OUTOKUMPU ANNUAL ACCOUNTS 2004 - NET PROFIT ALL-TIME HIGH AT EUR 390 MILLION
OUTOKUMPU OYJ STOCK EXCHANGE RELEASE FEBRUARY 10, 2005 at 1.00 PM
OUTOKUMPU ANNUAL ACCOUNTS 2004 - NET PROFIT
ALL-TIME HIGH AT EUR 390 MILLION
Outokumpus sales in 2004 increased by 20% to EUR 7 136 million.
Operating profit amounted to EUR 468 million (2003: EUR 214
million). Earnings per share were EUR 2.13 (2003: EUR 0.65). Net
cash generated from operating activities was EUR 128 million
negative (2003: EUR 194 million positive). The Groups gearing
ratio was 97.2%. The Board is proposing a dividend of [EUR 0.50]
per share.
Oct- Jul- Jan- Jan-
Dec Sep Dec Dec
Group key figures 2004 2004 2004 2003
Sales EUR 1 981 1 649 7 136 5 922
million
Operating profit EUR 124 73 468 214
million
Profit before taxes EUR 116 74 477 108
million
Net profit for the EUR 107 55 390 112
period million
Earnings per share EUR 0.58 0.29 2.13 0.65
Dividend per share EUR - - 0.50 1) 0.20
Return on capital % 10.1 6.0 10.3 5.0
employed
Net cash generated
from operating EUR 174 (36) (128) 194
activities million
Net interest-bearing EUR 2 435 2 515 2 435 2 025
debt million
Equity-to-assets ratio % 35.8 33.6 35.8 33.0
Debt-to-equity ratio % 97.2 104.6 97.2 97.2
Capital expenditure EUR 133 91 473 622
million
Average personnel
for the period 19 475 20 013 19 761 21 442
1) Board's proposal to the Annual General Meeting.
Outokumpu started to apply International Financial Reporting
Standards (IFRS) in the third-quarter interim report in 2004.
The date of transition to IFRS was January 1, 2003.
All figures in the annual accounts tables have been rounded and
consequently the sum of individual figures can deviate from the
presented sum figure.
Outokumpu de-consolidated all the assets sold to Boliden at the
end of 2003, while the results from these assets were consolidated
until the end of 2003. The assets acquired from Boliden were
consolidated to Outokumpu at the end of 2003.
THE YEAR 2004 IN BRIEF
- World economic growth accelerated to 4% in 2004. Global demand for
stainless steel grew by an estimated 6% and for copper and copper
alloy products by 7%. All raw material prices rose significantly
from the previous year. The conversion margin of stainless steel
improved only modestly.
- The Groups sales rose by 20% to EUR 7 136 million, mainly due to
higher selling prices and deliveries as well as a better product
mix.
- The Groups operating profit more than doubled to EUR 468 million.
This resulted from a significant profitability improvement by
Outokumpu Stainless. The Group's operating profit includes non-
recurring items of EUR 29 million. The comparable operating profit
for the fourth quarter was EUR 109 million, up markedly from the
third quarter.
- Total stainless steel deliveries in 2004 grew only modestly.
However, deliveries of cold rolled products and white hot strip
increased by 12%. The relative share of semi-finished products
decreased from the high level in 2003. Deliveries of fabricated
copper products increased by 34%, mainly due to the assets
acquired from Boliden at the end of 2003.
- At the year-end, the Groups net interest-bearing debt stood at
EUR 2 435 million and gearing was 97.2%. In spite of increased
profits, the Groups gearing remained at the end 2003 level due to
increased working capital. During the last quarter, however, cash
flow turned positive and gearing improved.
- The Groups capital expenditure decreased, but still remained
relatively high amounting to EUR 473 million. The EUR 1.1 billion
expansion program at Tornio is now nearing completion. Ramping-up
of the new cold rolling capacity (RAP5) is continuing according to
plan involving a demand-driven approach. The full capacity is
planned to be technically available in mid-2005.
- In August 2004, the Board outlined that Outokumpus future
strategic direction will be based on leadership in stainless and
various options to exit from the fabricated copper products
business will be explored. Furthermore, in early 2005, a new
vision for Outokumpu was defined - to be the undisputed number one
in stainless, with success based on operational excellence. A
decision was also made that the technology business will continue
to be developed as a part of the Outokumpu Group.
Outlook for 2005
Business and consumer surveys remain positive, and suggest that
the global economic growth will remain firm into the first half of
2005. Although the base price of stainless steel has softened
somewhat, global capacity utilization rates are expected to remain
high in 2005, providing a supportive background for prices and
margins. The ramp-up of Outokumpus new cold rolling mill (RAP5)
in Tornio will continue to improve profitability through higher
volumes and lower unit conversion costs. Furthermore, the product
mix is expected to improve further. It is currently estimated that
the increase in Outokumpus total deliveries of finished products
will be well above 20% in 2005 depending on the market situation.
Given the higher volumes and lower unit conversion costs, but also
slightly softening base price of stainless steel, Outokumpu
management estimates that the Groups operating profit excluding
non-recurring items, during the first half of 2005 will be at
least at the level of the corresponding period in 2004. Reaching
the gearing target of 75% will be a top priority for Outokumpu
management in 2005.
CEO Juha Rantanen comments:
"Year 2004 was in several ways better than the previous one.
Demand for our main products was robust and prices reasonably
good. We also recorded all-time high profits in the companys
history. Improvement was made in many fronts, but some of our key
targets were not yet reached. We will continue to work with the
Tornio ramp-up and the gearing target in 2005. Furthermore, by
launching the Commercial and Production Excellence programs in a
couple of months time we aim to improve both our operations and
financial performance".
MANAGEMENT ANALYSIS OF THE FOURTH-QUARTER OPERATING RESULT
The Groups comparable operating profit returns to levels of early
2004
The following table presents the Groups sales and comparable
operating profit (i.e. operating profit excluding non-recurring
items and Outokumpu Coppers LIFO-FIFO inventory adjustment) by
business.
Group key figures
EUR million I/03 II/03 III/03 IV/03 2003
Sales
Stainless 876 852 850 872 3 450
Copper 409 403 405 411 1 628
Technology 89 81 98 137 405
Zinc 93 95 98 110 396
Other operations 67 61 61 74 263
Intra-group sales (51) (53) (48) (68) (220)
The Group 1 483 1 439 1 464 1 536 5 922
Comparable
operating profit 1)
Stainless 47 33 7 19 106
Copper 6 11 5 6 27
Technology (6) (1) 1 11 5
Zinc 6 3 5 6 20
Other operations (18) (20) (15) (19) (72)
Intra-group items 1 0 1 0 3
The Group 36 26 4 23 89
Items affecting
comparability (1) (5) 26 105 125
The Group,
official
operating profit 35 21 31 128 214
EUR million I/04 II/04 III/04 IV/04 2004
Sales
Stainless 1 102 1 162 1 034 1 338 4 637
Copper 493 552 516 489 2 050
Technology 81 104 91 147 423
Zinc - - - - -
Other operations 41 39 41 42 163
Intra-group sales (37) (31) (33) (35) (136)
The Group 1 680 1 826 1 649 1 981 7 136
Comparable
operating profit 1)
Stainless 120 118 81 106 425
Copper 13 2 (2) 10 23
Technology (9) 0 1 15 8
Zinc - - - - -
Other operations (8) (2) (7) (22) (39)
Intra-group items (2) 3 0 0 0
The Group 114 121 73 109 417
Items affecting
comparability 28 8 0 15 51
The Group,
official
operating profit 142 128 73 124 468
1) The comparison periods have been restated to reflect the
correct earnings periods of the management share remuneration
scheme as well as some other minor adjustments.
Global economic growth continued robust in the last quarter of
2004. In the US, growth kept up its fast pace, and the FED raised
interest rates in mid-December for the fifth time since June 2004.
However, in Europe growth was slow. The euro gained another 6%
against the US dollar in the fourth quarter compared with the
previous quarter. European producers face tough competition
because of the weak US dollar. Chinas economic growth of 9.5% in
the last quarter was led by industrial investments. The previously
very rapid growth of industrial production in China has, however,
slowed to some 10%. The global market for stainless steel
moderated somewhat in the fourth quarter. European demand remained
sluggish, but Asian demand, for white hot strip in particular, was
very strong.
The Groups fourth-quarter sales rose by 20% from the previous
quarter and by 29% from the same period in 2003 due to higher
delivery volumes and selling prices. The delivery volumes of
stainless steel increased by 31% from the seasonally slow third
quarter and by 14% from the same period a year ago. Total
deliveries of fabricated copper products remained almost unchanged
from the third quarter, but rose by 27% from last year thanks to
the units acquired from Boliden at the end of 2003.
The Groups fourth-quarter comparable operating profit returned to
early 2004 levels and was EUR 109 (III/2004: EUR 73 million). The
profitability improvement was even more considerable when compared
with the same quarter of last year (IV/2003: EUR 23 million). High
delivery volumes of stainless steel coupled with reasonable base
prices and conversion margins contributed to the sound trend in
operating profit. Also, the continued high price of ferrochrome
supported fourth-quarter profitability. The Groups cash flow from
operating activities turned positive in the fourth quarter and was
EUR 174 million.
