capital employed | % | 9,4 | 5,3 | 2,6 | 2,6 |
| Net cash generated from operating activities | EUR million | -53 | 74 | 199 | 389 |
| Net debt at the end of period | EUR million | 1 376 | 1 551 | 1 242 | 1 242 |
| Debt-to-equity ratio at the end of period | % | 55,0 | 69,6 | 51,4 | 51,4 |
| Capital expenditure | EUR million | 19 | 32 | 61 | 164 |
| Stainless steel deliveries 3) | 1,000 tonnes | 639 | 610 | 596 | 2 444 |
| Personnel at the end of period | 10 420 | 10 920 | 10 600 | 10 600 |
1) Adjusted EBITDA = EBITDA – Items classified as adjustments.
2) Adjusted EBIT = EBIT – Items classified as adjustments.
3) Excludes ferrochrome deliveries.
Business and financial outlook for the second quarter of 2017
Underlying stainless steel demand is expected to remain robust in both Europe and the US in the second quarter and stainless steel base prices are expected to continue to improve. Outokumpu’s second-quarter stainless steel deliveries of both business area Europe and the Americas are expected to remain at the same level as in the first quarter.
For the second quarter, Outokumpu expects further strengthening performance from the stainless business supported by higher base prices. This however, will be more than offset by lower ferrochrome contract price and lower ferrochrome deliveries as a result of technical issues experienced in March. Consequently, Outokumpu expects its second-quarter adjusted EBITDA to be somewhat lower than in the first quarter of 2017.
CEO Roeland Baan:
“Outokumpu had a very strong start to the year. Our adjusted EBITDA improved significantly from last year and amounted to EUR 294 million. While the strong market had a notable impact on our result, I am particularly happy that our own productivity and efficiency improvement measures have resulted in higher delivery volumes and considerable cost benefits.
All business areas delivered black numbers. Europe’s adjusted EBITDA more than tripled to EUR 257 million compared to the first quarter of 2016 due to strong demand in all our customer segments and higher prices. In the Americas, adjusted EBITDA improved by over EUR 60 million to EUR 29 million. The reported numbers clearly demonstrate the ongoing turnaround of the Americas’ business area, a result of the decisive measures and determination to succeed by the Americas team. The solid performance of the Group was further supported by Long Products. The business area’s deliveries increased by 50% as a result of strong demand both in Europe and the US market leading to adjusted EBITDA of EUR 9 million.
While strongly improved base and raw material prices supported our results significantly, the flip side of the coin was the increase in working capital, specifically for receivables and the value of inventories. As a result, the operating cash flow for the quarter was EUR -53 million. Cash flow was further impacted by the payment of dividend and the share purchases during the quarter.
We have seen continued benefits from our self-help measures with further improvement in variable costs per tonne in all business areas. Although operationally we have been performing well in general, our ferrochrome operations have been hampered by instability in one of our three furnaces. Corrective maintenance is ongoing to return the furnace to normal performance during the second quarter. Despite these issues and lower ferrochrome prices, we expect strong financial performance to continue in the second quarter. Thanks to our world-class assets, comprehensive product portfolio and solid balance sheet, we are able to drive top-line growth and efficiency through our must-win battles, and remain well on track to fulfil our 2020 vision.”
Conference call today at 3.00 pm EET
A conference call for investors and analysts will be held on Thursday, April 27, 2017 at 3.00 pm EET (8.00 am US EST, 1.00 pm UK, 2.00 pm CET). The results will be introduced 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:
UK/Europe: +44 20 3427 1926
US & Canada: +1 646 254 3387
Confirmation code: 9543605
The event can be viewed live online at http://edge.media-server.com/m/p/8qio8pt4. 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 27, 2017 at around 6.00 pm EET.
For more information:
Investors: Tommi Järvenpää, tel. +358 9 421 3466, mobile +358 40 576 0288
Media: Reeta Kaukiainen, tel. +358 50 522 0924
Outokumpu Group
Outokumpu is a global leader in stainless steel. We create advanced materials that are efficient, long lasting and recyclable, thus building a world that lasts forever. Stainless steel, invented a century ago, is an ideal material to create lasting solutions in demanding applications from cutlery to bridges, energy and medical equipment: it is 100% recyclable, corrosion-resistant, maintenance-free, durable and hygienic. Outokumpu employs 10,000 professionals in more than 30 countries, with headquarters in Helsinki, Finland and shares listed in Nasdaq Helsinki.
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