Outokumpu Stainless fourth-quarter comparable operating profit
EUR 106 million
Outokumpu Stainless key
figures
EUR million I/03 II/03 III/03 IV/03 2003
Sales
Coil Products 704 697 661 687 2 749
Special Products 349 327 273 348 1 297
North America 64 59 64 65 252
Others (241) (231) (148) (228) (848)
Outokumpu Stainless 876 852 850 872 3 450
total
Comparable operating
profit
Coil Products 45 35 1 17 98
Special Products 0 2 (8) 5 (1)
North America 0 0 4 1 5
Others 2 (4) 10 (4) 4
Outokumpu Stainless 47 33 7 19 106
total
Release of the
Finnish TEL
disability pension - - - - -
liability
Panteg closure - - - (7) (7)
Stelco Hardy closure - - - - -
Outokumpu Stainless,
official operating 47 33 7 12 99
profit
Operating capital
at the end of period 3 383 3 527 3 558 3 493 3 493
Deliveries of
main products (1 000
tonnes)
Cold rolled 228 210 208 221 867
White hot strip 83 69 72 92 316
Other 150 158 169 115 592
Total deliveries 461 437 449 428 1 775
Development of
market prices 1)
Stainless steel
Transaction price EUR/kg 1.77 1.78 1.75 1.87 1.80
Base price EUR/kg 1.43 1.39 1.38 1.38 1.40
Conversion margin EUR/kg 0.98 0.93 0.92 0.93 0.94
Nickel USD/lb 3.78 3.80 4.25 5.64 4.37
EUR/kg 7.77 7.36 8.33 10.46 8.52
Ferrochrome (Cr-content) USD/lb 0.36 0.41 0.46 0.49 0.43
EUR/kg 0.74 0.80 0.90 0.90 0.84
Molybdenum USD/lb 4.21 5.36 5.78 6.23 5.40
EUR/kg 8.65 10.39 11.34 11.55 10.52
Iron scrap USD/t 146 130 148 162 147
EUR/t 136 115 132 136 130
EUR million I/04 II/04 III/04 IV/04 2004
Sales
Coil Products 849 894 767 994 3 503
Special Products 363 459 379 449 1 650
North America 78 94 98 98 367
Others (188) (285) (210) (203) (883)
Outokumpu Stainless 1 102 1 162 1 034 1 338 4 637
total
Comparable operating
profit
Coil Products 102 88 69 62 320
Special Products 11 25 8 25 69
North America 5 6 5 7 22
Others 2 (1) (1) 12 14
Outokumpu Stainless 120 118 81 106 425
total
Release of the
Finnish TEL
disability pension - - - 13 13
liability
Panteg closure - - - 7 7
Stelco Hardy closure - - (3) - (3)
Outokumpu Stainless,
official operating 120 118 78 126 442
profit
Operating capital
at the end of period 3 757 3 965 4 046 4 108 4 108
Deliveries of
main products (1 000
tonnes)
Cold rolled 239 222 213 217 891
White hot strip 103 99 74 157 432
Other 137 123 87 116 464
Total deliveries 479 444 374 490 1 787
Development of
market prices 1)
Stainless steel
Transaction price EUR/kg 2.12 2.28 2.26 2.35 2.25
Base price EUR/kg 1.40 1.43 1.44 1.43 1.43
Conversion margin EUR/kg 0.96 1.01 1.05 1.11 1.03
Nickel USD/lb 6.68 5.67 6.35 6.38 6.27
EUR/kg 11.79 10.38 11.45 10.84 11.11
Ferrochrome (Cr-content) USD/lb 0.60 0.71 0.73 0.68 0.69
EUR/kg 1.05 1.30 1.32 1.16 1.22
Molybdenum USD/lb 8.20 14.61 16.91 25.85 16.39
EUR/kg 14.46 26.49 30.50 43.92 29.05
Iron scrap USD/t 231 211 238 265 236
EUR/t 185 176 195 204 190
1) Sources:
Stainless steel: CRU - German conversion margin (2 mm cold rolled
304 sheet), price estimate for deliveries during the period.
Nickel: London Metal Exchange (LME) cash quotations converted into
USD/lb and EUR/kg.
Ferrochrome: CRU - US imported high carbon 50-55% Cr.
Molybdenum: Metal Bulletin - molybdenum oxide - Europe.
Iron Scrap: Metal Bulletin - Iron scrap HMS1 fob Rotterdam.
The markets for stainless steel moderated somewhat in the fourth
quarter of 2004. European demand for cold rolled stainless steel
weakened after the summer and remained sluggish in the last
quarter. Demand was disappointing, especially in the southern
Europe, where the pressure on margins exacerbated. Some softening
in demand was also felt in the US, but activity generally remained
high. Asian demand, especially for the white hot strip, improved
markedly after the summer and was very strong in the last quarter.
The shift to low nickel-containing and ferritic grades continued
due to very high raw material prices.
As a result of higher deliveries and transaction prices Outokumpu
Stainless fourth-quarter sales increased by 29% from the previous
quarter. Deliveries increased due to seasonally higher demand and
the ramping-up of the new production capacity in Tornio after the
production stoppages in the third quarter. Sales rose by 53%
compared with the same period of last year. Comparable operating
profit for the fourth quarter was EUR 106 million. It increased
from the third quarter mainly due to higher deliveries to Asia. On
the other hand, the relative share of deliveries of white hot
strip increased, reducing the average conversion margin.
The nickel market is forecast to be close to balance in the short-
term. Low stocks, good demand from stainless steel producers and
speculative trading are forecast to keep the market volatile. The
ferrochrome price is forecast to stay relatively high in the short-
term due to weak US dollar against the South-African rand, good
demand as well as high coke and sea freight costs. Fourth-quarter
contract prices have been rolled over to the first quarter of
2005. The high ferrochrome price continues to have a positive
effect on Outokumpus short-term profitability.
Although the base price of stainless steel has softened somewhat,
global capacity utilization rates are expected to remain high in
2005, providing a supportive background for prices and margins.
The ramp-up of Outokumpus new cold rolling mill (RAP5) in Tornio
will continue to improve profitability through higher volumes and
lower unit conversion costs. Furthermore, the product mix is
expected to improve further, though it will be subject to market
conditions. Given the higher volumes and lower unit conversion
costs, but also slightly softening base price of stainless steel,
the comparable operating profit of Outokumpu Stainless during the
first half of 2005 is estimated to be at least at the level of the
corresponding period in 2004.
Copper posts better fourth-quarter profits
Outokumpu Copper key
figures
EUR million I/03 II/03 III/03 IV/03 2003
Sales
Regional businesses 185 174 171 191 721
Global businesses 180 191 173 163 707
Others 44 38 61 57 200
Outokumpu Copper total 409 403 405 411 1 628
Comparable operating
profit
Regional businesses (2) 2 2 (2) (1)
Global businesses 6 11 4 6 27
Others 2 (3) 0 1 1
Outokumpu Copper total 6 11 5 6 27
LIFO-FIFO inventory (1) (5) 0 4 (2)
adjustment
Release of the Finnish
TEL disability
pension liability - - - - -
Waalwijk closure
Excess of Outokumpu's
interest in the
net fair value of
acquired
net assets over cost - - - 23 23
Provisions for the
copper tube cartel fines - - - (54) (54)
Outokumpu Copper,
official operating profit 5 6 5 (21) (6)
Operating capital
at the end of period 918 911 883 732 732
Deliveries of fabricated
products (1 000 tonnes)
Regional businesses 59 57 54 58 228
Global businesses 47 53 48 45 193
Internal deliveries 0 0 0 (1) (1)
Total deliveries 106 110 102 102 420
Order backlog
at the end of
period (1 000 tonnes) 67 64 51 66 66
Price development
Conversion margin
of copper products,
change on the
previous period, % 1) (4) (5) 1 (6) (15)
Price of copper 2) USD/lb 0.75 0.74 0.80 0.93 0.81
EUR/kg 1.55 1.44 1.56 1.73 1.57
EUR million I/04 II/04 III/04 IV/04 2004
Sales
Regional businesses 304 326 308 289 1 226
Global businesses 204 244 224 207 879
Others (15) (18) (16) (7) (56)
Outokumpu Copper total 493 552 516 489 2 050
Comparable operating
profit
Regional businesses 7 2 (4) 7 12
Global businesses 10 (0) 4 2 16
Others (4) 0 (2) 0 (6)
Outokumpu Copper total 13 2 (2) 10 23
LIFO-FIFO inventory 11 9 3 (1) 22
adjustment
Release of the Finnish
TEL disability
pension liability - - - 14 14
Waalwijk closure (7) (7)
Excess of Outokumpu's
interest in the
net fair value of
acquired
net assets over cost - - - - -
Provisions for the
copper tube cartel fines - - - - -
Outokumpu Copper,
official operating profit 24 11 1 16 52
Operating capital
at the end of period 893 968 994 953 953
Deliveries of fabricated
products (1 000 tonnes)
Regional businesses 107 106 98 92 403
Global businesses 54 58 51 49 212
Internal deliveries (13) (15) (14) (10) (52)
Total deliveries 148 149 135 130 562
Order backlog
at the end of
period (1 000 tonnes) 95 108 79 78 78
Price development
Conversion margin
of copper products,
change on the
previous period, % 1) (8) 6 (2) (2) (10)
Price of copper 2) USD/lb 1.24 1.27 1.29 1.40 1.30
EUR/kg 2.18 2.32 2.33 2.38 2.30
1) The average conversion margin of Outokumpus copper products.
Includes changes in the product mix. The fabrication business
acquired from Boliden is included as of January 2004.
2) London Metal Exchange (LME) cash quotation.
Regional businesses consists of the Americas, Europe, as well as
Tube and Brass divisions. Global businesses consists of the
Automotive Heat Exchangers as well as Appliance Heat Exchangers &
Asia divisions. Harjavalta Metals, which was sold to Boliden, is
included in 2003 figures for Others.
Following the seasonally lower demand in the third quarter, demand
for fabricated copper products started to pick up again during the
last quarter of the year. In Europe, price competition remained
fierce. Asian demand had been good throughout the year but
uncertainty increased in the market toward the year-end. In the
US, contract prices for many products for 2005 are expected to
rise, reflecting strong demand and a tight market through most of
2004.
Outokumpu Coppers fourth-quarter sales decreased by 5% from the
previous quarter, mainly due to the 4% decline in total
deliveries. Deliveries decreased particularly in the US, where
demand had softened at the end of the third quarter due to the
high raw material price. Outokumpu Coppers comparable operating
profit for the fourth quarter amounted to EUR 10 million, a marked
increase from the previous quarter and the same period of last
year.
Orders for fabricated copper products received during the fourth
quarter increased by 19% from the previous quarter. Demand is
expected to stay at a reasonably good level also in early 2005.
However, across the whole copper products industry, any
improvement in volumes or conversion margins during 2005 is likely
to be rather modest. Based on the current market prospects and
order backlog, Outokumpu Coppers comparable operating profit for
the first six months of 2005 is expected to improve on the same
period of last year.
Technologys fourth-quarter profits up again
Outokumpu Technology key
figures
EUR million I/03 II/03 III/03 IV/03 2003
Sales 89 81 98 137 405
Comparable operating (6) (1) 1 11 5
profit
Release of the Finnish
TEL disability
pension liability - - - - -
Gain on the sale
of the filter business - - - - -
Technology,
official operating (6) (1) 1 11 5
profit
Operating capital
at the end of period 42 50 32 38 38
Order backlog
at the end of period 359 294 410 356 356
EUR million I/04 II/04 III/04 IV/04 2004
Sales 81 104 91 147 423
Comparable operating (9) 0 1 15 8
profit
Release of the Finnish
TEL disability
pension liability - - - 5 5
Gain on the sale
of the filter business 18 (1) - (1) 16
Technology,
official operating 9 (1) 1 19 29
profit
Operating capital
at the end of period 27 45 29 39 39
Order backlog
at the end of period 390 336 423 458 458
The market situation for technology sales remained good. All the
important customer sectors except for copper and zinc smelting
were active. The ferrous markets were particularly buoyant. The
most important orders received in the fourth quarter were an EUR
59 million pelletizing plant to LKAB in Sweden and an EUR 19
million acid plant to Suez Fertilizer in Egypt. Technologys order
backlog improved considerably and was record high at the end of
2004, at EUR 458 million (2003: EUR 356 million). Technologys
fourth-quarter sales were EUR 147 million and the comparable
operating profit amounted to EUR 15 million.
Strong growth in Technologys order intake is expected to continue
in 2005. New capacity is needed in mines and metallurgical
facilities in both the ferrous and non-ferrous sectors. The mood
in the markets remains bullish, and customer industry
profitability is running at a high level. Demand growth is
estimated to continue particularly in metals processing businesses
and, especially in ferrous technologies, due to the strong demand
in China.
Given this background, Technologys comparable operating profit is
expected to improve somewhat in 2005. The typical seasonality of
technology sales suggests that the bulk of 2005 operating profit
will again be generated in the latter part of the year.
Other operations
Other operations key
figures
EUR million I/03 II/03 III/03 IV/03 2003
Sales 67 61 61 74 263
Comparable operating (18) (20) (15) (19) (72)
profit
Release of the Finnish
TEL disability
pension liability - - - - -
Loss on the sale
of Boliden shares - - - - -
Gain on the
Boliden transaction - - - 120 120
Gain on the sale
of the Inmet shares - - - 10 10
Gain on the sale of
the precious metals - - - 9 9
assets
Gain on the sale of
Arctic
Platinum Partnership - - 26 - 26
(49%)
Other operations,
official operating (18) (20) 11 120 93
profit
Operating capital
at the end of period 165 184 224 58 58
EUR million I/04 II/04 III/04 IV/04 2004
Sales 41 39 41 42 163
Comparable operating (8) (2) (7) (22) (39)
profit
Release of the Finnish
TEL disability
pension liability - - - 4 4
Loss on the sale
of Boliden shares - - - (19) (19)
Gain on the
Boliden transaction (1) - - - (1)
Gain on the sale
of the Inmet shares - - - - -
Gain on the sale of
the precious metals - - - - -
assets
Gain on the sale of
Arctic
Platinum Partnership (49%) - - - - -
Other operations,
official operating (9) (2) (7) (37) (55)
profit
Operating capital
at the end of period 83 75 83 77 77
Other operations financial result consists mainly of such
business development and Corporate Management expenses that are
not allocated to the businesses.
The comparable fourth-quarter operating loss reported by Other
operations increased from the previous quarters. This was mainly
attributable to the costs relating to the share remuneration
scheme for management, in which the third and last remuneration
period ended in 2004. These costs were provided for in the last
quarter accounts of the year during which they have been earned.
Correspondingly, the costs of the second remuneration period of
the scheme have been restated from the first-quarter results of
2004 to the fourth quarter of 2003 to reflect the correct earnings
period.
The official fourth-quarter operating loss also includes a non-
recurring capital loss of EUR 19 million on the sale of Boliden
shares that was completed in December 2004.
The attachments present a summary of the corporate review for 2004
by the Board of Directors as well as extracts from the IFRS
financial statements.
This report is unaudited.
For further information, please contact:
Kari Lassila, SVP - Investor Relations and Economic Research, tel.
+358 9 421 2555,kari.lassila@outokumpu.com
Eero Mustala, SVP - Corporate Communications, tel.+358 9 421 2435,
eero.mustala@outokumpu.com
Vesa-Pekka Takala, EVP - Corporate Controller, tel. +358 9 421
4134,vesa-pekka.takala@outokumpu.com
News conference and live web cast today at 3.00 pm
A combined news conference, conference call and live web cast
concerning the 2004 financial results will be held today at 3.00
pm Finnish time (8.00 am US EST, 1.00 pm UK time, 2.00 pm CET) at
Hotel Kämp, conference room Akseli Gallen-Kallela,
Pohjoisesplanadi 29, 00100 Helsinki, Finland.
To participate via a conference call, please dial 5-10 minutes
before the beginning of the event:
+ 44 20 7162 0181 (UK) or +1 33 4323 6203 (US & Canada). The
password is 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 -> Downloads.
An on-demand web cast of the news conference will be available at
www.outokumpu.com as of February 10, 2005 at 4.30 pm. An instant
reply service of the conference call will be available until
Monday, February 14, 2005 in the following numbers: +44 20 7031
4064, access code: 644496 (UK) or +1 888 365 0240, access code:
644496 (US & Canada).
OUTOKUMPU OYJ
Corporate Management
Johanna Sintonen
Vice President - Investor Relations
tel. +358 9 421 2438, mobile +358 40 530 0778, fax +358 9 421 2125
e-mail: johanna.sintonen@outokumpu.com
www.outokumpu.com
SUMMARY OF THE BOARD OF DIRECTORS CORPORATE REVIEW FOR 2004
IFRS standards adopted
Outokumpu has been applying International Financial Reporting
Standards (IFRS) in its financial reporting from the third-quarter
interim report 2004 onwards. Outokumpu's date of transition to
IFRS was January 1, 2003. However, for the adoption of IAS 39
(Financial Instruments: Recognition and Measurement) and IAS 32
(Financial Instruments: Disclosure and Presentation), the date of
transition was January 1, 2004. As for financial instruments,
Outokumpu has utilized the exemption for a first-time adopter of
IFRS not to restate comparative information for 2003. Prior to
IFRS, Outokumpu's financial reporting was based on Finnish
Accounting Standards (FAS). The most significant effects of the
transition to IFRS concerned the treatment of positive and
negative goodwill, pension and inventory accounting, recognition
of financial instruments and the presentation of market price
gains and losses.
Financial performance improved
Outokumpus financial result for 2004 improved significantly on
the previous year in step with the strengthened global economic
recovery, better market conditions and progress in the Tornio ramp-
up. The Groups sales rose by 20% to EUR 7 136 million (2003: EUR
5 922 million) and the official operating profit more than doubled
to EUR 468 million (2003: EUR 214 million). The profitability
improvement was mainly attributable to Outokumpu Stainless. Also,
the financial performance of Outokumpu Copper and Outokumpu
Technology developed favorably. Net profit for the financial year
rose to EUR 390 million (2003: EUR 112 million) and earnings per
share to EUR 2.13 (2003: EUR 0.65).
Cash flow from operating activities was, however, EUR 128 million
negative (2003: EUR 194 million positive). The Groups working
capital increased substantially due to soaring raw material
prices, and capital expenditure was still relatively high at EUR
473 million. Therefore, the Groups gearing remained above the
target level at 97.2% in spite of the clearly improved net profit
for the period.
The Board of Directors is proposing to the Annual General Meeting
that a dividend of EUR 0.50 per share be paid for 2004.
Global demand for stainless steel up 6%
The economic recovery strengthened and broadened during 2004.
Growth was especially strong in the US and activity in Japan also
improved markedly. Rapid expansion continued in China. Growth also
firmed in many other developing economies in Asia and Eastern
Europe. As a result, global GDP rose by about 4%, one of the
strongest showings in 20 years. The main disappointment was in the
eurozone, notably in Germany and Italy, where growth remained very
sluggish. The main end-uses for metals were strong during 2004, in
line with the general economic background. However, activity
showed signs of slowing toward the end of the year, and growth in
many sectors is expected to moderate during 2005.
Both production of and consumption for stainless steel increased
by an estimated 6% in 2004. Growth was led by China and followed
by the US. The increase in consumption was slowest in Europe, at
4%, but better than in 2003. Very high and volatile raw material
prices resulted in a significant fluctuation in demand as
stockists optimized the timing of their buying. In Europe, demand
was healthy during the first five months, supported partly by some
competitors production problems and increasing alloy costs, but
slowed down toward the summer. In Europe, demand for cold rolled
products weakened after the summer and remained sluggish in the
last quarter. Asian demand was very strong in the first quarter
but slowed down clearly in the second quarter due to destocking
and the Chinese governments measures to cool down the local
economy. Asian demand, especially for white hot strip, improved
markedly after the summer and was very strong in the last quarter.
The US cold rolled stainless steel market recovered significantly
in the first quarter and remained very strong throughout the year.
The nickel market was extremely volatile and prices at
historically high 2004. Volatility was mainly driven by
speculative activity rather than market fundamentals. The high
nickel prices resulted in an increased supply of stainless scrap,
which reduced the use of primary nickel. Some of the end users
also substituted high nickel alloyed stainless steel with lower
nickel-containing grades. These factors helped the undersupplied
market seen in the first half of the year to return to balance in
the second half. Altogether, the consumption of nickel grew by 2%
in 2004. The average nickel price for 2004 was 43% higher than in
2003.
Demand for ferrochrome increased by 8% in 2004 due to strong
growth in stainless steel production. The price of ferrochrome
rose in the first and second quarters, but stabilized for the
second half of the year. The average ferrochrome price was 60%
higher than in 2003. Also, the average prices for molybdenum and
iron scrap rose significantly compared to 2003.
In Europe, the cold rolled base price improved in the first half
of the year due to strong demand and increasing alloy surcharge,
that drove speculative buying. Base price came up against downward
pressure in the second half when demand weakened. According to
CRU, the German cold rolled average base price (2 mm cold rolled
304 sheet) was 2% higher and conversion margin 10% higher than in
2003. In the US, the cold rolled base price improved in the first
half of the year and stabilized thereafter. In Asia, the
transaction prices for cold rolled material and white hot strip
decreased in the second quarter due to lower demand and raw
material costs, but recovered strongly toward the end of 2004.
The base price of quarto plate improved in Europe and demand
increased toward the end of the year. The project market for
tubular products was good in Europe, but the standard products
business was markedly softer. The base price of tubes improved
before the summer, but has been under pressure since then. The
long products market improved globally, but the trend in Europe
was below global average. Precision strip prices remained low. In
the US, demand for quarto plate, tubular and long products
improved significantly at the beginning of 2004 and has since
remained at good levels.
For copper and copper alloy products, 2004 was a year of
contrasting fortunes. In global terms, consumption was very strong
and rose by 7% from the previous year. However, activity varied
sharply between regions. US consumption rose more than 9%, helped
by substantial restocking in the early part of the year, and Asian
consumption improved at a similar rate thanks to further dynamic
growth in China. In contrast, Western European demand remained
lackluster, and conversion margins were under pressure. The high
and volatile price of copper, and spiraling premiums on cathode,
exacerbated the pressure on conversion margins.
Sales rise by 20% due to higher prices and deliveries
The Groups sales rose by 20% compared with 2003 and amounted to
EUR 7 136 million. The growth in sales was primarily attributable
to the higher selling prices of stainless steel and copper
products, increased total deliveries of copper products and a
better product mix within stainless steel. The 2003 figures
include sales of the assets transferred to Boliden at the end of
2003.
Sales by business
EUR million 2004 2003 Change,%
Stainless 4 637 3 450 34
Copper 2 050 1 628 26
Technology 423 405 4
Zinc - 396 -
Other operations 163 263 (38)
Intra-group sales (136) (220) (38)
The Group 7 136 5 922 20
Sales of Outokumpu Stainless were up by 34% compared to the
previous year. This resulted mainly from higher raw material costs
and improved base prices. Total deliveries were at the previous
years level, but the 12% higher deliveries of cold rolled
products and white hot strip improved the product mix. The
weakening of the US dollar against the euro had a negative impact
on sales.
The 26% growth in Outokumpu Coppers sales was mainly due to an
increase in delivery volumes following the acquisition of the tube
and brass business from Boliden at the end of 2003. Also, the
higher copper raw material prices contributed significantly to
sales. Sales of Outokumpu Technology grew by 4% due to the
increased activity of customer industries. On the other hand,
sales by Other operations were down by 38% because of the sale of
Tara mine to Boliden at the end of 2003.
The relative share of the Groups sales to Europe declined
slightly from 62% to 60%. The share of Americas and Asia rose to
19% and 18%, respectively.
A substantial increase in profits
The Groups operating profit more than doubled to EUR 468 million
(2003: EUR 214 million). The improvement in profitability was
mainly attributable to Outokumpu Stainless. Also, the financial
performance of Outokumpu Copper and Outokumpu Technology developed
favorably. The Groups operating profit margin was 6.6% (2003:
3.6%). Operating profit includes EUR 29 million of non-recurring
items (2003: EUR 127 million).
Operating profit by business
EUR million 2004 2003 Change
Stainless 442 99 343
Copper 52 (6) 58
Technology 29 5 24
Zinc - 20 (20)
Other operations (55) 93 (148)
Intra-group items 0 3 (3)
The Group 468 214 254
Outokumpu Stainless operating profit for 2004 improved
considerably compared to the previous year and operating profit
margin was 9.5%. Almost all the business units within Stainless
improved their profitability. However, the majority of the
improved operating profit came from the Coil Products division,
where the higher share of finished products in total deliveries
improved the average conversion margin. The higher European cold
rolled base price also improved profitability. The rise in raw
material prices had a positive effect on operating profit because
of timing difference between inventory turnover and alloy
surcharge. The inclusion of an iron component in the alloy
surcharge formula improved profitability from June onwards.
Stainless operating profit includes non-recurring items of EUR 17
million in total, which comprises the release from the Finnish TEL
disability pension liability, capital gain on the sale of Panteg
assets and the closure costs for the Stelco Hardy operations. The
comparison period includes a negative non-recurring item of EUR 7
million relating to the closure of Panteg.
Outokumpu Coppers operating profit improved significantly from
the previous year. However, profitability was still
unsatisfactory. Coppers operating profit includes non-recurring
items of EUR 7 million. These items were the release from the TEL
disability pension liability and closure costs for the Waalwijk
tube plant. The comparison period includes negative non-recurring
items of EUR 31 million consisting of the provisions of the copper
tube cartel fines (EUR 54 million negative) as well as the
adjustment related to the assets acquired from Boliden (EUR 23
million). The LIFO-FIFO inventory adjustment in 2004 amounted to
EUR 22 million (2003: EUR 2 million negative).
Outokumpu Technologys operating profit remained unsatisfactory in
spite of the clear increase from the previous year. The rise in
operating profit resulted mainly from non-recurring items of EUR
21 million, which were attributable to the gain on the sale of the
filter business and the release from the TEL disability pension
liability. The comparison period did not include non-recurring
items.
Other operations operating loss resulted mainly from such
business development and Corporate Management expenses that are
not allocated to businesses. In addition to this, the operating
profit includes negative non-recurring items of EUR 16 million,
which comprises the capital loss from the sale of Boliden shares
and the release from the TEL disability pension liability. Other
operations' operating profit in 2003 included non-recurring items
of EUR 165 million, which related to gains on various asset
disposals.
The Groups share of results in associated companies rose to EUR
78 million (2003: EUR 15 million negative) due to new Bolidens
good performance. At the end of December, Outokumpus remaining
26.5% stake in Boliden had a carrying value of EUR 256 million,
which is slightly lower than its current market value.
The Groups net financial expenses decreased to EUR 69 million
(2003: EUR 91 million). Net interest expenses remained low
relative to the amount of net interest-bearing debt due to low
interest rate level. Market price gains and losses arising mainly
from metals exchange deals and the recognition of electricity
derivatives were EUR 24 million in total. However, the underlying
physical exposures had a negative impact on the Groups operating
profit.
The Groups profit before taxes rose to EUR 477 million (2003: EUR
108 million). The Groups effective tax rate was low at 18.4% due
to reduction in the Finnish corporate income tax rate and
utilization of tax losses, on which no deferred tax asset had
previously been recognized. Net profit for the financial year
increased to EUR 390 million (2003: EUR 112 million). Earnings per
share amounted to EUR 2.13 (2003: EUR 0.65). The return on capital
employed rose to 10.3% and the return on shareholders equity to
17.0% (2003: 5.0% and 5.4%).
Capital structure still below target
Cash flow from operating activities decreased from the previous
year and was EUR 128 million negative (2003: EUR 194 million
positive). The negative cash flow resulted mainly from the
increase in working capital due to the very high raw material
prices and larger business volume. Internal measures for managing
working capital did not suffice to offset the impact of the
significant rise in raw material prices.
Key financial indicators
on financial position
EUR million 2004 2003
Net interest-bearing debt
Long-term debt 1 975 1 777
Current debt 1 150 1 045
Total interest-bearing debt 3 125 2 821
Interest-bearing assets (690) (796)
Net interest-bearing debt 2 435 2 025
Net interest-bearing debt
in relation to sales, % 34.1 34.2
Shareholders' equity 2 468 2 048
Debt-to-equity ratio, % 97.2 97.2
Equity-to-assets ratio, % 35.8 33.0
Net cash generated
from operating activities (128) 194
Net financial expenses 69 91
Net financial expenses
in relation to sales, % 1.0 1.5
Interest cover 6.0 2.1
The Groups net interest-bearing debt increased from the previous
year and stood at EUR 2 435 million (2003: EUR 2 025 million). The
Groups equity-to-assets ratio strengthened to 35.8% (Dec. 31,
2003: 33.0%), and gearing was 97.2% (Dec. 31, 2003: 97.2%). Key
issues for bringing gearing down to the 75% target level are good
profits, the freeing up of working capital through operational
excellence and the potential divestment of fabricated copper
products business. It is estimated that at the year-end the Group
had excess working capital of some EUR 400 million due to
increased raw material prices compared with the long-term
averages.
The Groups liquidity remained satisfactory throughout the year in
spite of significant increase and fluctuation in working capital.
At year-end, cash and cash equivalents amounted to EUR 211
million. The Group had committed and available credit facilities
as well as other agreed and undrawn loans totaling EUR 684
million.
Capital expenditure heading down
The Groups total capital expenditure declined from the previous
year and amounted to EUR 473 million (2003: EUR 622 million).
Apart from the ongoing Tornio expansion, the biggest single
capital expenditure item, EUR 76 million, was the share
subscription in the Boliden rights issue in March 2004. Capital
expenditure in 2005 is estimated to decrease markedly from 2004
and to normalize close to the level of depreciation.
Capital expenditure by business
EUR million 2004 2003
Stainless 276 373
Copper 59 106
Technology 9 25
Zinc - 60
Other operations 129 58
The Group 473 622
The Tornio expansion program progressed significantly during 2004.
The modernization of the older melt shop was carried out in the
third quarter and the commissioning of the new stands in order to
increase the capacity of the hot rolling mill to 1.65 million
tonnes was completed in September. The idled furnace in the hot
rolling mill will go into operation in the first quarter of 2005
after which the full technical capacity is available. Ramping-up
of the new cold rolling capacity (RAP5) is continuing according to
plan. All the RAP5 products have been produced, and the full
capacity is planned to be technically available in mid-2005. The
market conditions are taken into account in the ramp-up volumes
and product mix. Due to strong Asian demand and relatively good
prices the RAP5 production has recently been steered toward white
hot strip products at the expense of cold rolled material.
The ramp-up of the Kemi underground mine is proceeding as planned
and the increase in long products capacity in the US was
inaugurated in October 2004.
In December 2004, Outokumpu decided to invest about EUR 53 million
in the Kloster thin strip cold rolling mill in Sweden. The capital
expenditure will be spread over a two-year period, with the bulk
to be spent in 2006. The investment will expand the mill's overall
capacity from 25 000 tonnes to 45 000 tonnes per year and enable
the production of thinner and wider products. The main components
of the investment are a new cold rolling mill, a bright annealing
line and a slitting line. The new capacity is scheduled to be in
place by the end of 2006.
In February 2004, Outokumpu completed the transaction whereby it
acquired the remaining 50% ownership in Neumayer GmbH, a
subsidiary of Outokumpu Copper, which fabricates various alloy
wire products in Leobersdorf, Austria. As consideration, Outokumpu
Oyj transferred 309 597 treasury shares to the seller.
Proceeds from the sale of the Boliden shares EUR 130 million
In December 2004, Outokumpu sold, in conjunction with Bolidens
share offering, 47 million shares in Boliden AB (publ) at a price
of SEK 25 per share. The total proceeds from the sale for
Outokumpu amounted to EUR 130 million. The sale of shares is in
accordance with Outokumpus strategy of decreasing its
shareholding in Boliden over time. Following the sale, Outokumpu's
shareholding in Boliden fell to 26.5%. The sale of the shares had
a EUR 19 million negative non-recurring impact on Outokumpu's
financial results. Due to Bolidens good earnings in the fourth
quarter, the capital loss was larger than initially estimated, but
at the same time Boliden contributed favorably to Outokumpus
results through the share of results in associated companies.
As a result of the Boliden transaction in 2003, Outokumpu had a
subordinated note of EUR 166 million from Boliden in its balance
sheet. Boliden repaid the whole amount in two installments in the
last quarter of 2004 as part of its loan portfolio restructuring
and following its successful equity offering.
Outokumpus strategic direction clear: aiming to be number one in
stainless
In August 2004, the Board stated that the Group's future strategic
direction will be based on leadership in stainless steel, and that
Outokumpu is looking at various options for exiting from its
fabricated copper products business. The process of divesting
Outokumpu Copper is underway and as of today the Board is not in
a position to assess any possible impact on the Group's financial position.
In January 2005, the Board outlined that Outokumpu is an
international stainless steel and technology company. According to
the new vision statement, Outokumpu's vision is to be the
undisputed number one in stainless, with success based on
operational excellence. To this end, two key strategic objectives
were defined: "Value creation through building superior production
and distribution capabilities in all major markets globally" and
"Value realization through production and commercial excellence".
The ultimate goal is to secure a significant and sustained
increase in shareholder value.
Outokumpus short-term priority is to deliver on the promises from
the previous strategic phase of growth and transformation in 2000-
2004. At the same time, new goals are being set for the coming
five-year period - to secure the position of number one in
stainless in Europe. Outokumpus future success will be achieved
by building and strengthening operational excellence in both
commercial and production arena. The final step is to leverage
operational excellence in other regions to achieve global
leadership, i.e., to reach the undisputed number one position
globally in stainless in the coming ten years. In the light of
Outokumpu's target of continuing to grow faster than the market,
the operational excellence efforts will be supported by further
development of the Group's current asset-base, value chain and
product offering.
New financial objectives, dividend policy unchanged
The Groups financial objectives were also aligned with the new
vision. Outokumpus overall financial objective is to generate the
maximum sustainable economic value added. Specific group-level
financial objectives for growth, profitability and financial
strength are: to continue to grow faster than the market, to have
a return on capital employed of over 13% and to be consistently
the best among peers, and to have gearing below 75%. Outokumpu's
dividend policy remains unchanged. The dividend payout ratio over
a business cycle should be at least one-third of the periods' net
profit
Management system and business organization trimmed toward
operational excellence
The new organizational structure, effective April 1, 2005, also
supports the new vision. The Group Executive Committee focuses on
running the stainless business directly, and the new roles of the
functional leaders of commercial and production operations will be
essential in driving the operational excellence efforts together
with the business units.
Outokumpus stainless business will be organized into two
divisions according to product types as well as into a separate
Tubular Products business unit. The new General Stainless division
will comprise three business units: Tornio Works and Ferrochrome,
Coil Products Sheffield, and Sheffield Primary Products. The new
Specialty Stainless division will consist of four business units:
Avesta Works, Thin Strip, Hot Rolled Plate, and Long Products.
Corporate Management and support functions will be realigned to
support the new management system and business organization.
Under the new structure, Outokumpu Technology will be managed,
from the Group perspective, at arms-length as a stand-alone
business through its board work. Accordingly, it will continue to
be developed as part of the Group but more independently. Until
the divestment of the fabricated copper products business is
completed, Outokumpu Copper will be managed separately. Both the
technology and copper businesses will report to the Deputy CEO.
The new external reporting structure, which will go into effect in
the second-quarter interim report in 2005, will be announced in
June 2005.
Changes in the Board of Directors and Group Executive Committee
Mr. Juha Rantanen was appointed CEO of the Outokumpu Group
effective from January 1, 2005. Mr. Rantanen joined Outokumpu on
October 1, 2004. Outokumpus former CEO, Dr. Jyrki Juusela retired
at the end of 2004. In accordance with Outokumpu's corporate
governance principles, Mr. Juha Rantanen resigned on September 30,
2004 from Outokumpu's Board of Directors, and Mr. Ole Johansson
moved up as Vice Chairman of the Board on October 1, 2004. Mr.
Johansson became also the new Chairman of the Board's Audit
Committee.
In connection with the new management system and business
organization, the Board has appointed a new Group Executive
Committee, effective April 1, 2005, and defined its members'
duties as follows: Juha Rantanen (CEO), Karri Kaitue (Deputy CEO),
Pekka Erkkilä (EVP - General Stainless & Production Operations),
Olof Faxander (EVP - Specialty Stainless), Esa Lager (CFO) and
Andrea
Gatti (EVP - Commercial Operations). The Executive Vice President
- Human Resources is still to be appointed.
The current Group Executive Committee will continue in office
until March 31, 2005, as follows: Juha Rantanen, CEO, Karri
Kaitue, Deputy CEO, Pekka Erkkilä, Tapani Järvinen (to continue as
President of Outokumpu Technology reporting to the new board
chaired by the Deputy CEO as of April 1, 2005), Esa Lager, Juho
Mäkinen (to continue as Special Adviser to the CEO from April 1,
2005 until his retirement on July 31, 2005), Kalevi Nikkilä (to
retire on March 31, 2005), Vesa-Pekka Takala (to continue as
Corporate Controller reporting to the CFO as of April 1, 2005) and
Risto Virrankoski (to retire on February 15, 2005).
Shareholders Nomination Committee
A Shareholders' Nomination Committee was set up based on the
resolution passed by the Annual General Meeting on April 2, 2004.
It was given the task of preparing proposals on the composition of
the Board of Directors along with director remuneration for the
following General Meeting. The members of the Committee were:
Markku Tapio (Chairman) representing the Finnish State, Pertti
Parmanne representing the Finnish Social Insurance Institution,
Kari Puro representing Ilmarinen, and Mikael Silvennoinen
representing the OP Delta investment fund. The Chairman of
Outokumpu's Board, Heimo Karinen, served as an expert member. The
committee submitted its proposals on January 31, 2005.
Environment, health and safety
Environmental emissions and discharges were mostly below
permission levels in 2004. Minor breaches occurred in Sheffield,
Degerfors, Tornio and Wildwood sites. The biggest environmental
investments were made in Tornio. The upgrading of the dust filter
systems at the Tornio melt shop and hot rolling mill amounts to
EUR 22 million and a significant reduction is anticipated in dust
emissions. Also, a new hazardous waste land filling area is under
construction in Tornio.
The Outokumpus stainless steel plants in Finland and Sweden
received carbon dioxide emissions trading allowances and emission
permits according to the national allocation plans in 2004. In
Britain the process was delayed, but the final allocations should
be available by the end of February 2005 at the latest. The
received allowances are sufficient for Outokumpus planned
production in 2005-2007. Monitoring and forecasting systems for
carbon dioxide emissions are in place.
An extensive environmental impact assessment is underway for
possible increase in production at Tornio. A separate impact
assessment process concerning the main Tornio shipping channel was
also started. The surveys related to soil and groundwater
contamination continued at eight Copper and six Stainless sites.
Groundwater remedial actions are ongoing in Tornio and three sites
in the US.
Outokumpus appeal concerning the definition of FeCr-slag and
steel scrap as waste is in the Supreme Administrative Court of
Finland.
All the Outokumpu units have valid environmental permits in place
or they are in the process for applying for them. Outokumpu is not
a party in any significant juridical or administrative proceeding
concerning environmental issues, nor is it aware of any
environmental risks that could have a material adverse effect on
the Groups financial position.
In 2004, the accident frequency remained almost unchanged at 18
accidents per million man-hours (2003: 19), and no major accidents
were reported. Sick leave days caused by occupational accidents
decreased by 10%. A safety management assessment and safety review
of the main sites in the Stainless business area were conducted in
2004. Consequently, an extensive safety-training program has been
started. Year 2005 will be a group-wide safety theme year. A new
safety target for the Group was set at 5 accidents per million man-
hours before 2009.
R&D is engaged in new products and applications
Expenditure on research and development during 2004 amounted to
EUR 40 million or 0.6 % of the net sales (2003: EUR 48 million and
0.8 %). 68 new patent applications were filed (2003:74). In
addition to new products, R&D focused on innovative manufacturing
processes. They provide lower cost and emissions, shorter lead
times and better quality.
New initiatives were taken to expand the stainless steel
applications in the automotive industry and buildings sector. In
the transportation and automotive segment, the special HyTens-
material innovation team was dedicated solely to development of
automotive components. New solutions for train construction were
developed based on ultra-high strength, laser-welded sandwich
panels. In the architecture, building and construction segment the
focus has been on producing of design data for stainless steel
building components.
Within Outokumpu Copper, the Nordic Systems product range for
building sector was widened by adding new coatings, surface
structures and appearances. Outokumpu Technologys new
hydrometallurgical method of producing copper, HydroCopper, was
in successful test runs using concentrates from many potential
customers, which demonstrates the wide interest in this new
method. New applications were developed for Circofer®- technology,
which was originally developed for the direct reduction of iron
ore. Outokumpu Technology also received an order to supply the
worlds largest solvent extraction plant to Escondida copper mine
in Chile, thus rewarding intensive long-term R&D work.
The most important process developments were made at Tornio
stainless operations. All the R&D skills and competencies were
committed to installation and ramp-up of the hot rolling system
and to revamping of the older melt shop. In addition to benefits
in production, the melt shop revamping brings a significant
reduction in dust emission. The ramp-up of the RAP5 continued. A
new product RAP 2E was launched on the market. This product with
tight thickness tolerances and smooth surface is ideal for tube
makers and re-rollers. Trials to find and optimize a new
production route for ferritic products continued. The flexibility
of the RAP technology is showing a big potential in ferritics
production. In copper products process development, the R&D focus
was on sophisticated casting and rolling technologies,
particularly in the production of tubes and narrow strips.
In order to minimize landfill waste, a new Hydrofluss product is
being developed from stainless steel pickling sludge. In addition,
the recently developed new stainless steel alloy, Lean Duplex
LDX2101®, is making good progress in light structures in
transportation and construction. It has been well received by
customers.
Human resources
Outokumpus human resources management focused on three key HR-
processes: Performance-Appraisal Dialogue, OPeople Employee
Survey and Management Review Process. These key processes are
applied in all business units and their implementation was
expanded during 2004.
During 2004, a total of five group-wide development programs two
OTalent seminars, two Leading the Way programs and a Outokumpu
Management Development Program were carried out and around 100
people participated in them. In addition, the business units ran
numerous development programs tailored at their specific needs.
The Outokumpu Personnel Forum (OPF) agreement was signed in an OPF
meeting in May 2004 to replace the former Outokumpu and
AvestaPolarit agreements. The new agreement follows the European
Work Council Directive and forms the basis for employee
participation in Outokumpu operations in Europe. A process to
unite Outokumpu and AvestaPolarit personnel funds according to
Finnish legislation is in progress.
Outokumpus new vision to be the undisputed number one in
stainless brings new HR challenges, notably in the areas of
leadership, competence development, internal mobility, attracting
and retaining talent and rewarding practices. At the same time,
Outokumpus potential exit from the fabricated copper products
business is likely to decrease the number of the Groups employees
significantly and lead to a major de-integration process.
Personnel by business
Dec. 31 2004 2003
Stainless 9 070 9 230
Copper 7 953 7 585
Technology 1 776 1 908
Other operations 666 636
The Group 19 19
465 359
At the end of the year, the Group employed 19 465 people in some
40 countries. The number of personnel increased only slightly from
previous year. Integration of the companies acquired from Boliden
at the end of 2003 was completed during the year.
Repurchase and transfer of the companys own shares
The Board of Directors has valid authorizations from the Annual
General Meeting of 2004 to repurchase and transfer of company's
own shares (treasury shares). The authorizations are valid until
the next Annual General Meeting. The authorization to repurchase
the companys own shares has not been used. Outokumpu Oyj
currently holds 498 533 treasury shares, which it has acquired in
2001.
On February 10, 2005, the Board of Directors confirmed the
management remuneration of the third scheme that expired at the
end of 2004. Under the said scheme, approximately 280 490 treasury
shares will be transferred to the designated persons on February
14, 2005.
The repurchase and transfer of the company's own shares is
discussed in greater detail in the section Notes to the income
statement and balance sheet.
Competition law issues
In September 2004, Outokumpu received a notification from the
European Commission concerning participation by Outokumpu's copper
tube business in a cartel with respect to sanitary tubes in the
European Union. The Commission concluded that Outokumpu had
participated in a cartel and fined Outokumpu EUR 36 million.
Outokumpu has appealed the sanitary tube decision with respect to
the grounds for the calculation of the fine and the amount of the
fine itself. In connection with the transition to IFRS, a
provision of EUR 36 million related to the sanitary tube cartel
fine was recognized already in the December 2003 income statement.
The business outlook for the first half of 2005 set to hold steady
Global economic growth is expected to slow from the current 4% to
closer to 3% in 2005. Western Europe is expected to remain the
weakest of the major regions, hindered by the strength of the
euro. Momentum in the US and Japan has also began to moderate.
Doubts about the sustainability of the US current account deficit
have been increasing, and worries remain as to whether China will
succeed in slowing growth to a more sustainable level. Also, high
energy prices could damp down the world business climate.
Business and consumer surveys remain positive, suggesting that the
global economic growth will remain firm into the first half of
2005. Although the base price of stainless steel has softened
somewhat, global capacity utilization rates are expected to remain
high in 2005, providing a supportive background for prices and
margins. The ramp-up of Outokumpus new cold rolling mill (RAP5)
in Tornio will continue to improve profitability through higher
volumes and lower unit conversion costs. Furthermore, the product
mix is expected to improve further. It is currently estimated that
the increase in Outokumpus total deliveries of finished products
will be well above 20% in 2005 depending on the market situation.
Given the higher volumes and lower unit conversion costs, but also
slightly softening base price of stainless steel, Outokumpu
management estimates that the Groups operating profit excluding
non-recurring items, during the first half of 2005 will be at
least at the level of the corresponding period in 2004.
Board of Directors' proposal for profit distribution
In accordance with the Board of Directors' established dividend
policy, the payout ratio over a business cycle should be at least
one-third of the company's profit for the period. In its annual
dividend proposal to the Annual General Meeting, the Board of
Directors will, in addition to financial results, take into
consideration the company's investment and development needs.
The Board of Directors is proposing to the Annual General Meeting
to be held on April 5, 2005 that a dividend of EUR 0.50 per
share be paid from the profits for the financial year ended
December 31, 2004 and that any remaining distributable funds be
allocated to retained earnings. The suggested dividend record date
is on April 8, 2005 and the dividend will be paid on April 15,
2005. All of the treasury shares transferred on February 14, 2005,
from the company to the persons belonging to the management's
share remuneration scheme are also entitled to a full dividend for
2004.
According to the financial statements at December 31, 2004, the
Group's distributable funds total EUR 1 010 million and those of
the parent company EUR 567 million. The proposed dividend
corresponds to 23.5% of the Group's profit for the financial year
attributable to equity holders of the company.
Espoo, February 10, 2005
Board of Directors
CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
INCOME STATEMENT Jan- Jan-
Dec Dec
EUR million 2004 2003
Sales 7 136 5 922
Other operating income 63 210
Costs and expenses (6) (5)
(696) (847)
Other operating expenses (35) (71)
Operating profit 468 214
Share of results in associated 78 (15)
companies
Financial income and expenses
Net interest expenses (95) (99)
Market price gains and losses 24 (1)
Other financial income and 2 9
expenses
Profit before taxes 477 108
Income taxes (87) 4
Net profit for the financial year 390 112
Attributable to:
Equity holders of the Company 383 111
Minority interest 7 1
Earnings per share for profit
attributable
to the equity holders of the
Company:
Earnings per share, EUR 2.13 0.65
Earnings per share, EUR - diluted 2.13 0.65
All figures in the annual accounts have been rounded and
consequently the sum of individual figures can deviate from the presented sum
figure.
BALANCE SHEET Dec Dec
31 31
EUR million 2004 2003
ASSETS
Non-current assets
Intangible assets 620 601
Property, plant and equipment 2 743 2 668
Non-current financial assets
Interest-bearing 409 480
Non interest-bearing 55 81
3 827 3 830
Current assets
Inventories 1 579 1 219
Current financial assets
Interest-bearing 70 85
Non interest-bearing 1 390 1 032
Cash and cash equivalents 211 231
3 250 2 567
Total assets 7 077 6 397
SHAREHOLDERS' EQUITY AND LIABILITIES
Total equity
Shareholders equity 2 468 2 048
Minority interest 38 35
2 506 2 083
Non-current liabilities
Interest-bearing 1 975 1 777
Non interest-bearing 441 520
2 416 2 297
Current liabilities
Interest-bearing 1 150 1 045
Non interest-bearing 1 004 973
2 154 2 017
Total shareholders equity and 7 077 6 397
liabilities
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Attributable to shareholders
Unregis
tered Share Fair
Share share premium Other value
capital capital fund reserves reserves
EUR million
Equity at January 1, 293 0 630 15 -
2003
Net investment hedge - - - - -
Change in translation
difference - - - - -
Net income,
(expense) recognised
directly in equity - - - - -
Net profit
for the period - - - - -
Total recognised
income
and expenses for 2003 - - - - -
Dividends paid - - - - -
Transfers from
unregistered
share capital 0 (0) - - -
Shares subscribed
with options 1 0 4 - -
Converted bonds 1 - 2 - -
Share offering 9 - 45 - -
Outokumpu Oyj
shares owned by
associated companies - - - - -
Transfer of
treasury shares - - - - -
Other changes - - (0) (1) -
Equity at
December 31, 2003 304 0 681 14 -
Cash flow hedges,
net of tax - - - - (2)
Fair value gains, net
of
tax - available-for-
sale
financial assets - - - - 16
Net investment hedge - - - - -
Change in translation
difference - - - - -
Net income,
(expense) recognised
directly in equity - - - - 14
Net profit for the - - - - -
period
Total recognised
income
and expenses for 2004 - - - - 14
Dividends paid - - - - -
Transfers from
unregistered
share capital 0 (0) - -
Shares subscribed
with options 4 - 15 - -
Converted bonds 1 - 3 - -
Outokumpu Oyj
shares owned by
associated companies - - - -
Transfer of
treasury shares - - 0 - -
Other changes - - 1 (1) -
Equity at
December 31, 2004 308 - 700 13 15
Attributable to shareholders
Cumula-
Fair Trea- tive
value sury transla- Retai- Mino- Total
reser- Shares tion ned rity equity
ves adjust- ear- interest
ment nings
EUR million
Equity at January 1, - (14) (18) 1 101 43 2 050
2003
Net investment hedge - - 1 - - 1
Change in translation
difference - - (44) - 0 (44)
Net income,
(expense) recognised
directly in equity - - (43) - 0 (43)
Net profit
for the period - - - 111 1 112
Total recognised
income
and expenses for 2003 - - (43) 111 1 69
Dividends paid - - - (69) - (69)
Transfers from
unregistered
share capital - - - - - 0
Shares subscribed
with options - - - - - 5
Converted bonds - - - - - 3
Share offering - - - - - 54
Outokumpu Oyj
shares owned by
associated companies - - - (26) - (26)
Transfer of
treasury shares - 2 - - - 2
Other changes - - - 5 (9) (5)
Equity at
December 31, 2003 - (12) (61) 1 122 35 2 083
Cash flow hedges,
net of tax (2) - - - - (2)
Fair value gains, net
of
tax - available-for-
sale
financial assets 16 - - - - 16
Net investment hedge - - (2) - - (2)
Change in translation
difference - - 4 - 0 4
Net income,
(expense) recognised
directly in equity 14 - 2 - 0 16
Net profit for the - - - 383 7 390
period
Total recognised
income
and expenses for 2004 14 - 2 383 7 406
Dividends paid - - - (36) - (36)
Transfers from
unregistered
share capital - - - - - 0
Shares subscribed
with options - - - - - 19
Converted bonds - - - - - 4
Outokumpu Oyj
shares owned by
associated companies - - - 26 - 26
Transfer of
treasury shares - 6 - - - 6
Other changes - - - 1 (4) (3)
Equity at
December 31, 2004 15 (5) (59) 1 496 38 2 506
RECONCILIATION OF SHAREHOLDERS' EQUITY FOR COMPARISON PERIOD
2003
EUR million Dec. 31,
2003
Shareholders' equity
according to FAS 1 924
Effects of adopting IFRS
Recognition of negative
goodwill in equity 151
Reversal of goodwill amortization 44
Restatement of business combinations 23
Inventory valuation 26
Pension obligations (97)
Provisions (42)
Deferred taxes on IFRS adjustments 27
Share remuneration schemes (8)
Other (1)
Shareholders' equity according to IFRS 2 048
RECONCILIATION OF NET PROFIT FOR THE PERIOD FOR COMPARISON
PERIODS 2003
EUR million 2003 Oct-Dec
2003
Net profit for the period
according to FAS 92 108
Effects of adopting IFRS
Reversal of goodwill amortization 44 11
Reversal of amortization
of negative goodwill (40) (10)
Restatement of business combinations 23 23
Inventory valuation (1) 8
Adjustment to the gain from Boliden 13 13
transaction
Change in pension obligations (2) (4)
Change in provisions (29) (29)
Change in deferred taxes on IFRS 12 10
adjustments
Share remuneration schemes (3) (8)
Other 1 2
Net profit for the period according to 111 125
IFRS
STATEMENT OF CASH FLOWS Jan-Dec Jan-Dec
EUR million 2004 2003
Net profit for the financial year 390 112
Adjustments 341 286
Increase in working capital (710) (87)
Dividends received 3 3
Interest received 23 14
Interest paid (112) (110)
Income tax paid (63) (24)
Net cash generated from operating activities (128) 194
Acquisition of subsidiary, net of cash 0 3
Purchases of intangible and tangible assets (376) (558)
Purchases of other assets (97) (11)
Proceeds from disposal of subsidiary, net of 20 379
cash
Proceeds from asset disposal 307 53
Change in other long-term receivables (6) (7)
Cash flow before financing activities (279) 53
Net cash generated from financing activities 235 (20)
Adjustments 26 (24)
(Decrease) increase in cash and cash (19) 9
equivalents
Jan-Dec Jan-Dec
GROUP KEY FIGURES 2004 2003
Operating profit margin, % 6.6 3.6
Return on capital employed, % 10.3 5.0
Return on shareholders' equity, % 17.0 5.4
Capital employed at end of period, EUR million 4 941 4 108
Net interest-bearing debt at end of period, EUR 2 435 2 025
million
Equity-to-assets ratio at end of period, % 35.8 33.0
Debt-to-equity ratio at end of period, % 97.2 97.2
Earnings per share, EUR 2.13 0.65
Average number of shares outstanding, in 180 057 171 623
thousands 1)
Fully diluted earnings per share, EUR 2.13 0.65
Fully diluted average number of shares, in 180 172 172 566
thousands 1)
Shareholders' equity per share at end of 13.65 11.54
period, EUR
Number of shares outstanding at end of period,
in thousands 1) 180 752 177 451
Capital expenditure, EUR million 473 622
Depreciation, EUR million 251 304
Average personnel for the period 19 761 21 442
1) The number of own shares repurchased is excluded.
NOTES TO THE INCOME STATEMENT AND BALANCE SHEET
The main changes to Outokumpu's accounting policies in transition
to IFRS are described in the stock exchange release Outokumpu's
comparative IFRS information, published on October 11, 2004.
Shares and share capital
The total number of Outokumpu Oyj shares was 181 250 555 and the
share capital amounted to EUR 308.1 million on December 31, 2004.
Outokumpu Oyj held a total of 498 533 treasury shares on December
31, 2004 with total account equivalent value of EUR 0.8 million.
This equaled to 0.3% of the share capital and the total voting
rights of the Company on December 31, 2004.
Two of Outokumpus share related incentive schemes - the 1998
option program and the 1999 convertible bond came to an end
during 2004 and the last share subscriptions were registered with
the Finnish trade register on April 7, 2004. Altogether 2 836 068
Outokumpu Oyj shares were subscribed for under the 1998 option
warrants that Outokumpu Oyj issued in March 1998 during the
subscription period from May 2, 2001 to March 31, 2004. All 2 584
option warrants were exercised by the close of the subscription
period. Bonds relating to the convertible bond loan of EUR 18 180
000, which was issued in April 1999 for the Groups personnel were
converted into 1 797 919 shares in Outokumpu Oyj during the
subscription period from April 9, 2001 to April 5, 2004. EUR 2 092
000 of the total amount of the convertible bond loan was prepaid
in advance and repayment of non-converted bonds of EUR 363 000
took place on April 7, 2004.
The Annual General Meeting of April 3, 2003 approved a stock
option program for management. Under the terms and conditions of
the stock option program, altogether 5 100 000 stock options may
be issued entitling holders thereof to subscribe for 5 100 000 new
shares in the Company during the years 2006 and 2011.
In February 2004, the Board of Directors confirmed that altogether
742 988 stock options 2003A be distributed to 116 persons in
management positions of Outokumpu. The members of the Group
Executive Committee received 62.00% and other key persons 45.25%
of the maximum number of stock options 2003A approved in June
2003. The number of stock options 2003A distributed was decided
based on the Groups earnings per share (EPS) and share price
development that were set as earnings criteria for the options in
June 2003. The additional earnings criterion for the Group
Executive Committee members was the Groups gearing. Altogether
742 988 Outokumpu Oyj shares can be subscribed for with the 2003A
stock options between September 1, 2006 and March 1, 2009.
Subscription price for a stock option will be the trading volume
weighted average of the Outokumpu share on the Helsinki Exchanges
between December 1, 2003 and February 29, 2004, i.e. EUR 10.70 per
share deducted with dividends paid annually.
In February 2004, the Board of Directors of Outokumpu Oyj decided
the earnings criteria on the basis of which stock options 2003B
will be distributed to 131 key persons of the Outokumpu Group in
spring 2005. The earnings criteria comprise the Groups earnings
per share (EPS), share price development, and additionally gearing
for the Group Executive Committee members. A total maximum of 1
700 000 Outokumpu Oyj shares can be subscribed for with the 2003B
stock options between September 1, 2007 and March 1, 2010.
Subscription price for a stock option will be the trading volume
weighted average of the Outokumpu share on the Helsinki Exchanges
between December 1, 2004 and February 28, 2005.
As a result of the share subscriptions with the 2003 stock
options, the share capital of Outokumpu Oyj may be increased by a
maximum of EUR 7 043 079.60 and the number of shares by a maximum
of 4 142 988 shares. The shares that can be subscribed with the
2003 stock options equal to 2.3% of the Company's shares and
voting rights.
Authorizations of the Board of Directors
During 2004, the Board of Directors utilized twice its
authorization to transfer the Companys own shares granted by the
Annual General Meeting in 2003. On February 12, 2004, Outokumpu
Oyj transferred a total of 315 310 of treasury shares to the
persons participating in the share remuneration scheme for
management. Furthermore on February 26, 2004, in conjunction with
the acquisition of the remaining 50% interest in its subsidiary
Neumayer GmbH, Outokumpu transferred 309 597 treasury shares to
the seller as consideration.
The Board of Directors has a valid authorizations granted by the
Annual General Meeting of April 2, 2004 to increase the share
capital by issuing new shares, stock options or convertible bonds.
The share capital may be increased by no more than EUR 30 400 000
and the aggregate maximum of 17 882 352 new shares may be issued
(10% of the companys share capital). The Board of Directors is
authorized to decide who will have the right to subscribe for the
new shares, stock options or convertible bonds. The Board of
Directors may deviate from the shareholders' pre-emptive
subscription right, provided that such deviation is justified by
an important financial reason for the Company, such as
strengthening the Company's capital structure or financing
corporate acquisitions or restructurings. The Board of Directors
decides the subscription price and the other terms and conditions
of the issue of shares, stock options or convertible bonds. The
Board of Directors may decide that the subscription price for new
shares can be paid by means of contribution in kind, set-off or
otherwise subject to specific terms and conditions determined by
the Board of Directors. The authorization is valid until the
Annual General Meeting in 2005, however no longer than one year
from the decision of the General Meeting. By February 10, 2005,
the Board of Directors had not used this authorization.
The Board of Directors has a valid authorization granted by the
Annual General Meeting of April 2, 2004 to repurchase the
Companys own shares. The maximum number of shares to be
repurchased is 8 900 000. The number of own shares in the
Companys possession may not exceed 5% of the total of the
Companys shares. Shares may be repurchased pursuant to a decision
of the Board of Directors through purchases in public trading at
the Helsinki stock exchange at the prevailing market price. Shares
may be repurchased for improving of the Company's capital
structure, or to be used as consideration when acquiring assets
for the Company's business or as consideration in possible
corporate acquisitions, in the manner and to the extent decided by
the Board of Directors. Repurchased shares may also be used as a
part of incentive and bonus schemes directed to the personnel of
the Company. The authorization is valid until the Annual General
Meeting in 2005, however no longer than one year from the decision
of the General Meeting. By February 10, 2005, the Board of
Directors had not used this authorization.
The Board of Directors has a valid authorization granted by the
Annual General Meeting of April 2, 2004 to transfer the Companys
own shares. The maximum number of shares to be transferred is 10
000 000. Shares may be transferred on one or several occasions.
The Board of Directors is authorized to decide on the recipients
of the shares and the procedure and terms to be applied. The Board
of Directors may decide to transfer shares in deviation of the pre-
emptive right of the shareholders to the Companys shares. Shares
can be transferred as consideration when acquiring assets for the
Company's business or as consideration in possible corporate
acquisitions, in the manner and to the extent decided by the Board
of Directors. The Board of Directors may decide to sell shares
through public trading at the Helsinki stock exchange in order to
obtain funds for the Company for investments and possible
corporate acquisitions. Shares can also be transferred as a part
of incentive and bonus schemes directed to the personnel of the
Company, including the Chief Executive Officer and his/her deputy.
Except as specifically authorized, the Board of Directors may not
deviate from the shareholders' pre-emptive right to shares in
favor of persons that are closely connected to the Company in the
meaning of chapter 1, section 4, subsection 1 of the Finnish
Companies Act. The transfer price may not be less than the fair
market value of the shares at the time of the transfer set in
public trading at the Helsinki stock exchange. The consideration
can be paid by means of contribution in kind, set-off or otherwise
subject to specific terms and conditions determined by the Board
of Directors. The authorization is valid until the Annual General
Meeting in 2005, however no longer than one year from the decision
of the General Meeting.
On February 10, 2005, the Board of Directors used the above-
mentioned authorization and confirmed the management remuneration
of the third and last scheme that expired at the end of 2004.
Approximately 280 490 treasury shares that the Company currently
holds will be transferred to the assigned persons as share part of
the total remuneration on February 14, 2005.
Jan- Jan-
Dec Dec
EUR million 2004 2003
Non-recurring items in operating profit
Release of the Finnish
TEL disability pension liability 36 -
Gain on the sale of the filter business 16 -
Gain on the Boliden transaction (1) 120
Stelco Hardy closure costs (3) -
Waalwijk closure costs (7) -
Loss on the sale of Boliden shares (19) -
Excess of Outokumpu's interest in the
net fair value of acquired net assets - 23
over cost
Gain on the sale of
Arctic Platinum Partnership (49%) - 26
Gain on the sale of the Inmet shares - 10
Gain on the sale of the precious metals - 9
assets
Panteg closure 7 (7)
Provisions for the copper tube cartel - (54)
fines
29 127
Income taxes (57) (18)
Current taxes (30) 22
Deferred taxes (87) 4
Commitments Dec 31 Dec 31
EUR million 2004 2003
Mortgages and pledges
To secure borrowings of Group 112 144
companies
Guarantees
On behalf of associated companies 4 6
On behalf of other parties 38 52
42 58
Minimum future lease
payments on operating leases 146 160
Open derivative instruments Fair Contract
value amounts
Dec 31 Dec 31 Dec 31
EUR million 2004 2004 2003
Currency and interest rate
derivatives
Currency forwards 26 1 247 1 620
Currency options
Purchased 0 7 280
Written 0 8 270
Currency swaps (1) 21 40
Interest rate swaps (2) 172 210
Metal derivatives 1)
Forward and futures copper 3 50 150 101 400
contracts
Copper options
Purchased 0 20 522 -
Forward and futures nickel 1 1 758 4 300
contracts
Nickel options
Purchased - - 720
Forward and futures zinc 0 39 000 299 700
contracts
Forward and futures aluminium 0 2 550 2 800
contracts
Forward and futures gold - - 146 800
contracts
Forward and futures silver - - 886 800
contracts
Electricity derivatives 2)
Traded electricity forwards and (0) 0.1 0.0
futures
Other financial contracts 0 5.0 3.5
1) Contract amounts of base metal derivatives in tonnes and
precious metal derivatives in troy ounce.
2) Contract amounts of electricity derivatives in TWh.
KEY FINANCIAL INDICATORS BY
QUARTER
EUR million I/03 II/03 III/03 IV/03
Sales
Outokumpu Stainless
Coil Products 704 697 661 687
Special Products 349 327 273 348
North America 64 59 64 65
Others (241 (231) (148) (228)
)
Outokumpu Stainless 876 852 850 872
total
Outokumpu Copper
Regional businesses 185 174 171 191
Global businesses 180 191 173 163
Others 44 38 61 57
Outokumpu Copper total 409 403 405 411
Outokumpu Technology 89 81 98 137
Zinc 93 95 98 110
Other operations 67 61 61 74
Intra-group sales (51) (53) (48) (68)
The Group 1 483 1 439 1 464 1 536
Operating profit
Outokumpu Stainless
Coil Products 45 35 1 10
Special Products 0 2 (8) 5
North America 0 0 4 1
Others 2 (4) 10 (4)
Outokumpu Stainless 47 33 7 12
total
Outokumpu Copper
Regional businesses (2) (1) 2 2
Global businesses 5 10 4 6
Others 2 (3) 0 (29)
Outokumpu Copper total 5 6 5 (21)
Outokumpu Technology (6) (1) 1 11
Zinc 6 3 5 6
Other operations (18) (20) 11 120
Intra-group items 1 0 1 0
The Group 35 21 31 128
Share of results
in associated companies (3) (3) (4) (5)
Financial income and (29) (27) (18) (17)
expenses
Profit before taxes 3 (9) 9 106
Income taxes (3) (4) (8) 19
Net profit for the period 0 (13) 1 125
Attributable to:
Equity holders of the (1) (14) 2 125
Company
Minority interest 1 1 (1) 0
EUR million I/04 II/04 III/04 IV/04
Sales
Outokumpu Stainless
Coil Products 849 894 767 994
Special Products 363 459 379 449
North America 78 94 98 98
Others (188) (285) (210) (203)
Outokumpu Stainless 1 102 1 162 1 034 1 338
total
Outokumpu Copper
Regional businesses 304 326 308 289
Global businesses 204 244 224 207
Others (15) (18) (16) (7)
Outokumpu Copper total 493 552 516 489
Outokumpu Technology 81 104 91 147
Zinc - - - -
Other operations 41 39 41 42
Intra-group sales (37) (31) (33) (35)
The Group 1 680 1 826 1 649 1 981
Operating profit
Outokumpu Stainless
Coil Products 102 88 69 77
Special Products 11 25 5 30
North America 5 6 5 7
Others 2 (1) (1) 12
Outokumpu Stainless 120 118 78 126
total
Outokumpu Copper
Regional businesses 17 7 (1) 10
Global businesses 11 4 4 6
Others (4) 0 (2) 0
Outokumpu Copper total 24 11 1 16
Outokumpu Technology 9 (1) 1 19
Zinc - - - -
Other operations (9) (2) (7) (37)
Intra-group items (2) 3 0 0
The Group 142 128 73 124
Share of results
in associated companies 15 9 31 23
Financial income and 10 (18) (29) (32)
expenses
Profit before taxes 167 120 75 116
Income taxes (34) (24) (20) (9)
Net profit for the period 133 96 55 107
Attributable to:
Equity holders of the 130 95 53 106
Company
Minority interest 3 1 2 1
GROUP KEY FIGURES BY QUARTER I/03 II/03 III/03 IV/03
Operating profit margin, % 2.3 1.4 2.1 8.3
Return on capital employed, % 3.1 1.8 2.6 11.5
Return on shareholders' equity, % neg. neg. 0.4 24.7
Capital employed at
end of period, EUR million 4 643 4 803 4 780 4 108
Net interest-bearing debt
at end of period, EUR million 2 633 2 884 2 846 2 025
Equity-to-assets ratio at end of 30.3 28.7 28.8 33.0
period, %
Debt-to-equity ratio at end of 131.0 150.2 147.1 97.2
period, %
Earnings per share, EUR (0.01) (0.08) 0.01 0.73
Average number of shares
outstanding, in thousands 1) 171 375 171 534 171 719 172 138
Shareholders' equity per
share at end of period, EUR 11.49 10.96 11.05 11.54
Number of shares outstanding
at end of period,
in thousands 1) 171 534 171 540 171 613 177 451
Capital expenditure, EUR million 178 124 116 204
Depreciation, EUR million 74 74 74 82
Average personnel for the period 21 242 22 064 21 440 21 037
GROUP KEY FIGURES BY QUARTER I/04 II/04 III/04 IV/04
Operating profit margin, % 8.5 7.0 4.4 6.3
Return on capital employed, % 13.2 10.9 6.0 10.1
Return on shareholders' equity, % 24.3 16.7 9.1 17.3
Capital employed at
end of period, EUR million 4 543 4 839 4 919 4 941
Net interest-bearing debt
at end of period, EUR million 2 261 2 496 2 515 2 435
Equity-to-assets ratio at end of 33.1 32.7 33.6 35.8
period, %
Debt-to-equity ratio at end of 99.0 106.5 104.6 97.2
period, %
Earnings per share, EUR 0.73 0.53 0.29 0.58
Average number of shares
outstanding, in thousands 1) 178 081 180 742 180 752 180 752
Shareholders' equity per
share at end of period, EUR 12.43 12.75 13.08 13.65
Number of shares outstanding
at end of period,
in thousands 1) 178 914 180 752 180 752 180 752
Capital expenditure, EUR million 156 93 91 133
Depreciation, EUR million 59 64 64 64
Average personnel for the period 19 433 20 122 20 013 19 475
1) The number of own shares repurchased is excluded.
